Readers are referred to the sections "Non-IFRS Financial
Measures and Presentation" and "Forward-Looking Statements"
at the end of this release.
MONTRÉAL, March 20, 2019 /CNW
Telbec/ - Power Corporation of Canada (Power Corporation or the Corporation)
(TSX: POW) today reported earnings results for the fourth
quarter and twelve months ended December 31,
2018.
Consolidated Results of Power Corporation
For the period ended December
31
Highlights
- Power Corporation announced on March 8,
2019 terms of a substantial issuer bid to repurchase up to
$1.35 billion of its
subordinated voting shares. Power Corporation also announced its
intention to participate in Power Financial Corporation's (Power
Financial) substantial issuer bid to repurchase up to $1.65 billion of its common shares which was
announced on March 4, 2019.
- Power Financial declared a 5.2% increase in its quarterly
dividend to 45.55 cents per common share.
- Third-party committed capital in credit and other investment
funds managed by Sagard Holdings increased to
$735 million.
- Power Energy Corporation (Power Energy) disposed of Eagle Creek
Renewable Energy, LLC, realizing a pre-tax gain of $62 million.
Fourth Quarter
Net earnings attributable to participating shareholders were
$229 million or $0.49 per share, compared with $208 million
or $0.44 per share in 2017.
Adjusted net earnings attributable to participating shareholders
(a non-IFRS financial measure) were $283 million or
$0.60 per share, compared with
$419 million or $0.90 per share in 2017.
Other items in the fourth quarter of 2018, not included in
adjusted net earnings, were a net charge of $54 million,
comprised of the Corporation's share of: Power Financial's other
items which were a net gain of $12 million and
IntegraMed America, Inc.'s (IntegraMed) goodwill impairment
charge of $66 million.
Contributions to Power Corporation's net earnings and adjusted
net earnings were:
(in millions of
dollars)
|
2018
|
2017
|
|
Net
Earnings
|
Adjusted
Net Earnings
|
Net
Earnings
|
Adjusted
Net Earnings
|
• Power
Financial
|
317
|
305
|
148
|
359
|
• Sagard Investment
Funds, China AMC and Other investments
|
(20)
|
(20)
|
139
|
139
|
• Corporate and Other
subsidiaries
|
(68)
|
(2)
|
(79)
|
(79)
|
|
229
|
283
|
208
|
419
|
Twelve Months
Net earnings attributable to
participating shareholders were $1,287
million or $2.77 per share,
compared with $1,286 million or
$2.77 per share in 2017.
Adjusted net earnings attributable to participating shareholders
were $1,438 million or $3.09 per share, compared with $1,560 million or $3.36 per share in 2017. Other items, not
included in adjusted net earnings, were net charges of $151 million in the period.
Contributions to Power Corporation's net earnings and
adjusted net earnings were:
(in millions of
dollars)
|
2018
|
2017
|
|
Net
Earnings
|
Adjusted
Net Earnings
|
Net
Earnings
|
Adjusted
Net Earnings
|
• Power
Financial
|
1,474
|
1,498
|
1,126
|
1,400
|
• Sagard Investment
Funds, China AMC and Other investments
|
164
|
164
|
445
|
445
|
• Corporate and Other
subsidiaries
|
(351)
|
(224)
|
(285)
|
(285)
|
|
1,287
|
1,438
|
1,286
|
1,560
|
Results of Power Financial Corporation
For the period ended December
31
Fourth Quarter
Net earnings attributable to common shareholders were $478 million or $0.67 per share, compared with $225 million
or $0.32 per share in 2017.
Adjusted net earnings attributable to common shareholders were
$460 million or $0.65 per share, compared with $547 million or $0.77 per share in 2017.
Other items in 2018, not included in adjusted net earnings, were
a net gain of $18 million consisting
of Power Financial's share of Imerys's net gain on the sale of its
roofing division, partially offset by restructuring and other
charges. Other items, not included in adjusted net earnings, were a
charge of $322 million in 2017.
Twelve Months
Net earnings attributable to common shareholders were $2,245 million or $3.15 per share, compared with $1,717 million or $2.41 per share in 2017.
Adjusted net earnings attributable to common shareholders were
$2,282 million or $3.20 per share, compared with $2,135 million or $2.99 per share in 2017. Other items, not
included in adjusted net earnings, were a net charge of
$37 million which is comprised of
Power Financial's share of: Great-West Lifeco's (Lifeco) other
items of $39 million, IGM Financial
Inc.'s (IGM) other items of $16
million, offset by a positive impact of $18 million at Pargesa related to Imerys.
