Partners Value Investments LP Announces 2017 Annual Results

Partners Value Investments LP Announces 2017 Annual Results

TORONTO, March 19, 2018 Partners Value Investments LP (the “Partnership”) announced today today its financial results for the year ended December 31, 2017. All amounts are stated in US dollars.

Net income for the year was $80 million, of which $58 million was attributable to the Equity Limited Partners ($0.65 per Equity LP unit) compared to $73 million ($0.82 per Equity LP unit) in the prior year. The decrease in net income is due to the impact of translating our Canadian dollar denominated preferred share liabilities at a higher rate due to the strengthening of the Canadian dollar versus our US dollar reporting currency. Ignoring this impact, we recorded modestly higher net income after-tax in 2017.

Consolidated Statements of Operations

For the years ended December 31
(Thousands)
2017
2016
Investment income


   Dividends
$87,666 $61,942
   Other investment income
2,142
5,228
  89,808
67,170
Expenses


   Operating expenses
(13,419) (15,270)
   Financing costs
(5,358) (2,116)
   Retractable preferred share dividends
(27,341) (25,289)
  
43,690 24,495
Other items
   
   Investment valuation gains (losses)  87,784  72,967
   Amortization of deferred financing costs  (2,473) (1,834)
   Change in value of fund unit liability
-  (896)
   Income taxes
(20,059)  (22,394)
   Income from equity accounted income 
253 -
   Foreign currency gains (losses)
 (29,112) 13,393
Net income (loss)
$ 80,083 $85,731

 
Net income (loss) attributable to:
   
   Partners Value Investments Inc.
 - $51,198
   Equity Limited Partners
 57,790 21,315
   General Partner
 - -
   Preferred Limited Partners
 22,293 13,218

$ 80,083 $85,731

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 December 31, 2017. The information in the following table shows the changes in net book value:

     
For the years ended December 31
2017 2016
(Thousands, except per unit amounts)
Total
Per Unit
Total
Per Unit
Net book value, beginning of period1
$2,337,457
$26.49
$2,260,264
$25.61
Net income2
 57,790  0.65 72,513 0.82
Other comprehensive income2
 848,407 9.61 149,520 1.69
Adjustment for impact of warrant3 
 24,533 0.28 355,063 4.02
Equity LP repurchase 
(11) - - -
Re-Organization - - (499,903) (5.65)
Net book value, end of period1,3 $3,268,176 $37.03 $2,337,457 $26.49

1) Calculated on a fully diluted basis, net book value is non-IFRS measure.
2) Attributable to Equity Limited Partners
3) The basic weighted average number of Equity Limited Partnership (“Equity LP”) units outstanding during the year ended December 31, 2017 was 73,541,190. The diluted weighted average number of Equity Limited Partnership (“Equity LP”) units available and outstanding during the year ended December 31, 2017 was 88,249,956; this includes the 14,708,766 Equity LP units issued through the exercise of all outstanding warrants.
4) At the end of the year, the diluted Equity LP units outstanding were 88,249,897 (December 31, 2016 – 88,250,327).
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 December 31, 2017 was $380 million (December 31, 2016 – $355 million).


The information in the following table has been extracted from the Partnership’s Statement of Financial Position:

Statement of Financial Position


December 31 December 31 
(Thousands, except per unit amounts)
2017 
2016
Assets


Cash and cash equivalents
$29,801 $5,971
Accounts receivable and other assets
6,443 20,881
Investment in Brookfield Asset Management Inc1
3,737,431 2,829,156
Other Securities 
   
   Available for sale investments 288,306  231,277
   Marketable securities  462,161  381,457
Equity accounted investment
13,643 -
Goodwill 3,102
-
   $4,540,887 $3,468,742
Liabilities and Shareholders' Equity


Accounts payable and other liabilities
$108,744 $124,820
Preferred shares2
 575,620 521,155
Deferred taxes3
  468,040  340,470
  
1,152,404
986,445
Equity    
Partnership’s Equity
  Equity Limited Partners 2,888,580 1,982,394
  General Partner 1 1
  Preferred Limited Partners 499,902 499,902
   $4,540,887 $3,468,742
Net book value per unit1,4,5
$37.03
$26.49

1) The investment in Brookfield Asset Management Inc. consists of 86 million Brookfield shares with a quoted market value of $43.54 per share as at December 31, 2017 (December 31, 2016 – $32.96).
2) Represents $529 million of retractable preferred shares less $8 million of unamortized issue costs as at December 31, 2016 (December 31, 2015 – $518 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) As at December 31, 2016, there were 73,541,531 (December 31, 2015 – 73,543,831) Equity LP units issued and outstanding on a fully diluted basis.
5) Net book value per unit is a non-IFRS measure. Net book value is equal to total equity less General Partner equity and Preferred Limited Partners equity.


Chief Executive Officer Appointment
Partners Value Investments LP is pleased to announce the appointment of Brian D. Lawson as the Chief Executive Officer of the Partnership, effective March 20, 2018. Mr. Lawson will be replacing George Myhal who has held the position since 2016.

For further information, contact Investor Relations at ir@pvii.ca or 647-503-6516.

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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.

©  2018 Partners Value Investments LP