Readers are referred to the sections "Non-IFRS Financial
Measures and Presentation" and "Forward-Looking Statements"
at the end of this release.
MONTRÉAL, Aug. 7, 2020 /CNW
Telbec/ - Power Corporation of Canada (Power Corporation or the Corporation)
(TSX: POW) today reported earnings results for the three and
six months ended June 30, 2020.
Power Corporation
Consolidated results for the
period ended June
30
Highlights
- The Corporation's net asset value per share (a non-IFRS
financial measure, see Non-IFRS Financial Measures and Presentation
later in this news release) was $32.96 at June 30,
2020, compared with $30.79 at
March 31, 2020, representing an
increase of 7.0%.
- On June 29, 2020, Great-West
Lifeco Inc.'s (Lifeco) subsidiary, Empower Retirement, announced
that it has entered into an agreement to purchase Personal Capital
Corporation, a hybrid wealth manager that combines a leading-edge
digital experience with personalized advice delivered by human
advisors.
- Lifeco's consolidated assets under administration were
$1.7 trillion at June 30, 2020, a 9.1% increase from March 31, 2020 primarily reflecting the market
recovery.
- IGM Financial Inc. (IGM) assets under management at
June 30, 2020 were $165.4 billion, an increase of 12.1% from
March 31, 2020 and down slightly from
the quarter-end record high of $166.8
million at December 31,
2019.
- Total net sales at IGM were $3.4
billion, compared to net redemptions of $544 million in the second quarter of 2019.
Investment fund net sales were $864
million, compared to net redemptions of $364 million in the second quarter of 2019.
- On August 4, 2020, Lifeco
announced that an agreement has been reached to sell its Canadian
subsidiary, GLC Asset Management Group Ltd., to Mackenzie Financial
Corporation, a subsidiary of IGM. This transaction is expected to
close in the fourth quarter of 2020 and is subject to regulatory
approval.
- Parjointco N.V. (Parjointco) and Pargesa Holding SA (Pargesa)
announced on March 11, 2020 a public
exchange offer for all Pargesa shares not held by Parjointco to be
exchanged for Groupe Bruxelles Lambert (GBL) shares. Following the
successful public exchange offer, Parjointco now holds over 98% of
Pargesa's total voting rights. The transaction is expected to be
completed in the second half of 2020.
Second Quarter
Net earnings attributable to participating shareholders were
$666 million or $0.99 per share, compared with $278 million
or $0.64 per share in 2019.
Adjusted net earnings attributable to participating
shareholders (a non-IFRS financial measure, see
Non-IFRS Financial Measures and Presentation later in this news
release) were $533 million or $0.79 per share, compared with $359 million or $0.83 per share in 2019.
Contributions to Power Corporation's net earnings per share and
adjusted net earnings per share were:
|
|
|
|
2020
[1]
|
|
2019
|
(in dollars per Power
Corporation share)
|
Net
Earnings
|
Adjusted Net
Earnings
|
|
Net
Earnings
|
|
Adjusted Net
Earnings
|
- Lifeco
[2]
|
0.86
|
0.70
|
|
0.45
|
|
0.62
|
- IGM
|
0.17
|
0.16
|
|
0.16
|
|
0.17
|
- Pargesa
|
0.05
|
0.06
|
|
0.13
|
|
0.14
|
- Other Investments
[3]
|
0.04
|
−
|
|
0.10
|
|
0.10
|
- China AMC
[4]
|
0.01
|
0.01
|
|
0.01
|
|
0.01
|
- Corporate
Operations [5]
|
(0.14)
|
(0.14)
|
|
(0.21)
|
|
(0.21)
|
|
0.99
|
0.79
|
|
0.64
|
|
0.83
|
|
|
|
|
|
|
|
|
|
[1]
|
The Corporation
completed a reorganization transaction on February 13, 2020 in
which it acquired the minority interests of Power Financial (the
Reorganization) and now holds 100% of the common shares in the
capital of Power Financial. In the second quarter of 2019, the
Corporation completed a substantial issuer bid and repurchased 9.8%
of its Subordinate Voting Shares.
|
[2]
|
Power Financial
participated in Lifeco's substantial issuer bid in the second
quarter of 2019; the number of shares held by Power Financial
decreased by 7.4%.
