Readers are referred to the sections "Non-IFRS Financial
Measures and Presentation" and "Forward-Looking Statements" at the
end of this release. All figures are expressed in Canadian dollars
unless otherwise noted.
MONTRÉAL, Aug. 6, 2021 /CNW
Telbec/ - Power Corporation of Canada (Power Corporation or the Corporation)
(TSX: POW) today reported earnings results for the three and
six months ended June 30, 2021.
Power Corporation
Consolidated results for the
period ended June 30, 2021
HIGHLIGHTS
- The Corporation reported net earnings per share of $1.47 for the second quarter of 2021, compared
with $0.99 in 2020 and record high
adjusted net earnings per share [1] of $1.51, compared with $0.79 per share in 2020.
- The Corporation's net asset value (NAV) per share
[1] increased 12.3% to $51.60 at June 30,
2021, compared with $45.94 at
March 31, 2021.
- Great-West Lifeco Inc. (Lifeco) announced several key strategic
business transactions in the U.S., Canada, and Ireland to add scale and grow its
businesses:
-
- On July 21, 2021, its U.S.
subsidiary, which operates primarily as Empower Retirement,
announced a definitive agreement to acquire Prudential Financial,
Inc.'s full-service retirement business for a total value of
approximately $4.45 billion
(US$3.55 billion), solidifying
Empower's position as the second largest retirement plan service
provider in the United
States.
- Irish Life Group Limited, a subsidiary of Lifeco, announced on
July 13, 2021 that it had entered
into an agreement to acquire Ark Life Assurance Company dac from
Phoenix Group Holdings plc for €230 million, adding significant
scale to its retail division and enhancing its ability to provide
customers with market-leading wealth and insurance solutions.
- The Canada Life Assurance Company, a subsidiary of Lifeco,
announced, on July 13, 2021, an
agreement to acquire ClaimSecure Inc., an industry-leading health
and dental claims management and administration firm to private and
public businesses in Canada,
extending its presence in a growing segment of the market.
- Lifeco's assets under administration were $2.2 trillion at June 30,
2021, an increase of 9.1% from December 31, 2020.
- IGM Financial Inc. (IGM) reported net earnings of $237.4 million, or $0.99 per share in the second quarter, the
highest in its history, and up 28.6% from the second quarter of
2020.
- IGM reported record high assets under management and advisement
of $262.0 billion, up 5.4% in the
quarter and 39.2% from June 30, 2020,
and record high second quarter investment fund net sales of
$1.9 billion.
- Groupe Bruxelles Lambert's (GBL) NAV was €23.1 billion at
June 30, 2021, compared with €21.1
billion at March 31, 2021, an
increase of 9.3%.
- Sagard Holdings Inc. (Sagard)
launched Portage Fintech Acquisition Corporation (PFAC), a special
purpose acquisition company sponsored by an affiliate of
Sagard. PFAC successfully
completed an initial public offering, raising gross proceeds of
US$240 million.
- Wealthsimple Financial Corp. (Wealthsimple) completed its
previously announced $750 million
financing round on May 12, 2021,
including a $500 million secondary
offering by the Corporation, IGM and Lifeco (Power Group). The
Power Group retained an interest of $2.1
billion in Wealthsimple.
- The Lion Electric Company (Lion) completed its business
combination with Northern Genesis Acquisition Corp. and on
May 7, 2021 began trading as "LEV" on
the TSX and the New York Stock Exchange. The Corporation held a
35.7% interest in Lion at June 30,
2021.
|
[1]
|
NAV, NAV per share
and adjusted net earnings per share are non-IFRS financial
measures. See the Non-IFRS Financial Measures and Presentation
section later in this news release.
|
Net Asset Value
|
Net asset value per
share represents management's estimate of the fair value of
participating shareholders' equity of the Corporation. Net asset
value is the fair value of the assets of the combined Power
Financial Corporation (Power Financial) and Power Corporation
non-consolidated balance sheet less their net debt and preferred
shares. Refer to the detailed Net Asset Value section later in this
news release for a reconciliation to the non-consolidated combined
balance sheet.
|
The Corporation's net asset value per share was $51.60 at June 30,
2021, compared with $45.94 at
March 31, 2021, representing an
increase of 12.3%.
|
|
|
|
|
(in millions of
dollars, except per share amounts)
|
June 30,
2021
|
March 31,
2021
|
Variation
%
|
|
Publicly
Traded
Operating
Companies
|
Lifeco
|
22,838
|
20,741
|
10
|
|
IGM
|
6,474
|
5,666
|
14
|
|
GBL
|
3,100
|
2,907
|
7
|
|
|
32,412
|
29,314
|
11
|
|
|
|
|
|
|
Alternative
Asset
Investment
Platforms
|
Sagard
[1][2]
|
1,790
|
1,958
|
(9)
|
|
Power Sustainable
[1]
|
1,738
|
1,581
|
10
|
|
3,528
|
3,539
|
−
|
|
|
|
|
|
|
Other
|
China AMC
[3]
|
705
|
690
|
2
|
|
Standalone businesses
[4]
|
2,004
|
1,369
|
46
|
|
Other assets and
investments
|
635
|
618
|
3
|
|
Cash and cash
equivalents
|
1,370
|
1,315
|
4
|
|
Gross asset
value
|
40,654
|
36,845
|
10
|
|
Liabilities and
preferred shares
|
(5,749)
|
(5,758)
|
−
|
|
Net asset
value
|
34,905
|
31,087
|
12
|
|
Shares outstanding
(millions)
|
676.5
|
676.7
|
|
|
Net asset value
per share
|
51.60
|
45.94
|
12
|
|
[1]
|
Includes the
management companies of the investment funds at their carrying
value.
