Brookfield Asset Management Inc. (NYSE:BAM)(TSX:BAM.A)(EURONEXT:BAMA) -
Investors, analysts and other interested parties can access Brookfield Asset
Management's 2013 Third 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 November 8, 2013 at 1:30 p.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 1:20 p.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, 2013.
"Fee income and operating performance from all our businesses was strong. In
addition, realizations from investments made during the downturn contributed to
our results," commented Bruce Flatt, CEO of Brookfield. "Clients continue to
allocate capital to our global private funds and the scale, breadth and trading
liquidity of our three flagship listed issuers advanced in the quarter."
-- Funds from operations ("FFO") for the third quarter of 2013 was $1.2
billion, or $1.85 per share, an increase of $970 million from the third
quarter of 2012.
-- Consolidated net income doubled during the third quarter to $1.5
billion, or $1.23 per common share. Total net income for the nine months
increased to $3.0 billion.
-- The company's annualized fee base grew to $992 million, including $562
million of annualized base management fees and incentive distributions,
$55 million of transaction and advisory fees and $375 million of target
annualized carried interests. Subsequent to quarter end we completed the
sale of assets from a private fund consortium and crystallized $558
million of previously accumulated carried interests.
-- Fee bearing capital increased to approximately $80 billion and total
assets under management increased to $184 billion. The fundraising for
our $1 billion timber fund was completed during the quarter, and
subsequent to quarter end, we closed our latest flagship private global
infrastructure fund with commitments of $7 billion.
-- Realizations of investments generated proceeds of nearly $4.1 billion,
returning significant cash to limited partners and increasing our
balance sheet resources.
-- We invested or committed $4.6 billion of total capital in the quarter on
behalf of clients and Brookfield bringing year-to-date investing
activity to $7.4 billion.
Financial Results
Three months ended Nine months ended
September 30 September 30
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US$ millions (except per share
amounts) 2013 2012 2013 2012
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Funds from operations(1,2) $ 1,193 $ 223 $ 2,346 $ 897
Consolidated net income(3) 1,495 875 2,994 1,976
Per Brookfield share
Funds from operations(1,2) $ 1.85 $ 0.30 $ 3.56 $ 1.27
Net income(1) 1.23 0.48 2.05 1.25
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1. Excludes amounts attributable to non-controlling interests
2. See Basis of Presentation on page 4
3. Consolidated basis - includes amounts attributable to non-controlling
interests
The increase in FFO reflects strong operating performance and gains from several
large realizations. Disposition gains included in FFO totalled $851 million for
the quarter, compared to losses of $77 million in the prior year, and included a
$525 million gain on the settlement of a long dated interest rate contract, as
well as gains on the sales of North American timberlands and private equity
investments.
FFO from operating activities reflects continued growth in all of our
operations, including a substantial increase in fee bearing capital, leading to
higher fee related earnings as well as a return to normal hydroelectric
generation levels following levels that were significantly below average in the
prior year.
FFO and net income for the nine months ended September 30, 2013 was $2.3 billion
and $3.0 billion, respectively, both of which increased substantially over
comparable periods in the prior year.
Operating Highlights
We expanded our asset management franchise.
Fee-bearing capital increased to approximately $80 billion, up 34% from year
end. We held a final close on a $1 billion timber fund during the quarter and
subsequent to quarter end held the final close of our
$7 billion global infrastructure fund. We continue to move forward with
fundraising initiatives for our other real asset strategies, with four private
funds in marketing. We have approximately $10 billion of committed client
capital that can be invested across our strategies.
We announced two major initiatives to enhance our flagship listed property
entity Brookfield Property Partners (or BPY). The first was a tender offer to
acquire the 49% of our office property company it does not currently own. The
second initiative, subsequent to quarter end, was the reorganization of the
consortium that acquired our U.S. shopping mall business, which allowed our
clients to realize significant gains and monetize their investments while
increasing our ownership in the business. This crystallized $558 million of
performance fees which will be reflected in our fourth quarter financial
statements. BPY issued $1.4 billion of equity to finance the transaction, of
which we purchased $1 billion.
We generated additional liquidity through asset realizations and debt financings.
