Bruce Flatt, CEO of
Operating Results
| Unaudited For the periods ended March 31 (US$ millions, except per share amounts) |
Three Months Ended | Last Twelve Months | |||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||
| Net income | $ | 1,855 | $ | 518 | $ | 5,888 | $ | 3,220 | |||||
| Per Brookfield share1 | 0.84 | (0.08 | ) | 2.26 | 1.25 | ||||||||
| Funds from operations1,2 | $ | 1,170 | $ | 674 | $ | 4,306 | $ | 3,208 | |||||
| Per Brookfield share1,2 | 1.16 | 0.65 | 4.25 | 3.15 | |||||||||
1. Excludes amounts attributable to non-controlling interests
2. See Basis of Presentation on page 3 and a reconciliation of net income to FFO on page 9
Net income increased significantly for both the quarter and the last twelve months ("LTM"). The increase reflects improvements at existing operations as well as strong contributions from acquisitions across each of our businesses. We also recorded a higher level of valuation gains in our opportunistic real estate portfolio and a gain on the sale of a utility asset whereas the prior period included the impact of lower stock market prices on market-valued investments.
First quarter funds from operations (“FFO”) also increased significantly to
Dividend Declaration
The Board declared a quarterly dividend of
Operating Highlights
Fee bearing capital reached
We continue to raise capital for our third real estate flagship fund, which is now over
Our current private equity flagship fund is over 90% committed and invested and we launched the successor fund in the quarter, with a first close anticipated later in the year. Our latest infrastructure flagship fund is 50% committed and invested.
In addition to establishing new funds, we are also continuing to expand through targeted acquisitions and strategic partnerships. In our public securities business we completed the previously announced acquisition of an investment advisor with an established retail distribution network and
As our managed capital expands, ongoing fee related earnings and carry potential grow. Carry potential is also benefiting from our funds progressing into more mature phases of their lives.
Fee related earnings increased by 56% to over
We also achieved growth in economic net income from our asset management activities, which more than doubled from the prior LTM period to
We continue to generate increasingly significant free cash at the corporate level. We receive significant cash flow from our asset management business as well as distributions from our invested capital, which adds to our robust liquidity profile.
On an annual basis, we receive approximately
We have significant liquidity to deploy for future opportunities. This includes $22 billion of third-party private fund commitments and $10 billion of core liquidity.
We continue to focus on asset sales and capital structure in strong markets. We generated almost $500 million from disposition gains in the quarter.
In March, our infrastructure business closed the sale of a 28% interest in Transelec, a Chilean electricity transmission business with approximately 10,000 kilometers of lines. During our ownership, we re-invested capital within the business to expand and grow the system, and returned cash dividends to us and our partners of over
Asset sales also included the sale of a 50% interest in the Bay Adelaide Centre West and East towers located in downtown
Basis of Presentation
This news release and accompanying financial statements are based on International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”), unless otherwise noted.
We make reference to Funds from Operations (“FFO”). We define FFO as net income attributable to shareholders prior to fair value changes, depreciation and amortization, and deferred income taxes, and include realized disposition gains that are not recorded in net income as determined under IFRS. FFO also includes the company’s share of equity accounted investments’ FFO on a fully diluted basis. FFO consists of the following components:
- FFO from Operating Activities represents the company’s share of revenues less direct costs and interest expenses; excludes realized carried interest and disposition gains, fair value changes, depreciation and amortization and deferred income taxes; and includes our proportionate share of FFO from operating activities recorded by equity accounted investments on a fully diluted basis. We present this measure as we believe it assists in describing our results and variances within FFO.
- Realized Carried Interest represents our contractual share of investment gains generated within a private fund after considering our clients minimum return requirements. Realized carried interest is determined on third-party capital that is no longer subject to future investment performance.
- Realized Disposition Gains are included in FFO because we consider the purchase and sale of assets to be 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.
We use FFO to assess our operating results and the value of Brookfield’s business and believe that many shareholders and analysts also find this measure of value to them.
We note that FFO, its components, 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.
We make reference to Economic Net Income ("ENI"). We use ENI as a supplement to FFO for our Asset Management segment to assess operating performance, including the fee revenues and carried interest generated on unrealized changes in value of our private fund investment portfolios. We use this measure to evaluate the total value created within our funds in a period and it is a leading indicator for future growth of our Asset Management FFO.
We make reference to Invested Capital. Invested Capital is defined as the amount of common equity in our segments and underlying businesses within the segments.
We make reference to cash flows before common share dividends that is Available for distribution or reinvestment. It is the sum of our Asset Management segment FFO and distributions received from our ownership of listed investments, net of Corporate FFO and preferred share dividends. This provides insight into earnings received by the corporation that are available for distribution to common shareholders or to be reinvested into the business.
We also make reference to Unrealized Carried Interest, which represents our share of fund profits if all of our funds were wound up and liquidated at period end values. We use this measure to gain additional insight into how investment performance is impacting our ability to earn carried interest in the future.
We provide additional information on key terms and non-IFRS measures in our filings available at www.brookfield.com.
