TORONTO, ONTARIO--(Marketwire - Aug. 23, 2012) - BAM Investments Corp. (TSX VENTURE:BNB) today announced its financial results for the second quarter ended June 30, 2012.
BAM Investments Corp. recorded comprehensive income, which consists of net income and other comprehensive income, of $110.4 million for the three months ended June 30, 2012, versus $36.4 million in the prior year comparable period. This, in turn, increased the company's net book value by $1.49 per share during the three months ended June 30, 2012 to $18.88 per share. Other comprehensive income includes $106.8 million of after-tax unrealized gains on the company's investment portfolio, primarily as a result of a $2.20 per share increase in the market price of the company's Brookfield Asset Management shares to $33.65 per share. The company recorded net income of $3.7 million ($0.05 per common share) for the three months ended June 30, 2012 compared to $1.5 million ($0.02 per common share) for the comparable period in 2011. The increase in net income in the current period was primarily the result of an increase in equity accounted income offset by realized investment gains which occurred in the prior period.
The company also announced today that it received approval from the TSX Venture Exchange (the "Exchange") for its proposed normal course issuer bid (the "Bid") to purchase up to 3,472,766 of its common shares, representing approximately 10% of the public float of its currently outstanding common shares. The period of the Bid will remain effective from August 30, 2012 to August 29, 2013, or such earlier date that the company completes its purchases. Purchases pursuant to the Bid will be made through the facilities of the Exchange and all applicable exchanges in Canada, and the price which the company will pay for any common shares purchased will be the market price of the common shares at the time of acquisition. Any common shares acquired through the Bid will be cancelled. Under its former normal course issuer bid that commenced on August 30, 2011 and expired on August 29, 2012, the company acquired none of its common shares. As of August 23, 2012, there were 74,206,510 common shares outstanding.
Consolidated Statements of Operations
| (unaudited) |
Three months ended June 30 |
Six months ended June 30 |
|||||||||||
| Thousands, except per share amounts | 2012 | 2011 | 2012 | 2011 | |||||||||
| Investment income | |||||||||||||
| Dividends and interest | $ | 8,724 | $ | 7,938 | $ | 16,974 | $ | 17,402 | |||||
| Cash portion of equity accounted income(1) | 1,220 | 1,220 | 2,440 | 1,220 | |||||||||
| Gain on sale of investments | - | 1,766 | - | 859 | |||||||||
| 9,944 | 10,924 | 19,414 | 19,481 | ||||||||||
| Less: | |||||||||||||
| Operating expenses | 122 | 156 | 449 | 432 | |||||||||
| Retractable preferred share dividends | 6,494 | 6,494 | 12,988 | 12,801 | |||||||||
| Income from operations(2) | 3,328 | 4,274 | 5,977 | 6,248 | |||||||||
| Adjust for other items: | |||||||||||||
| Non-cash portion of equity accounted income(1) | 1,075 | (2,318 | ) | 5,007 | (2,318 | ) | |||||||
| Foreign currency revaluation | - | (60 | ) | - | (1,202 | ) | |||||||
| Amortization of deferred financing costs | (356 | ) | (611 | ) | (711 | ) | (1,222 | ) | |||||
| Income tax (expense) recovery | (389 | ) | 252 | (1,070 | ) | 90 | |||||||
| Net income | $ | 3,658 | $ | 1,537 | $ | 9,203 | $ | 1,596 | |||||
| Net income per common share | |||||||||||||
| Notes: | |
| (1) | Equity accounted income is bifurcated into the company's proportionate share of cash distributions and non-cash changes in value to better reflect the amount of investment income generated by the investment portfolio. |
| (2) | Income from operations is a non-IFRS measure used by the company to better reflect the operating performance during the period. The measure is defined as investment income less expenses, as shown on the Consolidated Statements of Operations, and then adjusted for cash distributions received from the company's equity accounted investment. |
Financial Profile and Net Book Value
The company's principal investment is a direct and indirect interest in 56.2 million Class A Limited Voting Shares ("Class A Shares") of Brookfield Asset Management Inc. ("Brookfield"), representing 7.6 Brookfield Class A Shares for every 10 common shares of BAM Investments Corp.
