Mr. Stephane Lemay reports

POWER CORPORATION REPORTS SECOND QUARTER 2020 FINANCIAL RESULTS

Power Corp. of Canada has released earnings results for the three and six months ended June 30, 2020.

Power Corp.

Consolidated results for the period ended June 30

Highlights:

• The corporation's net asset value per share (a non-international financial reporting standard measure) was $32.96 at June 30, 2020, compared with $30.79 at March 31, 2020, representing an increase of 7.0 per cent.
• On June 29, 2020, Great-West Lifeco Inc.'s subsidiary, Empower Retirement, announced that it has entered into an agreement to purchase Personal Capital Corp., a hybrid wealth manager that combines a leading-edge digital experience with personalized advice delivered by human advisers.
• Lifeco's consolidated assets under administration were $1.7-trillion at June 30, 2020, a 9.1-per-cent increase from March 31, 2020, primarily reflecting the market recovery.
• IGM Financial Inc. assets under management at June 30, 2020, were $165.4-billion, an increase of 12.1 per cent from March 31, 2020, and down slightly from the quarter-end record high of $166.8-million at Dec. 31, 2019.
• Total net sales at IGM were $3.4-billion, compared with net redemptions of $544-million in the second quarter of 2019. Investment fund net sales were $864-million, compared with net redemptions of $364-million in the second quarter of 2019.
• On Aug. 4, 2020, Lifeco announced that an agreement has been reached to sell its Canadian subsidiary, GLC Asset Management Group Ltd., to Mackenzie Financial Corp., a subsidiary of IGM. This transaction is expected to close in the fourth quarter of 2020 and is subject to regulatory approval.
• Parjointco NV and Pargesa Holding SA announced on March 11, 2020, a public exchange offer for all Pargesa shares not held by Parjointco to be exchanged for Groupe Bruxelles Lambert (GBL) shares. Following the successful public exchange offer, Parjointco now holds over 98 per cent of Pargesa's total voting rights. The transaction is expected to be completed in the second half of 2020.

Second quarter

Net earnings attributable to participating shareholders were $666-million or 99 cents per share, compared with $278-million or 64 cents per share in 2019.

Adjusted net earnings attributable to participating shareholders (a non-IFRS measure) were $533-million or 79 cents per share, compared with $359-million or 83 cents per share in 2019.

Adjustments in the second quarter of 2020, excluded from adjusted net earnings, were a positive impact to earnings of $133-million or 20 cents per share mainly related to the corporation's share of Lifeco's adjustments, which consist of market-related recoveries, actuarial assumption changes and management actions, and a recovery on the deconsolidation of IntegraMed America Inc. Adjustments in the second quarter of 2019 were a net negative impact to earnings of $81-million mainly related to Lifeco's market-related impacts and a net loss on the sale of the U.S. individual life insurance and annuity business to Protective Life, partially offset by a positive impact from actuarial assumption changes.

Six months

Net earnings attributable to participating shareholders were $866-million or $1.40 per share, compared with $570-million or $1.27 per share in 2019.

Adjusted net earnings attributable to participating shareholders were $878-million or $1.42 per share, compared with $610-million or $1.36 per share in 2019.

Adjustments in the six-month period of 2020, excluded from adjusted net earnings, were $12-million or two cents per share mainly related to the corporation's share of Lifeco's adjustments, which consist of negative market-related impacts, offset by actuarial assumption changes and management actions, as well as by a recovery on the deconsolidation of IntegraMed. Adjustments in the six-month period of 2019 were $40-million mainly related to Lifeco's market-related impacts and a net loss on the sale of the U.S. individual life insurance and annuity business to Protective Life, partially offset by a positive impact from actuarial assumption changes and management actions.

Great-West Lifeco, IGM Financial and Pargesa

Results for the period ended June 30

The information herein is derived from Lifeco and IGM's interim management's discussion and analysis, as prepared and disclosed by the respective companies in accordance with applicable securities legislation, and which is also available either directly from SEDAR or from their websites. The information related to Pargesa is derived from publicly disclosed information, as issued by Pargesa in its second quarter press release. Further information on Pargesa's results is available on the Pargesa website.

Great-West Lifeco

Second quarter

Net earnings attributable to common shareholders were $863-million or 93.0 cents per share, compared with $459-million or 48.9 cents per share in 2019. As a result of the sale of the U.S. individual life insurance and annuity business during the second quarter of 2019, Lifeco's net earnings included a net charge of $199-million in the second quarter of 2019.

Adjusted net earnings (1) attributable to common shareholders were $706-million or 76.1 cents per share, compared with $627-million or 66.8 cents per share in 2019.

Adjustments in the second quarter of 2020, excluded from adjusted net earnings, were a net positive impact to earnings of $157-million, compared with a net negative impact of $168-million in 2019.

(1) Described as base earnings by Lifeco.

Six months

Net earnings attributable to common shareholders were $1,205-million or $1.299 per share, compared with $1,116-million or $1.159 per share in 2019.

Adjusted net earnings (1) attributable to common shareholders were $1,249-million or $1.347 per share, compared with $1,196-million or $1.241 per share in 2019.

Adjustments in the six-month period of 2020, excluded from adjusted net earnings, were a net negative impact to earnings of $44-million, compared with $80-million in 2019.

(1) Described as base earnings by Lifeco.

IGM Financial

Second quarter

Net earnings and adjusted net earnings available to common shareholders were $183.5-million or 77 cents per share, compared with net earnings of $185.1-million or 77 cents per share and adjusted net earnings of $193.1-million or 81 cents per share in 2019.

Assets under management at June 30, 2020, were $165.4-billion, an increase of 12.1 per cent from March 31, 2020.

