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, May 13, 2021 /CNW
Telbec/ - Power Corporation of Canada (Power Corporation or the Corporation)
(TSX: POW) today reported earnings results for the three
months ended March 31, 2021.
Power Corporation
Consolidated results for the
period ended March 31, 2021
HIGHLIGHTS
- The Corporation's net asset value (NAV) per share
[1] was $45.94 at
March 31, 2021, compared with
$41.27 at December 31, 2020, an increase of 11.3%.
- The Corporation reported net earnings per share of $0.82 for the first quarter of 2021, compared to
net earnings per share of $0.36 for
the first quarter of 2020. Adjusted net earnings per
share[1] was $1.16,
compared to $0.62 per share in
2020.
- Great-West Lifeco Inc.'s (Lifeco) assets under administration
were $2.1 trillion at March 31, 2021, an increase of 5% from
December 31, 2020.
- IGM Financial Inc. (IGM) reported record assets under
management and advisement of $248.5
billion, up 3.6% in the quarter.
- IGM's net earnings at March 31,
2021 were $202.2 million or
$0.85 per share, compared with
$160.9 million or $0.68 per share in the first quarter of 2020.
This represents a 25.0% increase in earnings per share and is the
highest first quarter result in IGM's history.
- Groupe Bruxelles Lambert's (GBL) NAV was €21.1 billion at
March 31, 2021, compared with €20.5
billion at December 31, 2020, an
increase of 2.9%.
- Wealthsimple Financial Corp. (Wealthsimple) announced a
$750 million financing round on
May 3, 2021, which values the Power
group's investment at $2.6 billion
compared to invested capital of $315
million. The Power group will receive proceeds of
$500 million from a secondary
offering and will retain an interest of $2.1
billion in Wealthsimple.
- Sagard Credit Partners II completed an additional closing in
April 2021, increasing the fund size
to US$909 million.
- Launch of third fintech fund, Portage Ventures III LP, with an
initial closing of US$148
million.
- Power Sustainable Capital Inc. (Power Sustainable) launched the
Power Sustainable Energy Infrastructure Partnership, a $1 billion investment platform dedicated to the
North American renewable energy sector, in January 2021.
- Lion began trading on the Toronto Stock Exchange (TSX: LEV) and
the New York Stock Exchange (NYSE: LEV) on May 7, 2021. Lion's market capitalization on
May 12, 2021 was US$2.8 billion, which values the Corporation's
investment at $1.2 billion.
|
|
[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 $45.94 at March 31,
2021, compared with $41.27 at
December 31, 2020, representing an
increase of 11.3%.
|
(in millions of
dollars, except per share amounts)
|
March 31,
2021
|
December 31,
2020
|
Variation
%
|
Publicly
Traded
Operating
Companies
|
Lifeco
|
20,741
|
18,825
|
10
|
IGM
|
5,666
|
5,105
|
11
|
GBL
|
2,907
|
2,870
|
1
|
|
|
29,314
|
26,800
|
9
|
|
|
|
|
|
Alternative
Asset
Investment
Platforms
|
Sagard
Holdings [1]
|
1,958
|
1,298
|
51
|
Power Sustainable
[1]
|
1,581
|
1,872
|
(16)
|
|
3,539
|
3,170
|
12
|
|
|
|
|
|
Other
|
China AMC
[2]
|
690
|
715
|
(3)
|
Standalone businesses
[3]
|
1,369
|
1,351
|
1
|
Other assets and
investments
|
618
|
548
|
13
|
Cash and cash
equivalents
|
1,315
|
1,226
|
7
|
|
Gross asset
value
|
36,845
|
33,810
|
9
|
|
Liabilities and
preferred shares
|
(5,758)
|
(5,859)
|
2
|
|
Net asset
value
|
31,087
|
27,951
|
11
|
|
Shares outstanding
(millions)
|
676.7
|
677.2
|
|
|
Net asset value
per share
|
45.94
|
41.27
|
11
|
|
|
[1]
|
Includes the
management companies of the investment funds at their carrying
value.
|
[2]
|
China Asset
Management Co., Ltd. (China AMC).
|
[3]
|
Includes Lion,
Lumenpulse Group Inc. (Lumenpulse), Peak Achievement Athletics Inc.
