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March 23, 2018

Power Financial Reports Fourth Quarter and 2017 Financial Results and Dividend Increase

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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, March 23, 2018 /CNW Telbec/ - Power Financial Corporation (TSX: PWF) today reported earnings results for the fourth quarter and the twelve months ended December 31, 2017 and dividend increase.

Consolidated Results of Power Financial
For the period ended December 31

  • The Board of Directors today declared a 5% increase in the quarterly dividend from 41.25 cents to 43.30 cents per share on the Corporation's common shares, payable May 1, 2018 to shareholders of record April 9, 2018.
  • Assets under administration increased to $1.521 trillion, compared with $1.404 trillion in 2016.

Fourth Quarter
Net earnings attributable to common shareholders were $225 million or $0.32 per share, compared with $616 million or $0.86 per share in 2016.

Adjusted net earnings attributable to common shareholders (a non-IFRS financial measure) were $547 million or $0.77 per share, the same as in 2016. Contributions from operating companies to Power Financial's adjusted net earnings were:

 

(in millions of dollars)


2017

2016

• Great-West Lifeco Inc. (Lifeco)


499

475

• IGM Financial Inc. (IGM)


106

122

• Pargesa Holding SA (Pargesa)


3

15

 

Other items, not included in adjusted net earnings, were a net charge of $322 million, representing the Corporation's share of Other items at Lifeco and IGM.

Twelve Months 
Net earnings attributable to common shareholders were $1,717 million or $2.41 per share, compared with $1,919 million or $2.69 per share in 2016.

Adjusted net earnings attributable to common shareholders were $2,135 million or $2.99 per share, compared with $2,136 million or $2.99 per share in 2016.

Contributions from operating companies to Power Financial's adjusted net earnings were:

 

(in millions of dollars)


2017

2016

• Lifeco


1,791

1,821

• IGM


428

452

• Pargesa


131

119

 

Other items, not included in adjusted net earnings, were a net charge of $418 million, representing the Corporation's share of Other items at Lifeco and IGM.

Net earnings and adjusted net earnings reflect a $175 million loss at Lifeco related to estimated hurricane claims, the Corporation's share being $123 million.

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

GREAT-WEST LIFECO INC.

  • On February 8, 2018, Lifeco announced a 6% increase in the quarterly dividend on its common shares from $0.3670 to $0.3890 per share, payable March 29, 2018.
  • Fourth quarter adjusted net earnings were up 5%, primarily driven by strong results in the Canada segment.
  • Consolidated assets under administration at December 31, 2017 were over $1.3 trillion, an 8% increase from December 31, 2016.
  • Putnam's investment performance was ranked in the "top ten" among investment firms in all time periods (one, five, ten years) in Barron's Best Fund Families of 2017.

Fourth Quarter
Net earnings attributable to common shareholders were $392 million or $0.397 per share, compared with $676 million or $0.686 per share in 2016.

Adjusted net earnings attributable to common shareholders were $734 million or $0.742 per share, compared with $698 million or $0.709 per share in 2016.

Other items, not included in adjusted net earnings, were a net charge of $342 million consisting mainly of a net charge on the disposal of an equity investment and the net impact of U.S. tax reform, which led to a revaluation of deferred tax balances and insurance contract liabilities. The lower U.S. corporate tax rate will benefit future net earnings.

Twelve Months
Net earnings attributable to common shareholders were $2,149 million or $2.173 per share, compared with $2,641 million or $2.668 per share in 2016.

Lifeco's adjusted net earnings attributable to common shareholders were $2,647 million or $2.676 per share, compared to $2,685 million or $2.712 per share in 2016. Lifeco's adjusted net earnings for the year included a loss of $175 million related to estimated hurricane claims.

Other items, not included in adjusted net earnings, were a net charge of $498 million. In addition to the items discussed above, Other items in the twelve-month period mainly consisted of restructuring charges for the realignment of Lifeco's Canadian operations.

At December 31, 2017, Power Financial and IGM held 67.7% and 4.0%, respectively, of Lifeco's common shares.

IGM FINANCIAL INC.

