Company Announcements

Power Corporation Reports Third Quarter 2022 Financial Results

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

MONTRÉAL , Nov. 9, 2022 /CNW Telbec/ - Power Corporation of Canada (Power Corporation or the Corporation) (TSX: POW) today reported earnings results for the three and nine months ended September 30, 2022.

Power Corporation
Consolidated results for the period ended September 30, 2022

HIGHLIGHTS

Power Corporation

  • Net earnings [1] were $422 million or $0.63 per share [2] for the third quarter of 2022, compared with $741 million or $1.09 per share in 2021.
  • Adjusted net earnings [1][3] were $422 million or $0.63 per share, compared with $748 million or $1.10 per share in the third quarter of 2021.
  • Adjusted net asset value per share [3] was $39.38 at September 30, 2022, compared with $52.60 at December 31, 2021. The Corporation's book value per participating share [4] was $33.40 at September 30, 2022, compared with $34.56 at December 31, 2021.
  • In the third quarter, the Corporation purchased for cancellation 1.5 million subordinate voting shares for a total of $50 million under its normal course issuer bid. In the nine months ended September 30, 2022, the Corporation has purchased for cancellation 10.2 million subordinate voting shares for a total of $384 million.

Great-West Lifeco Inc. (Lifeco)

  • Third quarter net earnings were $688 million, compared with $872 million in the third quarter of 2021. Adjusted net earnings [5] were $688 million, compared with $870 million in the third quarter of 2021. Net earnings and adjusted net earnings in the third quarter of 2022 included a net loss provision of $128 million after tax for estimated claims resulting from the impact of Hurricane Ian.
  • Total assets were $673 billion and assets under administration [3] were $2.4 trillion at September 30, 2022, an increase of 7% and 4%, respectively, from December 31, 2021.

IGM Financial Inc. (IGM)

  • Third quarter net earnings were $216.1 million, compared with $270.8 million in the third quarter of 2021.
  • Assets under management and advisement [4] were $238.1 billion at September 30, 2022, a decrease of 10.2% from the third quarter of 2021 and 1.6% from June 30, 2022.
  • Net outflows [6] were $342 million in the third quarter of 2022, compared with net inflows of $2.2 billion in 2021. Year-to-date net inflows [6] of $1.6 billion remained strong despite challenging market conditions.

Groupe Bruxelles Lambert (GBL)

  • GBL reported a net asset value [4] of €17.2 billion at September 30, 2022, representing €112.39 per share, compared with €22.5 billion or €143.91 per share at December 31, 2021.
  • In the third quarter of 2022, GBL completed €129 million of share buybacks. GBL completed €507 million of share buybacks in the nine months ended September 30, 2022.

Sagard Holdings Inc. (Sagard) and Power Sustainable Capital Inc. (Power Sustainable)

  • Assets under management [4], including unfunded commitments, of the alternative asset investment platforms were $20.0 billion at September 30, 2022, an increase from $12.5 billion at September 30, 2021.


[1]

Attributable to participating shareholders.

[2]

All per share amounts are per participating share of the Corporation.

[3]

Adjusted net earnings, adjusted net asset value and assets under administration (reported by Lifeco) are non-IFRS financial measures. Adjusted net earnings per share and adjusted net asset value per share are non-IFRS ratios. See the Non-IFRS Financial Measures section later in this news release.

[4] 

See the Other Measures section later in this news release.

[5]

Defined as "base earnings" by Lifeco, a non-IFRS financial measure; see the Non-IFRS Financial Measures section later in this news release.

[6]

Related to assets under management and advisement.

 

THIRD QUARTER

Net earnings attributable to participating shareholders were $422 million or $0.63 per share, compared with $741 million or $1.09 per share in 2021.

Adjusted net earnings attributable to participating shareholders [1] were $422 million or $0.63 per share, compared with $748 million or $1.10 per share in 2021.

Contributions to Power Corporation's Earnings

(in millions of dollars, except per share amounts)

Net Earnings

Adjusted Net Earnings 


2022


2021

2022

2021

Lifeco [2]

458


581

458

580

IGM [2]

134


167

134

167

GBL [2]

(36)


(11)

(36)

(11)

Effect of consolidation [3]

(21)


1

(21)

(4)

Publicly traded operating companies

535


738

535

732

Alternative asset investment platforms [4][5]

(34)


45

(34)

45

ChinaAMC [6]

15


17

15

17

Standalone businesses [5]

3


58

3

58


519


858

519

852

Corporate operations and Other [7]

(97)


(117)

(97)

(104)


422


741

422

748







Per participating share

0.63


1.09

0.63

1.10

Average shares outstanding (in millions)

668.7


676.7

668.7

676.7

Publicly traded operating companies: contribution to net earnings and adjusted net earnings was $535 million, representing a decrease of 27.5% and 26.9%, respectively, from the third quarter of 2021:

Lifeco: contribution to net and adjusted net earnings decreased by 21%.

IGM: contribution to net and adjusted net earnings decreased by 20%.

GBL: negative contribution to net earnings of $36 million. Results include the Corporation's share of a charge of $22 million in the third quarter of 2022 for losses due to an increase in the put right liability of the non-controlling interests in Webhelp Group (Webhelp) and charges related to Webhelp's employee incentive plan as well as a decrease in contributions from its associates and consolidated operating companies.

Alternative asset investment platforms: net earnings include a negative contribution of $31 million from Power Sustainable mainly related to realized losses in the Power Sustainable China portfolio of $22 million, and a negative contribution from Sagard of $14 million.

Standalone businesses: contribution to net and adjusted net earnings of $3 million.

