Readers are referred to the sections entitled "Forward-looking
Statements" and "Non-GAAP Financial Measures" at the end of this release.
MONTREAL, March 13 /CNW Telbec/ - Power Corporation of Canada reported today operating earnings of $1,458 million or $3.12 per participating share for the year ended December 31, 2007, compared with $1,166 million or $2.49 per share in 2006. This represents a 25.3% increase on a per share basis.
Growth in operating earnings reflect an increase of $186 million or 16.3% in the contribution from subsidiaries, primarily driven by the growth of 15.8% in operating earnings recorded by Power Financial in 2007, as well as a significant increase from income from investments, which was primarily recorded in previous quarters.
Other items, not included in operating earnings, were $5 million or $0.01 per share in 2007, compared with $227 million or $0.51 per share in 2006, which included an amount of $236 million or $0.52 per share representing the impact of the gain recorded by Groupe Bruxelles Lambert on the sale of its interest in Bertelsmann.
As a result, net earnings were $1,463 million or $3.13 per share in 2007, compared with $1,393 million or $3.00 per share in 2006.
FOURTH-QUARTER RESULTS
----------------------
The Corporation's operating earnings for the three-month period ended December 31, 2007 were $309 million or $0.66 per share, compared with $300 million or $0.64 per share in the same period in 2006. This represents a 2.7% increase on a per share basis.
Growth in operating earnings reflects a $20 million decrease in results from corporate activities resulting in particular from a lower contribution from investment funds in 2007, and a 6.0% increase in Power Financial's operating earnings, as discussed below.
Other items in the fourth quarter of 2007 were $41 million or $0.09 per share, compared with a charge of $11 million or $0.02 per share in the same period in 2006. Other items in the period in 2007 include the Corporation's share of other items recorded by Power Financial, as well as other items recorded by the Corporation and Power Technology Investment Corporation, a subsidiary.
As a result, net earnings for the fourth quarter of 2007 were $350 million or $0.75 per share, compared with $289 million or $0.62 per share for the same period in 2006.
POWER FINANCIAL CORPORATION'S RESULTS
-------------------------------------
Power Financial Corporation's operating earnings for the year ended December 31, 2007 were $2,082 million or $2.84 per share, compared with $1,802 million or $2.46 per share in 2006. This represents a 15.8% increase on a per share basis.
Growth in operating earnings reflect primarily an increase of $276 million or 14.8% in the contribution from the subsidiaries and Parjointco, from $1,871 million to $2,147 million. Based upon Lifeco's growth in net income on a constant currency basis, Power Financial's operating earnings on a per share basis for the year would have increased by 17.0%.
Other items, not included in operating earnings, were a net charge of $38 million or $0.05 per share in 2007, reflecting primarily the impact of a provision recorded by Lifeco during the third quarter, partly offset by the Power Financial's share of non-operating earnings recorded in the fourth quarter. In 2006, other items were $353 million or $0.50 per share, including an amount of $356 million representing the impact of the gain recorded by Groupe Bruxelles Lambert on the sale of its interest in Bertelsmann.
As a result, net earnings were $2,044 million or $2.79 per share in 2007, compared with $2,155 million or $2.96 per share in 2006.
Power Financial Corporation's operating earnings for the three-month period ended December 31, 2007 were $500 million or $0.68 per share, compared with $472 million or $0.65 per share in the same period in 2006. This represents a 6.0% increase on a per share basis.
Based upon Lifeco's growth in net income on a constant currency basis, Power Financial's operating earnings on a per share basis for the quarter would have increased by 12.1%.
Growth in operating earnings also reflects the negative impact of a timing difference relating to Pargesa's share of the interim dividend from Total which was recorded in the third quarter in 2007 whereas it was recorded in the fourth quarter in 2006.
Other items in the fourth quarter of 2007 were $32 million or $0.05 per share, compared with $2 million in the same period in 2006.
As a result, net earnings for the fourth quarter of 2007 were $532 million or $0.73 per share, compared with $474 million or $0.65 per share for the same period in 2006.
RESULTS OF POWER FINANCIAL'S SUBSIDIARIES AND PARJOINTCO
--------------------------------------------------------
Great-West Lifeco Inc.
