Brookfield Asset Management Reports Strong First Quarter 2014
Financial Results
TORONTO, ONTARIO--(Marketwired - May 7, 2014) -
Investors, analysts and other interested parties can access
Brookfield Asset Management's 2014 First 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 May 7, 2014
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.
(NYSE:BAM)(TSX:BAM.A)(EURONEXT:BAMA) today announced its financial
results for the quarter ended March 31, 2014.
"Our global portfolio of real assets turned in a strong
performance, including a significant increase in fee revenues and
the contribution from our renewable energy investments. We are well
positioned to deliver future growth through our funds and fee
revenues," commented Bruce Flatt, CEO of Brookfield. "We continue
to see attractive investment opportunities globally for all of our
funds, benefitting from both our strong access to capital and
operating platforms."
- Funds from operations ("FFO") for Brookfield shareholders were
$492 million in total for the quarter. Excluding realized
disposition gains, FFO increased by 6% to $387 million over the
2013 quarter, reflecting increases in asset management fees and the
impact of higher electricity prices on our renewable energy
portfolios.
- Consolidated net income in the quarter was $843 million, or
$0.80 per common share, an increase of 57% over the $0.51 recorded
in the first quarter last year.
- Total assets under management increased to $190 billion and fee
bearing capital increased 5% to $84 billion.
- A number of investments were committed to across our
operations. During the quarter we invested or committed to invest
$6 billion of capital on behalf of clients and shareholders.
Financial
Results
| Three months ended March 31 US$ millions (except
per share amounts) |
2014 |
2013 |
|
|
|
|
|
| Funds from operations1,2 |
$ |
492 |
$ |
689 |
|
Per Brookfield share1,2 |
|
0.72 |
|
1.03 |
|
|
|
|
|
| Consolidated net income3 |
$ |
843 |
$ |
697 |
|
Per Brookfield share1 |
|
0.80 |
|
0.51 |
- Excludes amounts attributable to non-controlling interests
- See Basis of Presentation on page 3
- Consolidated basis - includes amounts attributable to
non-controlling interests
We generated FFO of $492 million for the first quarter of 2014,
which consisted of $387 million of FFO from operations and $105
million of realized disposition gains. FFO excluding realized
disposition gains increased 6% over the prior year due to strong
pricing within our renewable energy operations and increased fee
related earnings from higher levels of fee bearing capital. These
positive variances were partially offset by a reduction in prices
within several more cyclical private equity investments. FFO in the
prior year was $689 million which consisted of $364 million from
operations and $325 million of realized disposition gains,
including a $172 million gain on the sale of a partial interest in
our renewable energy portfolio.
Net income for the quarter, which includes amounts attributable
to non-controlling interests, increased by 21%. The increase was
due to the growth in FFO noted above, as well as a higher level of
fair value gains on office and retail properties and private equity
investments, offset in part by an increase in deferred taxes due to
a change in tax rates.
Operating Highlights
We expanded our asset
management franchise and our flagship public entities.
Fee bearing capital increased
during the quarter by $4 billion to $84 billion at March 31, 2014.
We acquired the majority of outstanding shares in our office
property portfolio pursuant to a share exchange, which increased
the equity base of our flagship listed property entity by $2.8
billion. We continued to invest capital from our listed entities
and our property, infrastructure and private equity funds. We are
marketing four new funds with a total fundraising target of over $2
billion of third party capital, and currently we have approximately
$8 billion of uncalled client commitments that can be invested
across our strategies.
We announced or completed
acquisitions and capital expansions that will deploy $6 billion of
capital on behalf of clients and Brookfield shareholders.
