Partners Value Investments Inc. Announces Q2 2022 Interim Results
August 23 2022 - 5:00PM
Partners Value Investments Inc. (the “Company”, TSX: PVF.WT)
announced today its financial results for the three months ended
June 30, 2022. All amounts are stated in US dollars.
The Company generated net income of $489.3
million for the three months ended June 30, 2022 compared to a net
loss of $575.9 million in the prior year quarter. The increase in
net income was primarily due to a remeasurement gain of $386.2
million during the quarter relating to the Company’s retractable
common shares compared to remeasurement losses of $479.1 million in
the prior year quarter. These shares are classified as liabilities
due to their exchangeable feature equivalent to a 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.
Excluding remeasurement losses and warrant
liability valuations, Adjusted Earnings was $38.4 million for the
three months ended June 30, 2022, compared to adjusted earnings of
$28.4 million in the prior year quarter. Adjusted Earnings is
higher in the current year period due to foreign currency gains and
tax recoveries, partially offset by lower investment income from
dividends. Dividend income was lower in the current period due to
the receipt of Brookfield Asset Management Reinsurance Partners
Ltd. shares valued at $46 million as a dividend-in-kind from
Brookfield Asset Management in the prior year period.
The market price of a Brookfield Asset
Management Inc. (“Brookfield”) share was $44.47 per share at June
30, 2022 (December 2021 – $60.38). The market price of a Brookfield
share was $51.02 on August 22, 2022.
Consolidated Statements of
Operations
(Unaudited)(Thousands, US
dollars, except per share amounts) |
|
Three Months Ended |
|
|
Six Months Ended |
For the periods ended June 30 |
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
Investment income |
|
|
|
|
|
|
|
|
|
|
|
Dividends |
$ |
21,892 |
|
$ |
66,178 |
|
$ |
43,825 |
|
$ |
87,470 |
Other investment income |
|
923 |
|
|
1,035 |
|
|
1,819 |
|
|
3,044 |
|
|
22,815 |
|
|
67,213 |
|
|
45,644 |
|
|
90,514 |
Expenses |
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
(452) |
|
|
(735) |
|
|
(1,067) |
|
|
(1,100) |
Financing costs |
|
(9,383) |
|
|
(2,966) |
|
|
(16,361) |
|
|
(4,250) |
Retractable preferred share dividends |
|
(8,929) |
|
|
(7,678) |
|
|
(16,541) |
|
|
(19,218) |
|
|
4,051 |
|
|
55,834 |
|
|
11,675 |
|
|
65,946 |
Other items |
|
|
|
|
|
|
|
|
|
|
|
Investment valuation gains (losses) |
|
(3,441) |
|
|
709 |
|
|
13,242 |
|
|
5,993 |
Remeasurement gains (losses) of retractable shares |
|
386,280 |
|
|
(479,094) |
|
|
369,604 |
|
|
(479,094) |
Warrant liability valuation (losses) gain |
|
71,435 |
|
|
(125,162) |
|
|
114,983 |
|
|
(111,220) |
Amortization of deferred financing costs |
|
(886) |
|
|
(1,333) |
|
|
(1,652) |
|
|
(2,537) |
Current taxes recovery (expense) |
|
115 |
|
|
265 |
|
|
(20,175) |
|
|
2,245 |
Deferred taxes recovery (expense) |
|
3,779 |
|
|
(5,544) |
|
|
15,323 |
|
|
(8,171) |
Foreign currency (losses) gains |
|
27,923 |
|
|
(21,512) |
|
|
17,705 |
|
|
(37,446) |
Net income
(loss) |
$ |
489,256 |
|
$ |
(575,837) |
|
$ |
520,705 |
|
$ |
(564,284) |
Financial Profile
The Company’s principal investment is its
interest in 130 million Class A Limited Voting Shares (“Brookfield
shares”) of Brookfield. This represents a 8% interest as at June
30, 2022. 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 Statement of Financial Position:
Statement of Financial
Position
As at(Thousands, US dollars) |
Note |
|
(Unaudited)June 30,2022 |
|
|
December 31,2021 |
Assets |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
237,881 |
|
$ |
80,697 |
Accounts receivable and other
assets |
|
|
44,711 |
|
|
77,501 |
Investment in Brookfield Asset
Management Inc.1 |
|
|
5,796,037 |
|
|
7,869,681 |
Other investments carried at
fair value |
|
|
625,903 |
|
|
666,033 |
|
|
$ |
6,704,532 |
|
$ |
8,693,912 |
Liabilities and
Equity |
|
|
|
|
|
|
Accounts payable and other
liabilities |
|
$ |
25,042 |
|
$ |
7,693 |
Corporate borrowings |
|
|
232,178 |
|
|
236,513 |
Preferred shares2 |
|
|
786,041 |
|
|
682,613 |
Retractable Common Shares |
|
|
3,572,490 |
|
|
3,932,110 |
Warrant liability |
|
|
486,118 |
|
|
611,010 |
Deferred Taxes3 |
|
|
961 |
|
|
23,430 |
|
|
|
5,102,830 |
|
|
5,493,369 |
Equity |
|
|
|
|
|
|
Deficit |
|
|
(4,028,634) |
|
|
(4,549,339) |
Accumulated other
comprehensive income |
|
|
5,630,336 |
|
|
7,749,882 |
|
|
$ |
6,704,532 |
|
$ |
8,693,912 |
- The investment in
Brookfield Asset Management Inc. consists of approximately 130
million Brookfield shares with a quoted market value of $44.47 per
share as at June 30, 2022 (December 31, 2021 – $60.38).
- Represents $717 million of
retractable preferred shares less $15 million of unamortized issue
costs as at June 30, 2022 (December 31, 2021 – $612 million
less $13 million) and $84 million of three series of preferred
shares of a subsidiary of the Company (December 31, 2021 - $84
million).
- The deferred tax liability
represents the potential future income tax liability of the Company
recorded for accounting purposes based on the difference between
the carrying values of the Company’s assets and liabilities and
their respective tax values, as well as giving effect to estimated
capital and non-capital losses.
For further information, contact Investor
Relations at 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.
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