Press Releases
August 4, 2017

Power Corporation Reports Second Quarter and Six-Month Financial Results and Dividends

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

TORONTO, Aug. 4, 2017 /CNW Telbec/ - Power Corporation of Canada (TSX: POW) today reported earnings results for the second quarter and six months ended June 30, 2017.

SECOND QUARTER RESULTS

Net earnings attributable to participating shareholders were $350 million or $0.75 per share, compared with $272 million or $0.59 per share in 2016.

Adjusted net earnings attributable to participating shareholders (a non-IFRS financial measure) were $401 million or $0.86 per share, compared with $306 million or $0.66 per share in 2016.

Other items, not included in adjusted net earnings, were a net charge of $51 million. Other items consisted mainly of the Corporation's share of Great-West Lifeco's (Lifeco) restructuring charges to realign its Canadian operations and of IGM Financial Inc.'s (IGM) favourable revaluation of its registered pension plan obligation, partially offset by restructuring charges.

SIX-MONTH RESULTS

Net earnings attributable to participating shareholders were $608 million or $1.31 per share, compared with $320 million or $0.69 per share in 2016.

Adjusted net earnings attributable to participating shareholders were $670 million or $1.44 per share, compared with $497 million or $1.07 per share in 2016.

Other items, not included in adjusted net earnings, resulted in a net charge of $62 million. In addition to the items discussed above, other items in the first quarter included the Corporation's share of Lifeco's restructuring charges related to its health and retail business in Ireland and the completion of integration activities at Empower Retirement in the United States.

RESULTS OF POWER FINANCIAL CORPORATION
FOR THE PERIOD ENDED JUNE 30

SECOND QUARTER RESULTS

Power Financial reported net earnings attributable to common shareholders of $545 million or $0.76 per share, compared with $505 million or $0.71 per share in 2016.

Adjusted net earnings attributable to common shareholders were $622 million or $0.87 per share, compared with $557 million or $0.78 per share in 2016. 

Other items, not included in adjusted net earnings, were a net charge of $77 million representing Power Financial's share of the other items discussed above.

SIX-MONTH RESULTS

Power Financial reported net earnings attributable to common shareholders of $1,029 million or $1.44 per share, compared with $764 million or $1.07 per share in 2016.

Adjusted net earnings attributable to common shareholders were $1,123 million or $1.57 per share, compared with $1,033 million or $1.45 per share in 2016.

Other items, not included in adjusted net earnings, resulted in a net charge of $94 million.

At June 30, 2017, Power Corporation held a 65.6% economic interest in Power Financial. Power Financial's contribution to Power Corporation's adjusted net earnings was $407 million for the quarter, compared with $365 million in 2016. For the six-month period, Power Financial contributed $736 million to Power Corporation's adjusted net earnings, compared with $678 million in 2016.

SAGARD INVESTMENT FUNDS AND OTHER INVESTMENTS
FOR THE PERIOD ENDED JUNE 30

SECOND QUARTER RESULTS

Income from investments was $66 million, comprised of gains of $73 million from the Corporation's other investments and losses of $7 million in the Sagard Investment Funds. In 2016, these investment activities resulted in a loss of $3 million. The fair value of investments decreased from $2,690 million at December 31, 2016 to $2,601 million at June 30, 2017.

SIX-MONTH RESULTS

Income from investments was $87 million, compared with a loss of $49 million in 2016.

DIVIDEND ON PARTICIPATING SHARES

The Board of Directors today declared a quarterly dividend of 35.85 cents per share on the Participating Preferred Shares and the Subordinate Voting Shares of the Corporation, payable September 29, 2017 to shareholders of record September 8, 2017.

DIVIDENDS ON NON-PARTICIPATING PREFERRED SHARES

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

 

SERIES – STOCK SYMBOL

RECORD DATE

PAYMENT DATE

DIVIDEND

1986 Series – POW.PR.F 

September 22, 2017

October 15, 2017

At a floating rate equal to one quarter of 70% of the average prime rate of two major Canadian chartered banks [1]

Series A – POW.PR.A

September 22, 2017

October 15, 2017

35¢

Series B – POW.PR.B

September 22, 2017

October 15, 2017

33.4375¢

Series C – POW.PR.C

September 22, 2017

October 15, 2017

36.25¢

Series D – POW.PR.D

September 22, 2017

October 15, 2017

31.25¢

Series G – POW.PR.G

September 22, 2017

October 15, 2017

35¢

[1]

In accordance with the articles of the Corporation

 

ABOUT POWER CORPORATION

Power Corporation of Canada is a diversified international management and holding company with interests in companies in the financial services, renewable energy, communications and other business sectors in North America, Europe and Asia. To learn more, visit www.powercorporation.com.

