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Power Financial Reports First Quarter 2019 Financial Results

CNW Group - Mon May 13, 7:57AM CDT

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

Power Financial Corporation (Power Financial or the Corporation) (TSX:PWF.TO) today reported earnings results for the three months ended March 31, 2019.

Consolidated Results of Power FinancialFor the period ended March 31


--  Power Financial announced on April 17, 2019 the successful
        completion of its substantial issuer bid to repurchase for
        cancellation $1.65 billion of its common shares. The
        Corporation also announced its participation in Great-West
        Lifeco Inc.'s (Lifeco) substantial issuer bid to repurchase for
        cancellation $2.0 billion of its common shares. Power
        Financial's proceeds from its participation in the Lifeco
        substantial issuer bid were $1.65 billion. As a result, the
        Corporation's direct interest in Lifeco decreased to 66.8%
        (67.8% at March 31, 2019).
    --  Lifeco's sales for the first quarter of 2019 were $90.2
        billion, up 160% from the first quarter of 2018, primarily
        driven by a very large sale at Empower Retirement and a large
        fund management mandate in Europe.
    --  On April 3, 2019, Lifeco announced that its three Canadian life
        insurance companies, The Great-West Life Assurance Company,
        London Life Insurance Company and The Canada Life Assurance
        Company, are moving to one brand in Canada: Canada Life. Canada
        Life will become the brand under which the organization will
        create, deliver and communicate products and services in Canada
        across all of its lines of business.
    --  IGM Financial Inc. (IGM) reported record high quarter-end
        assets under management at March 31, 2019 of $160.5 billion, an
        increase of 7.6% in the quarter and 3.0% from the prior year
        driven by favourable investment returns.
    --  Pargesa Holding SA's (Pargesa) reported net asset value at
        March 31, 2019 increased 13.4% from December 31, 2018.

First Quarter Net earnings attributable to common shareholders were $536 million or $0.75 per share, compared with $586 million or $0.82 per share in 2018.

Contributions to Power Financial's net earnings were:

(in millions of dollars)

                                2019  2018

     Lifeco                     444   495

     IGM                        110   107

     Pargesa                     46    44

      Power Financial Corporate
       and Other                (64) (60)

                                 536   586

Results of Great-West Lifeco, IGM Financial and Pargesa HoldingFor the period ended March 31


First Quarter Net earnings attributable to common shareholders were $657 million or $0.67 per share, compared with $731 million or $0.74 per share in 2018.

On May 2, 2019, Lifeco declared a quarterly dividend of $0.4130 per common share, unchanged from the previous quarter.


First Quarter Net earnings available to common shareholders were $168 million or $0.70 per share, compared with $186 million or $0.77 per share in 2018. See contribution to Power Financial's net earnings in the table below.

On May 3, 2019, IGM declared a quarterly dividend of $0.5625 per common share, unchanged from the previous quarter.


First Quarter Pargesa reported net earnings of SF91 million, compared with SF61 million in 2018. See contribution to Power Financial's net earnings in the tables below.

On May 8, 2019, Pargesa declared a dividend of SF2.56 per bearer share, an increase of 2.4% over the previous year.

Dividends on Power Financial Common Shares

The Board of Directors today declared a quarterly dividend of 45.55 cents on the Corporation's common shares, payable August 1, 2019 to shareholders of record June 28, 2019.

Dividends on Power Financial Preferred Shares

The Board of Directors also declared quarterly dividends on the Corporation's preferred shares.