Great-West Lifeco reported adjusted net income attributable to common shareholders of $2,153 million or $2.413 per share in 2007, compared with $1,875 million or $2.104 per share in 2006, an increase of 15%. Adjusted net income in 2007 excludes a provision for certain Canadian retirement plans of $97 million after tax, which was recorded in the third quarter. Net income attributable to common shareholders after this provision was $2,056 million or $2.304 per share for the twelve months ended December 31, 2007. On a constant currency basis, adjusted net income attributable to common shareholders increased 16% over 2006.
For the three months ended December 31, 2007, Lifeco reported net income attributable to common shareholders of $537 million, compared with $491 million for the same period in 2006. This represents $0.601 per share for the period in 2007, compared with $0.550 for the corresponding period in 2006, an increase of 9%. On a constant currency basis, net income attributable to common shareholders increased 17% over 2006.
Net income includes $203 million in 2007 and $191 million in 2006 representing the contribution from Lifeco's healthcare business, which has been designated as discontinued operations. For the three-month periods ended December 31, the contribution from the healthcare business amounted to $43 million in 2007 and to $50 million in 2006.
IGM Financial Inc.
IGM Financial reported adjusted net income for the year ended December 31, 2007 of $864 million, compared with $763 million in 2006. Adjusted net earnings per share were $3.23 in 2007, compared with $2.85 in 2006, an increase of 13.3%. Adjusted net income in both years excludes a non-cash income tax benefit resulting from decreases in the federal corporate income tax rates and their effect on the future income tax liability related to indefinite life intangible assets. A benefit of $15 million was reported in the fourth quarter of 2007 and of $14 million was reported in the second quarter of 2006. Including these items, net income in 2007 was $879 million or $3.29 per share, compared with $777 million or $2.90 per share in 2006.
For the three months ended December 31, 2007, adjusted net income, excluding the non-cash tax benefit mentioned above, was $219 million or $0.82 per share, compared with net income of $200 million or $0.75 per share for the same period in 2006. This represents an increase of 9.3% on a per share basis. Including the non-cash tax benefit, net income for the fourth quarter of 2007 was $234 million or $0.88 per share.
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 SF609 million in 2007, compared with SF539 million in 2006. Non-operating earnings were SF113 million in 2007, compared with SF1,754 million in 2006, composed primarily of Pargesa's share of the gain recorded by GBL on the sale of its interest in Bertelsmann. As a result, net earnings reported by Pargesa were SF722 million in 2007, compared with SF2,293 million in 2006.
For the fourth quarter of 2007, operating earnings were SF72 million, compared with SF137 million in the same period in 2006. Non-operating earnings in the fourth quarter were SF101 million and a net charge of SF8 million in 2007 and 2006, respectively. As a result, Pargesa's net earnings were SF173 million in the period in 2007, compared with SF129 million in 2006.
Forward-looking Information
---------------------------
Certain statements in this press release, other than statements of historical fact, are forward-looking statements based on certain assumptions and reflect Power'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 cautionned 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 or 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 Power's and its subsidiaries' control, affect the operations, performance and results of Power 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, Power's and its subsidiaries' ability to complete strategic transactions and integrate acquisitions and Power'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 Power'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, Power 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 otherwise.
Additional information concerning the risks and uncertainties associated with Power'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 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 business are presented in the 2007
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
Power Corporation of Canada
CONSOLIDATED BALANCE SHEETS
December 31, December 31,
(in millions of dollars) (unaudited) 2007 2006
-------------------------------------------------------------------------
Assets
Cash and cash equivalents 6,320 5,761
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Investments
Shares 8,426 5,598
Bonds 65,069 64,946
Mortgages and other loans 16,423 15,823
Loans to policyholders 6,317 6,776
Real estate 2,549 2,218
-------------------------------------------------------------------------
98,784 95,361
Funds held by ceding insurers 1,512 12,371
Investments at equity 3,527 2,182
Assets of operations held for sale 697 866
Intangible assets 5,072 2,740
Goodwill 9,343 8,403
Future income taxes 826 472
Other assets 7,064 4,611
-------------------------------------------------------------------------
133,145 132,767
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Liabilities
Policy liabilities
Actuarial liabilities 87,681 89,379
Other 4,385 4,268
Deposits and certificates 857 778
Funds held under reinsurance contracts 164 1,822
Liabilities of operations held for sale 428 599
Debentures and other borrowings 6,875 3,534
Preferred shares of subsidiaries 1,603 1,625
Capital trust securities and debentures 639 646
Future income taxes 841 910
Other liabilities 6,854 8,622
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110,327 112,183
-------------------------------------------------------------------------
Non-controlling interests 12,781 11,983
-------------------------------------------------------------------------
Shareholder's Equity
Stated capital
Non-participating shares 794 795
Participating shares 475 442
Contributed surplus 78 59
Retained earnings 8,304 7,480
Accumulated other comprehensive income (loss) 386 (175)
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10,037 8,601
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133,145 132,767
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For additional information, refer to the 2007 audited Consolidated
Financial Statements to be published in March 2008.
