All figures are in Canadian dollars unless otherwise noted. Readers are referred to the sections "Non-IFRS Financial Measures and Presentation" and "Forward-Looking Statements" at the end of this release.
TORONTO, Nov. 10, 2017 /CNW Telbec/ - Power Corporation of Canada (TSX: POW) today reported earnings results for the third quarter and nine months ended September 30, 2017.
THIRD QUARTER RESULTS
Net earnings attributable to participating shareholders were $470 million or $1.02 per share, compared with $303 million or $0.65 per share in 2016.
Net earnings attributable to participating shareholders include the Corporation's share ($81 million or $0.17 per share) of a $175 million charge at Great-West Lifeco Inc. (Lifeco) related to recent hurricanes. Excluding this charge, net earnings of Power Corporation were $551 million or $1.19 per share.
NINE-MONTH RESULTS
Net earnings attributable to participating shareholders were $1,078 million or $2.33 per share, compared with $623 million or $1.34 per share in 2016.
Adjusted net earnings attributable to participating shareholders (a non-IFRS financial measure) were $1,141 million or $2.46 per share, compared with $811 million or $1.75 per share in 2016.
Other items, not included in adjusted net earnings, resulted in a net charge of $63 million. Other items, recorded in the second quarter, consisted of the Corporation's share of Lifeco's restructuring charges to realign its Canadian operations and of IGM Financial Inc.'s (IGM) favourable revaluation of its registered pension plan obligation.
RESULTS OF POWER FINANCIAL CORPORATION
FOR THE PERIOD ENDED SEPTEMBER 30
THIRD QUARTER RESULTS
Power Financial reported net earnings attributable to common shareholders of $463 million or $0.65 per share, compared with $539 million or $0.76 per share in 2016.
For the third quarter, Lifeco's net earnings included property catastrophe reinsurance losses of $175 million after tax relating to estimated claims resulting from the impact of Hurricanes Harvey, Irma and Maria which reduced Lifeco's net earnings per share by $0.177. Power Financial's share of this loss was $123 million or $0.17 per share. Excluding this charge, net earnings of Power Financial were $586 million or $0.82 per share.
NINE-MONTH RESULTS
Power Financial reported net earnings attributable to common shareholders of $1,492 million or $2.09 per share, compared with $1,303 million or $1.83 per share in 2016.
Adjusted net earnings attributable to common shareholders were $1,588 million or $2.22 per share, compared with $1,589 million or $2.23 per share in 2016.
Other items, not included in adjusted net earnings, resulted in a net charge of $96 million representing Power Financial's share of Lifeco's restructuring charges to realign its Canadian operations and of IGM's favourable revaluation of its registered pension plan obligation.
At September 30, 2017, Power Corporation held a 65.6% economic interest in Power Financial. Power Financial's contribution to Power Corporation's net earnings was $304 million for the quarter, compared with $354 million in 2016. For the nine-month period, Power Financial contributed $978 million to Power Corporation's net earnings, compared with $855 million in 2016. For the nine-month period, Power Financial contributed $1,041 million to Power Corporation's adjusted net earnings, compared with $1,043 million in 2016.
SAGARD INVESTMENT FUNDS, CHINA AMC AND OTHER INVESTMENTS
FOR THE PERIOD ENDED SEPTEMBER 30
THIRD QUARTER RESULTS
Income from investments was $219 million, compared with $4 million in 2016. Income from investments includes a non-cash gain of $174 million on the Corporation's investment in China Asset Management Co., Ltd. (China AMC); income of $34 million from the Sagard Investment Funds; and income of $8 million in Other Investments.
NINE-MONTH RESULTS
Income from investments was $306 million, compared with a loss of $45 million in 2016.
DIVIDEND ON PARTICIPATING SHARES
The Board of Directors today declared a quarterly dividend of 35.85 cents per share on the Participating Preferred Shares and the Subordinate Voting Shares of the Corporation, payable December 29, 2017 to shareholders of record December 8, 2017.
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 |
DIVIDEND |
| 1986 Series – POW.PR.F |
December 22, 2017 |
January 15, 2018 |
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 22, 2017 |
January 15, 2018 |
35¢ |
| Series B – POW.PR.B |
December 22, 2017 |
January 15, 2018 |
33.4375¢ |
| Series C – POW.PR.C |
December 22, 2017 |
January 15, 2018 |
36.25¢ |
| Series D – POW.PR.D |
December 22, 2017 |
January 15, 2018 |
31.25¢ |
| Series G – POW.PR.G |
December 22, 2017 |
January 15, 2018 |
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, renewable energy, communications and other business sectors in North America, Europe and Asia. To learn more, visit www.powercorporation.com.