(Peak) and GP Strategies.
|
Power Corporation's Ownership in Publicly Traded
Operating Companies
|
|
Shares
held [1]
(in millions)
|
Share
price
|
|
Ownership
[1]
(%)
|
March 31,
2021
|
December 31,
2020
|
Lifeco
|
66.8
|
620.3
|
$33.44
|
$30.35
|
IGM
|
62.1
|
147.9
|
$38.30
|
$34.51
|
GBL
[2]
|
14.1
|
22.8
|
€88.26
|
€82.52
|
|
[1] As at March 31,
2021.
|
[2] Held through
Parjointco.
|
FIRST QUARTER
Net earnings attributable to participating shareholders were
$556 million or $0.82 per share, compared with $200 million or $0.36 per share in 2020.
Adjusted net earnings attributable to participating shareholders
[1] were $786 million or
$1.16 per share, compared with
$345 million or $0.62 per share in 2020.
Contributions to Power Corporation's Earnings per
Share
|
|
2021
|
|
2020 [2]
|
(in dollars per Power
Corporation share)
|
Net
Earnings
|
Adjusted Net
Earnings
|
Net
Earnings
|
Adjusted Net
Earnings
|
Lifeco
|
0.70
|
0.73
|
0.27
|
0.52
|
IGM
|
0.18
|
0.18
|
0.15
|
0.15
|
GBL [3]
|
0.08
|
0.08
|
0.01
|
0.01
|
Effect of
consolidation [4]
|
(0.18)
|
(0.02)
|
0.05
|
0.06
|
|
0.78
|
0.97
|
0.48
|
0.74
|
Alternative and other
investments [5][6]
|
0.23
|
0.38
|
0.12
|
0.12
|
China
AMC
|
0.02
|
0.02
|
0.02
|
0.02
|
Standalone businesses
[6]
|
−
|
−
|
(0.08)
|
(0.08)
|
|
1.03
|
1.37
|
0.54
|
0.80
|
Corporate operations
and Other [7]
|
(0.21)
|
(0.21)
|
(0.18)
|
(0.18)
|
|
0.82
|
1.16
|
0.36
|
0.62
|
Average shares
outstanding (in millions)
|
|
677.1
|
|
560.2
|
Lifeco: contribution to net earnings per share increased
by 159%; contribution to adjusted net earnings per share increased
by 40%.
IGM: contribution to net earnings and adjusted net
earnings per share increased by 20%.
GBL: contribution to net earnings per share of
$0.08, compared with $0.01 per share in the corresponding period in
2020.
Alternative and other investments: net earnings per share
includes realized gains of $0.34 per
share on the Power Pacific portfolio, a contribution from Sagard
Holdings of $0.04 to adjusted net
earnings per share, and a charge of $0.15 per share related to the remeasurement of
the put right liability of the non-controlling interests in
Wealthsimple due to the increase in the fair value of
Wealthsimple.
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 66% of the
targeted reduction.
Adjustments to net earnings, which were excluded from adjusted
net earnings, were a negative net impact of $230 million or $0.34 per share in the first quarter of 2021.
These mainly related to the Corporation's 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. 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 to the net earnings in 2020,
which were excluded from adjusted net earnings, were a negative net
impact of $145 million or
$0.26 per share, mainly related to
the Corporation's share of Lifeco's adjustments, which consisted of
market-related impacts as well as actuarial assumption changes and
management actions.
[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]
|
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.
|
[3]
|
Adjustments in 2020
are as previously reported by Pargesa.
|
[4]
|
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
an allocation of the results of the fintech portfolio, including
Wealthsimple, Koho, Portage I and Portage II, to the contributions
from Lifeco and IGM based on their respective interest; and iii)
adjustments in accordance with IAS 39 for IGM and GBL.
|
[5]
|
Alternative asset
investment platforms includes earnings (losses) from investment
platforms including controlled and consolidated subsidiaries and
other investments.
|
[6]
|
Presented in
Alternative and other investments in the Non-Consolidated
Statements of Earnings section of the Corporation's most recent
MD&A.
|
[7]
|
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 March 31, 2021
The information below is derived from Lifeco and IGM's first
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 first quarter press release. Further information on GBL's
results is available on its website at www.gbl.be.
