Readers are referred to the sections entitled "Forward-looking
Statements" and "Non-GAAP Financial Measures" at the end of this release.
MONTREAL, May 9 /CNW Telbec/ - Power Corporation of Canada's operating
earnings for the three-month period ended March 31, 2008 were $304 million or
$0.64 per share, compared with $363 million or $0.78 per share in the
corresponding period of 2007.
The decrease in operating earnings in 2008 reflects a lower level of
income from investments in 2008 compared with 2007 where the Corporation
recorded substantial gains generated by the Corporation's investment in the
Sagard 1 Fund in Europe and the Corporation's QFII operations in China.
Other income was $72 million or $0.16 per share in the first quarter of
2008, compared with nil in the first quarter of 2007 and consisted of the
Corporation's share of non-operating earnings recorded by Power Financial as
discussed below.
As a result, net earnings for the period were $376 million or $0.80 per
share, compared with $363 million or $0.78 per share in the first quarter of
2007.
RESULTS OF POWER FINANCIAL CORPORATION
--------------------------------------
Power Financial Corporation's operating earnings for the three-month
period ended March 31, 2008 were $491 million or $0.67 per share, compared
with $482 million or $0.66 per share in the corresponding period in 2007. This
represents a 1.8% increase on a per share basis. Earnings were impacted by the
increase in the foreign exchange value of the Canadian dollar compared with
Great-West Lifeco's major operating currencies. Based upon Lifeco's growth in
earnings on a constant currency basis, Power Financial's operating earnings on
a per share basis for the quarter would have increased by 9.0%.
Growth in operating earnings reflects primarily growth in the
contribution from the corporation's subsidiaries and Parjointco.
Other income was $95 million or $0.13 per share in the first quarter of
2008 and consisted of Power Financial's share of non-operating earnings
recorded by Lifeco as well as by Pargesa.
The 2008 results of Great-West Lifeco include two non-recurring items
that totalled $118 million, after tax, or $0.132 per common share. A gain of
approximately $176 million was realized in connection with the termination of
a long-standing assumption reinsurance agreement under which GWL&A 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.
Net earnings, including other income, for the three-month period ended
March 31, 2008 were $586 million or $0.80 per share, compared with
$482 million or $0.66 per share in the first quarter of 2007.
DIVIDENDS ON PREFERRED SHARES
-----------------------------
The Board of Directors today declared quarterly dividends on the
Corporation's preferred shares, as follows:
-------------------------------------------------------------------------
Type of shares Record Date Payment Date Amount
-------------------------------------------------------------------------
1986 Series June 20, 2008 July 15, 2008 To be determined
In accordance
with the articles
of the Corporation
-------------------------------------------------------------------------
Series A June 20, 2008 July 15, 2008 35 cents
-------------------------------------------------------------------------
Series B June 20, 2008 July 15, 2008 33.4375 cents
-------------------------------------------------------------------------
Series C June 20, 2008 July 15, 2008 36.25 cents
-------------------------------------------------------------------------
Series D June 20, 2008 July 15, 2008 31.25 cents
-------------------------------------------------------------------------
DIVIDENDS ON PARTICIPATING SHARES
---------------------------------
The Board of Directors also declared a dividend of 29 cents on the
Participating Preferred and Subordinate Voting Shares of the Corporation,
payable June 30, 2008 to shareholders of record June 9, 2008. This represents
an increase of 4.875 cents or 20.2% over the previous quarterly dividend of
24.125 cents.
For purposes of the Income Tax Act (Canada) and any similar provincial
legislation, all of the above dividends of the Corporation's preferred and
subordinate voting shares are eligible dividends.
Forward-looking Statements
--------------------------
Certain statements in this press release, other than statements of
historical fact, are forward-looking statements based on certain assumptions
and reflect the Corporation's or its subsidiaries' current expectations.
Forward-looking statements are provided for the purpose of presenting
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,
priorities, ongoing objectives, strategies and outlook of Power Corporation
and its subsidiaries 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", "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 the 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. 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, business
competition, 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 and integrate acquisitions, 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 any of the Corporation's and its
subsidiaries' forward-looking statements. The reader is also cautioned to
consider these and other factors 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 associated with
the Corporation's business is provided in its disclosure materials, including
its most recent Management's Discussion and Analysis and Annual Information
Form, filed with the securities regulatory authorities in Canada, available at
www.sedar.com.
Non-GAAP Financial Measures
---------------------------
In analysing the financial results of the Corporation and consistent with
the presentation in previous years, net earnings are subdivided into the
following components:
- operating earnings; and
- other items, which include the after-tax impact of any item that
management considers to be of a non-recurring nature or that could make
the period-over-period comparison of results from operations less
meaningful, and also include the Corporation's share of any such item
presented in a comparable item manner by its subsidiaries.
Management has used these financial measures for many years in its
presentation and analysis of the financial performance of Power Corporation,
and believes that they provide additional meaningful information to readers in
their analysis of the results of the Corporation.
