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August 3, 2018

Power Corporation Reports Second Quarter Financial Results

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Readers are referred to the sections "Non-IFRS Financial Measures and Presentation" and "Forward-Looking Statements" at the end of this release.

TORONTO, Aug. 3, 2018 /CNW Telbec/ - Power Corporation of Canada (TSX: POW) today reported earnings results for the three and six months ended June 30, 2018.

Consolidated Results of Power Corporation
For the period ended June 30

Highlights

  • Power Financial reported second quarter net earnings and adjusted net earnings (a non-IFRS financial measure) of $658 million. Adjusted net earnings were the highest in its history.
  • Committed capital to Sagard Credit Partners LP has increased to US$460 million.

Second Quarter
Net earnings and adjusted net earnings attributable to participating shareholders were $347 million, or $0.75 per share, compared with 2017's net earnings of $350 million, or $0.75 per share, and adjusted net earnings of $401 million, or $0.86 per share.

Contributions to Power Corporation's net earnings and adjusted net earnings were:

 

(in millions of dollars)

2018

2017


Net Earnings

and

Adjusted Net Earnings

Net Earnings

Adjusted Net
Earnings

• Power Financial

433

356

407

• Sagard Investment Funds, China AMC and Other investments

(15)

66

66

• Corporate and Other subsidiaries

(71)

(72)

(72)


347

350

401

 

Six Months
Net earnings and adjusted net earnings attributable to participating shareholders were $872 million, or $1.88 per share, compared with 2017's net earnings of $608 million, or $1.31 per share, and adjusted net earnings of $670 million, or $1.44 per share.

Contributions to Power Corporation's net earnings and adjusted net earnings were:

 

(in millions of dollars)

2018

2017


Net Earnings

and

Adjusted Net Earnings

Net Earnings

Adjusted Net
Earnings

• Power Financial

816

674

736

• Sagard Investment Funds, China AMC and Other investments

212

87

87

• Corporate and Other subsidiaries

(156)

(153)

(153)


872

608

670

 

Power Financial Corporation
For the period ended June 30

Second Quarter
Net earnings and adjusted net earnings attributable to common shareholders were $658 million, or $0.92 per share, compared with 2017's net earnings of $545 million, or $0.76 per share, and adjusted net earnings of $622 million, or $0.87 per share.

Six Months
Net earnings and adjusted net earnings attributable to common shareholders were $1,244 million, or $1.74 per share, compared with 2017's net earnings of $1,029 million, or $1.44 per share, and adjusted net earnings of $1,123 million, or $1.57 per share.

Sagard Investment Funds, China AMC and Other Investments
For the period ended June 30

Second Quarter
Loss from investments was $15 million, compared with income of $66 million in 2017. The loss is attributable to the recognition of non-cash provisions in an investment of Sagard Holdings ULC (Sagard Holdings).

Six Months
Income from investments was $212 million, compared with $87 million in 2017. Income from investments in the six-month period was mainly comprised of realized gains in the Sagard Investment Funds in the first quarter.

Dividends on Power Corporation Participating Shares

The Board of Directors today declared a quarterly dividend of 38.20 cents per share on the Participating Preferred Shares and the Subordinate Voting Shares of the Corporation, payable September 28, 2018 to shareholders of record September 7, 2018.

Dividends on Power Corporation Non-Participating Preferred Shares

The Board of Directors also declared quarterly dividends on the Corporation's preferred shares, payable October 15, 2018 to shareholders of record September 24, 2018:

 







Series

Stock Symbol

Amount

Series

Stock Symbol

Amount

1986 Series

POW.PR.F

Floating rate [1]

Series C

POW.PR.C

36.25¢

Series A

POW.PR.A

35¢

Series D

POW.PR.D

31.25¢

Series B

POW.PR.B

33.4375¢

Series G

POW.PR.G

35¢

 

[1]

Equal to one quarter of 70% of the average prime rate of two major Canadian chartered banks for the period June 1, 2018 to August 31, 2018.

