Brookfield Business Partners CORPORATE PROFILE AUGUST 2017

Transcription

1 Brookfield Business Partners CORPORATE PROFILE AUGUST 2017

2 Brookfield Business Partners ( BBU ) We are a business services and industrials company focused on long-term capital appreciation Own and operate high-quality businesses that benefit from barriers to entry and/or low production costs Target long-term growth through acquisitions and organic growth in our business units, surfacing value through our operational expertise Leverage the broader Brookfield platform as an owner and operator of real assets where it provides us with a competitive advantage BBU NYSE BBU.UN TSX Flexibility to invest in multiple industries, geographies and in a variety of forms 2

3 Our Business has Diversified Operations Business Services Industrials Global business services: Global construction and related services: Energy supply chain operations: Industrial operations: Real estate services Facilities management Road fuel distribution and marketing Logistics Financial advisory services Design Program management Procurement Oil & Gas exploration and production Oilfield services Graphite electrode production Water and sewage treatment Pre-cast concrete construction products Specialty metals and aggregates 3

4 Q Financial Snapshot Total Assets $14.4 billion 1 Book Equity $2.6 billion 1,2 Corporate 3% 17% Construction Services Corporate 15% Construction 37% Services Industrial Operations 41% 10% 29% Business Services Industrial Operations 21% 12% 15% Business Services Energy Energy $4,500 Revenues $4.9 billion 3 Company FFO $43 million 3,4 US$ millions $3,273 US$ millions $3,000 $20 $17 $1,500 $1,125 $15 $10 $12 $11 $8 $0 Construction Business Services $64 Energy $406 Industrial Operations $5 $0 -$5 -$10 Construction Business Sevices Energy Industrial Operations ($5) Corporate -$15 1) Unaudited, as of June 30, ) Attributable to limited partnership unitholders, general partnership unitholders, and redemption-exchange unitholders. Equity is also attributable to preferred shareholders and Special LP unitholders 3) Unaudited, for the three months ended June 30, ) Attributable to limited partnership unitholders, general partnership unitholders, and redemption-exchange unitholders 4

5 Global Operations NORTH AMERICA $4.4 billion U.K & EUROPE $3.4 billion SOUTH AMERICA $4.2 billion MIDDLE EAST & ASIA $1.1 billion AUSTRALIA $1.3 billion ~400 LOCATIONS $14.4 billion ASSETS 65+ INVESTMENT PROFESSIONALS 5

6 Value Proposition Long Term Capital Appreciation We target 15% to 20% average return on our investments Leverage expertise from other Brookfield platforms Owner-operator of high-quality businesses Business Strategy Acquire high quality businesses on a value basis Actively manage operations to enhance their value by focusing on margins, cash flows and profitability Surface value by selling non-core assets, raising non-recourse financing and selling interests in businesses when value is maximized Opportunistically recycle capital 6

7 Liquidity and Capital Resources We maintain a strong balance sheet with ample liquidity and a consolidated net debt to capitalization ratio of 29% Managing Liquidity We manage our liquidity and capital requirements through: Cash flows from operations Opportunistically monetizing mature assets and operations Strategically refinancing existing debt and incurring additional debt Financing Assets We finance our assets principally at the operating company level with debt that generally does not have recourse against either our company or to our other operations Maturities range from 1 to 7 years These borrowings typically include customary covenants based on a fixed charge coverage and debt to EBITDA ratios We have no debt drawn at the corporate level Limited recourse for performance bonds and construction guarantees 7

8 Operating Segments 8

9 Business Services Service businesses in commercial and residential real estate, fuel distribution and marketing and financial advisory Broad exposure for our unitholders to the commercial and residential real estate services sectors Offering a suite of services across the service value chain for real estate and other real assets including brokerage services, appraisals, relocation services and facilities management Global client base including government agencies and large corporations Providing superior service levels and operating platforms that are global in scale Our road fuels distribution and marketing business comprises a leading supplier in the U.K. and a network of gas stations across Canada Our financial advisory business is part of a global services company specializing in real estate, infrastructure and power 300 million+ SQ. FT MANAGED REAL ESTATE ~66,000 REAL ESTATE AGENTS U.S. AND CANADA NETWORKS 9

