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November 11, 2016

Power Financial Reports 2016 Third Quarter and Nine-Month Financial Results and Dividends

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All figures are in Canadian dollars unless otherwise noted. Readers are referred to the sections entitled "Non-IFRS Financial Measures and Presentation" and "Forward-Looking Statements" at the end of this release.

TORONTO, Nov. 11, 2016 /CNW Telbec/ - Power Financial Corporation (TSX: PWF) today reported earnings results for the third quarter and nine months ended September 30, 2016.

THIRD QUARTER RESULTS
Operating earnings attributable to common shareholders (a non-IFRS financial measure) for the quarter ended September 30, 2016 were $541 million or $0.76 per share, compared with $596 million or $0.83 per share in 2015.  

Net earnings attributable to common shareholders were $539 million or $0.76 per share, compared with $602 million or $0.84 per share in 2015.

NINE-MONTH RESULTS
Operating earnings attributable to common shareholders for the nine months ended September 30, 2016 were $1,574 million or $2.21 per share, compared with $1,720 million or $2.41 per share in 2015. 

Non-operating items, not included in operating earnings, resulted in a net charge of $271 million which was mainly comprised of the Corporation's share of Groupe Bruxelles Lambert's (GBL) non-cash impairment charge as a result of a decrease in LafargeHolcim Ltd's share price, partially offset by a gain on the partial disposal of its interest in Total SA.  

Net earnings attributable to common shareholders were $1,303 million or $1.83 per share, compared with $1,791 million or $2.51 per share in 2015.

RESULTS OF GREAT-WEST LIFECO, IGM FINANCIAL AND PARGESA HOLDING

GREAT-WEST LIFECO INC.
For the quarter ended September 30, 2016, Great-West Lifeco Inc. (Lifeco) reported operating and net earnings attributable to common shareholders of $674 million or $0.682 per share, compared with $720 million or $0.724 per share in 2015.

For the nine-month period ended September 30, 2016, Lifeco reported operating and net earnings attributable to common shareholders of $1,965 million or $1.982 per share, compared with $2,079 million or $2.086 per share in 2015.

As at September 30, 2016, Power Financial and IGM Financial Inc. (IGM) held 67.9% and 4.0%, respectively, of Lifeco's common shares. Lifeco's contribution to Power Financial's operating earnings was $459 million for the quarter ended September 30, 2016, compared with $486 million in 2015. For the nine months ended September 30, 2016, Lifeco's contribution to Power Financial's operating earnings was $1,331 million, compared with $1,401 million in 2015.

IGM FINANCIAL INC.
For the quarter ended September 30, 2016, IGM reported operating and net earnings available to common shareholders of $198 million or $0.82 per share, compared with $199 million or $0.81 per share in 2015.

For the nine-month period ended September 30, 2016, IGM reported operating and net earnings available to common shareholders of $538 million or $2.22 per share, compared with $598 million or $2.40 per share in 2015.

As at September 30, 2016, Power Financial and The Great-West Life Assurance Company, a subsidiary of Lifeco, held 61.5% and 3.8%, respectively, of IGM's common shares. IGM's contribution to Power Financial's operating earnings was $122 million for the quarter ended September 30, 2016, compared with $121 million in 2015. For the nine months ended September 30, 2016, IGM's contribution to Power Financial's operating earnings was $330 million, compared with $356 million in 2015.

PARGESA HOLDING SA
For the quarter ended September 30, 2016, Pargesa Holding SA (Pargesa) reported operating earnings of SF53 million, compared with SF100 million in 2015.

For the nine months ended September 30, 2016, Pargesa reported operating earnings of SF281 million, compared with SF307 million in 2015.

Net earnings for the third quarter of 2016 were SF47 million, compared with SF115 million in 2015. For the nine-month period ended September 30, 2016, there were net losses of SF314 million, compared with net earnings of SF514 million in 2015.

