Brookfield Asset Management Inc. (TSX:BAM.A)(NYSE:BAM)(EURONEXT:BAMA) -
Investors, analysts and other interested parties can access Brookfield Asset
Management's 2011 Third Quarter Results as well as the Shareholders' Letter and
Supplemental Information on Brookfield's web site under the Investor
Centre/Financial Reports section at www.brookfield.com.
The 2011 Third Quarter Results conference call can be accessed via webcast on
November 11, 2011 at 10 a.m. Eastern Time at 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 a.m. Eastern Time. The
teleconference taped rebroadcast can be accessed at 1-800-319-6413 or
1-604-638-9010 (Password 2811#).
Brookfield Asset Management Inc. today announced its financial results for the
quarter ended September 30, 2011. The financial results are based on
International Financial Reporting Standards ("IFRS") unless otherwise noted.
Three months ended Nine months ended
September 30 September 30
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US$ millions (except per share 2011 2010 2011 2010
amounts)
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Net Income
- total $ 716 $ 342 $ 2,714 $ 1,124
- for Brookfield shareholders 253 112 1,369 365
Net operating cash flow
- total $ 465 $ 625 $ 1,810 $ 1,851
- for Brookfield shareholders 241 354 814 1,047
Per share
Net income $ 0.36 $ 0.16 $ 2.03 $ 0.53
Net operating cash flow 0.35 0.57 1.18 1.70
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"Our businesses continue to generate strong cash flow, reflecting the quality of
our assets, and we are moving forward with many growth initiatives across our
global operations," commented Bruce Flatt, CEO of Brookfield. "Economic
uncertainty and market volatility present both opportunities and challenges;
however, these conditions favour our style of investing."
Highlights
-- Net operating cash flow was $465 million on a consolidated basis, of
which $241 million ($0.35 per share) accrued to Brookfield shareholders.
We achieved improved results in most of our operations, although these
were partially offset by the results from our more cyclical businesses
and some of our financial assets which were below our long-term
expectation. We experienced favourable water flows in our power
generating operations and achieved strong leasing results in our
commercial office and retail businesses.
-- Invested capital was virtually unchanged during the quarter prior to the
impact of foreign currency fluctuations.
We generated a total return prior to currency variances of $240 million,
which was derived mostly from operating cash flow. Valuation gains from
our commercial properties and infrastructure assets were offset by
negative mark-to-markets on energy and interest rate contracts.
Volatility in the exchange rates for the Australian, Brazilian and
Canadian currencies against the U.S. dollar decreased our net invested
capital by approximately $1 billion, although approximately half of this
has reversed as at the date of this report.
-- We continued to expand our asset management franchise.
We are in the process of establishing a managed listed fund to own our
global renewable power operations, that is expected to have an initial
market capitalization of approximately $6 billion. We also announced a
partnership with the Investment Corporation of Dubai to form a platform
for investing in real estate with expected commitments of $1 billion. We
are in the process of raising capital for eight funds with the objective
of obtaining total third party commitments of approximately $5 billion.
We issued $460 million of additional equity to co-investors from
Brookfield Infrastructure Partners in October, increasing our fee
bearing capital under management.
-- We completed $6.1 billion of capital raising initiatives in the third
quarter of 2011, bringing the total to $22.1 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. Core liquidity was
$4.1 billion at September 30, 2011.
-- 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 $2.3 billion, which enabled us
to invest $1.9 billion of capital, to expand our asset base and cash
flows across all of our operating segments. This includes the purchase
of interests in two office properties in Melbourne and Perth. We signed
nearly four million square feet of new commercial office leases,
bringing the year-to-date total to more than eight million square feet,
and have a further six million square feet in serious discussions. We
also reached agreement to acquire two key toll roads in Santiago, Chile
at a gross purchase price of $750 million. Our Brazilian residential
businesses completed R$913 million of launches and contracted sales of
R$1,330 million, reflecting continued growth in this market and our U.S.
retail mall interests benefitted from continued sales growth and better
leasing.
-- 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$600 million expansion in our Western Australian rail lines
and are also pursuing an expansion of our coal terminal in Eastern
Australia. We have commenced 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
five projects comprising approximately nine million square feet and a
total value of approximately $7 billion. Our U.S. retail operation is in
the process of spinning off a portfolio of 30 non-core retail malls in
order to focus on its core fortress mall portfolio.
-- We announced a major initiative to combine our renewable power assets
into a single global listed entity.