 

Adjustments in the third quarter of 2022 were a net impact to earnings of nil as the Corporation's share of each of Lifeco's adjustments was offsetting. Adjustments in the third quarter of 2021, excluded from adjusted net earnings, were a negative net impact to earnings of $7 million or $0.01 per share, mainly related to the Corporation's net restructuring charge of $13 million in conjunction with the reorganization completed in February 2020, partially offset by the Corporation's share of Lifeco's adjustments.



[1]

A non-IFRS financial measure; see the Non-IFRS Financial Measures section later in this news release.

[2]

As reported by LifecoIGM and GBL.

[3]

Refer to the detailed table in the Contribution to Net Earnings and Adjusted Net Earnings section of the Corporation's most recent Management's Discussion and Analysis (MD&A) for additional information .

[4]

Alternative asset investment platforms includes earnings (losses) from investment platforms including controlled and consolidated subsidiaries and other investments.

[5]

Presented in Alternative and other investments in the Contribution to Net Earnings and Adjusted Net Earnings section of the Corporation's most recent MD&A.

[6]

China Asset Management Co., Ltd. (ChinaAMC).

[7]

Includes operating and other expenses, dividends on non-participating shares of the Corporation and Power Financial Corporation (Power Financial) corporate operations; refer to the Earnings Summary below.

 

NINE MONTHS

Net earnings attributable to participating shareholders were $1,427 million or $2.12 per share, compared with $2,291 million or $3.38 per share in 2021.

Adjusted net earnings attributable to participating shareholders [1] were $1,521 million or $2.26 per share, compared with $2,554 million or $3.77 per share in 2021.

Contributions to Power Corporation's Earnings

(in millions of dollars, except per share amounts)


Net Earnings

Adjusted Net Earnings



2022


2021

2022

2021

Lifeco [2]


1,460


1,577

1,549

1,625

IGM [2]


398


440

398

440

GBL [2]


(109)


63

(109)

63

Effect of consolidation [3]


40


(28)

35

74

Publicly traded operating companies


1,789


2,052

1,873

2,202

Alternative asset investment platforms [4][5]


(164)


321

(154)

421

ChinaAMC


43


45

43

45

Standalone businesses [5]


34


213

34

213



1,702


2,631

1,796

2,881

Corporate operations and Other [6]


(275)


(340)

(275)

(327)



1,427


2,291

1,521

2,554








Per participating share


2.12


3.38

2.26

3.77

Average shares outstanding (in millions) 


671.8


676.9

671.8

676.9



[1]

A non-IFRS financial measure; see the Non-IFRS Financial Measures section later in this news release.

[2]

As reported by Lifeco, IGM and GBL.

[3]

Refer to the detailed table in the Contribution to Net Earnings and Adjusted Net Earnings section of the Corporation's most recent MD&A for additional information.

[4]

Alternative asset investment platforms includes earnings (losses) from investment platforms including controlled and consolidated subsidiaries and other investments.

[5]

Presented in Alternative and other investments in the Contribution to Net Earnings and Adjusted Net Earnings section of the Corporation's most recent MD&A.

[6]

Includes operating and other expenses, dividends on non-participating shares of the Corporation and Power Financial corporate operations; refer to the Earnings Summary below.

 

Great-West Lifeco, IGM Financial and Groupe Bruxelles Lambert
Results for the quarter ended September 30, 2022

The information below is derived from Lifeco and IGM's third quarter MD&As, as prepared and disclosed by the respective companies in accordance with applicable securities legislation, and which are also available either directly from SEDAR (www.sedar.com) or from their websites, www.greatwestlifeco.com and www.igmfinancial.com. The information below related to GBL is derived from publicly disclosed information, as issued by GBL in its third quarter press release and half-year report at June 30, 2022. Further information on GBL's results is available on its website at www.gbl.be.

GREAT-WEST LIFECO INC.

THIRD QUARTER

Net earnings attributable to common shareholders were $688 million or $0.74 per share, compared with $872 million or $0.94 per share in 2021.

Adjusted net earnings [1] attributable to common shareholders were $688 million or $0.74 per share, compared with $870 million or $0.93 per share in 2021.

Net earnings and adjusted net earnings in the third quarter of 2022 included a net loss provision of $128 million after tax or $0.14 per share for estimated claims resulting from the impact of Hurricane Ian.

Adjustments in the third quarter of 2022, excluded from adjusted net earnings, were a net earnings impact of nil, compared with a net positive earnings impact of $2 million in 2021.

IGM FINANCIAL INC.

THIRD QUARTER

Net earnings available to common shareholders were $216.1 million or $0.91 per share, compared with $270.8 million or $1.13 per share in 2021.

Assets under management and advisement at September 30, 2022 were $238.1 billion, a decrease of 10.2% from the third quarter of 2021 and 1.6% from June 30, 2022.

GROUPE BRUXELLES LAMBERT

THIRD QUARTER

GBL reported [2] a net loss of €143 million, compared with a net loss of €44 million in 2021.

GBL reported a net asset value of €17,196 million at September 30, 2022, representing €112.39 per share, compared with €22,501 million or €143.91 per share at December 31, 2021.





[1]

Defined as "base earnings" by Lifeco. For additional information, please refer to the Non-IFRS Financial Measures section later in this news release.



[2]

GBL adopted IFRS 9 in 2018. Power Corporation continues to apply IAS 39; this resulted in a negative adjustment to the contribution from GBL of $14 million in the third quarter of 2022.



 

Alternative and Other Investments
Results for the quarter ended September 30, 2022

Alternative and other investments are comprised of the results of the Corporation's alternative asset investment platforms, Sagard and Power Sustainable, which includes income earned from asset management activities and investing activities. Asset management activities includes management fees and carried interest net of investment platform expenses. Investing activities comprises income earned on the capital invested by the Corporation (proprietary capital) in the investment funds managed by each platform and the share of earnings (losses) of controlled and consolidated subsidiaries held within the alternative asset investment platforms. Other includes the share of earnings (losses) of standalone businesses and the Corporation's investments in investment and hedge funds. For additional information, refer to the table later in this news release.

