Exhibit | Title |
99.1 | Brookfield Infrastructure Corporation’s interim report for the quarter ended June 30, 2020 |
99.2 | Certification of Samuel Pollock, Chief Executive Officer, Brookfield Infrastructure Corporation, pursuant to Canadian law |
99.3 | Certification of Bahir Manios, Chief Financial Officer, Brookfield Infrastructure Corporation, pursuant to Canadian law |
101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
101.SCH | Inline XBRL Taxonomy Extension Schema Document |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
BROOKFIELD INFRASTRUCTURE CORPORATION | ||||
Date: | August 13, 2020 | By: | /s/ MICHAEL RYAN | |
Name: Michael Ryan | ||||
Title: Corporate Secretary | ||||
INDEX | |
Page | |
As of | |||||||||
US$ MILLIONS | Notes | June 30, 2020 | December 31, 2019 | ||||||
Assets | |||||||||
Cash and cash equivalents | 3 | $ | $ | ||||||
Accounts receivable and other | 3 | ||||||||
Current assets | |||||||||
Property, plant and equipment | 4 | ||||||||
Intangible assets | 5 | ||||||||
Goodwill | 6 | ||||||||
Financial assets | 3 | ||||||||
Other assets | |||||||||
Deferred income tax asset | |||||||||
Total assets | $ | $ | |||||||
Liabilities and Equity | |||||||||
Liabilities | |||||||||
Accounts payable and other | 3 | $ | $ | ||||||
Financial liabilities | 3, 8 | ||||||||
Exchangeable and class B shares | 3, 8 | ||||||||
Current liabilities | |||||||||
Non-recourse borrowings | 3, 7 | ||||||||
Loans payable to Brookfield Infrastructure | 11 | ||||||||
Financial liabilities | 3, 8 | ||||||||
Other liabilities | |||||||||
Deferred income tax liability | |||||||||
Total liabilities | |||||||||
Equity | |||||||||
Brookfield Infrastructure Partners L.P.(1) | 10 | ( | ) | ||||||
Non-controlling interest | |||||||||
Total equity | ( | ) | |||||||
Total liabilities and equity | $ | $ | |||||||
1. | Common equity is attributable to the partnership prior to the special distribution and subsequently as a result of the partnership holding all of the class C shares issued by our company. Please refer to Note 2(c) Basis of Presentation and Significant Accounting Policies, for further details. |
For the three-month period ended June 30 | For the six-month period ended June 30 | ||||||||||||||||
US$ MILLIONS | Notes | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Revenues | 9 | $ | $ | $ | $ | ||||||||||||
Direct operating costs | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
General and administrative expenses | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
Depreciation and amortization expense | 4, 5 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Interest expense | 8, 11 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Remeasurement of exchangeable and class B shares | 8 | ( | ) | ( | ) | ||||||||||||
Mark-to-market on hedging items and foreign currency revaluation | 3 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Other expense | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
(Loss) income before income tax | ( | ) | |||||||||||||||
Income tax expense | |||||||||||||||||
Current | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
Deferred | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
Net (loss) income | $ | ( | ) | $ | $ | $ | |||||||||||
Attributable to: | |||||||||||||||||
Brookfield Infrastructure Partners L.P.(1) | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||
Non-controlling interest | |||||||||||||||||
1. | Net income is attributable to the partnership prior to the special distribution as well as subsequently as a result of the partnership holding all of the class C shares issued by our company. Please refer to Note 2(c) Basis of Presentation and Significant Accounting Policies, for further details. |
2. | Earnings per share have not been presented in the financial statements, as the underlying shares do not constitute “ordinary shares” under IAS 33 Earnings per share. See Note 2(q) Basis of Presentation and Significant Accounting Policies, for further details. |
For the three-month period ended June 30 | For the six-month period ended June 30 | ||||||||||||||||
US$ MILLIONS | Notes | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Net (loss) income | $ | ( | ) | $ | $ | $ | |||||||||||
Other comprehensive (loss) income: | |||||||||||||||||
Items that will not be reclassified subsequently to profit or loss: | |||||||||||||||||
Tax impact of remeasurement of revaluation surplus | ( | ) | |||||||||||||||
( | ) | ||||||||||||||||
Items that may be reclassified subsequently to profit or loss: | |||||||||||||||||
Foreign currency translation | ( | ) | ( | ) | |||||||||||||
Cash flow hedge | 3 | ||||||||||||||||
Taxes on the above items | ( | ) | ( | ) | ( | ) | |||||||||||
( | ) | ( | ) | ||||||||||||||
Total other comprehensive (loss) income | ( | ) | ( | ) | |||||||||||||
Comprehensive (loss) income | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||
Attributable to: | |||||||||||||||||
Brookfield Infrastructure Partners L.P.(1) | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||
Non-controlling interests | ( | ) | |||||||||||||||
1. | Comprehensive income is attributable to the partnership prior to the special distribution as well as subsequently as a result of the partnership holding all of the class C shares issued by our company. Please refer to Note 2(c) Basis of Presentation and Significant Accounting Policies, for further details. |
