Partners Value Investments LP Announces 2018 Third Quarter Results
November 29 2018 - 4:30PM
Partners Value Investments LP (the “Partnership”) announced today
its financial results for the three months ended September 30,
2018. All amounts are stated in US dollars.
Partners Value Investments LP (the “Partnership”) recorded an
increase in net book value during the third quarter of $318 million
($3.60 per unit) to $3.4 billion ($38.10 per unit). The increase is
due to an increase in the quoted market price of Brookfield Asset
Management common shares, investment valuation gains, and
investment income earned on the Partnerships investment
portfolio.
The net income for the quarter was $2 million, of which a loss
of $3 million was attributable to the Equity Limited Partners
($0.04 per Equity LP unit), down from net income of $2 million in
the prior year quarter. The net loss was primarily a result of
foreign currency losses resulting from the weakening United States
dollar, and income tax expense incurred due to large gains realized
as a result of selling various portfolio securities during the
third quarter.
Consolidated Statements of
Operations
(unaudited) For the
periods ended September 30 |
Three months |
|
Nine months |
(Thousands, US dollars) |
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
Investment income |
|
|
|
|
|
|
|
|
|
|
|
Dividends |
$ |
18,541 |
|
|
$ |
20,721 |
|
|
$ |
56,219 |
|
|
$ |
67,734 |
|
Other
investment income |
|
717 |
|
|
|
1,239 |
|
|
|
3,476 |
|
|
|
2,752 |
|
|
|
19,258 |
|
|
|
21,960 |
|
|
|
59,695 |
|
|
|
70,486 |
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses |
|
(631 |
) |
|
|
(10,047 |
) |
|
|
(3,691 |
) |
|
|
(12,808 |
) |
Financing
costs |
|
(748 |
) |
|
|
(1,889 |
) |
|
|
(2,436 |
) |
|
|
(3,677 |
) |
Retractable preferred share dividends |
|
(7,213 |
) |
|
|
(6,896 |
) |
|
|
(20,706 |
) |
|
|
(19,525 |
) |
|
|
10,666 |
|
|
|
3,128 |
|
|
|
32,862 |
|
|
|
34,476 |
|
Other items |
|
|
|
|
|
|
|
|
|
|
|
Investment valuation gains |
|
8,945 |
|
|
|
40,141 |
|
|
|
29,123 |
|
|
|
55,275 |
|
Amortization of deferred financing costs |
|
(871 |
) |
|
|
(726 |
) |
|
|
(1,938 |
) |
|
|
(1,694 |
) |
Income
tax expense |
|
(6,358 |
) |
|
|
(12,264 |
) |
|
|
(13,138 |
) |
|
|
(18,979 |
) |
Equity
accounted income |
|
572 |
|
|
|
262 |
|
|
|
651 |
|
|
|
262 |
|
Foreign
currency (losses) gains |
|
(10,745 |
) |
|
|
(22,756 |
) |
|
|
28,592 |
|
|
|
(29,695 |
) |
Net (loss) income |
$ |
2,209 |
|
|
$ |
7,785 |
|
|
$ |
76,152 |
|
|
$ |
39,645 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
income attributable to: |
|
|
|
|
|
|
|
|
|
|
|
General
Partner |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Preferred
Limited Partners |
|
5,625 |
|
|
|
5,427 |
|
|
|
16,877 |
|
|
|
16,675 |
|
Equity
Limited Partners |
|
(3,416 |
) |
|
|
2,358 |
|
|
|
59,275 |
|
|
|
22,970 |
|
|
$ |
2,209 |
|
|
$ |
7,785 |
|
|
$ |
76,152 |
|
|
$ |
39,645 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, 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 periods ended
September 30, 2018 |
Three months |
|
Nine months |
(Thousands, US dollars, except per unit amounts) |
|
Total |
|
|
|
Per Unit |
|
|
|
Total |
|
|
|
Per Unit |
|
Net book value,
beginning of period1 |
$ |
3,044,686 |
|
|
$ |
34.50 |
|
|
$ |
3,268,176 |
|
|
$ |
37.03 |
|
Net (loss) income2,
3 |
|
(3,416 |
) |
|
|
(0.04 |
) |
|
|
59,275 |
|
|
|
0.67 |
|
Other comprehensive
income2,3 |
|
315,007 |
|
|
|
3.57 |
|
|
|
45,382 |
|
|
|
0.51 |
|
Adjustment for impact
of warrant2,3 |
|
6,300 |
|
|
|
0.07 |
|
|
|
(9,928 |
) |
|
|
(0.11 |
) |
Equity LP
Repurchase2,3 |
|
(108 |
) |
|
|
— |
|
|
|
(436 |
) |
|
|
— |
|
Net book value, end of
period1,4 |
$ |
3,362,469 |
|
|
$ |
38.10 |
|
|
$ |
3,362,469 |
|
|
$ |
38.10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 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 September
30, 2018 was 73,535,535. The diluted weighted average number of
Equity Limited Partnership (“Equity LP”) units available and
outstanding during the period ended September 30, 2018 was
88,237,000; 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 88,234,397 (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 September 30, 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:
Statement of Financial
Position
As
at(Thousands, US dollars, except per unit amounts) |
|
September 30, 2018 |
|
|
December 31, 2017 |
Assets |
|
|
|
|
|
Cash and cash
equivalents |
$ |
152,193 |
|
$ |
29,801 |
Investment in
Brookfield Asset Management Inc.1 |
|
3,822,412 |
|
|
3,737,431 |
Other investments
carried at fair value |
|
527,849 |
|
|
750,467 |
Accounts receivable and
other assets |
|
1,796 |
|
|
6,443 |
Equity accounted
investment |
|
16,074 |
|
|
13,643 |
Goodwill |
|
4,125 |
|
|
3,102 |
|
$ |
4,524,449 |
|
$ |
4,540,887 |
Liabilities and
Equity |
|
|
|
|
|
Accounts payable and
other liabilities |
$ |
38,670 |
|
$ |
108,744 |
Preferred shares2 |
|
523,573 |
|
|
575,620 |
Deferred taxes3 |
|
469,502 |
|
|
468,040 |
|
|
1,031,745 |
|
|
1,152,404 |
Equity |
|
|
|
|
|
Partnership’s
Equity |
|
|
|
|
|
Equity
Limited Partners |
|
2,992,801 |
|
|
2,888,580 |
General
Partner |
|
1 |
|
|
1 |
Preferred
Limited Partners |
|
499,902 |
|
|
499,902 |
|
$ |
4,524,449 |
|
$ |
4,540,887 |
Net book value per
Equity LP unit4,5 |
$ |
38.10 |
|
$ |
37.03 |
|
|
|
|
|
|
- The investment in Brookfield Asset Management Inc. consists of
86 million Brookfield shares with a quoted market value of $44.53
per share as at September 30, 2018 (December 31, 2017 –
$43.54).
- Represents $531 million of retractable preferred shares less $7
million of unamortized issue costs as at September 30, 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 September 30, 2018,
there were 73,525,631 (December 31, 2017 – 73,541,131) Equity LP
units issued and outstanding, while the diluted Equity LP units
outstanding were 88,234,397 (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 September 30, 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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