Readers are referred to the sections "Non-IFRS Financial
Measures and Presentation" and "Forward-Looking Statements" at the
end of this release.
MONTRÉAL, Nov. 8, 2018 /CNW
Telbec/ - Power Corporation of Canada (TSX: POW) today reported earnings
results for the three and nine months ended September 30, 2018.
Consolidated Results of Power Corporation
For the period ended September
30
Highlights
- The Corporation completed the disposal of assets of La Presse,
ltée (La Presse) to a not-for-profit organization.
- Early redemption of 7.57% debentures due April 22, 2019, refinanced with 4.455% debentures
due in 2048, reducing annual financing expense by $8 million.
Third Quarter
Net earnings attributable to participating shareholders were
$186 million or $0.40 per share, compared with $470 million
or $1.02 per share in 2017. Power
Financial Corporation's (Power Financial) contribution to earnings
was $72 million higher than the
corresponding period, however, net earnings were adversely impacted
by lower income from investments and the loss resulting from the La
Presse transaction. The prior year included a gain of $174 million on the Corporation's investment in
China Asset Management Co., Ltd.
(China AMC).
Adjusted net earnings attributable to participating shareholders
(a non-IFRS financial measure) were $283 million or
$0.61 per share, compared with
$471 million or $1.02 per share in 2017.
Other items, not included in adjusted net earnings, resulted in
a charge of $97 million in the third
quarter of 2018 consisting of:
- the Corporation's share of Great-West Lifeco's (Lifeco)
restructuring charges related to the integration of U.K. financial
services provider Retirement Advantage as well as the pending sale
of a heritage block of policies;
- the Corporation's share of IGM Financial Inc.'s (IGM)
restructuring and other charges resulting from the re-engineering
of North American equity offerings as well as a premium on the
early redemption of IGM's debentures; and
- the loss realized by Power Corporation as a result of the
disposal of assets of La Presse and the premium paid on the early
redemption of its debentures.
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
|
341
|
377
|
304
|
305
|
· Sagard
Investment Funds, China AMC and Other investments
|
(28)
|
(28)
|
219
|
219
|
· Corporate
and Other subsidiaries
|
(127)
|
(66)
|
(53)
|
(53)
|
|
186
|
283
|
470
|
471
|
Nine Months
Net earnings attributable to participating shareholders were
$1,058 million or $2.28 per share, compared with $1,078 million or $2.33 per share in 2017.
Adjusted net earnings attributable to participating shareholders
were $1,155 million or $2.49 per share, compared with $1,141 million or $2.46 per share in 2017.
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
|
1,157
|
1,193
|
978
|
1,041
|
· Sagard
Investment Funds, China AMC and Other investments
|
184
|
184
|
306
|
306
|
· Corporate
and Other subsidiaries
|
(283)
|
(222)
|
(206)
|
(206)
|
|
1,058
|
1,155
|
1,078
|
1,141
|
Power Financial Corporation
For the period ended September
30
Third Quarter
Net earnings attributable to common
shareholders were $523 million or
$0.74 per share, compared with
$463 million or $0.65 per share
in 2017.
Adjusted net earnings attributable to common shareholders were
$578 million or $0.81 per share, compared with $465 million or $0.65 per share in 2017.
Other items, not included in adjusted net earnings, resulted in
a charge of $55 million and consisted
of Power Financial's share of Lifeco and IGM's other items as
indicated above.
Nine Months
Net earnings attributable to common shareholders were $1,767 million or $2.48 per share, compared with $1,492 million or $2.09 per share in 2017.
Adjusted net earnings attributable to common shareholders were
$1,822 million or $2.55 per share, compared with $1,588 million or $2.22 per share in 2017.
Sagard Investment Funds, China AMC and Other Investments
For the period ended September 30
(For additional information, refer to the table further in this
release)
Third Quarter
Loss from investments was $28
million, compared with income of $219
million in 2017. Third quarter income from investments in
2018 includes a loss from Sagard China related to Chinese equity
market declines. Income from investments in the third quarter of
2017 included a gain of $174 million
on China AMC.