GREAT-WEST LIFECO INC.
FIRST QUARTER
Net earnings attributable to common shareholders were
$707 million or $0.76 per share, compared with $342 million or $0.37 per share in 2020.
Adjusted net earnings [1] attributable to common
shareholders were $739 million or
$0.80 per share, compared with
$543 million or $0.59 per share in 2020. Lifeco acquired the
retirement services business of Massachusetts Mutual Life Insurance
Company (MassMutual) on December 31,
2020, which contributed $48
million (US$38 million) to
adjusted net earning in the first quarter.
Adjustments in the first quarter of 2021, excluded from adjusted
net earnings, were a net negative impact to earnings of
$32 million, compared with a net
negative impact to earnings of $201
million in 2020. Lifeco's adjustments in 2021 consisted of a
net positive impact of actuarial assumption changes and other
management actions, offset by a negative market-related impact on
liabilities and restructuring and integration charges related to
the acquisitions of Personal Capital Corporation (Personal Capital)
and MassMutual.
[1]
|
Described as "base
earnings" by Lifeco. For additional information, please refer to
the Non-IFRS Financial Measures and Presentation section later in
this news release.
|
IGM FINANCIAL INC.
FIRST QUARTER
Net earnings available to common shareholders were $202.2 million or $0.85 per share, compared with $160.9 million or $0.68 per share in 2020.
Assets under management and advisement at March 31, 2021 were $248.5
billion, an increase of 3.6% in the quarter and 47.6% from
the prior year, including $30.3
billion in net business acquisitions in 2020.
GROUPE BRUXELLES
LAMBERT
FIRST QUARTER
GBL reported net earnings of €225 million, compared with net
earnings of €15 million in 2020.
GBL reported a net asset value at March
31, 2021 of €21,090 million, representing €130.70 per share,
compared with €20,498 million or €127.03 per share at
December 31, 2020.
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 $24 million in the first
quarter of 2021.
Alternative and Other Investments
Results for the
quarter ended March 31, 2021
Alternative and other investments are comprised of the results
of the Corporation's alternative asset investment platforms, Sagard
Holdings 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.
FIRST QUARTER
Income from the Corporation's alternative and other investments,
including standalone businesses, was $156
million, compared with $25
million in the corresponding period in 2020. Adjusted net
earnings from alternative and other investments was $256 million, compared with $25 million in the comparative period in
2020.
Adjusted net earnings in the first quarter include a net
contribution of $29 million from
Sagard Holdings, and a net contribution of $206 million from Power Sustainable primarily due
to the recognition of realized gains of $229
million on the disposal of investments in Power Pacific. 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 has been
included in the Adjustments.
On May 3, 2021, Wealthsimple
announced that it had signed a $750
million equity offering. The Corporation currently holds a
23% equity interest in Wealthsimple, on a fully diluted basis. The
Corporation will receive proceeds of $187
million ($164 million
after-tax) from the secondary offering and will retain a 16% equity
interest in Wealthsimple, on a fully diluted basis, valued at
$796 million.
Subsequent to the first quarter, Lion completed its business
combination and on May 7, 2021 began
trading as "LEV" on the TSX and the NYSE. At the close of business
on May 12, 2021, the market
capitalization of Lion was US$2.8
billion. The fair value of the Corporation's investment in
Lion on May 12, 2021 was $1.2 billion, including $150 million related to the fair value of its
call rights, an increase in the Corporation's net asset value of
$351 million from March 31, 2021.
