Power Financial Corporation - Nine-Month Earnings and Dividends
Thu Nov 12, 12:06 PMReaders are referred to the sections entitled "Forward-looking Statements" and "Non-GAAP Financial Measures" at the end of this release.
MONTREAL, Nov. 12 /CNW Telbec/ - Power Financial Corporation's operating earnings for the nine-month period ended September 30, 2009 were $1,149 million or $1.54 per share, compared with $1,540 million or $2.10 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 $50 million or $0.07 per share for the nine-month period ended September 30, 2009 and consisted mainly of Power Financial's share of non-operating results recorded by Pargesa, as discussed below. For the nine-month period of 2008, other items were earnings of $570 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 nine-month period ended September 30, 2009 were $1,099 million or $1.47 per share, compared with $2,110 million or $2.91 per share in 2008.
THIRD-QUARTER RESULTS
---------------------
For the quarter ended September 30, 2009, operating earnings of the Corporation were $455 million or $0.61 per share, compared with $459 million or $0.62 per share in the third quarter of 2008.
Other items for the third quarter of 2009 were a charge of $3 million, compared with a charge of $2 million for the same quarter in 2008.
Net earnings for the quarter were $452 million or $0.61 per share in 2009, compared with $457 million or $0.62 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 $1,184 million or $1.254 per share for the nine-month period ended September 30, 2009, compared with $1,536 million or $1.717 per share in the corresponding period of 2008. For the three-month period ended September 30, 2009, Lifeco reported adjusted net income attributable to common shareholders of $445 million or $0.471 per share, compared with $436 million or $0.487 per share in the same period in 2008.
The above amounts exclude the following non-recurring items recorded by Lifeco in the nine-month period ended September 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 nine-month period ended September 30, 2009 was $1,184 million or $1.254 per share, compared with $2,303 million or $2.575 per share in the corresponding period of 2008. Net income attributable to Lifeco's common shareholders for the three-month period ended September 30, 2009 was $445 million or $0.471 per share, compared with $436 million or $0.487 per share in the corresponding period of 2008.
Lifeco's contribution to Power Financial's operating earnings was $815 million for the nine-month period ended September 30, 2009, compared with $1,079 million for the corresponding period in 2008. For the three-month period ended September 30, 2009, Lifeco's contribution to Power Financial's operating earnings was $307 million, compared with $306 million in 2008.
IGM Financial Inc.
IGM Financial reported adjusted net income for the nine months ended September 30, 2009 of $445 million, compared with $626 million in 2008. Adjusted net income for the nine months ended September 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. Adjusted earnings per share were $1.69 in 2009, compared with $2.36 in 2008. Net income for the nine months ended September 2009 was $445 million or $1.69 per share, compared with $651 million or $2.45 per share in the corresponding period of 2008.
Net income for the three months ended September 30, 2009 was $167 million or $0.63 per share, compared with $199 million or $0.75 in 2008.
For the nine-month and three-month periods ended September 30, 2009, IGM contributed $248 million and $95 million to Power Financial's operating earnings, compared with $349 million and $112 million in 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 operating earnings of SF504 million in the nine-month period ended September 30, 2009, compared with SF694 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 September 30, 2009, Pargesa's operating earnings were SF262 million, compared with SF256 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 $140 million for the nine-month period ended September 30, 2009, compared with $181 million for the corresponding period in 2008. For the third quarter of 2009, the contribution from Pargesa to Power Financial's operating earnings was $72 million, compared with $64 million in the third quarter of 2008.
