Readers are referred to the sections entitled "Forward-looking
Statements" and "Non-GAAP Financial Measures" at the end of this release.
WINNIPEG, July 31 /CNW Telbec/ - Power Corporation of Canada's operating
earnings for the six-month period ended June 30, 2008 were $685 million or
$1.45 per share, compared with $757 million or $1.62 per share in the
corresponding period of 2007.
For the six-month period ended June 30, 2008, subsidiaries contributed
$692 million to the Corporation's operating earnings, compared with
$665 million in 2007.
The decrease in operating earnings in 2008 reflects a lower level of
income from investments compared with 2007 when the Corporation recorded
substantial gains generated by its investment in the Sagard 1 Fund in Europe
and its QFII operations in China.
Other income was $386 million or $0.85 per share in the six-month period
ended June 30, 2008, compared with $2 million or $0.01 per share in the
corresponding period of 2007, and consisted mainly 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 $1,071 million or $2.30 per
share, compared with $759 million or $1.63 per share in the corresponding
period of 2007.
SECOND-QUARTER RESULTS
----------------------
For the quarter ended June 30, 2008, operating earnings of the
Corporation were $381 million or $0.81 per share, compared with $394 million
or $0.84 per share in the second quarter of 2007. Subsidiaries contributed
$383 million to Power Corporation's operating earnings in the second quarter
of 2008, compared with $363 million in the second quarter of 2007.
Other income for the second quarter in 2008 was $314 million or $0.69 per
share, compared with $2 million or $0.01 per share in same quarter of 2007.
Net earnings for the quarter were therefore $695 million or $1.50 per
share in 2008, compared with $396 million or $0.85 per share in 2007.
RESULTS OF POWER FINANCIAL CORPORATION
--------------------------------------
Power Financial Corporation's operating earnings for the six-month period
ended June 30, 2008 were $1,081 million or $1.48 per share, compared with
$1,052 million or $1.43 per share in the corresponding period in 2007. This
represents a 3.0% increase on a per share basis.
Growth in operating earnings reflects primarily growth in the
contribution from Power Financial's subsidiaries and Parjointco.
Other income for the six-month period ended June 30, 2008 was
$572 million or $0.81 per share and consisted of Power Financial's share of
non-operating earnings recorded by both Great-West Lifeco and Pargesa.
On April 1, 2008, Lifeco announced that GWL&A had completed the sale of
its health care business, Great-West Healthcare. As a result of the sale, a
gain of $649 million after tax or $0.726 per common share was recorded in
Lifeco's net income. Lifeco's 2008 results also 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 of Power Financial Corporation, including other income, for
the six-month period ended June 30, 2008 were $1,653 million or $2.29 per
share, compared with $1,055 million or $1.44 per share in 2007.
For the quarter ended June 30, 2008, Power Financial's operating earnings
were $590 million or $0.81 per share, compared with $570 million or $0.78 per
share in the second quarter of 2007. This represents an increase of 4.0% on a
per share basis.
Earnings were impacted by the increase in the foreign exchange value of
the Canadian dollar compared with 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 7.3%.
Other items for the second quarter of 2008 (which include Power
Financial's share of the gain recorded by Lifeco and discussed above) were
$477 million or $0.68 per share, compared with $3 million or $0.01 per share
for the same quarter in 2007.
Net earnings for the quarter were therefore $1,067 million or $1.49 per
share in 2008, compared with $573 million or $0.79 per share in 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 September 24, 2008 October 15, 2008 To be determined
in accordance with
the articles of
the Corporation
-------------------------------------------------------------------------
Series A September 24, 2008 October 15, 2008 35 cents
-------------------------------------------------------------------------
Series B September 24, 2008 October 15, 2008 33.4375 cents
-------------------------------------------------------------------------
Series C September 24, 2008 October 15, 2008 36.25 cents
-------------------------------------------------------------------------
Series D September 24, 2008 October 15, 2008 31.25 cents
-------------------------------------------------------------------------
DIVIDENDS ON PARTICIPATING SHARES
---------------------------------
The Board of Directors also declared a quarterly dividend of 29 cents on
the Participating Preferred and Subordinate Voting Shares of the Corporation,
payable September 30, 2008 to shareholders of record September 9, 2008.
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 and 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.
Following the announcement in 2007 of GWL&A's sale of its health care
business, which closed on April 1, 2008, the results from Lifeco's U.S. health
care 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, while the Corporation's
share of the gain realized on the sale is included in Other items.