  • Record high quarterly assets under management of $156.5 billion were achieved at December 31, 2017, an increase of 4.3% in the quarter and 9.7% annually.
  • Overall net sales in the fourth quarter were $1.8 billion and for the year ended December 31, 2017 were $4.8 billion, the best results in IGM's history. Fourth quarter investment fund net sales were $749 million, up significantly from net sales of $334 million during the fourth quarter of 2016.
  • Acquired a 13.9% interest in China AMC, which had assets under management of RMB¥870 billion ($168 billion) at December 31, 2017.

Fourth Quarter
Net earnings available to common shareholders were $50.6 million or $0.21 per share, compared with $233.0 million or $0.97 per share in 2016.

Adjusted net earnings available to common shareholders were $191.4 million or $0.79 per share, compared with $199.0 million or $0.83 per share in 2016.

Other items, not included in adjusted net earnings, were a net charge of $140.8 million consisting mainly of restructuring and other charges related to the implementation of initiatives to assist in IGM's operational effectiveness.  

Twelve Months
Net earnings available to common shareholders were $601.9 million or $2.50 per share, compared with $770.5 million or $3.19 per share in 2016.

Adjusted net earnings available to common shareholders were $727.8 million or $3.02 per share, compared with $736.5 million or $3.05 per share in 2016.

Other items, not included in adjusted net earnings, were a net charge of $125.9 million. In addition to the items discussed above, Other items mainly related to a favourable revaluation of IGM's pension plan obligations.

At December 31, 2017, Power Financial and The Great-West Life Assurance Company held 61.5% and 3.8%, respectively, of IGM's common shares.

PARGESA HOLDING SA

  • At its annual meeting on May 3, 2018, the board of directors of Pargesa will propose a 2017 dividend of SF2.50 per bearer share, an increase of 2.5% over the previous year, to be paid on May 15, 2018.
  • Net asset value per share increased 22% during the year.

Fourth Quarter
Net earnings were SF33 million, compared with SF282 million in 2016. 
Adjusted net earnings were SF36 million, compared with SF40 million in 2016.

Twelve Months
Net earnings were SF382 million, compared with a net loss of SF32 million in 2016.
Adjusted net earnings were SF384 million, compared with SF321 million in 2016.

At December 31, 2017, Power Financial held an indirect equity interest of 27.8% in Pargesa.

Dividends on Preferred Shares

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

Dividends payable May 15, 2018 to shareholders of record April 24, 2018:



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 January 1 to March 31, 2018.


 

Dividends payable April 30, 2018 to shareholders of record April 9, 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

16.1541¢

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 substantial 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.

 

Earnings Summary




(unaudited)

Three months ended

December 31,

Twelve months ended

December 31,

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


2017

2016

2017

2016

Adjusted net earnings





Lifeco [1]

499

475

1,791

1,821

IGM

106

122

428

452

Pargesa

3

15

131

119


608

612

2,350

2,392

Corporate operations [2]

(27)

(34)

(82)

(132)

Dividends on perpetual preferred shares

(34)

(31)

(133)

(124)

Adjusted net earnings [3]

547

547

2,135

2,136

Other items – see below

(322)

69

(418)

(217)

Net earnings [3]

225

616

1,717

1,919

Earnings per share – basic [3] 






Adjusted net earnings

0.77

0.77

2.99

2.99


Other items

(0.45)

0.09

(0.58)

(0.30)

Net earnings

0.32

0.86

2.41

2.69


[1]

Lifeco's adjusted net earnings for the year included a loss of $175 million related to estimated hurricane claims reflected in the third quarter (Power Financial's share: $123 million).

[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

Twelve months ended

(in millions of Canadian dollars)

December 31,

December 31,


2017

2016

2017

2016

Share of Lifeco's Other items:






Impact of U.S. tax reform

(146)

(146)


Restructuring charges

(3)

(16)

(107)

(31)


Net charge on sale of an equity investment

(83)

(83)


Share of IGM's Other items

(4)

(4)


(236)

(16)

(340)

(31)

Share of IGM's Other items:






Restructuring and other charges

(78)

(88)


Pension plan

22


Reduction of income tax estimates

21

21


Share of Lifeco's Other items

(8)

(12)


(86)

21

(78)

21

Share of Pargesa's Other items:






Total SA – Gains on partial disposal

74

175


LafargeHolcim Ltd – Impairment charges

(360)


Engie – Impairment charge and loss on partial disposal

(6)

(15)


Other (charge) income

(4)

(7)


64

(207)


(322)

69

(418)

(217)

 

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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