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, Nov. 10, 2021 /CNW
Telbec/ - Power Corporation of Canada (Power Corporation or the Corporation)
(TSX: POW) today reported earnings results for the three and
nine months ended September 30,
2021.
Power Corporation
Consolidated results for the
period ended September 30,
2021
HIGHLIGHTS
Power Corporation
- Net earnings per share of $1.09
for the third quarter of 2021, compared with $0.75 in 2020 and adjusted net earnings per share
[1] of $1.10, compared
with $0.72 per share in 2020.
- Net asset value (NAV) per share [1] increased 2% to
$52.81 at September 30, 2021, compared with $51.60 at June 30,
2021.
- Completed the sale of its 37.1% interest in the Sagard Europe 3
Fund (Sagard Europe 3) in a secondary transaction in the third
quarter. The Corporation received proceeds of $334 million (€225 million) and realized a gain
of $66 million in net earnings.
- The Corporation intends to resume normal course share buybacks
under its normal course issuer bid.
Power Financial Corporation (Power Financial)
- Completed an offering of 8,000,000 4.50% Non-Cumulative First
Preferred Shares, Series 23 for gross proceeds of $200 million on October
15, and on October 18
announced its intention to redeem all of its outstanding
$200 million 6.00% Non-Cumulative
First Preferred Shares, Series I.
Great-West Lifeco Inc. (Lifeco)
- Assets under administration were approximately $2.2 trillion at September
30, 2021, an increase of 11% from December 31, 2020.
- Lifeco and Sagard Holdings Inc. (Sagard) announced, on October 7, 2021, they had agreed to enter into a
long-term strategic relationship, which includes the sale of
Lifeco's United States-based
subsidiaries EverWest Real Estate Investors, LLC and EverWest
Advisors, LLC (EverWest) to Sagard, in exchange for a minority
shareholding in Sagard's
subsidiary, Sagard Holdings Management Inc. The strategic
relationship with Sagard is
intended to advance Lifeco's strategy to further broaden its access
to alternative investment options.
- On August 16, 2021, Lifeco issued
$1.5 billion aggregate principal
amount 3.60% Limited Recourse Capital Notes Series 1 (Subordinated
Indebtedness), maturing on December 31,
2081 and on October 8, 2021,
issued 8,000,000 Series Y, 4.50% Non- Cumulative First Preferred
Shares for gross proceeds of $200
million. On November 3, 2021,
Lifeco announced that it intends to redeem all of its outstanding
5.90% Non-Cumulative First Preferred Shares, Series F on
December 31, 2021.
IGM Financial Inc. (IGM)
- Record high net earnings of $270.8
million, or $1.13 per share,
up 42% from the third quarter of 2020 and up 14% from the second
quarter of 2021.
- Record high quarter-end assets under management and advisement
of $265.2 billion, up 1% in the
quarter and 35% from September 30,
2020 (including $30.3 billion
in net business acquisitions in 2020).
Groupe Bruxelles Lambert (GBL)
- GBL announced measures to enhance shareholder returns including
an additional share buyback of up to €500 million.
[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 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 $52.81 at September 30,
2021, compared with $51.60 at
June 30, 2021, representing an
increase of 2.3%.
|
|
|
|
|
|
(in millions of
dollars, except per share amounts)
|
September 30,
2021
|
June 30,
2021
|
Change (%)
|
Publicly
Traded
Operating
Companies
|
Lifeco
|
23,904
|
22,838
|
5
|
IGM
|
6,694
|
6,474
|
3
|
GBL
|
3,145
|
3,100
|
1
|
|
|
33,743
|
32,412
|
4
|
|
|
|
|
|
Alternative
Asset
Investment
Platforms
|
Sagard
[1][2]
|
1,407
|
1,790
|
(21)
|
Power Sustainable
[1]
|
1,726
|
1,738
|
(1)
|
|
3,133
|
3,528
|
(11)
|
|
|
|
|
|
Other
|
China AMC
[3]
|
740
|
705
|
5
|
Standalone businesses
[4]
|
1,568
|
2,004
|
(22)
|
Other assets and
investments
|
684
|
635
|
8
|
Cash and cash
equivalents
|
1,575
|
1,370
|
15
|
|
Gross asset
value
|
41,443
|
40,654
|
2
|
|
Liabilities and
preferred shares
|
(5,718)
|
(5,749)
|
1
|
|
Net asset
value
|
35,725
|
34,905
|
2
|
|
Shares outstanding
(millions)
|
676.5
|
676.5
|
|
|
Net asset value
per share
|
52.81
|
51.60
|
2
|
|
|
[1]
|
Includes the
management companies of the investment funds at their carrying
value.
