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Power Financial Reports Second Quarter 2019 Financial Results

CNW Group - Fri Aug 2, 7:54AM 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 (TSX:PWF.TO) today reported earnings results for the three and six months ended June 30, 2019.

Power FinancialConsolidated results for the period ended June 30

Highlights

--  On April 17, 2019, Power Financial successfully completed its
        substantial issuer bid to repurchase for cancellation $1.65
        billion of its common shares representing 7% of its issued and
        outstanding shares.
    --  Sales at Great-West Lifeco Inc. (Lifeco) for the second quarter
        of 2019 were $34.3 billion, up 4% from the second quarter of
        2018, primarily driven by higher sales in Europe.
    --  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 Lifeco to focus on the defined contribution retirement
        and asset management markets in the U.S. segment.
    --  IGM Financial Inc. (IGM) reported record quarter-end assets
        under management at June 30, 2019 of $162.3 billion, an
        increase of 1.2% in the quarter and 2.0% from the prior year
        driven by favourable investment returns.
    --  Groupe Bruxelles Lambert (GBL) finalized in March and April
        2019 its exit from the energy sector by selling its remaining
        interest in Total SA through forward sales maturing in January
        2020. In the quarter, GBL also sold a 0.7% interest in adidas
        AG (adidas).
    --  On July 9, 2019, GBL announced that it had entered into
        exclusive negotiations to acquire a majority stake in the
        Webhelp group, one of the world's leading providers of customer
        experience and business process outsourcing.

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 (a non-IFRS financial measure) 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 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 Lifeco's 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).

Contributions to Power Financial'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



     Lifeco                  306               440                       562


     IGM                     110               115                       121


     Pargesa
      Holding
      SA
      (Pargesa)               86                93                        36


     Power
      Financial
      Corporate
      and
      Other                 (59)             (59)                     (61)



                             443               589                       658

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.

Contributions to Power Financial'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



      Lifeco                   750           884                     1,057



     IGM                      220           225                       228


      Pargesa                  132           139                        80


      Power Financial
       Corporate and
       Other                 (123)        (123)                    (121)



                               979         1,125                     1,244

Great-West Lifeco, IGM Financial and Pargesa Results for the period ended June 30

GREAT-WEST LIFECO INC.

Second Quarter Net earnings attributable to common shareholders were $459 million or $0.49 per share and adjusted net earnings were $658 million or $0.70 per share, compared with net earnings and adjusted net earnings of $831 million or $0.84 per share in 2018.

Lifeco's net earnings for the second quarter of 2019 included a net charge of $199 million relating to the sale, via indemnity reinsurance, of the U.S. individual life insurance and annuity business, which reduced earnings per common share by $0.21.

Six Months Net earnings attributable to common shareholders were $1,116 million or $1.16 per share and adjusted net earnings were $1,315 million or $1.37 per share, compared with net earnings and adjusted net earnings of $1,562 million or $1.58 per share in 2018.

IGM FINANCIAL INC.

Second Quarter Net earnings available to common shareholders were $185 million or $0.77 per share and adjusted net earnings were $193 million or $0.81 per share, compared with net earnings and adjusted net earnings of $203 million or $0.85 per share in 2018. Other items, not included in net earnings, of $8 million in the second quarter consisted of IGM's share of Lifeco's other items.

Six Months Net earnings available to common shareholders were $353 million or $1.47 per share and adjusted net earnings were $361 million or $1.50 per share, compared with net earnings and adjusted net earnings of $389 million or $1.61 per share in 2018.

PARGESA HOLDING SA

Second Quarter Pargesa reported net earnings of SF134 million, compared with SF152 million in 2018. See contribution to Power Financial's earnings in the tables below.

Six Months Pargesa reported net earnings of SF225 million, compared with SF213 million in 2018.

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 November 1, 2019 to shareholders of record September 30, 2019.

Dividends on Power Financial Preferred Shares

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

Dividends payable November 15, 2019 to shareholders of record October 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 July 1 to September
                             30, 2019.

Dividends payable October 31, 2019 to shareholders of record October 10, 2019:

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
     20.5425¢


        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
     26.3438¢


        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 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 www.PowerFinancial.com.

