Power Financial Corporation Reports 2014 Third Quarter and Nine-Month Financial Results and Dividends

All figures are in Canadian dollars unless otherwise noted. Readers are referred to the sections entitled "Non-IFRS Financial Measures" and "Forward-Looking Statements" at the end of this release.

TORONTO, Nov. 14, 2014 /CNW Telbec/ - Power Financial Corporation (TSX: PWF) today reported earnings results for the third quarter and nine months ended September 30, 2014.

THIRD QUARTER RESULTS
Operating earnings (a non-IFRS financial measure) and net earnings attributable to common shareholders for the quarter ended September 30, 2014 were $595 million or $0.83 per share, compared with $434 million or $0.61 per share in 2013.

NINE-MONTH RESULTS
Operating earnings attributable to common shareholders for the nine months ended September 30, 2014 were $1,580 million or $2.22 per share, compared with $1,305 million or $1.83 per share in 2013.

Other items, not included in operating earnings, were a contribution of $50 million, compared with a net charge of $2 million in 2013. Additional details on other items can be found below in the Pargesa Holding SA (Pargesa) section and in the table entitled "Other Items".

Net earnings attributable to common shareholders for the nine months ended September 30, 2014 were $1,630 million or $2.29 per share, compared with $1,303 million or $1.83 per share in 2013.

RESULTS OF GREAT-WEST LIFECO, IGM FINANCIAL AND PARGESA HOLDING

GREAT-WEST LIFECO INC.
For the quarter ended September 30, 2014, Great-West Lifeco Inc. (Lifeco) reported operating and net earnings attributable to common shareholders of $687 million or $0.687 per share, compared with $523 million or $0.527 per share in 2013.

For the nine-month period ended September 30, 2014, Lifeco reported operating and net earnings attributable to common shareholders of $1,889 million or $1.891 per share, compared with $1,561 million or $1.618 per share in the corresponding period in 2013.

At September 30, 2014, Power Financial and IGM Financial Inc. (IGM) held 67.1% and 4.0%, respectively, of Lifeco's common shares. Lifeco's contribution to Power Financial's operating earnings was $462 million for the quarter ended September 30, 2014, compared with $353 million in the same period in 2013. For the nine months ended September 30, 2014, Lifeco's contribution to Power Financial's operating earnings was $1,268 million, compared with $1,061 million in the corresponding period in 2013.

IGM FINANCIAL INC.
For the quarter ended September 30, 2014, IGM reported operating and net earnings available to common shareholders of $219.7 million or $0.87 per share, compared with $193.4 million or $0.77 per share in 2013.

For the nine-month period ended September 30, 2014, IGM reported operating earnings available to common shareholders of $618 million or $2.44 per share, compared with $564.8 million or $2.24 per share in the corresponding period in 2013. Other items in the nine-month period of 2014 consisted of an after-tax charge of $13.6 million related to restructuring and other charges. There were no other items in the corresponding period of 2013. For the nine months ended September 30, 2014, net earnings available to common shareholders were $604.4 million or $2.39 per share, compared with $564.8 million or $2.24 per share in 2013.

At September 30, 2014, Power Financial and The Great-West Life Assurance Company, a subsidiary of Lifeco, held 58.7% and 3.7%, respectively, of IGM's common shares. IGM contributed $130 million to Power Financial's operating earnings for the quarter ended September 30, 2014, compared with $112 million for the corresponding period in 2013. For the nine months ended September 30, 2014, IGM's contribution to Power Financial's operating earnings was $366 million, compared with $331 million in the corresponding period in 2013.

PARGESA HOLDING SA
For the quarter ended September 30, 2014, Pargesa reported operating earnings of SF146 million, compared with SF70 million in 2013. For the nine months ended September 30, 2014, Pargesa reported operating earnings of SF294 million, compared with SF188 million in the same period in 2013.