Nine Months
Income from investments was $184
million, compared with $306
million in 2017. Income from investments in the nine-month
period ended September 30, 2018 also
included gains on the disposal by Sagard Europe of two investments
in the first quarter of 2018. Income from investments in 2017 also
included a gain on the disposal of the Corporation's interest in an
investment fund in the second quarter of 2017.
Dividends on Power Corporation Participating Shares
The Board of Directors today declared a quarterly dividend of
38.20 cents per share on the Participating Preferred Shares
and the Subordinate Voting Shares of the Corporation, payable
December 31, 2018 to shareholders of
record December 10, 2018.
Dividends on Power Corporation Non-Participating Preferred
Shares
The Board of Directors also declared quarterly dividends on the
Corporation's preferred shares, payable January 15, 2019 to
shareholders of record December 24,
2018:
|
|
|
|
|
|
Series
|
Stock
Symbol
|
Amount
|
Series
|
Stock
Symbol
|
Amount
|
1986
Series
|
POW.PR.F
|
Floating rate 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 September 1 to November 30, 2018.
|
About Power Corporation
Power Corporation of Canada is
a diversified international management and holding company with
interests in companies in the financial services, asset management,
sustainable and renewable energy, and other business sectors in
North America, Europe and Asia. To learn more, visit
www.PowerCorporation.com.
At September 30, 2018, Power
Corporation held the following economic interests:
· 65.5% –
Power Financial (TSX: PWF)
|
www.powerfinancial.com
|
· 100% –
Sagard SAS (Europe) [1]
|
www.sagard.com
|
· 100% –
Sagard Holdings
|
www.sagardholdings.com
|
· 100% –
Sagard China
|
www.sagardchina.com
|
· 100% – Power
Energy Corporation
|
|
· 27.8% –
China Asset Management Co., Ltd. [2]
|
www.chinaamc.com
|
|
|
[1]
|
Refer to the
Corporation's most recent MD&A for interest in the Sagard
Europe Funds.
|
[2]
|
IGM and the
Corporation each hold a 13.9% interest in China AMC.
|
Earnings
Summary
|
|
|
(unaudited)
|
Three months
ended
|
Nine months
ended
|
(in millions of
Canadian dollars, except per share amounts)
|
September
30,
|
September
30,
|
|
2018
|
2017
|
2018
|
2017
|
Adjusted net
earnings
|
|
|
|
|
Power Financial
[1]
|
377
|
305
|
1,193
|
1,041
|
Other subsidiaries
[2]
|
(17)
|
(10)
|
(72)
|
(65)
|
|
360
|
295
|
1,
121
|
976
|
Corporate
operations
|
|
|
|
|
Income – Sagard
Investment Funds, China AMC and Other Investments
[3]
|
(28)
|
219
|
184
|
306
|
Operating and other
expenses
|
(36)
|
(30)
|
(111)
|
(102)
|
Dividends on
non-participating shares
|
(13)
|
(13)
|
(39)
|
(39)
|
Adjusted net
earnings [4]
|
283
|
471
|
1,155
|
1,141
|
Other items – see
below
|
(97)
|
(1)
|
(97)
|
(63)
|
Net earnings
[4]
|
186
|
470
|
1,058
|
1,078
|
Earnings per share
– Basic [4]
|
|
|
|
|
Adjusted net
earnings
|
0.
61
|
1.02
|
2.49
|
2.46
|
Other items
|
(0.21)
|
—
|
(0.21)
|
(0.13)
|
Net
earnings
|
0.40
|
1.02
|
2.28
|
2.33
|
|
|
[1]
|
The contributions
from Lifeco and IGM include an allocation of the results of
Wealthsimple Financial Corp. and Portag3 Ventures Limited
Partnership, based on their respective interest. Contributions from
IGM and Pargesa reflect adjustments in accordance with IAS
39.
|
[2]
|
Comprised of: Power
Energy Corporation, Square Victoria Communications Group Inc., and
controlled portfolio investments IntegraMed America, Inc.