Non-operating earnings were SF304 million in the nine-month period ended September 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 and a partial reversal under International Financial Reporting Standards (IFRS) of an impairment charge taken on Lafarge in the third quarter of 2008, for an amount of SF509 million. This latter amount is however not recognized under Canadian Generally Accepted Accounting Principles. This compared with non-recurring earnings of SF102 million in 2008. As a result, the net earnings reported by Pargesa were SF808 million in the nine-month period ended September 30, 2009, compared with SF796 million in the same period of 2008. For the third quarter of 2009, Pargesa reported net earnings of SF760 million, compared with SF261 million in the third quarter 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 January 25, 2010 February 15, 2010 To be determined
In accordance with the
articles of the
Corporation
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Series C January 8, 2010 January 31, 2010 32.50 cents
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Series D January 8, 2010 January 31, 2010 34.375 cents
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Series E January 8, 2010 January 31, 2010 32.8125 cents
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Series F January 8, 2010 January 31, 2010 36.875 cents
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Series H January 8, 2010 January 31, 2010 35.9375 cents
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Series I January 8, 2010 January 31, 2010 37.50 cents
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Series J January 8, 2010 January 31, 2010 29.375 cents
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Series K January 8, 2010 January 31, 2010 30.9375 cents
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Series L January 8, 2010 January 31, 2010 31.875 cents
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Series M January 8, 2010 January 31, 2010 37.50 cents
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Series O January 8, 2010 January 31, 2010 45.288 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 February 1, 2010 to shareholders of record December 31, 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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September 30,
2009 December 31
(in millions of Canadian dollars) (unaudited) 2008
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Assets
Cash and cash equivalents 4,970 4,689
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Investments
Shares 6,302 5,359
Bonds 68,173 66,801
Mortgages and other loans 17,643 18,034
Loans to policyholders 7,058 7,622
Real estate 3,135 3,190
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102,311 101,006
Funds held by ceding insurers 11,258 11,447
Investment at equity 2,603 2,814
Intangible assets 4,415 4,659
Goodwill 8,636 8,613
Future income taxes 1,395 1,766
Other assets 6,279 6,524
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141,867 141,518
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Liabilities
Policy liabilities
Actuarial liabilities 99,033 97,895
Other 4,547 4,732
Deposits and certificates 953 959
Funds held under reinsurance contracts 122 192
Debentures and other borrowings 5,742 5,658
Preferred shares of the Corporation 300 300
Preferred shares of subsidiaries 1,310 1,269
Capital trust securities and debentures 782 658
Future income taxes 988 768
Other liabilities 6,650 7,254
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120,427 119,685
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Non-controlling interests 8,437 8,414
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Shareholders' Equity
Stated capital
Perpetual preferred shares 1,575 1,575
Common shares 605 595
Contributed surplus 100 91
Retained earnings 11,105 10,811
Accumulated other comprehensive income (loss) (382) 347
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13,003 13,419
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141,867 141,518
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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) 2009 2008 2009 2008
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Revenues
Premium income 4,336 3,912 13,709 25,225
Net investment income
Regular net investment income 1,606 1,571 4,820 4,645
Change in fair value on held-
for-trading assets 3,743 (2,258) 4,019 (4,793)
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5,349 (687) 8,839 (148)
Fee income 1,288 1,398 3,650 4,288
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10,973 4,623 26,198 29,365
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Expenses
Policyholder benefits, dividends
and experience refunds, and
change in actuarial liabilities 8,687 2,173 19,526 21,959
Commissions 502 556 1,509 1,646
Operating expenses 886 906 2,687 2,687
Financing charges 134 111 391 364
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10,209 3,746 24,113 26,656
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764 877 2,085 2,709
Share of earnings of investment
at equity 73 64 140 181
Other income (charges), net (3) (1) (50) 12
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Earnings from continuing operations
before income taxes and non-
controlling interests 834 940 2,175 2,902
Income taxes 170 266 481 709
Non-controlling interests 212 217 595 586
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Earnings from continuing operations 452 457 1,099 1,607
Earnings from discontinued
operations - - - 503
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Net earnings 452 457 1,099 2,110
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Earnings per common share
- Basic 0.61 0.62 1.47 2.91
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- Diluted 0.61 0.62 1.46 2.90
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SEGMENTED INFORMATION
INFORMATION ON PROFIT MEASURE
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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 31 - (16) 1,606
