Readers are referred to the sections "Non-IFRS Financial Measures and Presentation" and "Forward-Looking Statements" at the end of this release. |
Power Financial
Consolidated results for the period ended
Highlights
Power Financial andPower Corporation of Canada (Power Corporation ) completed a reorganization onFebruary 13, 2020 .Power Corporation now holds 100% of the issued and outstanding Power Financial common shares. Power Financial shares were delisted from theToronto Stock Exchange onFebruary 18, 2020 . Power Financial preferred shares and debt securities remain outstanding.Great-West Lifeco Inc.'s (Lifeco) consolidated assets under administration atMarch 31, 2020 were$1.5 trillion , a 6% decrease fromDecember 31, 2019 primarily reflecting the COVID-19 market declines.- Lifeco declared a quarterly dividend of
$0.4380 per common share payableJune 30, 2020 , unchanged from last quarter. IGM Financial Inc. (IGM) assets under management atMarch 31, 2020 of$147.5 billion , a decrease of 8.1% from the prior year and 11.6% fromDecember 31, 2019 , due to financial market declines related to COVID-19.- IGM declared a quarterly common share dividend of
$0.5625 per common share payableJuly 31, 2020 , unchanged from the last quarter. - At its annual general meeting held on
May 6, 2020 ,Pargesa Holding SA (Pargesa) approved a dividend of SF2.63 per share, a 2.7% increase. Parjointco N.V. and Pargesa announced onMarch 11, 2020 a public exchange offer for all Pargesa shares not held byParjointco to be exchanged for Groupe Bruxelles Lambert (GBL) shares. The offer, which is subject to certain restrictions, is open for acceptance fromMay 8 to June 8, 2020 .
COVID-19
The outbreak of the novel strain of coronavirus, specifically identified as "COVID-19", has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. These measures, which include the implementation of travel bans, self-imposed quarantine periods and social distancing, have caused material disruption to businesses globally resulting in an economic slowdown. Global equity markets have experienced significant volatility and weakness. Governments and central banks have reacted with significant monetary and fiscal interventions designed to stabilize economic conditions.
At Power Financial and its group companies, the focus has continued to be on managing the safety and well-being of its people, maintaining operational effectiveness, ensuring that the group can serve its customers, assessing impacts on earnings, liquidity and capital, planning for different potential scenarios and engaging with stakeholders. The respective boards of directors of Lifeco, IGM, Pargesa and GBL utilize their governance structures and processes to oversee the management of the risk and potential impacts presented by the current economic slowdown and other potential consequences due to COVID-19.
The duration and impact of the COVID-19 pandemic is unknown at this time, as is the efficacy of the government and central bank interventions. It is not possible to reliably estimate the length and severity of these developments and the impact on the financial results and condition of the Corporation and its operating subsidiaries in future periods.
First Quarter
Net earnings attributable to common shareholders were
Adjusted net earnings attributable to common shareholders (a non-IFRS financial measure, see Non-IFRS Financial Measures and Presentation below) were
Contributions to Power Financial's net earnings per share and adjusted net earnings per share were:
2020 [1] | 2019 | |||
(in dollars per Power Financial share) | Net Earnings | Adjusted Net | Net Earnings | Adjusted Net |
· Lifeco [2] | 0.34 | 0.54 | 0.62 | 0.54 |
· IGM | 0.14 | 0.15 | 0.15 | 0.14 |
· Pargesa | 0.12 | 0.12 | 0.07 | 0.07 |
· Power Financial Corporate and Other | (0.10) | (0.10) | (0.09) | (0.09) |
0.50 | 0.71 | 0.75 | 0.66 |
[1] | The Corporation completed a substantial issuer bid in the second quarter of 2019 and repurchased 7.0% of its common shares. |
[2] | The Corporation participated in Lifeco's substantial issuer bid, in the second quarter of 2019; the number of shares held by the Corporation decreased by 7.4%. |
Adjustments in 2020, excluded from adjusted net earnings, were a negative net impact of
Non-IFRS Financial Measure – Adjusted Net Earnings
Effective the first quarter of 2020, the Corporation introduced an enhanced definition of its non-IFRS earnings measure, Adjusted net earnings. This change is consistent with the introduction of base earnings by Lifeco which was introduced in the first quarter of 2020 to reflect management's view of the operating performance of Lifeco. The definition of Adjustments has been enhanced to include Lifeco's impact of actuarial assumption changes and management actions and direct equity and interest rate market impacts on insurance contract liabilities net of hedging. The comparative periods have been restated to reflect the introduction of this enhanced measure. For additional information, please refer to the Non-IFRS Financial Measures and Presentation section further in this news release.
