2016 Annual Report - Power Corporation of Canada | Home

2016 Annual Report

This Annual Report is intended to provide shareholders and other interested persons with selected 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 of Canada's 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 of Canada. 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, 2016, unless otherwise noted.

NON-IFRS FINANCIAL MEASURES AND PRESENTATION

Net earnings attributable to participating shareholders are comprised of:

? adjusted net earnings (previously described as operating 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 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.

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, 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 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 measures to results reported in accordance with IFRS, see the Results of Power Corporation of Canada?Earnings Summary?Condensed Supplementary Non-Consolidated Statements of Earnings section further in this report.

The following abbreviations are used throughout this report:

Power Corporation of Canada (Power Corporation or the Corporation) adidas AG (adidas) China Asset Management Co., Ltd. (China AMC) CITIC Limited (CITIC) Eagle Creek Renewable Energy, LLC (Eagle Creek) Euronext Brussels (EBR) Euronext Paris (EPA) Great-West Life & Annuity Insurance Company (Great-West Financial or Great-West Life & Annuity) Great-West Lifeco Inc. (Great-West Lifeco or Lifeco) Groupe Bruxelles Lambert (GBL) IGM Financial Inc. (IGM Financial or IGM) IntegraMed America, Inc. (IntegraMed) International Financial Reporting Standards (IFRS) Investors Group Inc. (Investors Group) Irish Life Group Limited (Irish Life) Lafarge SA (Lafarge) LafargeHolcim Ltd (LafargeHolcim) La Presse, lt?e (La Presse) London Life Insurance Company (London Life) Mackenzie Financial Corporation (Mackenzie Investments or Mackenzie)

PanAgora Asset Management, Inc. (PanAgora Asset Management or PanAgora) Pargesa Holding SA (Pargesa) Parjointco N.V. (Parjointco) Portag3 Ventures Limited Partnership (Portag3 Ventures or Portag3) Potentia Renewables Inc. (Potentia) Power Energy Corporation (Power Energy) Power Energy Eagle Creek LLP (Power Energy Eagle Creek) Power Financial Corporation (Power Financial) Putnam Investments, LLC (Putnam Investments or Putnam) Sagard Europe, Sagard Capital and Sagard China (Sagard Investment Funds) SGS SA (SGS) Square Victoria Communications Group Inc. (Square Victoria Communications Group or SVCG) Swiss Stock Exchange (SIX) The Canada Life Assurance Company (Canada Life) The Great-West Life Assurance Company (Great-West Life) Total SA (Total) Umicore, NV/SA (Umicore) Vein Clinics of America, Inc. (Vein Clinics) Wealthsimple Financial Corp. (Wealthsimple) XETRA Stock Exchange (XETR)

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 paid ? per participating share Consolidated assets Consolidated assets and assets under management Shareholders' equity[2, 3] Total equity[3, 4] Book value per participating share[3] Participating shares outstanding [in millions]

2016

50,750 1,082 2.33 1,203 2.59 1.32

422,903 796,670

13,864 35,061

27.84 463.3

2015

38,265 1,786 3.86 1,573 3.40 1.22

422,859 785,173

13,978 35,385

28.08 463.2

[1] Adjusted net earnings is a non-IFRS financial measure (previously described as operating earnings). Please refer to the reconciliation of non-IFRS financial measures to financial measures in accordance with IFRS in the Review of Financial Performance.

[2] Represents non-participating and participating shareholders' equity. [3] Comparative figures have been retrospectively adjusted. Refer to Note 16 of the 2016 Consolidated Financial Statements. [4] Includes non-controlling interests in the equity of subsidiaries.

Table of Contents

Financial Highlights

1

Group Organization Chart

2

Corporate Profile

3

2016 Overview6

Directors' Report to Shareholders

7

Responsible Management

16

Review of Financial Performance18

Consolidated Financial Statements50 Notes to the Consolidated

Financial Statements55 Five-Year Financial Summary123 Board of Directors124 Officers125 Corporate Information126

POWER CORPOR ATION OF CANADA2016 ANNUAL REPORT1

Group Organization Chart

Power Corporation of Canada

POWER FINANCIAL CORPORATION 65.6%

GREAT-WEST LIFECO INC. 67.9%[1] EQUITY | 65% VOTING

THE GREAT-WEST LIFE ASSURANCE COMPANY

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

96.2%EQUITY | 100%VOTING

PANAGORA ASSET MANAGEMENT, INC.

80%VOTING

IGM FINANCIAL INC. 61.5%[1]

INVESTORS GROUP INC.

100%

MACKENZIE FINANCIAL CORPORATION

100%

INVESTMENT PLANNING COUNSEL INC.

96.9%

PORTAG3 VENTURES LIMITED PARTNERSHIP

25%[2]

WEALTHSIMPLE FINANCIAL CORP.

46.5%[3]

2POWER CORPOR ATION OF CANADA2016 ANNUAL REPORT

PARGESA HOLDING SA

27.8%[4]

GROUPE BRUXELLES LAMBERT

50%EQUITY

| 51.9%VOTING

IMERYS

53.9%EQUITY | 69.7%VOTING

LAFARGEHOLCIM LTD9.4% SGS SA16.2% ADIDAS AG7.5% PERNOD RICARD 7.5%EQUITY |6.8%VOTING UMICORE, NV/SA17% TOTAL SA 0.7%EQUITY | 1.3% VOTING

Corporate Profile

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

SAGARD INVESTMENT FUNDS

POWER ENERGY CORPORATION 100%

SQUARE VICTORIA COMMUNICATIONS GROUP INC. 100%

SAGARD EUROPE

SAGARD CAPITAL[5]

SAGARD CHINA

POTENTIA RENEWABLES INC.

100%

EAGLE CREEK RENEWABLE ENERGY, LLC

31.2%[6]

CHINA ASSET MANAGEMENT CO., LTD.

10%

Percentages represent participating equity interest and voting interest (unless otherwise indicated) at December 31, 2016. [1] IGM Financial held 4.0% of the common shares of Great-West Lifeco

and Great-West Life held 3.8% of the common shares of IGM Financial. [2] Power Financial directly held 25% of Portag3 and both Great-West Lifeco

and IGM Financial held 37.5%. [3] IGM Financial also held a 22.7% interest in Wealthsimple. [4] Through its wholly owned subsidiary, Power Financial Europe B.V.,

Power Financial held a 50% interest in Parjointco. Parjointco held a voting interest of 75.4% and an equity interest of 55.5% in Pargesa. [5] Sagard Capital held a 96.7% interest in IntegraMed and a 97.3% interest in Vein Clinics. [6] Power Corporation held a 60% interest in Power Energy Eagle Creek, which held a 52% interest in Eagle Creek Renewable Energy.

POWER CORPOR ATION OF CANADA2016 ANNUAL REPORT3

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