Brascan Corporation
NYSE : BNN
TSX : BNN

Brascan Corporation

August 04, 2005 08:01 ET

Brascan Reports Second Quarter Net Income of US$610 Million

TORONTO, ONTARIO--(CCNMatthews - Aug. 4, 2005) - Brascan Corporation
(TSX:BNN)(NYSE:BNN) -

Investors, analysts and other interested parties can access Brascan's 2005 Second Quarter Results as well as the Shareholders' Letter and Supplemental Financial Information on Brascan's web site under the Investor Centre/Financial Reports and Investor Presentations section at www.brascancorp.com.

The 2005 Second Quarter Results conference call can be accessed via webcast on August 4, 2005 at 2:30 p.m. EST at www.brascancorp.com or via teleconference at 1-800-240-5124, toll free in North America. For overseas calls please dial
507-726-3566, at approximately 2:20 p.m. EST. The teleconference taped rebroadcast can be accessed at 1-800-807-5189.

CASH FLOW FROM OPERATIONS PER SHARE INCREASED 28%

Brascan Corporation (TSX:BNN)(NYSE:BNN) today announced operating results for the second quarter ended June 30, 2005. Net income totalled $610 million ($2.26 per share) compared with $190 million ($0.71 per share) in the same period last year. Results for the current quarter include $448 million in gains from the restructuring and partial monetization of Brascan's investment in Falconbridge, net of taxes and other non-cash items. Net income for the first half of the year totalled $775 million compared with $335 million for the same period last year.

Operating cash flow, before the Falconbridge gain, for the three months ended June 30, 2005 totalled $229 million ($0.82 per share) compared with $169 million ($0.64 per share) last year, representing growth of 28% on a per share basis. For the first six months, cash flow increased by 26% to $385 million from $305 million last year.

The following table presents the results on a total and per share basis.


---------------------------------------------------------------------
Three months ended Six months ended
June 30 June 30
---------------------------------------------------------------------
US$ millions
(except per share amounts) 2005 2004 2005 2004
---------------------------------------------------------------------

Net income $ 610 $ 190 $ 775 $ 335
- per share $ 2.26 $ 0.71 $ 2.85 $ 1.24
Cash flow from operations $ 229 $ 169 $ 385 $ 305
- per share $ 0.82 $ 0.64 $ 1.38 $ 1.13
---------------------------------------------------------------------


Bruce Flatt, Chief Executive Officer of Brascan commented: "Our core operations in property, power and infrastructure assets performed in line with expectations and we are well positioned to generate additional growth in operating cash flows for the balance of the year. The gain on our investment in Falconbridge represents another step in the monetization of our resource investments over time."

Dividend Declaration

On August 3, 2005, the Board of Directors declared a regular dividend of US$0.15 per Class A Share, payable on November 30, 2005, to shareholders of record as at the close of business on November 1, 2005.

Information on Brascan's common and preferred share dividends can be found on Brascan's web site under Investor Centre/Stock Information.

Additional Information

The Letter to Shareholders and the company's Supplemental Financial Information for the six months ended June 30, 2005 contains further information on the company's strategy, operations and financial results. Shareholders are encouraged to read these documents, which are available on the company's web site.

Brascan Profile

Brascan Corporation is a global asset manager focused on property, power and infrastructure assets. With $40 billion of assets under management, the company owns 70 premier office properties and over 130 power generating plants. The company is inter-listed on the New York and Toronto stock exchanges.



CONSOLIDATED STATEMENT OF INCOME
---------------------------------------------------------------------
(Unaudited) Three months ended Six months ended
US$ millions, except June 30 June 30
per share amounts 2005 2004(i) 2005 2004(i)
---------------------------------------------------------------------
Total revenues and gains $ 1,769 $ 898 $ 2,744 $ 1,666
---------------------------------------

