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Power Corporation Reports Second Quarter 2019 Financial Results

CNW Group - Fri Aug 2, 1:25PM CDT

Readers are referred to the sections "Non-IFRS Financial Measures and Presentation" and "Forward-Looking Statements" at the end of this release.

Power Corporation of Canada (TSX:POW.TO) today reported earnings results for the three and six months ended June 30, 2019.

Power CorporationConsolidated results for the period ended June 30

Highlights

--  On April 17, 2019, Power Corporation successfully completed its
        substantial issuer bid to repurchase for cancellation $1.35
        billion of its subordinate voting shares representing 9.8% of
        the issued and outstanding subordinate voting shares.
    --  On June 1, 2019, Great-West Life & Annuity (GWL&A) completed
        the sale of substantially all of its individual life insurance
        and annuity business to Protective Life Insurance Company. The
        transaction, valued at $1.6 billion, frees up capital and
        allows Great-West Lifeco Inc. (Lifeco) to focus on the defined
        contribution retirement and asset management markets in the
        U.S. segment.
    --  On July 30, 2019, Power Energy Corporation acquired a 100%
        equity interest in Nautilus Solar Energy, LLC, a company
        headquartered in New Jersey, U.S. that acquires, develops,
        finances and manages distributed solar projects across
        community, municipal/utility-scale, commercial and industrial
        markets.

Second Quarter

Net earnings attributable to participating shareholders were $278 million or $0.64 per share, compared with $347 million or $0.75 per share in 2018.

Adjusted net earnings attributable to participating shareholders (a non-IFRS financial measure) were $372 million or $0.86 per share, compared with $347 million or $0.75 per share in 2018.

Other items in 2019, not included in adjusted net earnings, were a net charge of $94 million consisting of the Corporation's share of Lifeco's net charge on the sale of GWL&A's individual life insurance and annuity business in the U.S. and the Corporation's share of Imerys' restructuring and other charges.

The Corporation participated in Power Financial Corporation's (Power Financial) substantial issuer bid to repurchase for cancellation $1.65 billion of its common shares. Power Corporation's proceeds from its participation in the Power Financial substantial issuer bid were $1.4 billion. As a result, the Corporation's interest in Power Financial decreased to 64.1% (65.5% at March 31, 2019).

Contributions to Power Corporation's net earnings and adjusted net earnings were:

(in millions of
      dollars)                                  2019                    2018



                           Net Earnings Adjusted Net
            Net Earnings
                                            Earnings                    and
                                                      Adjusted Net Earnings



     • Power Financial              283           377                     433


     • Sagard Investment
      Funds, China AMC and
      Other investments              69            69                    (15)


     • Corporate and Other
      subsidiaries                 (74)         (74)                   (71)



                                    278           372                     347

Six Months

Net earnings attributable to participating shareholders were $570 million or $1.27 per share, compared with $872 million or $1.88 per share in 2018.

Adjusted net earnings attributable to participating shareholders were $664 million or $1.48 per share, compared with $872 million or $1.88 per share in 2018.

Other items in the six-month period ended June 30, 2019 were as described above.

Contributions to Power Corporation's net earnings and adjusted net earnings were:

(in millions of
      dollars)                                2019                      2018



                         Net Earnings Adjusted Net
              Net Earnings
                                          Earnings                      and

                                                      Adjusted Net Earnings



     • Power Financial            633           727                       816


     • Sagard Investment
      Funds, China AMC
      and Other
      investments                  80            80                       212


     • Corporate and
      Other subsidiaries        (143)        (143)                    (156)



                                  570           664                       872

Power Financial CorporationResults for the period ended June 30

Second Quarter

Net earnings attributable to common shareholders were $443 million or $0.66 per share, compared with $658 million or $0.92 per share in 2018.

Adjusted net earnings attributable to common shareholders were $589 million or $0.88 per share, compared with $658 million or $0.92 per share in 2018.

Other items in 2019, not included in adjusted net earnings, were a net charge of $146 million consisting of Power Financial's share of Lifeco's net charge on the sale of GWL&A's individual life insurance and annuity business in the U.S. and its share of Imerys' restructuring and other charges.

Six Months

Net earnings attributable to common shareholders were $979 million or $1.41 per share, compared with $1,244 million or $1.74 per share in 2018.

Adjusted net earnings attributable to common shareholders were $1,125 million or $1.62 per share, compared with $1,244 million or $1.74 per share in 2018.

Other items in the six-month period ended June 30, 2019 were as described above.

Sagard Investment Funds, China AMC and Other InvestmentsFor the period ended June 30

Second Quarter

Income from investments was $69 million, compared with a loss of $15 million in 2018. See the table below for details. Income from investments in the quarter mainly comprised realized gains in Sagard China and a gain related to a private investment fund.

Six Months

Income from investments was $80 million, compared with $212 million in 2018. See the table below for details.

Dividends on Power Corporation Participating Shares

The Board of Directors today declared a quarterly dividend of 40.50 cents per share on the Participating Preferred Shares and the Subordinate Voting Shares of the Corporation, payable September 30, 2019 to shareholders of record September 9, 2019.

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, 2019 to shareholders of record September 24, 2019:

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, 2019.