Six months

Net earnings and adjusted net earnings available to common shareholders were $344.4-million or $1.45 per share, compared with net earnings of $352.6-million or $1.47 per share and adjusted net earnings of $360.6-million or $1.50 per share in 2019.

Pargesa Holding

Second quarter

Pargesa reported net earnings of 203 million Swiss francs, compared with 134 million Swiss francs in 2019.

Adjusted net earnings were 209 million Swiss francs, compared with 152 million Swiss francs in 2019. Adjustments, not included in adjusted net earnings, were a charge of six million Swiss francs in the second quarter.

Pargesa reported a net asset value at June 30, 2020, of 8,393 million Swiss francs, representing 99.0 Swiss francs per share, compared with 8,300 million Swiss francs or 98.0 Swiss francs per share at March 31, 2020.

Pargesa adopted international financial reporting standard 9 in 2018. Power Corp. continues to apply international accounting standard 39. This results in a decrease in its share of the contribution from Pargesa of $42-million in the second quarter of 2020.

Six months

Pargesa reported net earnings of 209 million Swiss francs, compared with 225 million Swiss francs in 2019.

Adjusted net earnings were 220 million Swiss francs, compared with 246 million Swiss francs in 2019. Adjustments, not included in adjusted net earnings, were a charge of 11 million Swiss francs in the six-month period.

Other investments

For the period ended June 30

Other investments are composed of the results of the corporation's investment platforms, Sagard Holdings Inc. and Power Sustainable Capital Inc., which include income earned from asset management activities and investment activities. Asset management activities include management fees and carried interests net of investment platform expenses, and investment activities comprise income earned on the capital invested by the corporation (proprietary capital) in each platform and the share of earnings (losses) of controlled and consolidated subsidiaries held within the investment platforms. Other includes the share of earnings (losses) of stand-alone businesses and the corporation's investments in investment and hedge funds.

Second quarter

Income from the corporation's investment platforms was a loss of $2-million, compared with income of $40-million in 2019.

During the second quarter of 2020, Sagard Holdings deconsolidated IntegraMed, resulting in a recovery on deconsolidation of $27-million, which has been excluded from adjusted net earnings.

Six months

Income from the corporation's investment platforms was $30-million, compared with $24-million in 2019.

COVID-19

The outbreak of the novel strain of coronavirus, specifically identified as COVID-19, has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. These measures, which include the implementation of travel bans, self-imposed quarantine periods and social distancing, have caused material disruption to businesses globally resulting in an economic slowdown. Governments and central banks have responded with significant monetary and fiscal interventions designed to stabilize economic conditions. Equity markets in particular have been volatile, experiencing material and rapid declines in the first quarter of 2020 followed by recoveries during the second quarter of 2020.

The corporation is managing the risks associated with the COVID-19 pandemic, utilizing its existing risk management framework. At Power Corp. and its group companies, the focus has continued to be on managing the safety and well-being of its people, maintaining operational effectiveness, ensuring that the group can serve its customers, assessing impacts on earnings, liquidity and capital, planning for different potential scenarios, and engaging with stakeholders. The respective boards of directors of Power Financial, Lifeco, IGM, Pargesa and GBL are responsible for the governance structures and processes to oversee the management of the risk and potential impacts presented by the current economic slowdown and other potential consequences due to COVID-19.

The duration and impact of the COVID-19 pandemic are unknown at this time. Economic damage and market weakness are being felt across the global economy. Significant economic headwinds are expected to continue in the second half of 2020 as a result of anticipated negative credit experiences, impairment of valuations in certain sectors of the economy and asset classes, and uncertainties in the durability and effectiveness of government and central bank interventions, among others. It is not possible to reliably estimate the length and severity of these developments and the impact on the financial results and condition of the corporation and its operating subsidiaries in future periods.

Dividend on Power Corp. participating shares

The board of directors declared a quarterly dividend of 44.75 cents per share on the participating preferred shares and the subordinate voting shares of the corporation, payable Oct. 30, 2020, to shareholders of record on Sept. 30, 2020.

Dividends on Power Corp. non-participating preferred shares

The board of directors also declared quarterly dividends on the corporation's preferred shares, payable Oct. 15, 2020, to shareholders of record on Sept. 24, 2020.

                                    DECLARED DIVIDENDS

Series      Stock symbol               Amount                 Series     Stock symbol amount

1986 series     POW.PR.F     Floating rate (1)     Series C POW.PR.C             36.25 cents
Series A        POW.PR.A             35 cents      Series D POW.PR.D             31.25 cents
Series B        POW.PR.B        33.4375 cents      Series G POW.PR.G                35 cents   

(1) Equal to one-quarter of 70 per cent of the average prime rate of two major Canadian 
chartered banks for the period from June 1 to Aug. 31, 2020.

About Power Corp. of Canada

Power Corp. 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.

At June 30, 2020, Power Corp. held the following economic interests.

Power Financial: 100 per cent

Great-West Lifeco:  66.9 per cent

IGM Financial:  62.1 per cent

Pargesa Holding (1):  44.5 per cent

Wealthsimple Financial Corp. (2):  83.6 per cent

Investment platforms

Sagard Holdings (3):  100 per cent

Power Sustainable Capital:  100 per cent

• Power Pacific Investment Management
• Power Energy Corp.

China AMC (4): 27.8 per cent

(1) Increased from 27.8 per cent to 44.5 per cent on June 16, 2020.

(2) Undiluted equity interest held by Lifeco, IGM and Power Financial.

(3) Includes the corporation's interest in European private equity funds (formerly Sagard Europe). Refer to the corporation's most recent management's discussion and analysis for interest in the funds managed by Sagard Holdings.

(4) IGM and the corporation each hold a 13.9-per-cent interest in China AMC.

We seek Safe Harbor.