 

About Power Corporation

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

At June 30, 2018, Power Corporation held the following economic interests:

 

• 65.5% – Power Financial (TSX: PWF)                

www.powerfinancial.com

• 100% – Sagard SAS (Europe) [1]              

www.sagard.com

• 100% – Sagard Holdings                      

www.sagardholdings.com

• 100% – Sagard China                       

www.sagardchina.com 

• 100% – Power Energy Corporation


• 100% – Square Victoria Communications Group Inc.


• 27.8% – China Asset Management Co., Ltd. [2]    

www.chinaamc.com

 

[1]

Refer to the Corporation's most recent MD&A for interest in the Sagard Europe Funds.

[2]

IGM and the Corporation each hold a 13.9% interest in China AMC.

 

Earnings Summary


(unaudited)

Three months ended

Six months ended 

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

June 30,

June 30,


2018

2017

2018

2017

Adjusted net earnings





Power Financial

433

407

816

736

Other subsidiaries [1]

(23)

(26)

(55)

(55)


410

381

761

681

Corporate operations






Income – Sagard Investment Funds, China AMC and Other Investments [2]

(15)

66

212

87


Operating and other expenses

(35)

(33)

(75)

(72)

Dividends on non-participating shares

(13)

(13)

(26)

(26)

Adjusted net earnings [3]

347

401

872

670

Other items – see below

(51)

(62)

Net earnings [3]

347

350

872

608

Earnings per share – Basic [3]






Adjusted net earnings

0.75

0.86

1.88

1.44


Other items

(0.11)

(0.13)


Net earnings

0.75

0.75

1.88

1.31



[1]

Comprised of: Power Energy Corporation, Square Victoria Communications Group Inc., and controlled portfolio investments IntegraMed America, Inc. (IntegraMed) and Vein Clinics of America, Inc. (Vein Clinics). Vein Clinics was disposed of on December 29, 2017.

[2]

Excludes earnings (losses) from controlled portfolio investments.

[3]

Attributable to participating shareholders.

 

Sagard Investment Funds


(unaudited)

(in millions of Canadian dollars)

June 30, 2018

December 31, 2017


Sagard

Europe

Sagard

Holdings

Sagard

China

Total 

Sagard

Europe

Sagard

Holdings

Sagard

China

Total

Cost

288

379

643

1,310

250

402

570

1,222

Unrealized gain (loss)

115

6

47

168

249

(5)

88

332

Fair value of non-controlled portfolio investments

403

385

690

1,478

499

397

658

1,554

Cash

188

113

301

219

126

345

Fair value of controlled portfolio investments and other

259

(2)

257

208

208

Total fair value

403

832

801

2,036

499

824

784

2,107

 

Income – Sagard Investment Funds, China AMC and Other Investments


(unaudited)

Three months ended

Six months ended 

(in millions of Canadian dollars)

June 30,

June 30,


2018

2017

2018

2017

Sagard Investment Funds [1]






Sagard Europe

(2)

(2)

166

(5)


Sagard Holdings [2, 3, 4]

(41)

(11)

(34)

(2)


Sagard China

17

6

48

18

China AMC

8

16

Other Investments






Investment and hedge funds, and other

3

73

16

76


(15)

66

212

87



[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 and Vein Clinics, presented in adjusted net earnings as Other subsidiaries.

[3]

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

[4]

The second quarter of 2018 includes a loss attributable to the recognition of non-cash provisions in an investment.

 

Other Items (Share of Power Financial's)


(unaudited)

Three months ended

Six months ended 

(in millions of Canadian dollars)

June 30,

June 30,


2018

2017

2018

2017

Power Financial's share of Other items:






Great-West Lifeco Inc.







Restructuring charges

(56)

(69)


IGM Financial Inc.






Restructuring charges

(6)

(6)


Pension plan

15

15


Share of Lifeco's Other items

(3)

(3)


6

6


Pargesa Holding SA






Other (charge) income

(1)

1


(51)

(62)

 

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.

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.

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, fluctuations in interest rates, inflation and foreign exchange rates, monetary policies, business investment and the health of local and global equity and capital markets, management of market liquidity and funding risks, risks related to investments in private companies and illiquid securities, risks associated with financial instruments, changes in accounting policies and methods used to report financial condition (including uncertainties associated with significant judgments, estimates and assumptions), the effect of applying future accounting changes, business competition, operational and reputational risks, technological changes, cybersecurity risks, 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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