Readers are referred to the sections "Non-IFRS Financial
Measures and Presentation" and "Forward-Looking Statements" at the
end of this release.
TORONTO, Aug. 2, 2019 /CNW Telbec/ - Power
Corporation of Canada (TSX: POW)
today reported earnings results for the three and six months ended
June 30, 2019.
Power Corporation
Consolidated results for the period ended June 30
Highlights
- On April 17, 2019, Power
Corporation successfully completed its substantial issuer bid to
repurchase for cancellation $1.35
billion of its subordinate voting shares representing 9.8%
of the issued and outstanding subordinate voting shares.
- On June 1, 2019, Great-West Life
& Annuity (GWL&A) completed the sale of substantially all
of its individual life insurance and annuity business to Protective
Life Insurance Company. The transaction, valued at $1.6 billion, frees up capital and allows
Great-West Lifeco Inc. (Lifeco) to focus on the defined
contribution retirement and asset management markets in the U.S.
segment.
- On July 30, 2019, Power Energy
Corporation acquired a 100% equity interest in Nautilus Solar
Energy, LLC, a company headquartered in New Jersey, U.S. that acquires, develops,
finances and manages distributed solar projects across community,
municipal/utility-scale, commercial and industrial markets.
Second Quarter
Net earnings attributable to participating shareholders were
$278 million or $0.64 per share, compared with $347 million or $0.75 per share in 2018.
Adjusted net earnings attributable to participating shareholders
(a non-IFRS financial measure) were $372 million or
$0.86 per share, compared with
$347 million or $0.75 per share in 2018.
Other items in 2019, not included in adjusted net earnings, were
a net charge of $94 million
consisting of the Corporation's share of Lifeco's net charge on the
sale of GWL&A's individual life insurance and annuity business
in the U.S. and the Corporation's share of Imerys' restructuring
and other charges.
The Corporation participated in Power Financial Corporation's
(Power Financial) substantial issuer bid to repurchase for
cancellation $1.65 billion
of its common shares. Power Corporation's proceeds from its
participation in the Power Financial substantial issuer bid were
$1.4 billion. As a result, the
Corporation's interest in Power Financial decreased to 64.1% (65.5%
at March 31, 2019).
Contributions to Power Corporation's net earnings and adjusted
net earnings were:
(in millions of
dollars)
|
|
2019
|
2018
|
|
Net
Earnings
|
Adjusted Net
Earnings
|
Net Earnings
and Adjusted Net
Earnings
|
• Power
Financial
|
283
|
377
|
433
|
• Sagard Investment
Funds, China AMC and Other investments
|
69
|
69
|
(15)
|
• Corporate and Other
subsidiaries
|
(74)
|
(74)
|
(71)
|
|
278
|
372
|
347
|
Six Months
Net earnings attributable to participating shareholders were
$570 million or $1.27 per share, compared with $872 million or $1.88 per share in 2018.
Adjusted net earnings attributable to participating shareholders
were $664 million or $1.48 per
share, compared with $872 million or
$1.88 per share in 2018.
Other items in the six-month period ended June 30, 2019 were as described above.
Contributions to Power Corporation's net earnings and adjusted
net earnings were:
(in millions of
dollars)
|
|
2019
|
2018
|
|
Net
Earnings
|
Adjusted Net
Earnings
|
Net Earnings
and
Adjusted Net
Earnings
|
• Power
Financial
|
633
|
727
|
816
|
• Sagard Investment
Funds, China AMC and Other investments
|
80
|
80
|
212
|
• Corporate and Other
subsidiaries
|
(143)
|
(143)
|
(156)
|
|
570
|
664
|
872
|
Power Financial Corporation
Results for the period
ended June 30
Second Quarter
Net earnings attributable to common shareholders were
$443 million or $0.66 per share, compared with $658 million
or $0.92 per share in 2018.
Adjusted net earnings attributable to common shareholders were
$589 million or $0.88 per share, compared with $658 million
or $0.92 per share in 2018.
Other items in 2019, not included in adjusted net earnings, were
a net charge of $146 million
consisting of Power Financial's share of Lifeco's net charge on the
sale of GWL&A's individual life insurance and annuity business
in the U.S. and its share of Imerys' restructuring and other
charges.
Six Months
Net earnings attributable to common shareholders were
$979 million or $1.41 per share, compared with $1,244 million or $1.74 per share in 2018.
Adjusted net earnings attributable to common shareholders
were $1,125 million or $1.62 per share, compared with $1,244 million or $1.74 per share in 2018.
Other items in the six-month period ended June 30, 2019 were as described above.
Sagard Investment Funds, China AMC and Other
Investments
For the period ended June 30
Second Quarter
Income from investments was $69
million, compared with a loss of $15
million in 2018. See the table below for details.
Income from investments in the quarter mainly comprised realized
gains in Sagard China and a gain related to a private investment
fund.
Six Months
Income from investments was $80
million, compared with $212
million in 2018. See the table below for details.
Dividends on Power Corporation Participating Shares
The Board of Directors today declared a quarterly dividend of
40.50 cents per share on the
Participating Preferred Shares and the Subordinate Voting Shares of
the Corporation, payable September 30,
2019 to shareholders of record September 9, 2019.