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 impact of the COVID-19 pandemic is unknown at
this time. While the conditions have become more stable,
governments and central banks in the jurisdictions in which the
Corporation and its operating subsidiaries operate have implemented
and extended many of the measures introduced earlier in 2020 to
deal with the economic impacts of the COVID-19 pandemic; however,
the depth and length of the recession, rollout and efficacy of
vaccines, and durability and effectiveness of government and
central bank interventions are unknown. 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
Participating Preferred Shares and the Subordinate Voting Shares of
the Corporation, payable July 30,
2021 to shareholders of record June
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 July
15, 2021 to shareholders of record June 23, 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 March 1 to May 31, 2021.
|
Investor Information
Access to
Quarterly
Results Materials:
|
|
Quarterly Earnings
Conference Call:
|
The first 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 Friday,
May 14, 2021 at 2 p.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
9947642#.
A replay of the
conference call will be available from May 14, 2021 at 5 p.m.
(Eastern Time) until August 5, 2021 by calling 1-800-585-8367
toll-free in North America or 416-621-4642 for international calls,
using the access code 9947642#. A webcast archive will also be
available on Power Corporation's website.
|
Investor Relations
Contact:
|
|
Treasury
514-286-7400
investor.relations@powercorp.com
|
|
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 March 31, 2021, Power
Corporation held the following economic interests:
100% – Power
Financial
|
www.powerfinancial.com
|
66.8%
|
Great-West
Lifeco (TSX: GWO)
|
www.greatwestlifeco.com
|
62.1%
|
IGM
Financial (TSX: IGM)
|
www.igmfinancial.com
|
14.1%
|
GBL [1] (Euronext:
GBLB)
|
www.gbl.be
|
74.0%
|
Wealthsimple
Financial Corp. [2]
|
www.wealthsimple.com
|
|
|
Investment
Platforms
|
|
100%
|
Sagard
Holdings
|
www.sagardholdings.com
|
100%
|
Power
Sustainable
|
www.powersustainable.com
|
|
Power
Pacific
|
www.powerpacificim.com
|
|
Power Sustainable
Energy Infrastructure
|
|
|
|
13.9% – China
AMC [3]
|
www.chinaamc.com
|
|
|
[1]
|
Held through
Parjointco, a jointly controlled corporation (50%).
|
[2]
|
Undiluted equity
interest held by Portage I, Power Financial and IGM, representing a
fully diluted equity interest of 61.7%.
|
[3]
|
IGM also holds a
13.9% interest in China AMC.
|
Earnings Summary
Contribution to Net and Adjusted Net Earnings
(unaudited)
(in millions of dollars)
|
|
|
|
Three months
ended
March 31,
|
|
|
|
2021
|
2020
|
Adjusted net
earnings
|
|
|
|
|
Lifeco [1]
|
|
|
494
|
363
|
IGM [1]
|
|
|
125
|
100
|
GBL [1]
|
|
|
50
|
4
|
Effect of
consolidation [2]
|
|
|
(14)
|
71
|
|
|
|
655
|
538
|
Alternative asset
investment platforms and Other [3][4]
|
|
|
255
|
69
|
China AMC
|
|
|
13
|
9
|
Standalone businesses
[3][5]
|
|
|
1
|
(44)
|
Corporate operating
and other expenses
|
|
|
(91)
|
(63)
|
Dividends on
non-participating and perpetual preferred shares
|
|
|
(47)
|
(48)
|
Non-controlling
interests of Power Financial
|
|
|
−
|
(116)
|
Adjusted net
earnings [6]
|
|
|
786
|
345
|
Adjustments – see
below
|
|
|
(230)
|
(145)
|
Net earnings
[6]
|
|
|
556
|
200
|
[1]
|
As reported by
Lifeco, IGM and GBL.
|
[2]
|
Effect of
consolidation includes the elimination of intercompany
transactions, as well as 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 an allocation of the results of the fintech
portfolio including Wealthsimple, Koho, Portage I and Portage II,
to the contributions from Lifeco and IGM based on their respective
interest and reflects 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.
|
[3]
|
Presented in
Alternative and other investments in the Non-Consolidated
Statements of Earnings section of the Corporation's most recent
MD&A.
|
[4]
|
Includes earnings of
the Corporation's alternative asset investment platforms including
investments held through Power Financial.