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
-------------------------------------------------------------------------
June 30, December 31,
2008 2007
(in millions of Canadian dollars) (unaudited)
-------------------------------------------------------------------------
Assets
Cash and cash equivalents 5,799 6,320
-------------------------------------------------------------------------
Investments
Shares 8,527 8,426
Bonds 64,611 65,069
Mortgages and other loans 17,520 16,423
Loans to policyholders 6,618 6,317
Real estate 2,916 2,549
-------------------------------------------------------------------------
100,192 98,784
Funds held by ceding insurers 13,676 1,512
Investments at equity 3,504 3,527
Assets of operations held for sale - 697
Intangible assets 5,139 5,072
Goodwill 9,388 9,343
Future income taxes 1,025 826
Other assets 7,084 7,064
-------------------------------------------------------------------------
145,807 133,145
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Liabilities
Policy liabilities
Actuarial liabilities 100,462 87,681
Other 4,463 4,385
Deposits and certificates 896 857
Funds held under reinsurance contracts 162 164
Liabilities of operations held for sale - 428
Debentures and other borrowings 5,421 6,875
Preferred shares of subsidiaries 1,611 1,603
Capital trust securities and debentures 640 639
Future income taxes 772 841
Other liabilities 7,270 6,854
-------------------------------------------------------------------------
121,697 110,327
-------------------------------------------------------------------------
Non-controlling interests 13,494 12,781
-------------------------------------------------------------------------
Shareholders' Equity
Stated capital
Non-participating shares 792 794
Participating shares 509 475
Contributed surplus 95 78
Retained earnings 9,114 8,304
Accumulated other comprehensive income 106 386
-------------------------------------------------------------------------
10,616 10,037
-------------------------------------------------------------------------
145,807 133,145
-------------------------------------------------------------------------
-------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF EARNINGS
-------------------------------------------------------------------------
Three months ended Six months ended
June 30 June 30
-------------------------------------------------------------------------
(unaudited) (in millions of
Canadian dollars, except
per share amounts) 2008 2007 2008 2007
-------------------------------------------------------------------------
Revenues
Premium income 4,523 4,010 21,313 9,352
Net investment income
Regular net investment income 1,711 1,579 3,135 3,116
Change in fair value on
held-for-trading assets (1,595) (1,927) (2,535) (2,344)
---------------------------------------
116 (348) 600 772
Fee and media income 1,569 1,326 3,111 2,627
-------------------------------------------------------------------------
6,208 4,988 25,024 12,751
-------------------------------------------------------------------------
Expenses
Policyholder benefits,
dividends and experience
refunds and change in
actuarial liabilities 3,484 2,550 19,768 7,891
Commissions 549 556 1,090 1,110
Operating expenses 1,019 795 2,056 1,618
Financing charges 112 90 254 176
-------------------------------------------------------------------------
5,164 3,991 23,168 10,795
-------------------------------------------------------------------------
1,044 997 1,856 1,956
Share of earnings of investments
at equity 97 75 110 87
Other income (charges), net 2 3 20 3
-------------------------------------------------------------------------
Earnings from continuing
operations before income
taxes and non-controlling
interests 1,143 1,075 1,986 2,046
Income taxes 278 243 467 469
Non-controlling interests 483 463 782 872
-------------------------------------------------------------------------
Earnings from continuing
operations 382 369 737 705
Earnings from discontinued
operations 313 27 334 54
-------------------------------------------------------------------------
Net earnings 695 396 1,071 759
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Earnings per participating share
Basic 1.50 0.85 2.30 1.63
-------------------------------------------------------------------------
Diluted 1.49 0.84 2.29 1.62
-------------------------------------------------------------------------
SEGMENTED INFORMATION
Information on Profit Measure
-------------------------------------------------------------------------
Three months
ended Par-
June 30, 2008 Lifeco IGM jointco Other Total
-------------------------------------------------------------------------
Revenues
Premium income 4,523 - - - 4,523
Net investment
income
Regular net
investment
income 1,648 56 - 7 1,711
Change in
fair value
on held-
for-trading
assets (1,595) - - - (1,595)
---------------------------------------------------------
53 56 - 7 116
Fees and
media income 806 665 - 98 1,569
-------------------------------------------------------------------------
5,382 721 - 105 6,208
-------------------------------------------------------------------------
Expenses
Policyholder
benefits,
dividends and
experience
refunds and
change in
actuarial
liabilities 3,484 - - - 3,484
Commissions 330 235 - (16) 549
Operating
expenses 698 163 - 158 1,019
Financing
charges 77 22 - 13 112
-------------------------------------------------------------------------
4,589 420 - 155 5,164
-------------------------------------------------------------------------
793 301 - (50) 1,044
Share of earnings
of investments
at equity - - 100 (3) 97
Other income
(charges), net - - 4 (2) 2
-------------------------------------------------------------------------
Earnings from
continuing
operations
before income
taxes and
non-controlling
interests 793 301 104 (55) 1,143
Income taxes 188 85 - 5 278
Non-controlling
interests 351 128 35 (31) 483
-------------------------------------------------------------------------
Contribution to
consolidated
earnings from
continuing
operating 254 88 69 (29) 382
Contribution to
consolidated
