Net Income of
FFO of
Bruce Flatt, CEO of
Operating Results
| Unaudited For the periods ended September 30 (US$ millions, except per share amounts) |
Three Months Ended | Last Twelve Months | ||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||
| Net income1 | $ | 941 | $ | 992 | $ | 6,543 | $ | 2,565 | ||||
| Per |
0.11 | 0.20 | 2.56 | 0.46 | ||||||||
| Funds from operations2,4 | $ | 1,085 | $ | 809 | $ | 4,346 | $ | 3,523 | ||||
| Per |
1.07 | 0.79 | 4.28 | 3.47 | ||||||||
1. Consolidated basis – includes amounts attributable to non-controlling interests
2. Excludes amounts attributable to non-controlling interests
3. Per share amounts are inclusive of dilutive effect of mandatorily redeemable preferred shares issued in a consolidated subsidiary
4. See Basis of Presentation on page 3 and a reconciliation of net income to FFO on page 8
Net income was
Third quarter funds from operations (“FFO”) was
Dividend Declaration
The Board declared a quarterly dividend of
Operating Highlights
Fee bearing capital increased by
Fee bearing capital from our listed partnerships increased by
We are currently raising capital for a wide variety of funds, including all three of our flagship funds. In October, we closed
Our current real estate, infrastructure and private equity flagship funds are now 95%, 75%, and 90%, invested or committed.
Annualized fee revenues and target carry have reached
Annualized fee revenues are now
Annualized target carry is now
We continued to advance several transaction in the quarter, investing or committing
Our infrastructure business has had a busy year, investing or committing up to an aggregate of
Our real estate business progressed several transactions in the quarter. This included closing on the acquisition of the balance of GGP for approximately
We continue to see strong demand from investors globally for mature, contracted renewable assets. Following the quarter, our renewable power business sold a 25% interest in a 413 megawatt Canadian hydroelectric portfolio. We also intend to sell an additional 25% interest in these assets at the same price to another group of investors prior to yearend. Our renewable business will retain management and operating responsibilities of these assets. In order to facilitate this transaction, BAM will transfer its North American energy marketing capabilities to Brookfield Renewable Partners ("BEP"), and BAM and BEP have amended or agreed to transfer certain of their existing Power Purchase Agreements ("PPA") to BEP. In exchange, BAM and BEP have agreed to reduce the price BEP receives for its remaining PPA with BAM that relates to BEP's
Our private equity operations completed several transactions in the quarter, returning capital to shareholders, and providing liquidity for reinvestment. Our graphite electrode manufacturing business, GrafTech, completed a secondary offering and share repurchase generating proceeds of
We continue to focus on maintaining a strong balance sheet. We ended the quarter with
Within the
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 Invested Capital. Invested Capital is defined as the amount of common equity in our segments and underlying businesses within the segments.
We also make reference to Generated or 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 September 30, 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 September 30, 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 Third Quarter Results as well as the Shareholders’ Letter and Supplemental Information on Brookfield’s website under the Reports & Filings section at www.brookfield.com.
