Power Corporation of Canada · TSX:POW

Power Corporation of Canada — Q2 2020 Earnings Presentation

38 slides from Power Corporation of Canada's earnings presentation, Aug 10, 2020

1. Slide 1: Investor Presentation Q2 2020 Quarterly Results

   Investor Presentation Q2 2020 Quarterly Results August 10th, 2020

2. Slide 2: Forward looking statements and COVID-19

   Forward looking statements and COVID-19 Forward Looking Statements In the course of today’s meeting, representatives of the Corporation may make, in their remarks or in response to questions, and the accompanying materials may include, statements containing forward-looking information. Certain state

3. Slide 3: Disclosures concerning public investees, IFRS and non-IFRS measures

   Disclosures concerning public investees, IFRS and non-IFRS measures Disclosures Concerning Public Investees Information in this presentation and any accompanying oral statements, including in response to questions, (i) concerning Great-West Lifeco and IGM, as applicable, has been derived from Great-

4. Slide 4: Conference call participants

   Conference call participants R. Jeffrey Orr President and Chief Executive Officer Gregory D. Tretiak, FCPA, FCA Executive Vice-President and Chief Financial Officer POWER CORPORATION OF CANADA QUARTERLY RESULTS PRESENTATION | Q2 2020 4

5. Slide 5: Q2 2020 Highlights

   Q2 2020 Highlights POWER CORPORATION OF CANADA QUARTERLY RESULTS PRESENTATION | Q2 2020 5

6. Slide 6: Publicly traded operating companies

   Publicly traded operating companies  This call follows a number of recent events held by our publicly traded operating companies  Investors are encouraged to contact the companies directly for specific inquiries Event / Date Contact  Q2 2020 Conference Call August 5, 2020 deirdre.neary@canadalife

7. Slide 7: Power Corporation Q2 2020 highlights

   Power Corporation Q2 2020 highlights  June 25 Power Corporation included in Corporate Knights 2020 ranking of Best 50 Corporate Citizens in Canada  June 29 As part of the Pargesa / GBL reorganization, Parjointco’s public exchange offer accepted by 94.3% of minority shareholders  June 29 Empower R

8. Slide 8: Power Corporation financial highlights – Q2 2020

   Power Corporation financial highlights – Q2 2020  Net earnings per share of $0.99, compared with $0.64 in Q2 2019  Adjusted net earnings per share1 of $0.79, compared with $0.83 in Q2 2019  The Board of Directors declared a quarterly dividend of 44.75¢ per share, up 10.5% from the 2019 rate  NAV

9. Slide 9: PCC earnings per share

   PCC earnings per share  Net EPS increased from $0.64 in Q2 2019 to $0.99 in Q2 2020  Adjusted net EPS1 decreased from $0.83 in Q2 2019 to $0.79 in Q2 2020 % vs. % vs. Q2'20 Q1'20 Q2'19 Q1'20 Q2'19 Power Financial Great-West Lifeco 0.70 0.52 0.62 34.6% 12.9% IGM 0.16 0.14 0.17 14.3% (5.9%) Pargesa

10. Slide 10: COVID-19 – PCC group of companies' businesses performing well

    COVID-19 – PCC group of companies’ businesses performing well  We continue to prioritize the health and safety of our employees, provide uninterrupted service to our clients and remain committed to supporting our communities  The performance of our companies in Q2 2020 reflects the strength of our

11. Slide 11: The Power Group's ongoing value creation strategy is focused on 3 key levers

    The Power Group’s ongoing value creation strategy is focused on 3 key levers Organic growth strategies at each of our 1 OpCo Organic Levers public operating companies1 2 OpCo M&A Levers Deployment and redeployment of capital Actions we can take at the Power level and 3 Holding Company Levers between

12. Slide 12: Continued investment in digital capabilities across the group

    Continued investment in digital capabilities across the group elevating the effectiveness of client interactions  SimpleProtect digital solution for participating life, term and critical illness insurance products allowing clients to complete an application in as little as 10 minutes  Ongoing inve

13. Slide 13: Recent transactions delivering on PCC's value creation strategy

    Recent transactions delivering on PCC’s value creation strategy Size Date Overview  Great-West Lifeco announced sale of U.S. individual life insurance and annuity business US$1.2 billion January 2019  Exit lower return business and enhance focus on the retirement and asset management C$1.6 billion