|
|
[2]
|
During the second
quarter, the Corporation completed a secondary offering of a
portion of its interest in Wealthsimple held through the Sagard
platform.
|
|
[3]
|
China Asset
Management Co., Ltd. (China AMC).
|
|
[4]
|
Includes Lion, LMPG
Inc. (LMPG), Peak Achievement Athletics Inc. (Peak) and GP
Strategies.
|
|
Power
Corporation's Ownership in Publicly Traded Operating
Companies
|
|
|
|
|
|
Share
price
|
|
Ownership
[1]
(%)
|
Shares held
[1]
(in millions)
|
June 30,
2021
|
March 31,
2021
|
|
Lifeco
|
66.7
|
620.3
|
$36.82
|
$33.44
|
|
IGM
|
61.9
|
147.9
|
$43.76
|
$38.30
|
|
GBL
[2]
|
14.1
|
22.8
|
€94.34
|
€88.26
|
|
[1]
|
As at June 30,
2021.
|
|
[2]
|
Held through
Parjointco SA (Parjointco), a jointly controlled corporation
(50%).
|
SECOND QUARTER
Net earnings attributable to participating shareholders were
$994 million or $1.47 per share, compared with $666 million or $0.99 per share in 2020.
Adjusted net earnings attributable to participating shareholders
[1] were $1,020 million or
$1.51 per share, compared with
$533 million or $0.79 per share in 2020.
|
Contributions to
Power Corporation's Earnings per Share
|
|
|
2021
|
|
2020
|
|
(in dollars per Power
Corporation share)
|
Net
Earnings
|
Adjusted
Net Earnings
|
Net
Earnings
|
Adjusted
Net Earnings
|
|
Lifeco
|
0.76
|
0.81
|
0.86
|
0.70
|
|
IGM
|
0.22
|
0.22
|
0.17
|
0.17
|
|
GBL
[2]
|
0.03
|
0.03
|
0.11
|
0.12
|
|
Effect of
consolidation [3]
|
0.15
|
0.14
|
(0.06)
|
(0.07)
|
|
1.16
|
1.20
|
1.08
|
0.92
|
|
Alternative and other
investments [4][5]
|
0.18
|
0.18
|
(0.01)
|
(0.01)
|
|
China
AMC
|
0.02
|
0.02
|
0.01
|
0.01
|
|
Standalone businesses
[5]
|
0.23
|
0.23
|
0.05
|
0.01
|
|
1.59
|
1.63
|
1.13
|
0.93
|
|
Corporate operations
and Other [6]
|
(0.12)
|
(0.12)
|
(0.14)
|
(0.14)
|
|
1.47
|
1.51
|
0.99
|
0.79
|
|
Average shares
outstanding (in millions)
|
|
676.8
|
|
676.3
|
Lifeco: contribution to net earnings per share
decreased by 11.6%; contribution to adjusted net earnings per share
increased by 15.7%.
IGM: contribution to net earnings per share and
adjusted net earnings per share increased by 29.4%.
GBL: contribution to net earnings per share of
$0.03, compared to $0.11 per share in 2020. Results include a charge
of $0.08 per share in the quarter for
losses due to an increase in the put right liability of the
non-controlling interests in Webhelp Group (Webhelp) and charges
related to Webhelp's employee incentive plan.
Alternative and other investments: net earnings per
share includes realized gains of $0.08 per share on the Power Pacific portfolio
and a contribution from Sagard of
$0.10 to net earnings per share which
includes gains realized on dispositions by Sagard Europe 3.
Standalone businesses: results include a positive
impact of $0.23 per share resulting
from the gains on the change in ownership in Lion on the completion
of Lion's business combination with Northern Genesis Acquisition
Corp. (Northern Genesis), including the increase in fair value of
call rights held by Power Sustainable during the quarter partially
offset by an increase in amounts payable for long-term incentive
plans and deferred taxes.
Corporate operations and Other: As part of the
reorganization completed in February
2020, the Corporation projected significant near-term cost
reductions of approximately $50
million per year within two years by eliminating duplicative
public company-related expenses and rationalizing other general and
administrative expenses. To date, the Corporation has implemented
actions to achieve 89% of the targeted reduction.
Adjustments in the second quarter of 2021, excluded from
adjusted net earnings, were a negative impact to earnings of
$26 million or $0.04 per share, mainly related to the
Corporation's share of Lifeco's adjustments, which consist of
negative market-related impacts on liabilities, transaction,
restructuring and integration charges and negative impacts from the
tax legislative changes in Europe,
partially offset by actuarial assumption changes and management
actions. Adjustments in the second quarter of 2020 were a net
positive impact to earnings of $133
million or $0.20 per share
mainly related to the Corporation's share of Lifeco's adjustments,
which consist of positive market-related impacts on liabilities and
actuarial assumption changes and management actions, as well as a
recovery on the deconsolidation of IntegraMed America, Inc.
