TORONTO, March 30, 2023 (GLOBE NEWSWIRE) -- Partners Value Investments Inc. (the “Company”, TSX: PVF.WT) announced today its financial results for the year ended December 31, 2022. All amounts are stated in US dollars.
The Company generated net income of $1.9 billion for the year ended December 31, 2022 compared to a net loss of $1.0 billion in the prior year. Net income was higher in the current period primarily due to a special non‐cash distribution received from Brookfield Corporation (the “Corporation”, formerly Brookfield Asset Management Inc.). On December 9, 2022, the Corporation completed the distribution of a 25% interest in its asset management business through Brookfield Asset Management Ltd. (the “Manager”), which was incorporated and publicly listed for the purpose of holding an interest in this business. As part of this distribution, the Company received one share of the Manager for every four shares held of the Corporation. As a result, the Company recognized non‐cash dividend income of $1.0 billion from the Corporation in its Consolidated Statements of Operations.
The increase in net income further included remeasurement gains of $495 million during the year relating to the Company’s retractable common shares, compared to remeasurement losses of $402 million in the prior year. The Company’s retractable common shares are classified as liabilities due to their exchangeable feature equivalent to a Partners Value Investments L.P (the “Partnership”) unit, therefore the remeasurement gains or losses in a given period are driven by the respective depreciation or appreciation of the Partnership unit price. During the year, the Partnership unit price decreased by $8.09 compared to an increase of $13.70 in the prior year. The Partnership unit value is primarily driven by the share prices of the Corporation and the Manager, which experienced decreases during the year along with the broader market.
Excluding retractable share and warrant liability remeasurement gains and non-recurring transactions, Adjusted Earnings for the Company was $121 million for the year ended December 31, 2022, compared to $6 million in the prior year. Adjusted Earnings is higher in the current year period due to foreign currency gains and tax recoveries as a result of the depreciation of the Canadian dollar, which most of the Company’s liabilities are denominated in.
As at December 31, 2022, the market prices of a Corporation (NYSE/TSX: BN) and Manager (NYSE/TSX: BAM) share were $31.46 and $28.67, respectively. As at March 29, 2023, the market prices of a BN and BAM share were $31.19 and $31.39, respectively.
Effective March 31, 2023, Rachel Powell was replaced by Jason Weckwerth as Chief Financial Officer of the Company.
Consolidated Statements of Operations
| For the years ended December 31 (Thousands, US dollars) | ||||||||
| 2022 | 2021 | |||||||
| Investment income | ||||||||
| Dividends | $ | 1,131,797 | $ | 128,784 | ||||
| Other investment income | 6,694 | 5,361 | ||||||
| 1,138,491 | 134,145 | |||||||
| Expenses | ||||||||
| Operating expenses | (1,677 | ) | (2,748 | ) | ||||
| Financing costs | (33,205 | ) | (404,711 | ) | ||||
| Retractable preferred share dividends | (34,379 | ) | (33,628 | ) | ||||
| (69,261 | ) | (441,087 | ) | |||||
| Other items | ||||||||
| Investment valuation gains (losses) | 10,653 | (5,739 | ) | |||||
| Retractable share remeasurement gains (losses) | 495,073 | (402,266 | ) | |||||
| Warrant liability remeasurement gains (losses) | 215,219 | (280,474 | ) | |||||
| Amortization of deferred financing costs | (3,363 | ) | (4,070 | ) | ||||
| Current tax (expense) recovery | (19,990 | ) | 7,816 | |||||
| Deferred tax recovery (expense) | 21,439 | (15,024 | ) | |||||
| Foreign currency gains (losses) | 62,415 | (20,075 | ) | |||||
| Net income (loss) | $ | 1,850,676 | $ | (1,026,774 | ) | |||
Financial Profile
The Company’s principal investments are its interest in 132 million Class A Limited Voting Shares of the Corporation and approximately 33 million Class A Limited Voting Shares of the Manager. This represents an 8% interest as at December 31, 2022 in both entities. In addition, the Company owns a diversified investment portfolio of marketable securities.
The information in the following table has been extracted from the Company’s Consolidated Statements of Financial Position:
Consolidated Statements of Financial Position
| As at (Thousands, US dollars) | December 31, 2022 | December 31, 2021 | |||||||
| Assets | |||||||||
| Cash and cash equivalents | $ | 185,711 | $ | 80,697 | |||||
| Accounts receivable and other assets | 47,260 | 77,501 | |||||||
| Deferred tax asset | 1,604 | — | |||||||
| Investment in Brookfield Corporation1 | 4,149,188 | 7,869,681 | |||||||
| Investment in Brookfield Asset Management Ltd.2 | 934,183 | — | |||||||
| Other investments carried at fair value | 606,223 | 666,033 | |||||||
| $ | 5,924,169 | $ | 8,693,912 | ||||||
| Liabilities and Equity | |||||||||
| Accounts payable and other liabilities | $ | 36,861 | $ | 7,693 | |||||
| Corporate borrowings | 220,711 | 236,513 | |||||||
| Preferred shares3 | 752,727 | 682,613 | |||||||
| Retractable common shares | 3,447,021 | 3,932,110 | |||||||
| Warrant liability | 363,707 | 611,010 | |||||||
| Deferred tax liability | — | 23,430 | |||||||
| 4,821,027 | 5,493,369 | ||||||||
| Equity | |||||||||
| Accumulated deficit | (2,698,663 | ) | (4,549,339 | ) | |||||
| Accumulated other comprehensive income | 3,801,805 | 7,749,882 | |||||||
| $ | 5,924,169 | $ | 8,693,912 | ||||||
- The investment in Brookfield Corporation (formerly known as Brookfield Asset Management Inc.) consists of 132 million Corporation shares with a quoted market value of $31.46 per share as at December 31, 2022.
- The investment in Brookfield Asset Management Ltd. consists of 33 million Manager shares with a quoted market value of $28.67 per share as at December 31, 2022.
- Represents $681 million of retractable preferred shares less $13 million of unamortized issue costs as at December 31, 2022 (December 31, 2021 – $611 million less $13 million). $84 million of three series of preferred shares of a subsidiary of the Company (December 31, 2021 ‐ $84 million).
For further information, contact Investor Relations at ir@pvii.ca or 416-956-5141.
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 Company’s potential future income taxes.
Although the Company 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 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 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 Company’s documents filed with the securities regulators in Canada.
The Company cautions that the foregoing list of important factors that may affect future results is not exhaustive. When relying on the Company’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 Company 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.
