Readers are referred to the sections "Non-IFRS Financial Measures and Presentation" and "Forward-Looking Statements" at the end of this release.
TORONTO, Aug. 3, 2018 /CNW Telbec/ - Power Financial Corporation (TSX: PWF) today reported earnings results for the three and six months ended June 30, 2018.
Consolidated Results of Power Financial
For the period ended June 30
Highlights
- Power Financial reported second quarter net earnings and adjusted net earnings (a non-IFRS financial measure) of $658 million. Adjusted net earnings were the highest in its history.
- Great-West Lifeco Inc. (Lifeco) reported second quarter net and adjusted net earnings of $831 million, compared with net earnings of $585 million and adjusted net earnings of $712 million in the second quarter of 2017.
- Putnam Investments, LLC's net asset inflows for the three months ended June 30, 2018 were US$1.6 billion, which were the highest since the second quarter of 2011.
- IGM Financial Inc. (IGM) reported second quarter net and adjusted net earnings of $203.7 million, up from net earnings of $200.8 million and adjusted net earnings of $185.9 million in the second quarter of 2017.
- Record high assets under management at IGM at June 30, 2018 were $159.1 billion, an increase of 2.2% in the quarter and 7.1% from the prior year driven by favourable investment returns.
- IGM's investment fund net sales in the second quarter were $171 million, the second-best second quarter results in a decade.
Second Quarter
Net earnings and adjusted net earnings attributable to common shareholders were $658 million, or $0.92 per share, compared with 2017's net earnings of $545 million, or $0.76 per share, and adjusted net earnings of $622 million, or $0.87 per share.
Contributions to Power Financial's net earnings and adjusted net earnings were:
| (in millions of dollars) |
2018 |
2017 |
|||
| Net Earnings and Adjusted Net Earnings |
Net Earnings |
Adjusted Net |
|||
| • Lifeco |
562 |
397 |
481 |
||
| • IGM |
121 |
124 |
116 |
||
| • Pargesa Holding SA (Pargesa) |
36 |
48 |
49 |
||
| • Power Financial Corporate and Other |
(61) |
(24) |
(24) |
||
| 658 |
545 |
622 |
|||
Six Months
Net earnings and adjusted net earnings attributable to common shareholders were $1,244 million, or $1.74 per share, compared with 2017's net earnings of $1,029 million, or $1.44 per share, and adjusted net earnings of $1,123 million, or $1.57 per share.
Contributions to Power Financial's net earnings and adjusted net earnings were:
| (in millions of dollars) |
2018 |
2017 |
|||
| Net Earnings and Adjusted Net Earnings |
Net Earnings |
Adjusted Net |
|||
| • Lifeco |
1,057 |
796 |
900 |
||
| • IGM |
228 |
228 |
220 |
||
| • Pargesa |
80 |
94 |
92 |
||
| • Power Financial Corporate and Other |
(121) |
(89) |
(89) |
||
| 1,244 |
1,029 |
1,123 |
|||
Results of Great-West Lifeco, IGM Financial and Pargesa Holding
For the period ended June 30
GREAT-WEST LIFECO INC.
Second Quarter
Net earnings and adjusted net earnings attributable to common shareholders were $831 million, or $0.839 per share, compared with 2017's net earnings of $585 million, or $0.591 per share, and adjusted net earnings of $712 million, or $0.719 per share.
Six Months
Net earnings and adjusted net earnings attributable to common shareholders were $1,562 million, or $1.579 per share, compared with 2017's net earnings of $1,176 million, or $1.189 per share, and adjusted net earnings of $1,331 million, or $1.345 per share.
IGM FINANCIAL INC.
Second Quarter
Net earnings and adjusted net earnings available to common shareholders were $203 million, or $0.85 per share, compared with 2017's net earnings of $201 million, or $0.83 per share, and adjusted net earnings of $186 million, or $0.77 per share.
Six Months
Net earnings and adjusted net earnings available to common shareholders were $389 million, or $1.61 per share, compared with 2017's net earnings of $378 million, or $1.57 per share, and adjusted net earnings of $363 million, or $1.51 per share.
