Brookfield Asset Management Inc. (TSX:BAM.A)(NYSE:BAM)(EURONEXT:BAMA) -
Investors, analysts and other interested parties can access Brookfield Asset
Management's year end 2011 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 year end 2011 Results conference call can be accessed via webcast on
February 17, 2012 at 11:00 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 11 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 and year ended December 31, 2011. The financial results are based on
International Financial Reporting Standards ("IFRS") unless otherwise noted.
Three months ended Years ended
December 31 December 31
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US millions (except per
share amounts) 2011 2010 2011 2010
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Total return(1)
- for Brookfield
shareholders $ 1,868 $ 419 $ 3,345 $ 2,054
Net income
- total $ 960 $ 2,071 $ 3,674 $ 3,195
- for Brookfield
shareholders 588 1,089 1,957 1,454
Funds from operations(1)
- total $ 611 $ 447 $ 2,355 $ 2,196
- for Brookfield
shareholders 271 161 1,052 1,106
Per Brookfield share
Total return(1) $ 2.98 $ 0.66 $ 5.33 $ 3.23
Net income $ 0.86 $ 1.80 $ 2.89 $ 2.33
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1. Non-IFRS measure. See Basis of Presentation on page 4 for details.
"We have momentum across our global businesses, with growth in assets under
management and our investment teams deploying capital into property, power and
infrastructure assets. We continue to be focused on increasing our cash flow
through both organic growth and opportunistic acquisitions," commented Bruce
Flatt, CEO of Brookfield. "Our performance has been strong throughout a period
of economic instability, and virtually all of our operations are growing as the
economy continues to recover."
Highlights
We recorded strong financial and operational performance during 2011, and remain
well positioned for future growth. We expect to increase the cash we generate
and the value of our assets through both organic expansion and new initiatives,
using our strong balance sheet and operational expertise. The following list
summarizes our more important achievements during the year:
- We generated Total Return for Brookfield shareholders of $3.3 billion (or
$5.33 per share), representing a 14% return, compared to $2.1 billion or
10% in the prior year.
Improved performance and economic conditions in most of our operations
contributed to this favourable result. Valuation gains contributed $2.4
billion compared to $1.0 billion in the prior year, while funds from
operations were relatively unchanged at $1.0 billion.
- Net income on a consolidated basis totalled $3.7 billion, of which $2.0
billion (or $2.89 per share) accrued to Brookfield shareholders and
represented an important component of Total Return.
This result compares favourably to the $3.2 billion of consolidated net
income recorded in 2010, of which $1.5 billion ($2.33 per fully diluted
share) accrued to Brookfield shareholders. Comprehensive income, which
includes valuation adjustments to our power generation and infrastructure
assets in addition to net income, increased to $4.6 billion from $3.4
billion, of which $2.8 billion accrued to Brookfield shareholders (2010
$1.2 billion).
- Funds from operations totalled $2.4 billion on a consolidated basis, of
which $1.1 billion ($1.51 per share) accrued to Brookfield shareholders.
We achieved improved results across our major business platforms.
Investments in certain cyclical businesses that are tied to long-term
growth remain below historic levels due to economic weakness, but are
expected to outperform over the long term. Our strategy of building
global operating units continues to generate strong risk-adjusted
returns. Our commercial office business achieved record leasing volumes,
our retail unit acquired in 2010 has successfully emerged from its
restructuring, our hydro power unit now ranks among the world's largest
public renewable power companies and our infrastructure business is well
positioned as a global leader, with a number of growth opportunities.
- We continued to expand our asset management franchise with both listed
and private entities.
We launched a listed global renewable power business that ranks as one of
the world's leading hydro power companies and are advancing capital
campaigns for eight private funds with a goal of obtaining further third
party commitments of approximately $5 billion.
- We raised $27 billion of capital in 2011 through asset sales, equity
issuance, fund formation and debt financings.
Low interest rates, receptive credit markets and strong investor interest
in our income-generating, high quality assets continued to support our
capital raising and refinancing initiatives. Our financing activities
enhanced our liquidity, refinanced near-term maturities, lowered our cost
of capital and extended terms, and funded new investment initiatives.
Core liquidity was $3.9 billion at December 31, 2011.
- Our operating teams delivered strong organic growth that increased the
value and cash flows of our assets.
We leased a record 11 million square feet of commercial office
properties, with new rental rates that were on average 10% higher than
expiring rents. We recycled capital in our property business by
reinvesting $0.6 billion in the acquisition of six office buildings and
additional interest in the U.S. Office Fund. We completed construction on
four power facilities for close to $1 billion, adding 280 megawatts of
power to a portfolio that now generates energy valued at approximately $1
billion annually.
Our Australian railway began a $600 million expansion that is expected to
be completed by 2014, underpinned by take-or-pay contracts with major
resource companies. Our Brazilian residential property businesses
completed a record R$3.9 billion of launches and R$4.4 billion of
contracted sales, reflecting demand for housing from an increasingly
affluent population. Our U.S. retail business, focused on high quality,
destination shopping centers, is benefitting from continued sales growth
and improving terms on leases, after spinning out a portfolio of 30
smaller, neighborhood malls as a new listed entity, which we assisted in
forming.