|
[3]
|
Other Investments
include earnings (losses) from investment platforms including
controlled and consolidated subsidiaries.
|
[4]
|
China Asset
Management Co., Ltd.
|
[5]
|
Operating and other
expenses, dividends on non-participating shares of the Corporation
and its share of Power Financial's corporate operations.
|
Adjustments in the second quarter of 2020, excluded from
adjusted net earnings, were a positive impact to earnings of
$133 million or $0.20 per share mainly related to the
Corporation's share of Lifeco's adjustments, which consist of
market-related recoveries, actuarial assumption changes and
management actions, and a recovery on the deconsolidation of
IntegraMed America, Inc. (IntegraMed). Adjustments in the second
quarter of 2019 were a net negative impact to earnings of
$81 million mainly related to
Lifeco's market-related impacts and a net loss on the sale of the
U.S. individual life insurance and annuity business to Protective
Life, partially offset by a positive impact from actuarial
assumption changes.
Six Months
Net earnings attributable to participating shareholders were
$866 million or $1.40 per share, compared with $570 million
or $1.27 per share in 2019.
Adjusted net earnings attributable to participating
shareholders were $878 million or $1.42 per share, compared with $610 million or $1.36 per share in 2019.
Contributions to Power Corporation's net earnings per share and
adjusted net earnings per share were:
|
|
|
|
2020
[1]
|
|
2019
|
(in dollars per Power
Corporation share)
|
Net
Earnings
|
Adjusted Net
Earnings
|
|
Net
Earnings
|
|
Adjusted Net
Earnings
|
- Lifeco
[2]
|
1.18
|
1.23
|
|
1.09
|
|
1.17
|
- IGM
|
0.30
|
0.30
|
|
0.31
|
|
0.31
|
- Pargesa
|
0.13
|
0.14
|
|
0.19
|
|
0.20
|
- Other Investments
[3]
|
0.09
|
0.05
|
|
0.06
|
|
0.06
|
- China
AMC
|
0.03
|
0.03
|
|
0.03
|
|
0.03
|
- Corporate
Operations [4]
|
(0.33)
|
(0.33)
|
|
(0.41)
|
|
(0.41)
|
|
1.40
|
1.42
|
|
1.27
|
|
1.36
|
|
|
|
|
|
|
|
|
|
[1]
|
The Corporation
completed the Reorganization on February 13, 2020 and now holds
100% of the common shares in the capital of Power Financial. In the
second quarter of 2019, the Corporation completed a substantial
issuer bid and repurchased 9.8% of its Subordinate Voting
Shares.
|
[2]
|
Power Financial
participated in Lifeco's substantial issuer bid in the second
quarter of 2019; the number of shares held by Power Financial
decreased by 7.4%.
|
[3]
|
Other Investments
include earnings (losses) from investment platforms including
controlled and consolidated subsidiaries.
|
[4]
|
Operating and other
expenses, dividends on non-participating shares of the Corporation
and its share of Power Financial's corporate operations.
|
Adjustments in the six-month period of 2020, excluded from
adjusted net earnings, were $12
million or $0.02 per share
mainly related to the Corporation's share of Lifeco's adjustments,
which consist of negative market-related impacts, offset by
actuarial assumption changes and management actions as well as by a
recovery on the deconsolidation of IntegraMed. Adjustments in the
six-month period of 2019 were $40 million mainly related to
Lifeco's market-related impacts and a net loss on the sale of the
U.S. individual life insurance and annuity business to Protective
Life, partially offset by a positive impact from actuarial
assumption changes and management actions.
Great-West Lifeco, IGM Financial and Pargesa
Results for the period ended June
30
The information below is derived from Lifeco and IGM's interim
MD&A, as prepared and disclosed by the respective companies in
accordance with applicable securities legislation, and which is
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 Pargesa is
derived from publicly disclosed information, as issued by Pargesa
in its second quarter press release. Further information on
Pargesa's results is available on its website at
www.pargesa.ch.
GREAT-WEST LIFECO INC.
Second Quarter
Net earnings attributable to common shareholders were
$863 million or $0.930 per
share, compared with $459 million or $0.489 per share in 2019. As a result of the sale
of U.S. individual life insurance and annuity business during the
second quarter of 2019, Lifeco's net earnings included a net charge
of $199 million in the second quarter
of 2019.
