Power Corporation Reports 2016 Second Quarter and Six-Month Financial Results and Dividends

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, Aug. 5, 2016 /CNW/ - Power Corporation of Canada (TSX: POW) today reported earnings results for the second quarter and six months ended June 30, 2016.

SECOND QUARTER RESULTS
Operating earnings attributable to participating shareholders (a non-IFRS financial measure) for the quarter ended June 30, 2016 were $306 million or $0.66 per share, compared with $423 million or $0.91 per share in 2015.

Non-operating items, not included in operating earnings, were a charge of $34 million comprised of the Corporation's share of Groupe Bruxelles Lambert's (GBL) non-cash impairment charge as a result of a further decline in LafargeHolcim Ltd's share price. In 2015, non-operating items represented a net contribution of $192 million.  

Net earnings attributable to participating shareholders were $272 million or $0.59 per share, compared with $615 million or $1.33 per share in 2015.

SIX-MONTH RESULTS
Operating earnings attributable to participating shareholders for the six months ended June 30, 2016 were $497 million or $1.07 per share, compared with $772 million or $1.67 per share in 2015.

Non-operating items, not included in operating earnings, resulted in a net charge of $177 million, compared with a net contribution of $197 million in 2015.

Net earnings attributable to participating shareholders were $320 million or $0.69 per share, compared with $969 million or $2.10 per share in 2015.

RESULTS OF POWER FINANCIAL CORPORATION

SECOND QUARTER RESULTS
Power Financial reported operating earnings attributable to common shareholders for the quarter ended June 30, 2016 of $557 million or $0.78 per share, compared with $559 million or $0.79 per share in 2015. 

Non-operating items, not included in operating earnings, were a charge of $52 million representing Power Financial's share of GBL's non-operating items, as discussed above. In 2015, non-operating items represented a net contribution of $57 million.

Net earnings attributable to common shareholders were $505 million or $0.71 per share, compared with $616 million or $0.87 per share in 2015.

SIX-MONTH RESULTS
Power Financial reported operating earnings attributable to common shareholders for the six months ended June 30, 2016 of $1,033 million or $1.45 per share, compared with $1,124 million or $1.58 per share in 2015.

Non-operating items, not included in operating earnings, resulted in a net charge of $269 million, compared with a net contribution of $65 million in 2015.

Net earnings attributable to common shareholders were $764 million or $1.07 per share, compared with $1,189 million or $1.67 per share in 2015.

As at June 30, 2016, Power Corporation held a 65.6% economic interest in Power Financial. Power Financial's contribution to Power Corporation's operating earnings was $365 million for the quarter ended June 30, 2016, compared with $367 million in 2015. For the six months ended June 30, 2016, Power Financial contributed $678 million to Power Corporation's operating earnings, compared with $738 million in 2015.

INCOME FROM INVESTMENTS

SECOND QUARTER RESULTS
Income from investments represented a loss of $3 million for the quarter ended June 30, 2016, compared with a gain of $124 million in 2015. The fair value of investments at the end of the quarter was $2,617 million, compared with $2,678 million at the end of 2015.

SIX-MONTH RESULTS
Income from investments represented a loss of $49 million for the six-month period ended June 30, 2016, compared with a gain of $165 million in 2015.


DIVIDEND ON PARTICIPATING SHARES
The Board of Directors today declared a quarterly dividend of 33.50 cents per share on the Participating Preferred Shares and the Subordinate Voting Shares of the Corporation, payable September 30, 2016 to shareholders of record September 9, 2016.

DIVIDENDS ON NON-PARTICIPATING 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

1986 Series –POW.PR.F 

September 23, 2016

October 15, 2016

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

Series A – POW.PR.A

September 23, 2016

October 15, 2016

35¢

Series B – POW.PR.B

September 23, 2016

October 15, 2016

33.4375¢

Series C – POW.PR.C

September 23, 2016

October 15, 2016

36.25¢

Series D – POW.PR.D

September 23, 2016

October 15, 2016

31.25¢

Series G – POW.PR.G

September 23, 2016

October 15, 2016

35¢

[1] In accordance with the articles of the Corporation

 

ABOUT POWER CORPORATION
Power Corporation of Canada is a diversified international management and holding company with interests in companies in the financial services, communications and other business sectors in North America, Europe and Asia. To learn more, visit www.powercorporation.com.

