Power Financial Corporation - Six-month results and dividend
Fri Aug 7, 2:36 PM
Readers are referred to the sections entitled "Forward-looking
Statements" and "Non-GAAP Financial Measures" at the end of this release.
WINNIPEG, Aug. 7 /CNW Telbec/ - Power Financial Corporation's operating earnings for the six-month period ended June 30, 2009 were $694 million or $0.92 per share, compared with $1,081 million or $1.48 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 $47 million or $0.06 per share for the six-month period ended June 30, 2009 and consisted mainly of Power Financial's share of non operating results recorded by Pargesa, as discussed below. For the six-month period of 2008, other items were earnings of $572 million or $0.81 per share and consisted of Power Financial's share of non-operating earnings recorded by Lifeco and Pargesa, also discussed below.
Net earnings, including other items, for the six-month period ended June 30, 2009 were $647 million or $0.86 per share, compared with $1,653 million or $2.29 per share in 2008.
SECOND-QUARTER RESULTS
----------------------
For the quarter ended June 30, 2009, operating earnings of the Corporation were $442 million or $0.60 per share, compared with $590 million or $0.81 per share in the second quarter of 2008.
Other items for the second quarter of 2009 were earnings of $10 million or $0.01 per share, compared with $477 million or $0.68 per share for the same quarter in 2008.
Net earnings for the quarter were $452 million or $0.61 per share in 2009, compared with $1,067 million or $1.49 per share in 2008.
RESULTS OF SUBSIDIARIES AND PARJOINTCO
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Great-West Lifeco Inc.
Great-West Lifeco reported adjusted net income attributable to common shareholders of $739 million or $0.783 per share for the six-month period ended June 30, 2009, compared with $1,100 million or $1.230 per share in the corresponding period of 2008. For the three-month period ended June 30, 2009, Lifeco reported adjusted net earnings of $413 million or $0.437 per share, compared with adjusted earnings of $564 million or $0.630 per share in the same period in 2008.
The above amounts exclude the following non-recurring items recorded by Lifeco in the six-month and three-month periods ended June 30, 2008. In the first quarter of 2008, Lifeco recorded two non-recurring items totalling $118 million or $0.132 per share after tax consisting of (a) a gain realized in connection with the termination of a long standing assumption reinsurance agreement for an amount of $176 million, and (b) a reserve strengthening in Great-West Life & Annuity Insurance Company's continuing operations for a charge of $58 million. In the second quarter of 2008, Lifeco recorded a gain of $649 million or $0.726 per share, representing the gain on the sale of its U.S. healthcare business.
Including these non-recurring items, net income attributable to Lifeco's common shareholders for the six-month period ended June 30, 2009 was $739 million or $0.783 per share, compared with $1,867 million or $2.088 per share in the corresponding period of 2008. For the three-month period ended June 30, 2009, net income attributable to common shareholders was $413 million or $0.437 per share, compared with $1,213 million or $1.356 per share in the corresponding period of 2008.
Lifeco's contribution to Power Financial's operating earnings was $508 million for the six-month period ended June 30, 2009, compared with $773 million for the corresponding period in 2008. For the three-month period ended June 30, 2009, Lifeco's contribution to Power Financial's operating earnings was $284 million, compared with $396 million in 2008.
IGM Financial Inc.
Net income for the six months ended June 30, 2009 was $278 million, compared with adjusted net income of $427 million in 2008. Adjusted net income for the six months ended June 30, 2008 excluded $25 million which represented IGM's proportionate share of Lifeco's after-tax gain on the sale of Great-West Healthcare recorded in the second quarter. Earnings per share were $1.05 in 2009, compared with adjusted earnings per share of $1.61 in 2008. Net income without adjustment for the six months ended June 2008 was $452 million and earnings per share on this basis were $1.70.
Net earnings for the three months ended June 30, 2009 were $145 million or $0.55 per share, compared with adjusted net earnings of $216 million or $0.81 in 2008.
For the six-month and three-month periods ended June 30, 2009, IGM contributed $153 million and $85 million to Power Financial's operating earnings, compared with $237 million and $118 million in 2008.
Partjointco 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 operating earnings of SF243 million in the six-month period ended June 30, 2009, compared with SF438 million for the corresponding period in 2008. The decrease is mainly due to lower contribution from Imerys and Lafarge. For the three-month period ended June 30, 2009, Pargesa's operating earnings were SF312 million, compared with SF363 million in the corresponding period of 2008. Expressed in Canadian dollars, the contribution from the investment at equity to Power Financial's operating earnings was $68 million for the six-month period ended June 30, 2009, compared with $117 million for the corresponding period in 2008. For the second quarter of 2009, the contribution from Pargesa to Power Financial's operating earnings was $88 million, compared with $100 million in the second quarter of 2008.