|
[2]
|
During the third
quarter, the Corporation completed the sale of its 37.1% interest
in Sagard Europe 3.
|
[3]
|
China Asset
Management Co., Ltd. (China AMC).
|
[4]
|
Includes The Lion
Electric Co. (Lion), LMPG Inc. (LMPG), Peak Achievement Athletics
Inc. (Peak) and GP Strategies. The decrease in the September 30,
2021 NAV is primarily due to a decrease in market value of Lion
compared to June 30, 2021 (US$12.62 per share at September 30, 2021
compared with US$19.44 per share on June 30, 2021).
|
Power
Corporation's Ownership in Publicly Traded Operating
Companies
|
|
|
|
|
|
|
Share
price
|
|
Ownership
[1]
(%)
|
Shares held
[1]
(in millions)
|
September 30,
2021
|
June 30,
2021
|
Lifeco
|
66.7
|
620.3
|
$38.54
|
$36.82
|
IGM
|
61.8
|
147.9
|
$45.25
|
$43.76
|
GBL
[2]
|
14.1
|
22.8
|
€95.08
|
€94.34
|
|
|
|
|
|
|
[1]
|
As at September
30, 2021.
|
[2]
|
Held through
Parjointco SA (Parjointco), a jointly controlled corporation
(50%).
|
THIRD QUARTER
Net earnings attributable to participating shareholders were
$741 million or $1.09 per share, compared with $505 million or $0.75 per share in 2020.
Adjusted net earnings attributable to participating shareholders
[1] were $748 million or
$1.10 per share, compared with
$483 million or $0.72 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
[2]
|
0.86
|
0.86
|
0.82
|
0.67
|
IGM
[2]
|
0.25
|
0.25
|
0.18
|
0.20
|
GBL
[2]
|
(0.02)
|
(0.02)
|
(0.02)
|
(0.02)
|
Effect of
consolidation [3]
|
−
|
(0.01)
|
(0.12)
|
(0.06)
|
|
1.09
|
1.08
|
0.86
|
0.79
|
Alternative asset
investment platforms and Other [4][5]
|
0.06
|
0.06
|
(0.05)
|
(0.01)
|
China
AMC
|
0.03
|
0.03
|
0.02
|
0.02
|
Standalone businesses
[5]
|
0.09
|
0.09
|
0.03
|
0.03
|
|
1.27
|
1.26
|
0.86
|
0.83
|
Corporate operations
and Other [6]
|
(0.18)
|
(0.16)
|
(0.11)
|
(0.11)
|
|
1.09
|
1.10
|
0.75
|
0.72
|
Average shares
outstanding (in millions)
|
|
676.7
|
|
676.3
|
|
|
|
|
|
Lifeco: contribution to net earnings per share increased
by 4.9% and contribution to adjusted net earnings per share
increased by 28.4%.
IGM: contribution to net earnings per share increased by
38.9% and contribution to adjusted net earnings per share increased
by 25.0%.
GBL: negative contribution to net earnings per share of
$0.02. Results include a charge of
$0.06 per share in the quarter of
both 2021 and 2020 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 asset investment platforms: net earnings per
share includes realized gains of $0.03 per share on the Power Pacific portfolio
and a contribution from Sagard of
$0.05 to net earnings per share which
includes the Corporation's realized gain on the disposition of its
interest in Sagard Europe 3.
Standalone businesses: results include a positive impact of
$0.08 per share resulting from the
contribution from Lion in the quarter which consists of the
Corporation's share of earnings of Lion, a decrease in the fair
value of the outstanding call rights held by Power Sustainable
Capital Inc. (Power Sustainable) and a decrease in amounts payable
for long-term incentive plans, net of related taxes.
Corporate operations and Other: As part of the
reorganization completed in February
2020 (the Reorganization), the Corporation projected
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 93% of the
targeted reduction.
