2018 Annual Report

2018 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 (MD&A). 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 ForwardLooking 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, including the 2018 annual MD&As of GreatWest Lifeco and IGM Financial, as filed under their respective profiles at .

All figures mentioned in this report are in Canadian dollars and as of December 31, 2018, unless otherwise noted.

NON-IFRS FINANCIAL MEASURES AND PRESENTATION

Management uses the following Non-IFRS financial measures and basis of presentation:

? Adjusted net earnings, which is net earnings excluding the impact of Other items;

? Other items, which include the after-tax impact of any item that in management's judgment would make the period-over-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;

? Adjusted net earnings per share, which is the adjusted net earnings divided by the weighted average number of participating shares outstanding;

? Adjusted return on equity, which is the calculation of adjusted net earnings divided by average participating shareholders' equity.

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 nonIFRS financial measure.

Adjusted net earnings attributable to participating shareholders, adjusted net earnings per share and adjusted return on equity are non-IFRS financial measures that do not have a standard meaning and may not be comparable to similar measures used by other entities. Refer to the "NonIFRS Financial Measures and Presentation" section further in this report for the definition of non-IFRS financial measures and their reconciliation with IFRS financial measures.

The Corporation also uses a non-consolidated basis of presentation to present and analyze its results whereby its interests in Power Financial and other subsidiaries are accounted for using the equity method. Presentation on a non-consolidated basis is a non-IFRS presentation. However, it is useful to the reader as it presents the holding company's (parent) results separately from the results of its operating subsidiaries. Reconciliations of the non-IFRS basis of presentation with the presentation in accordance with IFRS are included 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.) IG Wealth Management (Investors Group Inc.) IntegraMed (IntegraMed America, Inc.) Investment Planning Counsel (Investment Planning Counsel 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.) London Life (London Life Insurance Company) Lumenpulse (Lumenpulse Group Inc.) Mackenzie or Mackenzie Investments (Mackenzie Financial Corporation) Ontex (Ontex N.V.) PanAgora (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 (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 (Putnam Investments, LLC) Retirement Advantage (MGM Advantage Holdings Ltd.) 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

Net Earnings[1]

$1,287

MILLION

Net Earnings per Participating Share

In dollars

$2.77

3.86

2.77

2.77 2.77 2.33

14 15 16 17 18

Adjusted Net Earnings[1][2]

$1,438

MILLION

Adjusted Net Earnings per Participating Share[2]

In dollars

$3.09

2.69

3.40

2.64

3.36

3.09

14

15

16

17

18

Total Dividends Declared

$752

MILLION

Dividends Declared per Participating Share

In dollars

$1.50

1.16

1.22

1.32

1.41

1.50

14

15

16

17

18

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

Net earnings[1] Net earnings ? per participating share

Adjusted net earnings[1][2] Adjusted net earnings[2] ? per participating share

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

2018

1,287 2.77

1,438 3.09 1.50

452,303 15,118 30.38 466.0

2017

1,286 2.77

1,560 3.36 1.41

445,521 14,615 29.40 464.3

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

Power Corporation of Canada2018 Annual Report

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Group Organization Chart

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 and other business sectors in North America, Europe and Asia.

POWER FINANCIAL CORPORATION 65.5%

GREAT-WEST LIFECO INC.

67.8% 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

96.7%EQUITY | 100%VOTING

PANAGORA ASSET MANAGEMENT, INC.

95.4%EQUITY | 100%VOTING

IGM FINANCIAL INC.[1]

61.4%

IG WEALTH MANAGEMENT

100%

MACKENZIE FINANCIAL CORPORATION

100%

INVESTMENT PLANNING COUNSEL INC.

100%

PORTAG3 VENTURES LIMITED PARTNERSHIP[2]

WEALTHSIMPLE FINANCIAL CORP.[3]

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Power Corporation of Canada2018 Annual Report

POWER ENERGY CORPORATION 100%

SAGARD

INVESTMENT FUNDS[5]

PARGESA HOLDING SA[4]

27.8%

GROUPE BRUXELLES LAMBERT

50%EQUITY | 50.8%VOTING

POTENTIA RENEWABLES INC.

100%

LUMENPULSE GROUP INC.

60.5%

THE LION ELECTRIC CO.

43.8%

SAGARD EUROPE

SAGARD HOLDINGS

100%

SAGARD CHINA

100%

CHINA ASSET MANAGEMENT

CO., LTD.[6]

13.9%

Percentages represent participating equity interest and voting interest (unless otherwise indicated) at December 31, 2018.

[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] Power Financial directly holds 63% of Portag3, and both Great-West Lifeco and IGM Financial hold equal interests of 18.5%.

[3] Power Financial directly holds 16.0% of Wealthsimple, and Portag3 and IGM Financial also hold 21.9% and 43.8%, respectively, representing a combined voting interest of 83.2%.

[4] 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.

[5] Refer to the Sagard Investment Funds section in this report for the Corporation's interest in the Sagard Europe funds, and investments held by Sagard Holdings including a controlling interest in IntegraMed.

[6] IGM Financial also holds a 13.9% interest in China AMC. Power Corporation and IGM Financial hold a combined 27.8% interest in China AMC.

Power Corporation of Canada2018 Annual Report

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