Brookfield Asset Management Inc. (NYSE:BAM) (TSX:BAM.A)
(EURONEXT:BAMA)
Investors, analysts and other interested parties can access
Brookfield Asset Management's 2013 Second Quarter Results as well
as the Shareholders' Letter and Supplemental Information on
Brookfield's website under the Investors/Financial Reports section
at www.brookfield.com.
The conference call can be accessed via webcast on August 9,
2013 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 10:50
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 June 30, 2013.
"Asset management fees increased 72% during the quarter and
virtually all of our operating groups are performing well and
positioned for growth. We closed a number of realizations and
raised over $14 billion of fund commitments for new investments,"
commented Bruce Flatt, CEO of Brookfield. "We are also seeing
attractive opportunities to put money to work in all of our
businesses."
-- Funds from operations ("FFO") for the second quarter of 2013 increased
192% to $464 million, or $0.68 per share.
-- Net income attributable to shareholders increased 67% during the second
quarter to $230 million, or $0.31 per share.
-- The company's annualized fee base increased 21% over March 31, 2013 to
$932 million, including $557 million of annualized base management fees
and incentive distributions, and $375 million of annualized carried
interests, based on targeted fund returns.
-- Fee bearing capital in listed, private and public funds increased by $4
billion, increasing fee bearing capital under management to
approximately $78 billion.
-- Subsequent to quarter end, our flagship private global opportunistic
property fund was closed with total commitments of $4.4 billion.
-- Realizations of nearly $6 billion of proceeds were closed, which return
significant cash to limited partners and increase our balance sheet
resources.
Financial Results
Three months ended Six months ended
June 30 June 30
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US$ millions (except per share
amounts) 2013 2012 2013 2012
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Funds from operations for common
shareholders(1,2) $ 464 $ 159 $ 1,153 $ 674
Net income(3) 802 379 1,499 1,101
Per Brookfield share
Funds from operations(1,2) $ 0.68 $ 0.20 $ 1.72 $ 0.97
Net income(1) 0.31 0.17 0.82 0.78
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1. Excludes amounts attributable to non-controlling interests
2. Non-IFRS measure - see Basis of Presentation on page 3
3. Consolidated basis - includes amounts attributable to non-controlling
interests
Our financial results reflect substantial increases in asset
management fees as a result of higher capital under management;
improved hydrology levels and higher spot market power pricing in
our renewable power operations; and higher prices and volumes
related to operations with exposure to the continuing U.S. housing
recovery.
FFO for Brookfield shareholders increased to $464 million.
Disposition gains included in FFO were $58 million in the current
quarter compared to disposition losses of $87 million in the
comparable 2012 quarter. This excludes gains which will be booked
on a number of realizations which were closed after quarter end and
therefore will be recorded in the third quarter.
FFO and net income for the six months ended June 30, 2013 were
$1,153 million and $1,499 million, both of which increased
substantially over the same period in the prior year.
Operating Highlights
We expanded our asset management franchise.
Our fee-bearing capital under management increased to
approximately $78 billion, up 30% from year end. We held a final
close on our $4.4 billion global opportunistic property fund and
have already invested $1.1 billion of this capital in European,
Australian and North American commercial properties. We continue to
move forward with fundraising initiatives for other real asset
strategies, marketing five private funds. We hold nearly $10
billion of committed client capital that can be invested across our
platforms.
Our flagship listed entities expanded their operations and are
well positioned for future growth in cash distributions and net
asset value, which will increase our performance fee income.
We generated additional liquidity through asset sales, equity
issuance, fund formations and debt financings.
We sold investments in timberlands, a utility and a paper and
packaging company at attractive valuations. This generated $4.2
billion in gross proceeds, and increases liquidity by approximately
$2.0 billion after repayment of project debt and distributions to
private fund clients. Our retail property operations raised a total
of $1.6 billion through asset sales including a 50% interest in two
Las Vegas shopping malls and, subsequent to quarter end, a minority
interest in a Brazilian shopping center company.
We continue to refinance debt at attractive long term rates. We
refinanced $1.9 billion within our retail property portfolio,
generating proceeds of $300 million, and $1.1 billion of
refinancings in our commercial property portfolio, resulting in
$500 million of proceeds.
We increased cash flow with operational improvements in all of
our major businesses.