We expanded our real estate services and global relocation businesses
through an acquisition that made both among the largest companies
respectively in their sectors. Our private equity business has
approximately $8 billion invested in promising opportunities, including
investments in residential homebuilding, lumber and natural gas, all out
of favour sectors which we think will each turn in the foreseeable
future.
- We are working on a number of attractive growth opportunities, including
entry into new sectors and regions and the launch of new projects.
We acquired part of the toll road that circles Santiago, Chile, and made
our first investment in our Colombia Fund by purchasing an electrical
distribution network for $440 million. Australian regulators approved
plans to double the size of our coal terminal, already among the largest
in the world, and we are now doing a feasibility study on its expansion.
We have begun construction on our Texas electricity transmission system,
a $750 million project launched two years ago, and expect to complete the
network in 2013.
We are moving forward with four new hydro and wind projects in North
America and a number of renewable power developments in Brazil that are
expected to add 195 megawatts of installed capacity to our operations and
cost a total of $650 million. Commercial office development activities
are focused on five projects in North America, Australia and the UK that
comprise approximately nine million square feet, with a total value once
constructed of approximately $7 billion. We launched three new
international funds and platforms, two in India and one in Dubai with
proven local partners.
- We are executing our strategy of having flagship public entities in each
of our major areas of operational expertise.
The successful launch of our listed global renewable energy partnership
and solid performance from our public infrastructure business since it
was created in 2008 show there is strong investor support for high
quality public entities that deliver growth and attractive cash
distributions. The next step in our plan would be the launch of a
flagship public real estate partnership this year that would hold all our
property assets, and rank among the largest and most diversified real
estate businesses, with favourable access to capital. We would maintain a
meaningful ownership interest in this entity, which would have a global
growth strategy, a market capitalization of approximately $10 billion and
a high dividend payout policy, and be listed on the New York and Toronto
Stock Exchanges. This initiative should enhance our asset management
franchise, and create value for both Brookfield and unitholders in the
partnership.
- We increased our dividend by 8%.
This increase reflects the resumption of our policy of increasing the
distributions over time by an amount that corresponds to the growth in
cash flow generated from the business, while ensuring we retain
additional capital to reinvest in our business.
Intrinsic Value of Common Equity
The intrinsic value of Brookfield's common equity was $40.99 per share at
December 31, 2011. This includes net tangible asset value of $34.52 per share
and $6.47 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 quarterly dividend of US$0.14 per share
(representing US$0.56 per share on an annualized basis), payable on May 31,
2012, to shareholders of record as at the close of business on May 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.
Basis of Presentation
This news release and accompanying financial statements make reference to total
return, funds from operations, invested capital and intrinsic value.
Total return is defined as comprehensive income excluding deferred tax expenses
and the impact of foreign currency fluctuations on the long-term capital
invested in non U.S. operations, and including incremental valuation adjustments
for assets not otherwise revalued under IFRS. Brookfield uses total return to
assess the performance of the overall business as well as individual business
units.
Funds 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 funds 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.
Total return, funds from operations, invested capital and intrinsic value and
their per share equivalents 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 funds from operations, invested capital and
intrinsic value and a reconciliation between funds 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.
Additional Information
The Letter to Shareholders and the company's Supplemental Information for the
year ended December 31, 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 year ended December
31, 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 property, renewable
power, infrastructure 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.
Note: This news release contains forward-looking information within the meaning
of Canadian provincial securities laws and applicable regulations and
"forward-looking statements" within the meaning of the "safe harbour" provisions
of the United States Private Securities Litigation Reform Act of 1995. The words
"continue," "expect," "believe," "think," "focus," "goal," "advance," "grow,"
and derivations thereof and other expressions, including conditional verbs such
as "may," "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 the
following: our focus on increasing cash flow through organic growth and
opportunistic acquisitions; the growth of our operations as the economy
recovers; the increase in the cash we generate and the value of our assets;
capital campaigns for our private funds; our distribution policy and the payment
of dividends; the potential launch of a flagship public entity for our property
group; the expansion of our rail lines in Australia; the future performance of
the residential homebuilding, lumber and natural gas sectors; the expansion of
our Australian coal terminal; the construction of our electricity transmission
project in Texas; the development of renewable energy projects in North America
and Brazil; our commercial office development activities in North America,
Australia and the UK; and other statements with respect to our beliefs,
outlooks, plans, expectations and intentions. Although we believe that our
anticipated future results, performance or achievements expressed or implied 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
our actual results, performance or achievements 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 the following:
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
the ability to acquire or develop high quality assets; 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 we operate; availability of new
tenants to fill property vacancies; acts of God, such as earthquakes and
hurricanes; the possible impact of international conflicts and other
developments including terrorist acts; 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 us with the securities regulators
in Canada and the United States, including our 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 us, investors and others should carefully consider the foregoing
factors and other uncertainties and potential events. Except as required by law,
we undertake 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(1), (2)
(Unaudited)
As at December 31
US millions 2011 2010
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Assets
Operating platforms
Property $ 11,109 $ 7,527
Renewable Power 7,977 7,492
Infrastructure 2,600 1,905
Private equity 4,530 4,721
Cash and financial assets 1,461 1,543
Asset management services and other assets(3) 7,193 6,719
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$ 34,870 $ 29,907
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Liabilities
Corporate borrowings $ 3,701 $ 2,905
Subsidiary borrowings 988 858
Other liabilities 1,287 1,556
Capitalization
Capital securities 656 669
Shareholders' equity
Preferred equity 2,140 1,658
Common equity at intrinsic value(4) 26,098 22,261
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28,894 24,588
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$ 34,870 $ 29,907
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Notes:
1. The statements above differ from the company's Consolidated Balance
Sheets contained in its financial statements, which are prepared in
accordance with IFRS. See Basis of Presentation on page 4 of this news
release. 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 enables a reconciliation between
these two bases of presentation.
