“Over the past year we made significant progress enhancing our overall business. We closed five acquisitions and announced an additional two, deploying or committing
| Three months ended December 31 |
Year ended December 31 |
|||||||||||
| US$ millions (except per unit amount), unaudited | 2017 | 2016 | 2017 | 2016 | ||||||||
| Net income (loss) attributable to unitholders1 | $(45) | $(11) | $24 | $(29) | ||||||||
| Net income (loss) per limited partnership unit2,3,4 | $(1.25) | $(0.13) | $(1.04) | $(0.06) | ||||||||
Company FFO1,5 |
$68 | $55 | $252 | $200 | ||||||||
Operational Update
The following table presents Company FFO by segment:
| Three months ended December 31 |
Year ended December 31 |
||||||||||||
| US$ millions, unaudited | 2017 | 2016 | 2017 | 2016 | |||||||||
| Industrial Operations | $23 | $(2) | $132 | $6 | |||||||||
| Business Services | 22 | 19 | 66 | 54 | |||||||||
| Energy | 26 | 16 | 52 | 63 | |||||||||
| Construction Services | - | 31 | 26 | 94 | |||||||||
| Corporate and Other | (3) | (9) | (24) | (17) | |||||||||
| Company FFO1,5 | $68 | $55 | $252 | $200 | |||||||||
Our industrials segment generated Company FFO of
Our business services segment generated Company FFO for the year of
Our energy segment reported Company FFO of
Our construction services segment contributed
Strategic Initiatives Update
During the fourth quarter of 2017 and subsequent to the end of the year we executed on a number of transactions that we believe will contribute significantly to the growth and operational diversity of our business:
GrafTech International
In February,GrafTech secured commitments for a$1.5 billion term loan with proceeds to be used to refinance existing debt and issue a distribution of$1.1 billion to its shareholders. This will return approximately$380 million toBrookfield Business Partners , which is in excess of our invested capital of $295 million. In addition, inJanuary 2018 ,GrafTech submitted a confidential registration statement relating to a proposed initial public offering of the company’s stock.Brookfield Business Partners owns approximately 34% ofGrafTech with the balance owned by our institutional partners.
Westinghouse Electric Company
In January, together with institutional partners, we entered into a definitive agreement to acquire 100% ofWestinghouse Electric Company (“Westinghouse”), for a purchase price of approximately$4.6 billion . Westinghouse is a U.S.-based infrastructure services company and among the world’s leading suppliers of engineering, maintenance, facilities management and repair services to nuclear power generating facilities. We expect to fund the transaction with approximately$1 billion of equity investment, approximately $3 billion of long-term debt financing and the balance by the assumption of certain pension, environmental and other operating obligations.Brookfield Business Partners has committed to fund up to approximately 50% of the equity portion on closing using existing liquidity, with the balance coming from institutional partners. Closing is expected to occur in the third quarter of 2018, subject toBankruptcy Court and regulatory approvals.
- Schoeller Allibert
Together with institutional partners, we reached a definitive agreement in January to acquire a 75% interest in theSchoeller Allibert Group B.V. (“Schoeller Allibert”) for €205 million from a private equity group. Scholler Allibert is one of Europe’s largest manufacturers of returnable plastic packaging systems. The remaining 25% interest will continue to be held by theSchoeller Group . Closing is expected during the second quarter 2018.
Greater Toronto Area gaming facilities
In January, with institutional partners, we closed our transaction with theOntario Lottery and Gaming Corporation , in partnership with our gaming partner, to operate and manage three gaming facilities in theGreater Toronto Area (the “GTA Bundle”) for a minimum period of 22 years. Our partnership has the option to develop a new site and extend the concession period by 10 years.
During the year we issued 21,285,500 limited partnership units for gross proceeds of approximately $630 million. The proceeds will be used for general corporate purposes, including the funding of previously announced transactions and future growth opportunities. Our total liquidity, including the
Board of Directors
Distribution
The Board has declared a quarterly distribution in the amount of
Additional Information
The Board has reviewed and approved this news release, including the summarized unaudited consolidated financial statements contained herein.
Brookfield Business Partners’ Letter to Unitholders and the Supplemental Information are available at https://bbu.brookfield.com/reports-and-filings.
Notes:
1 Attributable to parent company prior to the spin-off onJune 20, 2016 (“Spin-off”) and to limited partnership unitholders, general partnership unitholders, redemption-exchange unitholders and special limited partnership unitholders post Spin-off.
2 Comparative figures for the year endedDecember 31, 2016 not representative of performance, as units were spun out onJune 20, 2016 .