Our infrastructure business recorded a significant increase in
traffic on its Australian railway, where cash flow doubled
year-over-year after an expansion of the network. Our renewable
power business achieved higher prices on sales of uncontracted spot
power and experienced significant cash contributions from U.S.
hydroelectric and wind assets acquired in the past nine months.
The continued recovery in U.S. housing markets resulted in
strong performance from a number of our private equity investments.
We continued to renew the mix of stores in our retail portfolio,
and signed new leases at rates that were 7% higher than expiring
leases. We signed 2.0 million square feet of new leases in our
office property business at rates that were 8% higher than the
previous rents.
We invested in growth opportunities in all our major operating
businesses, increasing the capital deployed by both our listed
entities and private funds.
We announced or completed acquisitions and capital expansions
during the quarter, deploying $1 billion of capital on behalf of
clients and Brookfield shareholders. We expect these businesses
will make a significant contribution to our future cash flows and
value increases.
In our property business, we acquired a European warehouse
company with significant growth potential, broke ground on an
office tower in Perth, Australia and moved forward with plans to
acquire a portfolio of office buildings in downtown Los Angeles.
Subsequent to quarter end, we launched construction of a flagship
2.4 million square foot office project in Calgary, with a leading
energy company as our lead tenant. Our retail property business is
investing $900 million on renovations at 24 properties, including
flagship malls in Hawaii, Nevada and Arizona.
Our infrastructure group expects to complete construction of an
$830 million electrical transmission system in Texas this quarter.
Our renewable power business continues to advance new hydroelectric
and wind projects in North and South America. In our private equity
business, we continue to harvest capital from housing related
businesses, while we acquired a Canadian cold storage company, made
a loan to a mining company and invested in a number of businesses
with exposure to the U.S. natural gas market.
Dividend Declaration
The Board of Directors declared a quarterly dividend of US$0.15
per share (representing US$0.60 per annum), payable on November 30,
2013, to shareholders of record as at the close of business on
November 1, 2013. The Board also declared all of the regular
monthly and quarterly dividends on its preferred shares.
Information on our dividends can be found on our website under
Investors/Stock and Dividend Information.
Basis of Presentation
This news release and accompanying financial statements are
based on International Financial Reporting Standards ("IFRS")
unless otherwise noted and make reference to funds from operations,
which is a non-IFRS measure.
Funds from operations is defined as net income prior to fair
value changes, depreciation and amortization, and deferred income
taxes, and includes certain disposition gains that are not
otherwise included in net income as determined under IFRS. Funds
from operations also include the company's proportionate share of
equity accounted investments' funds from operations. 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.
Funds from operations and its per share equivalent 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 and a reconciliation
between funds from operations and net income attributable to
Brookfield shareholders, in the Supplemental Information available
at www.brookfield.com.
Additional Information
The Letter to Shareholders and the company's Supplemental
Information for the three months ended June 30, 2013 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 website.
The attached statements are based primarily on information that
has been extracted from our interim financial statements for the
three and six months ended June 30, 2013, 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 over $175 billion in assets under management. The
company has over a 100-year history of owning and operating assets
with a focus on property, renewable power, infrastructure and
private equity. Brookfield offers a range of public and private
investment products and services, and is co-listed on the New York
and Toronto Stock Exchanges under the symbol BAM and BAM.A,
respectively. For more information, please visit our website 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 its website 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 website 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 harbor"
provisions of the United States Private Securities Litigation
Reform Act of 1995 and in any applicable Canadian securities
regulations. Forward-looking statements include statements that are
predictive in nature, depend upon or refer to future events or
conditions, include statements regarding the operations, business,
financial condition, expected financial results, performance,
prospects, opportunities, priorities, targets, goals, ongoing
objectives, strategies and outlook of the company and its
subsidiaries, as well as the outlook for North American and
international economies for the current fiscal year and subsequent
periods, and include words such as "expects," "anticipates,"
"plans," "believes," "estimates," "seeks," "intends," "targets,"
"projects," "forecasts" or negative versions thereof and other
similar expressions, or future or conditional verbs such as "may,"
"will," "should," "would" and "could."
