Capital régional et coopératif Desjardins share price is set at $15.07 following economic turbulence in the first half of 2020
Highlights for the six-month period ended June 30, 2020
- Share price: $15.07, down $0.87 from December 31, 2019
- Non-annualized return: -5.2%
- Non-annualized return of Investments impacting the Québec economy portfolio: -9.6%
- Non-annualized return of Other investments portfolio: 2.2%
- Sum of shares redeemed: $188 million
Montréal, August 13, 2020 – For the six-month period ended June 30, 2020, Capital régional et coopératif Desjardins (CRCD) announced that its share price declined today to $15.07, down $0.87 compared with December 31, 2019. For the first six months of fiscal 2020, CRCD realized a net loss of $115.6 million for a negative non-annualized return of -5.2%. As at June 30, 2020, CRCD’s net assets stood at $2,005 million.
These results stem primarily from the Investments impacting the Québec economy and Other investments portfolios, which generated non-annualized returns of -9.6% and 2.2%, respectively.
Investments impacting the Québec economy portfolio performance resulted primarily from the lower profitability of several companies which were significantly impacted by the economic turbulence, with businesses in the following three sectors being hardest hit: Retail Trade (B2C), Automotive, and Arts, Entertainment and Recreation. That said, the health crisis and shuttering of a portion of the economy spared some of our partner companies which performed well, particularly in the three areas of Transportation, Logistics and Warehousing, Civil Engineering, and Professional, Scientific and Technical Services.
Positive performance by the Other investments portfolio was due to significant securities weighting in the bond market, which performed well during the last six months. Global and Canadian equity funds were impacted by the equity markets.
All in all, the global management approach of the two portfolios, which aims to limit share price volatility in periods of substantial market turbulence or unfavourable events at partner companies, demonstrated its effectiveness during the last six months.
CRCD, leading the way to support the vitality of Québec regions
“Being a CRCD shareholder means contributing to the growth and viability of local businesses,” noted Yves Calloc’h, acting Chief Operating Officer of Desjardins Capital, CRCD’s manager. “As the pandemic continues, Québecers are demonstrating their social responsibility day in and day out. Individuals and businesses everywhere are pulling together to help their communities. As Québec’s economy reopens, we’re working closely with local business owners to contribute to the recovery. For example, since mid-March, nearly half of our partner companies have benefited from our relief measures.”
In addition to the moratoriums and management fee deferrals available, the Desjardins Capital investment team has provided entrepreneurs specific tools, in particular to help them with their budgetary control and cash flow management. By working in partnership with them since the beginning of the pandemic, Desjardins Capital has developed indicators for evaluating the short-, medium- and long-term operational risks, reinvestment needs and impacts of COVID-19 on CRCD’s Investments impacting the Québec economy portfolio. By collecting data continuously, Desjardins Capital can better support entrepreneurs and quickly adjust its strategies for monitoring companies, identify promising sectors and those likely to require special focus and, lastly, fine-tune recovery plans.
Compounded return of 4.0% over seven years
Despite the exceptional circumstances early in 2020, CRCD continues to deliver reasonable long-term return for the shareholders. In fact, the compounded return of the share is 4.0%[i] over seven years, the mandatory minimum holding period for shares of CRCD, plus the income tax credit claimed on purchase.
Redemption volume does not compromise CRCD’s ability to fulfill its mission
Given the uncertainty in the environment during the period, redemptions of common shares totalled $188.1 million for the first six months of 2020 compared with $50.6 million for the same period in 2019, with the highest volume occurring primarily from mid-March through late May. CRCD has the necessary liquidity to honour all redemptions requested by its shareholders. Note that shareholders who redeem some or all of their shares forfeit their right to a tax credit for subscriptions in the current tax year or any subsequent tax year.
$140 million in new shares for sale in the 2020 issue, with a Québec tax credit of 35%
Pre-subscription for the shares will take place from Monday, August 31 (9 a.m.) to Monday, September 21 (5 p.m.), 2020, through AccèsD or via the secure online form available during that time at www.desjardins.com/crcd. For 2020, the maximum amount per investor remains $3,000. Investors selected at the end of the pre-subscription period will have until November 8, 2020 to complete their subscription.
Exchanges of shares in 2020
The 2020 registration period for the exchange of shares, for an authorized amount of $100 million, will run from November 9, 2020 to January 8, 2021. All shareholders affected by the measure will be contacted by mail to let them know to express their interest using an online form. In accordance with CRCD’s constituting act, this is the last exchange period authorized by the Québec government.
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About Capital régional et coopératif Desjardins
With more than 105,000 shareholders, Capital régional et coopératif Desjardins (CRCD) is a public company with $2,005 million in net assets. CRCD contributes to Québec economic development through several levers developed with its manager, Desjardins Capital. These levers, with CRCD as the driving force, form an entrepreneurial ecosystem designed to value and nurture the best of Québec entrepreneurship. Directly or indirectly through its ecosystem, CRCD supports the growth of over 530 businesses, cooperatives and funds in various industries spanning all Québec regions, helping to create and retain more than 80,000* jobs. www.capitalregional.com
* Data as at December 31, 2019
For journalists only
[i] As at June 30, 2020, the share’s compounded returns were -5.9% over one year, 3.0% over three years, 4.3% over five years, 4.0% over seven years and 4.4% over ten years. The indicated rates of return are the historical annual compounded total returns including changes in share value and reinvestment of all dividends or distributions, as applicable. These rates do not take into account any income taxes payable by any shareholder that would have reduced returns. CRCD shares are not guaranteed, their value fluctuates and their past performance is not indicative of their future returns. Investment fees may apply Please read the prospectus online before investing.