Power Corporation Reports 2016 Third Quarter and Nine-Month Financial Results and Dividends

All figures are in Canadian dollars unless otherwise noted. Readers are referred to the sections entitled "Non-IFRS Financial Measures and Presentation" and "Forward-Looking Statements" at the end of this release.  

TORONTO, Nov. 11, 2016 /CNW Telbec/ - Power Corporation of Canada (TSX: POW) today reported earnings results for the third quarter and nine months ended September 30, 2016.

THIRD QUARTER RESULTS

Operating earnings attributable to participating shareholders (a non-IFRS financial measure) for the quarter ended September 30, 2016 were $304 million or $0.65 per share, compared with $484 million or $1.04 per share in 2015.

Net earnings attributable to participating shareholders were $303 million or $0.65 per share, compared with $508 million or $1.09 per share in 2015.

NINE-MONTH RESULTS

Operating earnings attributable to participating shareholders for the nine months ended September 30, 2016 were $801 million or $1.72 per share, compared with $1,256 million or $2.71 per share in 2015.

Non-operating items, not included in operating earnings, resulted in a net charge of $178 million which was mainly comprised of the Corporation's share of Groupe Bruxelles Lambert's (GBL) non-cash impairment charge as a result of a decrease in LafargeHolcim Ltd's share price, partially offset by a gain on the partial disposal of its interest in Total SA.

Net earnings attributable to participating shareholders were $623 million or $1.34 per share, compared with $1,477 million or $3.19 per share in 2015.

RESULTS OF POWER FINANCIAL CORPORATION

THIRD QUARTER RESULTS

Power Financial reported operating earnings attributable to common shareholders for the quarter ended September 30, 2016 of $541 million or $0.76 per share, compared with $596 million or $0.83 per share in 2015. 

Net earnings attributable to common shareholders were $539 million or $0.76 per share, compared with $602 million or $0.84 per share in 2015.

NINE-MONTH RESULTS

Operating earnings attributable to common shareholders for the nine months ended September 30, 2016 were $1,574 million or $2.21 per share, compared with $1,720 million or $2.41 per share in 2015. 

Non-operating items, not included in operating earnings, were a net charge of $271 million representing Power Financial's share of GBL's non-operating items, as discussed above.  

Net earnings attributable to common shareholders were $1,303 million or $1.83 per share, compared with $1,791 million or $2.51 per share in 2015.

At September 30, 2016, Power Corporation held a 65.6% economic interest in Power Financial. Power Financial's contribution to Power Corporation's operating earnings was $355 million for the quarter ended September 30, 2016, compared with $391 million in 2015. For the nine months ended September 30, 2016, Power Financial contributed $1,033 million to Power Corporation's operating earnings, compared with $1,129 million in 2015.

INCOME FROM INVESTMENTS

THIRD QUARTER RESULTS

Income from investments represented a gain of $4 million for the quarter ended September 30, 2016, compared with $144 million in 2015. The fair value of investments at the end of the quarter was $2,808 million, compared with $2,678 million at the end of 2015.

NINE-MONTH RESULTS

Income from investments represented a loss of $45 million for the nine-month period ended September 30, 2016, compared with a gain of $309 million in 2015.

DIVIDEND ON PARTICIPATING SHARES

The Board of Directors today declared a quarterly dividend of 33.50 cents per share on the Participating Preferred Shares and the Subordinate Voting Shares of the Corporation, payable December 30, 2016 to shareholders of record December 9, 2016.

DIVIDENDS ON NON-PARTICIPATING PREFERRED SHARES

The Board of Directors also declared quarterly dividends on the Corporation's preferred shares, as follows:

SERIES – STOCK SYMBOL	RECORD DATE	PAYMENT DATE	AMOUNT
1986 Series – POW.PR.F	December 23, 2016	January 15, 2017	At a floating rate equal to one quarter of 70% of the average prime rate of two major Canadian chartered banks ^[1]
Series A – POW.PR.A	December 23, 2016	January 15, 2017	35¢
Series B – POW.PR.B	December 23, 2016	January 15, 2017	33.4375¢
Series C – POW.PR.C	December 23, 2016	January 15, 2017	36.25¢
Series D – POW.PR.D	December 23, 2016	January 15, 2017	31.25¢
Series G – POW.PR.G	December 23, 2016	January 15, 2017	35¢

[1] In accordance with the articles of the Corporation

ABOUT POWER CORPORATION

Power Corporation of Canada is a diversified international management and holding company with interests in companies in the financial services, communications and other business sectors in North America, Europe and Asia. To learn more, visit www.powercorporation.com.

