Power Financial Corporation - First quarter financial results and dividends
Tue May 12, 10:59 AMReaders are referred to the sections entitled "Forward-looking
Statements" and "Non-GAAP Financial Measures" at the end of this release.
MONTREAL, May 12 /CNW Telbec/ - Power Financial Corporation's operating earnings for the three-month period ended March 31, 2009 were $252 million or $0.32 per share, compared with $491 million or $0.67 per share in the corresponding period in 2008.
The decrease in operating earnings reflects primarily the decrease in the contribution from the Corporation's subsidiaries and Parjointco.
Other items were a charge of $57 million or $0.08 per share in the first quarter of 2009 and consisted of Power Financial's share of non-operating results recorded by Pargesa, as discussed below. For the first quarter of 2008, other items were earnings of $95 million or $0.13 per share and consisted of Power Financial's share of non-operating earnings recorded by Lifeco and Pargesa.
Net earnings, including other items, for the three-month period ended March 31, 2009 were $195 million or $0.24 per share, compared with $586 million or $0.80 per share in the first quarter of 2008.
RESULTS OF SUBSIDIARIES AND PARJOINTCO
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Great-West Lifeco Inc.
Great-West Lifeco reported net income attributable to common shareholders of $326 million for the three months ended March 31, 2009, compared with $654 million in the corresponding period of 2008.
The 2008 results include two non-recurring items that totalled $118 million after tax. A gain of approximately $176 million was realized in connection with the termination of a long-standing assumption reinsurance agreement under which Great-West Life & Annuity Insurance Company had reinsured a block of U.S. participating policies. This gain was partly mitigated by an increase in policy reserves to provide for an increase in overhead costs expected to be absorbed as a result of the sale of Great-West Healthcare. Excluding these items, adjusted net income attributable to common shareholders was $536 million for the three months ended March 31, 2008.
Lifeco's contribution to Power Financial's operating earnings was $224 million for the three-month period ended March 31, 2009, compared with $377 million for the corresponding period of 2008.
IGM Financial Inc.
IGM Financial reported net income for the three-month period ended March 31, 2009 of $134 million, compared with net income of $211 million in the corresponding period of 2008.
For the three-month period ended March 31, 2009, the contribution from IGM to Power Financial Corporation's operating earnings was $68 million, compared with $119 million in the corresponding period of 2008.
Parjointco N.V.
Power Financial holds a 50% interest in Parjointco N.V., which in turn holds a 54.1% interest in Pargesa Holding SA. Pargesa reported an operating loss of SF69 million in the three-month period ended March 31, 2009, compared with earnings of SF75 million for the corresponding period in 2008. The decrease is due to lower contribution from Imerys and Lafarge as well as a negative change in the fair value of the GBL trading portfolio. Expressed in Canadian dollars, the contribution from the investment at equity to Power Financial's operating earnings was negative $20 million for the three-month period ended March 31, 2009, compared with a positive contribution of $17 million for the corresponding period in 2008.
Non-operating results were a charge of SF196 million in the first quarter 2009, which essentially consisted of the charge resulting from the adjustment of the carrying value of Pernod Ricard and Iberdrola to their market value at March 31, 2009. This compared with non-recurring earnings of SF58 million in 2008. As a result, the net loss reported by Pargesa was SF265 million in the first quarter 2009, compared with net earnings of SF133 million in the same period of 2008.
PREFERRED SHARE DIVIDENDS
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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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Series A July 24, 2009 August 15, 2009 To be determined
In accordance with
the articles of the
Corporation
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Series C July 10, 2009 July 31, 2009 32.50 cents
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Series D July 10, 2009 July 31, 2009 34.375 cents
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Series E July 10, 2009 July 31, 2009 32.8125 cents
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Series F July 10, 2009 July 31, 2009 36.875 cents
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Series H July 10, 2009 July 31, 2009 35.9375 cents
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Series I July 10, 2009 July 31, 2009 37.50 cents
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Series J July 10, 2009 July 31, 2009 29.375 cents
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Series K July 10, 2009 July 31, 2009 30.9375 cents
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Series L July 10, 2009 July 31, 2009 31.875 cents
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Series M July 10, 2009 July 31, 2009 37.50 cents
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COMMON SHARE DIVIDEND
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The Board of Directors also declared a quarterly dividend of 35 cents per
share on the Corporation's common shares payable July 31, 2009 to shareholders
of record June 30, 2009.