| EARNINGS SUMMARY |
||||||||
| (unaudited) |
Three months ended |
Nine months ended |
||||||
| (in millions of Canadian dollars, except per share amounts) |
September 30, |
September 30, |
||||||
| 2017 |
2016 |
2017 |
2016 |
|||||
| Adjusted net earnings |
||||||||
| Power Financial |
305 |
362 |
1,041 |
1,043 |
||||
| Other subsidiaries [1] |
(10) |
(12) |
(65) |
(50) |
||||
| 295 |
350 |
976 |
993 |
|||||
| Corporate operations |
||||||||
| Income – Sagard Investment Funds, China AMC and Other Investments [2] |
219 |
4 |
306 |
(45) |
||||
| Operating and other expenses |
(30) |
(30) |
(102) |
(98) |
||||
| Dividends on non-participating shares |
(13) |
(13) |
(39) |
(39) |
||||
| Adjusted net earnings [3] |
471 |
311 |
1,141 |
811 |
||||
| Other items – see below |
(1) |
(8) |
(63) |
(188) |
||||
| Net earnings [3] |
470 |
303 |
1,078 |
623 |
||||
| Earnings per share – Basic [3] |
||||||||
| Adjusted net earnings |
1.02 |
0.67 |
2.46 |
1.75 |
||||
| Other items |
– |
(0.02) |
(0.13) |
(0.41) |
||||
| Net earnings |
1.02 |
0.65 |
2.33 |
1.34 |
||||
| [1] |
Comprised of: Power Energy Corporation, Square Victoria Communications Group Inc., and controlled portfolio investments IntegraMed America, Inc. and Vein Clinics of America, Inc. (held through Sagard Holdings). |
| [2] |
Excluding earnings (losses) from controlled portfolio investments. |
| [3] |
Attributable to participating shareholders. |
| OTHER ITEMS |
|||||||||
| (unaudited) |
Three months ended |
Nine months ended |
|||||||
| (in millions of Canadian dollars) |
September 30, |
September 30, |
|||||||
| 2017 |
2016 |
2017 |
2016 |
||||||
| Share of Power Financial's other items: |
|||||||||
| Lifeco |
|||||||||
| Restructuring charges [1] |
– |
(7) |
(69) |
(10) |
|||||
| IGM |
|||||||||
| Restructuring charges |
– |
– |
(6) |
– |
|||||
| Pension plan |
– |
– |
15 |
– |
|||||
| Share of Lifeco's other items |
– |
– |
(3) |
– |
|||||
| – |
– |
6 |
– |
||||||
| Pargesa Holding SA |
|||||||||
| Total SA – Gain on partial disposal |
– |
– |
– |
67 |
|||||
| LafargeHolcim Ltd – Impairment charges |
– |
– |
– |
(237) |
|||||
| Engie – Impairment charges |
– |
– |
– |
(6) |
|||||
| Other (charge) income |
(1) |
(1) |
– |
(2) |
|||||
| (1) |
(1) |
– |
(178) |
||||||
| (1) |
(8) |
(63) |
(188) |
||||||
| [1] |
Amounts in comparative period have been reclassified. |
| INCOME – SAGARD INVESTMENT FUNDS, CHINA AMC |
||||||||
| (unaudited) |
Three months ended |
Nine months ended |
||||||
| (in millions of Canadian dollars) |
September 30, |
September 30, |
||||||
| 2017 |
2016 |
2017 |
2016 |
|||||
| Sagard Investment Funds [1] |
||||||||
| Sagard Europe |
6 |
(1) |
1 |
(5) |
||||
| Sagard Holdings [2, 3] |
7 |
7 |
5 |
(39) |
||||
| Sagard China |
21 |
(1) |
39 |
(10) |
||||
| China AMC[4] |
177 |
– |
177 |
6 |
||||
| Other Investments |
||||||||
| Investment and hedge funds |
12 |
– |
90 |
12 |
||||
| Other [5] |
(4) |
(1) |
(6) |
(9) |
||||
| 219 |
4 |
306 |
(45) |
|||||
| [1] |
Income from investments for the Sagard Investment Funds is presented net of expenses of their separate dedicated teams. |
| [2] |
Excludes the Corporation's share of the results of IntegraMed America, Inc. and Vein Clinics of America, Inc., presented in adjusted net earnings as Other subsidiaries. |
| [3] |
Includes share of earnings (loss) from investments in a jointly controlled corporation and an associate. |
| [4] |
Previously accumulated unrealized gains of $174 million were recognized as income upon attaining significant influence. |
| [5] |
Consisting mainly of foreign exchange gains or losses and interest on cash and cash equivalents. |
| SAGARD INVESTMENT FUNDS |
||||||||
| September 30, 2017 |
December 31, 2016 |
|||||||
| Sagard |
Sagard |
Sagard |
Total |
Sagard |
Sagard |
Sagard |
Total |
|
| Cost |
243 |
419 |
562 |
1,224 |
211 |
388 |
306 |
905 |
| Unrealized gain |
201 |
14 |
36 |
251 |
70 |
41 |
10 |
121 |
| Fair value of non-controlled portfolio investments [1] |
444 |
433 |
598 |
1,475 |
281 |
429 |
316 |
1,026 |
| Cash |
− |
39 |
103 |
142 |
− |
125 |
331 |
456 |
| Fair value of controlled portfolio investments and other |
− |
363 |
− |
363 |
− |
334 |
− |
334 |
| Total fair value |
444 |
835 |
701 |
1,980 |
281 |
888 |
647 |
1,816 |
| [1] |
As reported in the Corporation's non-consolidated balance sheets. |
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
Net earnings attributable to participating shareholders are comprised of:
- adjusted net earnings attributable to participating shareholders; and
- other items, which include the after-tax impact of any item that in management's judgment would make the period-over-period comparison of results from operations less meaningful. Other items include the Corporation's share of items presented as other items by a subsidiary or a jointly controlled corporation.
Management uses these financial measures in its presentation and analysis of the financial performance of Power Corporation, and believes that they provide additional meaningful information to readers in their analysis of the results of the Corporation. Adjusted net earnings, as defined by the Corporation, assist the reader in comparing the current period's results to those of previous periods as items that are not considered to be part of ongoing activities are excluded from this non-IFRS measure.
Adjusted net earnings attributable to participating shareholders and adjusted net earnings per share are non-IFRS financial measures that do not have a standard meaning and may not be comparable to similar measures used by other entities.
The Corporation also uses a non-consolidated basis of presentation to present and analyze its results whereby the Corporation's interests in Power Financial and other subsidiaries are accounted for using the equity method. Presentation on a non-consolidated basis is a non-IFRS presentation. However, it is useful to the reader as it presents the holding company's (parent) results separately from the results of its operating subsidiaries.
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
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