(IntegraMed).
|
[1]
|
Adjusted net earnings
and adjusted net earnings per share are non-IFRS financial
measures; see Non-IFRS Financial Measures and Presentation later in
this news release.
|
|
[2]
|
Adjustments in 2020
are as previously reported by Pargesa Holding SA
(Pargesa).
|
|
[3]
|
Effect of
consolidation reflects: i) the elimination of intercompany
transactions; ii) the application of the Corporation's accounting
method for investments under common control to the reported net
earnings of the publicly traded operating companies, which
includes: a) an adjustment related to Lifeco's investment in the
Power Sustainable Energy Infrastructure Partnership (PSEIP); and b)
an allocation of the results of the fintech portfolio including
Wealthsimple, Koho, Portage I, Portage II and Portage III to the
contributions from Lifeco and IGM based on their respective
interest; and iii) adjustments in accordance with IAS 39 for IGM
and GBL. Refer to the detailed table in the Non-Consolidated
Statements of Earnings section of the Corporation's most recent
MD&A.
|
|
[4]
|
Alternative asset
investment platforms includes earnings (losses) from investment
platforms including controlled and consolidated subsidiaries and
other investments.
|
|
[5]
|
Presented in
Alternative and other investments in the Non-Consolidated
Statements of Earnings section of the Corporation's most recent
MD&A.
|
|
[6]
|
Includes operating
and other expenses, dividends on non-participating shares of the
Corporation and Power Financial's corporate operations; refer to
the Earnings Summary below.
|
SIX MONTHS
Net earnings attributable to participating shareholders were
$1,550 million or $2.29 per share, compared with $866 million or $1.40 per share in 2020.
Adjusted net earnings attributable to participating shareholders
were $1,806 million or $2.67 per share, compared with $878 million or $1.42 per share in 2020.
|
Contributions to
Power Corporation's Earnings per Share
|
|
|
2021
|
|
2020
[1]
|
|
(in dollars per Power
Corporation share)
|
Net
Earnings
|
Adjusted
Net Earnings
|
Net
Earnings
|
Adjusted
Net Earnings
|
|
Lifeco
|
1.46
|
1.54
|
1.18
|
1.23
|
|
IGM
|
0.40
|
0.40
|
0.31
|
0.31
|
|
GBL
[2]
|
0.11
|
0.11
|
0.13
|
0.14
|
|
Effect of
consolidation [3]
|
(0.03)
|
0.12
|
(0.01)
|
(0.01)
|
|
1.94
|
2.17
|
1.61
|
1.67
|
|
Alternative and other
investments [4][5]
|
0.41
|
0.56
|
0.11
|
0.11
|
|
China
AMC
|
0.04
|
0.04
|
0.03
|
0.03
|
|
Standalone businesses
[5]
|
0.23
|
0.23
|
(0.02)
|
(0.06)
|
|
2.62
|
3.00
|
1.73
|
1.75
|
|
Corporate operations
and Other [6]
|
(0.33)
|
(0.33)
|
(0.33)
|
(0.33)
|
|
2.29
|
2.67
|
1.40
|
1.42
|
|
Average shares
outstanding (in millions)
|
|
676.9
|
|
618.2
|
Adjustments to net earnings in the six-month period were a
negative net impact of $256 million
or $0.38 per share, mainly related to
the Corporation's share of Lifeco's adjustments and its share of
the charge arising from the remeasurement of the put right
liability of certain of the non-controlling interests in
Wealthsimple to fair value of $208
million recognized in the first quarter. These were
reflected in the Adjustments of the alternative and other
investments and in the Effect of consolidation based on Lifeco and
IGM's respective interest. Adjustments in the six-month period of
2020 were a negative net impact of $12
million or $0.02 per share,
mainly related to the Corporation's share of Lifeco's adjustments,
which consisted of negative market-related impacts on liabilities,
partially offset by actuarial assumption changes and management
actions, as well as a recovery on the deconsolidation of
IntegraMed.
|
[1]
|
The Corporation
completed a reorganization transaction on February 13, 2020, in
which it acquired the minority interests of Power Financial (the
Reorganization) and now holds 100% of the common shares of Power
Financial.
|
|
[2]
|
Adjustments in 2020
are as previously reported by Pargesa.
|
|
[3]
|
Effect of
consolidation reflects: i) the elimination of intercompany
transactions; ii) the application of the Corporation's accounting
method for investments under common control to the reported net
earnings of the publicly traded operating companies, which
includes: a) an adjustment related to Lifeco's investment in PSEIP;
and b) an allocation of the results of the fintech portfolio
including Wealthsimple, Koho, Portage I, Portage II and Portage III
to the contributions from Lifeco and IGM based on their respective
interest; and iii) adjustments in accordance with IAS 39 for IGM
and GBL. Refer to the detailed table in the Non-Consolidated
Statements of Earnings section of the Corporation's most recent
MD&A.
|
|
[4]
|
Alternative asset
investment platforms includes earnings (losses) from investment
platforms including controlled and consolidated subsidiaries and
other investments.
|
|
[5]
|
Presented in
Alternative and other investments in the Non-Consolidated
Statements of Earnings section of the Corporation's most recent
MD&A.
|
|
[6]
|
Includes operating
and other expenses, dividends on non-participating shares of the
Corporation and its share of Power Financial's corporate
operations; refer to the Earnings Summary below.
|
Great-West Lifeco, IGM Financial and Groupe Bruxelles
Lambert
Results for the quarter ended June 30, 2021
|
The information below
is derived from Lifeco and IGM's second quarter MD&As, as
prepared and disclosed by the respective companies in accordance
with applicable securities legislation, and which are also
available either directly from SEDAR (www.sedar.com) or from their
websites, www.greatwestlifeco.com and www.igmfinancial.com. The
information below related to GBL is derived from publicly disclosed
information, as issued by GBL in its half-year report at June 30,
2021. Further information on GBL's results is available on its
website at www.gbl.be.
|
GREAT-WEST LIFECO INC.
