Brookfield Asset Management Inc. (TSX:BAM.A)(NYSE:BAM)(EURONEXT:BAMA)
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Investors, analysts and other interested parties can access Brookfield Asset
Management's 2011 Second Quarter Results as well as the Shareholders'
Letter, Supplemental Information on Brookfield's web site under the Investor
Centre/Financial Reports section at http://www.brookfield.com/.
The 2011 Second Quarter Results conference call can be accessed via webcast
on August 10, 2011 at 10:30 a.m. Eastern Time at http://www.brookfield.com/
or via teleconference at 1-800-319-4610 toll free in North America. For
overseas calls please dial 1-604-638-5340, at approximately 10:30 a.m.
Eastern Time. The teleconference taped rebroadcast can be accessed at 1-800-
319-6413 or 1-604-638-9010 (Password 2811#).
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Brookfield Asset Management Inc. today announced its financial results for the
quarter ended June 30, 2011. The financial results are based on International
Financial Reporting Standards ("IFRS") unless otherwise noted.
Three months Six months
ended June 30 ended June 30
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US$ millions (except per share amounts) 2011 2010 2011 2010
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Net Income
- total $ 1,428 $ 373 $ 1,998 $ 782
- for Brookfield shareholders 838 89 1,116 253
Cash flow from operations
- total $ 829 $ 645 $ 1,342 $ 1,226
- for Brookfield shareholders 342 327 573 693
Per share
Net income $ 1.26 $ 0.12 $ 1.67 $ 0.37
Cash flow from operations 0.50 0.53 0.83 1.13
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"Performance is strong at virtually all of our operations, and we are taking
advantage of numerous opportunities to increase our cash flow by investing in
both organic expansion initiatives and disciplined acquisitions," commented
Bruce Flatt, CEO of Brookfield.
Highlights
-- Operating cash flow was $829 million on a consolidated basis, of which
$342 million ($0.50 per share) accrued to Brookfield shareholders,
representing meaningful growth over 2010 on a comparable basis.
-- We increased tangible net asset values by $1.1 billion during the
quarter, resulting in a total return of $1.68 per share.
Total return reflects the cash flow generated within the business and
increases in the net tangible value of our assets. We distributed $0.13
per share as dividends and the balance will continue to compound in the
business.
-- We continued to expand our asset management franchise as measured by
third party capital under management, base management fees and
performance-based returns.
We will be fundraising for seven funds seeking total third party
commitments of more than $4 billion. Base management fees totalled $47
million compared to $37 million in the 2010 quarter and we added $95
million of unrealized performance-based income. Capital under management
for others increased by $1.4 billion during the quarter to $53.4
billion.
-- We completed $4.7 billion of capital raising initiatives in the second
quarter of 2011, bringing the total to $16.0 billion for 2011.
We continue to accelerate refinancing initiatives to take advantage of
the current low interest rate environment and extend our maturity
profile. These activities enhanced our liquidity, refinanced near-term
maturities and funded new investment initiatives. This included the
virtual completion of the refinancing of our U.S. Office Fund portfolio
debt. Our core liquidity at June 30, 2011 stood at $4.3 billion,
consistent with levels at the end of the first quarter.
-- Our operating teams completed a number of important initiatives to
increase the values and cash flows of our assets.
We acquired assets with a total value of $2.0 billion, which enabled us
to invest $1.6 billion of capital, to expand our asset base and cash
flows across all of our operating segments. This includes the
acquisition of a 30 megawatt hydroelectric facility in Brazil for R$300
million, the purchase of three office properties in New York, Melbourne
and Perth and the sale of an office property in Houston. We signed 1.7
million square feet of new commercial office leases bringing the year-
to-date total to 4.6 million square feet, and have a further 7 million
square feet in serious discussions, benefitting from continued
improvement in most of our major markets. We completed the spin-off of
our North American residential businesses, which raised $180 million of
equity capital from investors, and our Brazilian residential businesses
completed R$746 million of launches and contracted sales of R$1,088
million, reflecting continued growth in this market.
-- We are working on a number of attractive growth opportunities, including
expansion of our existing operations and potential acquisitions.
We completed a major long-term contract that will enable us to commence
a nearly A$500 million expansion in our Western Australian rail lines
and are also pursuing an expansion of our coal terminal in Eastern
Australia. We are well advanced towards commencing construction of a
$750 million transmission line in Texas and have a number of capital
projects in our South American transmission and UK connections
businesses.
In our renewable power business, we have eight projects in advanced
stages of development with an estimated cost of $1.4 billion that will
have approximately 500 megawatts of installed capacity and annual
expected generation of 1,500 gigawatt hours. Commercial office
development activities are focused on six projects comprising nine
million square feet and a total value of approximately $7 billion. Our
U.S. retail operations recently announced a plan to spin-off a portfolio
of 30 non-core retail malls in order to focus on its core fortress mall
portfolio.
Basis of Presentation
This news release and accompanying financial statements make reference to cash
flow from operations, invested capital and intrinsic value.