THIRD QUARTER

Net loss of alternative and other investments, including standalone businesses, was $31 million, compared with net earnings of $103 million in the corresponding period in 2021.

SAGARD AND POWER SUSTAINABLE

Net earnings in the third quarter include a negative contribution of $45 million from Sagard and Power Sustainable comprised of:

  • A negative contribution of $12 million from the asset management activities of Sagard and Power Sustainable;
  • A negative contribution of $33 million from investing activities comprised of i) a negative contribution of $5 million from Sagard; and ii) a negative contribution from Power Sustainable's investing activities of $28 million which includes realized losses in the Power Sustainable China portfolio of $22 million.

Summary of assets under management [1] (including unfunded commitments):

(in billions of dollars)

September 30, 2022  

September 30, 2021  

Sagard [2][3]

17.4

9.5

Power Sustainable [3]

2.6

3.0

Total

20.0

12.5

Percentage of third-party and associates

87 %

71 %

 

STANDALONE BUSINESSES

Net earnings of the standalone businesses in the third quarter of 2022 were $3 million, compared with $58 million in 2021.

At September 30, 2022, the fair value of standalone businesses was $0.9 billion, compared with $1.7 billion at September 30, 2021.



[1]

See the Other Measures section later in this news release.

[2]

Includes ownership in Wealthsimple Financial Corp. (Wealthsimple) valued at $0.9 billion at September 30, 2022 ($2.1 billion at September 30, 2021) and excludes assets under management of Sagard's wealth management business.

[3]

Excludes the fair value of interests held in standalone businesses.

 

Adjusted Net Asset Value and Participating Shareholders' Equity
At September 30, 2022

ADJUSTED NET ASSET VALUE

Adjusted net asset value represents management's estimate of the fair value of the participating shareholders' equity of the Corporation. Adjusted net asset value is the fair value of the assets of the combined Power Corporation and Power Financial holding company balance sheet (the gross asset value) less their net debt and preferred shares. Refer to the Non-IFRS Financial Measures section later in this news release for a reconciliation with the combined holding company balance sheet.

The Corporation's adjusted net asset value per share was $39.38 at September 30, 2022, compared with $52.60 at December 31, 2021, representing a decrease of 25.1%.


(in millions of dollars, except per share amounts)

September 30, 2022

December 31, 2021

Variation %

Publicly
Traded
Operating
Companies

Lifeco

18,496

23,545

(21)

IGM

5,092

6,749

(25)

GBL 

2,128

3,157

(33)



25,716

33,451

(23)

Alternative
Asset
Investment
Platforms





Sagard [1]

976

1,515

(36)

Power Sustainable [1]

1,356

1,654

(18)


2,332

3,169

(26)






Other

ChinaAMC 

1,150

1,150

Standalone businesses [2]

855

1,331

(36)

Other assets and investments

595

661

(10)

Cash and cash equivalents

1,407

1,635

(14)



4,007

4,777

(16)







Gross asset value

32,055

41,397

(23)


Liabilities and preferred shares

(5,744)

(5,810)

1


Adjusted net asset value

26,311

35,587

(26)







Shares outstanding (millions)

668.1

676.6



Adjusted net asset value per share

39.38

52.60

(25)

[1] Includes the management companies of the investment platforms at their carrying value.

[2] Includes The Lion Electric Company (Lion), LMPG Inc. (LMPG) and Peak Achievement Athletics Inc. (Peak).

 

Power Corporation's Ownership in Publicly Traded Operating Companies




Shares held [1]
(in millions) 

Share price



Ownership [1]
(%)

September 30, 2022

December 31, 2021

Lifeco


66.6

620.3

$29.82

$37.96

IGM


62.2

147.9

$34.42

$45.62

GBL [2]


14.9

22.8

€71.88

€98.16

[1] As at September 30, 2022.

[2] Held through Parjointco SA (Parjointco), a jointly controlled corporation (50%).

 

PARTICIPATING SHAREHOLDERS' EQUITY

Book value per participating share represents Power Corporation's participating shareholders' equity divided by the number of participating shares outstanding at the end of the reporting period. Participating shareholders' equity is the total assets of the combined Power Corporation and Power Financial holding company balance sheet, including investments in subsidiaries presented using the equity method, less their net debt and preferred shares.

The Corporation's book value per participating share was $33.40 at September 30, 2022, compared with $34.56 at December 31, 2021, a decrease of 3.4%.


(in millions of dollars, except per share amounts)

September 30, 2022

December 31, 2021

Variation %

Publicly
Traded
Operating
Companies

Lifeco

16,074

15,496

4

IGM

3,603

3,434

5

GBL 

3,023

4,278

(29)



22,700

23,208

(2)






Alternative
Asset
Investment
Platforms

Sagard 

718

822

(13)

Power Sustainable 

1,148

1,389

(17)


1,866

2,211

(16)






Other

ChinaAMC 

753

766

(2)

Standalone businesses [1]

769

725

6

Other assets and investments

524

611

(14)

Cash and cash equivalents

1,407

1,635

(14)



3,453

3,737

(8)







Total assets

28,019

29,156

(4)


Liabilities and preferred shares

(5,704)

(5,771)

1


Participating shareholders' equity

22,315

23,385

(5)







Shares outstanding (millions)

668.1

676.6



Book value per participating share

33.40

34.56

(3)

[1] Includes Lion, LMPG and Peak.

 

Dividend on Power Corporation Participating Shares

The Board of Directors declared a quarterly dividend of 49.50 cents per share on the Participating Preferred Shares and the Subordinate Voting Shares of the Corporation, payable February 1, 2023 to shareholders of record December 30, 2022.