 

EARNINGS SUMMARY


(unaudited)

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

Three months ended


Six months ended


June 30,

2016


June 30,

2015


June 30,

2016


June 30,

2015

Operating earnings









Power Financial

365


367


678


738


Other subsidiaries [1]

(11)


(21)


(38)


(39)


354


346


640


699

Corporate operations









Income from investments [2]

(3)


124


(49)


165


Operating and other expenses

(32)


(34)


(68)


(66)

Dividends on non-participating shares

(13)


(13)


(26)


(26)

Operating earnings (attributable to participating shareholders)

306


423


497


772

Other items (non-operating earnings) – see below

(34)


192


(177)


197

Net earnings (attributable to participating shareholders)

272


615


320


969









Earnings per share (attributable to participating shareholders) 









Operating earnings

0.66


0.91


1.07


1.67


Non-operating earnings

(0.07)


0.42


(0.38)


0.43


Net earnings

0.59


1.33


0.69


2.10



[1]

Comprised of: Power Energy Corporation, Square Victoria Communications Group Inc., and controlled portfolio investments
(Alvest and Les Délices des 7 Vallées (held through Sagard Europe), and IntegraMed America, Inc. and
Vein Clinics of America, Inc. (held through Sagard Capital)).



[2]

Includes income from Sagard Investment Funds (excluding income from controlled portfolio investments)
and income from other investments.

 

OTHER ITEMS (NON-OPERATING EARNINGS)





(unaudited)
(in millions of Canadian dollars)

Three months ended


Six months ended


June 30,

2016


June 30,

2015


June 30,

2016


June 30,

2015

Share of Power Financial's other items:









Pargesa










Total SA – Gain on partial disposal



67


6



LafargeHolcim Ltd – Impairment charges

(34)



(237)




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


53



53



Lafarge SA – Impairment and restructuring charges


(15)



(15)



Engie – Impairment charge



(6)




Suez Environnement Company – Gain on exchange


1



2



Other (charge) income


(2)


(1)


(4)


(34)


37


(177)


42

Other subsidiaries


(28)



(28)

Corporate operations


183



183


(34)


192


(177)


197

 

INCOME FROM INVESTMENTS



(unaudited)
(in millions of Canadian dollars)

Three months ended


Six months ended


June 30,

2016


June 30,

2015


June 30,

2016


June 30,

2015

Sagard Investment Funds [1]









Sagard Europe [2]

(1)


(2)


(4)


(4)


Sagard Capital [3]

(12)


4


(46)


1


Sagard China

(5)


68


(9)


102

Other Investments









Investment and hedge funds

7


7


12


8


China Asset Management Co. Ltd.

6



6



Other

2


47


(8)


58


(3)


124


(49)


165


[1]

Income from investments for the Sagard Investment Funds is presented net of expenses of their separate dedicated teams.



[2]

Excludes the Corporation's share of the results of Alvest and Les Délices des 7 Vallées, presented in operating earnings of other subsidiaries.



[3] 

Excludes the Corporation's share of the results of IntegraMed America, Inc. and Vein Clinics of America, Inc., presented in operating earnings of other subsidiaries.

 

INVESTMENTS


(unaudited)
(in millions of Canadian dollars)


June 30, 2016


December 31, 2015


Cost

Unrealized
gain (loss)

Fair value

Cost

Unrealized
gain (loss)

Fair value

Sagard Investment Funds[1]








Sagard Europe

201

62

263

154

40

194


Sagard Capital

266

151

417

268

202

470


Sagard China

390

15

405

462

36

498


857

228

1,085

884

278

1,162

Other Investments








China Asset Management Co. Ltd.

282

28

310

282

28

310


Investment and hedge funds and other

268

144

412

281

213

494

Total [2]

1,407

400

1,807

1,447

519

1,966


[1]

Including cash and the fair value of controlled portfolio investments, the total fair value of the Sagard Investment Funds as of June 30, 2016, was as follows:



June 30, 2016

December 31, 2015


Non-controlled
portfolio
investments

Cash and
controlled
portfolio

investments

Total fair
value

Non-controlled
portfolio
investments

Cash and
controlled
portfolio

investments

Total fair

value

Sagard Europe

263

67

330

194

63

257

Sagard Capital

417

520

937

470

481

951

Sagard China

405

223

628

498

168

666


1,085

810

1,895

1,162

712

1,874

[2]

Fair value includes $825 million of investments at June 30, 2016 ($972 million at December 31, 2015) valued using quoted prices in active markets.

 

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 shares (including the Participating Preferred Shares) and Subordinate Voting 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 participating shareholders are comprised of:

  • operating earnings attributable to participating 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 Corporation, 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 participating 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 Corporation's interests in Power Financial and other subsidiaries 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 Corporation of Canada

For further information: Mr. Stéphane Lemay, Vice-President, General Counsel and Secretary, 514-286-7400

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