Power Corporation of Canada - Six-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.
WINNIPEG, Aug. 6 /CNW Telbec/ - Power Corporation of Canada's operating earnings for the six-month period ended June 30, 2010 were $476 million or $0.99 per share, compared with $412 million or $0.86 per share in the corresponding period of 2009. This represents a 16.1% increase on a per share basis.
Subsidiaries contributed $518 million to Power Corporation's operating earnings for the six-month period ended June 30, 2010, compared with $420 million in the corresponding period of 2009. Results from corporate activities represented a charge of $42 million in the six-month period ended June 30, 2010, compared with a charge of $8 million in the same period in 2009, mainly due to lower income from investments and income tax recoveries in 2009.
Earnings from other items were $3 million or $0.01 per share in the six-month period ended June 30, 2010, compared with a charge of $34 million or $0.08 per share in the corresponding period of 2009, and consisted mainly of the Corporation's share of non-operating results recorded by Power Financial Corporation.
As a result, net earnings for the six-month period ended June 30, 2010 were $479 million or $1.00 per share, compared with $378 million or $0.78 per share in the corresponding period of 2009.
SECOND QUARTER RESULTS
----------------------
For the quarter ended June 30, 2010, operating earnings of the Corporation were $257 million or $0.54 per share, compared with $223 million or $0.47 per share in the second quarter of 2009. This represents an increase of 15.5% on a per share basis.
Subsidiaries contributed $279 million to Power Corporation's operating earnings in the second quarter of 2010, compared with $273 million in the second quarter of 2009. Results from corporate activities represented a charge of $22 million in the three-month period ended June 30, 2010, compared with a charge of $50 million in the same period in 2009, mainly due to higher income from investments.
Other items for the second quarter in 2010 were a charge of $2 million or $0.01 per share, compared with a positive contribution of $4 million or $0.01 per share in the same quarter of 2009.
Net earnings for the quarter were $255 million or $0.53 per share in 2010, compared with $227 million or $0.48 per share in 2009.
RESULTS OF POWER FINANCIAL CORPORATION
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Power Financial Corporation's operating earnings for the six-month period ended June 30, 2010 were $814 million or $1.09 per share, compared with $694 million or $0.92 per share in the corresponding period of 2009. The increase in operating earnings reflects primarily the increase in the contribution from Power Financial's subsidiaries, Great-West Lifeco and IGM Financial. For the six months ended June 30, 2010, the strengthening of the Canadian dollar against the U.S. dollar, the British pound and the euro had a negative currency impact of $64 million on Great-West Lifeco's net earnings. Power Financial's share of this currency effect is $45 million or $0.06 per share.
Earnings from other items were $4 million or nil per share for the six-month period ended June 30, 2010. For the six-month period ended June 30, 2009, other items were a charge of $47 million or $0.06 per share and consisted of Power Financial's share of non-operating earnings recorded by Pargesa.
Net earnings, including other items, for the six-month period ended June 30, 2010, were $818 million or $1.09 per share, compared with $647 million or $0.86 per share in 2009.
For the quarter ended June 30, 2010, operating earnings of Power Financial were $433 million or $0.58 per share, compared with $442 million or $0.60 per share in the second quarter of 2009. For the three months ended June 30, 2010, the negative currency impact on net earnings of Lifeco was $33 million. Power Financial's share of this currency effect is $23 million or $0.03 per share.
Other items for the second quarter of 2010 were a charge of $4 million or $0.01 per share, compared with earnings of $10 million or $0.01 per share for the same quarter in 2009.
Net earnings of Power Financial for the quarter were $429 million or $0.57 per share in 2010, compared with $452 million or $0.61 per share in 2009.
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 September 24, 2010 October 15, 2010 To be
determined in
accordance
with the
articles of
the Corporation
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Series A September 24, 2010 October 15, 2010 35 cents
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Series B September 24, 2010 October 15, 2010 33.4375 cents
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Series C September 24, 2010 October 15, 2010 36.25 cents
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Series D September 24, 2010 October 15, 2010 31.25 cents
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DIVIDENDS ON PARTICIPATING SHARES
---------------------------------
The Board of Directors also declared a quarterly dividend of 29 cents per share on the Participating Preferred and Subordinate Voting Shares of the Corporation, payable September 30, 2010 to shareholders of record on September 9, 2010.
