Brookfield Asset Management Reports Solid 2012 Financial Results

Brookfield Asset Management Reports Solid 2012 Financial Results 
- NET INCOME ATTRIBUTABLE TO SHAREHOLDERS OF $1.4 BILLION, OR $1.97
PER SHARE 
- 12% INCREASE IN FUNDS FROM OPERATIONS FOR 2012 
- 7% DIVIDEND INCREASE 
TORONTO, ONTARIO -- (Marketwire) -- 02/15/13 -- Brookfield Asset
Management Inc. (TSX:BAM.A)(NYSE:BAM)(EURONEXT:BAMA) -  
Investors, analysts and other interested parties can access
Brookfield Asset Management's 2012 Year End and Fourth 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 February 15, 2013
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 year ended December 31, 2012.  
Our operating performance was strong in 2012, with acquisitions and
organic expansion initiatives in recent years making a significant
contribution to our cash flow and the intrinsic value of our assets.
We have set the stage for solid future growth, as both our private
and public asset management franchises expanded significantly during
the year and are well positioned to attract an increasing amount of
capital from our clients and increase our management and performance
fees.  
Annual Performance Highlights 


 
--  Net income attributable to shareholders was $1.4 billion, or $1.97 per
    share, compared to $2.89 per share in 2011. The 2011 results included
    significant valuations gains. 
    
--  Funds from operations ("FFO") for 2012 increased 12% to $1.4 billion.
    Excluding disposition gains, FFO was $1.1 billion, representing an 11%
    increase over the comparable 2011 result. 
    
--  Total return to common shareholders was $3.4 billion, a 12.4% return in
    2012. 
    
--  Intrinsic value for common shareholders increased to $28.6 billion or
    $44.93 per share. 
    
--  Total assets under management ("AUM") increased 13% to $181 billion. 
    
--  Annualized base management fees, including incentive distributions,
    increased 38% to $415 million. 
    
--  Accumulated performance fees increased by $310 million, and $34 million
    of previously accumulated fees were crystallized. 
    
--  $7 billion of fee bearing capital was raised during the year for our
    private and listed funds, increasing fee bearing capital, after capital
    distributed to investors, to $60 billion. 

 
Bruce Flatt, CEO of Brookfield, commented: "We achieved significant
growth in funds from operations in 2012, reflecting strong
performance from most of our operations. We are well positioned to
continue to deliver solid results, as we raise and deploy further
capital for clients. We are expanding our global platforms to support
our public and private funds, whose global presence and scale provide
us with a competitive advantage when investing our capital." 
Financial Results  


 
                                    Three months ended  Years ended December
                                      December 31(1)           31(1)        
                                   -----------------------------------------
US$ millions (except per share                                              
 amounts)                                2012      2011       2012      2011
----------------------------------------------------------------------------
                                                                            
Net income(1,2)                      $    492  $    588   $  1,380  $  1,957
Funds from operations(2,3,4)              459       397      1,356     1,211
  - excluding disposition gains           312       250      1,073       970
Total return(2,3)                       1,842     1,868      3,403     3,345
                                                                            
Per Brookfield share                                                        
  Net income(2)                      $   0.72  $   0.86   $   1.97  $   2.89
  Funds from operations(2,3,4)           0.67      0.58       1.94      1.76
  Total return(2,3,4)                    2.92      2.98       5.39      5.33
----------------------------------------------------------------------------
----------------------------------------------------------------------------
 
1.  Financial results are based on International Financial Reporting
    Standards ("IFRS") unless otherwise noted 
2.  Attributable to Brookfield shareholders. Excludes amounts attributable
    to non-controlling interests 
3.  Non-IFRS measure. See Basis of Presentation on page 4 for details 
4.  Funds from operations includes disposition gains 