(IntegraMed) and Vein Clinics of America, Inc. (Vein Clinics). Vein
Clinics was disposed of on December 29, 2017 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)
|
Three months
ended
|
Nine months
ended
|
(in millions of
Canadian dollars)
|
September
30,
|
September
30,
|
|
2018
|
2017
|
2018
|
2017
|
Sagard Investment
Funds [1]
|
|
|
|
|
Sagard
Europe
|
(3)
|
6
|
163
|
1
|
Sagard Holdings
[2, 3]
|
7
|
7
|
(27)
|
5
|
Sagard China
[4]
|
(35)
|
21
|
13
|
39
|
China AMC
[5]
|
6
|
177
|
22
|
177
|
Other
Investments
|
|
|
|
|
Investment and hedge
funds, and other [6]
|
(3)
|
8
|
13
|
84
|
|
(28)
|
219
|
184
|
306
|
|
[1]
|
Income from
investments for the Sagard Investment Funds is presented net of
expenses of their separate dedicated teams.
|
[2]
|
Excludes the
Corporation's share of the results of IntegraMed and Vein Clinics,
presented in adjusted net earnings as Other
subsidiaries.
|
[3]
|
Includes share of
earnings (loss) from investments in a jointly controlled
corporation and associates.
|
[4]
|
Sagard China realized
losses of $34 million on the disposal of investments in the third
quarter of 2018.
|
[5]
|
Includes 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 in the third quarter of
2017.
|
[6]
|
Consists mainly of
foreign exchange gains or losses and interest on cash and cash
equivalents.
|
Other Items (Share
of Power Financial's)
|
|
|
|
(unaudited)
|
Three months
ended
|
Nine months
ended
|
(in millions of
Canadian dollars)
|
September
30,
|
September
30,
|
|
2018
|
2017
|
2018
|
2017
|
Power Financial's
share of Other items:
|
|
|
|
|
Lifeco
|
|
|
|
|
Restructuring
charges
|
(25)
|
—
|
(25)
|
(69)
|
IGM
|
|
|
|
|
Restructuring and
other charges
|
(7)
|
—
|
(7)
|
(6)
|
Premium paid on early
redemption of debentures
|
(3)
|
—
|
(3)
|
—
|
Pension
plan
|
—
|
—
|
—
|
15
|
Share of Lifeco's
Other items
|
(1)
|
—
|
(1)
|
(3)
|
|
(11)
|
—
|
(11)
|
6
|
Pargesa Holding
SA
|
|
|
|
|
Other income
(charge)
|
—
|
(1)
|
—
|
—
|
Corporate
operations
|
|
|
|
|
Divestiture of
La Presse operations [1]
|
(54)
|
—
|
(54)
|
—
|
Premium paid
on early redemption of debentures
|
(7)
|
—
|
(7)
|
—
|
|
(61)
|
—
|
(61)
|
—
|
|
(97)
|
(1)
|
(97)
|
(63)
|
|
[1]
|
Includes the
Corporation's financial contribution of $50 million.
|
Sagard Investment
Funds
|
|
|
(unaudited)
|
|
(in millions of
Canadian dollars)
|
September 30,
2018
|
December 31,
2017
|
|
Sagard
Europe
|
Sagard
Holdings
|
Sagard
China
|
Total
|
Sagard
Europe
|
Sagard
Holdings
|
Sagard
China
|
Total
|
Cost
|
293
|
363
|
498
|
1,154
|
250
|
402
|
570
|
1,222
|
Unrealized gain
(loss)
|
110
|
—
|
(3)
|
107
|
249
|
(5)
|
88
|
332
|
Fair value of
non-controlled
portfolio
investments
|
403
|
363
|
495
|
1,261
|
499
|
397
|
658
|
1,554
|
Cash
|
—
|
200
|
211
|
411
|
—
|
219
|
126
|
345
|
Fair value of
controlled portfolio
investments and
other
|
—
|
218
|
(3)
|
215
|
—
|
208
|
—
|
208
|
Total fair
value
|
403
|
781
|
703
|
1,887
|
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.
The Corporation also uses a non-consolidated basis of
presentation to present and analyze its results whereby the
Corporation's interests in Power Financial and other subsidiaries
are accounted for using the equity method. Presentation on a
non-consolidated basis is a non-IFRS presentation. However, it is
useful to the reader as it presents the holding company's (parent)
results separately from the results of its operating
subsidiaries.