For purposes of the Income Tax Act (Canada) and any similar provincial legislation, all of the above dividends on the Corporation's preferred (including the Participating Preferred) and subordinate voting shares are eligible dividends.
Forward-looking Statements
--------------------------
Certain statements in this press 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 base 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 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 item 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.
Attachments: Financial Information
POWER CORPORATION OF CANADA
CONSOLIDATED BALANCE SHEETS
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June 30,
2010 December 31,
(in millions of Canadian dollars) (unaudited) 2009
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Assets
Cash and cash equivalents 5,528 5,385
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Investments
Shares 7,346 7,463
Bonds 71,427 67,942
Mortgages and other loans 17,362 17,356
Loans to policyholders 7,052 6,957
Real estate 3,110 3,101
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106,297 102,819
Funds held by ceding insurers 10,345 10,839
Investments at equity 2,088 2,677
Intangible assets 4,488 4,502
Goodwill 8,776 8,760
Future income taxes 1,265 1,281
Other assets 6,768 6,744
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145,555 143,007
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Liabilities
Policy liabilities
Actuarial liabilities 100,072 98,059
Other 4,610 4,592
Deposits and certificates 863 907
Funds held under reinsurance contracts 359 186
Debentures and other borrowings 6,515 6,375
Preferred shares of subsidiaries 300 503
Capital trust securities and debentures 535 540
Future income taxes 1,338 1,136
Other liabilities 6,621 6,402
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121,213 118,700
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Non-controlling interests 14,915 14,478
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Shareholders' Equity
Stated capital
Non-participating shares 785 787
Participating shares 538 526
Contributed surplus 124 117
Retained earnings 8,929 8,742
Accumulated other comprehensive income (loss) (949) (343)
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9,427 9,829
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145,555 143,007
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CONSOLIDATED STATEMENTS OF EARNINGS
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Three months ended Six months ended
June 30 June 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 4,215 4,664 8,825 9,373
Net investment income
Regular net investment income 1,349 1,654 2,807 3,261
Change in fair value on
held-for-trading assets 1,101 2,250 2,603 276
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2,450 3,904 5,410 3,537
Fee and media income 1,416 1,301 2,841 2,570
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8,081 9,869 17,076 15,480
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Expenses
Policyholder benefits, dividends
and experience refunds, and
change in actuarial liabilities 5,622 7,473 12,193 10,839
Commissions 554 528 1,107 1,007
Operating expenses 1,010 1,034 2,029 2,081
Financing charges 118 156 231 268
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7,304 9,191 15,560 14,195
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777 678 1,516 1,285
Share of earnings of investments
at equity 57 83 54 62
Other income (charges), net (4) 8 4 (49)
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Earnings before income taxes and
non-controlling interests 830 769 1,574 1,298
Income taxes 173 172 327 290
Non-controlling interests 402 370 768 630
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Net earnings 255 227 479 378
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Earnings per participating share
- Basic 0.53 0.48 1.00 0.78
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- Diluted 0.53 0.48 1.00 0.78
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SEGMENTED INFORMATION
INFORMATION ON PROFIT MEASURE
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Three months ended Par-
June 30, 2010 Lifeco IGM jointco Other Total
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Revenues
Premium income 4,215 - - - 4,215
Net investment income
Regular net investment
income 1,342 17 - (10) 1,349
Change in fair value
on held-for-trading
assets 1,091 10 - - 1,101
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2,433 27 - (10) 2,450
Fee and media income 718 617 - 81 1,416
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7,366 644 - 71 8,081
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Expenses
Policyholder benefits,
dividends and experience
refunds, and change in
actuarial liabilities 5,622 - - - 5,622
Commissions 364 215 - (25) 554
Operating expenses 714 161 - 135 1,010
Financing charges 70 28 - 20 118
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6,770 404 - 130 7,304