 
Consolidated net income was $2.75 billion, of which $1.38 billion (or
$1.97 per share) accrued to Brookfield shareholders. The remaining
$1.37 billion accrues to the other investors in our consolidated
operations. This compares to $1.96 billion for Brookfield
shareholders (or $2.89 per share) in 2011, which included a larger
amount of valuation gains recognized within our retail property
operations.  
Total Return for Brookfield shareholders for the year was $3.40
billion, or $5.39 per share. Total Return includes our share of FFO,
which was $1.36 billion for the year, plus $2.18 billion of valuation
gains, less preferred share dividends, and represents a 12.4% return
during 2012. We distributed $0.55 per share to shareholders as
dividends and the balance was retained in the business.  
FFO totalled $2.92 billion for the year on a consolidated basis, of
which $1.36 billion (or $1.94 per share) accrued to Brookfield
shareholders and $1.56 billon accrues to the other investors in our
consolidated entities. This compared to $1.21 billion of FFO for
Brookfield shareholders in 2011 (or $1.76 per share). The increase in
FFO compared to the prior year reflects improved operating
performance in most of our core operations, including a higher level
of base fees and performance income generated on a larger amount of
fee bearing capital, higher cash flows in our property operations
reflecting improved leasing, acquisitions and completed developments,
and the impact of increased housing activity in the United States on
operations within our private equity and residential development
group. In addition, we monetized a number of assets during the year
and recorded an increased amount of disposition gains within FFO
relative to the prior year. 
Valuation gains of $2.18 billion (or $3.45 per share) include fair
value changes recorded in net income and other comprehensive income,
as well as changes in incremental values that we record in respect of
items not otherwise revalued in our financial statements. These
include continued strengthening in commercial property valuations,
gains within our housing-related private equity investments, and an
increase in our asset management franchise value reflecting the
continued increase in fee bearing third-party capital, and associated
revenues.  
The intrinsic value of our common equity was $44.93 per share at
December 31, compared to $40.99 at the beginning of the year. The
increase reflects the total return generated during the year, after
payment of common share div
idends to shareholders, and also reflects
the impact of foreign currency exchange rate changes and share
repurchases. 
Operating Highlights  
We expanded our asset management franchise with both listed and
private entities.  
Our strategy is to own and operate assets that generate long-term
stable and growing returns. Our listed and private funds have
established solid long-term track records using this approach, and as
a result, investors increased their allocation of capital to our
platforms, which allowed us to add $7 billion of fee-bearing assets
under management in our private and listed funds, increasing total
fee bearing capital to $60 billion after reflecting capital
distributions to investors.  
We received $3.6 billion of new third-party commitments to our
private funds, and had first and subsequent closes on four funds. We
are marketing a total of six funds to our clients, with a total
fundraising goal of an additional $5 billion. The capitalization of
our listed entities increased by $4.8 billion to $21.3 billion due to
issuance of additional capital and value appreciation. Our annualized
base management fees and incentive distributions are now tracking at
$415 million, up 38% from the previous year, and we earned $344
million in performance fees, of which $34 million was realized and
included in our financial results. We finished the year with over $5
billion of capital that we can deploy on behalf of our private fund
clients.  
We expect to launch our third flagship listed entity, Brookfield
Property Partners, in the near future and believe it will rank as one
of the largest and highest quality publicly traded global property
businesses. This will increase both fee bearing capital and base
management fees.  
We invested in growth opportunities in all our major operating
businesses, increasing the capital deployed by both our listed
entities and private funds.  
We announced or completed acquisitions and capital expansions
totalling $13.1 billion during the year, deploying $7.7 billion of
equity capital on behalf of clients and Brookfield shareholders. We
expect these businesses will make a significant contribution to our
future cash flows and value increases.  
In our property business, we acquired attractive properties in London
and Sydney with a total value of $1.8 billion and broke ground on a
major project in New York, where we will build above an existing rail
yard. We also purchased a U.S. industrial property portfolio with
strong growth potential. Our infrastructure business acquired a South
American toll road network, a UK utility business and a North
American district heating system, investing a total of $2.1 billion
in new projects. Our renewable power business deployed $600 million
to purchase four large U.S. hydroelectric facilities with 378
megawatts of generating capacity and announced an agreement to
acquire a second large portfolio for $760 million that is expected to
close in the first quarter of 2013. 
