Power Corporation Reports Fourth Quarter and 2016 Financial Results

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

MONTRÉAL, March 24, 2017 /CNW Telbec/ - Power Corporation of Canada (TSX: POW) today reported earnings results for the fourth quarter and the twelve months ended December 31, 2016.

FOURTH QUARTER RESULTS

Net earnings attributable to participating shareholders for the quarter ended December 31, 2016 were $459 million or $0.99 per share, compared with $309 million or $0.67 per share in 2015.

Adjusted net earnings attributable to participating shareholders (a non-IFRS financial measure) were $402 million or $0.87 per share, compared with $317 million or $0.69 per share in 2015.

Other items, not included in adjusted net earnings, were a contribution of $57 million, consisting mainly of the Corporation's share of Groupe Bruxelles Lambert's (GBL) gain on the disposal of a 0.7% equity interest in Total SA (Total) and a favourable change in income tax provision estimates related to certain tax filings at IGM Financial Inc. (IGM).

2016 RESULTS

Net earnings attributable to participating shareholders for the twelve months ended December 31, 2016 were $1,082 million or $2.33 per share, compared with $1,786 million or $3.86 per share in 2015.

Adjusted net earnings attributable to participating shareholders were $1,203 million or $2.59 per share, compared with $1,573 million or $3.40 per share in 2015.

Other items, not included in adjusted net earnings, were a net charge of $121 million. In addition to the fourth quarter items discussed above, other items in the twelve-month period included the Corporation's share of GBL's non-cash impairment charge related to a decrease in LafargeHolcim Ltd's (LafargeHolcim) share price.

POWER FINANCIAL CORPORATION

FOURTH QUARTER RESULTS

Power Financial reported net earnings attributable to common shareholders of $616 million or $0.86 per share, for the quarter ended December 31, 2016, compared with $528 million or $0.74 per share in 2015.

Adjusted net earnings attributable to common shareholders were $531 million or $0.74 per share, compared with $521 million or $0.73 per share in 2015. 

Other items, not included in adjusted net earnings, were a contribution of $85 million representing Power Financial's share of the items discussed above.

2016 RESULTS

Net earnings attributable to common shareholders for the twelve months ended December 31, 2016 were $1,919 million or $2.69 per share, compared with $2,319 million or $3.25 per share in 2015.

Adjusted net earnings attributable to common shareholders were $2,105 million or $2.95 per share, compared with $2,241 million or $3.14 per share in 2015. 

Other items, not included in adjusted net earnings, were a net charge of $186 million representing Power Financial's share of the items discussed above.

Earlier today, Power Financial announced a 5.1% increase in the quarterly dividend on its common shares, from $0.3925 to $0.4125 per share, payable on May 1, 2017.

As at December 31, 2016, Power Corporation held a 65.6% economic interest in Power Financial. Power Financial's contribution to Power Corporation's adjusted net earnings was $347 million for the quarter ended December 31, 2016, compared with $341 million in 2015. For the twelve months ended December 31, 2016, Power Financial contributed $1,380 million to Power Corporation's adjusted net earnings, compared with $1,470 million in 2015.

INCOME FROM INVESTMENTS

FOURTH QUARTER RESULTS

Income from investments was $119 million for the quarter ended December 31, 2016, compared with $46 million in 2015. Income from investments in the quarter is comprised of gains of $111 million from the Sagard Investment Funds and a gain of $8 million from the Corporation's other investments.

2016 RESULTS

Income from investments was $74 million for the twelve months ended December 31, 2016, compared with $355 million in 2015.

DIVIDENDS ON PARTICIPATING SHARES

On February 15, 2017, as previously disclosed, the Board of Directors declared a quarterly dividend of 33.50 cents per share on the Participating Preferred Shares and the Subordinate Voting Shares of the Corporation, payable March 31, 2017 to shareholders of record March 10, 2017.