We announced or completed the sale of several investments in our private equity
business as well as a number of timberland, property and utility assets; all at
attractive valuations. This generated $4.1 billion in gross proceeds, and
increased group core liquidity by approximately $1.7 billion after repayment of
project debt and distributions to private fund clients.
We continue to refinance debt at attractive long-term rates. We refinanced $1.5
billion (at share) within our retail property portfolio, generating proceeds of
$239 million, and $1.2 billion of refinancings in our office property portfolio,
resulting in $166 million of incremental cash proceeds.
We announced or completed acquisitions and capital expansions during the quarter
that will deploy $4.6 billion of capital on behalf of clients and Brookfield
shareholders bringing year-to-date investments to $7.4 billion.
In our property group, we acquired a U.S. warehouse business for $1.1 billion
and merged it with our existing operations to create one of North America's
largest logistics platforms. We committed $750 million to acquire a 22% interest
in an office and retail portfolio in Shanghai, China. We closed the purchase of
a $2 billion portfolio of office buildings in downtown Los Angeles and acquired
two urban shopping malls and an office property in San Francisco.
Our infrastructure group increased its investment in South American toll roads
by $490 million, purchased district energy assets in Louisiana and Texas for
$130 million and is in exclusive negotiations to acquire a significant stake in
a Brazilian railroad and ports business. Our renewable power team announced
plans to acquired 10 hydroelectric facilities in Maine and California, and
continues to develop new hydroelectric and wind projects in North and South
America. In our private equity business, we increased our investment in the
energy sector with a $215 million acquisition of coal-bed methane assets.
In addition, we repurchased and cancelled 2.4 million of our shares for
approximately $85 million.
We increased cash flow with operational improvements in all of our major
businesses.
The continued recovery in U.S. housing markets resulted in strong performance
from a number of our private equity investments, and we recycled capital by
continuing to sell mature assets. In our property group, our retail business
signed new stores as tenants and increased occupancy rates to 96.6% from 95.1%
in the same quarter last year, and signed new leases at rates that were 12%
higher than expiring leases. We signed 1.1 million square feet of new leases in
our office property business at rates that were 9% higher than the previous
rents, and launched construction of our new flagship office property in Calgary,
leased primarily to a major oil sands company.
Our infrastructure business recorded a significant increase in FFO, reflecting
expansion and improved performance from our utility and transport assets. Our UK
gas and electrical utility benefited from an increased scale of operation
following a merger last year. Traffic on our Australian railway rose due to a
better-than-average grain harvest and utilization from resource companies
following an expansion completed earlier this year. Our renewable power group
achieved higher prices on sales of uncontracted power, improved hydrology and
increased contributions from U.S. hydroelectric and wind facilities acquired in
the past year.
Dividend Declaration
We modified our dividend payment schedule in order to begin paying dividends on
the last day of each quarter, commencing in the second quarter of 2014. The
purpose of this change is to create a consistent quarterly record date and
payment date with our three flagship public entities and the payment dates for
most of our preferred shares.
To achieve this, the Board of Directors declared a quarterly dividend of US$0.20
per share, payable on February 28, 2014, to shareholders of record as at the
close of business on February 1, 2014. This dividend does not represent an
increase in the current annualized rate because it is intended to represent the
four-month period up to and including March 31, 2014. The Board of Directors
anticipates that the next quarterly dividend will be paid on June 30, 2014,
representing the three month period then ended.
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.
Funds from Operations (FFO) is defined as net income attributable to
shareholders prior to valuation gains, depreciation and amortization, and
deferred income taxes, and includes disposition gains that are not recorded in
net income as determined under IFRS. FFO also includes the company's share of
equity accounted investments' funds from operations. Brookfield uses FFO 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.
FFO 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.
-- FFO from Operating Activities represents the company's share of revenues
less operating costs and interest expenses; excludes disposition gains,
valuation items and deferred income taxes; and includes our
proportionate share of similar items recorded by equity accounted
investments. We present this measure as we believe it assists in
describing our results and reconciling variances within FFO.