This entity, to be named Brookfield Renewable Energy Partners ("BREP"),
is expected to be listed on the New York and Toronto stock exchanges,
with a market capitalization of approximately $6 billion, a stable cash
flow profile, and an attractive distribution profile. The launch of this
entity is a major step forward in the further expansion of our asset
management activities. We believe BREP will have favourable access to
capital to fund the substantial anticipated growth of our renewable
power business on an accretive basis to unitholders thereby providing
long-term value creation for both Brookfield and unitholders.
Basis of Presentation
This news release and accompanying financial statements make reference to net
operating cash flows, invested capital and intrinsic value.
Net operating cash flow 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 net operating cash flows 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.
Net operating cash flow, 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
net operating cash flow, invested capital and intrinsic value and a
reconciliation between net operating cash flow 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 $37.93 per share at
September 30, 2011. This includes net tangible asset value of $31.85 per share
and $6.08 per share related to the company's asset management franchise. Please
see page 6 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
February 29, 2012, to shareholders of record as at the close of business on
February 1, 2012. 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 September 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
September 30, 2011, which have been prepared using IFRS. 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 growth initiatives across our global operations; the fundraising for our
private funds; our refinancing initiatives; commercial office leases under
serious discussion; our growth opportunities, including expansion of our
existing operations and potential acquisitions; the development activity across
our businesses; the launch of Brookfield Renewable Energy Partners and our
expectations for this entity; 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
(Unaudited) September 30 December 31
US$ millions (except per share amounts) 2011 2010
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Assets
Operating platforms
Renewable power generation $ 7,495 $ 7,492
Commercial properties 9,754 6,909
Infrastructure 2,050 1,905
Development activities 3,224 3,184
Private equity and finance 1,860 2,155
Cash and financial assets 1,721 1,543
Other assets 707 919
Asset management and other services 1,670 1,800
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$ 28,481 $ 25,907
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Liabilities
Corporate borrowings $ 3,320 $ 2,905
Subsidiary borrowings 949 858
Other liabilities 1,563 1,556
Capitalization
Capital securities 638 669
Shareholders' equity
Preferred equity 1,893 1,658
Common equity (net tangible asset value) 20,118 18,261
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22,649 20,588
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$ 28,481 $ 25,907
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Intrinsic value per share
Net tangible asset value $ 31.85 $ 30.96
Asset management franchise value 6.08 6.49
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Intrinsic value $ 37.93 $ 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 www.brookfield.com, which contains a full reconciliation between
these two bases of presentation.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) Three Months Ended Nine Months Ended
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For the period ended
September 30
US$ millions (except per
share amounts) 2011 2010 2011 2010
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Total revenues $ 4,582 $ 3,550 $ 12,301 $ 9,957
Asset management and other 119 90 290 239
services
Revenues less direct
operating costs
Renewable power generation 188 157 594 560
Commercial properties 387 337 1,080 916
Infrastructure 186 40 574 145
Development activities 82 176 217 358
Private equity and finance 29 90 249 268
Equity accounted income 167 126 517 362
Investment and other income 69 193 290 512
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1,227 1,209 3,811 3,360
Expenses
Interest 622 452 1,732 1,316
Operating costs 119 94 352 296
Current income taxes 26 38 80 84
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Net income prior to other 460 625 1,647 1,664
items
Other items
Fair value changes 544 (54) 1,914 73
Depreciation and (224) (193) (676) (580)
amortization
Deferred income tax (64) (36) (171) (33)
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Net income $ 716 $ 342 $ 2,714 $ 1,124
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Net income attributable to:
Brookfield shareholders $ 253 $ 112 $ 1,369 $ 365
Non-controlling interests 463 230 1,345 759
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$ 716 $ 342 $ 2,714 $ 1,124
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Net income per share
Diluted $ 0.36 $ 0.16 $ 2.03 $ 0.53
Basic $ 0.36 $ 0.16 $ 2.10 $ 0.54
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Notes:
The foregoing table includes the results attributable to non-controlling
interests whereas the corporation's segmented operating results discussed
elsewhere do not.
RECONCILIATION OF NET INCOME TO NET OPERATING CASH FLOW
(Unaudited) Three Months Ended Nine Months Ended
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For the period ended September 30
US$ millions 2011 2010 2011 2010
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Net income attributable to
Brookfield shareholders (see page
7) $ 253 $ 112 $ 1,369 $ 365
Adjust for the following items(1)
Less: Fair value (gains)/losses (190) 64 (1,114) 6
Add back: Depreciation and
amortization 168 169 506 510
Deferred income tax
provisions/(recoveries) 5 9 (16) (21)
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Attributable to Brookfield
shareholders 236 354 745 860
Add: disposition and monetization
gains(2) 5 - 69 187
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Net operating cash flow $ 241 $ 354 $ 814 $ 1,047
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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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