Brookfield Asset Management Reports Consolidated Net Income of $3.8
Billion and Funds from Operations of $3.4 Billion
TORONTO, ONTARIO--(Marketwired - Feb 14, 2014) - 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 $12 billion of
capital during the year on behalf of clients and shareholders.
Financial
Results
|
Three months ended December 31 |
Years ended December 31 |
US$ millions (except per share amounts) |
2013 |
2012 |
2013 |
2012 |
|
|
|
|
|
|
|
|
|
Funds
from operations1,2 |
$ |
1,030 |
$ |
459 |
$ |
3,376 |
$ |
1,356 |
Per
Brookfield share1,2 |
|
1.59 |
|
0.67 |
|
5.14 |
|
1.94 |
|
|
|
|
|
|
|
|
|
Consolidated net income3 |
$ |
850 |
$ |
779 |
$ |
3,844 |
$ |
2,755 |
Per Brookfield share1 |
|
1.08 |
|
0.72 |
|
3.12 |
|
1.97 |
- Excludes amounts attributable to non-controlling interests
- See Basis of Presentation on page 4
- 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) US$ millions |
December 31 2013 |
December 31 2012 |
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 |
Total Assets |
$ |
112,745 |
$ |
108,862 |
|
|
|
|
|
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 |
|
Total Equity |
|
47,526 |
|
44,338 |
Total Liabilities and Equity |
$ |
112,745 |
$ |
108,862 |
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 |
|
Total revenues and other gains |
$ |
5,537 |
|
$ |
5,641 |
|
$ |
20,830 |
|
$ |
18,766 |
|
Direct costs |
|
(3,672 |
) |
|
(4,393 |
) |
|
(13,928 |
) |
|
(13,961 |
) |
|
|
1,865 |
|
|
1,248 |
|
|
6,902 |
|
|
4,805 |
|
Other income |
|
-- |
|
|
-- |
|
|
525 |
|
|
-- |
|
Equity accounted income |
|
75 |
|
|
338 |
|
|
759 |
|
|
1,237 |
|
|
|
1,940 |
|
|
1,586 |
|
|
8,186 |
|
|
6,042 |
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest |
|
(613 |
) |
|
(638 |
) |
|
(2,553 |
) |
|
(2,500 |
) |
|
Corporate costs |
|
(36 |
) |
|
(40 |
) |
|
(152 |
) |
|
(158 |
) |
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 |
) |
Net income |
$ |
850 |
|
$ |
779 |
|
$ |
3,844 |
|
$ |
2,755 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Brookfield shareholders |
$ |
717 |
|
$ |
492 |
|
$ |
2,120 |
|
$ |
1,380 |
|
|
Non-controlling interests |
|
133 |
|
|
287 |
|
|
1,724 |
|
|
1,375 |
|
|
$ |
850 |
|
$ |
779 |
|
$ |
3,844 |
|
$ |
2,755 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
$ |
1.08 |
|
$ |
0.72 |
|
$ |
3.12 |
|
$ |
1.97 |
|
|
Basic |
|
1.11 |
|
|
0.74 |
|
|
3.21 |
|
|
2.02 |
|
SUMMARIZED FINANCIAL RESULTS
|
Three Months Ended |
|
Years Ended |
|
(Unaudited) For the periods ended December
31 |
Funds from Operations1 |
|
Net Income1 |
|
Funds from Operations1 |
|
Net Income1 |
|
US$ millions (except per share amounts) |
2013 |
2012 |
|
2013 |
|
2012 |
|
2013 |
2012 |
|
2013 |
|
2012 |
|
Operating activities |
$ |
969 |
$ |
311 |
|
$ |
969 |
|
$ |
311 |
|
$ |
2,081 |
$ |
1,073 |
|
$ |
2,081 |
|
$ |
1,073 |
|
Disposition gains2 |
|
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 |
) |
|
$ |
1,030 |
$ |
459 |
|
$ |
717 |
|
$ |
492 |
|
$ |
3,376 |
$ |
1,356 |
|
$ |
2,120 |
|
$ |
1,380 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share |
$ |
1.59 |
$ |
0.67 |
|
$ |
1.08 |
|
$ |
0.72 |
|
$ |
5.14 |
$ |
1.94 |
|
$ |
3.12 |
|
$ |
1.97 |
|
Notes:
- Excludes amounts attributable to non-controlling interests
- 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 OPERATIONS1
(Unaudited) For the periods ended
December 31 US$ millions |
Three Months Ended |
|
Years Ended |
|
2013 |
|
2012 |
|
2013 |
|
2012 |
|
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 |
|
|
|
1,654 |
|
|
857 |
|
|
6,241 |
|
|
2,930 |
|
|
Non-controlling interest |
|
(624 |
) |
|
(398 |
) |
|
(2,865 |
) |
|
(1,574 |
) |
Funds from operations1 |
$ |
1,030 |
|
$ |
459 |
|
$ |
3,376 |
|
$ |
1,356 |
|
Notes:
- Non-IFRS measure - see Basis of Presentation on page 4
Brookfield Asset Management Inc. - Media:Andrew
WillisCommunications and Media(416) 369-8236(416)
363-2856andrew.willis@brookfield.comBrookfield Asset Management
Inc. - Investors:Amar DhotarInvestor Relations(416) 359-8629(416)
363-2856amar.dhotar@brookfield.comwww.brookfield.com