At September 30, 2016, Power Financial held a 50% interest in Parjointco N.V., which in turn held a 55.5% equity interest in Pargesa. Pargesa's contribution to Power Financial's operating earnings was $19 million for the quarter ended September 30, 2016, compared with $37 million in 2015. For the nine-month period ended September 30, 2016, Pargesa's contribution to Power Financial's operating earnings was $104 million, compared with $111 million in 2015.

DIVIDEND ON COMMON SHARES
The Board of Directors today declared a quarterly dividend of 39.25 cents per share on the Corporation's common shares payable February 1, 2017 to shareholders of record December 30, 2016.

DIVIDENDS ON PREFERRED SHARES
The Board of Directors also declared quarterly dividends on the Corporation's preferred shares, as follows:


SERIES – STOCK SYMBOL

RECORD DATE

PAYMENT DATE

AMOUNT

Series A – PWF.PR.A

January 25, 2017

February 15, 2017

At a floating rate equal to one quarter of 70% of the average prime rate of two major Canadian chartered banks [1]

Series D – PWF.PR.E

January 10, 2017

January 31, 2017

34.375¢

Series E – PWF.PR.F

January 10, 2017

January 31, 2017

32.8125¢

Series F – PWF.PR.G

January 10, 2017

January 31, 2017

36.875¢

Series H – PWF.PR.H

January 10, 2017

January 31, 2017

35.9375¢

Series I – PWF.PR.I

January 10, 2017

January 31, 2017

37.50¢

Series K – PWF.PR.K

January 10, 2017

January 31, 2017

30.9375¢

Series L – PWF.PR.L

January 10, 2017

January 31, 2017

31.875¢

Series O – PWF.PR.O

January 10, 2017

January 31, 2017

36.25¢

Series P – PWF.PR.P

January 10, 2017

January 31, 2017

14.4125¢

Series Q – PWF.PR.Q

January 10, 2017

January 31, 2017

13.4219¢

Series R – PWF.PR.R

January 10, 2017

January 31, 2017

34.375¢

Series S – PWF.PR.S

January 10, 2017

January 31, 2017

30¢

Series T – PWF.PR.T

January 10, 2017

January 31, 2017

26.25¢

[1] In accordance with the articles of the Corporation

ABOUT POWER FINANCIAL
Power Financial Corporation is a diversified management and holding company that has interests, directly or indirectly, in companies in the financial services sector in Canada, the United States and Europe. It also has diversified investments in industrial companies based in Europe. Power Financial Corporation is a member of the Power Corporation Group of Companies. To learn more, visit www.powerfinancial.com.

EARNINGS SUMMARY


(unaudited)

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

Three months ended

Nine months ended


September 30,

2016

September 30,
2015

September 30,

2016

September 30,

2015

Operating earnings






Lifeco

459

486

1,331

1,401


IGM

122

121

330

356


Pargesa

19

37

104

111


600

644

1,765

1,868


Corporate operations [1]

(28)

(15)

(98)

(50)


Dividends on perpetual preferred shares

(31)

(33)

(93)

(98)

Operating earnings (attributable to common shareholders)

541

596

1,574

1,720


Other items (non-operating earnings) – see below

(2)

6

(271)

71

Net earnings (attributable to common shareholders)

539

602

1,303

1,791






Earnings per share (attributable to common shareholders)






Operating earnings

0.76

0.83

2.21

2.41


Non-operating earnings

0.01

(0.38)

0.10


Net earnings

0.76

0.84

1.83

2.51

[1]

Includes interest on cash and cash equivalents, foreign exchange gains (losses) and losses on investments accounted for using the equity method.


OTHER ITEMS (NON-OPERATING EARNINGS)


(unaudited)

(in millions of Canadian dollars)

Three months ended

Nine months ended


September 30,

2016

September 30,

2015

September 30,

2016

September 30,

2015

Share of Pargesa's other items:






Total SA – Gain on partial disposal

101

9


LafargeHolcim Ltd – Impairment charges

(360)


Lafarge SA – Mark-to-market gains representing a reversal of impairment charges

8

88


Lafarge SA – Impairment and restructuring charges

(23)


Engie – Impairment charge

(9)


Suez Environnement Company – Gain on exchange

4


Other (charge) income

(2)

(2)

(3)

(7)


(2)

6

(271)

71

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.