PARGESA HOLDING SA
Second Quarter
Pargesa reported net earnings of SF152 million, compared with SF128 million in 2017.
These results exclude Pargesa's share of a gain realized on the disposal of its investment in Burberry Group plc (Burberry) of SF40 million, offset by an impairment charge of SF87 million on its investment in Ontex N.V. (Ontex). Effective January 1, 2018, these investments were reclassified by Pargesa as fair value through other comprehensive income in accordance with IFRS 9 [1].
Six Months
Pargesa reported net earnings of SF213 million, compared with SF253 million in 2017.
These results exclude Pargesa's share of a gain realized on the sale of Burberry and an impairment charge, as described above. The first quarter results of Pargesa exclude gains realized on private equity investments totalling SF57 million which, effective January 1, 2018, have been reclassified as fair value through profit and loss in accordance with IFRS 9 [2].
| [1] |
On January 1, 2018, Pargesa adopted IFRS 9 which resulted in the reclassification of the majority of its investments (excluding private equity funds) from available for sale (AFS) to fair value through other comprehensive income (FVOCI). All changes in fair value of equity investments designated as FVOCI are recognized permanently in other comprehensive income. Power Financial continues to apply IAS 39 and its share of the gain realized in the sale of Burberry of $18 million, offset by its share of the impairment charge of $34 million on Ontex, has been included in the contribution from Pargesa. |
| [2] |
Investments in private equity funds were reclassified from AFS to fair value through profit and loss (FVPL) and unrealized gains accumulated to December 31, 2017 were transferred to retained earnings. Power Financial continues to apply IAS 39 and its share of these gains realized on private equity investments of $21 million has been included in the contribution from Pargesa. |
Dividends on Power Financial Common Shares
The Board of Directors today declared a quarterly dividend of 43.30 cents on the Corporation's common shares, payable November 1, 2018 to shareholders of record September 28, 2018.
Dividends on Power Financial Preferred Shares
The Board of Directors also declared quarterly dividends on the Corporation's preferred shares.
Dividends payable November 15, 2018 to shareholders of record October 25, 2018:
| Series – Stock Symbol |
Amount |
| Series A – PWF.PR.A |
Floating rate [1] |
| [1] |
Equal to one quarter of 70% of the average prime rate of two major Canadian chartered banks for the period July 1 to September 30, 2018. |
Dividends payable October 31, 2018 to shareholders of record October 10, 2018:
| Series |
Stock Symbol |
Amount |
Series |
Stock Symbol |
Amount |
| Series D |
PWF.PR.E |
34.375¢ |
Series O |
PWF.PR.O |
36.25¢ |
| Series E |
PWF.PR.F |
32.8125¢ |
Series P |
PWF.PR.P |
14.4125¢ |
| Series F |
PWF.PR.G |
36.875¢ |
Series Q |
PWF.PR.Q |
17.9589¢ |
| Series H |
PWF.PR.H |
35.9375¢ |
Series R |
PWF.PR.R |
34.375¢ |
| Series I |
PWF.PR.I |
37.50¢ |
Series S |
PWF.PR.S |
30¢ |
| Series K |
PWF.PR.K |
30.9375¢ |
Series T |
PWF.PR.T |
26.25¢ |
| Series L |
PWF.PR.L |
31.875¢ |
Series V |
PWF.PR.Z |
32.1875¢ |
About Power Financial
Power Financial Corporation is a diversified international management and holding company that holds interests substantially in the financial services sector in Canada, the United States and Europe. It also has significant holdings in global industrial and services companies based in Europe. Power Financial Corporation is a member of the Power Corporation Group of Companies. To learn more, visit www.PowerFinancial.com.