3 Average number of partnership units outstanding on a fully diluted time weighted average basis, assuming the exchange of redemption exchange units held byBrookfield Asset Management for limited partnership units, for the three months and year endedDecember 31, 2017 was 129 million and 114 million respectively, and for the three months endedDecember 31 , 2016 and for the period fromJune 20, 2016 toDecember 31, 2016 was 94 million and 93 million, respectively.
4 Income (loss) attributed to limited partnership unit on a fully diluted basis is reduced by incentive distributions paid to special limited partnership unitholders during the period. A reconciliation of net income per unit is available on page 9 of this release.
5 Company FFO is presented as a net amount attributable to unitholders and is a non-IFRS measure and is calculated as net income excluding the impact of depreciation and amortization, deferred income taxes, breakage and transaction costs, non-cash gains or losses and other items. When determining Company FFO, we include our proportionate share of Company FFO of equity accounted investment. A reconciliation of net income to Company FFO is available on page 7 and 8 of this release.
For more information, please visit our website at https://bbu.brookfield.com or contact:
| Media: Claire Holland Tel: (416) 369-8236 Email: [email protected] |
Investors: Courtney Burke Tel: (416) 369-2629 Email: [email protected] |
Conference Call and 2017 Year End Earnings Details
Investors, analysts and other interested parties can access Brookfield Business Partners’ 2017 year end results as well as the Letter to Unitholders and Supplemental Information on our website under the Reports & Filings section at https://bbu.brookfield.com
The conference call can be accessed via webcast on
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS AND INFORMATION
Note: This news release contains “forward-looking information” within the meaning of Canadian provincial securities laws and “forward-looking statements” within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, Section 21E of the U.S. Securities Exchange Act of 1934, as amended, “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995 and in any applicable Canadian securities regulations. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, include statements regarding the operations, business, financial condition, expected financial results, performance, prospects, opportunities, priorities, targets, goals, ongoing objectives, strategies and outlook of
Although we believe that our 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 our control, which may cause the actual results, performance or achievements of
Factors that could cause actual results to differ materially from those contemplated or implied by forward-looking statements include, but are not limited to: the impact or unanticipated impact of general economic, political and market factors in the countries in which we do business; the behavior of financial markets, including fluctuations in interest and foreign exchange rates; global equity and capital markets and the availability of equity and debt financing and refinancing within these markets; strategic actions including dispositions; the ability to complete and effectively integrate acquisitions into existing operations and the ability to attain expected benefits; changes in accounting policies and methods used to report financial condition (including uncertainties associated with critical accounting assumptions and estimates); the ability to appropriately manage human capital; the effect of applying future accounting changes; business competition; operational and reputational risks; technological change; changes in government regulation and legislation within the countries in which we operate; governmental investigations; litigation; changes in tax laws; ability to collect amounts owed; catastrophic events, such as earthquakes and hurricanes; the possible impact of international conflicts and other developments including terrorist acts and cyber terrorism; and other risks and factors detailed from time to time in our documents filed with the securities regulators in
We caution that the foregoing list of important factors that may affect future results is not exhaustive. When relying on our forward-looking statements, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Except as required by law,
CAUTIONARY STATEMENT REGARDING USE OF NON-IFRS MEASURES
This press release contains references to Company FFO. When determining Company FFO, we include our unitholders’ proportionate share of Company FFO for equity accounted investments. Company FFO is not a generally accepted accounting measure under IFRS and therefore may differ from definitions of Company FFO or Funds from Operations used by other entities. We believe that this is a useful supplemental measure that may assist investors in assessing the financial performance of
References to
Consolidated Statements of Financial Position
| As of December 31 | ||||
| US$ millions, unaudited | 2017 | 2016 | ||
| Assets | ||||
| Cash and cash equivalents | $1,106 | $1,050 | ||
| Financial assets | 784 | 539 | ||
| Accounts receivable, net | 4,362 | 1,797 | ||
| Inventory and other assets | 1,577 | 647 | ||
| Assets held for sale | 14 | 264 | ||
| Property, plant and equipment | 2,530 | 2,096 | ||
| Deferred income tax assets | 174 | 111 | ||
| Intangible assets | 3,094 | 371 | ||
| Equity accounted investments | 609 | 166 | ||
| Goodwill | 1,554 | 1,152 | ||
| Total assets | $15,804 | $8,193 | ||
| Liabilities and equity | ||||
| Liabilities | ||||
| Accounts payable and other | $5,638 | $2,457 | ||
| Liabilities associated with assets held for sale | - | 66 | ||
| Borrowings | 3,265 | 1,551 | ||
| Deferred income tax liabilities | 837 | 81 | ||
| Total liabilities | 9,740 | 4,155 | ||
| Equity1 | ||||
| Limited partners | 1,585 | 1,206 | ||
| General partner | - | - | ||
| Non-controlling interests attributable to: | ||||
| Redemption-Exchange Units, Preferred Shares and Special Limited Partnership Units held by Brookfield Asset Management Inc. | 1,453 | 1,295 | ||
| Interest of others in operating subsidiaries | 3,026 | 1,537 | ||
| Total equity | 6,064 | 4,038 | ||
| Total liabilities and equity | $15,804 | $8,193 | ||
Note:
1 Attributable to parent company prior to the Spin-off onJune 20, 2016 and to limited partnership unitholders, general partnership unitholders, redemption-exchange unitholders, special limited partnership unitholders and preferred shareholders post Spin-off.