CONSOLIDATED STATEMENTS OF EARNINGS
(in millions of dollars, Three months ended For the years ended
except per share amounts) December 31 December 31
(unaudited) 2007 2006 2007 2006
-------------------------------------------------------------------------
Revenues
Premium income 5,764 5,997 18,753 17,752
Net investment income
Regular net investment
income 1,346 1,534 5,983 6,077
Change in fair value on
held for trading assets 821 - (1,098) -
--------------------------------------------
2,167 1,534 4,885 6,077
Fees and media income 1,637 1,228 5,770 4,622
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9,568 8,759 29,408 28,451
-------------------------------------------------------------------------
Expenses
Policyholder benefits,
dividends and experience
refunds and change in
actuarial liabilities 6,858 6,447 19,224 19,660
Commissions 592 566 2,240 2,024
Operating expenses 1,032 827 3,740 3,049
Financing charges 121 86 415 344
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8,603 7,926 25,619 25,077
-------------------------------------------------------------------------
965 833 3,789 3,374
Share of earnings of
investments at equity 13 26 126 110
Other income (charges), net 38 (10) 49 338
-------------------------------------------------------------------------
Earnings from continuing
operations before income
taxes and non-controlling
interests 1,016 849 3,964 3,822
Income taxes 236 189 870 847
Non-controlling interests 450 396 1,729 1,675
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Earnings from continuing
operations 330 264 1,365 1,300
Earnings from discontinued
operations 20 25 98 93
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Net earnings 350 289 1,463 1,393
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Basic earnings per
participating share
From continuing operations 0.70 0.57 2.91 2.79
From discontinued operations 0.05 0.05 0.22 0.21
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0.75 0.62 3.13 3.00
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Diluted earnings per
participating share
From continuing operations 0.69 0.56 2.88 2.76
From discontinued operations 0.05 0.05 0.22 0.21
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0.74 0.61 3.10 2.97
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SEGMENTED INFORMATION
Information on Profit Measure
(in millions of dollars)
(unaudited)
Three months ended Par-
December 31, 2007 Lifeco IGM jointco Other Total
-------------------------------------------------------------------------
Revenues
Premium income 5,764 - - - 5,764
Net investment income
Regular net
investment income 1,304 42 - - 1,346
Change in fair value
on held for trading
assets 821 - - - 821
------------------------------------------------
2,125 42 - - 2,167
Fees and media income 861 679 - 97 1,637
-------------------------------------------------------------------------
8,750 721 - 97 9,568
-------------------------------------------------------------------------
Expenses
Policyholder benefits,
dividends and
experience refunds,
and change in
actuarial liabilities 6,858 - - - 6,858
Commissions 374 241 - (23) 592
Operating expenses 712 157 - 163 1,032
Financing charges 84 22 - 15 121
-------------------------------------------------------------------------
8,028 420 - 155 8,603
-------------------------------------------------------------------------
722 301 - (58) 965
Share of earnings of
investments at equity - - 17 (4) 13
Other income, net - - 23 15 38
-------------------------------------------------------------------------
Earnings from continuing
operations before
income taxes and
non-controlling
interests 722 301 40 (47) 1,016
Income taxes 180 67 - (11) 236
Non-controlling interests 312 147 14 (23) 450
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Contribution to
consolidated earnings
from continuing
operations 230 87 26 (13) 330
Contribution to
consolidated earnings
from discontinued
operations 20 - - - 20
-------------------------------------------------------------------------
Contribution to
consolidated net
earnings 250 87 26 (13) 350
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Information on Profit Measure
Three months ended Par-
December 31, 2006 Lifeco IGM jointco Other Total
-------------------------------------------------------------------------
Revenues
Premium income 5,997 - - - 5,997
Net investment income
Regular net
investment income 1,473 50 - 11 1,534
Change in fair value
on held for trading
assets - - - - -
------------------------------------------------
1,473 50 - 11 1,534
Fees and media income 503 628 - 97 1,228
-------------------------------------------------------------------------
7,973 678 - 108 8,759
-------------------------------------------------------------------------
Expenses
Policyholder benefits,
dividends and
experience refunds,
and change in
actuarial liabilities 6,447 - - - 6,447
Commissions 364 219 - (17) 566
