Power Corporation Reports Fourth Quarter and 2022 Financial Results and Dividend Increase

MONTRÉAL, March 16, 2023 /CNW/ - Power Corporation of Canada (Power Corporation or the Corporation) (TSX: POW) today reported earnings results for the three and twelve months ended December 31, 2022.

Power Corporation
Consolidated results for the period ended December 31, 2022

HIGHLIGHTS

Power Corporation

• Net earnings [1] were $486 million or $0.73 per share [2] for the fourth quarter of 2022, compared with $626 million or $0.93 per share in 2021.
  Adjusted net earnings [1][3] were $394 million or $0.59 per share, compared with $676 million or $1.00 per share in the fourth quarter of 2021.
• Adjusted net asset value per share [3] was $41.91 at December 31, 2022, compared with $52.60 at December 31, 2021.
  The Corporation's book value per participating share [4] was $34.58 at December 31, 2022, compared with $34.56 at December 31, 2021.
• The Corporation declared a quarterly dividend of $0.5250 per participating share, an increase of 6.1%, payable on May 1, 2023.
• On January 12, 2023, the Corporation announced the closing of the transaction to combine its interest in China Asset Management Co., Ltd. (ChinaAMC) under IGM Financial Inc.
• In 2022, the Corporation purchased for cancellation 11.2 million subordinate voting shares for a total of $415 million.
• On February 27, 2023, the Corporation announced its intention to purchase for cancellation up to 30 million subordinate voting shares during a twelve-month period under a normal course issuer bid.
• Contribution to net earnings from the publicly traded operating companies was $833 million in the fourth quarter of 2022, compared with $667 million in 2021.
  Contribution to adjusted net earnings from the publicly traded operating companies was $741 million in the fourth quarter of 2022, compared with $702 million in 2021.

Great-West Lifeco Inc. (Lifeco)

• Fourth quarter net earnings were $1,026 million, compared with $765 million in the fourth quarter of 2021.
  Adjusted net earnings [5] were $892 million, compared with $825 million in the fourth quarter of 2021.
• Total assets were $701 billion and assets under administration [3] were $2.5 trillion at December 31, 2022, an increase of 11% and 9%, respectively, from December 31, 2021.
• Lifeco announced a 6.1% increase in its quarterly dividend, to $0.52 per share, payable March 31, 2023.
• Lifeco announced, on January 25, 2023, its intention to purchase for cancellation up to 20 million common shares during a twelve-month period under a normal course issuer bid.

IGM Financial Inc. (IGM or IGM Financial)

• Fourth quarter net earnings were $224.7 million, compared with net earnings of $268.5 million and adjusted net earnings of $260.8 million in 2021.
• Assets under management and advisement [4] were $249.4 billion at December 31, 2022, a decrease of 10.0% from December 31, 2021 and an increase of 4.7% from September 30, 2022.
• Net outflows [6] were $440 million in the fourth quarter of 2022, compared with net inflows of $1.2 billion in the fourth quarter of 2021. Annual net inflows [6] for 2022 of $1.2 billion remained strong.
• In December 2022, IGM announced a strategic agreement with nesto Inc. to provide its clients with a best-in-class mortgage experience and enhance its efforts to support growth in its mortgage business.

Groupe Bruxelles Lambert (GBL)

• GBL reported a net asset value [4] of €17.8 billion at December 31, 2022, or €116.18 per share, compared with €22.5 billion or €143.91 per share at December 31, 2021.
• In the fourth quarter of 2022, GBL completed €136 million of share buybacks. GBL completed €643 million of share buybacks in the twelve months ended December 31, 2022 and cancelled 3.4 million treasury shares.

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 $21.1 billion at December 31, 2022, an increase from $19.1 billion at December 31, 2021.
• On November 29, 2022, Power Sustainable announced the closing of Vintage II of Power Sustainable Energy Infrastructure Partnership (PSEIP), raising $600 million of additional capital commitments, increasing the committed capital of the investment platform to $1.6 billion.
• On February 8, 2023, Sagard announced the initial closing of Sagard Senior Lending Fund with commitments totalling US$315 million.
• On March 9, 2023, Power Sustainable announced the launch of its Global and European infrastructure credit platforms which will target global investments in energy, transportation, social, digital and other sustainable infrastructure.