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

--  66.8% - Great-West Lifeco (TSX:GWO.TO)
        www.greatwestlifeco.com
    --  62.1% - IGM Financial (TSX:IGM.TO)
        www.igmfinancial.com
    --  27.8% - Pargesa Holding (SIX:PARG)
        www.pargesa.ch
    --  81.8% - Wealthsimple Financial Corp. ([1])
        www.wealthsimple.com
[1] Interest held by Lifeco, IGM
                             and the Corporation.
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


        Lifeco
         [1]                                      440           562      884           1,057


        IGM [1]                                   115           121      225             228


        Pargesa
         [1]                                       93            36      139              80

    ---                                                                               ---

                                                  648           719    1,248           1,365


         Corporate
         operations
         [2]                                     (25)         (26)    (54)           (52)


         Dividends
         on
         perpetual
         preferred
         shares                                  (34)         (35)    (69)           (69)

    ---                                                                               ---

                     Adjusted
                     net
                     earnings
                     [3]                          589           658    1,125           1,244


        Other
         items
         - see
         below                                  (146)
              −   (146)
              −

    ---

                    Net
                     earnings
                     [3]                          443           658      979           1,244

    ---                                                                               ---

                    Earnings per share - basic
                     [3]


                     Adjusted
                     net
                     earnings                    0.88          0.92     1.62            1.74


        Other
         items                                 (0.22)
              −  (0.21)
              −

    ---

                    Net
                     earnings                    0.66          0.92     1.41            1.74

    ---                                                                               ---
[1] The contributions from Lifeco and
          IGM are adjusted for their share
          of the results of Wealthsimple
          Financial Corp., Portag3 Ventures
          Limited Partnership, and Portag3
          Ventures II Limited Partnership
          based on their respective
          interests. The contributions from
          IGM and Pargesa 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.


     [3] Attributable to common
          shareholders.
Other Items




        (unaudited)                            Three months          Six months
                                                   ended               ended

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

    ---                                                                  ---

                                         2019          2018    2019            2018

                                                                             ---

        Share of Lifeco's Other items:


        Net charge on the
         sale, via
         reinsurance, of
               U.S.
               individual life
         insurance and
         annuity business               (134)
              −  (134)
              −



       Share of IGM's Other items:


        Share of Lifeco's
         Other items                      (5)
              −    (5)
              −

    ---

        Share of Pargesa's Other items:


        Imerys -
         Restructuring
         charges and other                (7)
              −    (7)
              −

    ---

                                        (146)
              −  (146)
              −
Contribution to Power Financial's Adjusted Net Earnings




        Three months                                                                                    Contribution to Power
         ended June 30,                                                                                           Financial's
         2019
              Contribution           Consolidation entries [1]

        (unaudited)                       to adjusted net earnings                                      adjusted net earnings

        (in millions of
         Canadian
         dollars)
              as reported

    ---                                                                                                                   ---

        Lifeco                                                 441                                  (1)                    440



       IGM                                                    119                                  (4)                    115


        Pargesa                                                 56                                   37                      93

    ---



        Six months                                                                                      Contribution to Power
         ended June 30,                                                                                           Financial's
         2019
              Contribution           Consolidation entries [1]

        (unaudited)                       to adjusted net earnings                                      adjusted net earnings

        (in millions of
         Canadian
         dollars)
              as reported

    ---                                                                                                                   ---

        Lifeco                                                 886                                  (2)                    884



       IGM                                                    222                                    3                     225


        Pargesa                                                 90                                   49                     139

    ---
[1] The contributions from Lifeco
                             and IGM include an allocation of
                             the results of Wealthsimple
                             Financial Corp., Portag3 Ventures
                             Limited Partnership, and Portag3
                             Ventures II Limited Partnership
                             based on their respective
                             interests. The contributions from
                             IGM and Pargesa reflect
                             adjustments in accordance with
                             IAS 39.
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)                                         2019


        (in
         millions
         of
         Canadian
         dollars)
              Q2
              Q1
     Total

    ---                                                                 ---

        Partial
         disposal
         of
         interest
         in
         adidas
         [1]                               53                    18        71


         Impairment
         charges
         on
         Ontex
         N.V.
         [1]                             (13)
              −     (13)


        Reversal
         of
         unrealized
         gains on
         private
         equity
         funds                            (3)                  (6)      (9)

    ---

        Total                              37                    12        49

    ---
[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
                             items.

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, Portag3 Ventures II 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.

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 www.sedar.com.

SOURCE Power Financial Corporation

View original content: http://www.newswire.ca/en/releases/archive/August2019/02/c7387.html

SOURCE: Power Financial Corporation

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

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