2017 Annual Report

2017 Annual Report

This Annual Report is intended to provide shareholders and other interested persons with information concerning Power Corporation of Canada. For further information concerning the Corporation, shareholders and other interested persons should consult the Corporation's disclosure documents, such as its most recent Annual Information Form and Management's Discussion and Analysis. Copies of the Corporation's continuous disclosure documents can be obtained from its website at , from , or from the Office of the Secretary at the addresses shown at the end of this report.

Readers should also review the note further in this report, in the section entitled Review of Financial Performance, concerning the use of Forward-Looking Statements, which applies to the entirety of this Annual Report.

In addition, selected information concerning the business, operations, financial condition, financial performance, priorities, ongoing objectives, strategies and outlook of Power Corporation subsidiaries and associates is derived from public information published by such subsidiaries and associates and is provided here for the convenience of the shareholders of Power Corporation. For further information concerning such subsidiaries and associates, shareholders and other interested persons should consult the websites of, and other publicly available information published by, such subsidiaries and associates.

All figures mentioned in this report are in Canadian dollars and as of December 31, 2017, unless otherwise noted.

NON-IFRS FINANCIAL MEASURES AND PRESENTATION

Net earnings attributable to participating shareholders are comprised of:

? adjusted net earnings attributable to participating shareholders; and

? other items, which include the after-tax impact of any item that in management's judgment would make the periodover-period comparison of results from operations less meaningful. Other items include the Corporation's share of items presented as other items by a subsidiary or a jointly controlled corporation.

Management uses these financial measures in its presentation and analysis of the financial performance of Power Corporation and its holdings, and believes that they provide additional meaningful information to readers in their analysis of the results of the Corporation and its holdings. Adjusted net earnings, as defined by the Corporation, assist the reader in comparing the current period's results to those of previous periods, as items that are not considered to be part of ongoing activities are excluded from this non-IFRS financial measure.

Adjusted net earnings attributable to participating shareholders and adjusted net earnings per share are non-IFRS financial measures that do not have a standard meaning and may not be comparable to similar measures used by other entities. For a reconciliation of these non-IFRS financial measures to results reported in accordance with IFRS, see the Reconciliation of IFRS and non-IFRS financial measures section further in this report.

ABBREVIATIONS

The following abbreviations are used throughout this report:

Power Corporation or the Corporation (Power Corporation of Canada) adidas (adidas AG) BME (Madrid Stock Exchange) Burberry (Burberry Group plc) Canada Life (The Canada Life Assurance Company) China AMC (China Asset Management Co., Ltd.) Eagle Creek (Eagle Creek Renewable Energy, LLC) EBR (Euronext Brussels) EPA (Euronext Paris) GBL (Groupe Bruxelles Lambert) GEA (GEA Group) Great-West Financial or Great-West Life & Annuity (Great-West Life & Annuity Insurance Company) Great-West Life (The Great-West Life Assurance Company) IFRS (International Financial Reporting Standards) IGM or IGM Financial (IGM Financial Inc.) IntegraMed (IntegraMed America, Inc.) Investment Planning Counsel (Investment Planning Counsel Inc.) Investors Group (Investors Group Inc.) Irish Life (Irish Life Group Limited) LafargeHolcim (LafargeHolcim Ltd) La Presse (La Presse, lt?e) Lifeco or Great-West Lifeco (Great-West Lifeco Inc.) Lion Electric (The Lion Electric Co.) LON (London Stock Exchange) London Life (London Life Insurance Company) Lumenpulse (Lumenpulse Group Inc.)

