Partners Value Investments LP Announces 2017 Third Quarter Results
November 28 2017 - 4:30PM
Partners Value Investments LP (the “Partnership”) announced today
its financial results for the three months ended September 30,
2017. All amounts are stated in US dollars.
The Partnership recorded an increase in net book
value during the third quarter of $235 million ($2.66 per unit) to
$3.1 billion ($35.05 per unit). The increase is primarily due to
unrealized gains on the Partnership’s investment portfolio and an
increase in the quoted market price of Brookfield Asset Management
(“Brookfield”) common shares. The market price of Brookfield Asset
Management (“Brookfield”) Class A common shares increased 5% during
the quarter to $41.30 per share.
Net income for the quarter was $8 million, of which $2 million
was attributable to the Equity Limited Partners ($0.03 per Equity
LP unit), down from $19 million in the prior year quarter. The
decrease in net income was due to increased operating expenses in
the period reflective of increased investment activity, increased
current taxes resulting from disposition of securities, and foreign
exchange losses incurred on the translation of our Canadian dollar
denominated liabilities.
Consolidated Statements of
Operations
(unaudited) For the period ended September
30(Thousands, US dollars) |
Three months ended |
|
Nine months ended |
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
Investment income |
|
|
|
|
|
|
|
|
|
|
|
Dividends |
$ |
20,721 |
|
|
$ |
16,301 |
|
|
$ |
67,734 |
|
|
$ |
46,412 |
|
Other
investment income |
|
1,239 |
|
|
|
632 |
|
|
|
2,752 |
|
|
|
4,418 |
|
|
|
21,960 |
|
|
|
16,933 |
|
|
|
70,486 |
|
|
|
50,830 |
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses |
|
(10,047 |
) |
|
|
(3,662 |
) |
|
|
(12,808 |
) |
|
|
(9,723 |
) |
Financing
costs |
|
(1,889 |
) |
|
|
(523 |
) |
|
|
(3,677 |
) |
|
|
(924 |
) |
Retractable preferred share dividends |
|
(6,896 |
) |
|
|
(6,769 |
) |
|
|
(19,525 |
) |
|
|
(18,980 |
) |
|
|
3,128 |
|
|
|
5,979 |
|
|
|
34,476 |
|
|
|
21,203 |
|
Other items |
|
|
|
|
|
|
|
|
|
|
|
Investment valuation gains (losses) |
|
40,141 |
|
|
|
23,315 |
|
|
|
55,275 |
|
|
|
49,862 |
|
Amortization of deferred financing costs |
|
(726 |
) |
|
|
(480 |
) |
|
|
(1,694 |
) |
|
|
(1,363 |
) |
Change in
value of fund unit liability |
|
— |
|
|
|
(50 |
) |
|
|
— |
|
|
|
(898 |
) |
Income
tax (expense) recovery |
|
(9,640 |
) |
|
|
(2,823 |
) |
|
|
(16,355 |
) |
|
|
(16,654 |
) |
Equity
accounted income |
|
262 |
|
|
|
— |
|
|
|
262 |
|
|
|
— |
|
Foreign
currency (losses) gains |
|
(22,756 |
) |
|
|
(6,958 |
) |
|
|
(29,695 |
) |
|
|
18,031 |
|
Net income |
$ |
7,785 |
|
|
$ |
18,983 |
|
|
$ |
39,645 |
|
|
$ |
70,181 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to: |
|
|
|
|
|
|
|
|
|
|
|
Partners
Value Investments Inc. |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
51,198 |
|
General
Partner |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Preferred
Limited Partners |
|
5,427 |
|
|
|
7,529 |
|
|
|
16,675 |
|
|
|
7,529 |
|
Equity
Limited Partners |
|
2,359 |
|
|
|
11,454 |
|
|
|
22,971 |
|
|
|
11,454 |
|
|
$ |
7,785 |
|
|
$ |
18,983 |
|
|
$ |
39,645 |
|
|
$ |
70,181 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Profile and Net Book
Value
The Partnership’s principal investment is its
interest in 86 million Class A Limited Voting Shares (“Brookfield
shares”) of Brookfield, representing a 9% fully-diluted interest as
at September 30, 2017. In addition, the Partnership owns a
diversified investment portfolio of marketable securities. The
information in the following table shows the changes in net book
value:
For the periods ended September 30, 2017(Thousands, US
dollars, except per unit amounts) |
Three months ended |
|
Nine months ended |
|
Total |
|
|
Per Unit |
|
|
Total |
|
|
Per Unit |
Net book value,
beginning of period1 |
$ |
2,858,111 |
|
$ |
32.39 |
|
$ |
2,337,457 |
|
|
$ |
26.49 |
Net income2, 3 |
|
2,358 |
|
|
0.03 |
|
|
22,970 |
|
|
|
0.26 |
Other comprehensive
income2,3 |
|
218,481 |
|
|
2.48 |
|
|
705,313 |
|
|
|
7.99 |
Adjustment for impact
of warrant2,3 |
|
14,462 |
|
|
0.15 |
|
|
27,683 |
|
|
|
0.31 |
Equity LP
Repurchase2,3 |
|
— |
|
|
— |
|
|
(11 |
) |
|
|
— |
Net book value, end of
period1,4 |
$ |
3,093,412 |
|
$ |
35.05 |
|
$ |
3,093,412 |
|
|
$ |
35.05 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
|
Calculated
on a fully-diluted basis, net book value is a non-IFRS measure and
is equal to total equity less General Partner equity and Preferred
Limited Partners’ equity, plus the value of consideration to be
received on exercising of warrants, which as at September 30, 2017
was $383 million (December 31, 2016 – $355 million). |
2 |
|
Attributable to Equity Limited Partners |
3 |
|
The basic
weighted average number of Equity Limited Partnership (“Equity LP”)
units outstanding during the three and nine months ended September
30, 2017 was 73,541,131 and 73,541,210 respectively. The diluted
weighted average number of Equity Limited Partnership (“Equity LP”)
units available and outstanding during the three and nine months