Additional Information
The Letter to Shareholders and the company’s Supplemental Information for the three months ended March 31, 2018 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 quarter ended March 31, 2018, which have been prepared using IFRS, as issued by the IASB. The amounts have not been audited by Brookfield’s external auditor.
Information on our dividends can be found on our website under Stock & Distributions/Distribution History.
Quarterly Earnings Call Details
Investors, analysts and other interested parties can access Brookfield Asset Management’s 2018 First Quarter Results as well as the Shareholders’ Letter and Supplemental Information on Brookfield’s website under the Reports & Filings section at www.brookfield.com.
The conference call can be accessed via webcast on May 10, 2018 at 11:00 a.m. Eastern Time at www.brookfield.com or via teleconference at 1-866-521-4909 toll free in
Brookfield Asset Management Inc. is a leading global alternative asset manager with approximately $285 billion in assets under management. The company has more than a 100-year history of owning and operating assets with a focus on property, renewable power, infrastructure and private equity.
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 or contact:
| Claire Holland Communications & Media Tel: (416) 369-8236 Email: [email protected] |
Linda Northwood Investor Relations Tel: (416) 359-8647 Email: [email protected] |
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
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
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 ability to appropriately manage human capital; 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; governmental investigations; litigation; changes in tax laws; ability to collect amounts owed; catastrophic events, such as earthquakes and hurricanes; the possible impact of international conflicts and other developments including terrorist acts and cyber terrorism; and other risks and factors detailed from time to time in our documents filed with the securities regulators in
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,
This release does not constitute an offer of any
CONSOLIDATED BALANCE SHEETS
| Unaudited (US$ millions) |
March 31 | December 31 | ||||
| 2018 | 2017 | |||||
| Assets | ||||||
| Cash and cash equivalents | $ | 6,044 | $ | 5,139 | ||
| Other financial assets | 5,271 | 4,800 | ||||
| Accounts receivable and other | 12,257 | 11,973 | ||||
| Inventory | 6,638 | 6,311 | ||||
| Assets classified as held for sale | 302 | 1,605 | ||||
| Equity accounted investments | 30,750 | 31,994 | ||||
| Investment properties | 58,309 | 56,870 | ||||
| Property, plant and equipment | 54,431 | 53,005 | ||||
| Intangible assets | 14,231 | 14,242 | ||||
| Goodwill | 5,516 | 5,317 | ||||
| Deferred income tax assets | 2,186 | 1,464 | ||||
| Total Assets | $ | 195,935 | $ | 192,720 | ||
| Liabilities and Equity | ||||||
| Accounts payable and other | $ | 18,656 | $ | 17,965 | ||
| Liabilities associated with assets classified as held for sale | 568 | 1,424 | ||||
| Corporate borrowings | 6,476 | 5,659 | ||||
| Non-recourse borrowings | ||||||
| Property-specific mortgages | 65,901 | 63,721 | ||||
| Subsidiary borrowings | 7,938 | 9,009 | ||||
| Deferred income tax liabilities | 11,146 | 11,409 | ||||
| Subsidiary equity obligations | 3,935 | 3,661 | ||||
| Equity | ||||||
| Preferred equity | 4,192 | 4,192 | ||||
| Non-controlling interests in net assets | 52,667 | 51,628 | ||||
| Common equity | 24,456 | 24,052 | ||||
| Total Equity | 81,315 | 79,872 | ||||
| Total Liabilities and Equity | $ | 195,935 | $ | 192,720 | ||
CONSOLIDATED STATEMENTS OF OPERATIONS
| Unaudited For the three months ended March 31 (US$ millions, except per share amounts) |
||||||
| 2018 | 2017 | |||||
| Revenues | $ | 12,631 | $ | 6,001 | ||
| Direct costs | (10,091 | ) | (4,387 | ) | ||
| Other income and gains | 342 | 265 | ||||
| Equity accounted income | 288 | 335 | ||||
| Expenses | ||||||
| Interest | (1,037 | ) | (843 | ) | ||
| Corporate costs | (27 | ) | (25 | ) | ||
| Fair value changes | 572 | (204 | ) | |||
| Depreciation and amortization | (670 | ) | (499 | ) | ||
| Income tax | (153 | ) | (125 | ) | ||
| Net income | $ | 1,855 | $ | 518 | ||
| Net income (loss) attributable to: | ||||||
shareholders |
$ | 857 | $ | (37 | ) | |
| Non-controlling interests | 998 | 555 | ||||
| $ | 1,855 | $ | 518 | |||
| Net income (loss) per share | ||||||