About Power Corporation

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

At June 30, 2019, Power Corporation held the following economic interests:

--  64.1% - Power Financial (TSX:PWF.TO)
        www.powerfinancial.com
    --  100% - Sagard SAS (Europe)
        www.sagard.com
    --  100% - Sagard Holdings
        www.sagardholdings.com
    --  100% - Sagard China
        www.sagardchina.com
    --  100% - Power Energy Corporation
        www.powerenergycorporation.com
    --  27.8% - China Asset Management Co., Ltd. ([1]
        )www.chinaamc.com
[1] IGM Financial Inc. (IGM)
                and the Corporation each hold
                a 13.9% interest in China
                AMC.
Earnings Summary




        (unaudited)                                Three months            Six months
                                                    ended                ended


        (in
         millions
         of
         Canadian
         dollars,
         except
         per
         share
         amounts)                                   June 30,                   June 30,

    ---                                                                             ---

                                             2019          2018     2019                  2018

                                                                                        ---

                     Adjusted net earnings


        Power
         Financial
         [1]                                  377           433      727                   816


        Other
         subsidiaries
         [2]                                 (21)         (23)    (41)                 (55)

    ===                                                                                 ===

                                              356           410      686                   761


        Corporate operations


        Income
         -
         Sagard
         Investment
         Funds,
         China
         AMC
         and
         Other
         Investments                           69          (15)      80                   212


         Operating
         and
         other
         expenses                            (40)         (35)    (76)                 (75)


         Dividends
         on
         non-
         participating
         shares                              (13)         (13)    (26)                 (26)

    ---                                                                                 ---

                      Adjusted
                      net
                      earnings


                            [3]               372           347      664                   872


        Other
         items
         - see
         below                               (94)
              −    (94)
              −

    ---

                     Net
                      earnings


                            [3]               278           347      570                   872

    ===                                                                                 ===

                     Earnings per share -
                      Basic [3]


                      Adjusted
                      net
                      earnings               0.86          0.75     1.48                  1.88


        Other
         items                             (0.22)
              −  (0.21)
              −

    ---

                     Net
                      earnings               0.64          0.75     1.27                  1.88

    ===                                                                                 ===
[1]               The contributions from IGM and Pargesa
                                  Holding SA (Pargesa) reflect
                                  adjustments in accordance with IAS 39.


               [2]               Comprised of operating results of: Power
                                  Energy Corporation, Square Victoria
                                  Communications Group Inc. (up to the
                                  date of disposal in July 2018), and
                                  IntegraMed America, Inc. (IntegraMed).


               [3]               Attributable to participating
                                  shareholders.
Income - Sagard Investment Funds, China AMC and Other Investments




        (unaudited)                               Three months              Six months
                                                   ended                ended


        (in millions of
         Canadian
         dollars)                                 June 30,              June 30,

    ---                                                              ---

                                          2019       2018       2019       2018

                                                                         ---

        Sagard Investment Funds [1]


        Sagard Europe                     (10)       (2)      (13)       166


        Sagard Holdings
         [2][3]                            (2)      (41)       (8)      (34)


        Sagard China                        54         17         68         48


        China AMC                            8          8         15         16



       Other Investments


        Investment and
         hedge funds,
         and other [4]                      19          3         18         16

    ---                                                                  ---

                                            69       (15)        80        212

                                                                         ===
[1]               Income (loss) 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 operating results of
                                  IntegraMed presented in "Other
                                  subsidiaries".


               [3]               Includes share of earnings
                                  (losses) from investments in a
                                  jointly controlled corporation
                                  and associates. The second
                                  quarter of 2018 included a loss
                                  attributable to the recognition
                                  of non-cash provisions in an
                                  investment.


               [4]               Consists mainly of foreign
                                  exchange gains or losses and
                                  interest on cash and cash
                                  equivalents.
Sagard Investment Funds





       (unaudited)


        (in millions of
         Canadian
         dollars)                            June 30, 2019
     December 31, 2018

    ---                                                                    ---

                                             Sagard Europe     Sagard Holdings  Sagard China
     Total    Sagard Europe     Sagard Holdings      Sagard China
     Total

                                                                                                                                                                       ---


       Cost                                           309                  366            536      1,211               280                  342                515         1,137


        Unrealized gain
         (loss)                                        107                  (2)            70        175               111                   14                (5)          120

    ---

        Fair value of
         non-controlled

                   portfolio
         investments                                   416                  364            606      1,386               391                  356                510         1,257

    ---


       Cash                                             −                 145             94        239
              −                 185                162           347


        Fair value of
         controlled
         portfolio

              investments and
         other                                           −                  35              −        35
              −                  38                (3)           35

    ---                                                                                                                                                                ---

        Total fair value                               416                  544            700      1,660               391                  579                669         1,639

    ===
Other Items




               (unaudited)                            Three months         Six months
                                                       ended                 ended


               (in millions of
                Canadian
                dollars)                               June 30,           June 30,

    ---                                                                        ---

                                                2019          2018   2019            2018

                                                                                   ---

               Power Financial's share of Other
                items:



              Lifeco


               Net charge on
                the sale, via
                reinsurance, of
                U.S.                            (86)
              −  (86)
              −
    individual life
     insurance and annuity
     business

    ---


              IGM


               Share of
                Lifeco's Other
                items                            (3)
              −   (3)
              −

    ---


              Pargesa


               Imerys -
                Restructuring
                charges and
                other                            (5)
              −   (5)
              −

    ---

                                                (94)
              −  (94)
              −

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.

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, as well as the outlook for North American and international economies for the current fiscal year and subsequent. 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 Corporation of Canada

View original content: http://www.newswire.ca/en/releases/archive/August2019/02/c9476.html

SOURCE: Power Corporation of Canada

Stephane Lemay, Vice-President, General Counsel and Secretary, 514-286-7400

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