We launched or completed a number of development and operational
initiatives that increased the value of our assets and the associated
cash flows.  
Our property business opened an office complex in Perth, Australia,
we began construction on new projects in Toronto and Calgary and are
actively leasing vacancy in retail and office projects acquired over
the past four years. Our infrastructure group completed a $600
million expansion of our Australian railroad and expects to finish a
$750 million new-build electrical transmission system in Texas this
year. We began producing electricity at new power facilities and
advanced new generation projects in North and South America. In our
private equity business, we continued to invest in opportunities
related to the natural gas industry and experienced outstanding
performance from a number of our cyclical investments linked to the
North American housing industry.  
We generated $29 billion of capital over the course of the year
through asset sales, equity issuance, fund formations and debt
financings.  
We recycled capital by selling mature assets and investing in sectors
where we see opportunities to achieve superior returns. We improved
our liquidity and lowered our financing costs through our financing
activities, and we continue to see opportunities to raise capital at
attractive rates. We refinanced $8.0 billion of debt within our
retail property portfolios, generating net proceeds of $1.6 billion.
Our infrastructure business was awarded an investment grade credit
rating and we issued $3.8 billion of capital throughout our
infrastructure business at attractive terms. The renewable power
platform refinanced $2.3 billion of debt, including an inaugural
preferred share issue.  
We raised our quarterly dividend by 7% to $0.60 on an annualized
basis.  
The increase in our dividend reflects our policy of raising the
distributions over time by an amount that corresponds to the growth
in cash flow from our businesses, while ensuring we retain capital to
maintain our assets and take advantage of growth opportunities.  
Intrinsic Value of Common Equity  
The intrinsic value of Brookfield's common equity was $44.93 per
share at December 31, 2012. This includes our estimate of net
invested capital of $37.71 per share and $7.22 per share related to
our asset management franchise.  
Dividend Declaration  
The Board of Directors declared a quarterly dividend of US$0.15 per
share (representing US$0.60 per annum), payable on May 31, 2013, to
shareholders of record as at the close of business on May 1, 2013.
This represents an increase of 7% over the current dividend rate. The
Board also declared all of the regular monthly and quarterly
dividends on its preferred shares.  
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 total return, funds from operations,
invested capital and intrinsic value, which are non-IFRS measures.  
Total return is defined as comprehensive income excluding deferred
tax expenses and the impact of foreign currency fluctuations on the
long-term capital invested in non-U.S. operations, and including
incremental valuation adjustments for assets not otherwise revalued
under IFRS. Brookfield uses total return to assess the performance of
the overall business as well as its individual business units.  
Funds from operations is defined as net income prior to fair value
changes, depreciation and amortization, and deferred income taxes,
and includes certain disposition gains that are not otherwise
included in net income as determined under IFRS. Brookfield uses
funds from operations 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.  
Invested capital represents the capital invested by the company in
its operations, net of the underlying liabilities and non-controlling
interests. These balances are derived from the company's IFRS balance
sheets and are adjusted to exclude deferred income taxes and to
include adjustments to present the fair value of assets and
liabilities that are carried at historical book values or otherwise
not reflected in the company's IFRS balance sheets. Common equity on
this basis is referred to as net invested capital.  
Intrinsic value includes net invested capital as well as the value
attributed to the company's asset management franchise. Asset
management franchise value represents management's estimate of the
value attributable to the company's asset management activities that
is not otherwise included in net invested capital based on current
capital under management, associated fee arrangements, and potential
growth.  
Total return, funds from operations, invested capital and intrinsic
value and their per share equivalents 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
total return, funds from operations, invested capital and intrinsic
value and a reconciliation between total return and comprehensive
income attributable to Brookfield shareholders, funds from operations
and net income attributable to Brookfield shareholders, and invested
capital and intrinsic value and common equity in the Supplemental
Information available at www.brookfield.com. 
Additional Information 
The Letter to Shareholders and the company's Supplemental Information
for the year ended December 31, 2012 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 annual financial statements for the year
ended December 31, 2012, 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 power, 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 


