Power Corporation Reports Second Quarter 2022 Financial Results

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

MONTRÉAL, Aug. 5, 2022 /CNW Telbec/ - Power Corporation of Canada (Power Corporation or the Corporation) (TSX: POW) today reported earnings results for the three and six months ended June 30, 2022.

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

HIGHLIGHTS

Power Corporation

• Net earnings [1] were $527 million or $0.78 per share [2] for the second quarter of 2022, compared with $994 million or $1.47 per share in 2021.
  Adjusted net earnings [1][3] were $584 million or $0.87 per share, compared with $1,020 million or $1.51 per share in the second quarter of 2021.
• Adjusted net asset value per share [3] was $41.49 at June 30, 2022, compared with $52.60 at December 31, 2021. The Corporation's book value per participating share [4] was $33.18 at June 30, 2022, compared with $34.56 at December 31, 2021.
• In the second quarter, the Corporation purchased for cancellation 4.3 million subordinate voting shares for a total of $159 million under its normal course issuer bid. In the six-months ended June 30, 2022, the Corporation has purchased for cancellation 8.8 million subordinate voting shares for a total of $334 million under its normal course issuer bids.

Great-West Lifeco Inc. (Lifeco)

• Second quarter net earnings were $735 million, compared with $784 million in the second quarter of 2021.
  Adjusted net earnings [5] were $830 million, compared with $826 million in the second quarter of 2021.
• Total assets were $670 billion and assets under administration [3] were $2.3 trillion at June 30, 2022, compared with total assets of $630 billion and assets under administration of $2.3 trillion at December 31, 2021.
• On April 1, 2022, Lifeco's U.S. subsidiary, which operates primarily as Empower, closed its strategic acquisition of the full-service retirement business of Prudential Financial, Inc. Empower's reach in the U.S. has expanded to more than 17.4 million retirement plan participants and assets under administration to US$1.3 trillion on behalf of approximately 71,000 workplace savings plans as of June 30, 2022.

IGM Financial Inc. (IGM)

• Second quarter net earnings were $207.1 million, compared with $237.4 million in the second quarter of 2021.
• Assets under management and advisement [4] of $242.1 billion, decreased 7.6% from the second quarter of 2021 and 9.8% from March 31, 2022.
• Net outflows were $527 million in the second quarter of 2022, compared with net inflows of $2.9 billion in 2021. Year-to-date net inflows of $1.9 billion remained strong in a challenging environment.

Groupe Bruxelles Lambert (GBL)

• GBL reported a net asset value [4] of €17.8 billion, representing €116.53 per share, compared with €22.5 billion or €143.91 per share at December 31, 2021.
• In the second quarter of 2022, GBL completed €176 million of share buybacks.
• In June 2022, GBL completed the sale of a 3.5% interest in Mowi ASA, generating cash proceeds of €386 million and realized a gain of €86 million.

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 $19 billion, an increase from $12 billion at June 30, 2021.
• On June 15, 2022, Power Sustainable announced the initial $210 million close of its North American agri-food private equity fund, Lios Fund I. Power Sustainable Lios is a specialized agri-food private equity investment platform focusing on the sustainability transformation occurring in our food system.
• In the second quarter of 2022, Sagard reached its initial $400 million fundraising target for its inaugural Canadian private equity fund, Sagard Private Equity Canada.
• On July 28, 2022, Portage Ventures announced the launch of its late-stage, fintech-focused Portage Capital Solutions Fund, a strategy focusing on structured opportunities in fintech and financial services companies globally.

SECOND QUARTER

Net earnings attributable to participating shareholders were $527 million or $0.78 per share, compared with $994 million or $1.47 per share in 2021.

Adjusted net earnings attributable to participating shareholders [1] were $584 million or $0.87 per share, compared with $1,020 million or $1.51 per share in 2021.

Contributions to Power Corporation's Earnings

Publicly traded operating companies: contribution to net earnings and adjusted net earnings were $595 million and $652 million, representing a decrease of 24.6% and 20.0%, respectively, from the second quarter of 2021:

Lifeco: contribution to net earnings decreased by 6.5% and contribution to adjusted net earnings was comparable with 2021.
IGM: contribution to net and adjusted net earnings decreased by 12.8%.
GBL: negative contribution to net earnings of $44 million, which includes fair value decreases and impairments in its alternative asset portfolio.

Alternative asset investment platforms: net earnings include a negative contribution of $51 million from Power Sustainable mainly related to realized losses in the Power Sustainable China portfolio of $70 million, partially offset by a gain on disposal of $17 million on a portfolio of solar assets in Power Sustainable Infrastructure.

Standalone businesses: contribution to net and adjusted net earnings of $27 million; results in 2022 include a positive impact of $28 million related to the Corporation's share of The Lion Electric Company (Lion) which includes a reversal of long-term incentives due to the decrease in market value of Lion. Results in 2021 included a positive impact of $153 million resulting from the gains on the change in ownership in Lion on the completion of Lion's business combination with Northern Genesis Acquisition Corp. (Northern Genesis).

