Partners Value Investments Inc. Announces Q3 2022 Interim Results
November 22 2022 - 7:03PM
Partners Value Investments Inc. (the “Company”, TSX: PVF.WT)
announced today its financial results for the three months ended
September 30, 2022. All amounts are stated in US dollars.
The Company generated net income of $343.9
million for the three months ended September 30, 2022 compared to a
net loss of $269.0 million in the prior year quarter. The increase
in net income was primarily due to remeasurement gains of $214.3
million during the quarter relating to the Company’s retractable
common shares, compared to remeasurement losses of $239.2 million
in the prior year quarter. 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 quarter, the Partnership unit
price decreased by $3.59 compared to an increase of $3.25 in the
prior year quarter. The Partnership unit value is primarily driven
by the share price of Brookfield, which experienced a decrease in
the period along with the broader market.
Excluding retractable share and warrant
liability remeasurement gains, Adjusted Earnings for the Company
was $78.8 million for the three months ended September 30, 2022,
compared to $22.7 million in the prior year quarter. 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, partially offset by higher financing costs
and investment valuation losses. Financing costs are higher in the
current period as a result of senior unsecured notes issued since
the prior year period and dividends declared and paid on the
Company's retractable shares, which are recorded as a financing
cost in the Consolidated Statements of Operations.
The market price of a Brookfield share was
$40.89 as at September 30, 2022 (December 31, 2021 – $60.38). The
market price of a Brookfield share was $44.07 on November 21,
2022.
Consolidated Statements of
Operations
(Unaudited)(Thousands, US
dollars) |
|
Three Months Ended |
|
|
Nine Months Ended |
For the periods ended
September 30 |
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Investment income |
|
|
|
|
|
|
|
|
|
|
|
Dividends |
$ |
22,588 |
|
|
$ |
20,247 |
|
|
$ |
66,413 |
|
|
$ |
107,717 |
|
Other investment income |
|
2,150 |
|
|
|
1,116 |
|
|
|
3,969 |
|
|
|
4,160 |
|
|
|
24,738 |
|
|
|
21,363 |
|
|
|
70,382 |
|
|
|
111,877 |
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
(386 |
) |
|
|
(429 |
) |
|
|
(1,453 |
) |
|
|
(1,529 |
) |
Financing costs |
|
(8,469 |
) |
|
|
(2,132 |
) |
|
|
(24,830 |
) |
|
|
(6,382 |
) |
Retractable preferred share dividends |
|
(9,075 |
) |
|
|
(7,207 |
) |
|
|
(25,616 |
) |
|
|
(26,425 |
) |
|
|
6,808 |
|
|
|
11,595 |
|
|
|
18,483 |
|
|
|
77,541 |
|
Other items |
|
|
|
|
|
|
|
|
|
|
|
Investment valuation gains (losses) |
|
(3,683 |
) |
|
|
2,692 |
|
|
|
9,559 |
|
|
|
8,685 |
|
Retractable share remeasurement gains (losses) |
|
214,305 |
|
|
|
(239,224 |
) |
|
|
583,910 |
|
|
|
(718,318 |
) |
Warrant liability remeasurement gains (losses) |
|
56,885 |
|
|
|
(52,548 |
) |
|
|
171,868 |
|
|
|
(163,768 |
) |
Amortization of deferred financing costs |
|
(872 |
) |
|
|
(764 |
) |
|
|
(2,524 |
) |
|
|
(3,301 |
) |
Current taxes (expenses) recovery |
|
(73 |
) |
|
|
(618 |
) |
|
|
(20,248 |
) |
|
|
1,627 |
|
Deferred taxes recovery (expense) |
|
7,557 |
|
|
|
(3,310 |
) |
|
|
22,880 |
|
|
|
(11,481 |
) |
Foreign currency gains (losses) |
|
62,983 |
|
|
|
13,122 |
|
|
|
80,687 |
|
|
|
(24,324 |
) |
Net income
(loss) |
$ |
343,910 |
|
|
$ |
(269,055 |
) |
|
$ |
864,615 |
|
|
$ |
(833,339 |
) |
Financial Profile
The Company’s principal investment is its
interest in 130 million Class A Limited Voting Shares (“Brookfield
shares”) of Brookfield. This represents an 8% interest as at
September 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 Statements of Financial Position:
Statements of Financial
Position
As
at(Thousands, US dollars) |
|
|
(Unaudited)September 30,
2022 |
|
|
December 31, 2021 |
Assets |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
230,982 |
|
|
$ |
80,697 |
|
Accounts receivable and other
assets |
|
|
44,703 |
|
|
|
77,501 |
|
Investment in Brookfield Asset
Management Inc.1 |
|
|
5,329,435 |
|
|
|
7,869,681 |
|
Other investments carried at fair
value |
|
|
614,308 |
|
|
|
666,033 |
|
Deferred tax asset2 |
|
|
6,950 |
|
|
|
— |
|
|
|
$ |
6,226,378 |
|
|
$ |
8,693,912 |
|
Liabilities and
Equity |
|
|
|
|
|
|
Accounts payable and other
liabilities |
|
$ |
40,196 |
|
|
$ |
7,693 |
|
Corporate borrowings |
|
|
216,162 |
|
|
|
236,513 |
|
Preferred shares3 |
|
|
738,267 |
|
|
|
682,613 |
|
Retractable common shares |
|
|
3,358,184 |
|
|
|
3,932,110 |
|
Warrant liability |
|
|
398,807 |
|
|
|
611,010 |
|
Deferred tax liability |
|
|
— |
|
|
|
23,430 |
|
|
|
|
4,751,616 |
|
|
|
5,493,369 |
|
Equity |
|
|
|
|
|
|
Deficit |
|
|
(3,684,724 |
) |
|
|
(4,549,339 |
) |
Accumulated other comprehensive
income |
|
|
5,159,486 |
|
|
|
7,749,882 |
|
|
|
$ |
6,226,378 |
|
|
$ |
8,693,912 |
|
- The investment in Brookfield Asset
Management Inc. consists of approximately 130 million Brookfield
shares with a quoted market value of $40.89 per share as at
September 30, 2022 (December 31, 2021 – $60.38).
- The deferred taxes balance
represents the potential tax recovery arising from the difference
between the carrying value of net assets and the respective tax
values. Changes in the deferred taxes balance are mainly related to
changes in the market value of the Partnership’s investments and
foreign currency fluctuations.
- Represents $667 million of
retractable preferred shares less $13 million of unamortized issue
costs as at September 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).
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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