As a consequence of GWL&A's sale of its healthcare business, the results
from Lifeco's U.S. healthcare business are presented in the consolidated
financial statements as "discontinued operations", in accordance with GAAP,
Power Corporation'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 Corporation of Canada
CONSOLIDATED BALANCE SHEETS
-------------------------------------------------------------------------
March 31, December 31,
2008 2007
(in millions of Canadian dollars) (unaudited)
-------------------------------------------------------------------------
Assets
Cash and cash equivalents 5,889 6,320
-------------------------------------------------------------------------
Investments
Shares 8,216 8,426
Bonds 66,935 65,069
Mortgages and other loans 16,983 16,423
Loans to policyholders 6,521 6,317
Real estate 2,693 2,549
-------------------------------------------------------------------------
101,348 98,784
Funds held by ceding insurers 14,393 1,512
Investments at equity 3,359 3,527
Assets of operation held for sale 670 697
Intangible assets 5,176 5,072
Goodwill 9,396 9,343
Future income taxes 879 826
Other assets 7,076 7,064
-------------------------------------------------------------------------
148,186 133,145
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Liabilities
Policy liabilities
Actuarial liabilities 102,195 87,681
Other 4,472 4,385
Deposits and certificates 940 857
Funds held under reinsurance contracts 169 164
Liabilities of operations held for sale 396 428
Debentures and other borrowings 6,803 6,875
Preferred shares of subsidiaries 1,614 1,603
Capital trust securities and debentures 636 639
Future income taxes 785 841
Other liabilities 7,031 6,854
-------------------------------------------------------------------------
125,041 110,327
-------------------------------------------------------------------------
Non-controlling interests 12,965 12,781
-------------------------------------------------------------------------
Shareholders' Equity
Stated capital
Non-participating shares 793 794
Participating shares 508 475
Contributed surplus 83 78
Retained earnings 8,559 8,304
Accumulated other comprehensive income 237 386
-------------------------------------------------------------------------
10,180 10,037
-------------------------------------------------------------------------
148,186 133,145
-------------------------------------------------------------------------
-------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF EARNINGS
-------------------------------------------------------------------------
Three months ended March 31 2008 2007
(unaudited) (in millions of Canadian dollars,
except per share amounts)
-------------------------------------------------------------------------
Revenues
Premium income 16,790 5,342
Net investment income
Regular net investment income 1,424 1,537
Change in fair value on held-for-trading
assets (940) (417)
---------------------------
484 1,120
Fee and media income 1,542 1,301
-------------------------------------------------------------------------
18,816 7,763
-------------------------------------------------------------------------
Expenses
Policyholder benefits, dividends and
experience refunds and change in actuarial
liabilities 16,284 5,341
Commissions 541 554
Operating expenses 1,037 823
Financing charges 142 86
-------------------------------------------------------------------------
18,004 6,804
-------------------------------------------------------------------------
812 959
Share of earnings of investments at equity 13 12
Other income, net 18 -
-------------------------------------------------------------------------
Earnings from continuing operations before
income taxes and non-controlling interests 843 971
Income taxes 189 226
Non-controlling interests 299 409
-------------------------------------------------------------------------
Earnings from continuing operations 355 336
Earnings from discontinued operations 21 27
-------------------------------------------------------------------------
Net earnings 376 363
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Earnings per participating share
Basic 0.80 0.78
-------------------------------------------------------------------------
Diluted 0.80 0.77
-------------------------------------------------------------------------
SEGMENTED INFORMATION
Information on Profit Measure
-------------------------------------------------------------------------
Three months ended Par-
March 31, 2008 Lifeco IGM jointco Other Total
-------------------------------------------------------------------------
Revenues
Premium income 16,790 - - - 16,790
Net investment income
Regular net
investment income 1,352 61 - 11 1,424
Change in fair value
on held-for-trading
assets (940) - - - (940)
-------------------------------------------------
412 61 - 11 484
Fee and media income 797 654 - 91 1,542
-------------------------------------------------------------------------
17,999 715 - 102 18,816
-------------------------------------------------------------------------
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 - 160 1,037
Financing charges 106 22 - 14 142
-------------------------------------------------------------------------
17,422 424 - 158 18,004
-------------------------------------------------------------------------
577 291 - (56) 812
Share of earnings of
investments at equity - - 17 (4) 13
Other income (charges),
net - - 9 9 18
-------------------------------------------------------------------------
Earnings from continuing
operations before
income taxes and
non-controlling
interests 577 291 26 (51) 843
Income taxes 109 79 - 1 189
Non-controlling
interests 183 131 9 (24) 299
-------------------------------------------------------------------------
Contribution to
consolidated earnings
from continuing
operations 285 81 17 (28) 355
Contribution to
consolidated earnings
from discontinued
operations 21 - - - 21
-------------------------------------------------------------------------
Contribution to
consolidated net
earnings 306 81 17 (28) 376
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Information on Profit Measure
-------------------------------------------------------------------------
Three months ended Par-
March 31, 2007 Lifeco IGM jointco Other Total
-------------------------------------------------------------------------
Revenues
Premium income 5,342 - - - 5,342
Net investment income
Regular net
investment income 1,394 63 - 80 1,537
Change in fair value
on held-for-trading
assets (417) - - - (417)
-------------------------------------------------
977 63 - 80 1,120
Fee and media income 553 658 - 90 1,301
-------------------------------------------------------------------------
6,872 721 - 170 7,763
-------------------------------------------------------------------------
Expenses
Policyholder benefits,
dividends and
experience refunds
and change in
actuarial liabilities 5,341 - - - 5,341
Commissions 340 231 - (17) 554
Operating expenses 522 157 - 144 823
Financing charges 51 22 - 13 86
-------------------------------------------------------------------------
6,254 410 - 140 6,804
-------------------------------------------------------------------------
618 311 - 30 959
Share of earnings of
investments at equity - - 18 (6) 12
Other income (charges),
net - - - - -
-------------------------------------------------------------------------
Earnings from continuing
operations before
income taxes and
non-controlling
interests 618 311 18 24 971
Income taxes 113 99 - 14 226
Non-controlling
interests 291 134 6 (22) 409
-------------------------------------------------------------------------
Contribution to
consolidated earnings
from continuing
operations 214 78 12 32 336
Contribution to
consolidated earnings
from discontinued
operations 27 - - - 27
-------------------------------------------------------------------------
Contribution to
consolidated net
earnings 241 78 12 32 363
-------------------------------------------------------------------------
-------------------------------------------------------------------------
