Brookfield Asset Management Inc. (NYSE:BAM)(TSX:BAM.A)(EURONEXT:BAMA) -
Investors, analysts and other interested parties can access Brookfield Asset
Management's 2013 Fourth Quarter and Full Year 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 February 14, 2014 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 and the year ended December 31, 2013.
"We recorded the strongest results in our history, and clients continue to
allocate capital to real assets given the returns from these investments,"
commented Bruce Flatt, CEO of Brookfield. "Fee income continues to increase and
our businesses are well positioned to deliver growth in 2014."
-- Funds from operations ("FFO") for Brookfield shareholders was $3.4
billion during 2013, an increase of 149% from the previous year. FFO in
the fourth quarter of 2013 was $1.0 billion, or $1.59 per share, which
was more than double the result from the same quarter a year ago,
predominantly due to carried interests on Private Funds received during
the quarter.
-- Consolidated net income for the year increased 40% to $3.8 billion, or
$3.12 per common share. Net income for the quarter increased to $850
million or $1.08 per share, up 9% from the same quarter in the prior
year.
-- The company's annualized fees and carry now stand at approximately $1.0
billion, including $580 million of annualized base management fees and
incentive distributions and $350 million of target annualized carried
interests.
-- Total assets under management increased to $187 billion, and fee bearing
capital increased 32% to nearly $80 billion.
-- Realizations on investments generated $12 billion of liquidity for the
full year and locked in favourable investment gains, returned
significant cash to limited partners and increased our balance sheet
resources.
-- We continue to identify attractive investments opportunities across our
operations and we invested or committed $12 billion of capital during
the year on behalf of clients and shareholders.
Financial Results
Three months ended Years ended
December 31 December 31
--------------------------------------------
US$ millions (except per share
amounts) 2013 2012 2013 2012
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Funds from operations(1,2) $ 1,030 $ 459 $ 3,376 $ 1,356
Per Brookfield share(1,2) 1.59 0.67 5.14 1.94
Consolidated net income(3) $ 850 $ 779 $ 3,844 $ 2,755
Per Brookfield share(1) 1.08 0.72 3.12 1.97
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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
FFO for the fourth quarter more than doubled over the 2012 quarter and increased
nearly 150% on a full year basis. Our fourth quarter results included $563
million of carried interest on the realization of private fund investments for
clients.
Continued business expansion and operating activities positively impacted FFO
for both the fourth quarter and the full year. Fee related earnings increased
due to the growth in fee bearing capital. We also benefitted from higher lease
rates in both our office and retail portfolios, expansion in our transportation
and utility businesses and increased power generation as a result of improved
water flows and the contribution from acquired and completed facilities.
FFO included $1.3 billion of disposition gains for the full year, including our
share of gains on the sale of private equity investments, North American
timberlands, units in Brookfield Renewable Energy Partners and the settlement of
a long-dated interest rate contract. Core liquidity increased by $2.2 billion.
Net income for the fourth quarter, which includes amounts attributable to
non-controlling interests, increased by 9% as the improvement in FFO was largely
offset by a decline in the level of fair value changes compared to the 2012
quarter, which included a large number of property appraisal gains that did not
recur in 2013. Net income for the year increased by $1.1 billion or nearly 40%,
as the increase in FFO more than offset a reduction in the level of fair value
gains.
Operating Highlights
- We expanded our asset management franchise and raised a record amount of fee
bearing capital.
Fee bearing capital increased to nearly $80 billion, up 32% from the prior year.
We completed the launch of Brookfield Property Partners L.P. in April, 2013, and
have now established large capitalization listed entities in each of our
property, renewable energy and infrastructure businesses. We also held final
closes for our follow-on $7 billion infrastructure fund, a $4.4 billion property
fund, a $1 billion timber fund, and several smaller funds and assumed management
of a property fund in India with $300 million of committed capital. We continue
to market four new funds with a total fundraising target of over $2 billion of
third party capital. Lastly, we have approximately $9 billion of uncalled client
capital that can be invested across our strategies.
- We announced or completed acquisitions and capital expansions during the year
that will deploy $12 billion of capital on behalf of clients and Brookfield
shareholders.