Sagard Investment Funds, China AMC and Other Investments
For the period ended December
31
(For additional information, refer to the table
further in this news release)
Fourth Quarter
Sagard Investment Funds, China Asset Management Co., Ltd. (China
AMC) and Other Investments were a net loss of $20 million, compared with income of $139 million in 2017. The decrease in investment
income in the fourth quarter was mainly due to impairments and
losses realized on equity investments in the Sagard Holdings and
Sagard China portfolios reflecting the decline of equity values
during the fourth quarter of 2018.
Twelve Months
Income from investments was $164 million, compared with $445 million in 2017. Income from investments in
the twelve-month period ended December 31,
2018 included investment income of Sagard Europe mainly
comprised of gains in the first and fourth quarters which were
offset by losses in the Sagard Holdings and Sagard China investment
funds as discussed above.
Other Subsidiaries
Fourth Quarter
The contribution from other subsidiaries to net earnings was a loss
of $41 million, compared with a loss
of $24 million in 2017. Net earnings in 2018 included the
Corporation's share of the gain recognized on the sale of Eagle
Creek of $62 million, an investment
held by Power Energy.
The contribution to adjusted net earnings in 2018 was
$25 million. Other items of
$66 million, the Corporation's share
of IntegraMed's goodwill impairment charge, were excluded from
adjusted net earnings. There were no other items in 2017.
Twelve Months
The contribution from other subsidiaries to net earnings was a loss
of $113 million for the twelve-month
period, compared with a loss of $89
million in 2017.
The contribution to adjusted net earnings was a loss of
$47 million. Other items of
$66 million were excluded from
adjusted net earnings as described above.
Dividend – Power Corporation Participating Shares
On February 12, 2019, the Board of
Directors announced the declaration of a quarterly dividend of
38.20 cents per share on the Participating Preferred Shares
and the Subordinate Voting Shares of the Corporation, payable
March 29, 2019 to shareholders
of record March 8, 2019.
Dividend – Power Corporation Non-Participating Preferred
Shares
On February 12, 2019, the Board of
Directors also announced the declaration of quarterly dividends on
the Corporation's preferred shares, payable April 15, 2019 to
shareholders of record March 25,
2019:
|
|
|
|
|
|
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 December 1, 2018 to February 28,
2019.
|
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 December 31, 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
- 27.8% – China
AMC [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)
(in millions of
Canadian dollars, except per share amounts)
|
Three months
ended
December
31,
|
Twelve months
ended
December
31,
|
|
2018
|
2017
|
2018
|
2017
|
Adjusted net
earnings
|
|
|
|
|
Power Financial
[1]
|
305
|
359
|
1,498
|
1,400
|
Other subsidiaries
[2]
|
25
|
(24)
|
(47)
|
(89)
|
|
330
|
335
|
1,451
|
1,311
|
Corporate
operations
|
|
|
|
|
Income – Sagard
Investment Funds, China AMC and Other Investments
[3]
|
(20)
|
139
|
164
|
445
|
Operating and other
expenses
|
(14)
|
(42)
|
(125)
|
(144)
|
Dividends on
non-participating shares
|
(13)
|
(13)
|
(52)
|
(52)
|
Adjusted net
earnings [4]
|
283
|
419
|
1,438
|
1,560
|
Other items – see
below
|
(54)
|
(211)
|
(151)
|
(274)
|
Net
earnings [4]
|
229
|
208
|
1,287
|
1,286
|
Earnings per share
– Basic [4]
|
|
|
|
|
Adjusted net
earnings
|
0.60
|
0.90
|
3.09
|
3.36
|
Other items
|
(0.11)
|
(0.46)
|
(0.32)
|
(0.59)
|
Net
earnings
|
0.49
|
0.44
|
2.77
|
2.77
|
|
|
[1]
|
Contributions from
IGM and Pargesa reflect adjustments in accordance with IAS
39.
|
[2]
|
Comprised of
operating results of: Power Energy, Square Victoria Communications
Group Inc., and controlled portfolio investments IntegraMed and
Vein Clinics of America, Inc. (Vein Clinics). Vein Clinics was
disposed of on December 29, 2017 and the Corporation divested
of the operations of La Presse on July 14,
2018.
|
[3]
|
Excludes earnings
(losses) from controlled portfolio investments.
|
[4]
|
Attributable to
participating shareholders.
|
Income – Sagard
Investment Funds, China AMC and Other Investments
|
(unaudited)
(in millions of
Canadian dollars)
|
Three months
ended
December
31,
|
Twelve months
ended
December
31,
|
|
2018
|
2017
|
2018
|
2017
|
Sagard Investment
Funds [1]
|
|
|
|
|
Sagard Europe
[2]
|
37
|
4
|
200
|
5
|
Sagard Holdings
[3,4]
|
(36)
|
87
|
(63)
|
92
|
Sagard China
[5]
|
(42)
|
30
|
(29)
|
69
|
China AMC
[6]
|
7
|
7
|
29
|
184
|
Other
Investments
|
|
|
|
|
Investment and hedge
funds, and other
|
14
|
11
|
27
|
95
|
|
(20)
|
139
|
164
|
445
|
|
|
[1]
|
Income from
investments for the Sagard Investment Funds is presented net of
expenses of their separate dedicated teams.