Consolidated Statements of Operating Results
| US$ millions, unaudited | Three months ended December 31 |
Year ended December 31 |
||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||||
| Revenues | $8,379 | $2,232 | $22,823 | $7,960 | ||||||||||||||
| Direct operating costs | (8,034) | (2,064) | (21,876) | (7,386) | ||||||||||||||
| General and administrative expenses | (107) | (72) | (340) | (269) | ||||||||||||||
| Depreciation and amortization expense | (109) | (67) | (371) | (286) | ||||||||||||||
| Interest expense | (67) | (19) | (202) | (90) | ||||||||||||||
| Equity accounted income (loss), net | 8 | (7) | 69 | 68 | ||||||||||||||
| Impairment expense | (9) | (155) | (39) | (261) | ||||||||||||||
| Gain on acquisitions/dispositions | - | - | 267 | 57 | ||||||||||||||
| Other income (expenses), net | (72) | 9 | (108) | (11) | ||||||||||||||
| Income (loss) before income tax | (11) | (143) | 223 | (218) | ||||||||||||||
| Income tax (expense) recovery | ||||||||||||||||||
| Current | (11) | (7) | (30) | (25) | ||||||||||||||
| Deferred | 16 | 16 | 22 | 41 | ||||||||||||||
| Net income (loss) | $(6) | $(134) | $215 | $(202) | ||||||||||||||
| Attributable to1: | ||||||||||||||||||
| Limited partners | $(79) | $(5) | $(58) | $3 | ||||||||||||||
| General partner | - | - | - | - | ||||||||||||||
| Brookfield Asset Management Inc. | - | - | - | (35) | ||||||||||||||
| Non-controlling interests attributable to: | ||||||||||||||||||
| Redemption-exchange units held by Brookfield Asset Management Inc. |
(83) | (6) | (60) | 3 | ||||||||||||||
| Special Limited Partners | 117 | - | 142 | - | ||||||||||||||
| Interest of others | $39 | $(123) | $191 | $(173) | ||||||||||||||
Note:
1 Attributable to parent company prior to the Spin-off onJune 20, 2016 and to limited partnership unitholders, general partnership unitholders, special limited partnership unitholders and redemption-exchange unitholders post Spin-off.
Statements of Company Funds from Operations
| For the 3 months ended December 31, 2017 US$ millions, unaudited |
Construction Services |
Business Services |
Energy | Industrial Operations |
Corporate and Other |
As per IFRS Financials |
|||||||||||||
| Revenues | $1,272 | $6,502 | $81 | $522 | $2 | $8,379 | |||||||||||||
| Direct operating costs | (1,254) | (6,371) | (51) | (358) | - | (8,034) | |||||||||||||
| General and administrative expenses | (14) | (43) | (8) | (27) | (15) | (107) | |||||||||||||
| Interest expense | - | (19) | (6) | (41) | (1) | (67) | |||||||||||||
| Equity accounted Company FFO | - | 5 | 26 | - | - | 31 | |||||||||||||
| Current income taxes | (4) | (5) | (5) | (8) | 11 | (11) | |||||||||||||
| Realized disposition gains, net | - | - | - | - | - | - | |||||||||||||
| Company FFO attributable to others | - | (47) | (11) | (65) | - | (123) | |||||||||||||
| Company FFO1,2 | - | 22 | 26 | 23 | (3) | 68 | |||||||||||||
| Depreciation and amortization | (109) | ||||||||||||||||||
| Impairment expense | (9) | ||||||||||||||||||
| Realized disposition gains recorded in fair value changes or prior periods | - | ||||||||||||||||||
| Deferred income taxes | 16 | ||||||||||||||||||
| Other income/(expense), net | (72) | ||||||||||||||||||
| Non-cash items attributable to equity accounted investments | (23) | ||||||||||||||||||
| Non-cash items attributable to others | 84 | ||||||||||||||||||
| Net income (loss) attributable to unitholders2 | $(45) | ||||||||||||||||||
Notes:
1 The Statements of Company Funds from Operations above are prepared on a basis that is consistent with Brookfield Business Partner’s Supplemental Information and differs from net income as presented in Brookfield Business Partners’ Consolidated Statements of Operating Results on page 6 of this release, which is prepared in accordance with IFRS. Management uses company funds from operations (Company FFO) as a key measure to evaluate operating performance. Readers are encouraged to consider both measures in assessing Brookfield Business Partners’ results. Company FFO is presented as a net amount attributable to unitholders and is a non-IFRS measure and is calculated as net income excluding the impact of depreciation and amortization, deferred income taxes, breakage and transaction costs, non-cash gains or losses and other items. When determining Company FFO, we include our proportionate share of Company FFO for equity accounted investments.