Change in fair value
on held-for-trading
assets 3,734 9 - - 3,743
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5,325 40 - (16) 5,349
Fee income 728 582 - (22) 1,288
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10,389 622 - (38) 10,973
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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 - 12 886
Financing charges 93 30 - 11 134
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9,825 383 - 1 10,209
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564 239 - (39) 764
Share of earnings of
investment at equity - - 73 - 73
Other income (charges),
net - - (3) - (3)
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Earnings from continuing
operations before
income taxes and non-
controlling interests 564 239 70 (39) 834
Income taxes 98 72 - - 170
Non-controlling interests 158 73 - (19) 212
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Contribution to
consolidated earnings
from continuing
operations 308 94 70 (20) 452
Contribution to
consolidated earnings
from discontinued
operations - - - - -
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Contribution to
consolidated net
earnings 308 94 70 (20) 452
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Three months ended Par-
September 30, 2008 Lifeco IGM jointco Other Total
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Revenues
Premium income 3,912 - - - 3,912
Net investment income
Regular net investment
income 1,539 49 - (17) 1,571
Change in fair value
on held-for-trading
assets (2,258) - - - (2,258)
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(719) 49 - (17) (687)
Fee income 778 635 - (15) 1,398
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3,971 684 - (32) 4,623
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Expenses
Policyholder benefits,
dividends and
experience refunds,
and change in
actuarial liabilities 2,173 - - - 2,173
Commissions 341 230 - (15) 556
Operating expenses 732 155 - 19 906
Financing charges 76 22 - 13 111
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3,322 407 - 17 3,746
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649 277 - (49) 877
Share of earnings of
investment at equity - - 64 - 64
Other income (charges),
net - - (1) - (1)
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Earnings from continuing
operations before
income taxes and non-
controlling interests 649 277 63 (49) 940
Income taxes 187 78 - 1 266
Non-controlling interests 156 87 - (26) 217
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Contribution to
consolidated earnings
from continuing
operations 306 112 63 (24) 457
Contribution to
consolidated earnings
from discontinued
operations - - - - -
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Contribution to
consolidated net
earnings 306 112 63 (24) 457
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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 4,718 148 - (46) 4,820
Change in fair value
on held-for-trading
assets 4,039 (20) - - 4,019
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8,757 128 - (46) 8,839
Fee income 2,074 1,641 - (65) 3,650
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24,540 1,769 - (111) 26,198
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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 - 35 2,687
Financing charges 274 81 - 36 391
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22,966 1,141 - 6 24,113
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1,574 628 - (117) 2,085
Share of earnings of
investment at equity - - 140 - 140
Other income (charges),
net - - (62) 12 (50)
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Earnings from continuing
operations before
income taxes and non-
controlling interests 1,574 628 78 (105) 2,175
Income taxes 298 183 - - 481
Non-controlling interests 460 198 - (63) 595
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Contribution to
consolidated earnings
from continuing
operations 816 247 78 (42) 1,099
Contribution to
consolidated earnings
from discontinued
operations - - - - -
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Contribution to
consolidated net
earnings 816 247 78 (42) 1,099
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Nine months ended Par-
September 30, 2008 Lifeco IGM jointco Other Total
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Revenues
Premium income 25,225 - - - 25,225
Net investment income
Regular net investment
income 4,539 166 - (60) 4,645
Change in fair value
on held-for-trading
assets (4,793) - - - (4,793)
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(254) 166 - (60) (148)
Fee income 2,381 1,954 - (47) 4,288
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27,352 2,120 - (107) 29,365
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Expenses
Policyholder benefits,
dividends and experience
refunds, and change in
actuarial liabilities 21,959 - - - 21,959
Commissions 993 700 - (47) 1,646
Operating expenses 2,140 485 - 62 2,687
Financing charges 259 66 - 39 364
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25,351 1,251 - 54 26,656
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2,001 869 - (161) 2,709
Share of earnings of
investment at equity - - 181 - 181
Other income (charges),
net - - 12 - 12
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Earnings from continuing
operations before
income taxes and non-
controlling interests 2,001 869 193 (161) 2,902
Income taxes 466 242 - 1 709
Non-controlling interests 418 260 - (92) 586
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Contribution to
consolidated earnings
from continuing
operations 1,117 367 193 (70) 1,607
Contribution to
consolidated earnings
from discontinued
operations 503 - - - 503
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Contribution to
consolidated net
earnings 1,620 367 193 (70) 2,110
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ContactsMr. Edward Johnson
Senior Vice-President
General Counsel and Secretary
(514) 286-7400
158.94 (1.43%)