To participate in the Conference Call, please dial (877) 255-3077 toll free in
Brookfield Asset Management Inc. is a leading global alternative asset manager with over $330 billion in assets under management. The company has more than a 115-year history of owning and operating assets with a focus on real estate, 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:
| Communications & Media: Claire Holland Vice President, Branding & Communications Tel: (416) 369-8236 Email: [email protected] |
Investor Relations Linda Northwood Director, 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: lower than target investment returns; 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) |
September 30 | December 31 | ||||
| 2018 | 2017 | |||||
| Assets | ||||||
| Cash and cash equivalents | $ | 7,839 | $ | 5,139 | ||
| Other financial assets | 5,573 | 4,800 | ||||
| Accounts receivable and other | 15,424 | 11,973 | ||||
| Inventory | 7,312 | 6,311 | ||||
| Assets classified as held for sale | 1,727 | 1,605 | ||||
| Equity accounted investments | 31,994 | 31,994 | ||||
| Investment properties | 79,217 | 56,870 | ||||
| Property, plant and equipment | 59,688 | 53,005 | ||||
| Intangible assets | 16,146 | 14,242 | ||||
| Goodwill | 7,012 | 5,317 | ||||
| Deferred income tax assets | 2,029 | 1,464 | ||||
| Total Assets | $ | 233,961 | $ | 192,720 | ||
| Liabilities and Equity | ||||||
| Accounts payable and other | $ | 22,546 | $ | 17,965 | ||
| Liabilities associated with assets classified as held for sale | 785 | 1,424 | ||||
| Corporate borrowings | 6,661 | 5,659 | ||||
| Non-recourse borrowings | ||||||
| Property-specific mortgages | 91,551 | 63,721 | ||||
| Subsidiary borrowings | 8,762 | 9,009 | ||||
| Deferred income tax liabilities | 11,550 | 11,409 | ||||
| Subsidiary equity obligations | 3,847 | 3,661 | ||||
| Equity | ||||||
| Preferred equity | 4,192 | 4,192 | ||||
| Non-controlling interests in net assets | 61,376 | 51,628 | ||||
| Common equity | 22,691 | 24,052 | ||||
| Total Equity | 88,259 | 79,872 | ||||
| Total Liabilities and Equity | $ | 233,961 | $ | 192,720 | ||
CONSOLIDATED STATEMENTS OF OPERATIONS
| Unaudited For the periods ended September 30 (US$ millions, except per share amounts) |
Three Months Ended | Nine Months Ended | |||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||
| Revenues | $ | 14,858 | $ | 12,276 | $ | 40,765 | $ | 27,721 | |||||
| Direct costs | (11,967 | ) | (10,034 | ) | (32,839 | ) | (21,753 | ) | |||||
| Other income and gains (losses) | 144 | (29 | ) | 581 | 236 | ||||||||
| Equity accounted income | 50 | 505 | 680 | 1,090 | |||||||||
| Expenses | |||||||||||||
| Interest | (1,274 | ) | (932 | ) | (3,377 | ) | (2,640 | ) | |||||
| Corporate costs | (25 | ) | (24 | ) | (76 | ) | (69 | ) | |||||
| Fair value changes | 132 | 132 | 1,537 | 141 | |||||||||
| Depreciation and amortization | (833 | ) | (643 | ) | (2,175 | ) | (1,755 | ) | |||||
| Income taxes | (144 | ) | (259 | ) | (636 | ) | (503 | ) | |||||
| Net income | $ | 941 | $ | 992 | $ | 4,460 | $ | 2,468 | |||||
| Net income attributable to: | |||||||||||||
shareholders |
$ | 163 | $ | 228 | $ | 1,700 | $ | 416 | |||||
| Non-controlling interests | 778 | 764 | 2,760 | 2,052 | |||||||||
| $ | 941 | $ | 992 | $ | 4,460 | $ | 2,468 | ||||||
| Net income per share | |||||||||||||
| Diluted | $ | 0.11 | $ | 0.20 | $ | 1.53 | $ | 0.32 | |||||
| Basic | 0.11 | 0.20 | 1.57 | 0.32 | |||||||||
SUMMARIZED FINANCIAL RESULTS
RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS
| Unaudited For the periods ended September 30 (US$ millions) |
Three Months Ended | Last Twelve Months Ended | |||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||
| Net income | $ | 941 | $ | 992 | $ | 6,543 | $ | 2,565 | |||||
| Realized disposition gains in fair value changes or prior periods | 387 | 232 | 1,135 | 1,079 | |||||||||