10 Construction Services Provide construction and related services globally, including design, program management and procurement Leading international contractor operating in Australia, Europe, the Middle East, Canada and India Operates under the Multiplex banner Extensive development and construction capability to drive value creation Focus on commercial and residential buildings, social infrastructure and mixeduse properties Landmark projects include One St. George Wharf in London, King Street Wharf in Sydney and Emirates Towers in Dubai Fiona Stanley Hospital, Perth $7 billion+ BACKLOG ~1,030 CURRENT AND DELIVERED PROJECTS SINCE INCEPTION St. George Wharf, London 50 Martin Place, Sydney 10

11 Energy Oil and gas exploration & production and energy related services Our energy businesses operate across the supply chain including exploration and production, and well and drilling services We operate in Western Canada with an orientation toward long-life, low-cost reserves located at shallow depths, and in Australia where we are focused on long-life, contracted natural gas reserves and high return offshore oil projects Our contract drilling and well servicing business operates in Western Canada where we have the infrastructure to meet the changing needs of our upstream customers and respond to technological developments in the drilling space 100,000+ BARRELS OF OIL EQUIVALENT PER DAY OF PRODUCTION ~85% / ~15% GAS / OIL PRODUCTION 11

12 Industrials Industrials including manufacturing, metals & mining and water supply and treatment Our industrial manufacturing and metals & mining operations leverage Brookfield s expertise as an owner and operator of real assets Industrial manufacturing operations are lowcost producers with high barriers to entry due to market position, required operational expertise, or capital intensity Water distribution, collection and treatment business operates through long-term concessions and public-private partnerships Metals & mining operations are specialty, niche commodity producers that supply local and global markets 5,000 TONNES PER DAY PALLADIUM PRODUCTION 1 15 million CUSTOMERS WATER & WASTEWATER SERVICES 1) Underground mining production 12

13 Strategic Initiatives 13

14 Acquisition of Greenergy Acquired an approximate 85% controlling stake in Greenergy 1, U.K. s leading provider of road fuels Approximately 300 kt of biodiesel production capacity Significant import and storage infrastructure Extensive distribution network which delivers over 18 billion liters of road fuels annually Well positioned to continue growing service offering for U.K. customer base given track record of reliability and competitive supply Opportunity to expand to other geographies including in Europe, Brazil and Canada U.K. Infrastructure Access 1) Greenergy Fuels Holdings Ltd. 14

15 Acquisition of Gas Stations Acquired one of the largest gas station networks in Canada Acquired Loblaw s gas station operations, including 213 retail gas stations and associated convenience kiosks adjacent to Loblaw-owned grocery stores across Canada Rebranding to the Mobil fuel brand Long-term agreement with Imperial Oil Building on Mobil s premier service station brand in the U.S. with deep presence across key markets The gas stations will continue to allow customers to collect PC points through Loblaw's PC Plus loyalty program and by using PC Financial products 15

16 Acquisition of BRK Ambiental BRK Ambiental is Brazil s largest private water distribution, collection and treatment company Acquired a 70% controlling stake in Odebrecht Ambiental s core water, wastewater and industrial water treatment businesses in April 2017 and renamed the company BRK Ambiental operates municipal water and sewage systems through long-term concessions and publicprivate partnerships serving 15 million people, more than the rest of the private sector combined Supported by a strong regulatory framework for water and wastewater concessions in Brazil We believe the business is well positioned to gain a growing share of the water and sewage improvements planned in Brazil over the next two decades Ability to generate strong and stable long-term returns for Brookfield Business Partners 22 assets Water & Sewage Public concessions and public-private partnerships with state and municipal authorities Customers - residential, commercial and public users Revenue - direct billing and/or sponsored payments, inflation linked 4 assets Industrial and Other Industrial water utilities outsourcing from steel and petrochemical companies Small construction waste landfill and recycling unit Revenue - waste disposal fees, recycled aggregates sales, soil and scrap metal 16

