Organic Capital Generation and IFRS Transition Outlook
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Non-IFRS and Additional Financial Measures (cont.)
Core earnings:
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о
о
о
Category under Regulation 52-112: Non-IFRS financial measures that constitute historical information.
Definition: Removes from reported earnings (loss) the impacts of the following items that create volatility in the Company's results under IFRS, or that are not representative of its underlying
operating performance - each of these items is classified as an Supplementary financial measure and has no directly comparable IFRS financial measure disclosed in the financial statements of
the Company to which the measure relates, nor are reconciliations available:
a.
market-related impacts that differ from management's best estimate assumptions, which include impacts of returns on equity markets and changes in interest rates related to (i)
management fees collected on assets under management or administration (MERS), (ii) universal life policies, (iii) the level of assets backing long-term liabilities, and (iv) the dynamic
hedging program for segregated fund guarantees;
b. assumption changes and management actions;
c. charges or proceeds related to acquisition or disposition of a business, including acquisition, integration and restructuring costs;
d. amortization of acquisition-related finite life intangible assets;
e. non-core pension expense, that represents the difference between the asset return (interest income on plan assets) calculated using the expected return on plan assets and the IFRS
prescribed pension plan discount rate; and
f. specified items which management believes are not representative of the performance of the Company, including (i) material legal settlements and provisions, (ii) unusual income tax
gains and losses, (iii) material impairment charges related to goodwill and intangible assets, and (iv) other specified unusual gains and losses.
Purpose: The core earnings definition provides a supplementary measure to understand the underlying operating business performance compared to IFRS net earnings. Also, core earnings
helps in explaining results from period to period by excluding items that are simply non-representative of the business performance from period to period. In addition, core earnings, along with
net income attributed to shareholders, is used as a basis for management planning and strategic priority setting. Therefore, this measure is useful in understanding how management views the
underlying operating business performance of the Company and also helps in better understanding the long-term earnings capacity and valuation of the business..
Reconciliation: "Net income attributed to common shareholders" is the most directly comparable IFRS measure disclosed in the financial statements of the Company to which the measure
relates, and a reconciliation with this measure is presented in the "Management's Discussion and Analysis".
Note: This core earnings definition is applicable as of January 1, 2021. However, the core results for prior periods that are presented for comparison purposes have also been calculated
according to this definition. The changes to the definition of core earnings at the beginning of 2021 are consistent with the ongoing evolution of the business and help to better reflect and
assess the underlying operating business performance, while maintaining consistency with the general concept of the metric and continuity with the previous definition.
Core earnings per common share (core EPS):
о
о
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Category under Regulation 52-112: Non-IFRS ratio.
Definition: Obtained by dividing the core earnings by the diluted weighted average number of common shares.
Purpose: Used to better understand the Company's capacity to generate sustainable earnings and is an additional indicator for evaluating the Company's financial performance.
Reconciliation: "Earnings per common share (EPS)" is the most directly comparable IFRS financial measure disclosed in the financial statements of the Company to which the measure relates,
and a reconciliation with this measure is presented in the "Management's Discussion and Analysis" for 2021, which is available at sedar.com.View entire presentation