Results for the period ended
First Quarter
Net earnings attributable to common shareholders were $342 million or
Adjusted net earnings [1] attributable to common shareholders were
[1] | Described as base earnings by Lifeco. For additional information, please refer to the Non-IFRS Financial Measures and Presentation section further in this news release. |
First Quarter
Net earnings available to common shareholders were
Assets under management at
First Quarter
Pargesa reported net earnings of SF6 million, compared with SF91 million in 2019.
Adjusted net earnings were SF11 million, compared with SF94 million in 2019. Adjustments, not included in adjusted net earnings, were a charge of SF5 million in the first quarter.
Pargesa reported a net asset value at
Pargesa adopted IFRS 9 in 2018. Power Financial continues to apply IAS 39; this results in an increase in its share of the contribution from Pargesa of $75 million in the first quarter of 2020, as further described in the table below.
Dividends on Power Financial Preferred Shares
The Board of Directors declared quarterly dividends on the Corporation's preferred shares.
Dividends payable
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 |
Dividends payable
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 | 11.5315¢ | |
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¢ |
Extension to provide information to make a Canadian income tax election with
In
Instructions on how to make a tax election with
https://www.powercorporation.com/en/investors/reorganization/.
About Power Financial
Power Financial, a wholly owned subsidiary of
At
- 66.9% –
Great-West Lifeco (TSX: GWO) www.greatwestlifeco.com - 62.1% –
IGM Financial (TSX: IGM) www.igmfinancial.com - 27.8% –
Pargesa Holding (SIX: PARG) www.pargesa.ch - 83.9% –
Wealthsimple Financial Corp. [1] www.wealthsimple.com
[1] Undiluted equity interest held by Lifeco, IGM and the Corporation. |
Earnings Summary | ||
Earnings | ||
(unaudited) | Three months ended | |
(in millions of Canadian dollars) | ||
2020 | 2019 | |
Adjusted net earnings [1] | ||
Lifeco [2] | 362 | 384 |
IGM [2] | 99 | 108 |
Pargesa [2] | 79 | 46 |
540 | 538 | |
Corporate operations [3] | (35) | (29) |
Dividends on perpetual preferred shares | (35) | (35) |
Adjusted net earnings [4] | 470 | 474 |
Adjustments – see below | (141) | 62 |
Net earnings [4] | 329 | 536 |
Earnings per Share | ||
(unaudited) | Three months ended | |
(in dollars per share) | ||
2020 | 2019 | |
Adjusted net earnings per share - basic [1] | ||
Lifeco [2] | 0.54 | 0.54 |
IGM [2] | 0.15 | 0.14 |
Pargesa [2] | 0.12 | 0.07 |
0.81 | 0.75 | |
Corporate operations [3] | (0.05) | (0.04) |
Dividends on perpetual preferred shares | (0.05) | (0.05) |
Adjusted net earnings per share [4] | 0.71 | 0.66 |
Adjustments – see below | (0.21) | 0.09 |
Net earnings per share [4] | 0.50 | 0.75 |
[1] | Effective the first quarter of 2020, the Corporation introduced an enhanced definition of its Non-IFRS earnings measures, Adjusted net earnings. The comparative figures have been restated. For additional information, please refer to the Non-IFRS Financial Measures and Presentation section further in this news release. |
[2] | The contributions from Lifeco and IGM include an allocation of the results of |
[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. |
Adjustments (not included in adjusted net earnings) | ||
(unaudited) | Three months ended | |
(in millions of Canadian dollars) | ||
2020 | 2019 | |
Share of Lifeco's adjustments: | ||
Actuarial assumption changes and management actions | (35) | 88 |
Market-related impacts | (100) | (28) |
(135) | 60 | |
Share of IGM's adjustments: | ||
Share of Lifeco's adjustments [1] | (5) | 2 |
Share of Pargesa's adjustments | ||
Other charges | (1) | − |
(141) | 62 |
[1] | Includes IGM's share of Lifeco's Adjustments for the impact of actuarial assumption changes and management actions and market impacts on insurance contract liabilities, in accordance with the Corporation's definition of Adjusted net earnings. |
Contribution to Power Financial's Adjusted Net Earnings | |||
Three months ended (unaudited) (in millions of Canadian dollars) | Contribution to adjusted as reported | Consolidation | Contribution to adjusted |
Lifeco | 363 | (1) | 362 |
IGM | 100 | (1) | 99 |
Pargesa | 4 | 75 | 79 |
[1] | The contributions from Lifeco and IGM include an allocation of the results of |
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) | 2020 | 2019 |
(in millions of Canadian dollars) | Q1 | Q1 |
Disposal of interest in Total SA [1] | 70 | − |
Partial disposal of interest in adidas [1] | − | 18 |
Impairment charges [1] | (40) | − |
Disposal of private equity funds and other [2] | 20 | − |
Reversal on unrealized gains (losses) on private equity funds and other [3] | 25 | (6) |
Total | 75 | 12 |
[1] | On |
[2] | During the first quarter of 2020, an investment held through private equity funds, classified as fair value through profit or loss (FVPL) in accordance with IFRS 9, was disposed of, resulting in a realized gain. Power Financial's share of the realized gain in accordance with IAS 39 was |
[3] | Pargesa classifies private equity investments at FVPL in accordance with IFRS 9 and recognizes unrealized changes in fair value in earnings. Power Financial does not recognize these unrealized fair value changes in earnings as it continues to classify these private equity funds as available for sale in accordance with IAS 39. |
Net Asset Value
Net asset value represents management's estimate of the fair value of the common shareholders' equity of the Corporation. Net asset value is the fair value of Power Financial's non-consolidated assets less its net debt and preferred shares.
