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
Contacts: Media: SVP, Communications & Media Andrew Willis
(416) 369-8236 (416) 363-2856 (FAX)andrew.willis@brookfield.com
Investors: SVP, Investor Relations Katherine Vyse (416) 369-8246
(416) 363-2856
(FAX)katherine.vyse@brookfield.comwww.brookfield.com
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