14. Slide 14: Empower Retirement's acquisition of Personal Capital

    Empower Retirement’s acquisition of Personal Capital On June 29, Empower Retirement announced an agreement to acquire Personal Capital for US$825 million and deferred consideration of up to US$175 million  Personal Capital is a hybrid wealth manager that combines a leading-edge digital experience w

15. Slide 15: Mackenzie's acquisition of GLC Asset Management

    Mackenzie’s acquisition of GLC Asset Management On August 4, Great-West Lifeco and IGM announced the sale of GLC Asset Management to Mackenzie for $175 million; Canada Life will acquire the fund management contracts relating to the Quadrus Group of Funds for $30 million  Solidifies Mackenzie as one

16. Slide 16: Simplification of the Pargesa and GBL structure

    Simplification of the Pargesa and GBL structure Public exchange offer to Pargesa's minority shareholders was completed with 94.3% acceptance  On March 11, 2020, Parjointco N.V. announced an offer of 0.93 GBL shares for each publicly- held Pargesa bearer share  Pargesa’s assets almost exclusively c

17. Slide 17: Simplification of Power group structure over the last few quarters

    Simplification of Power group structure over the last few quarters Pre-December 2019 Reorganization Pro forma 64% 67% 62% 14%1 PCC Non- PCC Non-Public Public Investments Investments 67% 62% 28% 50% 1 Represents a 15.7% economic interest as at June 30, 2020 as a result of GBL holding 5% treasury shar

18. Slide 18: Established investment platforms with focus on growing 3rd party capital

    Established investment platforms with focus on growing 3rd party capital  $4.5B of AUM at June 30, 2020, including $2.0B from 3rd parties  $1.9B of additional unfunded commitments, including $1.4B from 3rd parties • Sagard NewGen launched in Q2’20 with $168M of new commitments  Strong market rebo

19. Slide 19: Enhanced investment platform financial reporting

    Enhanced investment platform financial reporting  Continued development of Sagard Holdings and Power Sustainable organization structures  Financial results being segmented into asset management and investment activities ($ millions) Q2'20 Q1'20 YTD 2020 Sagard Holdings Asset management activities

20. Slide 20: China AMC's growth has accelerated in 2020

    China AMC’s growth has accelerated in 2020  #1 onshore ETF issuer, #2 Chinese long-term mutual fund manager by market share  28% increase in net profit in Q2’20 versus Q2’19  PCC’s share of China AMC income was $10M in Q2’20, compared to $8M in Q2’19, a 25% increase  Chinese equity market has re

21. Slide 21: Wealthsimple's business is growing rapidly in the current environment

    Wealthsimple’s business is growing rapidly in the current environment  PCC group companies currently hold an 83.6% Assets Under Administration undiluted equity interest in Wealthsimple ($ billions) $8.4  One of Canada’s largest and fastest-growing $6.8 $6.3 digital investing services $5.6 $4.9  $

22. Slide 22: Standalone businesses – An additional source of value creation

    Standalone businesses – An additional source of value creation PCC will continue to manage standalone businesses to realize value over time  Strong unfilled order book  Share price rebounded +58% as at June 30, 2020 from May lows  Secured deal with major U.S. waste management company for zero- em

23. Slide 23: Operating expense reduction

    Operating expense reduction To date, we have implemented actions to achieve 45% of the targeted expense reductions, or $23M on an annual run-rate basis  Retirement of Co-CEOs and changes in governance  Certain PFC public company expenses eliminated  Restructuring of Group’s research and advisory

24. Slide 24: Recent group disclosure enhancements

    Recent group disclosure enhancements  Introduced base earnings metric in Q1’20  New segment disclosure in Q1’20: Canada, U.S., Europe and Capital & Risk Solutions  Enhanced sources of earnings disclosure in Q2’20  New segment disclosure approach to be introduced in Q3’20: Wealth Management, Asse

25. Slide 25: Broader market indices have recovered year-to-date losses, however life insurance sector lagged

    Broader market indices have recovered year-to-date losses, however life insurance sector globally has lagged Year-to-Date Share Price Performance 15% Power Group S&P 500 Power Corporation (24%) 4% - Great-West Lifeco (21%) (3%) S&P TSX S&P TSX (15%) Life & Health (20%) (27%) (30%) S&P 500 Life & Hea