(in millions of Canadian dollars, | ||||||
Non-consolidated | Fair value | Net asset | Non-consolidated | Fair value | Net asset | |
Assets | ||||||
Investments | ||||||
Lifeco | 14,161 | 917 | 15,078 | 13,654 | 6,976 | 20,630 |
IGM | 2,813 | 641 | 3,454 | 2,720 | 2,795 | 5,515 |
3,406 | (1,188) | 2,218 | 3,954 | (1,413) | 2,541 | |
Other [1] | 194 | 134 | 328 | 203 | 127 | 330 |
Cash and cash equivalents | 1,027 | − | 1,027 | 1,021 | − | 1,021 |
Other assets [2] | 121 | − | 121 | 138 | − | 138 |
Total assets | 21,722 | 504 | 22,226 | 21,690 | 8,485 | 30,175 |
Liabilities and preferred shares | ||||||
Debentures | 250 | − | 250 | 250 | − | 250 |
Other liabilities | 295 | − | 295 | 625 | − | 625 |
Perpetual preferred shares | 2,830 | − | 2,830 | 2,830 | − | 2,830 |
Total liabilities and preferred shares | 3,375 | − | 3,375 | 3,705 | − | 3,705 |
Net value | ||||||
Common shareholders' equity / Net asset value | 18,347 | 504 | 18,851 | 17,985 | 8,485 | 26,470 |
Per share | 27.63 | 28.39 | 27.08 | 39.86 |
[1] | Fair value adjustment is related to Power Financial's investments in |
[2] | Includes |
Non-IFRS Financial Measures and Presentation
Effective the first quarter of 2020, the Corporation introduced an enhanced definition of its non-IFRS earnings measure, Adjusted net earnings. This change is consistent with the introduction of base earnings (loss) by Lifeco which was introduced in the first quarter of 2020 to reflect management's view of the operating performance of Lifeco. Lifeco defines base earnings (loss) as net earnings excluding the impact of actuarial assumption changes and management actions, direct equity and interest rate market impacts on insurance contract liabilities net of hedging, and items that management believes are not indicative of the company's underlying business results. The definition of Adjustments includes what the Corporation previously presented as other items and also includes Lifeco's impact of actuarial assumption changes and management actions, and direct equity and interest rate market impacts on insurance contract liabilities net of hedging. The definition of Adjustments used in Adjusted net earnings is being adopted to enhance comparability of results between reporting periods and in anticipation of Lifeco's implementation of accounting changes related to IFRS 17, Insurance Contracts, on
Net earnings attributable to common shareholders are comprised of:
- Adjusted net earnings attributable to common shareholders; and
- Adjustments, 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. Adjustments include the Corporation's share of Lifeco's impact of actuarial assumption changes and management actions, direct equity and interest rate market impacts on insurance contract liabilities net of hedging, as well as items that management believes are not indicative of the underlying business results which include those identified 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 it reflects management's view of the operating performance of the Corporation and its subsidiaries and excludes items that are not considered to be part of the underlying business results from this non-IFRS financial 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,
Net asset value is commonly used by holding companies to determine their value. Net asset value is the fair value of Power Financial's non-consolidated assets less its net debt and preferred shares. The investments held in public entities (Lifeco, IGM and Pargesa) are measured at their market value and investments in private entities are measured at management's estimate of fair 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 (
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, the expected impact of the COVID-19 pandemic on the Corporation and its subsidiaries' operations, results and dividends, as well as the outlook for North American and international economies for the current fiscal year and subsequent periods, the intended effects of the Reorganization (as defined herein) and the proposed redemption by the Corporation and
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
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 the availability of cash to redeem First Preferred Shares and 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
SOURCE
© Canada Newswire, source