SECOND QUARTER
Net earnings attributable to common shareholders were
$784 million or $0.84 per share, compared with $863 million or $0.93 per share in 2020.
Adjusted net earnings [1] attributable to common
shareholders were $826 million or
$0.89 per share, compared with
$706 million or $0.76 per share in 2020.
Adjustments in the second quarter of 2021, excluded from
adjusted net earnings, were a net negative impact to earnings of
$42 million, compared with a net positive impact to earnings
of $157 million in 2020. Lifeco's
adjustments in the second quarter of 2021 consisted of negative
market-related impacts on liabilities, tax legislative changes,
transaction costs related to the acquisitions of Personal Capital
Corporation (Personal Capital) and Massachusetts Mutual Life
Insurance Company (MassMutual) and restructuring and integration
costs partially offset by positive impacts from actuarial
assumption changes and other management actions.
|
[1]
|
Described by Lifeco
as "base earnings". For additional information, please refer to the
Non-IFRS Financial Measures and Presentation section later in this
news release.
|
IGM FINANCIAL INC.
SECOND QUARTER
Net earnings available to common shareholders were $237.4 million or $0.99 per share, compared with $183.5 million or $0.77 per share in 2020.
Assets under management and advisement at June 30, 2021 were $262.0
billion, up 5.4% in the quarter and 39.2% from June 30, 2020 (including $30.3 billion in net business acquisitions in
2020).
GROUPE BRUXELLES
LAMBERT
SECOND QUARTER
GBL reported net earnings of €110 million, compared with net
earnings of €370 million in 2020.
GBL reported a net asset value at June
30, 2021 of €23,057 million, representing €142.89 per share,
compared with €21,090 million or €130.70 per share at
March 31, 2021.
GBL adopted IFRS 9 in 2018. Power Corporation continues to apply
IAS 39; this results in a positive adjustment to the contribution
from GBL of $107 million in the
second quarter of 2021.
Alternative and Other Investments
Results for the
quarter ended June 30, 2021
|
Alternative and other
investments are comprised of the results of the Corporation's
alternative asset investment platforms, Sagard and Power
Sustainable, which includes income earned from asset management and
investing activities. Asset management activities includes
management fees and carried interest, net of investment platform
expenses. Investing activities comprises income earned on the
capital invested by the Corporation (proprietary capital) in each
platform and the share of earnings (losses) of controlled and
consolidated subsidiaries held within the alternative asset
investment platforms. Other includes the share of earnings (losses)
of standalone businesses and the Corporation's investments in
investment and hedge funds. For additional information, refer to
the table later in this news release.
|
SECOND QUARTER
Income from the Corporation's alternative and other investments,
including standalone businesses, was $275
million, compared with $28
million in the corresponding period in 2020. Adjusted net
earnings from alternative and other investments was $275 million, compared with $1 million in the comparative period in 2020.
Adjusted net earnings in the second quarter include a net
contribution of $68 million from
Sagard, and a net contribution of
$48 million from Power Sustainable, primarily due to realized
gains on the sale of investments by Sagard Europe 3 and within the
Power Pacific portfolio.
Adjusted net earnings from the standalone businesses in the
second quarter of 2021 was $154
million, compared with $5
million in the comparative period in 2020. The second
quarter includes gains of $209
million related to the effect of change in ownership in Lion
as a result of the completion of the merger transaction between
Lion and Northern Genesis and the revaluation of certain call
rights held by Power Sustainable, which were partially exercised in
the quarter, partially offset by an increase in amounts payable for
long-term incentive plans and deferred taxes of $56 million. The Corporation also recorded a
reversal of a previously recognized impairment on its investment in
GP Strategies of $33 million.
At June 30, 2021, Sagard had US$8.1
billion of assets under management, including unfunded
commitments. In July 2021,
subsequent to quarter end, Sagard Credit Partners II LP completed
an additional closing of approximately US$78
million, increasing the fund size to US$987 million and Portage Ventures III LP
completed an additional closing of US$145
million, increasing total commitments to US$358 million.
At June 30, 2021, Power
Sustainable had $3.0 billion of
assets under management, including unfunded commitments, of which
$370 million is managed on behalf of
third-party investors in Power Pacific's China A-shares core
strategy.
At June 30, 2021, the fair value
of standalone businesses was $2.3
billion.
COVID-19
The outbreak of the novel strain of coronavirus, specifically
identified as "COVID-19", has resulted in governments worldwide
enacting emergency measures to combat the spread of the virus.