|
[2]
|
Mainly comprised
gains distributed by the funds in the first and fourth quarters of
2018 on the sale of investments.
|
[3]
|
Excludes the
Corporation's share of the operating results of IntegraMed and Vein
Clinics, presented in the section "Other subsidiaries". The fourth
quarter of 2017 includes the gain on disposal of Vein Clinics of
$67 million.
|
[4]
|
Includes share of
earnings (loss) from investments in a jointly controlled
corporation and associates. The 2018 results include impairment
charges on an equity-accounted investment and available-for-sale
investments due to the decline in equity values at the end of
December 2018.
|
[5]
|
Sagard China realized
losses of $34 million and $12 million on the disposal of
investments in the third and fourth quarters of 2018,
respectively.
|
[6]
|
The 2017 results
include a gain of $174 million on the fair value remeasurement of
the Corporation's previously held interest of 10% in China AMC as a
result of attaining significant influence, recognized in the third
quarter.
|
Other
Items
|
|
|
(unaudited)
(in millions of
Canadian dollars)
|
Three months
ended
December
31,
|
Twelve months
ended
December
31,
|
|
2018
|
2017
|
2018
|
2017
|
Power Financial's
share of Other items:
|
|
|
|
|
Lifeco
|
|
|
|
|
Restructuring
charges
|
—
|
(2)
|
(25)
|
(71)
|
Impact of U.S. tax
reform
|
—
|
(96)
|
—
|
(96)
|
Net charge on sale of
an equity investment
|
—
|
(54)
|
—
|
(54)
|
Share of IGM's other
items
|
—
|
(2)
|
—
|
(2)
|
|
—
|
(154)
|
(25)
|
(223)
|
IGM
|
|
|
|
|
Restructuring and
other charges
|
—
|
(52)
|
(7)
|
(58)
|
Premium paid on early
redemption of debentures
|
—
|
—
|
(3)
|
—
|
Pension
plan
|
—
|
—
|
—
|
15
|
Share of Lifeco's
Other items
|
—
|
(5)
|
(1)
|
(8)
|
|
—
|
(57)
|
(11)
|
(51)
|
Pargesa
|
|
|
|
|
Imerys – Disposal of
roofing activity
|
56
|
—
|
56
|
—
|
Imerys – Impairments,
restructuring charges and other
|
(44)
|
—
|
(44)
|
—
|
|
12
|
—
|
12
|
—
|
Other
Subsidiaries
|
|
|
|
|
IntegraMed – Goodwill
impairment charge
|
(66)
|
—
|
(66)
|
—
|
Corporate
operations
|
|
|
|
|
Divestiture of La
Presse operations [1]
|
—
|
—
|
(54)
|
—
|
Premium paid on early
redemption of debentures
|
—
|
—
|
(7)
|
—
|
|
—
|
—
|
(61)
|
—
|
|
(54)
|
(211)
|
(151)
|
(274)
|
|
|
[1]
|
Includes the
Corporation's financial contribution of $50 million.
|
Sagard Investment
Funds
|
(unaudited)
|
|
(in millions of
Canadian dollars)
|
December 31,
2018
|
December 31,
2017
|
|
Sagard
Europe
|
Sagard
Holdings
|
Sagard
China
|
Total
|
Sagard
Europe
|
Sagard
Holdings
|
Sagard
China
|
Total
|
Cost
|
280
|
342
|
515
|
1,137
|
250
|
402
|
570
|
1,222
|
Unrealized gain
(loss)
|
111
|
14
|
(5)
|
120
|
249
|
(5)
|
88
|
332
|
Fair value of
non-controlled portfolio
investments
|
391
|
356
|
510
|
1,257
|
499
|
397
|
658
|
1,554
|
Cash
|
—
|
185
|
162
|
347
|
—
|
219
|
126
|
345
|
Fair value of
controlled portfolio investments
and other
|
—
|
38
|
(3)
|
35
|
—
|
208
|
—
|
208
|
Total fair
value
|
391
|
579
|
669
|
1,639
|
499
|
824
|
784
|
2,107
|
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. Refer to the "Non-IFRS
Financial Measures and Presentation" section of the Corporation's
most recent Management's Discussion and Analysis for the definition
of non-IFRS financial measures and their reconciliation with IFRS
financial measures.
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, the outlook for North American and international
economies for the current fiscal year and subsequent periods as
well as statements or information related to the substantial issuer
bids of the Corporation, Power Financial and Lifeco whose terms
were announced on March 8, 2019.
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