Brookfield Infrastructure Partners L.P. | ||||||||||||||||||||||||||||
FOR THE THREE-MONTH PERIOD ENDED JUNE 30, 2020 $US MILLIONS | Share capital | Retained earnings | Ownership changes | Accumulated other comprehensive income | Brookfield Infrastructure Partners L.P. | Non-controlling interest | Total equity | |||||||||||||||||||||
Balance as at April 1, 2020 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||
Net (loss) income | — | ( | ) | — | — | ( | ) | ( | ) | |||||||||||||||||||
Other comprehensive loss | — | — | — | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Comprehensive (loss) income | — | ( | ) | — | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
Affiliate distributions to non-controlling interest | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||
Balance as at June 30, 2020 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||
Brookfield Infrastructure Partners L.P. | ||||||||||||||||||||||||||||
FOR THE THREE-MONTH PERIOD ENDED JUNE 30, 2019 $US MILLIONS | Share capital | Retained earnings | Ownership changes | Accumulated other comprehensive income | Brookfield Infrastructure Partners L.P. | Non-controlling interest | Total equity | |||||||||||||||||||||
Balance as at April 1, 2019 | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Net income | — | — | — | |||||||||||||||||||||||||
Other comprehensive (loss) income | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||
Comprehensive income (loss) | — | — | ( | ) | ||||||||||||||||||||||||
Distributions to, net of contributions from, Brookfield Infrastructure Partners L.P. | ( | ) | — | — | — | ( | ) | — | ( | ) | ||||||||||||||||||
Affiliate distributions to non-controlling interest | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||
Balance as at June 30, 2019 | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Brookfield Infrastructure Partners L.P. | ||||||||||||||||||||||||||||
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2020 $US MILLIONS | Share capital | Retained Earnings | Ownership changes | Accumulated other comprehensive income | Brookfield Infrastructure Partners L.P. | Non-controlling interest | Total equity | |||||||||||||||||||||
Balance as at January 1, 2020 | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Net (loss) income | — | ( | ) | — | — | ( | ) | |||||||||||||||||||||
Other comprehensive loss | — | — | — | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Comprehensive loss | — | ( | ) | — | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
Distributions to, net of contributions from, Brookfield Infrastructure Partners L.P. | ( | ) | — | — | — | ( | ) | — | ( | ) | ||||||||||||||||||
Affiliate distributions to non-controlling interests | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||
Special distribution/reorganization(1) | ( | ) | — | ( | ) | — | ( | ) | — | ( | ) | |||||||||||||||||
Balance as at June 30, 2020 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||
Brookfield Infrastructure Partners L.P. | ||||||||||||||||||||||||||||
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2019 $US MILLIONS | Share capital | Retained Earnings | Ownership changes | Accumulated other comprehensive income | Brookfield Infrastructure Partners L.P. | Non-controlling interest | Total equity | |||||||||||||||||||||
Balance as at January 1, 2019 | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Net income | — | — | — | |||||||||||||||||||||||||
Other comprehensive income | — | — | — | |||||||||||||||||||||||||
Comprehensive income | — | — | ||||||||||||||||||||||||||
Distributions to, net of contributions from, Brookfield Infrastructure Partners L.P. | ( | ) | — | — | — | ( | ) | — | ( | ) | ||||||||||||||||||
Affiliate distributions to non-controlling interest | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||
Balance as at June 30, 2019 | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
1. | See Note 1(b) Organization and Description of our Company for further details. |
For the three-month period ended June 30 | For the six-month period ended June 30 | ||||||||||||||||
US$ MILLIONS | Notes | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Operating Activities | |||||||||||||||||
Net (loss) income | $ | ( | ) | $ | $ | $ | |||||||||||
Adjusted for the following items: | |||||||||||||||||
Depreciation and amortization expense | 4, 5 | ||||||||||||||||
Mark-to-market on hedging items and other | 3 | ||||||||||||||||
Remeasurement of exchangeable and class B shares | 8 | ||||||||||||||||
Deferred income tax expense | |||||||||||||||||
Changes in non-cash working capital, net | 12 | ( | ) | ( | ) | ||||||||||||
Cash from operating activities | |||||||||||||||||
Investing Activities | |||||||||||||||||
Purchase of long-lived assets, net of disposals | 4, 5 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Cash used by investing activities | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
Financing Activities | |||||||||||||||||
Distributions to Brookfield Infrastructure Partners L.P. | ( | ) | ( | ) | ( | ) | |||||||||||
Distributions to non-controlling interest | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
Proceeds from non-recourse borrowings | 7 | ||||||||||||||||
Repayment of non-recourse borrowings | 7 | ( | ) | ( | ) | ( | ) | ||||||||||
Cash used by financing activities | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