EARNINGS SUMMARY
(unaudited) (in millions of Canadian dollars, except per share amounts)		Three months ended				Nine months ended
		September 30, 2016		September 30, 2015		September 30, 2016		September 30, 2015
Operating earnings
	Power Financial	355		391		1,033		1,129
	Other subsidiaries ^[1]	(12)		(5)		(50)		(44)
		343		386		983		1,085
	Income from investments ^[2]	4		144		(45)		309
	Operating and other expenses	(30)		(33)		(98)		(99)
	Dividends on non-participating shares	(13)		(13)		(39)		(39)
Operating earnings (attributable to participating shareholders)		304		484		801		1,256
	Other items (non-operating earnings) – see below	(1)		24		(178)		221
Net earnings (attributable to participating shareholders)		303		508		623		1,477
Earnings per share (attributable to participating shareholders)
	Operating earnings	0.65		1.04		1.72		2.71
	Non-operating earnings	–		0.05		(0.38)		0.48
	Net earnings	0.65		1.09		1.34		3.19

[1]	Comprised of: Power Energy Corporation, Square Victoria Communications Group Inc., and controlled portfolio investments (Alvest and Les Délices des 7 Vallées (held through Sagard Europe), and IntegraMed America, Inc. and Vein Clinics of America, Inc. (held through Sagard Capital)).
[2]	Includes income from Sagard Investment Funds (excluding income from controlled portfolio investments) and income from other investments.

OTHER ITEMS (NON-OPERATING EARNINGS)
(unaudited) (in millions of Canadian dollars)			Three months ended				Nine months ended
			September 30, 2016		September 30, 2015		September 30, 2016		September 30, 2015
Share of Power Financial's other items:
	Pargesa Holding SA
		Total SA – Gain on partial disposal	–		–		67		6
		LafargeHolcim Ltd – Impairment charges	–		–		(237)		–
		Lafarge SA – Mark-to-market gains representing a reversal of impairment charges	–		5		–		58
		Lafarge SA – Impairment and restructuring charges	–		–		–		(15)
		Engie – Impairment charge	–		–		(6)		–
		Suez Environnement Company – Gain on exchange	–		–		–		2
		Other (charge) income	(1)		(1)		(2)		(5)
			(1)		4		(178)		46
Other subsidiaries			–		20		–		(8)
Corporate operations			–		–		–		183
			(1)		24		(178)		221

INCOME FROM INVESTMENTS
(unaudited) (in millions of Canadian dollars)		Three months ended				Nine months ended
		September 30, 2016		September 30, 2015		September 30, 2016		September 30, 2015
Sagard Investment Funds^[1]
	Sagard Europe^[2]	(1)		35		(5)		31
	Sagard Capital^[3]	7		(2)		(39)		(1)
	Sagard China	(1)		37		(10)		139
Other Investments
	Investment and hedge funds	−		55		12		63
	China Asset Management Co. Ltd.	−		−		6		−
	Other ^[4]	(1)		19		(9)		77
		4		144		(45)		309

[1]	Income from investments for the Sagard Investment Funds is presented net of expenses of their separate dedicated teams.
[2]	Excludes share of the results of Alvest and Les Délices des 7 Vallées, presented in operating earnings of other subsidiaries.
[3]	Excludes share of the results of IntegraMed America, Inc. and Vein Clinics of America, Inc., presented in operating earnings of other subsidiaries.
[4]	Consisting mainly of foreign exchange gains or losses and interest on cash and cash equivalents, and a gain of $46 million on an investment in China in 2015.

INVESTMENTS
September 30, 2016 (unaudited) (in millions of Canadian dollars)		Cost		Unrealized gain (loss)		Fair value of non-controlled portfolio investments		Cash		Fair value of controlled portfolio investments^[1]		Total fair value
Sagard Investment Funds
	Sagard Europe	203		73		276		−		67		343
	Sagard Capital	181		177		358		179		457		994
	Sagard China	383		49		432		230		−		662
		767		299		1,066		409		524		1,999
Other Investments
	China Asset Management Co. Ltd.	282		108		390		−		−		390
	Investment and hedge funds and other	273		146		419		−		−		419
Total		1,322		553		1,875		409		524		2,808
December 31, 2015 (unaudited) (in millions of Canadian dollars)		Cost		Unrealized gain (loss)		Fair value of non-controlled portfolio investments		Cash		Fair value of controlled portfolio investments^[1]		Total fair value
Sagard Investment Funds
	Sagard Europe	154		40		194		−		63		257
	Sagard Capital	268		202		470		21		460		951
	Sagard China	462		36		498		168		−		666
		884		278		1,162		189		523		1,874
Other Investments
	China Asset Management Co. Ltd.	282		28		310		−		−		310
	Investment and hedge funds and other	281		213		494		−		−		494
Total		1,447		519		1,966		189		523		2,678

[1]	Comprised of Alvest and Les Délices des 7 Vallées (held through Sagard Europe), and IntegraMed America, Inc. and Vein Clinics of America, Inc. (held through Sagard Capital).

