Partners Value Investments Inc. (the “Company”, TSX: PVF.WT) announced today its financial results for the three months ended June 30, 2022. All amounts are stated in US dollars.

The Company generated net income of $489.3 million for the three months ended June 30, 2022 compared to a net loss of $575.9 million in the prior year quarter. The increase in net income was primarily due to a remeasurement gain of $386.2 million during the quarter relating to the Company’s retractable common shares compared to remeasurement losses of $479.1 million in the prior year quarter. These shares are classified as liabilities due to their exchangeable feature equivalent to a 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.

Excluding remeasurement losses and warrant liability valuations, Adjusted Earnings was $38.4 million for the three months ended June 30, 2022, compared to adjusted earnings of $28.4 million in the prior year quarter. Adjusted Earnings is higher in the current year period due to foreign currency gains and tax recoveries, partially offset by lower investment income from dividends. Dividend income was lower in the current period due to the receipt of Brookfield Asset Management Reinsurance Partners Ltd. shares valued at $46 million as a dividend-in-kind from Brookfield Asset Management in the prior year period.

The market price of a Brookfield Asset Management Inc. (“Brookfield”) share was $44.47 per share at June 30, 2022 (December 2021 – $60.38). The market price of a Brookfield share was $51.02 on August 22, 2022.

Consolidated Statements of Operations

(Unaudited)(Thousands, US dollars, except per share amounts)   Three Months Ended     Six Months Ended
For the periods ended June 30   2022     2021     2022     2021
Investment income                      
Dividends $ 21,892   $ 66,178   $ 43,825   $ 87,470
Other investment income   923     1,035     1,819     3,044
    22,815     67,213     45,644     90,514
Expenses                      
Operating expenses   (452)     (735)     (1,067)     (1,100)
Financing costs   (9,383)     (2,966)     (16,361)     (4,250)
Retractable preferred share dividends   (8,929)     (7,678)     (16,541)     (19,218)
    4,051     55,834     11,675     65,946
Other items                      
Investment valuation gains (losses)   (3,441)     709     13,242     5,993
Remeasurement gains (losses) of retractable shares   386,280     (479,094)     369,604     (479,094)
Warrant liability valuation (losses) gain   71,435     (125,162)     114,983     (111,220)
Amortization of deferred financing costs   (886)     (1,333)     (1,652)     (2,537)
Current taxes recovery (expense)   115     265     (20,175)     2,245
Deferred taxes recovery (expense)   3,779     (5,544)     15,323     (8,171)
Foreign currency (losses) gains   27,923     (21,512)     17,705     (37,446)
Net income (loss) $ 489,256   $ (575,837)   $ 520,705   $ (564,284)

Financial Profile

The Company’s principal investment is its interest in 130 million Class A Limited Voting Shares (“Brookfield shares”) of Brookfield. This represents a 8% interest as at June 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 Statement of Financial Position:

Statement of Financial Position

As at(Thousands, US dollars) Note   (Unaudited)June 30,2022     December 31,2021
Assets            
Cash and cash equivalents   $ 237,881   $ 80,697
Accounts receivable and other assets     44,711     77,501
Investment in Brookfield Asset Management Inc.1     5,796,037     7,869,681
Other investments carried at fair value     625,903     666,033
    $ 6,704,532   $ 8,693,912
Liabilities and Equity            
Accounts payable and other liabilities   $ 25,042   $ 7,693
Corporate borrowings     232,178     236,513
Preferred shares2     786,041     682,613
Retractable Common Shares     3,572,490     3,932,110
Warrant liability     486,118     611,010
Deferred Taxes3     961     23,430
      5,102,830     5,493,369
Equity            
Deficit     (4,028,634)     (4,549,339)
Accumulated other comprehensive income     5,630,336     7,749,882
    $ 6,704,532   $ 8,693,912
  1. The investment in Brookfield Asset Management Inc. consists of approximately 130 million Brookfield shares with a quoted market value of $44.47 per share as at June 30, 2022 (December 31, 2021 – $60.38).
  2. Represents $717 million of retractable preferred shares less $15 million of unamortized issue costs as at June 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).
  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.

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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