Our property group made nine
acquisitions, deploying close to $400 million of capital into
assets in North America, Europe and China, in addition to a $3.5
billion equity investment to increase our investment in our $12
billion office portfolio. We also invested $1 billion in a Spanish
property company restructuring which was recently repaid at par for
a gain of ±$150 million. We continued to acquire renewable energy
assets in North America, commissioned a new $200 million hydro
facility in British Columbia and are moving forward to acquire $680
million of wind facilities in Ireland. Our infrastructure group has
agreed to acquire a port in New York/New Jersey and district energy
systems in Chicago, Las Vegas and Seattle. We also closed an
acquisition of a port in Los Angeles, and moved forward with an
acquisition of a port and rail business in Brazil.
We increased cash flow and
created value with growth initiatives and operational improvements
in all of our major businesses.
The increased scale of our
operations contributed to strong results from our major operations.
Our property group generated FFO of $199 million, up 21% from the
same quarter last year, as a result of an increased ownership of
our retail portfolio and increases in net rents compared with
expiring leases. Our renewable power assets generated FFO of $164
million, and benefitted from higher prices for uncontracted power
and the integration of U.S. hydroelectric facilities acquired in
the last year. Our infrastructure group recorded $59 million of
FFO, primarily reflecting increased ownership of our Brazilian toll
roads, and additional traffic on our recently expanded Australian
rail road. Our private equity group generated $63 million of FFO,
lower than last year, as there were fewer asset monetizations
compared to the same period a year ago. Our residential development
business' FFO increased by $35 million reflecting sales of land and
homes.
Dividend Declaration
The Board of Directors declared
a quarterly dividend of US$0.16 per share (representing US$0.64 per
annum, a 7% increase), payable on June 30, 2014 to shareholders of
record as at the close of business on May 31, 2014. The Board also
declared all of the regular monthly and quarterly dividends on its
preferred shares.
The previous dividend paid on
February 28, 2014 of $0.20 per share represented a four month
period and therefore $0.60 per share on an annualized basis.
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.
- Realized Disposition Gains are included in FFO as the
purchase and sale of assets is a normal part of the company's
business. Realized 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 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 March 31, 2014 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 three months ended
March 31, 2014, 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.
Forward-Looking
Statements
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 |
March 31 2014 |
December 31 2013 |
| Assets |
|
|
|
|
| Cash and cash equivalents |
$ |
3,555 |
$ |
3,663 |
| Other financial assets |
|
6,610 |
|
4,947 |
| Accounts receivable and other |
|
6,253 |
|
6,666 |
| Inventory |
|
6,342 |
|
6,291 |
| Equity accounted investments |
|
13,836 |
|
13,277 |
| Investment properties |
|
39,287 |
|
38,336 |
| Property, plant and equipment |
|
31,042 |
|
31,019 |
| Sustainable resources |
|
452 |
|
502 |
| Intangible assets |
|
4,870 |
|
5,044 |
| Goodwill |
|
1,638 |
|
1,588 |
| Deferred income tax assets |
|
1,397 |
|
1,412 |