Dividends on Power Corporation Non-Participating Preferred Shares

The Board of Directors also declared quarterly dividends on the Corporation's preferred shares, payable January 15, 2023 to shareholders of record December 23, 2022:

Series

Stock Symbol

Amount

Series

Stock Symbol

Amount

Series A

POW.PR.A

35¢

Series D

POW.PR.D

31.25¢

Series B

POW.PR.B

33.4375¢

Series G

POW.PR.G

35¢

Series C

POW.PR.C

36.25¢




 

Investor Information

Access to Quarterly
Results Materials:


Quarterly Earnings Conference Call:

The third quarter earnings
news release and shareholder
report are available on the
Power Corporation website at
www.powercorporation.com/en/
investors


Power Corporation will host an earnings call and live audio webcast on Thursday, November 10, 2022 at 12:00 p.m. (Eastern Time). A question-and-answer period with analysts will follow the presentation. Shareholders, investors, and other stakeholders are welcome to participate on a listen-only basis.

 

The live audio webcast and presentation materials will be available at: www.powercorporation.com/en/investors/events-presentations/.

 

To listen via telephone, please dial 1-888-886-7786 toll-free in North America or 416-764-8658 for local calls made in the Toronto area.

 

A replay of the conference call will be available from November 10, 2022 at 3:00 p.m. (Eastern Time) until March 15, 2023 by calling 1-877-674-7070 toll-free in North America or 416-764-8692 for local calls made in the Toronto area, using the access code 112518#. A webcast archive will also be available on Power Corporation's website.

Investor Relations Contact:


Treasury 514-286-7400

investor.relations@powercorp.com


 

About Power Corporation

Power Corporation is an international management and holding company that focuses on financial services in North America, Europe and Asia. Its core holdings are leading insurance, retirement, wealth management and investment businesses, including a portfolio of alternative asset investment platforms. To learn more, visit www.PowerCorporation.com.

At September 30, 2022, Power Corporation held the following economic interests:

100% – Power Financial

www.powerfinancial.com

66.6 %

Great-West Lifeco  [1] (TSX: GWO)

www.greatwestlifeco.com

62.2 %

IGM Financial (TSX: IGM)

www.igmfinancial.com

14.9 %

GBL  [2] (Euronext: GBLB)

www.gbl.be

54.4 %

Wealthsimple  [3]

www.wealthsimple.com




Investment Platforms


100 %

Sagard  [4]

www.sagard.com

100 %

Power Sustainable

www.powersustainable.com




13.9% – ChinaAMC [1][5]

www.chinaamc.com

[1]

On January 5, 2022, the Corporation and IGM entered into an agreement under which the interest in ChinaAMC will be consolidated at IGM. In a separate agreement, IGM will sell approximately 15.2 million common shares of Lifeco, representing a 1.6% interest in Lifeco, to Power Financial. Refer to the ChinaAMC section in the Corporation's most recent MD&A.

[2]

Held through Parjointco, a jointly controlled corporation (50%).

[3]

Undiluted equity interest held by Portag3 Ventures Limited Partnership (Portage I), Power Financial and IGM, representing a fully diluted equity interest of 42.5%.

[4]

The Corporation holds an 83.1% interest in Sagard Holdings Management Inc.

[5]

IGM also holds a 13.9% interest in ChinaAMC.

 

Earnings Summary

Contribution to Adjusted Net Earnings and Net Earnings

(in millions of dollars)

Three months ended
September 30,

Nine months ended
September 30,


2022

2021

2022

2021

Adjusted net earnings  [1]





Lifeco [2]

458

580

1,549

1,625

IGM [2]

134

167

398

440

GBL [2]

(36)

(11)

(109)

63

Effect of consolidation [3]

(21)

(4)

35

74


535

732

1,873

2,202

Alternative asset investment platforms and other [4][5]

(34)

45

(154)

421

ChinaAMC

15

17

43

45

Standalone businesses [4][6]

3

58

34

213

Corporate operating and other expenses

(50)

(57)

(135)

(186)

Dividends on non-participating and perpetual preferred shares

(47)

(47)

(140)

(141)

Adjusted net earnings  [7]

422

748

1,521

2,554

Adjustments [8]

− 

(7)

(94)

(263)

Net earnings 





Lifeco [2]

458

581

1,460

1,577

IGM [2]

134

167

398

440

GBL [2]

(36)

(11)

(109)

63

Effect of consolidation [3]

(21)

1

40

(28)


535

738

1,789

2,052

Alternative asset investment platforms and other [4][5]

(34)

45

(164)

321

ChinaAMC

15

17

43

45

Standalone businesses [4][6]

3

58

34

213

Corporate operating and other expenses

(50)

(70)

(135)

(199)

Dividends on non-participating and perpetual preferred shares

(47)

(47)

(140)

(141)

Net earnings  [7]

422

741

1,427

2,291

[1]

For a reconciliation of Lifeco and Alternative and other investments' non-IFRS adjusted net earnings to their net earnings, refer to the Non-IFRS Financial Measures and Alternative and Other Investments sections below.

[2]

As reported by Lifeco, IGM and GBL.

[3]

Effect of consolidation reflects: i) the elimination of intercompany transactions; ii) the application of the Corporation's accounting method for investments under common control to the reported net earnings of the publicly traded operating companies, which include: a) an adjustment related to Lifeco's investment in Power Sustainable Energy Infrastructure Partnership (PSEIP); and b) an allocation of the results of the fintech portfolio including Wealthsimple, Portage I, Portag3 Ventures II Limited Partnership (Portage II) and Portage Ventures III Limited Partnership (Portage III) to the contributions from Lifeco and IGM based on their respective interest; and iii) adjustments in accordance with IAS 39 for IGM and GBL. Refer to the detailed table in the Contribution to Net Earnings and Adjusted Net Earnings section of the Corporation's most recent MD&A.