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.

Non-IFRS Financial Measures and Presentation

In analyzing the financial results of the Corporation and consistent with the presentation in previous periods, net earnings attributable to participating shareholders are comprised of:

• operating earnings attributable to participating shareholders; and
• other items or non-operating earnings, which include the after-tax impact of any item that in management's judgment would make the period-over-period comparison of results from operations less meaningful. Other items include the Corporation's share of items presented as other items or non-operating earnings by a subsidiary or a jointly controlled corporation or associate.

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. Operating earnings, as defined by the Corporation, assist the reader in comparing the current period's results to those of previous periods as items that are not considered to be ongoing operating activities are excluded from this non-IFRS measure.

Operating earnings attributable to participating shareholders and operating 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, financial position and cash flows. In this basis of presentation, Power 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.

Forward-Looking Statements

Certain statements in this news release, other than statements of historical fact, are forward-looking statements based on certain assumptions and reflect the Corporation's current expectations, or with respect to disclosure regarding the Corporation's public subsidiaries, reflect such subsidiaries' disclosed current expectations. Forward-looking statements are provided for the purposes of assisting the reader in understanding the Corporation's financial performance, financial position and cash flows as at and for the periods ended on certain dates and to present information about management's current expectations and plans relating to the future and the reader is cautioned that such statements may not be appropriate for other purposes. These statements may include, without limitation, statements regarding the operations, business, financial condition, expected financial results, performance, prospects, opportunities, priorities, targets, goals, ongoing objectives, strategies and outlook of the Corporation and its subsidiaries, as well as the outlook for North American and international economies for the current fiscal year and subsequent periods. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, or include words such as "expects", "anticipates", "plans", "believes", "estimates", "seeks", "intends", "targets", "projects", "forecasts" or negative versions thereof and other similar expressions, or future or conditional verbs such as "may", "will", "should", "would" and "could".

By its nature, this information is subject to inherent risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct and that objectives, strategic goals and priorities will not be achieved. A variety of factors, many of which are beyond the Corporation's and its subsidiaries' control, affect the operations, performance and results of the Corporation and its subsidiaries and their businesses, and could cause actual results to differ materially from current expectations of estimated or anticipated events or results. These factors include, but are not limited to: the impact or unanticipated impact of general economic, political and market factors in North America and internationally, interest and foreign exchange rates, global equity and capital markets, management of market liquidity and funding risks, changes in accounting policies and methods used to report financial condition (including uncertainties associated with critical accounting assumptions and estimates), the effect of applying future accounting changes, business competition, operational and reputational risks, technological change, changes in government regulation and legislation, changes in tax laws, unexpected judicial or regulatory proceedings, catastrophic events, the Corporation's and its subsidiaries' ability to complete strategic transactions, integrate acquisitions and implement other growth strategies, and the Corporation's and its subsidiaries' success in anticipating and managing the foregoing factors.

The reader is cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking statements. Information contained in forward-looking statements is based upon certain material assumptions that were applied in drawing a conclusion or making a forecast or projection, including management's perceptions of historical trends, current conditions and expected future developments, as well as other considerations that are believed to be appropriate in the circumstances, including that the list of factors in the previous paragraph, collectively, are not expected to have a material impact on the Corporation and its subsidiaries. While the Corporation considers these assumptions to be reasonable based on information currently available to management, they may prove to be incorrect.

Other than as specifically required by applicable Canadian law, the Corporation undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or results, or otherwise.

Additional information about the risks and uncertainties of the Corporation's business and material factors or assumptions on which information contained in forward-looking statements is based is provided in its disclosure materials, including its most recent Management's Discussion and Analysis and Annual Information Form, filed with the securities regulatory authorities in Canada and available at www.sedar.com.

SOURCE Power Corporation of Canada

Mr. Stéphane Lemay, Vice-President, General Counsel and Secretary, 514-286-7400