Adjustments in the third quarter of 2021, excluded from adjusted
net earnings, were a negative net impact to earnings of
$7 million or $0.01 per share, mainly related to the
Corporation's net restructuring charge of $13 million in conjunction with the
Reorganization, partially offset by the Corporation's share of
Lifeco's adjustments, which consist of positive market-related
impacts on liabilities, actuarial assumption changes and management
actions partially offset by transaction, restructuring and
integration charges. Adjustments in the third quarter of 2020 were
a net positive impact to earnings of $22
million or $0.03 per share
mainly related to the Corporation's share of Lifeco's adjustments,
partially offset by the Corporation's share of IGM's adjustments
and the 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 $45
million. These were reflected in the Adjustments of the
alternative and other investments and in the Effect of
consolidation based on Lifeco's and IGM's respective interest.
[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. In the first quarter of 2021, the charge related
to the remeasurement of the put right liability of certain of the
non-controlling interests in Wealthsimple Financial Corp.
(Wealthsimple) to fair value was presented as an Adjustment as
these rights were extinguished at the close of the transaction and
thereafter will not have future fair value changes. The fair value
changes in the put right obligations were not previously presented
as an Adjustment as they were expected to be recurring. The related
amounts in the comparative periods have been reclassified as an
Adjustment to reflect this presentation. Adjusted net earnings in
the third quarter of 2020 has been restated to reflect this change.
The Corporation's share of the charge on the remeasurement of the
put right liability was $45 million in the third quarter of 2020.
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 $22 million,
$2 million and $21 million, respectively. For additional
information, please refer to the Non-IFRS Financial Measures and
Presentation section further in this news release.
|
[2]
|
As reported by
Lifeco, IGM and GBL.
|
[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 Financial Inc. (Koho), Portag3 Ventures Limited
Partnership (Portage I), Portag3 Ventures II Limited Partnership
(Portage II) and Portage Ventures III Limited Partnership (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.
|
NINE MONTHS
Net earnings attributable to participating shareholders were
$2,291 million or $3.38 per share, compared with $1,371 million or $2.15 per share in 2020.
Adjusted net earnings attributable to participating shareholders
were $2,554 million or $3.77 per share, compared with $1,361 million or $2.13 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
[2]
|
2.32
|
2.40
|
2.02
|
1.91
|
IGM
[2]
|
0.65
|
0.65
|
0.50
|
0.52
|
GBL
[2][3]
|
0.09
|
0.09
|
0.10
|
0.11
|
Effect of
consolidation [4]
|
(0.03)
|
0.11
|
(0.13)
|
(0.07)
|
|
3.03
|
3.25
|
2.49
|
2.47
|
Alternative asset
investment platforms and Other [5][6]
|
0.47
|
0.62
|
0.04
|
0.08
|
China
AMC
|
0.07
|
0.07
|
0.04
|
0.04
|
Standalone businesses
[6]
|
0.32
|
0.32
|
0.02
|
(0.02)
|
|
3.89
|
4.26
|
2.59
|
2.57
|
Corporate operations
and Other [7]
|
(0.51)
|
(0.49)
|
(0.44)
|
(0.44)
|
|
3.38
|
3.77
|
2.15
|
2.13
|
Average shares
outstanding (in millions)
|
|
676.9
|
|
637.7
|
Adjustments to net earnings in the nine-month period were a
negative net impact of $263 million
or $0.39 per share, mainly related to
the Corporation's net charges of $13
million in conjunction with the Reorganization, its 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's and IGM's respective interest. Adjustments in the
nine-month period of 2020 were a positive net impact of
$10 million or $0.02 per share, mainly related to the
Corporation's share of Lifeco's adjustments, a recovery on the
deconsolidation of IntegraMed America, Inc. (IntegraMed), partially
offset by the Corporation's share of IGM's adjustments and the
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 $45
million discussed in the explanation of the third quarter
above.
[1]
|
Pursuant to the
Reorganization, the Corporation acquired the minority interests of
Power Financial and now holds 100% of the common shares of Power
Financial.
|
[2]
|
As reported by
Lifeco, IGM and GBL.
|
[3]
|
Adjustments in 2020
are as previously reported by Pargesa SA (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: 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.
|
[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 September 30, 2021
The information below
is derived from Lifeco and IGM's third 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 third quarter press release at
September 30, 2021. Further information on GBL's results is
available on its website at www.gbl.be.
|
GREAT-WEST LIFECO INC.