The increase in operating earnings is due to the mark-to-market adjustments on call options embedded in bonds exchangeable for shares of portfolio investments of Groupe Bruxelles Lambert (GBL), a subsidiary of Pargesa, and in bonds convertible into GBL shares. These adjustments resulted in a gain of SF43 million in the third quarter of 2014, compared with a charge of SF63 million in 2013, and a charge of SF38 million in the nine-month period ended September 30, 2014, compared with a charge of SF96 million in the corresponding period of 2013.

Other items in the first nine months of 2014 include Pargesa's share of gains recorded by GBL on the partial disposal of Total SA shares in each of the first three quarters of 2014, for an amount of SF176 million. As reported in the second quarter of 2014, holders of Suez Environnement Company (Suez Environnement) exchangeable bonds exercised their right to exchange approximately 85% of the bonds outstanding for shares of Suez Environnement. Pargesa's share of the gain recorded by GBL on this exchange was SF129 million, of which SF55 million (representing the reversal of the accumulated mark-to-market adjustments on options related to Suez Environnement) was recorded as operating earnings. The remaining portion of SF74 million, which represents the economic gain measured at the exchange price set at the time of the issuance of the exchangeable bonds in 2012, has been recognized as non-operating earnings.

Net earnings for the third quarter of 2014 were SF147 million, compared with SF67 million in the corresponding quarter in 2013. For the nine-month period ended September 30, 2014, net earnings were SF525 million, compared with SF177 million in the corresponding period in 2013.

Power Financial holds a 50% interest in Parjointco N.V., which in turn held a 55.5% equity interest in Pargesa at September 30, 2014. Pargesa's contribution to Power Financial's operating earnings was $48 million for the quarter ended September 30, 2014, compared with $20 million in the corresponding period in 2013. For the nine-month period ended September 30, 2014, Pargesa's contribution to Power Financial's operating earnings was $98 million, compared with $55 million in the same period in 2013.

DIVIDENDS ON PREFERRED SHARES

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

DIVIDEND ON COMMON SHARES
The Board of Directors also declared a quarterly dividend of 35 cents per share on the Corporation's common shares payable January 30, 2015 to shareholders of record December 31, 2014.

ABOUT POWER FINANCIAL
Power Financial Corporation is a diversified management and holding company that has interests, directly or indirectly, in companies in the financial services sector in Canada, the United States, Europe and Asia. It also has diversified investments in industrial companies based in Europe. Power Financial Corporation is a member of the Power Corporation Group of Companies. To learn more, visit www.powerfinancial.com.

Eligible Dividends

For purposes of the Income Tax Act (Canada) and any similar provincial legislation, all of the above dividends on the Corporation's preferred and common shares are eligible dividends.

Non-IFRS Financial Measures and Presentation

In analyzing the financial results of the Corporation and consistent with the presentation in previous years, net earnings attributable to common shareholders are classified as follows:

• operating earnings attributable to common shareholders; and
• other items or non-operating earnings, which include the after-tax impact of any item that in management's judgment would make the period-over-period comparison of results from operations less meaningful. Other items also include the Corporation's share of any such item presented in a comparable manner by its subsidiaries and Pargesa.

Management uses these financial measures 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. Operating earnings, as defined by the Corporation, assist the reader in comparing the current period's results to those of previous periods as items that are not part of ongoing activities are excluded from this non-IFRS measure.

Operating earnings attributable to common shareholders 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.

The Corporation also uses a non-consolidated basis of presentation to present and analyze its results, financial position and cash flows. In this basis of presentation, Power Financial's interests in Lifeco and IGM are accounted for using the equity method. This non-consolidated basis, which is a non-IFRS presentation, is useful for the reader as it isolates the parent's activities from those of operating subsidiaries, and reflects their individual respective contributions.

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, reflect 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 list of factors in the previous paragraph, 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 its most recent Management's Discussion and Analysis and Annual Information Form, filed with the securities regulatory authorities in Canada and available at www.sedar.com. 

SOURCE Power Financial Corporation