Dividends payable August 15, 2019 to shareholders of record July 25, 2019:

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 April 1 to
                                  June 30, 2019.
Dividends payable July 31, 2019 to shareholders of record July 10, 2019:

                     Series                            Stock Symbol                       Amount            Series            Stock Symbol            Amount

    ---                                                                                                                                                  ---

        Series D
     Series O

        Series E
     Series P

        Series F
     Series Q

        Series H
     Series R

        Series I
     Series S

        Series K
     Series T

        Series L
     Series V

    ---                                                                                                                                                  ---

About Power Financial

Power Financial Corporation is a diversified international management and holding company with 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

At March 31, 2019, Power Financial
      held the following economic

     67.8% - Great-West Lifeco (TSX:
      GWO) [1]

     61.5% - IGM Financial (TSX:IGM.TO)

     27.8% - Pargesa Holding (SIX:

     88.6% - Wealthsimple Financial
      Corp. [2]
[1]               On April 17, 2019, following the
                                  Corporation's participation in
                                  Lifeco's substantial issuer bid,
                                  Power Financial's interest in
                                  Lifeco decreased to approximately

               [2]               Interest held by Lifeco, IGM and
                                  the Corporation.
Earnings Summary


       (unaudited)                                      Three months

        (in millions of Canadian
         dollars, except per share
         amounts)                                           March 31,


                                                    2019            2018

                     Adjusted net earnings

       Lifeco [1]                                   444             495

       IGM [1] [2]                                  110             107

       Pargesa [1]                                   46              44


                                                     600             646

        Corporate operations [3]                    (29)           (26)

        Dividends on perpetual
         preferred shares                           (35)           (34)


                     Adjusted net earnings [4]       536             586

       Other items                                    −


                     Net earnings [4]                536             586


                     Earnings per share - Basic [4]

                     Adjusted net earnings          0.75            0.82

       Other items                                    −


                     Net earnings                   0.75            0.82

[1]               The contributions from Lifeco and
                                  IGM are adjusted for their share of
                                  the results of Wealthsimple
                                  Financial Corp. and Portag3
                                  Ventures Limited Partnership, based
                                  on their respective interests.
                                  Contributions from IGM and Pargesa
                                  reflect adjustments in accordance
                                  with IAS 39.

               [2]               In the first quarter, IGM invested a
                                  further $66.8 million in Personal
                                  Capital Corporation which increased
                                  its voting interest to 22.7%. IGM
                                  has significant influence and
                                  accounts for its interest as an
                                  associate using the equity method.
                                  This reclassification of the
                                  investment to an associate, under
                                  IAS 39, resulted in a gain included
                                  in the contribution to Power
                                  Financial's net earnings.

               [3]               Includes operating expenses,
                                  financing charges, depreciation,
                                  income taxes, interest on cash and
                                  cash equivalents, foreign exchange
                                  gains (losses) and income (losses)
                                  from investments.

               [4]               Attributable to common shareholders.
Contribution to Power Financial's Net Earnings


        Three months                                                                            Contribution to Power
         ended March                                                                         Financial's net earnings
         31, 2019
              Contribution to
     Consolidation entries

              net earnings

        (in millions of
              as reported


        Lifeco                                                  445                      (1)                       444

       IGM                                                     103                        7                        110

        Pargesa                                                  34                       12                         46

Adjustments to Pargesa's Contribution

        Power Financial has deferred the adoption of IFRS 9 and
         continues to apply IAS 39. The following table presents
         adjustments to the contribution of Pargesa to Power
         Financial's earnings in accordance with IAS 39:


        (unaudited)                                      Three months

        (in millions of
         Canadian dollars)                                  March 31,

    ---                        ---

                                                    2019            2018


        Gain on partial
         disposal of
         interest in adidas
         [1]                                          18

        Gain on disposal of
         private equity
         funds [2]                                     −             21

        Reversal of
         unrealized (gains)
         losses on private
         equity funds                                (6)              1

    ---                                                             ---

       Total                                         12              22

    ---                                                             ---
[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 has adjusted its share of these

               [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 permanently
                                  transferred to retained earnings.
                                  Power Financial continues to apply
                                  IAS 39 and has adjusted its share of
                                  these gains.

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

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.

Net asset value is commonly used by holding companies to determine their 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 Groupe Bruxelles Lambert 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 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, including the fintech strategy, 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

SOURCE Power Financial Corporation

View original content:

SOURCE: Power Financial Corporation

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

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