[4]

Presented in Alternative and other investments in the Contribution to Net Earnings and Adjusted Net Earnings section of the Corporation's most recent MD&A.

[5]

Includes earnings of the Corporation's alternative asset investment platforms, including investments held through Power Financial.

[6]

Includes the results of Lion, LMPG, Peak and GP Strategies Corporation (GP Strategies) (up to the date of disposal in the fourth quarter of 2021).

[7]

Attributable to participating shareholders.

[8]

Refer to the detailed table of Adjustments in the Non-IFRS Financial Measures section below.

 

Contribution to Adjusted Net Earnings per Share and Net Earnings per Share

(in dollars per share)

Three months ended
September 30,

Nine months ended
September 30,


2022

2021

2022

2021

Adjusted net earnings per share – basic  [1]





Lifeco [2]

0.68

0.86

2.30

2.40

IGM [2]

0.20

0.25

0.59

0.65

GBL [2]

(0.05)

(0.02)

(0.16)

0.09

Effect of consolidation [3]

(0.03)

(0.01)

0.06

0.11


0.80

1.08

2.79

3.25

Alternative asset investment platforms and other [4][5]

(0.05)

0.06

(0.23)

0.63

ChinaAMC

0.02

0.03

0.06

0.07

Standalone businesses [4][6]

− 

0.09

0.05

0.31

Corporate operating and other expenses and Dividends
   on non‑participating and perpetual preferred shares

(0.14)

(0.16)

(0.41)

(0.49)

Adjusted net earnings per share  [7]

0.63

1.10

2.26

3.77

Adjustments [8]

− 

(0.01)

(0.14)

(0.39)

Net earnings per share – basic 





Lifeco [2]

0.68

0.86

2.16

2.32

IGM [2]

0.20

0.25

0.59

0.65

GBL [2]

(0.05)

(0.02)

(0.16)

0.09

Effect of consolidation [3]

(0.03)

− 

0.07

(0.03)


0.80

1.09

2.66

3.03

Alternative asset investment platforms and other [4][5]

(0.05)

0.06

(0.24)

0.48

ChinaAMC

0.02

0.03

0.06

0.07

Standalone businesses [4][6]

− 

0.09

0.05

0.31

Corporate operating and other expenses and Dividends
   on non‑participating and perpetual preferred shares

(0.14)

(0.18)

(0.41)

(0.51)

Net earnings per share – basic  [7]

0.63

1.09

2.12

3.38

[1]

For a reconciliation of Lifeco and Alternative and other investments' non-IFRS adjusted net earnings to their net earnings, refer to the Non-IFRS Financial Measures and Alternative and Other Investments sections below.

[2]

As reported by Lifeco, IGM and GBL.

[3]

Effect of consolidation reflects: i) the elimination of intercompany transactions; ii) the application of the Corporation's accounting method for investments under common control to the reported net earnings of the publicly traded operating companies, which include: a) an adjustment related to Lifeco's investment in PSEIP; and b) an allocation of the results of the fintech portfolio including Wealthsimple, Portage I, Portage II and Portage III to the contributions from Lifeco and IGM based on their respective interest; and iii) adjustments in accordance with IAS 39 for IGM and GBL. Refer to the detailed table in the Contribution to Net Earnings and Adjusted Net Earnings section of the Corporation's most recent MD&A.

[4]

Presented in Alternative and other investments in the Contribution to Net Earnings and Adjusted Net Earnings section of the Corporation's most recent MD&A.

[5]

Includes earnings of the Corporation's alternative asset investment platforms, including investments held through Power Financial.

[6]

Includes the results of Lion, LMPG, Peak and GP Strategies (up to the date of disposal in the fourth quarter of 2021).

[7]

Attributable to participating shareholders.

[8]

Refer to the detailed table of Adjustments in the Non-IFRS Financial Measures section below.

 

Alternative and Other Investments – Earnings

(in millions of dollars)

Three months ended
September 30,

Nine months ended
September 30,


2022

2021

2022

2021

Adjusted net earnings (loss)





Asset management activities [1]





Sagard [2]

(9)

(18)

(59)

44

Power Sustainable

(3)

(5)

(18)

(16)

Investing activities (proprietary capital)





Sagard [3]

(5)

55

40

90

Power Sustainable [4]

(28)

13

(145)

279

Standalone businesses [5]

3

58

34

213

Investment and hedge funds and Other [6]

11

− 

28

24

Adjusted net earnings (loss) 

(31)

103

(120)

634

Adjustments [7]

− 

− 

(10)

(100)

Net earnings (loss) 

(31)

103

(130)

534

[1]

Includes management fees charged by the investment platforms on proprietary capital. Management fees paid by the Corporation are deducted from income from investing activities.

[2]

The first and second quarters of 2022 include a reversal of net carried interest of $13 million and $42 million, respectively, mainly due to decreases in the fair value of Wealthsimple and investments held by Portage II in the period.

[3]

Includes the Corporation's share of earnings (losses) of Wealthsimple. The first and second quarters of 2022 include a reversal of carried interest payable of $13 million and $25 million, respectively, mainly due to decreases in the fair value of Wealthsimple and investments held by Portage II in the period. The first quarter of 2021 included a charge of $52 million related to the Corporation's share of the carried interest payable due to increases in fair value of investments held in the Portage Funds and Wealthsimple; as well, it excluded a charge of $100 million related to the remeasurement of the put right liability held by certain of the non-controlling interests in Wealthsimple to fair value which has been included in Adjustments (see the Adjustments section below). The net decrease in fair value of the Corporation's investments, including its investments held through Power Financial, in Portage I, Portage II, Portage III, KOHO Financial Inc. and Wealthsimple was $424 million in the nine-month period ended September 30, 2022, compared with an increase of $606 million in fair value in the corresponding period in 2021.