These measures, which include the implementation of travel bans,
imposing restrictions on certain non-essential businesses,
self-imposed quarantine periods and social distancing, have caused
material disruption to businesses globally resulting in an economic
slowdown. Governments and central banks have responded with
significant monetary and fiscal interventions designed to stabilize
economic conditions. Equity markets in particular have been
volatile, experiencing material and rapid declines in the first
quarter of 2020; however, the markets have since experienced
recoveries.
The duration and full impacts of the COVID-19 pandemic are still
unknown at this time. The distribution of vaccines has resulted in
the easing of restrictions in many economies; though the COVID-19
pandemic continues to cause material disruption to businesses
globally, resulting in continued economic pressures. While
the conditions have become more stable, many factors continue to
extend economic uncertainty including the rollout and efficacy of
vaccines, emergence of new COVID-19 variants and the durability and
effectiveness of government and central bank interventions. It is
not possible to reliably estimate the length and severity of these
developments and the impact on the financial results and condition
of the Corporation and its operating subsidiaries in future
periods.
Dividend on Power Corporation Participating Shares
The Board of Directors declared a quarterly dividend of
44.75 cents per share on the
Corporation's Participating Preferred Shares and the Subordinate
Voting Shares, payable November 1,
2021, to shareholders of record September 30, 2021.
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, 2021, to shareholders of record
September 24, 2021:
|
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, 2021.
|
Investor Information
|
Access to
Quarterly
Results Materials:
|
|
Quarterly Earnings
Conference Call:
|
|
The second quarter
earnings
news release and shareholder
report are available on the
Power Corporation website at
www.powercorporation.com/en/
investors
|
|
Power Corporation
will host an earnings call and live audio webcast on Monday,
August 9, 2021
at 8:30 a.m. (Eastern Time). A question-and-answer period with
analysts will follow the
presentation. Shareholders, investors and other stakeholders are
welcome to participate on a
listen-only basis.
The live audio
webcast and presentation materials will be available at:
www.powercorporation.com/en/investors/events-presentations
To listen via
telephone, please dial 1-833-979-2697 toll-free in North America or
647-689-6826
for international calls and enter passcode 9199980#.
A replay of the
conference call will be available from August 9, 2021 at 11:30 a.m.
(Eastern Time)
until November 9, 2021 by calling 1-800-585-8367 toll-free in North
America or 416-621-4642 for
international calls, using the access code 9199980#. A webcast
archive will also be available on
Power Corporation's website.
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Investor Relations
Contact:
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Treasury
514-286-7400
investor.relations@powercorp.com
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About Power Corporation
Power Corporation is an international management and holding
company that focuses on financial services in North America, Europe and Asia. Its core holdings are leading insurance,
retirement, wealth management and investment businesses, including
a portfolio of alternative asset investment platforms. To learn
more, visit www.PowerCorporation.com.
At June 30, 2021, Power
Corporation held the following economic interests:
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100% – Power
Financial
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www.powerfinancial.com
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66.7%
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Great-West
Lifeco (TSX: GWO)
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www.greatwestlifeco.com
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61.9%
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IGM
Financial (TSX: IGM)
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www.igmfinancial.com
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14.1%
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GBL [1] (Euronext:
GBLB)
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www.gbl.be
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55.9%
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Wealthsimple [2]
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www.wealthsimple.com
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|
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Investment
Platforms
|
|
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100%
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Sagard
|
www.sagard.com
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100%
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Power
Sustainable
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www.powersustainable.com
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Power
Pacific
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www.powerpacificim.com
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Power Sustainable
Energy Infrastructure
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13.9% – China
AMC [3]
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www.chinaamc.com
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[1]
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Held through
Parjointco, a jointly controlled corporation (50%).
|
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[2]
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Undiluted equity
interest held by Portage I, Power Financial and IGM, representing a
fully diluted equity interest of 42.6%.
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[3]
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IGM also holds a
13.9% interest in China AMC.