2 Attributable to limited partnership unitholders, general partnership unitholders, special limited partnership unitholders and redemption-exchange unitholders post Spin-off.
Statements of Company Funds from Operations
| For the year ended December 31, 2017 US$ millions, unaudited |
Construction Services |
Business Services |
Energy | Industrial Operations |
Corporate and Other |
As per IFRS Financials |
|||||||||||||
| Revenues | $4,650 | $16,224 | $280 | $1,662 | $7 | $22,823 | |||||||||||||
| Direct operating costs | (4,584) | (15,864) | (197) | (1,228) | (3) | (21,876) | |||||||||||||
| General and administrative expenses | (47) | (135) | (20) | (93) | (45) | (340) | |||||||||||||
| Interest expense | - | (47) | (26) | (128) | (1) | (202) | |||||||||||||
| Equity accounted Company FFO | - | 28 | 62 | 1 | - | 91 | |||||||||||||
| Current income taxes | 5 | (21) | (4) | (28) | 18 | (30) | |||||||||||||
| Realized disposition gain, net | 2 | 17 | (12) | 237 | - | 244 | |||||||||||||
| Company FFO attributable to others | - | (136) | (31) | (291) | - | (458) | |||||||||||||
| Company FFO1,2 | 26 | 66 | 52 | 132 | (24) | 252 | |||||||||||||
| Depreciation and amortization | (371) | ||||||||||||||||||
| Impairment expense | (39) | ||||||||||||||||||
| Realized disposition gains recorded in fair value changes or prior periods | 23 | ||||||||||||||||||
| Deferred income taxes | 22 | ||||||||||||||||||
| Other income, net | (108) | ||||||||||||||||||
| Non-cash items attributable to equity accounted investments | (22) | ||||||||||||||||||
| Non-cash items attributable to others | 267 | ||||||||||||||||||
| Net income attributable to unitholders2 | $24 | ||||||||||||||||||
Notes:
1 The Statements of Company Funds from Operations above are prepared on a basis that is consistent with Brookfield Business Partners’ Supplemental Information and differs from net income as presented in Brookfield Business Partners’ Consolidated Statements of Operating Results on page 6 of this release, which is prepared in accordance with IFRS. Management uses company funds from operations (Company FFO) as a key measure to evaluate operating performance. Readers are encouraged to consider both measures in assessing Brookfield Business Partners’ results. Company FFO is presented as a net amount attributable to unitholders and is a non-IFRS measure and is calculated as net income excluding the impact of depreciation and amortization, deferred income taxes, breakage and transaction costs, non-cash gains or losses and other items. When determining Company FFO, we include our proportionate share of Company FFO for equity accounted investments.
2 Attributable to limited partnership unitholders, general partnership unitholders, special limited partnership unitholders and redemption-exchange unitholders post Spin-off.
Reconciliation of Net Income per Unit
| Three months ended December 31 |
Year ended December 31 |
|||||||||||
| US$, unaudited | 2017 | 2016 | 2017 | 2016 | ||||||||
| Net income (loss) per unitholder, excluding incentive distribution1,2,3 | $(0.35) | $(0.13) | $0.21 | $0.06 | ||||||||
| Incentive distribution per unit2,3 | $(0.90) | $- | $(1.25) | $- | ||||||||
| Net income (loss) attributable to limited partnership unit2,3,4 | $(1.25) | $(0.13) | $(1.04) | $0.06 | ||||||||
Notes:
1 Attributable to parent company prior to the Spin-off onJune 20, 2016 and to limited partnership unitholders, general partnership unitholders, redemption-exchange unitholders and special limited partnership unitholders post Spin-off.
2 Comparative figures for the year endedDecember 31, 2016 are not representative of performance, as units were spun out onJune 20, 2016 .
3 Average number of partnership units outstanding on a fully diluted time weighted average basis, assuming the exchange of redemption exchange units held byBrookfield Asset Management for limited partnership units, for the three months and year endedDecember 31, 2017 was 129 million and 113.5 million respectively, and for the three months endedDecember 31, 2016 and for the periodJune 20, 2016 toDecember 31, 2016 was 93.9 million and 92.9 million, respectively .
4 Income (loss) attributed to limited partnership unit on a fully diluted basis is reduced by incentive distributions paid to special limited partnership unitholders during the period.
Source:
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English |