Adjusted net
earnings [1] attributable
to common shareholders were $706
million or $0.761 per share,
compared with $627 million or
$0.668 per share in 2019.
Adjustments in the second quarter of 2020, excluded from
adjusted net earnings, were a net positive impact to earnings of
$157 million, compared with a net
negative impact of $168 million in
2019.
[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.
|
Six Months
Net earnings attributable to common shareholders were $1,205 million or $1.299 per share, compared with $1,116 million or $1.159 per share in 2019.
Adjusted net
earnings [1] attributable
to common shareholders were $1,249
million or $1.347 per share,
compared with $1,196 million or
$1.241 per share in 2019.
Adjustments in the six-month period of 2020, excluded from
adjusted net earnings, were a net negative impact to earnings of
$44 million, compared with
$80 million in 2019.
[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.
Second Quarter
Net earnings and adjusted net earnings available to common
shareholders were $183.5 million or
$0.77 per share, compared with
net earnings of $185.1 million or
$0.77 per share and adjusted net
earnings of $193.1 million or
$0.81 per share in 2019.
Assets under management at June 30,
2020 were $165.4 billion, an
increase of 12.1% from March 31,
2020.
Six Months
Net earnings and adjusted net earnings available to common
shareholders were $344.4 million or
$1.45 per share, compared with
net earnings of $352.6 million
or $1.47 per share and adjusted net
earnings of $360.6 million or
$1.50 per share in 2019.
PARGESA HOLDING SA
Second Quarter
Pargesa reported net earnings of SF203 million, compared with SF134
million in 2019.
Adjusted net earnings were SF209 million, compared with SF152
million in 2019. Adjustments, not included in adjusted net
earnings, were a charge of SF6 million in the second quarter.
Pargesa reported a net asset value at June 30, 2020 of SF8,393 million, representing
SF99.0 per share, compared with SF8,300 million or SF98.0 per share
at March 31, 2020.
Pargesa adopted IFRS 9 in 2018. Power Corporation continues to
apply IAS 39; this results in a decrease in its share of the
contribution from Pargesa of $42 million in the second quarter
of 2020.
Six Months
Pargesa reported net earnings of SF209 million, compared with SF225
million in 2019.
Adjusted net earnings were SF220 million, compared with SF246
million in 2019. Adjustments, not included in adjusted net
earnings, were a charge of SF11 million in the six-month
period.
Other Investments
For the period ended June 30
Other investments are comprised of the results of the
Corporation's investment platforms, Sagard Holdings Inc. (Sagard
Holdings) and Power Sustainable Capital Inc. (Power Sustainable
Capital), which include income earned from asset management
activities and investment activities. Asset management activities
includes management fees and carried interests net of investment
platform expenses and investment 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 investment platforms.
Other includes the share of earnings (losses) of standalone
businesses and the Corporation's investments in investment and
hedge funds. For additional information, refer to the table later
in this news release.
Second Quarter
Income from the Corporation's investment platforms was a loss of
$2 million, compared with income of
$40 million in 2019.
During the second quarter of 2020, Sagard Holdings
deconsolidated IntegraMed resulting in a recovery on
deconsolidation of $27 million which has been excluded from
adjusted net earnings.
Six Months
Income from the Corporation's investment platforms was $30 million, compared with $24 million in 2019.
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,
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 followed by recoveries during the second quarter of
2020.
The Corporation is managing the risks associated with the
COVID-19 pandemic utilizing its existing risk management framework.
At Power Corporation and its group companies, the focus has
continued to be on managing the safety and well-being of its
people, maintaining operational effectiveness, ensuring that the
group can serve its customers, assessing impacts on earnings,
liquidity and capital, planning for different potential scenarios
and engaging with stakeholders. The respective boards of directors
of Power Financial, Lifeco, IGM, Pargesa and GBL are responsible
for the governance structures and processes to oversee the
management of the risk and potential impacts presented by the
current economic slowdown and other potential consequences due to
COVID-19.
The duration and impact of the COVID-19 pandemic is unknown at
this time. Economic damage and market weakness are being felt
across the global economy. Significant economic headwinds are
expected to continue in the second half of 2020 as a result of
anticipated negative credit experiences, impairment of valuations
in certain sectors of the economy and asset classes, and
uncertainties in the durability and effectiveness of government and
central bank interventions, among others. 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 October 30, 2020
to shareholders of record September 30,
2020.