Mackenzie or Mackenzie Investments (Mackenzie Financial Corporation) Ontex (Ontex N.V.) PanAgora or PanAgora Asset Management (PanAgora Asset Management, Inc.) Pargesa (Pargesa Holding SA) Parjointco (Parjointco N.V.) Parques (Parques Reunidos Servicios Centrales, S.A.) Peak (Peak Achievement Athletics Inc.) Portag3 or Portag3 Ventures (Portag3 Ventures Limited Partnership) Potentia or Potentia Renewables (Potentia Renewables Inc.) Power Energy (Power Energy Corporation) Power Energy Eagle Creek (Power Energy Eagle Creek LLP) Power Financial (Power Financial Corporation) Putnam or Putnam Investments (Putnam Investments, LLC) Sagard Holdings (Sagard Holdings ULC) Sagard Investment Funds (Sagard Europe, Sagard Holdings and Sagard China) SGS (SGS SA) SIX (Swiss Stock Exchange) Square Victoria Communications Group or SVCG (Square Victoria Communications Group Inc.) Total (Total SA) Umicore (Umicore, NV/SA) Vein Clinics (Vein Clinics of America, Inc.) Wealthsimple (Wealthsimple Financial Corp.) XETR (XETRA Stock Exchange)

Financial Highlights

FOR THE YEARS ENDED DECEMBER 31 [IN MILLIONS OF DOLLARS, EXCEPT PER SHARE AMOUNTS]

Revenues Net earnings ? attributable to participating shareholders

Net earnings ? per participating share Adjusted net earnings[1] ? attributable to participating shareholders

Adjusted net earnings[1] ? per participating share Dividends declared ? per participating share Consolidated assets[2] Shareholders' equity[3] Book value per participating share Participating shares outstanding [in millions]

2017

51,253 1,286 2.77 1,560 3.36 1.41

445,521 14,615 29.40 464.3

2016

50,750 1,082 2.33 1,223 2.64 1.32

422,724 13,864 27.84 463.3

[1] Adjusted net earnings is a non-IFRS financial measure. Please refer to the reconciliation of IFRS and non-IFRS financial measures in the Review of Financial Performance.

[2] Comparative figures have been retrospectively adjusted. Refer to Note 16 of the 2017 Consolidated Financial Statements.

[3] Represents non-participating and participating shareholders' equity.

Table of Contents

Financial Highlights1 Group Organization Chart2 Corporate Profile4 2017 Overview6 Directors' Report to Shareholders7 Responsible Management16 Review of Financial Performance18 Consolidated Financial Statements56 Notes to the Consolidated Financial Statements61 Five-Year Financial Summary131 Board of Directors132 Officers133 Corporate Information134

Power Corporation of Canada2017 Annual Report 1

Group Organization Chart

Power Corporation of Canada

POWER FINANCIAL CORPORATION 65.5%

GREAT-WEST LIFECO INC.

67.7% EQUITY | 65% VOTING

THE GREAT-WEST LIFE

ASSURANCE COMPANY[1] 100%

LONDON LIFE INSURANCE COMPANY

100%

THE CANADA LIFE ASSURANCE COMPANY

100%

IRISH LIFE GROUP LIMITED

100%

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

100%

PUTNAM INVESTMENTS, LLC

95.9%EQUITY | 100%VOTING

PANAGORA ASSET

MANAGEMENT, INC.[2] 92.7%EQUITY | 100%VOTING

IGM FINANCIAL INC.[1]

61.5%

INVESTORS GROUP INC.

100%

MACKENZIE FINANCIAL CORPORATION

100%

INVESTMENT PLANNING

COUNSEL INC .[3] 100%

PORTAG3 VENTURES

LIMITED PARTNERSHIP[4]

WEALTHSIMPLE

FINANCIAL CORP.[5]

PARGESA HOLDING SA[6]

27.8%

GROUPE BRUXELLES LAMBERT

50%EQUITY | 51.8%VOTING

2 Power Corporation of Canada2017 Annual Report

SAGARD INVESTMENT FUNDS

POWER ENERGY CORPORATION

100%

SQUARE VICTORIA COMMUNICATIONS

GROUP INC. 100%

SAGARD EUROPE[7] 100%

SAGARD HOLDINGS[8] 100%

SAGARD CHINA

CHINA ASSET MANAGEMENT CO., LTD.[9]

13.9%

POTENTIA RENEWABLES INC.

