Brookfield Asset Management Reports Solid 2012 Financial Results

Fri Feb 15, 2013 7:56am EST

* Reuters is not responsible for the content in this press release.

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 

    The conference call can be accessed via webcast on February 15, 2013 at
11:00 a.m. Eastern Time at 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
--  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 dividends 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

    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

    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

    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

    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

    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

    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 Hard
copies of the annual and quarterly reports can be obtained free of charge
upon request. 

    For more information, please visit our website at 

    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.


                                                    December 31  December 31
US$ millions                                               2012         2011
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
  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


(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 
  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 
The foregoing table includes the results attributable to non-controlling    
interests whereas the corporation's segmented operating results discussed   
elsewhere do not.                                                           


                                           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 


                                           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 


(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

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 

Brookfield Asset Management Inc.
Andrew Willis, SVP, Communications & Media
(416) 369-8236
(416) 363-2856 (FAX)

Brookfield Asset Management Inc.
Katherine Vyse, SVP, Investor Relations
(416) 369-8246
(416) 363-2856 (FAX)

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