Dividends on Power Corporation Non-Participating Preferred
Shares
The Board of Directors also declared quarterly dividends on the
Corporation's preferred shares, payable October 15, 2020 to
shareholders of record September 24,
2020:
Series
|
Stock
Symbol
|
Amount
|
|
Series
|
Stock
Symbol
|
Amount
|
1986
Series
|
POW.PR.F
|
Floating rate
[1]
|
|
Series C
|
POW.PR.C
|
36.25¢
|
Series A
|
POW.PR.A
|
35¢
|
|
Series D
|
POW.PR.D
|
31.25¢
|
Series B
|
POW.PR.B
|
33.4375¢
|
|
Series G
|
POW.PR.G
|
35¢
|
[1]
|
Equal to one quarter
of 70% of the average prime rate of two major Canadian chartered
banks for the period June 1 to August 31, 2020.
|
About Power Corporation
Power Corporation is an international management and holding
company that focuses on financial services in North America, Europe and Asia. Its core holdings are leading insurance,
retirement, wealth management and investment businesses, including
a portfolio of alternative asset investment platforms. To learn
more, visit www.PowerCorporation.com.
At June 30, 2020, Power
Corporation held the following economic interests:
- 100% – Power
Financial
www.powerfinancial.com
-
- 66.9% – Great-West Lifeco (TSX:
GWO)
www.greatwestlifeco.com
- 62.1% – IGM Financial (TSX: IGM)
www.igmfinancial.com
- 44.5% – Pargesa Holding (SIX: PARG)
[1]
www.pargesa.ch
- 83.6% – Wealthsimple Financial
Corp. [2]
www.wealthsimple.com
- Investment Platforms
-
- 100% – Sagard Holdings [3]
www.sagardholdings.com
- 100% – Power Sustainable
Capital
www.powersustainable.com
-
- Power Pacific Investment Management
www.powerpacificim.com
- Power Energy Corporation
www.powerenergycorporation.com
- 27.8% – China
AMC [4]
www.chinaamc.com
[1]
|
Increased from 27.8%
to 44.5% on June 16, 2020.
|
[2]
|
Undiluted equity
interest held by Lifeco, IGM and Power Financial.
|
[3]
|
Includes the
Corporation's interest in European private equity funds (formerly
Sagard Europe). Refer to the Corporation's most recent MD&A for
interest in the funds managed by Sagard Holdings.
|
[4]
|
IGM and the
Corporation each hold a 13.9% interest in China AMC.
|
Earnings Summary
Earnings
(unaudited)
|
Three months
ended
|
|
Six months
ended
|
(in millions of
Canadian dollars)
|
June 30,
|
|
June 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Adjusted net
earnings [1]
|
|
|
|
|
|
|
|
Power
Financial
|
|
|
|
|
|
|
|
Lifeco
[2]
|
470
|
|
419
|
|
832
|
|
803
|
IGM
[2]
|
108
|
|
113
|
|
205
|
|
220
|
Pargesa
[2]
|
42
|
|
93
|
|
121
|
|
139
|
Corporate
operations of Power Financial
|
|
|
|
|
|
|
|
Income (loss) from investments
|
3
|
|
−
|
|
(4)
|
|
(4)
|
Operating and other expenses
|
(21)
|
|
(25)
|
|
(49)
|
|
(50)
|
Dividends on perpetual preferred shares
|
(34)
|
|
(34)
|
|
(69)
|
|
(69)
|
|
568
|
|
566
|
|
1,036
|
|
1,039
|
Attributable to
non-controlling interests of Power Financial [3]
|
−
|
|
202
|
|
116
|
|
366
|
Corporation's share
of Power Financial
|
568
|
|
364
|
|
920
|
|
673
|
Other Investments
[4]
|
(2)
|
|
40
|
|
30
|
|
24
|
China AMC
|
10
|
|
8
|
|
19
|
|
15
|
Corporate
operations
|
(30)
|
|
(40)
|
|
(65)
|
|
(76)
|
Dividends on
non-participating shares
|
(13)
|
|
(13)
|
|
(26)
|
|
(26)
|
Adjusted net
earnings [5]
|
533
|
|
359
|
|
878
|
|
610
|
Adjustments – see
below
|
133
|
|
(81)
|
|
(12)
|
|
(40)
|
Net
earnings [5]
|
666
|
|
278
|
|
866
|
|
570
|
[1]
|
Effective the first
quarter of 2020, the Corporation introduced a modified definition
of its Non-IFRS earnings measures, Adjusted net earnings. The
comparative figures have been restated. For additional information,
please refer to the Non-IFRS Financial Measures and Presentation
section later in this news release.