FOURTH QUARTER

Net earnings attributable to participating shareholders were $486 million or $0.73 per share, compared with $626 million or $0.93 per share in 2021.

Adjusted net earnings attributable to participating shareholders [1] were $394 million or $0.59 per share, compared with $676 million or $1.00 per share in 2021.

Contributions to Power Corporation's Earnings

Publicly traded operating companies: contribution to net earnings was $833 million and adjusted net earnings was $741 million, representing an increase of 24.9% and 5.6%, respectively, from the fourth quarter of 2021:

Lifeco: contribution to net and adjusted net earnings increased by 33.7% and 8.0%, respectively.

IGM: contribution to net and adjusted net earnings decreased by 15.7% and 13.0%, respectively.

GBL: negative contribution to net earnings of $24 million. Results include the Corporation's share of a charge of $18 million in the fourth 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 GBL's associates and consolidated operating companies.

Sagard and Power Sustainable: net earnings include a negative contribution of $160 million from Power Sustainable mainly related to a charge for the revaluation of non-controlling interests of $63 million due to fair value increases within the Power Sustainable Energy Infrastructure Partnership and operating losses in its energy infrastructure platform, as well as realized losses in the Power Sustainable China portfolio of $55 million. Sagard had a negative contribution of $23 million.

Other investments and standalone businesses: negative contribution to net and adjusted net earnings of $82 million includes a non-cash impairment charge on the Corporation's investment in The Lion Electric Company (Lion) of $109 million after tax.

Adjustments in the fourth quarter of 2022, excluded from adjusted net earnings, were a positive net impact to earnings of $92 million or $0.14 per share, mainly related to the Corporation's share of Lifeco's adjustments. Adjustments in the fourth quarter of 2021 were a negative net impact to earnings of $50 million or $0.07 per share, mainly related to the Corporation's share of Lifeco's adjustments and the Corporation's share of an impairment charge of $15 million recognized by Power Sustainable on direct investments in energy assets.

TWELVE MONTHS

Net earnings attributable to participating shareholders were $1,913 million or $2.85 per share, compared with $2,917 million or $4.31 per share in 2021.

Adjusted net earnings attributable to participating shareholders [1] were $1,915 million or $2.85 per share, compared with $3,230 million or $4.77 per share in 2021.

Contributions to Power Corporation's Earnings

Great-West Lifeco, IGM Financial and Groupe Bruxelles Lambert
Results for the quarter ended December 31, 2022

GREAT-WEST LIFECO INC.

FOURTH QUARTER

Net earnings attributable to common shareholders were $1,026 million or $1.10 per share, compared with $765 million or $0.82 per share in 2021.

Adjusted net earnings [1] attributable to common shareholders were $892 million or $0.96 per share, compared with $825 million or $0.89 per share in 2021.

Adjustments in the fourth quarter of 2022, excluded from adjusted net earnings, were a positive net impact of $134 million, compared with a negative net impact of $60 million in 2021. Lifeco's adjustments consisted of:

• Positive earnings impact of $49 million relating to actuarial assumption changes and other management actions;
• Positive market-related impacts on liabilities of $38 million; and
• Positive impact from tax legislative changes of $84 million.

Partially offset by:

• Restructuring and integration costs of $32 million in the United States segment; and
• Transaction costs of $5 million related to recent acquisitions in the Europe segment.

IGM FINANCIAL INC.

FOURTH QUARTER

Net earnings available to common shareholders were $224.7 million or $0.94 per share, compared with $268.5 million or $1.11 per share in 2021.

Adjusted net earnings [2] available to common shareholders were $224.7 million or $0.94 per share, compared with $260.8 million or $1.08 per share in 2021.

Adjustments in the fourth quarter of 2021, excluded from adjusted net earnings, were a positive impact of $7.7 million.