Non-operating results were a charge of SF195 million in the six-month period ended June 30, 2009, which essentially consisted of the charge resulting from the adjustment of the carrying value of Pernod Ricard and Iberdrola recorded in the first quarter of 2009. This compared with non-recurring earnings of SF97 million in 2008. As a result, the net earnings reported by Pargesa were SF47 million in the six-month period ended June 30, 2009, compared with SF535 million in the same period of 2008. For the second quarter of 2009, Pargesa reported net earnings of SF312 million, compared with SF402 million in the second quarter of 2008.
PREFERRED SHARE DIVIDENDS
-------------------------
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 October 23, 2009 November 15, 2009 To be determined in
accordance with the
articles of the
Corporation
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Series C October 9, 2009 October 31, 2009 32.50 cents
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Series D October 9, 2009 October 31, 2009 34.375 cents
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Series E October 9, 2009 October 31, 2009 32.8125 cents
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Series F October 9, 2009 October 31, 2009 36.875 cents
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Series H October 9, 2009 October 31, 2009 35.9375 cents
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Series I October 9, 2009 October 31, 2009 37.50 cents
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Series J October 9, 2009 October 31, 2009 29.375 cents
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Series K October 9, 2009 October 31, 2009 30.9375 cents
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Series L October 9, 2009 October 31, 2009 31.875 cents
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Series M October 9, 2009 October 31, 2009 37.50 cents
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COMMON SHARE DIVIDEND
---------------------
The Board of Directors also declared a quarterly dividend of 35 cents per share on the Corporation's common shares payable October 30, 2009 to shareholders of record September 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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June 30
2009 December
(in millions of Canadian dollars) (unaudited) 31, 2008
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Assets
Cash and cash equivalents 5,270 4,689
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Investments
Shares 6,014 5,359
Bonds 68,311 66,801
Mortgages and other loans 18,090 18,034
Loans to policyholders 7,416 7,622
Real estate 3,380 3,190
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103,211 101,006
Funds held by ceding insurers 11,761 11,447
Investment at equity 2,461 2,814
Intangible assets 4,562 4,659
Goodwill 8,647 8,613
Future income taxes 1,585 1,766
Other assets 6,067 6,524
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143,564 141,518
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Liabilities
Policy liabilities
Actuarial liabilities 100,127 97,895
Other 4,683 4,732
Deposits and certificates 997 959
Funds held under reinsurance contracts 169 192
Debentures and other borrowings 5,828 5,658
Preferred shares of the Corporation 300 300
Preferred shares of subsidiaries 1,296 1,269
Capital trust securities and debentures 786 658
Future income taxes 893 768
Other liabilities 6,822 7,254
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121,901 119,685
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Non-controlling interests 8,526 8,414
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Shareholders' Equity
Stated capital
Perpetual preferred shares 1,575 1,575
Common shares 605 595
Contributed surplus 98 91
Retained earnings 10,921 10,811
Accumulated other comprehensive income (loss) (62) 347
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13,137 13,419
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143,564 141,518
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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) 2009 2008 2009 2008
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Revenues
Premium income 4,664 4,523 9,373 21,313
Net investment income
Regular net investment income 1,669 1,678 3,214 3,074
Change in fair value on
held-for-trading assets 2,252 (1,595) 276 (2,535)
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3,921 83 3,490 539
Fee income 1,192 1,455 2,362 2,890
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9,777 6,061 15,225 24,742
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Expenses
Policyholder benefits, dividends
and experience refunds, and change
in actuarial liabilities 7,473 3,502 10,839 19,786
Commissions 528 549 1,007 1,090
Operating expenses 889 883 1,801 1,781
Financing charges 147 112 257 253
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9,037 5,046 13,904 22,910
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740 1,015 1,321 1,832
Share of earnings of investment
at equity 87 100 67 117
Other income (charges), net 10 4 (47) 13
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Earnings from continuing operations
before income taxes and
non-controlling interests 837 1,119 1,341 1,962
Income taxes 181 255 311 443
Non-controlling interests 204 269 383 369
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Earnings from continuing operations 452 595 647 1,150
Earnings from discontinued
operations - 472 - 503
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Net earnings 452 1,067 647 1,653
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Earnings per common share
- Basic 0.61 1.49 0.86 2.29
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- Diluted 0.61 1.48 0.86 2.28
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SEGMENTED INFORMATION
INFORMATION ON PROFIT MEASURE
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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 59 - (6) 1,669
Change in fair value
on held-for-trading
assets 2,272 (20) - - 2,252
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3,888 39 - (6) 3,921