ended September 30, 2017 was 88,249,897 and 88,249,976
respectively; this includes the 14,708,766 Equity LP units issued
through the exercise of all outstanding warrants. |
4 |
|
At the end
of the quarter, the diluted Equity LP units outstanding were
88,249,897 (December 31, 2016 – 88,250,327); this includes the
14,708,766 Equity LP units issued through the exercise of all
outstanding warrants. |
|
|
|
The information in the following table has been extracted from
the Partnership’s Statement of Financial Position:
Statement of Financial
Position
As
at(Thousands, US dollars, except per unit amounts) |
|
September 30, 2017 |
|
|
December 31, 2016 |
Assets |
|
|
|
|
|
Cash and cash
equivalents |
$ |
122,084 |
|
$ |
5,971 |
Investments |
|
|
|
|
|
Brookfield Asset Management Inc.1 |
|
3,545,152 |
|
|
2,829,156 |
Other
securities |
|
775,058 |
|
|
612,734 |
Accounts receivable and
other assets |
|
7,154 |
|
|
20,881 |
Investment in Trisura
Group Ltd. |
|
13,635 |
|
|
— |
Goodwill |
|
3,128 |
|
|
— |
|
$ |
4,466,211 |
|
$ |
3,468,742 |
Liabilities and
Equity |
|
|
|
|
|
Accounts payable and
other liabilities |
$ |
164,872 |
|
$ |
124,820 |
Preferred shares2 |
|
679,852 |
|
|
521,155 |
Deferred taxes3 |
|
410,918 |
|
|
340,470 |
|
|
1,255,642 |
|
|
986,445 |
Equity |
|
|
|
|
|
Partnership equity |
|
|
|
|
|
General
Partner |
|
1 |
|
|
1 |
Preferred
Limited Partners |
|
499,902 |
|
|
499,902 |
Equity
Limited Partners |
|
2,710,666 |
|
|
1,982,394 |
|
$ |
4,466,211 |
|
$ |
3,468,742 |
Net book value per
Equity LP unit4,5 |
$ |
35.05 |
|
$ |
26.49 |
|
|
|
|
|
|
1 |
|
The
investment in Brookfield Asset Management Inc. consists of 86
million Brookfield shares with a quoted market value of $41.30 per
share as at September 30, 2017 (December 31, 2016 – $32.96). |
2 |
|
Represents
$690 million of retractable preferred shares less $10 million of
unamortized issue costs as at September 30, 2017 (December 31, 2016
– $529 million less $8 million). |
3 |
|
The
deferred tax liability represents the potential future income tax
liability of the Partnership recorded for accounting purposes based
on the difference between the carrying values of the Partnership’s
assets and liabilities and their respective tax values, as well as
giving effect to estimated capital and non-capital losses. |
4 |
|
Calculated
on a fully-diluted basis. As at September 30, 2017, there were
73,541,131 (December 31, 2016 – 73,541,531) Equity LP units issued
and outstanding, while the diluted Equity LP units outstanding were
88,249,897 (December 31, 2016 – 88,250,327) which includes the
14,708,766 Equity LP units that would be issued through the
exercise of all outstanding warrants. |
5 |
|
Net book
value is a non-IFRS measure and is equal to total equity less
General Partner equity and Preferred Limited Partners’ equity, plus
the value of consideration to be received on exercising of
warrants, which as at September 30, 2017 was $383 million (December
31, 2016 – $355 million). |
|
|
|
For further information, contact Investor
Relations at ir@pvii.ca or 647-503-6516.
Note: This news release contains
“forward-looking information” within the meaning of Canadian
provincial securities laws and “forward-looking statements” within
the meaning of applicable Canadian securities regulations. The
words “potential” and “estimated” and other expressions which are
predictions of or indicate future events, trends or prospects and
which do not relate to historical matters, identify forward-looking
information. Forward-looking information in this news release
includes statements with regard to the Partnership’s potential
future income taxes.
Although the Partnership believes that its
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 its
control, which may cause the actual results, performance or
achievements of the Partnership 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 and information include, but are not
limited to: the financial performance of Brookfield Asset
Management Inc., the impact or unanticipated impact of general
economic, political and market factors; the behavior of financial
markets, including fluctuations in interest and foreign exchanges
rates; global equity and capital markets and the availability of
equity and debt financing and refinancing within these markets;
strategic actions including dispositions; 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; 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 the
Partnership’s documents filed with the securities regulators in
Canada.
The Partnership cautions that the foregoing list
of important factors that may affect future results is not
exhaustive. When relying on the Partnership’s forward-looking
statements and information, investors and others should carefully
consider the foregoing factors and other uncertainties and
potential events. Except as required by law, the Partnership
undertakes no obligation to publicly update or revise any
forward-looking statements and information, whether written or
oral, that may be as a result of new information, future events or
otherwise.
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