2. Invested capital and intrinsic value are non-IFRS measures.
3. Includes asset management franchise value.
4. Intrinsic value includes $4,250 million (2010 $4,000 million) of value
ascribed to our asset management franchise.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) Three Months Ended Years Ended
----------------------------------------
For the periods ended December 31
US millions (except per share
amounts) 2011 2010 2011 2010
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Total revenues $ 4,122 $ 3,666 $ 15,921 $ 13,623
Asset management services 98 126 388 365
Revenues less direct operating costs
Property 495 364 1,678 1,495
Renewable Power 146 188 740 748
Infrastructure 182 76 756 221
Private equity 206 135 538 628
Equity accounted income 584 376 2,205 765
Investment and other income 73 73 328 503
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1,784 1,338 6,633 4,725
Expenses
Interest 620 513 2,352 1,829
Operating costs 129 121 481 417
Current income taxes 17 13 97 97
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Net income prior to other items 1,018 691 3,703 2,382
Other items
Fair value changes 410 1,605 1,286 1,651
Depreciation and amortization (228) (215) (904) (795)
Deferred income tax (240) (10) (411) (43)
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Net income $ 960 $ 2,071 $ 3,674 $ 3,195
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Net income attributable to:
Brookfield shareholders $ 588 $ 1,089 $ 1,957 $ 1,454
Non-controlling interests 372 982 1,717 1,741
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$ 960 $ 2,071 $ 3,674 $ 3,195
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Net income per share
Diluted $ 0.86 $ 1.80 $ 2.89 $ 2.33
Basic $ 0.90 $ 1.86 $ 3.00 $ 2.40
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Note:
The foregoing table includes the results attributable to non-controlling
interests whereas the corporation's segmented operating results discussed
elsewhere do not.
RECONCILIATION OF COMPREHENSIVE INCOME TO TOTAL RETURN(1)
(Unaudited) Three Months Ended Years Ended
----------------------------------------
For the periods ended December 31
US millions (except per share
amounts) 2011 2010 2011 2010
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Net income attributable to
Brookfield shareholders (see page
7)(2) $ 588 $ 1,089 $ 1,957 $ 1,454
Other comprehensive income (loss)(2) 1,544 (424) 795 (226)
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Comprehensive income(2) 2,132 665 2,752 1,228
remove impact of:
Deferred income taxes(2) 389 (385) 102 (422)
Foreign currency revaluations(2) (158) (186) 443 (276)
add impact of:
Fair value changes not included in
IFRS (466) 347 154 1,599
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1,897 441 3,451 2,129
less: preferred share dividends (29) (22) (106) (75)
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Total return(3) $ 1,868 $ 419 $ 3,345 $ 2,054
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- Per share $ 2.98 $ 0.66 $ 5.33 $ 3.23
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(Unaudited) Three Months Ended Years Ended
----------------------------------------
For the periods ended December 31
US millions 2011 2010 2011 2010
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Total return consists of
Funds from operations $ 271 $ 161 $ 1,052 $ 1,106
Valuation gains 1,626 280 2,399 1,023
less: preferred share dividend (29) (22) (106) (75)
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$ 1,868 $ 419 $ 3,345 $ 2,054
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Notes:
1. See Basis of Presentation on page 4.
2. Excludes amounts attributable to non-controlling interests.
3. Non-IFRS measure.
RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS(1)
(Unaudited) Three Months Ended Years Ended
----------------------------------------
For the periods ended December 31
US millions 2011 2010 2011 2010
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Net income prior to other items (see
page 7) $ 1,018 $ 691 $ 3,703 $ 2,382
Adjust for: fair value changes
within equity accounted income (425) (244) (1,529) (271)
Disposition gains recorded in
equity under IFRS 18 - 181 85
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611 447 2,355 2,196
Non-controlling interest (340) (286) (1,303) (1,090)
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Funds from operations(2) $ 271 $ 161 $ 1,052 $ 1,106
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Notes:
1. See Basis of Presentation on page 4.
2. Non-IFRS measure.
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