| Non-controlling interests | (1,415 | ) | (1,073 | ) | (6,030 | ) | (3,692 | ) | |||||
| Financial statement components not included in FFO | |||||||||||||
| Equity accounted fair value changes and other non-FFO items | 446 | (15 | ) | 1,570 | 546 | ||||||||
| Fair value changes | (132 | ) | (132 | ) | (1,817 | ) | 347 | ||||||
| Depreciation and amortization | 833 | 643 | 2,765 | 2,237 | |||||||||
| Deferred income taxes | 25 | 162 | 180 | 441 | |||||||||
| Funds from operations1,2 | $ | 1,085 | $ | 809 | $ | 4,346 | $ | 3,523 | |||||
SEGMENT FUNDS FROM OPERATIONS
| Unaudited For the periods ended September 30 (US$ millions, except per share amounts) |
Three Months Ended | Last Twelve Months Ended | |||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||
| Asset management | $ | 320 | $ | 211 | $ | 1,286 | $ | 922 | |||||
| Real estate | 464 | 382 | 1,745 | 1,736 | |||||||||
| Renewable power | 48 | 45 | 307 | 203 | |||||||||
| Infrastructure | 80 | 87 | 598 | 357 | |||||||||
| Private equity | 247 | 137 | 615 | 427 | |||||||||
| Residential | 16 | (24 | ) | 93 | 13 | ||||||||
| Corporate | (90 | ) | (29 | ) | (298 | ) | (135 | ) | |||||
| Funds from operations1,2 | $ | 1,085 | $ | 809 | $ | 4,346 | $ | 3,523 | |||||
| Per share3 | $ | 1.07 | $ | 0.79 | $ | 4.28 | $ | 3.47 | |||||
- Non-IFRS measure – see Basis of Presentation on page 3
- Excludes amounts attributable to non-controlling interests
- Per share amounts are inclusive of dilutive effect of mandatorily redeemable preferred shares held in a consolidated subsidiary
EARNINGS PER SHARE
| Unaudited For the periods ended September 30 (US$ millions, except per share amounts) |
Three Months Ended | Last Twelve Months Ended | |||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||
| Net income | $ | 941 | $ | 992 | $ | 6,543 | $ | 2,565 | |||||
| Non-controlling interests | (778 | ) | (764 | ) | (3,797 | ) | (1,976 | ) | |||||
| Net income attributable to shareholders | 163 | 228 | 2,746 | 589 | |||||||||
| Preferred share dividends | (38 | ) | (35 | ) | (153 | ) | (139 | ) | |||||
| Dilutive effect of conversion of subsidiary preferred shares | (20 | ) | — | (87 | ) | — | |||||||
| Net income available to common shareholders | $ | 105 | $ | 193 | $ | 2,506 | $ | 450 | |||||
| Weighted average shares | 957.9 | 958.9 | 958.1 | 958.8 | |||||||||
| Dilutive effect of the conversion of options and escrowed shares using treasury stock method1 | 20.1 | 21.6 | 21.2 | 16.5 | |||||||||
| Shares and share equivalents | 978.0 | 980.5 | 979.3 | 975.3 | |||||||||
| Diluted earnings per share2 | $ | 0.11 | $ | 0.20 | $ | 2.56 | $ | 0.46 | |||||
CASH AVAILABLE FOR DISTRIBUTION
| Unaudited For the periods ended September 30 (US$ millions) |
Three Months Ended | Last Twelve Months Ended | |||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||
| Asset management FFO3 | $ | 320 | $ | 211 | $ | 1,286 | $ | 922 | |||||
| Dividends received from listed investments | 464 | 329 | 1,478 | 1,239 | |||||||||
| Corporate activities FFO3 | |||||||||||||
| Financial assets earnings | 19 | 54 | 116 | 156 | |||||||||
| Corporate costs, cash taxes and other | (26 | ) | (17 | ) | (103 | ) | (39 | ) | |||||
| Corporate interest expense | (83 | ) | (66 | ) | (311 | ) | (252 | ) | |||||
| (90 | ) | (29 | ) | (298 | ) | (135 | ) | ||||||
| Preferred share dividends | (38 | ) | (35 | ) | (153 | ) | (139 | ) | |||||
| Available for distribution/reinvestment3 | $ | 656 | $ | 476 | $ | 2,313 | $ | 1,887 | |||||
- Includes management share option plan and escrowed stock plan
- Per share amounts are inclusive of dilutive effect of mandatorily redeemable preferred shares held in a consolidated subsidiary
- Non-IFRS measure – see Basis of Presentation on page 3
Source: Brookfield Asset Management Inc
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