17 Acquisition of Teekay Offshore Definitive agreement to acquire ~60% of Teekay Offshore L.P. (NYSE: TOO), a leading global provider of marine services and solutions 1 Teekay Offshore is an international provider of marine transportation, storage, long-distance towing, offshore installation, maintenance and safety services to the oil industry Primarily focusing on the offshore oil regions of the North Sea, Brazil and the east coast of Canada The company controls approximately 40% of the world's shuttle tanker fleet and owns the world s fourth largest portfolio of floating production, storage and offloading vessels Unique opportunity to acquire a leading player for critical transportation services in offshore production Stable, diverse cash flows underpinned by strong contracts Global footprint and strong operational track record Closing expected in the third quarter ) There can be no assurance that Brookfield Business Partners will be able to successfully execute on this transaction 17

18 Acquisition of Gaming Operations Selected as the successful proponent by the Ontario Lottery and Gaming Corporation ( OLG ) to operate and manage gaming facilities in the Greater Toronto Area (the GTA Bundle ) Partnership with Great Canadian Gaming Corporation, the largest private sector casino operator in Canada Includes three gaming facilities in the Greater Toronto area including: Slots at Woodbine, located near Pearson International Airport Slots at Ajax Downs Great Blue Heron Long-term contracted commitment to be the gaming service provider for the GTA Bundle for a minimum period of 22 years Business plan includes strategic positioning of assets with significant capital investment Integrated property expansions that will enhance gaming offerings Leading world-class facilities with hotels, conference facilities and entertainment venues Opportunity to make a value investment in a services business with stable and growing cash flows and an attractive risk adjusted return profile, in an underserved market Closing expected in early 2018 OLG Slots at Woodbine OLG Slots at Ajax Downs Great Blue Heron Casino 18

19 Appendices 19

20 Selected Segmented Statements of Operating Results and Statements of Financial Position Information Statements of Operating Results Statements of Financial Position Three months ended June 30 Six months ended June 30 US$ MILLIONS, UNAUDITED US$ MILLIONS, UNAUDITED As of Jun. 30, 2017 Dec. 31, 2016 Revenue by Segment Construction Services $ 1,125 $ 1,119 $ 2,141 $ 2,007 Business Services 3, , Energy Industrial Operations Corporate and Other 2 4 Revenue $ 4,870 $ 2,008 $ 6,804 $ 3,685 Total assets by segment Construction Services $ 2,497 $ 2,275 Business Services 4,212 1,690 Energy 1,382 1,596 Industrial Operations 5,891 2,047 Corporate and Other Total assets $ 14,392 $ 8,193 Direct operating costs by segment Construction Services $ 1,104 $ 1,082 $ 2,124 $ 1,938 Business Services 3, , Energy Industrial Operations Corporate and Other Direct operating costs $ 4,673 $ 1,865 $ 6,547 $ 3,434 Debt by segment Construction Services $ 7 $ 7 Business Services Energy Industrial Operations 1, Corporate and Other Borrowings $ 3,209 $ 1,551 Company FFO by segment Construction Services $ 12 $ 25 $ 9 $ 47 Business Services Energy Industrial Operations (3) Corporate and Other (5) (1) (10) (1) Company FFO 1,2 $ 43 $ 58 $ 138 $ 95 Equity attributable to unitholders by segment Construction Services $ 948 $ 877 Business Services Energy Industrial Operations Corporate and Other Equity attributable to unitholders 1 $ 2,560 $ 2,501 1) Attributable to parent company prior to the Spin-off on June 20, 2016 and to limited partnership unitholders, general partnership unitholders, and redemption-exchange unitholders post Spin-off. Post Spin-off, equity is also attributable to preferred shareholders and Special LP unitholders 2) Company FFO 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. For further information on Company FFO see Use of Non IFRS Measures on page 1 of the 20-F 20