Non-IFRS Financial Measures and Presentation

In analyzing the financial results of the Corporation and consistent with the presentation in previous periods, net earnings attributable to common shareholders are comprised of:

  • operating earnings attributable to common shareholders; and
  • other items or non-operating earnings, 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 or non-operating earnings by a subsidiary or a jointly controlled corporation or associate.

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. Operating 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 ongoing operating activities are excluded from this non-IFRS measure.

Operating earnings attributable to common shareholders and operating 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, financial position and cash flows. In this basis of presentation, Power Financial's interests in Lifeco and IGM are accounted for using the equity method. Presentation on a non-consolidated basis is a non-IFRS presentation. However, it is useful to the reader as it presents the holding company's (parent) results separately from the results of its operating subsidiaries.

Forward-Looking Statements

Certain statements in this news release, other than statements of historical fact, are forward-looking statements based on certain assumptions and reflect the Corporation's current expectations, or with respect to disclosure regarding the Corporation's public subsidiaries, reflect such subsidiaries' disclosed current expectations. Forward-looking statements are provided for the purposes of assisting the reader in understanding the Corporation's financial performance, financial position and cash flows as at and for the periods ended on certain dates and to present information about management's current expectations and plans relating to the future and the reader is cautioned that such statements may not be appropriate for other purposes. These statements may include, without limitation, statements regarding the operations, business, financial condition, expected financial results, performance, prospects, opportunities, priorities, targets, goals, ongoing objectives, strategies and outlook of the Corporation and its subsidiaries, as well as the outlook for North American and international economies for the current fiscal year and subsequent periods. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, or include words such as "expects", "anticipates", "plans", "believes", "estimates", "seeks", "intends", "targets", "projects", "forecasts" or negative versions thereof and other similar expressions, or future or conditional verbs such as "may", "will", "should", "would" and "could".

By its nature, this information is subject to inherent risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct and that objectives, strategic goals and priorities will not be achieved. A variety of factors, many of which are beyond the Corporation's and its subsidiaries' control, affect the operations, performance and results of the Corporation and its subsidiaries and their businesses, and could cause actual results to differ materially from current expectations of estimated or anticipated events or results. These factors include, but are not limited to: the impact or unanticipated impact of general economic, political and market factors in North America and internationally, interest and foreign exchange rates, global equity and capital markets, management of market liquidity and funding risks, changes in accounting policies and methods used to report financial condition (including uncertainties associated with critical accounting assumptions and estimates), the effect of applying future accounting changes, business competition, operational and reputational risks, technological change, changes in government regulation and legislation, changes in tax laws, unexpected judicial or regulatory proceedings, catastrophic events, the Corporation's and its subsidiaries' ability to complete strategic transactions, integrate acquisitions and implement other growth strategies, and the Corporation's and its subsidiaries' success in anticipating and managing the foregoing factors.

The reader is cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking statements. Information contained in forward-looking statements is based upon certain material assumptions that were applied in drawing a conclusion or making a forecast or projection, including management's perceptions of historical trends, current conditions and expected future developments, as well as other considerations that are believed to be appropriate in the circumstances, including that the list of factors in the previous paragraph, collectively, are not expected to have a material impact on the Corporation and its subsidiaries. While the Corporation considers these assumptions to be reasonable based on information currently available to management, they may prove to be incorrect.

Other than as specifically required by applicable Canadian law, the Corporation undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or results, or otherwise.

Additional information about the risks and uncertainties of the Corporation's business and material factors or assumptions on which information contained in forward-looking statements is based is provided in its disclosure materials, including its most recent Management's Discussion and Analysis and Annual Information Form, filed with the securities regulatory authorities in Canada and available at www.sedar.com.

SOURCE Power Financial Corporation

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