Cash flow from operations is defined as net income prior to fair value changes,
depreciation and amortization, and future income taxes and includes certain
disposition gains that are not otherwise included in net income as determined
under IFRS, and after deducting the associated interests of non-controlling
shareholders. Brookfield uses cash flow from operations to assess its operating
results and the value of its business and believes that many of its shareholders
and analysts also find this measure of value to them.
Invested capital represents the capital invested by the company in its
operations on a segmented basis, net of the underlying liabilities and
non-controlling interests. These balances are derived from the company's IFRS
balance sheets and adjusted to exclude deferred income taxes and to include
adjustments to reflect the fair value of assets and liabilities that are carried
at historical book values or otherwise not recognized in the company's IFRS
balance sheets. Common equity on this basis is referred to as net tangible asset
value.
Intrinsic value includes net tangible asset value, as represented by its
invested capital, as well as the value attributed to the company's asset
management franchise. Asset management franchise value represents management's
estimate of the value attributable to the company's asset management activities
that is not otherwise included in net tangible asset value, based on current
capital under management, associated fee arrangements, and potential growth.
Cash flow from operations, invested capital and intrinsic value per share are
non-IFRS measures which do not have any standard meaning prescribed by IFRS and
therefore may not be comparable to similar measures presented by other
companies. The company provides additional information on the determination of
cash flow from operations, invested capital and intrinsic value and a
reconciliation between cash flow from operations and net income attributable to
Brookfield shareholders and invested capital and intrinsic value and common
equity in the Supplemental Information available at www.brookfield.com.
Intrinsic Value
The intrinsic value of Brookfield's common equity was $39.31 per share at June
30, 2011. This includes net tangible asset value of $33.26 per share and $6.05
per share related to the company's asset management franchise. Please see page 5
of this release for further information on the company's intrinsic value.
Dividend Declaration
The Board of Directors declared a dividend of US$0.13 per share, payable on
November 30, 2011, to shareholders of record as at the close of business on
November 1, 2011. The Board also declared all of the regular monthly and
quarterly dividends on its preferred shares.
Information on Brookfield Asset Management's declared share dividends can be
found on the company's web site under Investors/Stock and Dividend Information.
Additional Information
The Letter to Shareholders and the company's Supplemental Information for the
quarter ended June 30, 2011 contain further information on the company's
strategy, operations and financial results. Shareholders are encouraged to read
these documents, which are available on the company's web site.
The attached statements are based primarily on information that has been
extracted from our unaudited financial statements for the quarter ended June 30,
2011, which have been prepared using International Financial Reporting
Standards. The amounts have not been audited and are not subject to review by
Brookfield's external auditor.
Brookfield Asset Management Inc. is a global alternative asset manager with
approximately $150 billion in assets under management. We have over a 100-year
history of owning and operating assets with a focus on real estate,
infrastructure, power and private equity. We have a range of public and private
investment products and services, which leverage our expertise and experience
and provide us with a distinct competitive advantage in the markets where we
operate. Brookfield is co-listed on the New York and Toronto Stock Exchanges
under the symbol BAM and on NYSE Euronext under the symbol BAMA. For more
information, please visit our web site at www.brookfield.com.
Please note that Brookfield's previous audited annual and unaudited quarterly
reports have been filed on EDGAR and SEDAR and can also be found in the investor
section of our web site at www.brookfield.com. Hard copies of the annual and
quarterly reports can be obtained free of charge upon request.
For more information, please visit our web site at www.brookfield.com.
Note: This news release contains forward-looking information within the meaning
of Canadian provincial securities laws and "forward-looking statements" within
the meaning of Section 27A of the U.S. Securities Act of 1933, as amended,
Section 21E of the U.S. Securities Exchange Act of 1934, as amended, "safe
harbour" provisions of the United States Private Securities Litigation Reform
Act of 1995 and in any applicable Canadian securities regulations. The words
"continue," "expect," "intend," "believe," derivations thereof and other
expressions, including conditional verbs such as "may," "will," "could,"
"would," and "should," are predictions of or indicate future events, trends or
prospects or identify forward-looking statements. Forward-looking statements in
this news release include statements with respect to: our ability to increase
our cash flow organically and through disciplined acquisitions; the fundraising
for seven funds seeking total third party commitments of more than $4 billion
over 2011 and 2012; our refinancing initiatives; our growth opportunities,
including expansion of our existing operations, development activities and
potential acquisitions; the spin-off of 30 non-core malls in our U.S. retail
operations; and other statements with respect to our beliefs, outlooks, plans,
expectations and intentions. Although Brookfield Asset Management believes that
its anticipated future results, performance or achievements expressed or implied
of such assets by the forward-looking statements and information are based upon
reasonable assumptions and expectations, the reader should not place undue
reliance on forward-looking statements and information as such statements and
information involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of the company
to differ materially from anticipated future results, performance or achievement
expressed or implied by such forward-looking statements and information.