Fee income 666 549 - (23) 1,192
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9,218 588 - (29) 9,777
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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 - 10 889
Financing charges 106 28 - 13 147
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8,653 384 - - 9,037
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565 204 - (29) 740
Share of earnings of
investment at equity - - 87 - 87
Other income (charges),
net - - (2) 12 10
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Earnings from continuing
operations before
income taxes and
non-controlling
interests 565 204 85 (17) 837
Income taxes 122 59 - - 181
Non-controlling interests 159 60 - (15) 204
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Contribution to
consolidated earnings
from continuing
operations 284 85 85 (2) 452
Contribution to
consolidated earnings
from discontinued
operations - - - - -
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Contribution to
consolidated net
earnings 284 85 85 (2) 452
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INFORMATION ON PROFIT MEASURE
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Three months ended Par-
June 30, 2008 Lifeco IGM jointco Other Total
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Revenues
Premium income 4,523 - - - 4,523
Net investment income
Regular net investment
income 1,648 56 - (26) 1,678
Change in fair value
on held-for-trading
assets (1,595) - - - (1,595)
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53 56 - (26) 83
Fee income 806 665 - (16) 1,455
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5,382 721 - (42) 6,061
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Expenses
Policyholder benefits,
dividends and experience
refunds, and change in
actuarial liabilities 3,502 - - - 3,502
Commissions 330 235 - (16) 549
Operating expenses 698 163 - 22 883
Financing charges 77 22 - 13 112
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4,607 420 - 19 5,046
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775 301 - (61) 1,015
Share of earnings of
investment at equity - - 100 - 100
Other income (charges),
net - - 4 - 4
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Earnings from continuing
operations before income
taxes and non-controlling
interests 775 301 104 (61) 1,119
Income taxes 170 85 - - 255
Non-controlling interests 223 83 - (37) 269
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Contribution to
consolidated earnings
from continuing
operations 382 133 104 (24) 595
Contribution to
consolidated earnings
from discontinued
operations 472 - - - 472
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Contribution to
consolidated net
earnings 854 133 104 (24) 1,067
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INFORMATION ON PROFIT MEASURE
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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 3,127 117 - (30) 3,214
Change in fair value
on held-for-trading
assets 305 (29) - - 276
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3,432 88 - (30) 3,490
Fee income 1,346 1,059 - (43) 2,362
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14,151 1,147 - (73) 15,225
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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 - 23 1,801
Financing charges 181 51 - 25 257
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13,141 758 - 5 13,904
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1,010 389 - (78) 1,321
Share of earnings of
investment at equity - - 67 - 67
Other income (charges),
net - - (59) 12 (47)
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Earnings from continuing
operations before
income taxes and
non-controlling
interests 1,010 389 8 (66) 1,341
Income taxes 200 111 - - 311
Non-controlling
interests 302 125 - (44) 383
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Contribution to
consolidated earnings
from continuing
operations 508 153 8 (22) 647
Contribution to
consolidated earnings
from discontinued
operations - - - - -
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Contribution to
consolidated net
earnings 508 153 8 (22) 647
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INFORMATION ON PROFIT MEASURE
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Six months ended Par-
June 30, 2008 Lifeco IGM jointco Other Total
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Revenues
Premium income 21,313 - - - 21,313
Net investment income
Regular net investment
income 3,000 117 - (43) 3,074
Change in fair value
on held-for-trading
assets (2,535) - - - (2,535)
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465 117 - (43) 539
Fee income 1,603 1,319 - (32) 2,890
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23,381 1,436 - (75) 24,742
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Expenses
Policyholder benefits,
dividends and experience
refunds, and change in
actuarial liabilities 19,786 - - - 19,786
Commissions 652 470 - (32) 1,090
Operating expenses 1,408 330 - 43 1,781
Financing charges 183 44 - 26 253
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22,029 844 - 37 22,910
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1,352 592 - (112) 1,832
Share of earnings of
investment at equity - - 117 - 117
Other income (charges),
net - - 13 - 13
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Earnings from continuing
operations before
income taxes and
non-controlling
interests 1,352 592 130 (112) 1,962
Income taxes 279 164 - - 443
Non-controlling
interests 262 173 - (66) 369
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Contribution to
consolidated earnings
from continuing
operations 811 255 130 (46) 1,150
Contribution to
consolidated earnings
from discontinued
operations 503 - - - 503
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Contribution to
consolidated net
earnings 1,314 255 130 (46) 1,653
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ContactsMr. Edward Johnson Senior Vice-President
General Counsel and Secretary
(514) 286-7400
