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
Attachments: Financial Information
Mr. Edward Johnson
Senior Vice-President,
General Counsel and Secretary
514-286-7400
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