At June 30, 2018, Power Financial held the following economic interests:
- 67.7% – Great-West Lifeco (TSX: GWO) www.greatwestlifeco.com
- 61.4% – IGM Financial (TSX: IGM) www.igmfinancial.com
- 27.8% – Pargesa Holding (SIX: PARG) www.pargesa.ch
- 81.6% – Wealthsimple Financial Corp. [1] www.wealthsimple.com
| [1] Interest held by Lifeco, IGM and the Corporation. |
| Earnings Summary |
||||||
| (unaudited) |
Three months ended |
Six months ended |
||||
| (in millions of Canadian dollars, except per share amounts) |
June 30, |
June 30, |
||||
| 2018 |
2017 |
2018 |
2017 |
|||
| Adjusted net earnings |
||||||
| Lifeco |
562 |
481 |
1,057 |
900 |
||
| IGM [1] |
121 |
116 |
228 |
220 |
||
| Pargesa [1] |
36 |
49 |
80 |
92 |
||
| 719 |
646 |
1,365 |
1,212 |
|||
| Corporate operations [2] |
(26) |
7 |
(52) |
(27) |
||
| Dividends on perpetual preferred shares |
(35) |
(31) |
(69) |
(62) |
||
| Adjusted net earnings [3] |
658 |
622 |
1,244 |
1,123 |
||
| Other items – see below |
— |
(77) |
— |
(94) |
||
| Net earnings [3] |
658 |
545 |
1,244 |
1,029 |
||
| Earnings per share – basic [3] |
||||||
| Adjusted net earnings |
0.92 |
0.87 |
1.74 |
1.57 |
||
| Other items |
— |
(0.11) |
— |
(0.13) |
||
| Net earnings |
0.92 |
0.76 |
1.74 |
1.44 |
||
| [1] |
IGM and Pargesa's contributions reflect adjustments in accordance with IAS 39. |
| [2] |
Includes operating expenses, financing charges, depreciation, income taxes, interest on cash and cash equivalents, foreign exchange gains (losses) and income (losses) from investments. In the second quarter of 2017, Power Financial attained control of Wealthsimple Financial Corp. and recognized a gain reflecting the Corporation's investment at fair value. |
| [3] |
Attributable to common shareholders. |
| Other Items |
|||||||
| (unaudited) |
Three months ended |
Six months ended |
|||||
| (in millions of Canadian dollars) |
June 30, |
June 30, |
|||||
| 2018 |
2017 |
2018 |
2017 |
||||
| Share of Lifeco's Other items: |
|||||||
| Restructuring charges |
— |
(84) |
— |
(104) |
|||
| Share of IGM's Other items: |
|||||||
| Restructuring charges |
— |
(10) |
— |
(10) |
|||
| Pension plan |
— |
22 |
— |
22 |
|||
| Share of Lifeco's Other items |
— |
(4) |
— |
(4) |
|||
| — |
8 |
— |
8 |
||||
| Share of Pargesa's Other items: |
|||||||
| Other (charge) income |
— |
(1) |
— |
2 |
|||
| — |
(77) |
— |
(94) |
||||
| Contribution to Power Financial's Adjusted Net Earnings |
|||
| Three months ended June 30, 2018
(unaudited) (in millions of Canadian dollars) |
Contribution to net earnings as reported |
Consolidation |
Contribution to net earnings |
| Lifeco |
563 |
(1) |
562 |
| IGM |
125 |
(4) |
121 |
| Pargesa |
57 |
(21) |
36 |
| Six months ended June 30, 2018
(unaudited) (in millions of Canadian dollars) |
Contribution to net earnings as reported |
Consolidation |
Contribution to net earnings |
| Lifeco |
1,058 |
(1) |
1,057 |
| IGM |
239 |
(11) |
228 |
| Pargesa |
79 |
1 |
80 |
| [1] |
The contributions from Lifeco and IGM include an allocation of the results of Wealthsimple Financial Corp. and Portag3 Ventures Limited Partnership based on their respective interest. Contributions from IGM and Pargesa reflect adjustments in accordance with IAS 39. |
Non-IFRS Financial Measures and Presentation
Net earnings attributable to common shareholders are comprised of:
- Adjusted net earnings attributable to common 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 Financial, 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 common 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 Lifeco, IGM, Portag3 Ventures Limited Partnership and Wealthsimple Financial Corp. 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.
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 and common 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, 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, 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, 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 Financial Corporation
please contact: Stéphane Lemay, Vice-President, General Counsel and Secretary, 514-286-7400
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