|
[2]
|
The contributions
from Lifeco and IGM include an allocation of the results of
Wealthsimple Financial Corp., KOHO Financial Inc., Portag3 Ventures
Limited Partnership and Portag3 Ventures II Limited Partnership,
based on their respective interest. The contributions from IGM and
Pargesa reflect adjustments in accordance with IAS 39.
|
[3]
|
The comparatives have
been adjusted to reflect a corporate elimination on consolidation
directly in the contribution from IGM.
|
[4]
|
Includes earnings of
the Corporation's investment platforms and earnings (losses) from
Power Energy Corporation and standalone businesses which include
IntegraMed (up to the date of deconsolidation on May 20,
2020).
|
[5]
|
Attributable to
participating shareholders.
|
Earnings per Share
(unaudited)
|
Three months
ended
|
|
Six months
ended
|
(in dollars per
share)
|
June 30,
|
|
June 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Adjusted net
earnings per share - basic
[1]
|
|
|
|
|
|
|
|
Power
Financial
|
|
|
|
|
|
|
|
Lifeco
[2]
|
0.70
|
|
0.62
|
|
1.23
|
|
1.17
|
IGM
[2]
|
0.16
|
|
0.17
|
|
0.30
|
|
0.31
|
Pargesa
[2]
|
0.06
|
|
0.14
|
|
0.14
|
|
0.20
|
Corporate
operations of Power Financial
|
(0.08)
|
|
(0.09)
|
|
(0.18)
|
|
(0.18)
|
|
0.84
|
|
0.84
|
|
1.49
|
|
1.50
|
Other investments
[3]
|
−
|
|
0.10
|
|
0.05
|
|
0.06
|
China AMC
|
0.01
|
|
0.01
|
|
0.03
|
|
0.03
|
Corporate operations
and dividends
on
non-participating shares
|
(0.06)
|
|
(0.12)
|
|
(0.15)
|
|
(0.23)
|
Adjusted net
earnings per share [4]
|
0.79
|
|
0.83
|
|
1.42
|
|
1.36
|
Adjustments – see
below
|
0.20
|
|
(0.19)
|
|
(0.02)
|
|
(0.09)
|
Net earnings per
share [4]
|
0.99
|
|
0.64
|
|
1.40
|
|
1.27
|
|
|
|
|
|
|
|
|
|
[1]
|
Effective the first
quarter of 2020, the Corporation introduced a modified definition
of its Non-IFRS earnings measures, Adjusted net earnings. The
comparative figures have been restated. For additional information,
please refer to the Non-IFRS Financial Measures and Presentation
section later in this news release.
|
[2]
|
The contributions
from Lifeco and IGM include an allocation of the results of
Wealthsimple Financial Corp., KOHO Financial Inc., Portag3 Ventures
Limited Partnership and Portag3 Ventures II Limited Partnership,
based on their respective interest. The contributions from IGM and
Pargesa reflect adjustments in accordance with IAS 39.
|
[3]
|
Includes earnings of
the Corporation's investment platforms and earnings (losses) from
Power Energy Corporation and standalone businesses which include
IntegraMed (up to the date of deconsolidation on May 20,
2020).
|
[4]
|
Attributable to
participating shareholders.
|
Investment Platforms
(unaudited)
|
Three months
ended
|
|
Six months
ended
|
(in millions of
Canadian dollars)
|
June 30,
|
|
June 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Sagard
Holdings
|
|
|
|
|
|
|
|
Asset
management activities [1]
|
1
|
|
(13)
|
|
(4)
|
|
(20)
|
Investment
activities (proprietary capital)
|
(5)
|
|
5
|
|
32
|
|
8
|
Power Sustainable
Capital
|
|
|
|
|
|
|
|
Investment
activities (proprietary capital)
|
(7)
|
|
49
|
|
43
|
|
52
|
Other
|
|
|
|
|
|
|
|
Standalone
businesses [2]
|
5
|
|
(20)
|
|
(39)
|
|
(34)
|
Investment and
hedge funds and other [3]
|
4
|
|
19
|
|
(2)
|
|
18
|
|
(2)
|
|
40
|
|
30
|
|
24
|
[1]
|
Includes management
fees charged by the investment platform on proprietary capital.