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596 240 - (59) 777
Share of earnings (losses)
of investments at equity - - 57 - 57
Other income (charges), net - - (4) - (4)
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Earnings before income
taxes and non-controlling
interests 596 240 53 (59) 830
Income taxes 115 57 - 1 173
Non-controlling interests 284 116 18 (16) 402
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Contribution to
consolidated net
earnings 197 67 35 (44) 255
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Three months ended Par-
June 30, 2009 Lifeco IGM jointco Other Total
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Revenues
Premium income 4,664 - - - 4,664
Net investment income
Regular net investment
income 1,616 63 - (25) 1,654
Change in fair value
on held-for-trading
assets 2,272 (20) - (2) 2,250
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3,888 43 - (27) 3,904
Fee and media income 666 549 - 86 1,301
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9,218 592 - 59 9,869
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Expenses
Policyholder benefits,
dividends and experience
refunds, and change in
actuarial liabilities 7,473 - - - 7,473
Commissions 353 198 - (23) 528
Operating expenses 721 158 - 155 1,034
Financing charges 106 32 - 18 156
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8,653 388 - 150 9,191
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565 204 - (91) 678
Share of earnings
(losses) of investments
at equity - - 87 (4) 83
Other income (charges),
net - - (2) 10 8
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Earnings before income
taxes and non-controlling
interests 565 204 85 (85) 769
Income taxes 122 59 - (9) 172
Non-controlling interests 255 89 29 (3) 370
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Contribution to
consolidated net
earnings 188 56 56 (73) 227
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Six months ended Par-
June 30, 2010 Lifeco IGM jointco Other Total
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Revenues
Premium income 8,825 - - - 8,825
Net investment income
Regular net investment
income 2,764 55 - (12) 2,807
Change in fair value
on held-for-trading
assets 2,593 10 - - 2,603
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5,357 65 - (12) 5,410
Fee and media income 1,454 1,228 - 159 2,841
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15,636 1,293 - 147 17,076
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Expenses
Policyholder benefits,
dividends and
experience refunds,
and change in actuarial
liabilities 12,193 - - - 12,193
Commissions 727 430 - (50) 1,107
Operating expenses 1,432 322 - 275 2,029
Financing charges 139 55 - 37 231
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14,491 807 - 262 15,560
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1,145 486 - (115) 1,516
Share of earnings
(losses) of investments
at equity - - 54 - 54
Other income (charges),
net - - 4 - 4
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Earnings before income
taxes and non-control-
ling interests 1,145 486 58 (115) 1,574
Income taxes 201 122 - 4 327
Non-controlling
interests 546 230 20 (28) 768
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Contribution to
consolidated net
earnings 398 134 38 (91) 479
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Six months ended Par-
June 30, 2009 Lifeco IGM jointco Other Total
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Revenues
Premium income 9,373 - - - 9,373
Net investment income
Regular net
investment income 3,127 125 - 9 3,261
Change in fair value
on held-for-trading
assets 305 (29) - - 276
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3,432 96 - 9 3,537
Fee and media income 1,346 1,059 - 165 2,570
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14,151 1,155 - 174 15,480
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Expenses
Policyholder benefits,
dividends and
experience refunds,
and change in
actuarial liabilities 10,839 - - - 10,839
Commissions 660 390 - (43) 1,007
Operating expenses 1,461 317 - 303 2,081
Financing charges 181 59 - 28 268
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13,141 766 - 288 14,195
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1,010 389 - (114) 1,285
Share of earnings
(losses) of investments
at equity - - 67 (5) 62
Other income (charges),
net - - (59) 10 (49)
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Earnings before income
taxes and non-control-
ling interests 1,010 389 8 (109) 1,298
Income taxes 200 111 - (21) 290
Non-controlling
interests 473 177 3 (23) 630
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Contribution to
consolidated net
earnings 337 101 5 (65) 378
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For further information: Mr. Edward Johnson, Senior Vice-President, General Counsel and Secretary, 514-286-7400
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