PVS Annual Report 2014

Partners Value Split Corp. has released its Annual Report to December 31, 2014.

The company has the following issues outstanding: PVS.PR.A, PVS.PR.B, PVS.PR.C and PVS.PR.D. Note that there was a ticker change (from BNA) in July 2014.

Figures of interest are:

MER: I suggest it is best to include the amortization of share issue costs in MER – after all, this is a charge against the stated value of the company. Therefore, expenses were $382,000 (regular expenses) + $1,443,000 (amortization) = $1,825,000 on assets of $2.65-billion (see below) or 7bp.

Average Net Assets: We need this to calculate portfolio yield and MER. The average of the beginning and end of year assets (including preferred shares) so: [(3,108-million + 2,191-million)]/2 = $2.65-billion. It may be noted with admiration that this was done without significant financing – the increase came from appreciation of the underlying BAM.A shares, which increased in price from $41.22 on 2013-12-31 to $58.22 on 2014-12-31.

Underlying Portfolio Yield: Total Income of $40.1-million divided by average net assets of $2,650-million is 1.5%.

Income Coverage: Net income of $39.760-million less amortization of $1.443-million is $38.32-million to cover senior preferred dividends and debenture interest of $26.097-million is 147%. However, I consider it prudent to include the $10-million stated entitlement of the Junior preferreds, even though none of this was actually paid in 2014 because the Juniors can be retracted at any time, which could prove embarrassing in times of extreme stress. So I’d say income coverage is 103%.

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