-- Disposition Gains are included in FFO as the purchase and sale of assets
is a normal part of the company's business. Disposition gains include
gains and losses recorded directly in net income or equity in the
current period, adjusted to include fair value changes and revaluation
surplus balances recorded in prior periods.
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 September 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 nine months
ended September 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.
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) September 30 December 31
US$ millions 2013 2012
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Assets
Cash and cash equivalents $ 3,799 $ 2,850
Other financial assets 4,052 3,111
Accounts receivable and other 7,257 6,952
Inventory 6,478 6,581
Investments 12,868 11,618
Investment properties 33,858 33,161
Property, plant and equipment 30,937 31,148
Sustainable resources 502 3,516
Intangible assets 5,256 5,770
Goodwill 1,688 2,490
Deferred income tax assets 1,425 1,665
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Total Assets $ 108,120 $ 108,862
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Liabilities and Equity
Accounts payable and other $ 10,611 $ 11,652
Corporate borrowings 3,848 3,526
Non-recourse borrowings
Property-specific mortgages 33,329 33,720
Subsidiary borrowings 7,233 7,585
Deferred income tax liabilities 6,180 6,425
Capital securities 812 1,191
Interests of others in consolidated funds 483 425
Equity
Preferred equity 3,098 2,901
Non-controlling interests in net assets 25,153 23,287
Common equity 17,373 18,150
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Total Equity 45,624 44,338
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Total Liabilities and Equity $ 108,120 $ 108,862
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CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the period ended
September 30 Three months ended Nine months ended
---------------------- ------------------------
US$ millions (except per
share amounts) 2013 2012 2013 2012
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Total revenues and other
gains $ 5,176 $ 4,661 $ 15,293 $ 13,125
Direct costs (3,230) (3,420) (10,256) (9,568)
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1,946 1,241 5,037 3,557
Other income 525 - 525 -
Equity accounted income 194 254 684 899
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2,665 1,495 6,246 4,456
Expenses
Interest (617) (593) (1,940) (1,862)
Corporate costs (36) (41) (116) (118)
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Net income prior to valuation
items and income tax 2,012 861 4,190 2,476
Valuation items
Fair value changes 104 495 630 738
Depreciation and
amortization (357) (327) (1,095) (911)
Income tax (264) (154) (731) (327)
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Net income $ 1,495 $ 875 $ 2,994 $ 1,976
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Net income attributable to:
Brookfield shareholders $ 813 $ 334 $ 1,403 $ 888
Non-controlling interests 682 541 1,591 1,088
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$ 1,495 $ 875 $ 2,994 $ 1,976
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Net income per share
Diluted $ 1.23 $ 0.48 $ 2.05 $ 1.25
Basic 1.26 0.49 2.10 1.28
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SUMMARIZED FINANCIAL RESULTS
(Unaudited)
For the period ended Funds from
September 30 Operations(1,2) Net Income(1,2)
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US$ millions (except per
share amounts) 2013 2012 2013 2012
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Operating activities $ 342 $ 300 $ 342 $ 300
Disposition gains(3) 851 (77) 781 (15)
Valuation items in net income - - (92) 105
Income tax - - (218) (56)
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$ 1,193 $ 223 $ 813 $ 334
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Per share $ 1.85 $ 0.30 $ 1.23 $ 0.48
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Notes:
1. Three months ended
2. Excludes amounts attributable to non-controlling interests
3. FFO includes gains recorded directly in equity as well as the
realization of appraisal gains recorded in prior years
RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS(1)
(Unaudited)
For the period ended September
30 Three months ended Nine months ended
--------------------- ----------------------
US$ millions 2013 2012 2013 2012
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Net income prior to valuation
items and income tax (see page
7) $ 2,012 $ 861 $ 4,190 $ 2,476
Adjust for:
Fair value changes within
equity accounted income (8) (102) (108) (464)
Current income taxes (35) (31) (107) (100)
Disposition gains not
included in net income 176 (62) 612 161
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2,145 666 4,587 2,073
Non-controlling interest (952) (443) (2,241) (1,176)
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Funds from operations(1) $ 1,193 $ 223 $ 2,346 $ 897
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Notes:
1. Non-IFRS measure - see Basis of Presentation on page 4
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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