The net book value of the company's common shares as at June 30, 2012, based on the stock market price of Brookfield's Class A Shares of $33.65, was $18.88 per share. The information in the following table shows the changes in net book value for the three months ended June 30, 2012.
| Three months ended | Six months ended | |||||||
| Total | Per Share | Total | Per Share | |||||
| Net book value, beginning of period(1) | $ | 1,290,516 | $ | 17.39 | $ | 1,102,815 | $ | 14.86 |
| Net income(2) | 3,658 | 0.05 | 9,203 | 0.12 | ||||
| Other comprehensive income | 106,759 | 1.44 | 288,915 | 3.90 | ||||
| Net book value, end of period(1), (3) | $ | 1,400,933 | $ | 18.88 | $ | 1,400,933 | $ | 18.88 |
| Notes: | |
| (1) | Net book value per common share is non-IFRS measure. |
| (2) | The weighted average number of common shares outstanding during the six months ended June 30, 2012, was 74,206,510 (June 30, 2011 - 78,373,193). |
| (3) | As at June 30, 2012, there were 74,206,510 (December 31, 2011 - 74,206,510) voting and non-voting common shares of the company issued and outstanding on a fully diluted basis. |
Statement of Financial Position
The information in the following table has been extracted from the company's consolidated balance sheet as at June 30, 2012.
| (unaudited) Thousands, except per share amounts |
Net Book Value | ||
| Assets | |||
| Investment in Brookfield Asset Management Inc.(1) | $ | 1,892,013 | |
| Other securities | 136,368 | ||
| Cash and cash equivalents | 36,032 | ||
| Accounts receivable and other | 1,672 | ||
| $ | 2,066,085 | ||
| Liabilities and Shareholders' Equity | |||
| Accounts payable and other | $ | 62 | |
| Retractable preferred shares (2) | 487,429 | ||
| Deferred taxes (3) | 177,661 | ||
| 665,152 | |||
| Shareholders' equity | 1,400,933 | ||
| $ | 2,066,085 | ||
| Net book value per common share, pre tax (4), (5) | $ | 21.27 | |
| Net book value per common share, after tax (4) | $ | 18.88 | |
| Notes: | |
| (1) | The investment in Brookfield Asset Management Inc. consists of 56.2 million Class A Shares at a bid price of $33.65 per Class A Share as at June 30, 2012. |
| (2) | Represents $492.4 million of retractable preferred shares less $5.0 million of unamortized issue costs. |
| (3) | 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. |
| (4) | As at June 30, 2012, there were 74,206,510 (December 31, 2011 - 74,206,510) voting and non-voting common shares of the company issued and outstanding on a fully diluted basis. |
| (5) | Net book value per common share is a non-IFRS measure. |
Note: This news release contains "forward-looking information" within the meaning of Canadian provincial securities laws and 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 the anticipated future results or achievements expressed or implied by the forward-looking information and statements are based upon reasonable assumptions and expectations, the reader should not place undue reliance on the forward-looking information and statements because they involve known and unknown risks, uncertainties and other factors 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 information and statements.
Factors that could cause actual results to differ materially from those contemplated or implied by the forward-looking information and statements include: the behavior of financial markets, including fluctuations in interest and exchange rates, availability of equity and debt financing and other risks and factors detailed from time to time in the company's other documents filed with the Canadian securities regulators.
We caution that the foregoing list of important factors that may affect future results is not exhaustive. When relying on our forward-looking information to make decisions with respect to the company, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Except as may be required by law, the company undertakes no obligation to publicly update or revise any forward-looking information or statements, whether written or oral, that may be as a result of new information, future events or otherwise. Reference should be made to the company's most recent Annual Information Form for a description of the major risk factors.
Contact Information:
Edward C. Kress
President
(416) 956-5140