 
                                                    December 31  December 31
US$ millions                                               2012         2011
----------------------------------------------------------------------------
Assets                                                                      
Cash and cash equivalents                           $     2,844  $     2,027
Other financial assets                                    3,111        3,773
Accounts receivable and other                             6,945        6,723
Inventory                                                 6,579        6,060
Investments                                              11,689        9,401
Investment properties                                    33,161       28,366
Property, plant and equipment                            31,114       22,832
Timber                                                    3,283        3,155
Intangible assets                                         5,764        3,968
Goodwill                                                  2,490        2,607
Deferred income tax asset                                 1,664        2,110
----------------------------------------------------------------------------
Total Assets                                        $   108,644  $    91,022
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Liabilities and Equity                                                      
Accounts payable and other                          $    11,599  $     9,266
Corporate borrowings                                      3,526        3,701
Non-recourse borrowings                                                     
  Property-specific mortgages                            33,648       28,415
  Subsidiary borrowings                                   7,585        4,441
                                                                            
Deferred income tax liability                             6,419        5,817
                                                                            
Capital securities                                        1,191        1,650
Interests of others in consolidated funds                   425          333
Equity                                                                      
  Preferred equity                                        2,901        2,140
  Non-controlling interests in net assets                23,190       18,516
  Common equity                                          18,160       16,743
----------------------------------------------------------------------------
  Total equity                                           44,251       37,399
----------------------------------------------------------------------------
Total Liabilities and Equity                        $   108,644  $    91,022
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
CONSOLIDATED STATEMENTS OF OPERATIONS 


 
(Unaudited)                          Three Months Ended     Years Ended     
                                    ----------------------------------------
For the periods ended December 31                                           
US$ millions (except per share                                              
 amounts)                                2012      2011      2012      2011 
----------------------------------------------------------------------------
Revenues                             $  5,385  $  4,122  $ 18,590  $ 15,921 
Direct costs                           (4,129)   (2,759)  (13,849)  (11,488)
----------------------------------------------------------------------------
                                        1,256     1,363     4,741     4,433 
Equity accounted income                   339       584     1,243     2,205 
----------------------------------------------------------------------------
                                        1,595     1,947     5,984     6,638 
Expenses                                                                    
  Interest                               (637)     (620)   (2,497)   (2,352)
  Corporate costs                         (40)      (40)     (158)     (168)
----------------------------------------------------------------------------
Net income prior to valuation items                                         
 and income tax                           918     1,287     3,329     4,118 
Valuation items                                                             
  Fair value changes                      401       158     1,197       968 
  Depreciation and amortization          (352)     (228)   (1,263)     (904)
                                                                            
Income tax                               (191)     (257)     (516)     (508)
----------------------------------------------------------------------------
Net income                           $    776  $    960  $  2,747  $  3,674 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Net income attributable to:                                                 
  Brookfield shareholders            $    492  $    588  $  1,380  $  1,957 
  Non-controlling interests               284       372     1,367     1,717 
----------------------------------------------------------------------------
                                     $    776  $    960  $  2,747  $  3,674 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Net income per share                                                        
  Diluted                            $   0.72  $   0.86  $   1.97  $   2.89 
  Basic                              $   0.74  $   0.90  $   2.02  $   3.00 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Note:                                                                       
The foregoing table includes the results attributable to non-controlling    
interests whereas the corporation's segmented operating results discussed   
elsewhere do not.                                                           

 
RECONCILIATION OF COMPREHENSIVE INCOME TO TOTAL RETURN(1) 