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Earnings Summary
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Contribution to
Adjusted and Net Earnings
|
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(unaudited)
(in millions of dollars)
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|
Three months
ended June 30
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Six months
ended June 30
|
|
2021
|
2020
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2021
|
2020
|
|
Adjusted net
earnings
|
|
|
|
|
|
Lifeco
[1]
|
551
|
472
|
1,045
|
835
|
|
IGM
[1]
|
148
|
114
|
273
|
214
|
|
GBL
[1]
|
24
|
84
|
74
|
88
|
|
Effect of
consolidation [2]
|
92
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(50)
|
78
|
21
|
|
815
|
620
|
1,470
|
1,158
|
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Alternative asset
investment platforms and Other [3][4]
|
121
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(4)
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376
|
65
|
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China AMC
|
15
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10
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28
|
19
|
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Standalone businesses
[3][5]
|
154
|
5
|
155
|
(39)
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|
Corporate operating
and other expenses
|
(38)
|
(51)
|
(129)
|
(114)
|
|
Dividends on
non-participating and perpetual preferred shares
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(47)
|
(47)
|
(94)
|
(95)
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Non-controlling
interests of Power Financial
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−
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−
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−
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(116)
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Adjusted net
earnings [6]
|
1,020
|
533
|
1,806
|
878
|
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Adjustments – see
below
|
(26)
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133
|
(256)
|
(12)
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Net
earnings [6]
|
994
|
666
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1,550
|
866
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|
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Contribution to
Adjusted and Net Earnings per Share
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(unaudited)
(in dollars per share)
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Three months
ended June 30
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Six months
ended June 30
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2021
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2020
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2021
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2020
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|
Adjusted net
earnings per share – basic
|
|
|
|
|
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Lifeco
[1]
|
0.81
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0.70
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1.54
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1.23
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IGM
[1]
|
0.22
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0.17
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0.40
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0.31
|
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GBL
[1]
|
0.03
|
0.12
|
0.11
|
0.14
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Effect of
consolidation [2]
|
0.14
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(0.07)
|
0.12
|
(0.01)
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1.20
|
0.92
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2.17
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1.67
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Alternative asset
investment platforms and Other [3][4]
|
0.18
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(0.01)
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0.56
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0.11
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China AMC
|
0.02
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0.01
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0.04
|
0.03
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Standalone businesses
[3][5]
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0.23
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0.01
|
0.23
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(0.06)
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Corporate operating
and other expenses and dividends
on non–participating and perpetual
preferred shares
|
(0.12)
|
(0.14)
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(0.33)
|
(0.33)
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|
Adjusted net
earnings per share [6]
|
1.51
|
0.79
|
2.67
|
1.42
|
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Adjustments – see
below
|
(0.04)
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0.20
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(0.38)
|
(0.02)
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Net earnings per
share [6]
|
1.47
|
0.99
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2.29
|
1.40
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[1]
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As reported by
Lifeco, IGM and GBL.
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[2]
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Effect of
consolidation reflects: i) the elimination of intercompany
transactions; ii) the application of the Corporation's accounting
method for investments under common control to the reported net
earnings of the publicly traded operating companies, which
includes: a) an adjustment related to Lifeco's investment in PSEIP;
and b) an allocation of the results of the fintech portfolio
including Wealthsimple, Koho, Portage I, Portage II and Portage III
to the contributions from Lifeco and IGM based on their respective
interest; and iii) adjustments in accordance with IAS 39 for IGM
and GBL. Refer to the detailed table in the Non-Consolidated
Statements of Earnings section of the Corporation's most recent
MD&A.
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[3]
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Presented in
Alternative and other investments in the Non-Consolidated
Statements of Earnings section of the Corporation's most recent
MD&A.
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[4]
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Includes earnings of
the Corporation's alternative asset investment platforms, including
investments held through Power Financial.
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[5]
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Includes the results
of Lion, LMGP, Peak, GP Strategies and IntegraMed (up to the date
of deconsolidation on May 20, 2020).
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[6]
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Attributable to
participating shareholders.
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Alternative and Other Investments – Earnings
|
|
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|
|
|
(unaudited)
(in millions of dollars)
|
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Three months
ended
June 30,
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Six months ended
June 30,
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2021
|
2020
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2021
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2020
|
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Sagard
|
|
|
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Asset management
activities [1]
|
3
|
1
|
62
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(4)
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Investing activities
(proprietary
capital) [2][3]
|
65
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(3)
|
35
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25
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Power
Sustainable
|
|
|
|
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Asset management
activities [1]
|
(7)
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(5)
|
(12)
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(8)
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Investing activities
(proprietary capital) [4]
|
55
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(2)
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266
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51
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Standalone businesses
[5]
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154
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5
|
155
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(39)
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Investment and hedge
funds and Other [6]
|
5
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5
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25
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1
|
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275
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1
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531
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26
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[1]
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Includes management
fees charged by the investment platform on proprietary capital.
Management fees paid by the Corporation are deducted from income
from investing activities.
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[2]
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Includes the
Corporation's share of earnings (losses) of Wealthsimple and Koho
(up to the date of deconsolidation on December 1, 2020). The first
quarter of 2021 included a charge of $52 million related to the
Corporation's share of the carried interest payable due to
increases in fair value of investments held in the Portage Funds
and Wealthsimple; as well, it excluded a charge of $100 million
related to the remeasurement of the put right liability held by
certain of the non-controlling interests in Wealthsimple to fair
value which has been included in Adjustments. The increase in fair
value of the Corporation's investment, including its investment
held through Power Financial, in Portage I, Portage II, Portage
III, Koho and Wealthsimple was $609 million in the six-month period
ended June 30, 2021, compared with an increase of $1 million in
fair value in the corresponding period in 2020.
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[3]
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The second quarter
includes realized gains on disposals by Sagard 3 of private equity
investments.
|
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[4]
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Mainly comprised of
gains (losses) realized on the disposal of investments and
dividends received. In the first and second quarters of 2021, the
Corporation recognized realized gains on the disposal of
investments in Power Pacific of $229 million and $54 million,
respectively.
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[5]
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In the second quarter
of 2021, the Corporation recorded a net gain of $153 million
related to its investment in Lion which is comprised of i) a gain
of $62 million related to the effect of the change in ownership as
a result of the completion of the merger transaction between Lion
and Northern Genesis, ii) a gain of $147 million related to
the revaluation of call rights held by Power Sustainable, a
portion of which were exercised during the quarter, and iii) an
expense of $56 million related to the increase in amounts payable
for long term incentive plans and deferred taxes. The Corporation
also recorded a reversal of a previously recognized impairment on
its investment in GP Strategies of $33 million. Includes the
Corporation's share of earnings (losses) of IntegraMed (up to the
date of deconsolidation on May 20, 2020), LMPG, Lion, a jointly
controlled corporation, and associates.