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
because they involve known and unknown risks, uncertainties and
other factors, many of which are beyond our control, 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, but are not limited to: the impact or unanticipated impact
of general economic, political and market factors in the countries
in which we do business; the behavior of financial markets,
including fluctuations in interest and foreign exchange rates;
global equity and capital markets and the availability of equity
and debt financing and refinancing within these markets; strategic
actions including dispositions; the ability to complete and
effectively integrate acquisitions into existing operations and the
ability to attain expected benefits; changes in accounting policies
and methods used to report financial condition (including
uncertainties associated with critical accounting assumptions and
estimates); the effect of applying future accounting changes;
business competition; operational and reputational risks;
technological change; changes in government regulation and
legislation within the countries in which we operate; changes in
tax laws, catastrophic events, 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 our documents filed with the
securities regulators in Canada and the United States.
We caution that the foregoing list of important factors that may
affect future results is not exhaustive. When relying on our
forward-looking statements, 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, that may be as
a result of new information, future events or otherwise.
CONSOLIDATED BALANCE SHEETS
(Unaudited) June 30 December 31
US$ millions 2013 2012
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Assets
Cash and cash equivalents $ 3,264 $ 2,850
Other financial assets 3,514 3,111
Accounts receivable and other 6,774 6,952
Inventory 6,348 6,581
Assets classified as held for sale 4,400 -
Investments 11,478 11,618
Investment properties 33,134 33,161
Property, plant and equipment 30,294 31,148
Sustainable resources 503 3,516
Intangible assets 5,184 5,770
Goodwill 1,676 2,490
Deferred income tax assets 1,651 1,665
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Total Assets $ 108,220 $ 108,862
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Liabilities and Equity
Accounts payable and other $ 9,873 $ 11,652
Corporate borrowings 3,361 3,526
Non-recourse borrowings
Property-specific mortgages 32,406 33,720
Subsidiary borrowings 8,357 7,585
Deferred income tax liabilities 6,024 6,425
Capital securities 940 1,191
Interests of others in consolidated funds 505 425
Liabilities associated with assets classified
as held for sale 2,660 -
Equity
Preferred equity 3,098 2,901
Non-controlling interests in net assets 24,308 23,287
Common equity 16,688 18,150
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Total Equity 44,094 44,338
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Total Liabilities and Equity $ 108,220 $ 108,862
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CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended Six months ended
------------------- --------------------
(Unaudited)
For the period ended June 30
US$ millions (except per share
amounts) 2013 2012 2013 2012
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Revenues $ 5,166 $ 4,425 $ 10,117 $ 8,464
Direct costs (3,606) (3,284) (7,026) (6,148)
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1,560 1,141 3,091 2,316
Equity accounted income 224 257 490 645
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1,784 1,398 3,581 2,961
Expenses
Interest (668) (614) (1,323) (1,269)
Corporate costs (36) (35) (80) (77)
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Net income prior to valuation items
and income tax 1,080 749 2,178 1,615
Valuation items
Fair value changes 465 (100) 526 243
Depreciation and amortization (373) (287) (738) (584)
Income tax (370) 17 (467) (173)
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Net income $ 802 $ 379 $ 1,499 $ 1,101
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Net income attributable to:
Brookfield shareholders $ 230 $ 138 $ 590 $ 554
Non-controlling interests 572 241 909 547
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$ 802 $ 379 $ 1,499 $ 1,101
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Net income per share
Diluted $ 0.31 $ 0.17 $ 0.82 $ 0.78
Basic 0.31 0.17 0.84 0.80
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RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS(1)
Three months ended Six months ended
----------------------------------------
(Unaudited)
For the period ended June 30
US$ millions 2013 2012 2013 2012
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Net income prior to valuation items
and income tax (see above) $ 1,080 $ 749 $ 2,178 $ 1,615
Adjust for:
Fair value changes within equity
accounted income (23) (111) (91) (362)
Current income taxes (47) (42) (81) (69)
Disposition gains not included
in net income 86 (68) 436 223
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1,096 528 2,442 1,407
Non-controlling interest (632) (369) (1,289) (733)
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Funds from operations(1) $ 464 $ 159 $ 1,153 $ 674
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Notes:
1. Non-IFRS measure - see Basis of Presentation on page 3
Contacts: Media: Brookfield Asset Management Inc. Andrew Willis,
Communications and Media (416) 369-8236 (416) 363-2856
(FAX)andrew.willis@brookfield.com Investors: Brookfield Asset
Management Inc. Amar Dhotar, Investor Relations (416) 359-8629
(416) 363-2856 (FAX)amar.dhotar@brookfield.com
www.brookfield.com
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