Eligible Dividends
For purposes of the Income Tax Act (Canada) and any similar provincial
legislation, all of the above dividends on the Corporation's
preferred shares (including the Participating Preferred Shares) and
Subordinate Voting Shares are eligible dividends.
Forward-Looking Statements
Certain statements in this news release, other than statements
of historical fact, are forward-looking statements based on certain
assumptions and reflect the Corporation's current expectations, or
with respect to disclosure regarding the Corporation's public
subsidiaries, reflect such subsidiaries' disclosed current
expectations. Forward-looking statements are provided for the
purposes of assisting the reader in understanding the Corporation's
financial performance, financial position and cash flows as at and
for the periods ended on certain dates and to present information
about management's current expectations and plans relating to the
future and the reader is cautioned that such statements may not be
appropriate for other purposes. These statements may include,
without limitation, statements regarding the operations, business,
financial condition, expected financial results, performance,
prospects, opportunities, priorities, targets, goals, ongoing
objectives, strategies and outlook of the Corporation and its
subsidiaries, as well as the outlook for North American and
international economies for the current fiscal year and subsequent
periods. Forward-looking statements include statements that are
predictive in nature, depend upon or refer to future events or
conditions, or include words such as "expects", "anticipates",
"plans", "believes", "estimates", "seeks", "intends", "targets",
"projects", "forecasts" or negative versions thereof and other
similar expressions, or future or conditional verbs such as "may",
"will", "should", "would" and "could".
By its nature, this information is subject to inherent risks and
uncertainties that may be general or specific and which give rise
to the possibility that expectations, forecasts, predictions,
projections or conclusions will not prove to be accurate, that
assumptions may not be correct and that objectives, strategic goals
and priorities will not be achieved. A variety of factors, many of
which are beyond the Corporation's and its subsidiaries' control,
affect the operations, performance and results of the Corporation
and its subsidiaries and their businesses, and could cause actual
results to differ materially from current expectations of estimated
or anticipated events or results. These factors include, but are
not limited to: the impact or unanticipated impact of general
economic, political and market factors in North America and internationally,
fluctuations in interest rates, inflation and foreign exchange
rates, monetary policies, business investment and the health of
local and global equity and capital markets, management of market
liquidity and funding risks, risks related to investments in
private companies and illiquid securities, risks associated with
financial instruments, changes in accounting policies and methods
used to report financial condition (including uncertainties
associated with significant judgments, estimates and assumptions),
the effect of applying future accounting changes, business
competition, operational and reputational risks, technological
changes, cybersecurity risks, changes in government regulation and
legislation, changes in tax laws, unexpected judicial or regulatory
proceedings, catastrophic events, the Corporation's and its
subsidiaries' ability to complete strategic transactions, integrate
acquisitions and implement other growth strategies, and the
Corporation's and its subsidiaries' success in anticipating and
managing the foregoing factors.
The reader is cautioned to consider these and other factors,
uncertainties and potential events carefully and not to put undue
reliance on forward-looking statements. Information contained in
forward-looking statements is based upon certain material
assumptions that were applied in drawing a conclusion or making a
forecast or projection, including management's perceptions of
historical trends, current conditions and expected future
developments, as well as other considerations that are believed to
be appropriate in the circumstances, including that the list of
factors in the previous paragraph, collectively, are not expected
to have a material impact on the Corporation and its subsidiaries.
While the Corporation considers these assumptions to be reasonable
based on information currently available to management, they may
prove to be incorrect.
Other than as specifically required by applicable Canadian law,
the Corporation undertakes no obligation to update any
forward-looking statement to reflect events or circumstances after
the date on which such statement is made, or to reflect the
occurrence of unanticipated events, whether as a result of new
information, future events or results, or otherwise.
Additional information about the risks and uncertainties of the
Corporation's business and material factors or assumptions on which
information contained in forward-looking statements is based is
provided in its disclosure materials, including its most recent
Management's Discussion and Analysis and Annual Information Form,
filed with the securities regulatory authorities in Canada and available at www.sedar.com.
SOURCE Power Corporation of Canada