Operating expenses 526 148 - 153 827
Financing charges 50 22 - 14 86
-------------------------------------------------------------------------
7,387 389 - 150 7,926
-------------------------------------------------------------------------
586 289 - (42) 833
Share of earnings of
investments at equity - - 32 (6) 26
Other income (charges),
net - - (2) (8) (10)
-------------------------------------------------------------------------
Earnings from continuing
operations before
income taxes and
non-controlling
interests 586 289 30 (56) 849
Income taxes 101 89 - (1) 189
Non-controlling interests 281 126 10 (21) 396
-------------------------------------------------------------------------
Contribution to
consolidated earnings
from continuing
operations 204 74 20 (34) 264
Contribution to
consolidated earnings
from discontinued
operations 25 - - - 25
-------------------------------------------------------------------------
Contribution to
consolidated net
earnings 229 74 20 (34) 289
-------------------------------------------------------------------------
-------------------------------------------------------------------------
SEGMENTED INFORMATION
Information on Profit Measure
For the year ended Par-
December 31, 2007 Lifeco IGM jointco Other Total
-------------------------------------------------------------------------
Revenues
Premium income 18,753 - - - 18,753
Net investment income
Regular net
investment income 5,565 194 - 224 5,983
Change in fair value
on held for trading
assets (1,098) - - - (1,098)
------------------------------------------------
4,467 194 - 224 4,885
Fees and media income 2,703 2,701 - 366 5,770
-------------------------------------------------------------------------
25,923 2,895 - 590 29,408
-------------------------------------------------------------------------
Expenses
Policyholder benefits,
dividends and
experience refunds
and change in
actuarial liabilities 19,224 - - - 19,224
Commissions 1,366 947 - (73) 2,240
Operating expenses 2,517 623 - 600 3,740
Financing charges 269 88 - 58 415
-------------------------------------------------------------------------
23,376 1,658 - 585 25,619
-------------------------------------------------------------------------
2,547 1,237 - 5 3,789
Share of earnings of
investments at equity - - 145 (19) 126
Other income, net - - 26 23 49
-------------------------------------------------------------------------
Earnings from continuing
operations before
income taxes and
non-controlling
interests 2,547 1,237 171 9 3,964
Income taxes 480 355 - 35 870
Non-controlling interests 1,204 556 58 (89) 1,729
-------------------------------------------------------------------------
Contribution to
consolidated earnings
from continuing
operations 863 326 113 63 1,365
Contribution to
consolidated earnings
from discontinued
operations 98 - - - 98
-------------------------------------------------------------------------
Contribution to
consolidated net
earnings 961 326 113 63 1,463
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Information on Profit Measure
For the year ended Par-
December 31, 2006 Lifeco IGM jointco Other Total
-------------------------------------------------------------------------
Revenues
Premium income 17,752 - - - 17,752
Net investment income
Regular net
investment income 5,836 212 - 29 6,077
Change in fair value
on held for trading
assets - - - - -
------------------------------------------------
5,836 212 - 29 6,077
Fees and media income 1,894 2,392 - 336 4,622
-------------------------------------------------------------------------
25,482 2,604 - 365 28,451
-------------------------------------------------------------------------
Expenses
Policyholder benefits,
dividends and
experience refunds
and change in
actuarial liabilities 19,660 - - - 19,660
Commissions 1,254 833 - (63) 2,024
Operating expenses 1,946 573 - 530 3,049
Financing charges 202 88 - 54 344
-------------------------------------------------------------------------
23,062 1,494 - 521 25,077
-------------------------------------------------------------------------
2,420 1,110 - (156) 3,374
Share of earnings of
investments at equity - - 126 (16) 110
Other income (charges),
net - - 341 (3) 338
-------------------------------------------------------------------------
Earnings from continuing
operations before
income taxes and
non-controlling
interests 2,420 1,110 467 (175) 3,822
Income taxes 522 331 - (6) 847
Non-controlling interests 1,115 491 157 (88) 1,675
-------------------------------------------------------------------------
Contribution to
consolidated earnings
from continuing
operations 783 288 310 (81) 1,300
Contribution to
consolidated earnings
from discontinued
operations 93 - - - 93
-------------------------------------------------------------------------
Contribution to
consolidated net
earnings 876 288 310 (81) 1,393
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