Partners Value Investments Inc. Announces Q3 2022 Interim Results
TORONTO, Nov. 22, 2022 (GLOBE NEWSWIRE) — 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.