100%

LUMENPULSE GROUP INC.

55.7%

EAGLE CREEK RENEWABLE ENERGY, LLC

32.9%[10]

THE LION ELECTRIC CO.

43.8%

Percentages represent participating equity interest and voting interest (unless otherwise indicated) at December 31, 2017.

[1] IGM Financial holds a 4.0% interest in Great-West Lifeco and Great-West Life holds a 3.8% interest in IGM Financial. [2] As of February 9, 2018. [3] As of January 19, 2018. [4] Power Financial directly holds 63% of Portag3, and both Great-West Lifeco and IGM Financial hold equal interests of 18.5%. [5] Power Financial directly holds 10.8% of Wealthsimple, and Portag3 and IGM Financial also hold 29.4% and 37.1%, respectively. [6] Through its wholly owned subsidiary, Power Financial Europe B.V., Power Financial holds a 50% interest in Parjointco.

Parjointco holds an equity interest of 55.5% and a voting interest of 75.4% in Pargesa. [7] See page 21 for the Corporation's interest in the Sagard Europe Funds. [8] Sagard Holdings holds a 91.6% interest in IntegraMed. [9] Mackenzie also holds a 13.9% interest in China AMC. Power Corporation and Mackenzie hold a combined 27.8% interest in China AMC. [10] Held through Power Energy Eagle Creek LLP, in which Power Corporation has a 60% interest.

Power Corporation of Canada2017 Annual Report 3

Corporate Profile

POWER CORPORATION HOLDS INTERESTS IN:

POWER FINANCIAL

holds a controlling interest in both Great-West Lifeco and IGM Financial. Power Financial and the Fr?re Group each hold a 50 per cent interest in Parjointco, through which their 55.5% interest in Pargesa is held. Power Financial has an interest in Portag3 Ventures, an investment fund dedicated to backing innovative financial services companies. Power Financial also has a controlling interest in Wealthsimple, a technologydriven investment manager.

Great-West Lifeco

is an international financial services holding company with interests in life insurance, health insurance, retirement and investment services, asset management and reinsurance businesses. The company has operations in Canada, the United States and Europe through Great-West Life, London Life, Canada Life, Irish Life, Great-West Financial, Putnam Investments and PanAgora. Great-West Lifeco and its companies have $1.35 trillion in total assets under administration.

Great-West Life is a leading Canadian insurer, with interests in life insurance, health insurance, investment, savings and retirement income, and reinsurance businesses, primarily in Canada and Europe. In Canada, Great-West Life and its subsidiaries, London Life and Canada Life, offer a broad portfolio of financial and benefit plan solutions and serve the financial security needs of 13 million people. In Europe, Great-West Life has operations through Canada Life and Irish Life.

London Life offers financial security advice and planning in Canada through its Freedom 55 FinancialTM division. Freedom 55 Financial offers London Life's own brand of investments, savings and retirement income, annuities, life insurance and mortgage products, and a broad range of financial products from other financial institutions. London Life also participates in international reinsurance markets through London Reinsurance Group Inc.

Canada Life provides insurance and wealth management products and services in Canada, the United Kingdom, Isle of Man and Germany, and in Ireland through Irish Life. Canada Life is a leading provider of traditional mortality, structured and longevity reinsurance solutions for life insurers in the U.S. and in international markets.

Great-West Financial provides life insurance, annuities and executive benefits products in the U.S. Its Great-West Investments unit offers fund management, investment and advisory services. Its Empower Retirement arm is the second-largest retirement services provider in the U.S. by participants. Serving the corporate, government, non-profit and institutional sectors, Empower also offers individual retirement accounts.

Putnam Investments is a U.S.-based global asset manager with 80 years of investment experience. In addition to over 100 mutual funds, the firm offers a full range of investment products and services for financial advisors, institutional investors and retirement plan sponsors.