Assets under management and advisement [3] at December 31, 2022 were $249.4 billion, a decrease of 10.0% from December 31, 2021 and an increase of 4.7% from September 30, 2022.

GROUPE BRUXELLES LAMBERT

FOURTH QUARTER

GBL reported [4] a net loss of €112 million, compared with a net loss of €12 million in 2021.

GBL reported a net asset value [3] of €17,775 million at December 31, 2022, or €116.18 per share, compared with €22,501 million or €143.91 per share at December 31, 2021.

Sagard and Power Sustainable
Results for the quarter ended December 31, 2022

FOURTH QUARTER

Net loss and adjusted net loss [1] of alternative asset investment platforms were $183 million, compared with net earnings of $14 million and adjusted net earnings of $29 million in the corresponding period in 2021.

Adjustments in the fourth quarter of 2021, excluded from adjusted net earnings, were $15 million and related to the Corporation's share of an impairment charge recognized by Power Sustainable on direct investments in energy assets.

Net loss in the fourth quarter is comprised of:

• A negative contribution of $7 million from the asset management activities of Sagard and Power Sustainable;
• A negative contribution of $176 million from investing activities comprised of :
• $13 million from Sagard; and
• $163 million from Power Sustainable comprised of:
1. realized losses in the Power Sustainable China portfolio of $55 million;
2. losses before the revaluation of non-controlling interests liabilities of $45 million which mainly includes operating losses in its energy infrastructure platform due to seasonality; and
3. a revaluation of non-controlling interests liabilities [2] of $63 million due to fair value increases within the Power Sustainable Energy Infrastructure Partnership.

Summary of assets under management [3] (including unfunded commitments):

Other Investments and Standalone Businesses

Results for the quarter ended December 31, 2022

FOURTH QUARTER

STANDALONE BUSINESSES

Net loss of the standalone businesses in the fourth quarter of 2022 was $102 million, compared with net earnings of $12 million in 2021. The net loss in the fourth quarter of 2022 includes a non-cash impairment charge of $109 million after tax ($126 million pre-tax) on the Corporation's investment in Lion due to a decline in market value at December 31, 2022.

At December 31, 2022, the fair value of standalone businesses was $0.8 billion, compared with $1.5 billion at December 31, 2021.

Adjusted Net Asset Value and Participating Shareholders' Equity
At December 31, 2022

ADJUSTED NET ASSET VALUE

The Corporation's adjusted net asset value per share was $41.91 at December 31, 2022, compared with $52.60 at December 31, 2021, representing a decrease of 20.3%.

Power Corporation's Ownership in Publicly Traded Operating Companies

PARTICIPATING SHAREHOLDERS' EQUITY

The Corporation's book value per participating share was $34.58 at December 31, 2022, comparable with $34.56 at December 31, 2021.

Update on Transition to IFRS 17 and IFRS 9

IFRS 17, Insurance Contracts (IFRS 17) has replaced IFRS 4, Insurance Contracts (IFRS 4) effective January 1, 2023. While the new standard will change Lifeco's recognition and measurement of insurance contracts and the corresponding presentation and disclosures in the Corporation's financial statements, it is not expected to have a material financial impact or to change Lifeco's underlying business strategy. IFRS 9, Financial Instruments (IFRS 9) has replaced IAS 39, Financial Instruments: Recognition and Measurement effective January 1, 2023 and is not expected to lead to a material change in the level of investments. Upon adoption of IFRS 17 and IFRS 9, the Corporation expects an increase in net earnings volatility.

The Corporation will report under the new standards for the first time for the quarter ended March 31, 2023. The Corporation and Lifeco continue to evaluate the impact of the adoption of these standards. The Corporation's January 1, 2022 shareholders' equity is expected to decrease by approximately 10% on the adoption of IFRS 17 on January 1, 2023 in line with original expectations, primarily due to Lifeco's establishment of the contractual service margin (CSM), partially offset by the removal of provisions no longer required under IFRS 17.

Dividend on Power Corporation Participating Shares

The Board of Directors declared a quarterly dividend of 52.50 cents per share on the Participating Preferred Shares and the Subordinate Voting Shares of the Corporation, an increase of 6.1%, payable May 1, 2023 to shareholders of record March 31, 2023.