DIVIDENDS ON NON-PARTICIPATING PREFERRED SHARES

On February 15, 2017, as previously disclosed, 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 

March 24, 2017

April 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 A – POW.PR.A

March 24, 2017

April 15, 2017

35¢

Series B – POW.PR.B

March 24, 2017

April 15, 2017

33.4375¢

Series C – POW.PR.C

March 24, 2017

April 15, 2017

36.25¢

Series D – POW.PR.D

March 24, 2017

April 15, 2017

31.25¢

Series G – POW.PR.G

March 24, 2017

April 15, 2017

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)

Three months ended

Twelve months ended 

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

December 31,

December 31,


2016

2015

2016

2015

Adjusted net earnings [1]





Power Financial

347

341

1,380

1,470

Other subsidiaries [2]

(15)

(22)

(65)

(66)


332

319

1,315

1,404

Corporate operations





Income – Sagard Investment Funds and other [3]

119

46

74

355

Operating and other expenses

(36)

(35)

(134)

(134)

Dividends on non-participating shares

(13)

(13)

(52)

(52)

Adjusted net earnings [4]

402

317

1,203

1,573

Other items – see below

57

(8)

(121)

213

Net earnings [4] 

459

309

1,082

1,786

Earnings per share – Basic [4]






Adjusted net earnings

0.87

0.69

2.59

3.40


Other items

0.12

(0.02)

(0.26)

0.46


Net earnings

0.99

0.67

2.33

3.86

[1]

Previously described as "Operating earnings".

[2]

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)).

[3]

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

[4]

Attributable to participating shareholders.

OTHER ITEMS

(unaudited)

Three months ended

Twelve months ended 

(in millions of Canadian dollars)

December 31,

December 31,


2016

2015

2016

2015

Share of Power Financial's other items:






IGM







Reduction of certain income tax estimates

14

14



Restructuring charges

(10)

(10)


14

(10)

14

(10)


Pargesa Holding SA







Total – Gains on partial disposal

48

32

115

38



LafargeHolcim – Impairment charges

(237)



Lafarge SA – Reversal of impairment charges

58



Lafarge SA – Impairment and restructuring charges

(15)



Imerys – Impairment and restructuring charges

(17)

(17)



Engie – Impairment charges and loss on partial disposal

(3)

(9)



Other (charges) income

(2)

(4)

(3)


43

15

(135)

61

Other subsidiaries

(13)

(21)

Corporate operations

183


57

(8)

(121)

213

INCOME – SAGARD INVESTMENT FUNDS AND OTHER

(unaudited)

Three months ended

Twelve months ended  

(in millions of Canadian dollars)

December 31,

December 31,



2016

2015

2016

2015

Sagard Investment Funds [1]






Sagard Europe [2]

19

14

31


Sagard Capital [3, 4]

66

(28)

27

(29)


Sagard China

26

4

16

143

Other Investments






Investment and hedge funds

7

56

19

119


China Asset Management Co., Ltd.

6

6

6


Other 

1

8

(8)

85



119

46

74

355

[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 adjusted net earnings.

[3]

Excludes the Corporation's share of the results of IntegraMed America, Inc. and Vein Clinics of America, Inc., presented in adjusted net earnings.

[4]

Includes share of earnings from investments in a jointly controlled corporation and an associate.

INVESTMENTS

December 31, 2016

(unaudited)

(in millions of Canadian dollars)

Cost

Unrealized
gains

Fair value of
non-controlled
portfolio
investments [1]

Cash

Fair value of
controlled
portfolio
investments
and other

Total
fair value

Sagard Investment Funds








Sagard Europe

211

70

281

281


Sagard Capital

388

41

429

125

334

888


Sagard China

306

10

316

331

647


905

121

1,026

456

334

1,816

Other Investments








China Asset Management Co., Ltd.

282

181

463

463


Investment and hedge funds and other

270

141

411

411

Total [2]

1,457

443

1,900

456

334

2,690















December 31, 2015

(unaudited)

(in millions of Canadian dollars)

Cost

Unrealized
gains

Fair value of
non-controlled
portfolio

investments [1]

Cash

Fair value of
controlled
portfolio
investments

Total

fair value

Sagard Investment Funds








Sagard Europe

154

40

194

63

257


Sagard Capital

268

202

470

21

460

951


Sagard China

462

36

498

168

666



884

278

1,162

189

523

1,874

Other Investments








China Asset Management Co., Ltd.

282

28

310

310


Investment and hedge funds and other

281

213

494

494

Total [2]

1,447

519

1,966

189

523

2,678

[1]

As reported in the Corporation's non-consolidated balance sheets.

[2]

Fair value of non-controlled portfolio investments includes $428 million of investments at December 31, 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

Net earnings attributable to participating shareholders are comprised of:

  • adjusted net earnings attributable to participating 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 Corporation, 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 participating 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 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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