|
[5]
|
Includes the results
of Peak, GP Strategies, Lumenpulse, Lion and IntegraMed America,
Inc. (IntegraMed) (up to the date of deconsolidation on May 20,
2020).
|
[6]
|
Attributable to
participating shareholders.
|
Contribution to Net and Adjusted Net Earnings per
Share
(unaudited)
(in dollars per share)
|
|
|
|
|
Three
month ended March 31,
|
|
|
|
|
2021
|
2020
|
Adjusted net
earnings per share – basic
|
|
|
|
|
|
Lifeco [1]
|
|
|
|
0.73
|
0.52
|
IGM [1]
|
|
|
|
0.18
|
0.15
|
GBL [1]
|
|
|
|
0.08
|
0.01
|
Effect of
consolidation [2]
|
|
|
|
(0.02)
|
0.06
|
|
|
|
|
0.97
|
0.74
|
Alternative asset
investment platforms and Other [3][4]
|
|
|
|
0.38
|
0.12
|
China AMC
|
|
|
|
0.02
|
0.02
|
Standalone businesses
[3][5]
|
|
|
|
−
|
(0.08)
|
Corporate operating
and other expenses and dividends on non‑participating and
perpetual preferred shares
|
|
|
|
(0.21)
|
(0.18)
|
Adjusted net
earnings per share [6]
|
|
|
|
1.16
|
0.62
|
Adjustments – see
below
|
|
|
|
(0.34)
|
(0.26)
|
Net earnings per
share [6]
|
|
|
|
0.82
|
0.36
|
[1]
|
As reported by
Lifeco, IGM and GBL.
|
[2]
|
Effect of
consolidation includes the elimination of intercompany
transactions, as well as 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 an allocation of the results of the fintech
portfolio including Wealthsimple, Koho, Portage I and Portage II,
to the contributions from Lifeco and IGM based on their respective
interest and reflects 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.
|
[3]
|
Presented in
Alternative and other investments in the Non-Consolidated
Statements of Earnings section of the Corporation's most recent
MD&A.
|
[4]
|
Includes earnings of
the Corporation's alternative asset investment platforms including
investments held through Power Financial.
|
[5]
|
Includes the results
of Peak, GP Strategies, Lumenpulse, Lion and IntegraMed (up to the
date of deconsolidation on May 20, 2020).
|
[6]
|
Attributable to
participating shareholders.
|
Alternative and Other Investments – Earnings
(unaudited)
(in millions of dollars)
|
|
|
|
Three months
ended
March 31,
|
|
|
|
2021
|
2020
|
Sagard
Holdings
|
|
|
|
|
Asset management
activities [1]
|
|
|
59
|
(5)
|
Investing activities
(proprietary capital) [2]
|
|
|
(30)
|
28
|
Power
Sustainable
|
|
|
|
|
Asset management
activities [1]
|
|
|
(5)
|
(3)
|
Investing activities
(proprietary capital) [3]
|
|
|
211
|
53
|
Standalone
businesses [4]
|
|
|
1
|
(44)
|
Investment and hedge
funds and Other [5]
|
|
|
20
|
(4)
|
|
|
|
256
|
25
|
[1]
|
Includes management
fees charged by the investment platform on proprietary capital.
Management fees paid by the Corporation are deducted from income
from investing activities.
|
[2]
|
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 includes 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, excludes 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, Koho and
Wealthsimple was $605 million in the first quarter of 2021,
compared with no change in the fair value in the first quarter of
2020.
|
[3]
|
Mainly comprised of
gains (losses) realized on the disposal of investments and
dividends received. In the first quarter of 2021, the Corporation
recognized realized gains on the disposal of investments in Power
Pacific of $229 million.
|
[4]
|
Includes the
Corporation's share of earnings (losses) of IntegraMed (up to the
date of deconsolidation), Lumenpulse, Lion, a jointly controlled
corporation and associates.
|
[5]
|
Other consists mainly
of foreign exchange gains or losses and interest on cash and cash
equivalents.