THIRD QUARTER
Net earnings attributable to common shareholders were
$872 million or $0.938 per share, compared with $826 million or $0.891 per share in 2020.
Adjusted net earnings [1] attributable to common
shareholders were $870 million or
$0.934 per share, compared with
$679 million or $0.732 per share in 2020.
Adjustments in the third quarter of 2021, excluded from adjusted
net earnings, were a net positive earnings impact of $2 million. Lifeco's adjustments in the third
quarter of 2021 consisted of positive impact on earnings from:
- Actuarial assumption changes and other management actions of
$69 million; and
- Market-related impact on liabilities of $47 million.
Partially offset by:
- Transaction costs of $90 million
related to the acquisitions of the full-service retirement business
of Prudential Financial, Inc. (Prudential), Personal Capital
Corporation (Personal Capital) and the retirement services business
of Massachusetts Mutual Life Insurance Company (MassMutual), which
includes a provision for payments relating to Lifeco's 2003
acquisition of The Canada Life Assurance Company of $58 million; and
- Restructuring and integration costs of $24 million.
|
|
[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.
THIRD QUARTER
Net earnings available to common shareholders were $270.8 million or $1.13 per share, compared with $190.9 million or $0.80 per share in 2020.
Adjusted net earnings available to common shareholders were
$270.8 million or $1.13 per share, compared with $214.2 million or $0.90 per share in 2020.
Assets under management and advisement at September 30, 2021 were $265.2 billion, up 1.2% in the quarter and 35.0%
from September 30, 2020 (including
$30.3 billion in net business
acquisitions in 2020).
GROUPE BRUXELLES
LAMBERT
THIRD QUARTER
GBL reported a net loss of €44 million, compared with a net loss
of €62 million in 2020.
GBL reported a net asset value at September 30, 2021 of €22,489 million,
representing €139.37 per share, compared with €23,057 million
or €142.89 per share at June 30,
2021.
GBL adopted IFRS 9 in 2018. Power Corporation continues to apply
IAS 39; this resulted in a positive adjustment to the contribution
from GBL of $5 million in the third
quarter of 2021.
Alternative and Other Investments
Results for the
quarter ended September 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.
|
THIRD QUARTER
Net earnings of alternative and other investments, including
standalone businesses, was $103
million, compared with a net loss of $14 million in the
corresponding period in 2020. Adjusted net earnings of alternative
and other investments was $103
million, compared with $8
million in the comparative period in 2020.
SAGARD AND POWER
SUSTAINABLE
- Sagard Credit Partners announced on October 20, 2021 the launch of a new Senior Loans
strategy which will focus on first-lien lending to non
sponsor-owned North American companies with $50 million or less in EBITDA.
Net earnings in the third quarter include a net contribution of
$37 million from Sagard, and a net contribution of
$6 million from Power Sustainable, primarily due to a realized
gain on the sale of the Corporation's interest in Sagard Europe 3
and realized gains within the Power Pacific portfolio.
Summary of assets under management (including unfunded
commitments):
(in billions of
dollars)
|
September 30,
2021
|
September 30,
2020
|
Sagard [1][2]
|
9.5
|
5.6
|
Power
Sustainable [2]
|
3.0
|
1.7
|
Total
|
12.5
|
7.3
|
Percentage of
third-party and associates
|
71%
|
54%
|
|
|
[1]
|
Includes ownership in
Wealthsimple valued at $2.1 billon based on its May 2021 investment
round and excludes AUM of Sagard's wealth management
business.
|
[2]
|
Excludes the fair
value of interests held in standalone businesses.
|
STANDALONE BUSINESSES
- On October 15, 2021, GP
Strategies completed its previously announced transaction and was
acquired by Learning Technologies Group (AIM: LTG.L). Sagard disposed of its 21.0% equity interest
and received proceeds of US$76
million.
Net earnings of the standalone businesses in the third quarter
of 2021 was $58 million, compared
with $23 million in the comparative
period in 2020. The third quarter of 2021 includes a net
contribution of $55 million from Lion
which consists of the Corporation's share of earnings of Lion, a
decrease in the fair value of outstanding call rights held by Power
Sustainable and a decrease in amounts payable for long-term
incentive plans, net of related taxes.
At September 30, 2021, the fair
value of standalone businesses was $1.7
billion, compared with $0.6
billion at September 30,
2020.