Management fees paid by the Corporation are deducted from income
from investment activities.
|
[2]
|
Includes the
Corporation's share of earnings (losses) of IntegraMed (up to the
date of deconsolidation on May 20, 2020), Lumenpulse Group Inc.,
The Lion Electric Co., and a jointly controlled corporation and
associates.
|
[3]
|
Other consists mainly
of foreign exchange gains or losses and interest on cash and cash
equivalents.
|
Adjustments (not included in adjusted net earnings)
(unaudited)
|
Three months
ended
|
|
Six months
ended
|
(in millions of
Canadian dollars)
|
June 30,
|
|
June 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Share of Lifeco's
adjustments:
|
|
|
|
|
|
|
|
Actuarial assumption
changes and management actions
|
82
|
|
25
|
|
47
|
|
113
|
Market-related
impacts
|
23
|
|
(4)
|
|
(77)
|
|
(32)
|
Net charge on the
sale, via reinsurance, of U.S. individual life insurance and
annuity business
|
−
|
|
(134)
|
|
−
|
|
(134)
|
|
105
|
|
(113)
|
|
(30)
|
|
(53)
|
Share of IGM's
adjustments:
|
|
|
|
|
|
|
|
Share of Lifeco's
adjustments [1]
|
4
|
|
(4)
|
|
(1)
|
|
(2)
|
|
4
|
|
(4)
|
|
(1)
|
|
(2)
|
Share of Pargesa's
adjustments:
|
|
|
|
|
|
|
|
Imerys – Impairments,
restructuring charges and other
|
(2)
|
|
(7)
|
|
(2)
|
|
(7)
|
Parques and other
charges
|
(1)
|
|
−
|
|
(2)
|
|
−
|
|
(3)
|
|
(7)
|
|
(4)
|
|
(7)
|
|
106
|
|
(124)
|
|
(35)
|
|
(62)
|
Attributable to
non-controlling interests of Power Financial
|
−
|
|
(43)
|
|
4
|
|
(22)
|
Corporation's share
of Power Financial
|
106
|
|
(81)
|
|
(39)
|
|
(40)
|
Other
investments
|
|
|
|
|
|
|
|
Recovery on
deconsolidation of IntegraMed
|
27
|
|
−
|
|
27
|
|
−
|
|
133
|
|
(81)
|
|
(12)
|
|
(40)
|
[1]
|
Includes IGM's share
of Lifeco's Adjustments for the impact of actuarial assumption
changes and management actions and market-related impacts on
insurance contract liabilities, in accordance with the
Corporation's definition of Adjusted net earnings. For additional
information, please refer to the Non-IFRS Financial Measures and
Presentation section later in this news release.
|
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 $32.96 at June 30,
2020, compared with $30.79 at
March 31, 2020, representing an
increase of 7.0%. The net asset value per share was $44.98 at December 31,
2019.