[4]

Includes a gain on disposal of a portfolio of solar assets of $17 million in the second quarter of 2022, and unrealized gains on derivative contracts hedging energy infrastructure projects of $16 million in each of the first and second quarters and $10 million in the third quarter of 2022. As well, the Corporation realized a loss of $54 million, $70 million and $22 million in the first, second and third quarters of 2022, respectively, on the disposal of investments in Power Sustainable China and $16 million in impairments recognized in 2022, of which $13 million was recognized in the first quarter due to declines in Chinese equity markets (realized gains of $229 million, $54 million and $18 million in the first, second and third quarters of 2021, respectively).

[5]

Includes the Corporation's share of earnings (losses) of Lion, LMPG, Peak and GP Strategies (up to the date of disposal in the fourth quarter of 2021). The second quarter of 2022 includes a net contribution of $28 million related to the investment in Lion which includes remeasurements attributable to the decline in market value of Lion in the quarter and is comprised of i) share of earnings of $17 million which includes a recovery related to the revaluation of its warrants; ii) a recovery of $18 million related to the decrease in amounts payable by Power Sustainable to its management for long-term incentive plans; and iii) a loss of $5 million related to the revaluation of call rights held by Power Sustainable.


The third quarter of 2021 included a net contribution of $55 million related to the investment in Lion which consisted of i) the Corporation's share of earnings of Lion; ii) a decrease in the fair value of outstanding call rights held by Power Sustainable; and iii) a decrease in amounts payable for long-term incentive plans, net of related taxes.


In the second quarter of 2021, the Corporation recorded a net gain of $153 million related to its investment in Lion which was comprised of i) a gain of $62 million related to the effect of the change in ownership as a result of the completion of the merger transaction between Lion and Northern Genesis; ii) a gain of $147 million related to the revaluation of call rights held by Power Sustainable, a portion of which were exercised during the quarter; and iii) an expense of $56 million related to the increase in amounts payable for long-term incentive plans and deferred taxes. The Corporation also recorded a reversal of a previously recognized impairment on its investment in GP Strategies of $33 million in the second quarter of 2021.

[6]

Other consists mainly of foreign exchange gains or losses and interest on cash and cash equivalents. The second quarter of 2022 includes a gain on disposal of a property by the Corporation of $7 million.

[7]

Refer to the detailed table of Adjustments in the Non-IFRS Financial Measures section below.

 

NON-IFRS FINANCIAL MEASURES
Net earnings attributable to participating shareholders are comprised of:

  • Adjusted net earnings attributable to participating shareholders; and
  • Adjustments, which include the after-tax impact of any item that in management's judgment, including those identified by management of its publicly traded operating companies, would make the period-over-period comparison of results from operations less meaningful. Includes the Corporation's share of Lifeco's impact of actuarial assumption changes and other management actions, direct equity and interest rate market impacts on insurance and investment 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. Items that management and management of its subsidiaries believe are not indicative of the underlying business results include restructuring or reorganization costs, integration costs related to business acquisitions, material legal settlements, material impairment charges, impact of substantially enacted income tax rate changes and other tax impairments, certain non-recurring material items, and net gains, losses or costs related to the disposition or acquisition of a business.

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 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.

Adjusted net asset value is commonly used by holding companies to assess their value. Adjusted net asset value is the fair value of the assets of the combined Power Corporation and Power Financial holding company balance sheet, the gross asset value, less their net debt and preferred shares. The investments held in public entities (including Lifeco, IGM and GBL) are measured at their market value and investments in private entities and investment funds are measured at management's estimate of fair value. This measure presents the fair value of the net assets of the holding company to management and investors, and assists the reader in determining or comparing the fair value of investments held by the holding company or its overall fair value.

Adjusted net earnings attributable to participating shareholders, adjusted net asset value, gross asset value, adjusted net earnings per share and adjusted net asset value per share are non-IFRS financial measures and ratios that do not have a standard meaning and may not be comparable to similar measures used by other entities.

Presentation of Holding Company Activities
The Corporation's reportable segments include Lifeco, IGM and GBL, which represent the Corporation's investments in publicly traded operating companies. These reportable segments, in addition to the asset management and holding company activities, reflect Power Corporation's management structure and internal financial reporting. The Corporation evaluates its performance based on the operating segment's contribution to earnings.

The holding company activities comprise the corporate activities of the Corporation and Power Financial, on a combined basis, and present the investment activities of the Corporation as a holding company. The investment activities of the holding company, including the investments in Lifeco, IGM and controlled entities within the alternative asset investment platforms, are presented using the equity method. The holding company activities also present the corporate assets and liabilities managed, including the cash and non-participating shares. The discussions included in the sections "Financial Position" and "Cash Flows" of the Corporation's most recent MD&A present the segmented balance sheet and cash flow statement of the holding company; these non-consolidated statements are presented in Note 19 of the Corporation's Interim Consolidated Financial Statements. This presentation is useful to the reader as it presents the holding company's (parent) results separately from the results of its consolidated operating subsidiaries.

RECONCILIATIONS OF NON-IFRS FINANCIAL MEASURES

Power Corporation

ADJUSTED NET EARNINGS


(in millions of dollars)

Three months ended
September 30,

Nine months ended
September 30,


2022

2021

2022

2021

Adjusted net earnings – Non-IFRS financial measure [1]

422

748

1,521

2,554

Share of Adjustments [2], net of tax





Lifeco

− 

6

(89)

(51)

IGM

− 

− 

5

(99)

Alternative and other investments

− 

− 

(10)

(100)

Corporate operations

− 

(13)

− 

(13)


− 

(7)

(94)

(263)

Net earnings – IFRS financial measure [1]

422

741

1,427

2,291

[1] Attributable to participating shareholders of Power Corporation.