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[6]
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Other consists mainly
of foreign exchange gains or losses and interest on cash and cash
equivalents.
|
Adjustments (excluded from Adjusted Net Earnings)
|
|
|
|
|
|
(unaudited)
(in millions of dollars)
|
|
Three months
ended June 30
|
|
Six months
ended June 30
|
|
2021
|
2020
|
2021
|
2020
|
|
Share of Lifeco's
adjustments:
|
|
|
|
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Actuarial assumption changes and other
management actions
|
25
|
82
|
29
|
47
|
|
Market-related impacts
on liabilities
|
(13)
|
23
|
(29)
|
(77)
|
|
Transaction costs
related to the acquisitions of
Personal Capital and MassMutual
|
(16)
|
−
|
(17)
|
−
|
|
Tax legislative
changes impact on liabilities
|
(14)
|
−
|
(14)
|
−
|
|
Restructuring and
integration charges
|
(10)
|
−
|
(18)
|
−
|
|
(28)
|
105
|
(49)
|
(30)
|
|
Effect of
consolidation [1][2]
|
3
|
−
|
(8)
|
−
|
|
(25)
|
105
|
(57)
|
(30)
|
|
Share of IGM's
adjustments:
|
|
|
|
|
|
Effect of
consolidation [1][2]
|
(1)
|
4
|
(99)
|
(1)
|
|
Share of GBL's
adjustments [3]:
|
|
|
|
|
|
Other
charges
|
−
|
(3)
|
−
|
(4)
|
|
|
|
|
|
|
Alternative and other
investments
|
−
|
27
|
(100)
|
27
|
|
Non-controlling
interest of Power Financial
|
−
|
−
|
−
|
(4)
|
|
(26)
|
133
|
(256)
|
(12)
|
|
[1]
|
The Effect of
consolidation reflects the elimination of intercompany transactions
and the application of the Corporation's accounting method for
investments under common control to the Adjustments reported by
Lifeco and IGM, which includes an allocation of the Adjustments
related to the fintech portfolio based on their respective
interest. Includes IGM's share of Lifeco's Adjustments for the
impact of actuarial assumption changes and management actions and
market impact on insurance contract liabilities, in accordance with
the Corporation's definition of Adjusted net
earnings.
|
|
[2]
|
On May 3, 2021,
Wealthsimple announced that it had signed a $750 million equity
offering. As a result, in the first quarter of 2021, the fair value
increase in Wealthsimple resulted in a charge related to the
remeasurement of the put right liability of certain of the
non-controlling interests in Wealthsimple to fair value. The
Corporation's share of the charge on the remeasurement of the put
right liability was $208 million and is included as an Adjustment.
The charge has been reflected in the Adjustments of the alternative
asset investment platforms, Lifeco and IGM, based on their
respective interest in the Effect of consolidation, of $100
million, $11 million and $97 million, respectively.
|
|
[3]
|
As previously
reported by Pargesa; GBL does not identify Adjustments.
|
Net Asset Value
|
Net asset value
represents management's estimate of the fair value of the
participating shareholders' equity of the Corporation. Net asset
value is the fair value of the assets of the combined Power
Financial and Power Corporation's non-consolidated balance sheet
less their net debt and preferred shares. The Corporation's net
asset value per share is presented on a look-through
basis.
|
The Corporation's net asset value per share was $51.60 at June 30,
2021, compared with $45.94 at
March 31, 2021, representing an
increase of 12.3%.
|
June 30,
2021 (in millions of dollars, except per share
amounts)
|
Combined
non–consolidated
balance sheet
|
Fair value
adjustment
|
Net asset
value
|
|
Assets
|
|
|
|
|
Investments
|
|
|
|
|
Power
Financial
|
|
|
|
|
Lifeco
|
14,860
|
7,978
|
22,838
|
|
IGM
|
3,209
|
3,265
|
6,474
|
|
GBL
|
4,407
|
(1,307)
|
3,100
|
|
Alternative and other
investments
|
|
|
|
|
Sagard
[1][2]
|
1,105
|
685
|
1,790
|
|
Power Sustainable
[1]
|
1,375
|
363
|
1,738
|
|
Other
|
|
|
|
|
Standalone businesses
[3]
|
752
|
1,252
|
2,004
|
|
Other
|
267
|
19
|
286
|
|
China AMC
[4]
|
705
|
−
|
705
|
|
Cash and cash
equivalents
|
1,370
|
−
|
1,370
|
|
Other
assets
|
349
|
−
|
349
|
|
Total
assets
|
28,399
|
12,255
|
40,654
|
|
Liabilities and
non-participating shares
|
|
|
|
|
Debentures and other
debt instruments
|
927
|
−
|
927
|
|
Other liabilities
[5]
|
1,037
|
−
|
1,037
|
|
Non-participating
shares and perpetual preferred shares
|
3,785
|
−
|
3,785
|
|
Total liabilities and
non-participating shares
|
5,749
|
−
|
5,749
|
|
Net
value
|
|
|
|
|
Participating
shareholders' equity / Net asset value
|
22,650
|
12,255
|
34,905
|
|
Per
share
|
33.48
|
|
51.60
|
|
[1]
|
Includes the
management companies of the investment funds, which are presented
at their carrying value in accordance with IFRS and are primarily
composed of cash and net carried interest receivable.