PanAgora, a Putnam affiliate, offers a broad range of investment solutions using sophisticated quantitative techniques.

4 Power Corporation of Canada2017 Annual Report

Incorporated in 1925, Power Corporation is a diversified international management and holding company with interests in companies in the financial services, asset management, sustainable and renewable energy, communications and other business sectors.

IGM Financial

is one of Canada's premier personal financial services companies, and one of the country's largest managers and distributors of investment funds and other managed asset products, with $157 billion in total assets under management at December 31, 2017. The company serves the financial needs of Canadians through multiple distinct businesses, including Investors Group, Mackenzie Investments and Investment Planning Counsel.

Investors Group is a national leader in delivering personalized financial solutions through a network of consultants to approximately one million Canadians. Investors Group is committed to comprehensive planning and offers an exclusive family of mutual funds and other investment vehicles, along with a wide range of insurance, securities, mortgage and other financial services.

Mackenzie Investments is recognized as one of Canada's premier investment managers and provides investment advisory and related services through multiple distribution channels focused on the provision of financial advice. Mackenzie Investments offers mutual funds, pooled funds, segregated accounts and separate accounts for retail and institutional investors.

Pargesa Group

is a holding company which focuses on a limited number of global industrial and services companies, held through its subsidiary, Groupe Bruxelles Lambert.

SAGARD INVESTMENT FUNDS

The Corporation operates equity investment funds in three geographies under the Sagard name: Sagard Europe, Sagard Holdings in North America and Sagard China.

CHINA AMC

Power Corporation holds an interest in China AMC. A leader in the Chinese asset management sector, China AMC was one of the first asset management companies approved by the China Securities Regulatory Commission.

POWER ENERGY

Power Energy actively manages investments in the sustainable and renewable energy sector. To date, Power Energy has invested in Potentia Renewables (a renewable energy generating company active in North America and the Caribbean); Lumenpulse (a leading manufacturer of high-performance, specification-grade LED lighting solutions); Eagle Creek Renewable Energy (a U.S.-based owner and operator of hydroelectric facilities); and Lion Electric (a manufacturer of zeroemission vehicles sold throughout North America).

Groupe Bruxelles Lambert, the second largest listed holding company in Europe, holds significant positions in major global companies based in Europe: Imerys (mineral-based specialty solutions for industry); SGS (testing, inspection and certification); LafargeHolcim (cement, aggregates and concrete); Pernod Ricard (wines and spirits); adidas (design and distribution of sportswear); Umicore (materials technology and recycling of precious metals); Total (oil, gas and chemical industries); Burberry (a global luxury brand); Ontex (disposable hygiene products); GEA (supplier of equipment and project management for a wide range of processing industries primarily in the food and beverage sectors); and Parques (operation of regional leisure parks).

SQUARE VICTORIA COMMUNICATIONS GROUP

Square Victoria Communications Group is a wholly owned subsidiary. Its principal asset is La Presse, a French-language news media company providing content on several platforms: the La Presse+ digital edition for tablets, the news website LaPresse.ca and the La Presse mobile application for smartphones.

Power Corporation of Canada2017 Annual Report 5

2017 Overview

$1,286

MILLION

Net Earnings[1]

$1,560

MILLION

Adjusted Net Earnings[1,2]

$706

MILLION

Total Dividends Declared

Net Earnings per Participating Share

In dollars

$2.77

3.86

2.12

2.77

2.33

2.77

13

14

15

16

17

Adjusted Net Earnings[2] per Participating Share

In dollars

$3.36

2.08

2.69

3.40

2.64

3.36

13

14

15

16

17

Dividends Declared per Participating Share

In dollars

$1.41

1.16

1.16

1.22

1.32

1.41

13

14

15

16

17

6 Power Corporation of Canada2017 Annual Report

[1] Attributable to participating shareholders.

[2] Adjusted net earnings is a non-IFRS financial measure. Please refer to the reconciliation of IFRS and nonIFRS financial measures in the Review of Financial Performance.

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download