earnings from
discontinued
operations 313 - - - 313
-------------------------------------------------------------------------
Contribution to
consolidated
net earnings 567 88 69 (29) 695
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Information on Profit Measure
-------------------------------------------------------------------------
Three months
ended Par-
June 30, 2007 Lifeco IGM jointco Other Total
-------------------------------------------------------------------------
Revenues
Premium income 4,010 - - - 4,010
Net investment
income
Regular net
investment
income 1,465 45 - 69 1,579
Change in
fair value
on held-
for-trading
assets (1,927) - - - (1,927)
---------------------------------------------------------
(462) 45 - 69 (348)
Fee and
media income 554 677 - 95 1,326
-------------------------------------------------------------------------
4,102 722 - 164 4,988
-------------------------------------------------------------------------
Expenses
Policyholder
benefits,
dividends and
experience
refunds and
change in
actuarial
liabilities 2,550 - - - 2,550
Commissions 336 237 - (17) 556
Operating
expenses 485 154 - 156 795
Financing
charges 53 22 - 15 90
-------------------------------------------------------------------------
3,424 413 - 154 3,991
-------------------------------------------------------------------------
678 309 - 10 997
Share of earnings
of investments
at equity - - 80 (5) 75
Other income
(charges), net - - 3 - 3
-------------------------------------------------------------------------
Earnings from
continuing
operations
before income
taxes and
non-controlling
interests 678 309 83 5 1,075
Income taxes 131 93 - 19 243
Non-controlling
interests 319 135 28 (19) 463
-------------------------------------------------------------------------
Contribution to
consolidated
earnings from
continuing
operations 228 81 55 5 369
Contribution to
consolidated
earnings from
discontinued
operations 27 - - - 27
-------------------------------------------------------------------------
Contribution to
consolidated
net earnings 255 81 55 5 396
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Information on Profit Measure
-------------------------------------------------------------------------
Six months
ended Par-
June 30, 2008 Lifeco IGM jointco Other Total
-------------------------------------------------------------------------
Revenues
Premium income 21,313 - - - 21,313
Net investment
income
Regular net
investment
income 3,000 117 - 18 3,135
Change in
fair value
on held-
for-trading
assets (2,535) - - - (2,535)
---------------------------------------------------------
465 117 - 18 600
Fees and
media income 1,603 1,319 - 189 3,111
-------------------------------------------------------------------------
23,381 1,436 - 207 25,024
-------------------------------------------------------------------------
Expenses
Policyholder
benefits,
dividends and
experience
refunds and
change in
actuarial
liabilities 19,768 - - - 19,768
Commissions 652 470 - (32) 1,090
Operating
expenses 1,408 330 - 318 2,056
Financing
charges 183 44 - 27 254
-------------------------------------------------------------------------
22,011 844 - 313 23,168
-------------------------------------------------------------------------
1,370 592 - (106) 1,856
Share of earnings
of investments
at equity - - 117 (7) 110
Other income
(charges), net - - 13 7 20
-------------------------------------------------------------------------
Earnings from
continuing
operations
before income
taxes and
non-controlling
interests 1,370 592 130 (106) 1,986
Income taxes 297 164 - 6 467
Non-controlling
interests 534 259 44 (55) 782
-------------------------------------------------------------------------
Contribution to
consolidated
earnings from
continuing
operations 539 169 86 (57) 737
Contribution to
consolidated
earnings from
discontinued
operations 334 - - - 334
-------------------------------------------------------------------------
Contribution to
consolidated
net earnings 873 169 86 (57) 1,071
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Information on Profit Measure
-------------------------------------------------------------------------
Six months
ended Par-
June 30, 2007 Lifeco IGM jointco Other Total
-------------------------------------------------------------------------
Revenues
Premium income 9,352 - - - 9,352
Net investment
income
Regular net
investment
income 2,859 108 - 149 3,116
Change in
fair value
on held-
for-trading
assets (2,344) - - - (2,344)
--------------------------------------------------------
515 108 - 149 772
Fee and
media income 1,107 1,335 - 185 2,627
-------------------------------------------------------------------------
10,974 1,443 - 334 12,751
-------------------------------------------------------------------------
Expenses
Policyholder
benefits,
dividends and
experience
refunds and
change in
actuarial
liabilities 7,891 - - - 7,891
Commissions 676 468 - (34) 1,110
Operating
expenses 1,007 311 - 300 1,618
Financing
charges 104 44 - 28 176
-------------------------------------------------------------------------
9,678 823 - 294 10,795
-------------------------------------------------------------------------
1,296 620 - 40 1,956
Share of earnings
of investments
at equity - - 98 (11) 87
Other income
(charges), net - - 3 - 3
-------------------------------------------------------------------------
Earnings from
continuing
operations
before income
taxes and
non-controlling
interests 1,296 620 101 29 2,046
Income taxes 244 192 - 33 469
Non-controlling
interests 610 269 34 (41) 872
-------------------------------------------------------------------------
Contribution to
consolidated
earnings from
continuing
operations 442 159 67 37 705
Contribution to
consolidated
earnings from
discontinued
operations 54 - - - 54
-------------------------------------------------------------------------
Contribution to
consolidated
net earnings 496 159 67 37 759
-------------------------------------------------------------------------
-------------------------------------------------------------------------