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, 2019 to
shareholders of record September 24,
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 June 1 to August 31,
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 June 30, 2019, Power
Corporation held the following economic interests:
- 64.1% – Power Financial (TSX: PWF) www.powerfinancial.com
- 100% – Sagard SAS (Europe)
www.sagard.com
- 100% – Sagard Holdings www.sagardholdings.com
- 100% – Sagard China www.sagardchina.com
- 100% – Power Energy Corporation
www.powerenergycorporation.com
- 27.8% – China Asset Management Co., Ltd. [1]
www.chinaamc.com
[1] IGM Financial
Inc. (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,
|
|
2019
|
2018
|
2019
|
2018
|
Adjusted net
earnings
|
|
|
|
|
Power Financial
[1]
|
377
|
433
|
727
|
816
|
Other subsidiaries
[2]
|
(21)
|
(23)
|
(41)
|
(55)
|
|
356
|
410
|
686
|
761
|
Corporate
operations
|
|
|
|
|
Income – Sagard
Investment Funds, China AMC and Other Investments
|
69
|
(15)
|
80
|
212
|
Operating and other
expenses
|
(40)
|
(35)
|
(76)
|
(75)
|
Dividends on
non-participating shares
|
(13)
|
(13)
|
(26)
|
(26)
|
Adjusted net
earnings [3]
|
372
|
347
|
664
|
872
|
Other items – see
below
|
(94)
|
−
|
(94)
|
−
|
Net
earnings [3]
|
278
|
347
|
570
|
872
|
Earnings per share
– Basic [3]
|
|
|
|
|
Adjusted net
earnings
|
0.86
|
0.75
|
1.48
|
1.88
|
Other items
|
(0.22)
|
−
|
(0.21)
|
−
|
Net
earnings
|
0.64
|
0.75
|
1.27
|
1.88
|
|
|
[1]
|
The contributions
from IGM and Pargesa Holding SA (Pargesa) reflect adjustments in
accordance with IAS 39.
|
[2]
|
Comprised of
operating results of: Power Energy Corporation, Square Victoria
Communications Group Inc. (up to the date of disposal in July
2018), and IntegraMed America, Inc. (IntegraMed).
|
[3]
|
Attributable to
participating shareholders.
|
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,
|
|
2019
|
2018
|
2019
|
2018
|
Sagard Investment
Funds [1]
|
|
|
|
|
Sagard
Europe
|
(10)
|
(2)
|
(13)
|
166
|
Sagard
Holdings [2][3]
|
(2)
|
(41)
|
(8)
|
(34)
|
Sagard
China
|
54
|
17
|
68
|
48
|
China AMC
|
8
|
8
|
15
|
16
|
Other
Investments
|
|
|
|
|
Investment and hedge
funds, and other [4]
|
19
|
3
|
18
|
16
|
|
69
|
(15)
|
80
|
212
|
|
|
[1]
|
Income (loss) 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 operating results of IntegraMed
presented in "Other subsidiaries".
|
[3]
|
Includes share of
earnings (losses) from investments in a jointly controlled
corporation and associates. The second quarter of 2018 included a
loss attributable to the recognition of non-cash provisions in an
investment.
|
[4]
|
Consists mainly of
foreign exchange gains or losses and interest on cash and cash
equivalents.
|
Sagard Investment
Funds
|
|
(unaudited)
|
|
|
(in millions of
Canadian dollars)
|
June 30,
2019
|
December 31,
2018
|
|
Sagard
Europe
|
Sagard
Holdings
|
Sagard
China
|
Total
|
Sagard
Europe
|
Sagard
Holdings
|
Sagard
China
|
Total
|
Cost
|
309
|
366
|
536
|
1,211
|
280
|
342
|
515
|
1,137
|
Unrealized gain
(loss)
|
107
|
(2)
|
70
|
175
|
111
|
14
|
(5)
|
120
|
Fair value of
non-controlled portfolio
investments
|
416
|
364
|
606
|
1,386
|
391
|
356
|
510
|
1,257
|
Cash
|
−
|
145
|
94
|
239
|
−
|
185
|
162
|
347
|
Fair value of
controlled portfolio investments
and other
|
−
|
35
|
−
|
35
|
−
|
38
|
(3)
|
35
|
Total fair
value
|
416
|
544
|
700
|
1,660
|
391
|
579
|
669
|
1,639
|
Other
Items
|
|
(unaudited)
|
Three months
ended
|
Six months
ended
|
(in millions of
Canadian dollars)
|
June 30,
|
June 30,
|
|
2019
|
2018
|
2019
|
2018
|
Power Financial's
share of Other items:
|
|
|
|
|
Lifeco
|
|
|
|
|
Net charge on the
sale, via reinsurance, of U.S.
individual life insurance and annuity business
|
(86)
|
−
|
(86)
|
−
|
IGM
|
|
|
|
|
Share of Lifeco's
Other items
|
(3)
|
−
|
(3)
|
−
|
Pargesa
|
|
|
|
|
Imerys – Restructuring
charges and other
|
(5)
|
−
|
(5)
|
−
|
|
(94)
|
−
|
(94)
|
−
|
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.
This news release may also contain other non-IFRS financial
measures which are publicly disclosed by the Corporation's
subsidiaries such as sales, assets under management and assets
under administration. 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.
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, including the fintech strategy, as well as the
outlook for North American and international economies for the
current fiscal year and subsequent. 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