[2] Refer to the Adjustments section for more detail on Adjustments from Lifeco, IGM, alternative and other investments, and corporate operations.





ADJUSTMENTS (excluded from Adjusted net earnings)


(in millions of dollars)

Three months ended
September 30,

Nine months ended
September 30,


2022

2021

2022

2021

Lifeco [1]





Actuarial assumption changes and other management actions (pre-tax)

16

48

26

80

Income tax (expense) benefit

29

(3)

27

(6)

Market-related impacts on liabilities (pre-tax)

(36)

35

(58)

9

Income tax (expense) benefit

6

(3)

11

(6)

Transaction costs related to acquisitions (pre-tax)

10

(70)

(42)

(88)

Income tax (expense) benefit

4

10

13

11

Restructuring and integration charges (pre-tax)

(39)

(21)

(90)

(46)

Income tax (expense) benefit

10

5

24

12

Tax legislative changes impact on liabilities

− 

− 

− 

(14)


− 

1

(89)

(48)

Effect of consolidation (pre-tax) [2]

− 

5

− 

(3)

Income tax (expense) benefit

− 

− 

− 

− 


− 

6

(89)

(51)

IGM 





Effect of consolidation (pre-tax) [2]

− 

− 

5

(99)

Income tax (expense) benefit

− 

− 

− 

− 


− 

− 

5

(99)

Alternative and other investments





Remeasurements of Wealthsimple's put right liability

− 

− 

− 

(100)

Impairment charges on direct energy infrastructure investments (pre-tax)

− 

− 

(13)

− 

Income tax (expense) benefit

− 

− 

3

− 


− 

− 

(10)

(100)

Corporate operations





Reorganization charges

− 

(13)

− 

(13)


− 

(7)

(94)

(263)

[1]

As reported by Lifeco.

[2]

Effect of consolidation reflects i) the elimination of intercompany transactions; ii) the application of the Corporation's accounting method for investments under common control to the Adjustments reported by Lifeco and IGM, which includes an allocation of the Adjustments related to the fintech portfolio based on their respective interest; iii) IGM's share of Lifeco's Adjustments, in accordance with the Corporation's definition of Adjusted net earnings; and iv) adjustments in accordance with IAS 39 for IGM.

 

ADJUSTED NET ASSET VALUE

Adjusted net asset value represents management's estimate of the fair value of the participating shareholders' equity of the Corporation. Adjusted net asset value is the fair value of the assets of the combined Power Corporation and Power Financial holding company balance sheet less their net debt and preferred shares. The Corporation's adjusted net asset value per share is presented on a look-through basis.

The Corporation's adjusted net asset value per share was $39.38 at September 30, 2022, compared with $52.60 at December 31, 2021, representing a decrease of 25.1%. The Corporation's book value per participating share was $33.40 at September 30, 2022, compared with $34.56 at December 31, 2021, representing a decrease of 3.4%.



September 30, 2022


December 31, 2021

(in millions of dollars, except per share amounts)

Holding
company
balance sheet

Fair value
adjustment

Adjusted net
asset value

Holding
company
balance sheet

Fair value
adjustment

Adjusted net
asset value

Assets







Investments







Power Financial







Lifeco

16,074

2,422

18,496

15,496

8,049

23,545

IGM

3,603

1,489

5,092

3,434

3,315

6,749

GBL [1]

3,023

(895)

2,128

4,278

(1,121)

3,157

Alternative and other investments







Asset management companies [2]







Sagard

68

− 

68

116

− 

116

Power Sustainable

30

− 

30

21

− 

21

Investing activities







Sagard [3]

650

258

908

706

693

1,399

Power Sustainable

1,118

208

1,326

1,368

265

1,633

Other







Standalone businesses [4]

769

86

855

725

606

1,331

Other

247

71

318

262

50

312

ChinaAMC 

753

397

1,150

766

384

1,150

Cash and cash equivalents

1,407

− 

1,407

1,635

− 

1,635

Other assets

277

− 

277

349

− 

349

Total assets

28,019

4,036

32,055

29,156

12,241

41,397

Liabilities and non-participating shares







Debentures and other debt instruments

897

− 

897

897

− 

897

Other liabilities [5][6]

1,027

40

1,067

1,090

39

1,129

Non-participating shares and perpetual
 preferred shares

3,780

− 

3,780

3,784

− 

3,784

Total liabilities and non-participating shares

5,704

40

5,744

5,771

39

5,810

Net value







Participating shareholders'
 equity / Adjusted net asset value

22,315

3,996

26,311

23,385

12,202

35,587

Per share

33.40


39.38

34.56


52.60

[1]

The Corporation's share of GBL's reported net asset value was $3.4 billion (€2.6 billion) at September 30, 2022 ($4.7 billion (€3.3 billion) at December 31, 2021).

[2]

The management companies of the investment funds are presented at their carrying value and are primarily composed of cash and net carried interest receivable.

[3]

Includes the Corporation's investments in Portage I, Portage II and Wealthsimple, held by Power Financial.

[4]

An additional deferred tax liability of $4 million has been included in the adjusted net asset value at September 30, 2022 ($80 million at December 31, 2021) with respect to the investments in standalone businesses at fair value, without taking into account possible tax planning strategies. The Corporation has tax attributes (not otherwise recognized on the balance sheet) that could be available to minimize the tax if the Corporation were to dispose of its interests held in the standalone businesses.

[5]

In accordance with IAS 12, Income Taxes, no deferred tax liability is recognized with respect to temporary differences associated with investments in subsidiaries and jointly controlled corporations as the Corporation is able to control the timing of the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future. If the Corporation were to dispose of an investment in a subsidiary or a jointly controlled corporation, income taxes payable on such disposition would be minimized through careful and prudent tax planning and structuring, as well as with the use of available tax attributes not otherwise recognized on the balance sheet, including tax losses, tax basis, safe income and foreign tax surplus associated with the subsidiary or jointly controlled corporation.