|
Adjustments (not included in Adjusted net earnings)
(unaudited)
(in millions of dollars)
|
|
|
|
Three months
ended
March 31,
|
|
|
|
2021
|
2020
|
Share of Lifeco's
adjustments:
|
|
|
|
|
Actuarial assumption
changes
and other management actions
|
|
|
4
|
(35)
|
Market-related impacts
on liabilities
|
|
|
(16)
|
(100)
|
Transaction costs
related to the acquisitions
of Personal Capital and MassMutual
|
|
|
(1)
|
−
|
Restructuring and
integration charges
|
|
|
(8)
|
−
|
|
|
|
(21)
|
(135)
|
Effect of
consolidation [1][2]
|
|
|
(11)
|
−
|
|
|
|
(32)
|
(135)
|
Share of IGM's
adjustments:
|
|
|
|
|
Effect of
consolidation [1][2]
|
|
|
(98)
|
(5)
|
Share of GBL's
adjustments [3]:
|
|
|
|
|
Other
charges
|
|
|
−
|
(1)
|
Alternative and other
investments [2]
|
|
|
(100)
|
−
|
Non-controlling
interest of Power Financial
|
|
|
−
|
(4)
|
|
|
|
(230)
|
(145)
|
[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 $45.94 at March 31,
2021, compared with $41.27 at
December 31, 2020, representing
an increase of 11.3%.
March 31,
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
|
14,685
|
6,056
|
20,741
|
IGM
|
2,807
|
2,859
|
5,666
|
GBL
|
4,089
|
(1,182)
|
2,907
|
Alternative and other
investments
|
|
|
|
Sagard Holdings
[1][2]
|
915
|
1,043
|
1,958
|
Power Sustainable
[1]
|
1,191
|
390
|
1,581
|
Other
|
|
|
|
Standalone businesses
[3]
|
567
|
802
|
1,369
|
Other
|
255
|
24
|
279
|
China AMC
[4]
|
690
|
−
|
690
|
Cash and cash
equivalents
|
1,315
|
−
|
1,315
|
Other
assets
|
339
|
−
|
339
|
Total
assets
|
26,853
|
9,992
|
36,845
|
Liabilities and
non-participating shares
|
|
|
|
Debentures and other
debt instruments
|
982
|
−
|
982
|
Other liabilities
[5]
|
991
|
−
|
991
|
Non-participating
shares and perpetual preferred shares
|
3,785
|
−
|
3,785
|
Total liabilities and
non-participating shares
|
5,758
|
−
|
5,758
|
Net
value
|
|
|
|
Participating
shareholders' equity / Net asset value
|
21,095
|
9,992
|
31,087
|
Per
share
|
31.17
|
|
45.94
|
|
|
[1]
|
Includes the
management companies of the investment funds at their carrying
value in accordance with IFRS.
|
[2]
|
Includes the
Corporation's investments in Portage I, Portage II, Wealthsimple
and Koho, held by Power Financial.
|
[3]
|
At March 31, 2021,
the investment in Lion was valued based on the subscription price
of US$10.00 per share for the private placement of common shares
announced as part of the merger transaction with Northern Genesis.
Subsequent to the completion of the merger on May 6, 2021, the
investment in Lion increased to $1.2 billion, valued based on the
market value of Lion at May 12, 2021, and including $150 million
related to the fair value of its call rights, representing an
increase of $0.52 per share.
|
[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 Holdings, and have
been presented combined with the investing activities of Sagard
Holdings, 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, 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 subsidiaries.
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' disclosed current
expectations. Forward-looking statements are provided for the
purposes of assisting the reader in understanding the Corporation's
financial performance, financial position and cash flows as at and
for the periods ended on certain dates and to present information
about management's current expectations and plans relating to the
future and the reader is cautioned that such statements may not be
appropriate for other purposes. These statements may include,
without limitation, statements regarding the operations, business,
financial condition, expected financial results, performance,
prospects, opportunities, priorities, targets, goals, ongoing
objectives, strategies and outlook of the Corporation and its
subsidiaries, the completion of the Wealthsimple financing round,
including the expected proceeds from the primary and secondary
offerings and the resulting size and value of the Corporation's
ownership interest, 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 and the intended effects of the Reorganization.
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 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