 

EARNINGS SUMMARY





(unaudited)

Three months ended


Six months ended

(in millions of Canadian dollars, except per share amounts)

June 30,


June 30,


2017


2016


2017


2016

Adjusted net earnings








Power Financial

407


365


736


678

Other subsidiaries [1]

(26)


(11)


(55)


(38)


381


354


681


640

Corporate operations









Income from Sagard Investment Funds and Other Investments [2]

66


(3)


87


(49)


Operating and other expenses

(33)


(32)


(72)


(68)

Dividends on non-participating shares

(13)


(13)


(26)


(26)

Adjusted net earnings [3]

401


306


670


497

Other items – see below

(51)


(34)


(62)


(177)

Net earnings [3] 

350


272


608


320

Earnings per share – Basic [3]   









Adjusted net earnings

0.86


0.66


1.44


1.07


Other items

(0.11)


(0.07)


(0.13)


(0.38)


Net earnings

0.75


0.59


1.31


0.69

[1]

Comprised of: Power Energy Corporation, Square Victoria Communications Group Inc., and controlled portfolio investments IntegraMed America, Inc. and Vein Clinics of America, Inc. (held through Sagard Holdings).

[2]

Includes income from Sagard Investment Funds (excluding income from controlled portfolio investments), China Asset Management Co., Ltd., and income from other investments.

[3]

Attributable to participating shareholders.

 

OTHER ITEMS





(unaudited)

Three months ended


Six months ended

(in millions of Canadian dollars)

June 30,


June 30,


2017


2016


2017


2016

Share of Power Financial's other items:









Lifeco









Restructuring charges

(56)



(69)



(56)



(69)



IGM









Restructuring charges

(6)



(6)




Pension plan

15



15




Share of Lifeco's other items

(3)



(3)



6



6



Pargesa









Total SA – Gain on partial disposal




67



LafargeHolcim Ltd – Impairment charges


(34)



(237)



Engie – Impairment charges




(6)



Other (charge) income

(1)



1


(1)


(1)


(34)


1


(177)


(51)


(34)


(62)


(177)

 

INCOME – SAGARD INVESTMENT FUNDS AND OTHER INVESTMENTS





(unaudited)

Three months ended


Six months ended

(in millions of Canadian dollars)

June 30,


June 30,


2017


2016


2017


2016

Sagard Investment Funds [1]









Sagard Europe

(2)


(1)


(5)


(4)


Sagard Holdings [2, 3]

(11)


(12)


(2)


(46)


Sagard China

6


(5)


18


(9)

Other Investments









Investment and hedge funds

76


7


78


12


China Asset Management Co., Ltd.


6



6


Other [4]

(3)


2


(2)


(8)


66


(3)


87


(49)

[1]

Income from investments for the Sagard Investment Funds is presented net of expenses of their separate dedicated teams.

[2]

Excludes the Corporation's share of the results of IntegraMed America, Inc. and Vein Clinics of America, Inc., presented in adjusted net earnings as other subsidiaries.

[3]

Includes share of earnings (loss) from investments in a jointly controlled corporation and an associate.

[4]

Consisting mainly of foreign exchange gains or losses and interest on cash and cash equivalents.

 

INVESTMENTS













June 30, 2017

(unaudited)

(in millions of Canadian dollars)

Cost


Unrealized
gains


Fair value of

non-controlled

portfolio
investments [1]


Cash


Fair value of
controlled
portfolio
investments
and other


Total
fair value

Sagard Investment Funds













Sagard Europe

244


144


388




388


Sagard Holdings

409


25


434


43


359


836


Sagard China

405


38


443


248



691


1,058


207


1,265


291


359


1,915

Other Investments













China Asset Management Co., Ltd.

282


177


459




459


Investment and hedge funds and other

124


103


227




227

Total 

1,464


487


1,951


291


359


2,601













 

December 31, 2016

(unaudited)

(in millions of Canadian dollars)

Cost


Unrealized
gains


Fair value of
non-controlled
portfolio
investments [1]


Cash


Fair value of
controlled
portfolio
investments

and other


Total

fair value

Sagard Investment Funds













Sagard Europe

211


70


281




281


Sagard Holdings

388


41


429


125


334


888


Sagard China

306


10


316


331



647


905


121


1,026


456


334


1,816

Other Investments













China Asset Management Co., Ltd.

282


181


463




463


Investment and hedge funds and other

270


141


411




411

Total  

1,457


443


1,900


456


334


2,690

[1]

As reported in the Corporation's non-consolidated balance sheets.


 

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 shares (including the Participating Preferred Shares) and Subordinate Voting Shares are eligible dividends.

Non-IFRS Financial Measures and Presentation

Net earnings attributable to participating shareholders are comprised of:

  • adjusted net earnings attributable to participating shareholders; and
  • other items, 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 include the Corporation's share of items presented as other items by a subsidiary or a jointly controlled corporation.

Management uses these financial measures 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. Adjusted net 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 considered to be part of ongoing activities are excluded from this non-IFRS measure.

Adjusted net earnings attributable to participating shareholders and adjusted net 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 whereby the Corporation's interests in Power Financial and other subsidiaries are accounted for using the equity method. Presentation on a non-consolidated basis is a non-IFRS presentation. However, it is useful to the reader as it presents the holding company's (parent) results separately from the results of its operating subsidiaries.

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 Corporation of Canada

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