(in millions of
Canadian dollars, except per share
amounts)
|
June 30,
2020
|
December 31,
2019
|
|
Combined
non-consolidated
balance sheet
|
Fair value
adjustment
|
Net asset
value
|
Combined
non-consolidated
balance sheet [1]
|
Fair value
adjustment
|
Net asset
value
|
Assets
|
|
|
|
|
|
|
Investments
|
|
|
|
|
|
|
Power
Financial [2]
|
|
|
|
|
|
|
Lifeco
|
13,933
|
829
|
14,762
|
13,654
|
6,976
|
20,630
|
IGM
|
2,778
|
2,102
|
4,880
|
2,729
|
2,786
|
5,515
|
Parjointco [3]
|
3,763
|
(1,223)
|
2,540
|
3,954
|
(1,413)
|
2,541
|
Other Power Financial
investments
|
193
|
134
|
327
|
203
|
127
|
330
|
Other
investments
|
|
|
|
|
|
|
Sagard
Holdings
|
|
|
|
|
|
|
Asset management
companies [4]
|
164
|
−
|
164
|
153
|
−
|
153
|
Investments
[5]
|
686
|
−
|
686
|
587
|
−
|
587
|
Power Sustainable
Capital
|
|
|
|
|
|
|
Power
Pacific
|
850
|
−
|
850
|
739
|
−
|
739
|
Power Energy
Corporation
|
384
|
349
|
733
|
325
|
320
|
645
|
Other
|
660
|
199
|
859
|
671
|
223
|
894
|
China
AMC [6]
|
687
|
−
|
687
|
658
|
−
|
658
|
Cash and cash
equivalents
|
1,362
|
−
|
1,362
|
1,392
|
−
|
1,392
|
Other
assets
|
337
|
−
|
337
|
360
|
−
|
360
|
Total
assets
|
25,797
|
2,390
|
28,187
|
25,425
|
9,019
|
34,444
|
|
|
|
|
|
|
|
Liabilities
and
non-participating shares
|
|
|
|
|
|
|
Debentures and other
debt instruments
|
1,027
|
−
|
1,027
|
933
|
−
|
933
|
Other
liabilities [7]
|
1,083
|
−
|
1,083
|
1,024
|
−
|
1,024
|
Non-participating
shares and
perpetual preferred shares
|
3,788
|
−
|
3,788
|
3,790
|
−
|
3,790
|
Total liabilities
and
non-participating shares
|
5,898
|
−
|
5,898
|
5,747
|
−
|
5,747
|
Non-controlling
interests
|
−
|
−
|
−
|
6,464
|
3,050
|
9,514
|
|
5,898
|
−
|
5,898
|
12,211
|
3,050
|
15,261
|
|
|
|
|
|
|
|
Net
value
|
|
|
|
|
|
|
Participating
shareholders'
equity / Net asset value
|
19,899
|
2,390
|
22,289
|
13,214
|
5,969
|
19,183
|
|
|
|
|
|
|
|
Per
share
|
29.43
|
|
32.96
|
30.98
|
|
44.98
|
[1]
|
In the second quarter
of 2020, the Corporation modified the presentation of the asset
management companies held by the investment platforms. For
additional information, please refer to the Non-IFRS Financial
Measures and Presentation below.
|
[2]
|
Investments held by
Power Financial have been presented on a look-through basis at
December 31, 2019; the corresponding adjustment representing the
ownership not held by Power Corporation is included in
non-controlling interests.
|
[3]
|
As part of the
Pargesa reorganization, Parjointco holds approximately 90% of
Pargesa's shares at June 30, 2020; the fair value of Parjointco at
June 30, 2020 is based on the market value of GBL. At December 31,
2019, the fair value of Parjointco based on the market value of GBL
was $3,032 million.
|
[4]
|
The management
companies of the investment funds are presented at their carrying
value in accordance with IFRS.
|
[5]
|
Includes investments
in European private equity, formerly Sagard Europe.
|
[6]
|
Valued at carrying
value in accordance with IFRS.
|
[7]
|
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
In the second quarter of 2020, the Corporation modified the
presentation of the asset management companies held by the
investment platforms. Previously, the asset management activities
were consolidated and included as corporate activities within the
non-consolidated balance sheet of the Corporation. Pursuant to the
Corporation's recently announced strategy, the activities of each
asset management company are now presented within their operations.
The comparatives in the non-consolidated balance sheets and
non-consolidated statement of cash flows have been restated to
reflect this change.
Effective the first quarter of 2020, the Corporation introduced
a modified definition of its non-IFRS earnings measure, Adjusted
net earnings. This change is consistent with the introduction of
base earnings (loss) by Lifeco which was introduced in the first
quarter of 2020 to reflect management's view of the operating
performance of Lifeco. Lifeco defines base earnings (loss) as net
earnings excluding the impact of actuarial assumption changes and
management actions, direct equity and interest rate market impacts
on insurance contract liabilities net of hedging, and items that
management believes are not indicative of the company's underlying
business results. The definition of Adjustments includes what the
Corporation previously presented as other items and also includes
Lifeco's impact of actuarial assumption changes and management
actions, and direct equity and interest rate market impacts on
insurance contract liabilities net of hedging. The definition of
Adjustments used in Adjusted net earnings is being adopted to
enhance comparability of results between reporting periods and in
anticipation of Lifeco's implementation of accounting changes
related to IFRS 17, Insurance Contracts, on January 1, 2023. The comparative periods have
been restated to reflect the introduction of this modified
measure.
