Power Corporation of Canada Reports 2011 Third Quarter Financial Results and Dividends

TORONTO, Nov. 11, 2011 /CNW Telbec/ - Power Corporation of Canada's operating earnings for the nine-month period ended September 30, 2011 were $942 million or $1.98 per share, compared with $756 million or $1.58 per share in the corresponding period of 2010. This represents a 25.1% increase on a per share basis.

The increase in operating earnings reflects a higher contribution from Power Financial Corporation, a subsidiary of the Corporation, and higher income from investments.

Subsidiaries contributed $871 million to Power Corporation's operating earnings for the nine-month period ended September 30, 2011, compared with $823 million in the corresponding period of 2010. Results from corporate activities were a net contribution of $71 million in the nine-month period ended September 30, 2011, compared with a net charge of $67 million in the same period in 2010. This increase is mainly due to income from investments generated by the Corporation's interest in the Sagard 1 fund in Europe which is managed by Sagard SAS, a subsidiary of the Corporation, and income from other investment funds.

Other items in the nine-month period ended September 30, 2011 represented a charge of $150 million and include a write-down of the Corporation's investment in CITIC Pacific for an amount of $72 million recorded in the third quarter. Also included in other items is the Corporation's share (in the amount of $87 million) of Pargesa's impairment charge recorded in the third quarter on its indirect investment in Lafarge S.A. In the corresponding nine-month period of 2010, other items were a charge of $227 million and included an impairment charge on CITIC Pacific of $133 million and the Corporation's share (in the amount of $96 million) of a litigation provision recorded by Great-West Lifeco Inc. (Lifeco), a subsidiary of Power Financial.

Net earnings attributable to participating shareholders (including other items and after dividends on non-participating shares) for the nine-month period ended September 30, 2011 were $761 million or $1.66 per share, compared with $498 million or $1.09 per share in the corresponding period of 2010.

THIRD QUARTER RESULTS

Operating earnings for the three-month period ended September 30, 2011 were $348 million or $0.73 per share, compared with $275 million or $0.58 per share in the corresponding period in 2010. This represents an increase of 27.6% on a per share basis.

Power Corporation's share of operating earnings from its subsidiaries was $284 million for the three-month period ended September 30, 2011, compared with $293 million for the same period in 2010. Corporate activities represented a net contribution of $64 million in the quarter ended September 30, 2011, compared with a net charge of $18 million in the corresponding period in 2010, mainly due to income from investments generated by the Corporation's interest in the Sagard 1 fund in Europe and income from other investment funds.

Other items were a charge of $148 million in the three-month period ended September 30, 2011, compared with a charge of $96 million in the corresponding period of 2010.

Net earnings attributable to participating shareholders (including other items and after dividends on non-participating shares) for the three-month period ended September 30, 2011 were $190 million or $0.41 per share, compared with $169 million or $0.37 per share in the corresponding period in 2010.

RESULTS OF POWER FINANCIAL CORPORATION

Power Financial Corporation's operating earnings for the nine-month period ended September 30, 2011 were $1,385 million or $1.84 per share, compared with $1,294 million or $1.73 per share in the corresponding period in 2010. This represents an increase of 6.8% on a per share basis.

The increase in operating earnings reflects primarily the increase in the contribution from Power Financial's subsidiaries, Lifeco and IGM Financial Inc.

For the nine-month period ended September 30, 2011, other items represented a charge of $118 million and consisted mainly of Power Financial's share (in the amount of $133 million) of Pargesa's impairment charge recorded in the third quarter on its indirect investment in Lafarge S.A. In the corresponding nine-month period of 2010, other items were a charge of $142 million and consisted mainly of Power Financial's share of a litigation provision recorded by Lifeco, established in the third quarter.

Net earnings attributable to common shareholders of Power Financial (including other items and after dividends on perpetual preferred shares) for the nine-month period ended September 30, 2011 were $1,189 million or $1.68 per share, compared with $1,079 million or $1.53 per share in the corresponding period of 2010.

For the three-month period ended September 30, 2011, Power Financial reported operating earnings of $454 million or $0.60 per share, compared with $465 million or $0.62 per share for the same period in 2010.

Other items for the third quarter of 2011 were a charge of $116 million, compared with a charge of $144 million for the same quarter in 2010.

Net earnings attributable to common shareholders of Power Financial (including other items and after dividends on perpetual preferred shares) for the three-month period ended September 30, 2011 were $312 million or $0.44 per share, compared with $294 million or $0.42 per share in the corresponding quarter of 2010.

DIVIDENDS ON PREFERRED SHARES

The Board of Directors today declared quarterly dividends on the Corporation's preferred shares, as follows:

DIVIDENDS ON PARTICIPATING SHARES

The Board of Directors also declared a dividend of 29 cents per share on the Participating Preferred and Subordinate Voting Shares of the Corporation, payable December 30, 2011 to shareholders of record December 9, 2011.

For purposes of the Income Tax Act (Canada) and any similar provincial legislation, all of the above dividends on the Corporation's preferred shares (including the Participating Preferred Shares) and Subordinate Voting 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 current expectations, or with respect to disclosure regarding the Corporation's public subsidiaries, reflects such subsidiaries' disclosed current expectations. Forward-looking statements are provided for the purposes of assisting the reader in understanding the Corporation's financial performance, financial position and cash flows 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 the reader is 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".

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 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, 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 to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking statements. Information contained in forward-looking statements is based upon certain material assumptions that were applied in drawing a conclusion or making a forecast or projection, including management's perceptions of historical trends, current conditions and expected future developments, as well as other considerations that are believed to be appropriate in the circumstances, including that the foregoing list of factors, collectively, are not expected to have a material impact on the Corporation and its subsidiaries. While the Corporation considers these assumptions to be reasonable based on information currently available to management, they may prove to be incorrect.

Other than as specifically required by applicable Canadian 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 and material factors or assumptions on which information contained in forward-looking statements is based is provided in its disclosure materials, including this MD&A and its Annual Information Form filed with the securities regulatory authorities in Canada, available at www.sedar.com.

Non-IFRS Financial Measures

In analyzing 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 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.

Operating earnings and operating earnings per share are non-IFRS financial measures that do not have a standard meaning and may not be comparable to similar measures used by other entities.