Dividends on Power Corporation Non-Participating Preferred Shares

The Board of Directors also declared quarterly dividends on the Corporation's preferred shares, payable April 15, 2023 to shareholders of record March 24, 2023:

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 December 31, 2022, Power Corporation held the following economic interests:

Earnings Summary

Contribution to Adjusted Net Earnings and Net Earnings

Sagard and Power Sustainable

Other Investments and Standalone Businesses

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, and related deferred tax liabilities 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, assists 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.

Fee-related earnings is presented for Sagard and Power Sustainable and includes revenues from management fees earned across all asset classes, less i) fee-related compensation including salary, bonus, and benefits, and ii) operating expenses. Fee-related earnings is presented on a gross basis, including non-controlling interests. Fee-related earnings excludes i) share-based compensation expenses, ii) amortization of acquisition-related intangibles, iii) foreign exchange-related gains and losses, iv) net interest, and v) other items that in management's judgment are not indicative of underlying operating performance of the alternative asset investment platforms, which include restructuring costs, transaction and integration costs related to business acquisitions and certain non-recurring material items. Management uses this measure to assess the profitability of the asset management activities of the alternative asset investment platforms. This financial measure provides insight as to whether recurring revenues from management fees, which are not based on future realization events, are sufficient to cover associated operating expenses.

Adjusted net asset value is commonly used by holding companies to assess their value. Adjusted net asset value represents the fair value of the participating shareholders' equity of Power Corporation. Adjusted net asset value is calculated as the fair value of the assets of the combined Power Corporation and Power Financial holding company 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 participating shareholders equity of the holding company, 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, fee-related earnings, 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, as well as the holding company. These reportable segments, in addition to the asset management 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 comprises the corporate activities of the Corporation and Power Financial, on a combined basis, and presents the investment activities of the Corporation. 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 present the holding company's assets and liabilities, including cash, investments, debentures and non-participating shares. The discussions included in the sections "Financial Position" and "Cash Flows" of the Corporation's 2022 Annual MD&A present the segmented balance sheet and cash flow statement of the holding company, which are presented in Note 33 of the Corporation's 2022 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 following table presents a reconciliation of the participating shareholders' equity reported in accordance with IFRS to the adjusted net asset value, a non-IFRS financial measure:

The Corporation's adjusted net asset value per share was $41.91 at December 31, 2022, compared with $52.60 at December 31, 2021, representing a decrease of 20.3%. The Corporation's book value per participating share was $34.58 at December 31, 2022, comparable with $34.56 at December 31, 2021.

Lifeco
ADJUSTED NET EARNINGS ATTRIBUTABLE TO LIFECO'S COMMON SHAREHOLDERS

Adjusted net earnings (loss) [1] reflects Lifeco management's view of the underlying business performance of Lifeco and provides an alternate measure to understand the underlying business performance compared with IFRS net earnings. Adjusted net earnings (loss) excludes 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.

LIFECO'S ASSETS UNDER MANAGEMENT AND ASSETS UNDER ADMINISTRATION

Assets under management and assets under administration are non-IFRS financial 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, proprietary mutual funds and institutional assets, and other assets under administration. Please refer to the section "Glossary" of Lifeco's most recent Management's Discussion and Analysis for additional information regarding proprietary mutual funds and institutional assets, and other assets under administration.

IGM Financial
ADJUSTED NET EARNINGS ATTRIBUTABLE TO IGM'S COMMON SHAREHOLDERS

Adjusted net earnings attributable to common shareholders excludes Adjustments [1], which includes the after-tax impact of any item that management considers to be of a non-recurring nature, or that could make the period-over-period comparison of results from operations less meaningful.

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, statements concerning deferred taxes, the Corporation's normal course issuer bid commenced in 2023, statements concerning the expected impact of IFRS 17 on shareholders' equity, fundraising activities by investment platforms and capital commitments by the Power group and third parties, and the strategic agreement with nesto Inc. and timing of offerings thereunder. 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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