For purposes of the Income Tax Act (Canada) and any similar provincial
legislation, all of the above dividends of 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 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 readers are 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".
This information is based upon certain material factors or assumptions
that were applied in drawing a conclusion or making a forecast or projection
as reflected in the forward-looking statements, including perception of
historical trends, current conditions and expected future developments, as
well as other factors that are believed to be appropriate in the
circumstances.
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 material 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 that the foregoing list of factors is not
exhaustive of the factors that may affect the Corporation's and its
subsidiaries' forward-looking statements. The reader is also cautioned to
consider these and other factors, uncertainties and potential events carefully
and not to put undue reliance on forward-looking statements.
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 Discussion and Analysis of Operating Results 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 manner by Lifeco or IGM.
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.
As a consequence of the announcement by Lifeco of the signing of a
definitive agreement by GWL&A to sell its healthcare insurance business, the
results from Lifeco's U.S. healthcare insurance business are presented in the
consolidated financial statements as "discontinued operations" in accordance
with GAAP. Power Financial's share of these results is included in operating
earnings
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 (unaudited)
POWER FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
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March 31 December
2009 31
(in millions of Canadian dollars) (unaudited) 2008
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Assets
Cash and cash equivalents 4,823 4,689
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Investments
Shares 5,388 5,359
Bonds 67,563 66,801
Mortgages and other loans 17,997 18,034
Loans to policyholders 7,842 7,622
Real estate 3,259 3,190
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102,049 101,006
Funds held by ceding insurers 10,820 11,447
Investment at equity 2,376 2,814
Intangible assets 4,715 4,659
Goodwill 8,632 8,613
Future income taxes 1,828 1,766
Other assets 6,012 6,524
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141,255 141,518
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Liabilities
Policy liabilities
Actuarial liabilities 97,245 97,895
Other 4,765 4,732
Deposits and certificates 1,045 959
Funds held under reinsurance contracts 191 192
Debentures and other borrowings 5,797 5,658
Preferred shares of the Corporation 300 300
Preferred shares of subsidiaries 1,265 1,269
Capital trust securities and debentures 755 658
Future income taxes 803 768
Other liabilities 7,613 7,254
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119,779 119,685
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Non-controlling interests 8,468 8,414
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Shareholders' Equity
Stated capital
Perpetual preferred shares 1,575 1,575
Common shares 605 595
Contributed surplus 95 91
Retained earnings 10,736 10,811
Accumulated other comprehensive income (loss) (3) 347
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13,008 13,419
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141,255 141,518
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CONSOLIDATED STATEMENTS OF EARNINGS
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Three months ended
(unaudited) (in millions of
Canadian dollars, except per March 31, December 31, March 31,
share amounts) 2009 2008 2008
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Revenues
Premium income 4,709 4,782 16,790
Net investment income
Regular net investment income 1,545 1,469 1,396
Change in fair value on
held-for-trading assets (1,976) (368) (940)
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(431) 1,101 456
Fee income 1,170 1,252 1,435
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5,448 7,135 18,681
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Expenses
Policyholder benefits, dividends
and experience refunds, and change
in actuarial liabilities 3,366 4,815 16,284
Commissions 479 526 541
Operating expenses 912 918 898
Financing charges 110 74 141
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4,867 6,333 17,864
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581 802 817
Share of earnings (losses) of
investment at equity (20) 2 17
Other income (charges), net (57) (2,414) 9
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Earnings from continuing operations
before income taxes and
non-controlling interests 504 (1,610) 843
Income taxes 130 (693) 188
Non-controlling interests 179 (144) 100
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Earnings from continuing operations 195 (773) 555
Earnings from discontinued
operations - - 31
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Net earnings 195 (773) 586
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Earnings per common share
- Basic 0.24 (1.12) 0.80
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- Diluted 0.24 (1.12) 0.80