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
February 1, 2022, to shareholders of
record December 31, 2021.
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, 2022, to shareholders of record
December 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 September 1 to November 30, 2021.
|
Investor Information
Access to
Quarterly
Results Materials:
|
|
Quarterly Earnings
Conference Call:
|
The third 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 Thursday,
November 11, 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
7390136#.
A replay of the
conference call will be available from November 11, 2021 at 11:30
a.m. (Eastern Time) until March 16, 2022 by calling 1-800-585-8367
toll-free in North America or 416–621–4642 for international calls,
using the access code 7390136#. A webcast archive will also be
available on Power Corporation's website.
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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 September 30, 2021, Power
Corporation held the following economic interests:
100% – Power
Financial
|
www.powerfinancial.com
|
66.7%
|
Great-West
Lifeco (TSX: GWO)
|
www.greatwestlifeco.com
|
61.8%
|
IGM
Financial (TSX: IGM)
|
www.igmfinancial.com
|
14.1%
|
GBL [1] (Euronext:
GBLB)
|
www.gbl.be
|
55.0%
|
Wealthsimple [2]
|
www.wealthsimple.com
|
|
Investment
Platforms
|
100%
|
Sagard
|
www.sagard.com
|
100%
|
Power
Sustainable
|
www.powersustainable.com
|
|
Power
Pacific
|
www.powerpacificim.com
|
|
Power Sustainable
Energy Infrastructure
|
www.powersustainable.com
|
|
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 42.6%.
|
[3]
|
IGM also holds a
13.9% interest in China AMC.
|
Earnings Summary
Contribution to
Adjusted and Net Earnings
|
|
|
|
|
(unaudited)
(in millions of dollars)
|
Three months
ended
September 30,
|
Nine months ended
September 30,
|
|
2021
|
2020
|
2021
|
2020
|
Adjusted net
earnings [1]
|
|
|
|
|
Lifeco [2]
|
580
|
454
|
1,625
|
1,289
|
IGM [2]
|
167
|
133
|
440
|
347
|
GBL [2]
|
(11)
|
(15)
|
63
|
73
|
Effect of
consolidation [3]
|
(4)
|
(31)
|
74
|
(10)
|
|
732
|
541
|
2,202
|
1,699
|
Alternative asset
investment platforms and Other [4][5]
|
45
|
(15)
|
421
|
50
|
China AMC
|
17
|
11
|
45
|
30
|
Standalone businesses
[4][6]
|
58
|
23
|
213
|
(16)
|
Corporate operating
and other expenses
|
(57)
|
(30)
|
(186)
|
(144)
|
Dividends on
non-participating and perpetual preferred shares
|
(47)
|
(47)
|
(141)
|
(142)
|
Non-controlling
interests of Power Financial
|
−
|
−
|
−
|
(116)
|
Adjusted net
earnings [7]
|
748
|
483
|
2,554
|
1,361
|
Adjustments – see
below
|
(7)
|
22
|
(263)
|
10
|
Net
earnings [7]
|
741
|
505
|
2,291
|
1,371
|
Contribution to
Adjusted and Net Earnings per Share
|
|
|
|
|
(unaudited)
(in dollars per share)
|
Three months
ended
September 30,
|
Nine months ended
September 30,
|
|
2021
|
2020
|
2021
|
2020
|
Adjusted net
earnings per share – basic [1]
|
|
|
|
|
Lifeco
[2]
|
0.86
|
0.67
|
2.40
|
1.91
|
IGM
[2]
|
0.25
|
0.20
|
0.65
|
0.52
|
GBL
[2]
|
(0.02)
|
(0.02)
|
0.09
|
0.11
|
Effect of
consolidation [3]
|
(0.01)
|
(0.06)
|
0.11
|
(0.07)
|
|
1.08
|
0.79
|
3.25
|
2.47
|
Alternative asset
investment platforms and Other [4][5]
|
0.06
|
(0.01)
|
0.62
|
0.08
|
China AMC
|
0.03
|
0.02
|
0.07
|
0.04
|
Standalone businesses
[4][6]
|
0.09
|
0.03
|
0.32
|
(0.02)
|
Corporate operating
and other expenses and dividends
on non–participating and perpetual
preferred shares
|
(0.16)
|
(0.11)
|
(0.49)
|
(0.44)
|
Adjusted net
earnings per share [7]
|
1.10
|
0.72
|
3.77
|
2.13
|
Adjustments – see
below
|
(0.01)
|
0.03
|
(0.39)
|
0.02
|
Net earnings per
share [7]
|
1.09
|
0.75
|
3.38
|
2.15
|
|
|
[1]
|
For a reconciliation
of Lifeco, IGM, GBL, and Alternative and other investments'
non-IFRS adjusted net earnings to their net earnings, refer to the
section "Contribution to net earnings and adjusted net earnings" of
the Corporation's most recent MD&A.