| Diluted | $ | 0.84 | $ | (0.08 | ) | |
| Basic | 0.85 | (0.08 | ) | |||
SUMMARIZED FINANCIAL RESULTS
RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS
| Unaudited For the periods ended March 31 (US$ millions) |
Three Months Ended | Last Twelve Months Ended |
|||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||
| Net income | $ | 1,855 | $ | 518 | $ | 5,888 | $ | 3,220 | |||||
| Equity accounted fair value changes and other non-FFO items | 333 | 122 | 1,067 | 306 | |||||||||
| Fair value changes | (572 | ) | 204 | (1,197 | ) | 686 | |||||||
| Depreciation and amortization | 670 | 499 | 2,516 | 2,038 | |||||||||
| Deferred income taxes | (74 | ) | 108 | 145 | (620 | ) | |||||||
| Realized disposition gains in fair value changes or prior periods | 420 | 152 | 1,384 | 706 | |||||||||
| Non-controlling interests | (1,462 | ) | (929 | ) | (5,497 | ) | (3,128 | ) | |||||
| Funds from operations1 | $ | 1,170 | $ | 674 | $ | 4,306 | $ | 3,208 | |||||
SEGMENT FUNDS FROM OPERATIONS
| Unaudited For the periods ended March 31 (US$ millions, except per share amounts) |
Three Months Ended | Last Twelve Months Ended |
|||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||
| Asset management | $ | 363 | $ | 166 | $ | 1,167 | $ | 848 | |||||
| Property | 439 | 325 | 2,118 | 1,513 | |||||||||
| Renewable power | 100 | 67 | 303 | 179 | |||||||||
| Infrastructure | 341 | 83 | 603 | 386 | |||||||||
| Private equity | 54 | 102 | 285 | 430 | |||||||||
| Residential | (33 | ) | (8 | ) | 9 | 70 | |||||||
| Corporate | (94 | ) | (61 | ) | (179 | ) | (218 | ) | |||||
| Funds from operations1 | $ | 1,170 | $ | 674 | $ | 4,306 | $ | 3,208 | |||||
| Per share | $ | 1.16 | $ | 0.65 | $ | 4.25 | $ | 3.15 | |||||
RECONCILIATION OF ASSET MANAGEMENT FFO TO ECONOMIC NET INCOME
| Unaudited For the periods ended March 31 (US$ millions) |
Three Months Ended | Last Twelve Months Ended |
|||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||
| Asset Management FFO | $ | 363 | $ | 166 | $ | 1,167 | $ | 848 | |||||
| Less: Realized carried interest, net | (20 | ) | (3 | ) | (91 | ) | (152 | ) | |||||
| Less: Realized disposition gains | — | — | — | (5 | ) | ||||||||
| Unrealized carried interest generated in the period, net | 246 | 137 | 1,037 | 330 | |||||||||
| Economic net income | $ | 589 | $ | 300 | $ | 2,113 | $ | 1,021 | |||||
Notes:
- Excludes amounts attributable to non-controlling interests
EARNINGS PER SHARE
| Unaudited For the periods ended March 31 (US$ millions, except per share amounts) |
Three Months Ended | Last Twelve Months Ended |
|||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||
| Net income | $ | 1,855 | $ | 518 | $ | 5,888 | $ | 3,220 | |||||
| Non-controlling interests | (998 | ) | (555 | ) | (3,532 | ) | (1,863 | ) | |||||
| Net income attributable to shareholders | 857 | (37 | ) | 2,356 | 1,357 | ||||||||
| Preferred share dividends | (38 | ) | (36 | ) | (147 | ) | (136 | ) | |||||
| Net income available to common shareholders | $ | 819 | $ | (73 | ) | $ | 2,209 | $ | 1,221 | ||||
| Weighted average shares | 957.9 | 958.5 | 958.6 | 958.8 | |||||||||
| Dilutive effect of the conversion of options and escrowed shares using treasury stock method1 | 19.1 | — | 19.5 | 15.3 | |||||||||
| Shares and share equivalents | 977.0 | 958.5 | 978.1 | 974.1 | |||||||||
| Diluted earnings per share | $ | 0.84 | $ | (0.08 | ) | $ | 2.26 | $ | 1.25 | ||||
CASH AVAILABLE FOR DISTRIBUTION
| Unaudited For the periods ended March 31 (US$ millions) |
Three Months Ended | Last Twelve Months Ended |
|||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||
| Asset management FFO | $ | 363 | $ | 166 | $ | 1,167 | $ | 848 | |||||
| Dividends received from listed investments | 343 | 307 | 1,313 | 1,215 | |||||||||
| Corporate activities FFO | |||||||||||||
| Financial assets earnings | 22 | 19 | 148 | 123 | |||||||||
| Corporate costs, cash taxes and other | (38 | ) | (18 | ) | (50 | ) | (94 | ) | |||||
| Corporate interest expense | (78 | ) | (62 | ) | (277 | ) | (247 | ) | |||||
| (94 | ) | (61 | ) | (179 | ) | (218 | ) | ||||||
| Preferred share dividends | (38 | ) | (36 | ) | (147 | ) | (136 | ) | |||||
| Available for distribution/reinvestment | $ | 574 | $ | 376 | $ | 2,154 | $ | 1,709 | |||||
Notes:
- Includes management share option plan and escrowed stock plan
Source: Brookfield Asset Management Inc
| Title | Document |
|---|---|
English |
|
Q1 2018 Supplemental |
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Q1 2018 Transcript |