| Total Assets |
$ |
115,282 |
$ |
112,745 |
|
|
|
|
|
| Liabilities and Equity |
|
|
|
|
| Accounts payable and other |
$ |
10,820 |
$ |
10,316 |
| Corporate borrowings |
|
4,364 |
|
3,975 |
| Non-recourse borrowings |
|
|
|
|
| Property-specific mortgages |
|
36,878 |
|
35,495 |
| Subsidiary borrowings |
|
7,666 |
|
7,392 |
| Deferred income tax liabilities |
|
6,570 |
|
6,164 |
| Capital securities |
|
765 |
|
791 |
| Interests of others in consolidated funds |
|
1,265 |
|
1,086 |
| Equity |
|
|
|
|
|
Preferred equity |
|
3,279 |
|
3,098 |
|
Non-controlling interests in net assets |
|
25,828 |
|
26,647 |
|
Common equity |
|
17,847 |
|
17,781 |
| Total Equity |
|
46,954 |
|
47,526 |
| Total Liabilities and Equity |
$ |
115,282 |
$ |
112,745 |
|
|
|
|
|
|
| CONSOLIDATED STATEMENTS OF OPERATIONS |
|
| (Unaudited) For the three months ended March 31 US$
millions (except per share amounts) |
2014 |
|
2013 |
|
|
|
|
|
|
|
|
| Total revenues and other gains |
$ |
4,373 |
|
$ |
4,951 |
|
| Direct costs |
|
(2,990 |
) |
|
(3,420 |
) |
|
|
1,383 |
|
|
1,531 |
|
| Equity accounted income |
|
274 |
|
|
266 |
|
|
|
1,657 |
|
|
1,797 |
|
| Expenses |
|
|
|
|
|
|
|
Interest |
|
(626 |
) |
|
(655 |
) |
|
Corporate costs |
|
(33 |
) |
|
(44 |
) |
|
|
998 |
|
|
1,098 |
|
| Fair value changes |
|
715 |
|
|
61 |
|
| Depreciation and amortization |
|
(376 |
) |
|
(365 |
) |
| Income tax |
|
(494 |
) |
|
(97 |
) |
| Net income |
$ |
843 |
|
$ |
697 |
|
|
|
|
|
|
|
|
| Net income attributable to: |
|
|
|
|
|
|
|
Brookfield shareholders |
$ |
541 |
|
$ |
360 |
|
|
Non-controlling interests |
|
302 |
|
|
337 |
|
|
$ |
843 |
|
$ |
697 |
|
|
|
|
|
|
|
|
| Net income per share |
|
|
|
|
|
|
|
Diluted |
$ |
0.80 |
|
$ |
0.51 |
|
|
Basic |
|
0.82 |
|
|
0.52 |
|
|
|
|
|
|
|
|
|
|
| SUMMARIZED FINANCIAL RESULTS3 |
|
| (Unaudited) For the three months ended March 31 US$
millions (except per share amounts) |
Funds from Operations1 |
|
Net Income1 |
|
| 2014 |
2013 |
2014 |
|
2013 |
|
|
Operating activities |
$ |
387 |
$ |
364 |
$ |
387 |
|
$ |
364 |
|
|
Realized disposition gains2 |
|
105 |
|
325 |
|
35 |
|
|
61 |
|
|
Fair value changes |
|
?öÇ |
|
?öÇ |
|
568 |
|
|
136 |
|
|
Depreciation and amortization |
|
?öÇ |
|
?öÇ |
|
(177 |
) |
|
(165 |
) |
|
Income tax |
|
?öÇ |
|
?öÇ |
|
(272 |
) |
|
(36 |
) |
|
|
$ |
492 |
$ |
689 |
$ |
541 |
|
$ |
360 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share |
$ |
0.72 |
$ |
1.03 |
$ |
0.80 |
|
$ |
0.51 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
- Excludes amounts attributable to non-controlling interests
- FFO includes gains recorded in net income, directly in equity
as well as the realization of appraisal gains recorded in prior
years
- Includes non-IFRS measures - see Basis of Presentation on page
3
|
|
| RECONCILIATION OF NET INCOME TO FUNDS FROM
OPERATIONS1 |
|
|
|
| (Unaudited) For the three months ended March 31 US$
millions |
2014 |
|
2013 |
|
| Net income prior to fair value changes, depreciation
and amortization and income tax (see page 6) |
$ |
998 |
|
$ |
1,098 |
|
|
Adjust for: |
|
|
|
|
|
|
|
|
Fair value changes within equity accounted income |
|
(14 |
) |
|
(68 |
) |
|
|
Current income taxes |
|
(37 |
) |
|
(34 |
) |
|
|
Realized disposition gains not included in net income |
|
207 |
|
|
350 |
|
|
|
1,154 |
|
|
1,346 |
|
|
Non-controlling interest |
|
(662 |
) |
|
(657 |
) |
| Funds from operations1 |
$ |
492 |
|
$ |
689 |
|
Notes:
- Non-IFRS measure - see Basis of Presentation on page 3
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