Corporate operations and Other: includes a gain of $17 million on the remeasurement of cash-settled share-based payments, net of the loss on remeasurement of the related derivative instrument.

Adjustments in the second quarter of 2022, excluded from adjusted net earnings, were a net negative impact to earnings of $57 million or $0.09 per share, mainly related to the Corporation's share of Lifeco's adjustments, which consisted of negative market-related impacts on liabilities and transaction, restructuring and integration charges, partially offset by actuarial assumption changes and management actions. Adjustments in the second quarter of 2021 were a negative net impact to earnings of $26 million or $0.04 per share, mainly related to the Corporation's share of Lifeco's adjustments.

SIX MONTHS

Net earnings attributable to participating shareholders were $1,005 million or $1.49 per share, compared with $1,550 million or $2.29 per share in 2021.

Adjusted net earnings attributable to participating shareholders [1] were $1,099 million or $1.63 per share, compared with $1,806 million or $2.67 per share in 2021.

Contributions to Power Corporation's Earnings

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

GREAT-WEST LIFECO INC.

SECOND QUARTER

Net earnings attributable to common shareholders were $735 million or $0.79 per share, compared with $784 million or $0.84 per share in 2021.

Adjusted net earnings [1] attributable to common shareholders were $830 million or $0.89 per share, compared with $826 million or $0.89 per share in 2021.

Adjustments in the second quarter of 2022, excluded from adjusted net earnings, were a net negative earnings impact of $95 million, compared with a net negative earnings impact of $42 million in 2021.

IGM FINANCIAL INC.

SECOND QUARTER

Net earnings available to common shareholders were $207.1 million or $0.87 per share, compared with $237.4 million or $0.99 per share in 2021.

Assets under management and advisement at June 30, 2022 were $242.1 billion, a decrease of 7.6% from the second quarter of 2021 and 9.8% from March 31, 2022.

GROUPE BRUXELLES LAMBERT

SECOND QUARTER

GBL reported [2] a net loss of €204 million, compared with net earnings of €110 million in 2021.

GBL reported a net asset value at June 30, 2022 of €17,828 million, representing €116.53 per share, compared with €22,501 million or €143.91 per share at December 31, 2021.

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

SECOND QUARTER

Net loss of alternative and other investments, including standalone businesses, was $7 million, compared with net earnings of $275 million in the corresponding period in 2021.

SAGARD AND POWER SUSTAINABLE

Net earnings in the second quarter include a negative contribution of $56 million from Sagard and Power Sustainable comprised of:

• A negative contribution of $39 million from the asset management activities of Sagard and Power Sustainable;
• A net negative contribution from investing activities of $17 million comprised of i) a positive contribution from Sagard of $31 million, offset by ii) a negative contribution from Power Sustainable's investing activities of $48 million which includes realized losses in the Power Sustainable China portfolio of $70 million, partially offset by a net gain on disposal of a portfolio of solar assets of $17 million by Power Sustainable Infrastructure.

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

STANDALONE BUSINESSES

Net earnings of the standalone businesses in the second quarter of 2022 were $27 million, compared with $154 million in 2021. Net earnings in the period include a 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 Lion which includes a recovery related to the revaluation of its warrants, ii) a recovery related to the decrease in amounts payable by Power Sustainable to its management for long-term incentive plans, and iii) a loss related to the revaluation of call rights held by Power Sustainable.

At June 30, 2022, the fair value of standalone businesses was $1.0 billion, compared with $2.3 billion at June 30, 2021.

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

ADJUSTED NET ASSET VALUE

The Corporation's adjusted net asset value per share was $41.49 at June 30, 2022, compared with $52.60 at December 31, 2021, representing a decrease of 21.1%.

PARTICIPATING SHAREHOLDERS' EQUITY

The Corporation's book value per participating share was $33.18 at June 30, 2022, compared with $34.56 at December 31, 2021, a decrease of 4.0%.

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 November 1, 2022 to shareholders of record September 29, 2022.

Dividends on Power Corporation Non-Participating Preferred Shares

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

Investor Information

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 June 30, 2022, Power Corporation held the following economic interests:

Earnings Summary

Contribution to Adjusted Net Earnings and Net Earnings

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

Alternative and Other Investments – Earnings

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

ADJUSTMENTS (excluded from Adjusted net earnings)

ADJUSTED NET ASSET VALUE

The Corporation's adjusted net asset value per share was $41.49 at June 30, 2022, compared with $52.60 at December 31, 2021, representing a decrease of 21.1%. The Corporation's book value per participating share was $33.18 at June 30, 2022, compared with $34.56 at December 31, 2021, representing a decrease of 4.0%.

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 second 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;
• 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.

LIFECO'S ASSETS UNDER MANAGEMENT AND ASSETS UNDER ADMINISTRATION

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.

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, including 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

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