We launched the merger of our office property business with our flagship listed
property entity. Our listed entities committed or invested nearly $4 billion of
capital into growth initiatives. In our property group, we acquired a U.S.
warehouse business that we merged with our existing operations to create one of
North America's largest logistics platforms, and also acquired a European
warehouse business. We broke ground on commercial developments in New York,
London, Toronto, Calgary and Perth after substantially pre-leasing each project.
We committed $750 million to acquire a 22% interest in an office and retail
portfolio in Shanghai, China and an additional $500 million for additional
property investments in China. We also closed the purchase of a $1.1 billion
portfolio of office buildings in downtown Los Angeles.
Our infrastructure group committed a total of $2.7 billion to new investments,
increasing its ownership of South American toll roads with a $700 million
investment, purchasing district energy assets in Louisiana and Texas and agreed
to commit approximately $1.1 billion towards a South American infrastructure
logistics business and two container terminal facilities in California. Our
renewable energy business invested $1.5 billion in hydroelectric facilities in
North America and announced plans to acquire a portfolio of wind farms and
development sites in Europe. Our private equity group invested $1.2 billion in a
variety of energy, mining and logistics businesses.
- We increased cash flow and created value with operational improvements in all
of our major businesses.
Organic growth initiatives launched over the past five years contributed to
solid increases in the cash flows from all our businesses. For example, our
office property group undertook a $250 million renovation of our flagship New
York development and signed new leases during the year that were 7% higher than
expiring rents. Our retail property business invested $285 million in shopping
mall redevelopments and expansions and signed new leases at rates 12.3% higher
than expiring rents.
Our infrastructure business expanded the capacity of its transport networks,
increasing customer traffic on its toll road and railways, and commissioned an
electrical transmission network in Texas, all of which contributed to a 111%
increase in FFO within this segment. Our renewable energy group benefitted from
increased hydrology levels, achieved higher prices on sales of uncontracted
power and increased its operating efficiency, as we used the expanded scale of
our business to reduce costs, and increased FFO by 43%. Our private equity
business realized significant gains on investments made in housing-related
businesses which increased FFO by 152%.
We continue to refinance debt at attractive long-term rates. We completed $5.5
billion (at share) of refinancing within our retail property portfolio and $5.0
billion of refinancings in our office property portfolio, resulting in $1.8
billion of incremental cash proceeds.
- We completed $12 billion of asset realizations, locking in attractive
investment gains and returning capital to investors.
We announced or completed the sale of assets in our major businesses. Highlights
included the realization of $2.8 billion from the sale of North American
timberlands, $3.1 billion from property dispositions and $780 million from the
sale of private equity investments. These transactions, together with the
reorganization of the consortium that acquired our U.S. shopping mall business,
enabled us to distribute $9 billion of capital and gains from our private funds
and increased our group core liquidity by approximately $2.2 billion.
Dividend Policy
In November 2013, the company changed its dividend payment schedule and will now
pay dividends on the last day of each quarter, consistent with the payment date
of our three flagship public entities and most of our preferred shares.
To make this transition, in November, 2013, the Board of Directors declared a
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 did 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 previous
quarterly dividend, paid at the end of November 2013, covered a three month
period and was $0.15 per share.
The Board of Directors anticipates that the next quarterly dividend will be
declared at the directors' meeting to be held on May 7, 2014 and paid on June
30, 2014, in respect of the three month period then ended.
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 items, 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. FFO consists of the
following two components:
-- FFO from Operating Activities represents the company's share of revenues
less direct costs and interest expenses; excludes disposition gains,
valuation items and deferred income taxes;
and includes our proportionate share of FFO from operating activities
recorded by equity accounted investments. We present this measure as we
believe it assists in describing our results and 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 in net income and equity in the current
period, and are adjusted to include fair value changes and revaluation
surplus balances recorded in prior periods which were not included in
prior period FFO.
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.