26. Slide 26: PCC NAV and discount to NAV

    PCC NAV and discount to NAV  Prior to the reorganization, the dual holding company structure traded at a 29% discount to NAV1, with PCC and PFC individually trading at a 16% and 18% discount to NAV1, respectively 35% average discount from the end of 2015 to 2018, decreased to 21% immediately after

27. Slide 27: Value creation roadmap

    Value creation roadmap OpCo  Investing to drive higher organic earnings growth 1 Organic  Enhanced disclosure to provide market Levers greater visibility Drive higher earnings and NAV OpCo + 2 M&A  Augment value through acquisitions Levers and associated synergies Potential multiple revisions at

28. Slide 28: Summary

    Summary  Power group of companies continue to respond well in the COVID-19 pandemic • Results reflect the strength and resiliency of the group businesses • Ongoing investments across the group focused upon client offerings and profitability  The group of companies maintain significant liquidity an

29. Slide 29: Questions

    Questions POWER CORPORATION OF CANADA QUARTERLY RESULTS PRESENTATION | Q2 2020 29

30. Slide 30: Appendix

    Appendix POWER CORPORATION OF CANADA QUARTERLY RESULTS PRESENTATION | Q2 2020 30

31. Slide 31: Abbreviations

    Abbreviations The following abbreviations are used throughout this presentation: adidas adidas AG Ontex Ontex N.V. AUM Assets under management Pargesa Pargesa Holding SA Canada Life The Canada Life Assurance Company Parjointco Parjointco N.V. China AMC or CAMC China Asset Management Co., Ltd. Parque

32. Slide 32: Net asset value

    Net asset value  NAV per share of $32.96 at June 30, 2020, up 7% compared to $30.79 at March 31, 2020 ($ millions) June 30, 2020 Publicly Traded Great-West Lifeco $14,762 IGM Financial 4,880 Parjointco (1) 2,540 22,182 Investment Platforms Sagard Holdings Asset management companies (2) 164 Investme

33. Slide 33: GBL net asset value

    GBL net asset value Portfolio companies have shown adaptability and resilience, attributable to their position as sector leaders, critical size and pre-crisis robustness of their balance sheets % Jun. 30, 2020 PCC Share of  €108.70 NAV per share at June 30, (1) Ownership Value (€M) Value (€M) 2020,

34. Slide 34: Current and pro forma Pargesa and GBL structure

    Current and pro forma Pargesa and GBL structure Pre-Exchange Offer Pro Forma – At Completion of Offer 1 4 50% 50% 50% 50% Parjointco N.V. Frère Family Parjointco N.V. Frère Family 56% 2 44% Other Pargesa Shareholders 28% 50% 46% 67% Other Current 3 Other GBL 3 Pargesa and GBL Shareholders Shareholde

35. Slide 35: Corporate Knights' Best 50 Corporate Citizens

    Corporate Knights’ Best 50 Corporate Citizens  PCC’s commitment to responsible management has led to a continuous strengthening of ESG-related disclosures  On June 25, PCC announced its inclusion in Corporate Knights annual ranking of Best 50 Corporate Citizens in Canada • Evaluation based on a nu

36. Slide 36: Corporate Social Responsibility (CSR) at PCC

    Corporate Social Responsibility (CSR) at PCC CSR is fundamental to the way we, and our group of companies, do business — what we refer to as “responsible management”. It has been at the core of our investment philosophy, enabling us to build a resilient and sustainable business, through our role as

37. Slide 37: CSR priorities and recent progress

    CSR priorities and recent progress Focus Areas Aligned with UN Sustainable Development Goals Priorities Our Progress in 2018/2019 Environment Reduce our environmental • 5.4% direct renewable energy (natural gas procured by IGM Financial) and 70.9% indirect footprint, and transition our renewable ene

38. Slide 38: PCC's efforts have culminated in a number of recognitions

    PCC’s efforts have culminated in a number of recognitions  Over the past few years, PCC and its group companies have increased efforts to strengthen our CSR programs and initiatives. We are proud to see our efforts being recognized by a number of highly respected organizations, including: In 2019,

Power Corporation of Canada — Q2 2020 Earnings Presentation on 6ix