|
|
[2]
|
Includes the
Corporation's investments in Portage I, Portage II and
Wealthsimple, held by Power Financial.
|
|
[3]
|
An additional
deferred tax liability of $177 million has been included in the net
asset value with respect to the investments in standalone
businesses at fair value, without taking into account possible tax
reduction strategies. The Corporation has tax attributes (not
otherwise recognized on the balance sheet) that could be available
to minimize the tax if the Corporation were to dispose of its
interests held in the standalone businesses.
|
|
[4]
|
Valued at carrying
value in accordance with IFRS.
|
|
[5]
|
In accordance with
IAS 12, Income Taxes, no deferred tax liability is
recognized with respect to temporary differences associated with
investments in subsidiaries and jointly controlled corporations as
the Corporation is able to control the timing of the reversal of
the temporary differences and it is probable that the temporary
differences will not reverse in the foreseeable future. If the
Corporation were to dispose of an investment in a subsidiary or a
jointly controlled corporation, income taxes payable on such
disposition would be minimized through careful and prudent tax
planning and structuring, as well as with the use of available tax
attributes not otherwise recognized on the balance sheet, including
tax losses, tax basis, safe income and foreign tax surplus
associated with the subsidiary or jointly controlled
corporation.
|
NON-IFRS FINANCIAL MEASURES AND PRESENTATION
The Corporation completed the Reorganization and announced a
change in its strategy in early 2020. Subsequent to the
Reorganization, the corporate operations of both the Corporation
and Power Financial are being managed together and have been
presented on a combined basis throughout the "Results of the
Corporation" section of the MD&A. The investment activities of
Power Financial are primarily interests held in fintech
investments, all of which are managed by Sagard, and have been presented combined with
the investing activities of Sagard, which represents the management and
oversight structure.
Net earnings attributable to participating shareholders are
comprised of:
- Adjusted net earnings attributable to participating
shareholders; and
- Adjustments, which include the after-tax impact of any item
that in management's judgment, including those identified by
management of its publicly traded operating companies, would make
the period-over-period comparison of results from operations less
meaningful. Adjustments includes the Corporation's share of
Lifeco's impact of actuarial assumption changes and management
actions, direct equity and interest rate market impacts on
insurance contract liabilities net of hedging, as well as items
that management believes are not indicative of the underlying
business results which include those identified 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 it reflects management's view of the operating
performance of the Corporation and its subsidiaries and excludes
items that are not considered to be part of the underlying business
results.
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 controlling interests held through Power Financial in
Lifeco, IGM, Portage I, Portage II, Portage III and Wealthsimple,
as well as other subsidiaries and investment funds consolidated by
Power Corporation, 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 consolidated operating companies.
Net asset value is commonly used by holding companies to assess
their value. Net asset value is the fair value of Power
Corporation's non–consolidated assets less its net debt and
preferred shares. The investments held in public entities
(including Lifeco, IGM and GBL) are measured at their market value
and investments in private entities and investment funds are
measured at management's estimate of fair value. This measure
presents the fair value of the net assets of the holding company to
management and investors and assists the reader in determining or
comparing the fair value of investments held by the company or its
overall fair value.
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' current expectations as
disclosed in their respective MD&A. 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, the expected impact of the COVID-19 pandemic on
the Corporation and its subsidiaries' operations, results and
dividends, as well as the outlook for North American and
international economies for the current fiscal year and subsequent
periods, the intended effects of the Reorganization (as defined
herein), the Corporation's NCIB (as defined herein), management of
standalone businesses to realize value over time, fundraising
activities by investment platforms, timing of the proposed GP
Strategies transaction (as defined herein), and the Corporation's
subsidiaries' disclosed expectations, including the acquisition of
the Prudential full-service retirement business (as defined
herein), ClaimSecure Inc., Ark Life (as defined herein) and related
synergies, impacts, and timing thereof as well as a result of the
acquisition of the retirement services business of MassMutual,
Personal Capital, Northleaf and related synergies, impacts and
timing thereof. 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, man-made disasters, terrorist
attacks, wars and other conflicts, or an outbreak of a public
health pandemic or other public health crises (such as COVID-19),
the Corporation's and its subsidiaries' ability to complete
strategic transactions, integrate acquisitions and implement other
growth strategies, the Corporation's and its subsidiaries' success
in anticipating and managing the foregoing factors and with respect
to forward-looking statements of the Corporation's subsidiaries
disclosed in this news release, the factors identified by such
subsidiaries in their respective MD&A.
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 the availability of
cash to complete purchases under the NCIB, that the list of factors
in the previous paragraph, collectively, are not expected to have a
material impact on the Corporation and its subsidiaries and with
respect to forward-looking statements of the Corporation's
subsidiaries disclosed in this news release, the risks identified
by such subsidiaries in their respective MD&A and Annual
Information Form most recently filed with the securities regulatory
authorities in Canada and
available at www.sedar.com. 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
annual, and subsequently filed interim, MD&A and Annual
Information Form, filed with the securities regulatory authorities
in Canada and available at
www.sedar.com.
SOURCE Power Corporation of Canada