Factors that could cause actual results to differ materially from those
contemplated or implied by forward-looking statements include: economic and
financial conditions in the countries in which we do business; the behaviour of
financial markets, including fluctuations in interest and exchange rates;
availability of equity and debt financing; strategic actions including
dispositions; the ability to complete and effectively integrate acquisitions
into existing operations and the ability to attain expected benefits; adverse
hydrology conditions; regulatory and political factors within the countries in
which the company operates; availability of new tenants to fill property
vacancies; tenant bankruptcies; acts of God, such as earthquakes and hurricanes;
the possible impact of international conflicts and other developments including
terrorist acts; changes in accounting policies to be adopted under IFRS; and
other risks and factors detailed from time to time in the company's form 40-F
filed with the Securities and Exchange Commission as well as other documents
filed by the company with the securities regulators in Canada and the United
States, including the company's most recent Management's Discussion and Analysis
of Financial Results under the heading "Business Environment and Risks."
We caution that the foregoing factors that may affect future results are not
exhaustive. When relying on our forward-looking statements to make decisions
with respect to Brookfield Asset Management, investors and others should
carefully consider the foregoing factors and other uncertainties and potential
events. Except as required by law, the company undertakes no obligation to
publicly update or revise any forward-looking statements or information, whether
written or oral, as a result of new information, future events or otherwise.
STATEMENTS OF INVESTED CAPITAL AND INTRINSIC VALUE
June 30 December 31
(Unaudited) 2011 2010
US$ millions (except per share amounts)
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Assets
Operating platforms
Renewable power generation $ 7,879 $ 7,492
Commercial properties 9,613 6,909
Infrastructure 1,983 1,905
Development activities 3,594 3,184
Private equity and finance 1,930 2,155
Cash and financial assets 1,763 1,543
Other assets 715 919
Asset management and other services 1,943 1,800
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$ 29,420 $ 25,907
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Liabilities
Corporate borrowings $ 3,330 $ 2,905
Subsidiary borrowings 921 858
Other liabilities 1,512 1,556
Capitalization
Capital securities 695 669
Shareholders' equity
Preferred equity 1,893 1,658
Common equity (net tangible asset value) 21,069 18,261
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23,657 20,588
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$ 29,420 $ 25,907
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Intrinsic value per share
Net tangible asset value $ 33.26 $ 30.96
Asset management franchise value 6.05 6.49
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Intrinsic value $ 39.31 $ 37.45
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Notes:
The statements above differ from the company's Consolidated Balance Sheets
contained in its quarterly financial statements, which are prepared in
accordance with IFRS. Readers are encouraged to consider both bases of
presentation in assessing Brookfield Asset Management's financial position
and to refer to the company's Financial Review and Supplemental Information,
available at http://www.brookfield.com/, which contains a full
reconciliation between these two bases of presentation.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months Six months
(Unaudited) ended ended
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For the period ended June 30
US$ millions (except per share
amounts) 2011 2010 2011 2010
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Total revenues $ 4,136 $ 3,376 $ 7,719 $ 6,407
Asset management and other services 95 78 171 149
Revenues less direct operating costs
Renewable power generation 220 164 406 403
Commercial properties 383 300 693 579
Infrastructure 200 58 388 105
Development activities 83 112 135 182
Private equity and finance 151 104 220 178
Equity accounted income 173 121 350 236
Investment and other income 72 177 221 319
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1,377 1,114 2,584 2,151
Expenses
Interest 564 437 1,110 864
Operating costs 118 109 233 202
Current income taxes 21 25 54 46
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Net income prior to other items 674 543 1,187 1,039
Other items
Fair value changes 1,088 (1) 1,370 127
Depreciation and amortization (231) (208) (452) (387)
Deferred income tax (103) 39 (107) 3
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Net income $ 1,428 $ 373 $ 1,998 $ 782
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Net income attributable to:
Brookfield shareholders $ 838 $ 89 $ 1,116 $ 253
Non-controlling interests 590 284 882 529
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$ 1,428 $ 373 $ 1,998 $ 782
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Net income per share
Diluted $ 1.26 $ 0.12 $ 1.67 $ 0.37
Basic $ 1.32 $ 0.12 $ 1.74 $ 0.38
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Notes:
The foregoing table includes the results attributable to non-controlling
interests whereas the corporation's segmented operating results presented
elsewhere do not
RECONCILIATION OF NET INCOME TO CASH FLOW FROM OPERATIONS
(Unaudited) Three months ended Six months ended
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For the period ended June 30
US$ millions 2011 2010 2011 2010
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Net income attributable to
Brookfield shareholders
(see page 6) $ 838 $ 89 $ 1,116 $ 253
Adjust for the following items(1)
Fair value changes (768) 5 (924) (58)
Depreciation and amortization 174 184 338 341
Deferred income tax 37 (53) (21) (30)
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Attributable to Brookfield
shareholders 281 225 509 506
Add: disposition and monetization
gains(2) 61 102 64 187
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Cash flow from operations $ 342 $ 327 $ 573 $ 693
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1. Excludes amounts attributable to non-controlling interests
2. Represents gains that are not recorded in net income
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