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 would make the period-over-period
comparison of results from operations less meaningful. Adjustments
include 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 from this non-IFRS financial measure.
Adjusted net earnings attributable to participating shareholders
and adjusted net earnings per share are non-IFRS financial measures
that do not have a standard meaning and may not be comparable to
similar measures used by other entities.
The Corporation also uses a non-consolidated basis of
presentation to present and analyze its results whereby the
Corporation's interests in Power Financial and other subsidiaries
are accounted for using the equity method. Presentation on a
non-consolidated basis is a non-IFRS presentation. However, it is
useful to the reader as it presents the holding company's (parent)
results separately from the results of its operating
subsidiaries.
Net asset value is commonly used by holding companies to
determine 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 (through Parjointco)) are measured
at their market value and investments in private entities and
investment funds are measured at management's estimate of fair
value. Pargesa's net asset value is determined on the basis of
current market values for listed shareholdings, plus the fair value
of private equity activities and GBL treasury shares, less net
debt. This measure presents the fair value of the net assets of the
holding company to management and investors and assists the reader
in determining the value of the holding company.
This news release may also contain other non-IFRS financial
measures which are publicly disclosed by the Corporation's
subsidiaries such as sales, assets under management and assets
under administration. Refer to the "Non-IFRS Financial Measures and
Presentation" section of the Corporation's most recent Management's
Discussion and Analysis for the definition of non-IFRS financial
measures and their reconciliation with IFRS financial measures.
Eligible Dividends
For purposes of the Income Tax Act (Canada) and any similar provincial
legislation, all of the above dividends on the Corporation's
preferred shares (including the Participating Preferred Shares) and
Subordinate Voting Shares are eligible dividends.
Forward-Looking Statements
Certain statements in this news release, other than statements
of historical fact, are forward-looking statements based on certain
assumptions and reflect the Corporation's current expectations, or
with respect to disclosure regarding the Corporation's public
subsidiaries, reflect such subsidiaries' disclosed current
expectations. Forward-looking statements are provided for the
purposes of assisting the reader in understanding the Corporation's
financial performance, financial position and cash flows as at and
for the periods ended on certain dates and to present information
about management's current expectations and plans relating to the
future and the reader is cautioned that such statements may not be
appropriate for other purposes. These statements may include,
without limitation, statements regarding the operations, business,
financial condition, expected financial results, performance,
prospects, opportunities, priorities, targets, goals, ongoing
objectives, strategies and outlook of the Corporation and its
subsidiaries, including the fintech strategy, the expected impact
of the COVID-19 pandemic on the Corporation and its subsidiaries'
operations, results and dividends, as well as the outlook for North
American and international economies for the current fiscal year
and subsequent periods, the intended effects of the Reorganization
(as defined herein), and the proposed redemption by the Corporation
and Power Financial of certain classes of their Second Preferred
Shares. 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, and the Corporation's and its subsidiaries'
success in anticipating and managing the foregoing factors.
The reader is cautioned to consider these and other factors,
uncertainties and potential events carefully and not to put undue
reliance on forward-looking statements. Information contained in
forward-looking statements is based upon certain material
assumptions that were applied in drawing a conclusion or making a
forecast or projection, including management's perceptions of
historical trends, current conditions and expected future
developments, as well as other considerations that are believed to
be appropriate in the circumstances, including the availability of
cash to redeem Second Preferred Shares of the Corporation and Power
Financial and that the list of factors in the previous paragraph,
collectively, are not expected to have a material impact on the
Corporation and its subsidiaries. While the Corporation considers
these assumptions to be reasonable based on information currently
available to management, they may prove to be incorrect.
Other than as specifically required by applicable Canadian law,
the Corporation undertakes no obligation to update any
forward-looking statement to reflect events or circumstances after
the date on which such statement is made, or to reflect the
occurrence of unanticipated events, whether as a result of new
information, future events or results, or otherwise.
Additional information about the risks and uncertainties of the
Corporation's business and material factors or assumptions on which
information contained in forward-looking statements is based is
provided in its disclosure materials, including its most recent
Management's Discussion and Analysis and Annual Information Form,
filed with the securities regulatory authorities in Canada and available at www.sedar.com.
SOURCE Power Corporation of Canada