Partners Value Investments LP Announces 2018 First Quarter Results
May 28 2018 - 5:00PM
Partners Value Investments LP (the “Partnership”) announced today
its financial results for the three months ended March 31, 2018.
All amounts are stated in US dollars.
The Partnership recorded a decrease in net book
value during the first quarter of $357 million ($4.04 per unit) to
$2.9 billion ($32.99 per unit). The decrease is primarily due to a
decrease in the quoted market price of Brookfield Asset Management
common shares. The market price of a Brookfield share decreased
from $43.54 per share at December 31, 2017 to $39.00 per share
at March 31, 2018.
Net income for the quarter was $18.7 million, of
which $13.1 million was attributable to the Equity Limited Partners
($0.15 per Equity LP unit), slightly down from $13.4 million in the
prior year quarter. The decrease in net income was due to
investment valuation losses in the current period compared to gains
in the prior year quarter, largely offset by foreign exchange gains
in the period.
Consolidated Statements of
Operations
For the three months ended March 31(Thousands, US
dollars) |
|
|
2018 |
|
|
|
2017 |
|
Investment income |
|
|
|
|
|
Dividends |
$ |
18,744 |
|
|
$ |
18,216 |
|
Other
investment income |
|
764 |
|
|
|
1,394 |
|
|
|
19,508 |
|
|
|
19,610 |
|
Expenses |
|
|
|
|
|
Operating
expenses |
|
(1,251 |
) |
|
|
(1,118 |
) |
Financing
costs |
|
(1,210 |
) |
|
|
(781 |
) |
Retractable preferred share dividends |
|
(6,789 |
) |
|
|
(6,358 |
) |
|
|
10,258 |
|
|
|
11,353 |
|
Other items |
|
|
|
|
|
Investment valuation gains (losses) |
|
(11,643 |
) |
|
|
12,582 |
|
Amortization of deferred financing costs |
|
(501 |
) |
|
|
(473 |
) |
Income
taxes |
|
(488 |
) |
|
|
(2,812 |
) |
Income
from equity accounted investment |
|
206 |
|
|
|
— |
|
Foreign
currency gains (losses) |
|
20,851 |
|
|
|
(1,578 |
) |
Net income (loss) |
$ |
18,683 |
|
|
$ |
19,072 |
|
|
|
|
|
|
|
Net income
(loss) attributable to: |
|
|
|
|
|
Equity
Limited Partners |
|
13,055 |
|
|
|
13,443 |
|
General
Partner |
|
— |
|
|
|
— |
|
Preferred
Limited Partners |
|
5,628 |
|
|
|
5,629 |
|
|
$ |
18,683 |
|
|
$ |
19,072 |
|
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 Asset Management Inc. (“Brookfield”),
representing a 9% fully-diluted interest as at March 31, 2018. 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 three months ended March 31(Thousands, US
dollars, except per unit amounts) |
2018 |
|
|
2017 |
|
Total |
|
|
|
Per Unit |
|
|
|
Total |
|
|
|
Per Unit |
Net book value,
beginning of period1 |
$ |
3,268,176 |
|
|
$ |
37.03 |
|
|
$ |
2,337,457 |
|
|
$ |
26.49 |
Net income2,3 |
|
13,055 |
|
|
|
0.15 |
|
|
|
13,443 |
|
|
|
0.15 |
Other comprehensive
income2,3 |
|
(360,566 |
) |
|
|
(4.08 |
) |
|
|
274,558 |
|
|
|
3.11 |
Adjustment for impact
of warrant3 |
|
(9,594 |
) |
|
|
(0.11 |
) |
|
|
3,293 |
|
|
|
0.04 |
Equity LP
repurchase3 |
|
— |
|
|
|
— |
|
|
|
(11 |
) |
|
|
— |
Net book value, end of
period1,4,5 |
$ |
2,911,071 |
|
|
$ |
32.99 |
|
|
$ |
2,628,740 |
|
|
$ |
29.79 |
- Calculated on a fully-diluted basis, net book value is non-IFRS
measure.
- Attributable to Equity Limited Partners.
- The basic weighted average number of Equity Limited Partnership
(“Equity LP”) units outstanding during the period ended March 31,
2018 was 73,541,131. The diluted weighted average number of Equity
Limited Partnership (“Equity LP”) units available and outstanding
during the period ended March 31, 2018 was 88,249,897; this
includes the 14,708,766 Equity LP units that would be issued
through the exercise of all outstanding warrants.
- At the end of the period, the diluted Equity LP units
outstanding were 88,249,897 (December 31, 2017 – 88,249,897).
- 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 that would be received on
exercising of warrants, which as at March 31, 2018 was $370 million
(December 31, 2017 – $380 million).
The information in the following table has been
extracted from the Partnership’s Statement of Financial
Position:
Consolidated Statements of Financial
Position
As
at(Thousands, US dollars, except per unit amounts) |
|
March 31, 2018 |
|
|
December 31, 2017 |
Assets |
|
|
|
|
|
Cash and cash
equivalents |
$ |
28,272 |
|
$ |
29,801 |
Investment in
Brookfield Asset Management Inc.1 |
|
3,347,722 |
|
|
3,737,431 |
Other investments
carried at fair value |
|
643,909 |
|
|
750,467 |
Accounts receivable and
other assets |
|
7,046 |
|
|
6,443 |
Equity accounted
investment |
|
13,977 |
|
|
13,643 |
Goodwill |
|
3,307 |
|
|
3,102 |
|
$ |
4,044,233 |
|
$ |
4,540,887 |
Liabilities and
Equity |
|
|
|
|
|
Accounts payable and
other liabilities |
$ |
35,569 |
|
$ |
108,744 |
Preferred shares2 |
|
561,499 |
|
|
575,620 |
Deferred taxes3 |
|
406,193 |
|
|
468,040 |
|
|
1,003,261 |
|
|
1,152,404 |
Equity |
|
|
|
|
|
Partnership’s
Equity |
|
|
|
|
|
Equity
Limited Partners |
|
2,541,069 |
|
|
2,888,580 |
General
Partner |
|
1 |
|
|
1 |
Preferred
Limited Partners |
|
499,902 |
|
|
499,902 |
|
$ |
4,044,233 |
|
$ |
4,540,887 |
Net book value per
Equity LP unit4,5 |
$ |
32.99 |
|
$ |
37.03 |
- The investment in Brookfield Asset Management Inc. consists of
86 million Brookfield shares with a quoted market value of $39.00
per share as at March 31, 2018 (December 31, 2017 – $43.54).
- Represents $570 million of retractable preferred shares less $9
million of unamortized issue costs as at March 31, 2018 (December
31, 2017 – $585 million less $9 million).
- 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.
- Calculated on a fully diluted basis. As at March 31, 2018,
there were 73,541,131 (December 31, 2017 – 73,541,131) Equity LP
units issued and outstanding, while the diluted Equity LP units
outstanding were 88,249,897 (December 31, 2017 – 88,249,897) which
includes the 14,708,766 Equity LP units that would be issued
through the exercise of all outstanding warrants.
- 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 that would be received on
exercising of warrants, which as at March 31, 2018 was $370 million
(December 31, 2017 – $380 million).
For further information, contact Investor
Relations at ir@pvii.ca or 647-503-6513.
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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