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
FOR FURTHER INFORMATION PLEASE CONTACT:
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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