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SEGMENTED INFORMATION
INFORMATION ON PROFIT MEASURE
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Three months ended Par-
March 31, 2009 Lifeco IGM jointco Other Total
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Revenues
Premium income 4,709 - - - 4,709
Net investment income
Regular net investment
income 1,511 58 - (24) 1,545
Change in fair value
on held-for-trading
assets (1,967) (9) - - (1,976)
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(456) 49 - (24) (431)
Fee income 680 510 - (20) 1,170
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4,933 559 - (44) 5,448
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Expenses
Policyholder benefits,
dividends and experience
refunds, and change in
actuarial liabilities 3,366 - - - 3,366
Commissions 307 192 - (20) 479
Operating expenses 740 159 - 13 912
Financing charges 75 23 - 12 110
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4,488 374 - 5 4,867
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445 185 - (49) 581
Share of earnings (losses)
of investment at equity - - (20) - (20)
Other income (charges),
net - - (57) - (57)
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Earnings from continuing
operations before
income taxes and
non-controlling
interests 445 185 (77) (49) 504
Income taxes 78 52 - - 130
Non-controlling interests 143 65 - (29) 179
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Contribution to
consolidated earnings
from continuing
operations 224 68 (77) (20) 195
Contribution to
consolidated earnings
from discontinued
operations - - - - -
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Contribution to
consolidated net
earnings 224 68 (77) (20) 195
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SEGMENTED INFORMATION
INFORMATION ON PROFIT MEASURE
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Three months ended Par-
December 31, 2008 Lifeco IGM jointco Other Total
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Revenues
Premium income 4,782 - - - 4,782
Net investment income
Regular net investment
income 1,423 36 - 10 1,469
Change in fair value
on held-for-trading
assets (368) - - - (368)
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1,055 36 - 10 1,101
Fee income 743 549 - (40) 1,252
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6,580 585 - (30) 7,135
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Expenses
Policyholder benefits,
dividends and experience
refunds, and change in
actuarial liabilities 4,815 - - - 4,815
Commissions 360 206 - (40) 526
Operating expenses 746 163 - 9 918
Financing charges 37 25 - 12 74
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5,958 394 - (19) 6,333
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622 191 - (11) 802
Share of earnings (losses)
of investment at equity - - 2 - 2
Other income (charges),
net (2,248) - (376) 210 (2,414)
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Earnings from continuing
operations before
income taxes and
non-controlling
interests (1,626) 191 (374) 199 (1,610)
Income taxes (744) 51 - - (693)
Non-controlling interests (244) 95 - 5 (144)
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Contribution to
consolidated earnings
from continuing
operations (638) 45 (374) 194 (773)
Contribution to
consolidated earnings
from discontinued
operations - - - - -
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Contribution to
consolidated net
earnings (638) 45 (374) 194 (773)
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SEGMENTED INFORMATION
INFORMATION ON PROFIT MEASURE
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Three months ended Par-
March 31, 2008 Lifeco IGM jointco Other Total
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Revenues
Premium income 16,790 - - - 16,790
Net investment income
Regular net investment
income 1,352 61 - (17) 1,396
Change in fair value
on held-for-trading
assets (940) - - - (940)
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412 61 - (17) 456
Fee income 797 654 - (16) 1,435
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17,999 715 - (33) 18,681
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Expenses
Policyholder benefits,
dividends and experience
refunds, and change in
actuarial liabilities 16,284 - - - 16,284
Commissions 322 235 - (16) 541
Operating expenses 710 167 - 21 898
Financing charges 106 22 - 13 141
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17,422 424 - 18 17,864
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577 291 - (51) 817
Share of earnings
(losses) of investment
at equity - - 17 - 17
Other income (charges),
net - - 9 - 9
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Earnings from continuing
operations before
income taxes and
non-controlling
interests 577 291 26 (51) 843
Income taxes 109 79 - - 188
Non-controlling
interests 39 90 - (29) 100
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Contribution to
consolidated earnings
from continuing
operations 429 122 26 (22) 555
Contribution to
consolidated earnings
from discontinued
operations 31 - - - 31
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Contribution to
consolidated net
earnings 460 122 26 (22) 586
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ContactsMr. Edward Johnson Senior Vice-President
General Counsel and Secretary
(514) 286-7400