|
[2]
|
As reported by
Lifeco, IGM and GBL.
|
[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
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]
|
Presented in
Alternative and other investments in the Non-Consolidated
Statements of Earnings section of the Corporation's most recent
MD&A.
|
[5]
|
Includes earnings of
the Corporation's alternative asset investment platforms, including
investments held through Power Financial.
|
[6]
|
Includes the results
of Lion, LMGP, Peak, GP Strategies and IntegraMed (up to the date
of deconsolidation on May 20, 2020).
|
[7]
|
Attributable to
participating shareholders.
|
Alternative and
Other Investments – Adjusted Net Earnings
|
|
|
|
|
(unaudited)
(in millions of dollars)
|
Three months
ended
September 30,
|
Nine months ended
September 30,
|
|
2021
|
2020
|
2021
|
2020
|
Sagard
|
|
|
|
|
Asset management
activities [1]
|
(18)
|
4
|
44
|
−
|
Investing activities
(proprietary
capital) [2][3]
|
55
|
(15)
|
90
|
10
|
Power
Sustainable
|
|
|
|
|
Asset management
activities [1]
|
(7)
|
(6)
|
(19)
|
(14)
|
Investing activities
(proprietary capital) [4]
|
13
|
1
|
279
|
52
|
Standalone businesses
[5]
|
58
|
23
|
213
|
(16)
|
Investment and hedge
funds and Other [6]
|
2
|
1
|
27
|
2
|
|
103
|
8
|
634
|
34
|
|
|
[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 a realized
gain of $66 million recognized by the Corporation on disposal of
its interest in Sagard Europe 3 in the third quarter of 2021, as
well as realized gains on disposals by Sagard Europe 3 of private
equity investments in the second and third quarters of
2021.
|
[3]
|
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, Portage
III, Koho and Wealthsimple was $606 million in the nine-month
period ended September 30, 2021, compared with an increase of $184
million in fair value in the corresponding period in
2020.
|
[4]
|
Mainly comprised of
gains (losses) realized on the disposal of investments and
dividends received. In 2021, the Corporation recognized realized
gains on the disposal of investments in Power Pacific of $229
million, $56 million and $18 million, respectively, in the first,
second and third quarters.
|
[5]
|
The third quarter of
2021, includes a net contribution of $55 million from Lion which
consists of the Corporation's share of earnings of Lion, a decrease
in the fair value of outstanding call rights held by Power
Sustainable and a decrease in amounts payable for long-term
incentive plans, net of related taxes. 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 Acquisition Corp., 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 second
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 in the second quarter. 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.
|
[6]
|
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
September 30,
|
Nine months ended
September 30,
|
|
2021
|
2020
|
2021
|
2020
|
Share of Lifeco's
adjustments [1]
|
|
|
|
|
Actuarial assumption
changes
and other
management actions
|
45
|
44
|
74
|
91
|
Market-related impacts
on liabilities
|
32
|
13
|
3
|
(64)
|
Transaction costs
related to acquisitions
|
(60)
|
(21)
|
(77)
|
(21)
|
Tax legislative
changes impact on liabilities
|
−
|
−
|
(14)
|
−
|
Net gain on business
dispositions
|
−
|
63
|
−
|
63
|
Restructuring and
integration charges
|
(16)
|
−
|
(34)
|
−
|
|
1
|
99
|
(48)
|
69
|
Effect of
consolidation [2]
|
5
|
(2)
|
(3)
|
(2)
|
|
6
|
97
|
(51)
|
67
|
Share of IGM's
adjustments [1]
|
|
|
|
|
Gain on the sale of
Personal Capital
|
−
|
19
|
−
|
19
|
Restructuring and
other charges
|
−
|
(34)
|
−
|
(34)
|
|
−
|
(15)
|
−
|
(15)
|
Effect of
consolidation [2]
|
−
|
(36)
|
(99)
|
(37)
|
|
−
|
(51)
|
(99)
|
(52)
|
Share of GBL's
adjustments [3]
|
|
|
|
|
Other
charges
|
−
|
(2)
|
−
|
(6)
|
|
|
|
|
|
Alternative and other
investments
|
|
|
|
|
Remeasurements of
Wealthsimple's put right liability
|
−
|
(22)
|
(100)
|
(22)
|
Recovery on
deconsolidation of IntegraMed
|
−
|
−
|
−
|
27
|
|
−
|
(22)
|
(100)
|
5
|
Corporate
operations
|
|
|
|
|
Reorganization
charges
|
(13)
|
−
|
(13)
|
−
|
Non-controlling
interest of Power Financial
|
−
|
−
|
−
|
(4)
|
|
(7)
|
22
|
(263)
|
10
|
|
|
[1]
|
As reported by Lifeco
and IGM.