[6]

At September 30, 2022, an additional deferred tax liability of $40 million ($39 million at December 31, 2021) has been included in the adjusted net asset value related to the investment in ChinaAMC at fair value.

 

This news release also contains other non-IFRS financial measures which are publicly disclosed by the Corporation's subsidiaries including adjusted net earnings, adjusted net earnings per share and Lifeco's assets under administration. The section below includes the description and reconciliation of the non-IFRS financial measures included in this news release as reported by the Corporation's subsidiaries. The information below is derived from Lifeco's third quarter MD&A, as prepared and disclosed in accordance with applicable securities legislation, and which is also available either directly from SEDAR (www.sedar.com) or from its website, www.greatwestlifeco.com.

Lifeco
ADJUSTED NET EARNINGS ATTRIBUTABLE TO LIFECO'S COMMON SHAREHOLDERS

Adjusted net earnings (loss) [1] reflect Lifeco management's view of the underlying business performance of Lifeco and provide an alternate measure to understand the underlying business performance compared to IFRS net earnings. Adjusted net earnings (loss) exclude the following items:

  • The impact of actuarial assumption changes and other management actions;
  • The net earnings impact related to the direct equity and interest rate market impacts on insurance and investment contract liabilities, net of hedging, and related deferred tax liabilities, which includes:
    • the impact of hedge ineffectiveness related to segregated fund guarantee liabilities that are hedged and the performance of the related hedge assets;
    • the impact on segregated fund guarantee liabilities not hedged;
    • the impact on general fund equity and investment properties supporting insurance contract liabilities; and
    • other market impacts on insurance and investment contract liabilities and deferred tax liabilities, including those arising from the difference between actual and expected market movements; and
  • Certain items that, when removed, assist in explaining Lifeco's underlying business performance including restructuring costs, integration costs related to business acquisitions, material legal settlements, material impairment charges related to goodwill and intangible assets, impact of substantially enacted income tax rate changes and other tax impairments and net gains, losses or costs related to the disposition or acquisition of a business.



(in millions of dollars)

Three months ended
September 30,

Nine months ended
September 30,


2022

2021

2022

2021

Adjusted net earnings – Non-IFRS financial measure [1][2]

688

870

2,327

2,435

Adjustments





Actuarial assumption changes and other management actions (pre-tax)

24

74

39

120

Income tax (expense) benefit

44

(5)

41

(9)

Market-related impacts on liabilities (pre-tax)

(54)

52

(87)

13

Income tax (expense) benefit

9

(5)

16

(9)

Transaction costs related to acquisitions (pre-tax)

16

(104)

(63)

(131)

Income tax (expense) benefit

4

14

19

16

Restructuring and integration charges (pre-tax)

(58)

(32)

(135)

(69)

Income tax (expense) benefit

15

8

36

18

Tax legislative changes impact on liabilities

− 

− 

− 

(21)


− 

2

(134)

(72)

Net earnings – IFRS financial measure [2]

688

872

2,193

2,363

[1] Defined as "base earnings" and identified as a non-GAAP financial measure by Lifeco.

[2] Attributable to Lifeco common shareholders.

 

LIFECO'S ASSETS UNDER MANAGEMENT AND ASSETS UNDER ADMINISTRATION

Assets under management and assets under administration are non-IFRS measures that provide an indicator of the size and volume of Lifeco's overall business. Total assets under administration includes total assets per Lifeco's financial statements, other assets under management and other assets under administration. Please refer to the "Glossary" section of Lifeco's most recent Management's Discussion and Analysis for additional information regarding other assets under management and other assets under administration.

(in billions of dollars)

September 30, 2022

December 31, 2021

Total assets per financial statements

672.8

630.5

Other assets under management

319.1

377.2

Assets under management

991.9

1,007.7

Other assets under administration  [1]

1,392.4

1,283.9

Assets under administration [1 ]

2,384.3

2,291.6

[1]

Comparative figures for 2021 have been restated to include Financial Horizons Group and Excel Private Wealth Inc. assets under administration in the Canada segment.

 

OTHER MEASURES

This news release and other continuous disclosure documents also include other measures used to discuss activities of the Corporation's consolidated publicly traded operating companies and alternative asset investment platforms including, but not limited to, "assets under management", "assets under administration", "assets under management and advisement", "book value per participating share", "carried interest", "net asset value", and "unfunded commitments". Refer to the section "Other Measures" in the Corporation's most recent MD&A, which can be located in the Corporation's profile on SEDAR at www.sedar.com, for definitions of such measures, which definitions are incorporated herein by reference.

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.

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, the Corporation's sale of its interest in ChinaAMC to IGM, and IGM's sale of a portion of its interest in Lifeco, and related impacts and timing thereof, statements concerning deferred taxes, fundraising activities by investment platforms and capital commitments by the Power group and third parties. 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 rates, 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, man-made disasters, terrorist attacks, wars and other conflicts (such as the invasion of Ukraine), or an outbreak of a public health pandemic or other public health crises (such as COVID-19), the Corporation's and its subsidiaries' ability to complete strategic transactions, integrate acquisitions and implement other growth strategies, the Corporation's and its subsidiaries' success in anticipating and managing the foregoing factors and with respect to forward-looking statements of the Corporation's subsidiaries disclosed in this news release, the factors identified by such subsidiaries in their respective MD&A.

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 risks and uncertainties in the previous paragraph, collectively, are not expected to have a material impact on the Corporation and its subsidiaries and with respect to forward-looking statements of the Corporation's subsidiaries disclosed in this news release, the risks identified by such subsidiaries in their respective MD&A and Annual Information Form most recently filed with the securities regulatory authorities in Canada and available at www.sedar.com. 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