The company provides additional information on the determination of funds from
operations and 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
fourth quarter and full year ended December 31, 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 financial statements for the year ended December 31, 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 energy,
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) December 31 December 31
US$ millions 2013 2012
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Assets
Cash and cash equivalents $ 3,663 $ 2,850
Other financial assets 4,947 3,111
Accounts receivable and other 6,666 6,952
Inventory 6,291 6,581
Investments 13,277 11,618
Investment properties 38,336 33,161
Property, plant and equipment 31,019 31,148
Sustainable resources 502 3,516
Intangible assets 5,044 5,770
Goodwill 1,588 2,490
Deferred income tax assets 1,412 1,665
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Total Assets $ 112,745 $ 108,862
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Liabilities and Equity
Accounts payable and other $ 10,316 $ 11,652
Corporate borrowings 3,975 3,526
Non-recourse borrowings
Property-specific mortgages 35,495 33,720
Subsidiary borrowings 7,392 7,585
Deferred income tax liabilities 6,164 6,425
Capital securities 1,282 1,191
Interests of others in consolidated funds 595 425
Equity
Preferred equity 3,098 2,901
Non-controlling interests in net assets 26,647 23,287
Common equity 17,781 18,150
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Total Equity 47,526 44,338
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Total Liabilities and Equity $ 112,745 $ 108,862
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CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the periods ended
December 31
US$ millions (except per
share amounts) Three Months Ended Years Ended
---------------------- ------------------------
2013 2012 2013 2012
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Total revenues and other
gains $ 5,537 $ 5,641 $ 20,830 $ 18,766
Direct costs (3,672) (4,393) (13,928) (13,961)
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1,865 1,248 6,902 4,805
Other income - - 525 -
Equity accounted income 75 338 759 1,237
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1,940 1,586 8,186 6,042
Expenses
Interest (613) (638) (2,553) (2,500)
Corporate costs (36) (40) (152) (158)
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Net income prior to valuation
items and income tax 1,291 908 5,481 3,384
Valuation items
Fair value changes 33 415 663 1,153
Depreciation and
amortization (360) (352) (1,455) (1,263)
Income tax (114) (192) (845) (519)
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Net income $ 850 $ 779 $ 3,844 $ 2,755
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Net income attributable to:
Brookfield shareholders $ 717 $ 492 $ 2,120 $ 1,380
Non-controlling interests 133 287 1,724 1,375
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$ 850 $ 779 $ 3,844 $ 2,755
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Net income per share
Diluted $ 1.08 $ 0.72 $ 3.12 $ 1.97
Basic 1.11 0.74 3.21 2.02
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SUMMARIZED FINANCIAL RESULTS
Three Months Ended Years Ended
----------------------------- -------------------------------
(Unaudited)
For the periods
ended December Funds from Funds from
31 Operations(1) Net Income(1) Operations(1) Net Income(1)
------------- --------------- -------------- ----------------
US$ millions
(except per
share amounts) 2013 2012 2013 2012 2013 2012 2013 2012
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Operating
activities $ 969 $ 311 $ 969 $ 311 $2,081 $1,073 $2,081 $1,073
Disposition
gains(2) 61 148 4 77 1,295 283 861 100
Valuation items
in net income
Fair value
change - - (100) 359 - - 383 1,108
Depreciation
and
amortization - - (183) (162) - - (720) (635)
Income tax - - 27 (93) - - (485) (266)
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$1,030 $ 459 $ 717 $ 492 $3,376 $1,356 $2,120 $1,380
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Per share $ 1.59 $ 0.67 $ 1.08 $ 0.72 $ 5.14 $ 1.94 $ 3.12 $ 1.97
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Notes:
1. Excludes amounts attributable to non-controlling interests
2. 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) Three Months Ended Years Ended
For the periods ended December 31 -------------------- ---------------------
US$ millions 2013 2012 2013 2012
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Net income prior to valuation
items and income tax (see page
7) $ 1,291 $ 908 $ 5,481 $ 3,384
Adjust for:
Fair value changes within
equity accounted income 184 (114) 85 (578)
Current income taxes (43) (35) (159) (135)
Disposition gains not included
in net income 222 98 834 259
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1,654 857 6,241 2,930
Non-controlling interest (624) (398) (2,865) (1,574)
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Funds from operations(1) $ 1,030 $ 459 $ 3,376 $ 1,356
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Notes:
1. Non-IFRS measure - see Basis of Presentation on page 4
FOR FURTHER INFORMATION PLEASE CONTACT:
Brookfield Asset Management Inc. - Media:
Andrew Willis
Communications and Media
(416) 369-8236
(416) 363-2856 (FAX)
andrew.willis@brookfield.com
Brookfield Asset Management Inc. - Investors:
Amar Dhotar
Investor Relations
(416) 359-8629
(416) 363-2856 (FAX)
amar.dhotar@brookfield.com
www.brookfield.com
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