|
[2]
|
The 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 Adjustments
reported by Lifeco and IGM, which includes an allocation of the
Adjustments related to the fintech portfolio based on their
respective interest, iii) 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. As
well, the three- and nine-month periods ended September 30, 2020
reflect the adjustment to the Corporation's share of IGM's
Adjustment related to the gain on disposal of Personal Capital; the
Corporation has not included this amount as an Adjustment as the
gain recognized by the Corporation relates to the remeasurement of
the investment in Personal Capital at fair value on the date Lifeco
acquired control.
|
[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 $52.81 at September 30,
2021, compared with $51.60 at
June 30, 2021, representing an
increase of 2.3%.
September 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
|
15,295
|
8,609
|
23,904
|
IGM
|
3,315
|
3,379
|
6,694
|
GBL
|
4,278
|
(1,133)
|
3,145
|
Alternative and other
investments
|
|
|
|
Sagard
[1][2]
|
714
|
693
|
1,407
|
Power Sustainable
[1]
|
1,380
|
346
|
1,726
|
Other
|
|
|
|
Standalone businesses
[3]
|
820
|
748
|
1,568
|
Other
|
280
|
38
|
318
|
China AMC
[4]
|
740
|
−
|
740
|
Cash and cash
equivalents
|
1,575
|
−
|
1,575
|
Other
assets
|
366
|
−
|
366
|
Total
assets
|
28,763
|
12,680
|
41,443
|
Liabilities and
non-participating shares
|
|
|
|
Debentures and other
debt instruments
|
897
|
−
|
897
|
Other liabilities
[5]
|
1,037
|
−
|
1,037
|
Non-participating
shares and perpetual preferred shares
|
3,784
|
−
|
3,784
|
Total liabilities and
non-participating shares
|
5,718
|
−
|
5,718
|
Net
value
|
|
|
|
Participating
shareholders' equity / Net asset value
|
23,045
|
12,680
|
35,725
|
Per
share
|
34.07
|
|
52.81
|
|
|
|
|
[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 $99 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, other than those held in publicly traded operating
companies, 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.
Comparative Figures
In the first quarter of 2021, the charge related to the
remeasurement of the put right liability of certain of the
non-controlling interests in Wealthsimple to fair value was
presented as an Adjustment as these rights were extinguished at the
close of the transaction and thereafter will not have future fair
value changes. The fair value changes in the put right obligations
were not previously presented as an Adjustment as they were
expected to be recurring. The related amounts in the comparative
periods have been reclassified as an Adjustment to reflect this
presentation. Adjusted net earnings in the third quarter of 2020
has been restated to reflect this change.
The Corporation's share of the charge on the remeasurement of
the put right liability was $45
million in the third quarter of 2020. 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 $22
million, $2 million and
$21 million, respectively.
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, the
Corporation's normal course issuer bid, redemption by Power
Financial of its Series I First Preferred Shares, fundraising
activities by investment platforms, and the Corporation's
subsidiaries' disclosed expectations, including the acquisition of
the Prudential full-service retirement business (as defined
herein), impacts, and timing thereof as well as a result of the
acquisition of the retirement services business of MassMutual,
Personal Capital and related synergies, impacts and timing thereof
as well as the impacts and timing of the EverWest transaction.
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 normal course issuer bid, 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