 
                                           Three Months      Years Ended    
(Unaudited)                                   Ended                         
                                        ------------------------------------
For the periods ended December 31                                           
US$ millions (except per share amounts)     2012     2011     2012     2011 
----------------------------------------------------------------------------
Net income attributable to Brookfield                                       
 shareholders (see page 7)(2)            $   492  $   588  $ 1,380  $ 1,957 
  Valuation gains included in: other                                        
   comprehensive income(2)                   858    1,663      843    1,244 
----------------------------------------------------------------------------
Comprehensive income(2)                    1,350    2,251    2,223    3,201 
  Remove: deferred income taxes included                                    
   in net income(2)                           91      112      268       96 
  Add: fair value changes not included                                      
   in IFRS comprehensive income              436     (466)   1,041      154 
----------------------------------------------------------------------------
                                           1,877    1,897    3,532    3,451 
Less: preferred share dividends              (35)     (29)    (129)    (106)
----------------------------------------------------------------------------
Total return(3)                          $ 1,842  $ 1,868  $ 3,403  $ 3,345 
----------------------------------------------------------------------------
- Per share                              $  2.92  $  2.98  $  5.39  $  5.33 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(Unaudited)                          Three Months Ended     Years Ended     
                                    ----------------------------------------
For the periods ended December 31                                           
US$ millions                             2012      2011      2012      2011 
----------------------------------------------------------------------------
  Total return consists of:                                                 
    Funds from operations            $    459  $    397  $  1,356  $  1,211 
    Valuation gains                     1,418     1,500     2,176     2,240 
    less: preferred share dividends       (35)      (29)     (129)     (106)
----------------------------------------------------------------------------
                                     $  1,842  $  1,868  $  3,403  $  3,345 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS(1) 


 
                                           Three Months      Years Ended    
(Unaudited)                                   Ended                         
                                        ------------------------------------
For the periods ended December 31                                           
US$ millions                                2012     2011     2012     2011 
----------------------------------------------------------------------------
Net income prior to valuation items and                                     
 income tax (see page 7)                 $   918  $ 1,287  $ 3,329  $ 4,118 
  Adjust for:                                                               
    Fair value changes within equity                                        
     accounted income                       (113)    (425)    (577)  (1,529)
    Current income taxes                     (35)     (17)    (135)     (97)
    Disposition gains recorded in equity                                    
     under IFRS                               84       18      306      181 
----------------------------------------------------------------------------
                                             854      863    2,923    2,673 
  Non-controlling interest                  (395)    (466)  (1,567)  (1,462)
----------------------------------------------------------------------------
Funds from operations(3)                 $   459  $   397  $ 1,356  $ 1,211 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
RECONCILIATION OF COMMON EQUITY TO INTRINSIC VALUE(1)  


 
(Unaudited)                                    2012              2011       
                                        ------------------------------------
As at December 31                                      Per               Per
US$ millions, (except per share amounts)    Total    Share    Total    Share
----------------------------------------------------------------------------
Common equity per IFRS financial                                            
 statements                              $ 18,160 $  28.99 $ 16,743 $  26.77
Add back deferred income taxes(4)           2,339     3.55    2,255     3.42
Incremental values(3)                       3,400     5.17    2,850     4.33
----------------------------------------------------------------------------
Net invested capital                       23,899    37.71   21,848    34.52
Asset management franchise value            4,750     7.22    4,250     6.47
----------------------------------------------------------------------------
Total intrinsic value(3)                 $ 28,649 $  44.93 $ 26,098 $  40.99
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Notes:                                                                      
 
1.  See Basis of Presentation on page 4 
2.  Excludes amounts attributable to non-controlling interests 
3.  Non-IFRS measure 
4.  Net of non-controlling interests 

 
Contacts:
Media:
Brookfield Asset Management Inc.
Andrew Willis, SVP, Communications & Media
(416) 369-8236
(416) 363-2856 (FAX)
andrew.willis@brookfield.com 
Investors:
Brookfield Asset Management Inc.
Katherine Vyse, SVP, Investor Relations
(416) 369-8246
(416) 363-2856 (FAX)
katherine.vyse@brookfield.com
www.brookfield.com
 
 
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