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May 10, 2018

Power Financial Reports First Quarter Financial Results

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

MONTRÉAL, May 10, 2018 /CNW Telbec/ - Power Financial Corporation (TSX: PWF) today reported earnings results for the three months ended March 31, 2018.

Consolidated Results of Power Financial
For the period ended March 31

  • Adjusted net earnings increased $85 million from the corresponding quarter of 2017, an increase of 17%.

First Quarter
Net earnings attributable to common shareholders and adjusted net earnings attributable to common shareholders (a non-IFRS financial measure) were $586 million or $0.82 per share, compared with net earnings of $484 million, or $0.68 per share, and adjusted net earnings of $501 million, or $0.70 per share, in 2017.

Contributions to Power Financial's adjusted net earnings were:

 

(in millions of dollars)

2018

2017

• Great-West Lifeco Inc. (Lifeco)

495

419

• IGM Financial Inc. (IGM)

107

104

• Pargesa Holding SA (Pargesa)

44

43

• Power Financial Corporate and Other

(60)

(65)


586

501

 

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

GREAT-WEST LIFECO INC.

  • Sales for the first quarter of 2018 were $34.6 billion, up 7% from the first quarter of 2017, with strong sales in each of the segments.
  • Fee and other income was $1.4 billion, up 6% from the first quarter of 2017, driven by market performance, particularly in the U.S., and business growth in all the segments.

First Quarter
Net earnings and adjusted net earnings attributable to common shareholders were $731 million or $0.740 per share, compared with net earnings of $591 million, or $0.598 per share, and adjusted net earnings of $619 million, or $0.627 per share, in 2017.

On May 3, 2018, Lifeco declared a quarterly dividend of $0.3890 per common share, unchanged from the previous quarter.

IGM FINANCIAL INC.

  • Net sales in the first quarter were $1.4 billion, the best first quarter result in IGM's history, and reflects good contribution from each of the operating companies.
  • Assets under management of $155.8 billion were down slightly from the quarter‐end record high assets under management of $156.5 billion at December 31, 2017.

First Quarter
Net earnings and adjusted net earnings available to common shareholders were $186 million or $0.77 per share, compared with $177 million or $0.74 per share in 2017.

On May 4, 2018, IGM declared a quarterly dividend of $0.5625 per common share, unchanged from the previous quarter.

PARGESA HOLDING

  • Net asset value increased 1.6% in the quarter.

First Quarter
Pargesa reported net earnings of SF61 million, compared with SF125 million in 2017. The 2018 results exclude Pargesa's share of 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 [1].

On May 3, 2018, Pargesa declared a dividend of SF2.50 per bearer share, an increase of 2.5% over the previous year.

 

[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.




Investments in private equity funds were reclassified from AFS to fair value through profit or 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 August 1, 2018 to shareholders of record June 29, 2018.

Dividends on Power Financial Preferred Shares

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

Dividends payable August 15, 2018 to shareholders of record July 25, 2018:



Series – Stock Symbol

Amount

Series A – PWF.PR.A

Floating rate [2]



[2]

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, 2018.

 

Dividends payable July 31, 2018 to shareholders of record July 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

16.9507¢

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 March 31, 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 [1] 

www.wealthsimple.com



[1] Interest held by Lifeco, IGM and the Corporation.

 

Earnings Summary



(unaudited)

Three months ended

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

March 31,


2018

2017

Adjusted net earnings



Lifeco

495

419

IGM [1]

107

104

Pargesa [1]

44

43


646

566

Corporate operations [2]

(26)

(34)

Dividends on perpetual preferred shares

(34)

(31)

Adjusted net earnings [3]

586

501

Other items – see below

(17)

Net earnings [3]

586

484

Earnings per share – Basic [3] 




Adjusted net earnings

0.82

0.70


Other items

(0.02)


Net earnings

0.82

0.68



[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.

[3]

Attributable to common shareholders.

 

Other Items



(unaudited)

Three months ended

(in millions of Canadian dollars)

March 31,


2018

2017

Share of Lifeco's Other items:




Restructuring charges

(20)

Share of Pargesa's Other items:




Other income

3


(17)

 


Contribution to Power Financial's Adjusted Net Earnings





Three months ended March 31, 2018

 

(unaudited)

(in millions of Canadian dollars)

Contribution

to adjusted net
earnings

as reported

Consolidation
entries

Contribution to
Power Financial's
adjusted net
earnings

Lifeco

495

495

IGM

114

(7)

107

Pargesa

22

22

44

 

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, 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

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