Net operating income
Property 264 222 492 436
Power generation 122 71 263 145
Funds management 104 65 168 119
Investment income and other gains 58 77 90 102
---------------------------------------------------------------------
548 435 1,013 802
Expenses
Interest expense 235 153 434 300
Current income taxes 30 16 46 24
Other operating costs 20 13 47 31
Minority share of net income
before the following 78 100 161 174
---------------------------------------------------------------------
185 153 325 273
Other items
Equity accounted income from
investments 73 95 176 191
Gain on reorganization of
Falconbridge 565 - 565 -
Depreciation and amortization (92) (56) (169) (112)
Future income taxes and other
provisions (151) (42) (180) (86)
Minority share of the foregoing
items 30 40 58 69
---------------------------------------------------------------------
Net income $ 610 $ 190 $ 775 $ 335
---------------------------------------------------------------------
---------------------------------------------------------------------
Net income per common share
Diluted $ 2.26 $ 0.71 $ 2.85 $ 1.24
Basic $ 2.31 $ 0.71 $ 2.92 $ 1.25
---------------------------------------------------------------------
---------------------------------------------------------------------



CONSOLIDATED STATEMENT OF CASH FLOW FROM OPERATIONS
---------------------------------------------------------------------
Three months ended Six months ended
(Unaudited) June 30 June 30
US$ millions, except 2005 2004(i) 2005 2004(i)
---------------------------------------------------------------------
Income before non-cash items(1) $ 185 $ 153 $ 325 $ 273
Dividends from Falconbridge 12 11 24 22
Dividends from Norbord 32 5 36 10
---------------------------------------------------------------------
Cash flow from operations $ 229 $ 169 $ 385 $ 305
---------------------------------------------------------------------
---------------------------------------------------------------------

(1) Net operating income less expenses
(i) See accompanying notes on following page



CONSOLIDATED BALANCE SHEET
---------------------------------------------------------------------
(Unaudited)
June 30 December 31
US$ millions 2005 2004(2)
---------------------------------------------------------------------
Assets
Operating assets
Property $ 10,217 $ 9,289
Power generation 3,520 3,048
Funds management 5,538 4,719
--------------------------
19,275 17,056
Cash and cash equivalents 674 404
Securities 1,731 996
Accounts receivable and other 3,199 1,551
---------------------------------------------------------------------
$ 24,879 $ 20,007
---------------------------------------------------------------------
---------------------------------------------------------------------
Liabilities and Shareholders' interests
Liabilities
Corporate borrowings $ 1,832 $ 1,675
Non-recourse borrowings
Property specific mortgages 7,865 6,045
Other debt of subsidiaries 2,544 2,373
Accounts payable and other liabilities 4,576 2,719
Capital securities(2) 1,513 1,548
Shareholders' interests
Minority interests of others in assets 2,087 1,780
Preferred equity 590 590
Common equity 3,872 3,277
---------------------------------------------------------------------
$ 24,879 $ 20,007
---------------------------------------------------------------------
---------------------------------------------------------------------


Note 1

The press release and accompanying consolidated financial statements make reference to cash flow from operations on a total and per share basis. Management uses cash flow from operations as a key measure to evaluate performance and to determine the underlying value of its businesses. The consolidated statement of cash flow from operations provides a full reconciliation between this measure and net income. Readers are encouraged to consider both measures in assessing Brascan's results. In addition, the consolidated balance sheet above presents the company's cost accounted investment in Canary Wharf Group, plc as part of its property operations, consistent with management's determination of business segments, whereas it is included in "Funds Management" in the company's interim report to shareholders.

Note 2

Certain convertible preferred shares and preferred securities have been reclassified as capital securities in accordance with changes in accounting guidelines. This has also resulted in conforming changes to dividends paid, interest expense, foreign exchange gains and retained earnings.

Note: This press release and attachments contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words "believe", "expect", "anticipate", "intend", "estimate" and other expressions which are predictions of or indicate future events and trends and which do not relate to historical matters identify forward-looking statements. Reliance should not be placed on forward-looking 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 statements. Factors that could cause actual results to differ materially from those set forward in the forward- looking statements include general economic conditions, interest rates, availability of equity and debt financing and other risks detailed from time to time in the company's 40-F filed with the Securities and Exchange Commission. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Contact Information