Brookfield Corporation · NYSE:BN
Brookfield — Brookfield Asset Management — Investor Presentation (April 2010)
27 slides from Brookfield's investor presentation, Apr 30, 2010
Slide 1: International Financial Reporting Standards
Brookfield Asset Management Inc. A GLOBAL ASSET MANAGEMENT COMPANY Focused on Property, Power and Infrastructure Assets International Financial Reporting Standards April 30, 2010
Slide 2: Forward Looking Information
Forward Looking Information Note: This presentation contains forward-looking information within the meaning of Canadian provincial securities laws and other “forward-looking statements ” within the meaning of certain securities laws including Section 27A of the U.S. statements, U S Securities Act of
Slide 3: Agenda
Agenda Background Cash Flow from Operations Asset Values and Fair Value Methodology Underlying Value Definition Other Accounting Considerations Reconciling Tables Q&A 2 | Brookfield Asset Management Inc.
Slide 4: Background
Background
Slide 5: Background
Background All Canadian reporting issuers are required to adopt International Financial Reporting Standards (IFRS) by 2011 Brookfield elected to early adopt IFRS in 2010 and accordingly started its transition process in 2008 IFRS presents us with the opportunity to revalue a significant amount
Slide 6: Brookfield Transition Plan
Brookfield Transition Plan Brookfield’s global transition plan benefitted from: – a number of Brookfield subsidiaries which already prepare local financial statements in IFRS – a number of large subsidiaries transitioning on a consistent timetable with Brookfield Accordingly, on transition, over
Slide 7: Cash Flow From Operations
Cash Flow From Operations
Slide 8: Impact on Cash Flow From Operations
Impact on Cash Flow From Operations Transition to IFRS has minimal impact to our reported cash flow from operations Adjustments are primarily related to non-cash amortization of above/below market contracts which were previously amortized into reported cash flow, f and timing off revenue recogni
Slide 9: Impact on Cash Flow From Operations cont'd
Impact on Cash Flow From Operations cont’d The following table reconciles cash flow from operations under Canadian GAAP to IFRS for the year ended December 31, 2009 IFRS Adjustments Levelized Revenue Financial (US M ILLIONS) CGAAP contracts recognition Instruments Other Total IFRS Asset management
Slide 10: Impact on Cash Flow From Operations cont'd
Impact on Cash Flow From Operations cont’d The following table reconciles cash flow from operations under Canadian GAAP to IFRS for the three months ended March 31, 2009 IFRS Adjustments Levelized Revenue Financial (US M ILLIONS) CGAAP contracts recognition Instruments Other Total IFRS Asset manag
Slide 11: Fair Value Framework
Fair Value Framework
Slide 12: Fair Value Framework
Fair Value Framework IFRS provides an opportunity to periodically revalue over approximately 85% of our asset base under a widely accepted framework which is subject to annual audit The major exceptions are residential land inventory and short duration investments held in our special situations
Slide 13: Renewable Power Generation
Renewable Power Generation Renewable power assets are revalued annually with changes in value accruing through equity Quarterly depreciation is applied to the revalued asset base and is reflected as a charge to earnings, in spite of the fact that sustaining capital expenditures are already charg
Slide 14: Renewable Power Generation
Renewable Power Generation The following discounts rates are used to determine fair value for our renewable power generation assets United States Canada Brazil 2009 2008 2009 2008 2009 2008 Discount rate 8.20% 8.00% 7.30% 7.70% 11.00% 10.40% Terminal capitalization rate 8 40% 8.40% 8 20% 8.20% 7 9
Slide 15: Commercial Properties
Commercial Properties Commercial properties are revalued quarterly with changes in value accruing through income Depreciation is no longer applied to assets as it forms a component of the underlying value of the buildings Directly held assets in North America and Australia are independently va
Slide 16: Commercial Properties
Commercial Properties The following discounts rates are used to determine fair value for our commercial property assets United States Canada Australia United Kingdom 2009 2008 2009 2008 2009 2008 2009 2008 Discount rate 8.80% 8.60% 7.40% 7.30% 9.30% 8.40% 9.60% 9.60% Terminal capitalization 6.90%
Slide 17: Infrastructure – Timber
Infrastructure – Timber External valuations are obtained annually for all of our timberlands with changes in value accruing through income Quarterly, valuations are updated to reflect significant changes in macro economic or industry specific conditions Assumption Description / Comment Discount
Slide 18: Infrastructure – Fee for Service and Rate Regulated
Infrastructure – Fee for Service and Rate Regulated Fee for service and rate regulated assets are revalued annually with changes in value through equity Quarterly depreciation is applied to the revalued asset base and is reflected as a charge to earnings Current valuation is supported by purch
Slide 19: Underlying Value
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Slide 20: Underlying Value Definition
Underlying Value Definition Brookfield’s underlying value (a non-IFRS management reporting metric) is comprised of our IFRS common equity value, on a pre-tax basis, plus the incremental value of assets and/or cash flows which are not otherwise presented on a fair value basis December 31, 31 2009 (
Slide 21: Underlying Value – Items Not Included in Common Equity
Underlying Value – Items Not Included in Common Equity Future taxes are deducted from common equity – Current IFRS rules require all assets to be ascribed a future tax liability based on the difference between the tax value and carrying value of the asset, at the tax rate expected to be in place w
Slide 22: Underlying Value – Total Return Reporting
Underlying Value – Total Return Reporting (US MILLIONS) Total Per Share Underlying value, value IFRS basis - December 31, 31 2008 $ 13,042 13 042 $ 22.47 22 47 Unrecognized value - December 31, 2008 1,500 2.50 Underlying value - December 31, 2008 14,542 24.97 Operating cash flow* 1,450 2.43 Less: Re
Slide 23: Other IFRS Considerations
Other IFRS Considerations
Slide 24: Other IFRS Considerations
Other IFRS Considerations The following table highlights some of the rules under IFRS which are materially different from Canadian and US GAAP Changing Rules Summary Explanation Monetization gains • Gains on partial dispositions of interests in businesses where control is retained are recognized i
Slide 25: IFRS Equity Reconciliation – December 31, 2009
IFRS Equity Reconciliation – December 31, 2009 The following reconciles Brookfield’s common equity as at December 31, 2009 (US BILLIONS) As reported under Canadian GAAP - December 31, 2009 $ 6.4 Differences increasing (decreasing) amount: Fair value 9.6 Financial instruments (0.3) Levelized contra
Slide 26: Conclusion
Conclusion IFRS provides a more realistic portrayal of our balance sheet and capitalization without comprising the economic characteristics of operating cash flow. This allows us to provide more relevant information, in our view, to equity and debt holders – Significant portion of our assets are s
Slide 27: Q&A
Q&A
Brookfield Asset Management — Investor Presentation (April 2010) on 6ix