21 Governance Senior Management Team Cyrus Madon Chief Executive Officer Ralf Rank Head of Services Craig Laurie Chief Financial Officer Peter Gordon Head of Industrials Joe Freedman Senior Managing Partner Jim Reid Head of Energy Jaspreet Dehl Managing Director Brookfield Business Partners has entered into a Master Services Agreement with Brookfield Asset Management Provides a comprehensive suite of services to Brookfield Business Partners Base management fee equal to 1.25% annually of total capitalization of Brookfield Business Partners Brookfield is entitled to receive incentive distributions equal to 20% of an increase in the unit price of BBU over the incentive distribution threshold (currently $26.17/unit) 1) For further information regarding the arrangements refer to the Management Services Agreement available in the public filings of Brookfield Business Partners in the U.S. and Canada 21

22 For investor-related information please call our Investor Line: North America Global

23 Definitions and Use of Non-IFRS Measures Company Funds From Operations (Company FFO), where applicable, is a key measure of our financial performance and we use Company FFO to assess operating results and our business performance. Company FFO is a non-ifrs measure which does not have any standard meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other companies. Company FFO 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. Company FFO is presented net to unitholders, or net to parent company. When determining Company FFO, we include our proportionate share of Company FFO of equity accounted investments. For further information on Company FFO see Use of Non IFRS Measures on page 5 of the F. Company EBITDA, where applicable, is a key measure of our financial performance and we use Company EBITDA to assess operating results and our business performance. Company EBITDA is non-ifrs measure which does not have any standard meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other companies. Company FFO is further adjusted as Company EBITDA to exclude the impact of realized disposition gains (losses), interest expense, current income taxes, and realized disposition gain, current income taxes and interest expenses related to equity accounted investments. Company EBITDA is presented net to unitholders, or net to parent company. For further information on Company EBITDA see Use of Non IFRS Measures on page 5 of the F. Equity accounted Company EBITDA is exclusive of non-cash items, realized disposition gains, current income taxes and interest expenses included within equity accounted income. Equity attributable to unitholders is exclusive of the equity interest of others in our operating subsidiaries. Net (loss) income attributable to unitholders is exclusive of the net (loss) income attributable to others in our operating subsidiaries. Unitholders are defined as the parent company prior to the Spin-off on June 20, 2016 and as limited partnership unitholders, general partnership unitholders, and redemption-exchange unitholders post Spin-off. 23

24 Important Cautionary Notes All amounts are in U.S. dollars unless otherwise specified. Unless otherwise indicated, the statistical and financial data in this document is presented as of June 30, CAUTIONARY STATEMENT REGARDING FORWARD- LOOKING STATEMENTS AND INFORMATION This Corporate Profile 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 Brookfield Business Partners and its subsidiaries, as well as the outlook for North American and international economies for the current fiscal year and subsequent periods. In some cases, forward-looking statements can be identified by terms such as expects, anticipates, plans, believes, estimates, seeks, intends, targets, projects, forecasts or negative versions thereof and other similar expressions, or future or conditional verbs such as may, will, should, would and could. 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 forwardlooking 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 Brookfield Business Partners L.P. and its subsidiaries 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 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 exchanges rate; 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 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; 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 our documents filed with the securities regulators in Canada and the United States. Statements relating to reserves are deemed to be forward-looking statements as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described herein can be profitably produced in the future. We qualify any and all of our forward-looking statements by these cautionary factors. 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, Brookfield Business Partners undertakes no obligation to publicly update or revise any forward-looking statements or information, whether written or oral, that may be as a result of new information, future events or otherwise. CAUTIONARY STATEMENT REGARDING USE OF NON-IFRS MEASURES This Corporate Profile 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 Brookfield Business Partners and its subsidiaries. Company FFO should not be considered as the sole measure of our performance and should not be considered in isolation from, or as a substitute for, analysis of our financial statements prepared in accordance with IFRS. 24