Cash and cash equivalents | |||||||||||||||||
Change during the period | ( | ) | |||||||||||||||
Impact of foreign exchange on cash | ( | ) | |||||||||||||||
Balance, beginning of period | |||||||||||||||||
Balance, end of period | $ | $ | $ | $ | |||||||||||||
a) | Brookfield Infrastructure Corporation |
b) | Special Distribution of Brookfield Infrastructure Corporation |
i) | Exchangeable shares |
ii) | Class B shares and class C shares |
iii) | Credit facilities |
iv) | Equity Commitment |
v) | Other arrangements with Brookfield |
a) | Statement of Compliance |
b) | Basis of presentation |
c) | Continuity of Interests |
d) | Foreign Currency Translation |
e) | Business Combinations |
f) | Cash and Cash Equivalents |
g) | Accounts Receivable |
h) | Property, Plant and Equipment |
Buildings | Up to 50 years |
Machinery and equipment | Up to 5 years |
Network systems | Up to 60 years |
i) | Asset Impairment |
j) | Intangible Assets |
k) | Goodwill |
l) | Revenue Recognition |
m) | Financial Instruments and Hedge Accounting |
i) | Financial Instrument Classification |
ii) | Hedge Accounting |
n) | Income Taxes |
i) | Current income tax |
ii) | Deferred income tax |
o) | Assets Held for Sale |
p) | Provisions |
q) | Earnings per share |
r) | Critical Accounting Judgments and Key Sources of Estimation Uncertainty |
i) | Common control transactions |
ii) | Financial instruments |
iii) | Revaluation of property, plant and equipment |
iv) | Fair values in business combinations |
v) | Impairment of goodwill, intangibles with indefinite lives |
US$ MILLIONS Financial Instrument Classification | |||||||||||
MEASUREMENT BASIS | Fair value through profit or loss | Amortized Cost | Total | ||||||||
Financial assets | |||||||||||
Cash and cash equivalents | $ | $ | $ | ||||||||
Accounts receivable and other | |||||||||||
Financial assets (current and non-current)(1) | |||||||||||
Total | $ | $ | $ | ||||||||
Financial liabilities | |||||||||||
Accounts payable and other | $ | $ | $ | ||||||||
Non-recourse borrowings (current and non-current) | |||||||||||
Exchangeable and class B shares(2) | |||||||||||
Financial liabilities (current and non-current)(1) | |||||||||||
Total | $ | $ | $ | ||||||||
1. | Derivative instruments which are elected for hedge accounting totaling $ |
2. | Class C shares are also classified as financial liabilities due to their cash redemption feature. As discussed in Note 1(b)(ii) Organization and Description of our Company, the class C shares meet certain qualifying criteria and are presented as equity. See Note 10, Equity. |
US$ MILLIONS Financial Instrument Classification | |||||||||||
MEASUREMENT BASIS | Fair value through profit or loss | Amortized Cost | Total | ||||||||
Financial assets | |||||||||||
Cash and cash equivalents | $ | $ | $ | ||||||||
Accounts receivable and other | |||||||||||
Financial assets (current and non-current)(1) | |||||||||||
Total | $ | $ | $ | ||||||||
Financial liabilities | |||||||||||
Accounts payable and other | $ | $ | $ | ||||||||
Non-recourse borrowings (current and non-current) | |||||||||||
Financial liabilities (current and non-current)(1) | |||||||||||
Total | $ | $ | $ | ||||||||
1. |
June 30, 2020 | December 31, 2019 | ||||||||||||||
US$ MILLIONS | Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||
Financial assets | |||||||||||||||
Cash and cash equivalents | $ | $ | $ | $ | |||||||||||
Accounts receivable and other | |||||||||||||||
Financial assets (current and non-current) | |||||||||||||||
Total | $ | $ | $ | $ | |||||||||||
Financial liabilities | |||||||||||||||
Accounts payable and other (current and non-current) | $ | $ | $ | $ | |||||||||||
Non-recourse borrowings(1) | |||||||||||||||
Exchangeable and class B shares(2) | |||||||||||||||
Financial liabilities (current and non-current) | |||||||||||||||
Total | $ | $ | $ | $ | |||||||||||
1. | Non-recourse borrowings are classified under level 2 of the fair value hierarchy. For level 2 fair values, future cash flows are estimated based on observable forward interest rates at the end of the reporting period. |
2. | Class C shares are also classified as financial liabilities due to their cash redemption feature. As discussed in Note 1(b)(ii) Organization and Description of our Company, the class C shares meet certain qualifying criteria and are presented as equity. For the purpose of the disclosure above, the class C shares have a fair value of $ |
Level 1 | — | Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. | ||
Level 2 | — | Inputs other than quoted prices included in Level 1 are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life. Fair valued assets and liabilities that are included in this category are primarily certain derivative contracts and other financial assets carried at fair value in an inactive market. | ||
Level 3 | — | Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to determining the estimate. Fair valued assets and liabilities that are included in this category are interest rate swap contracts, derivative contracts, certain equity securities carried at fair value which are not traded in an active market and the non-controlling interest’s share of net assets of limited life funds. | ||
US$ MILLIONS | Fair value hierarchy | June 30, 2020 | December 31, 2019 | ||||||
Interest rate swaps & other | Level 2(1) | ||||||||
Financial asset | $ | $ | |||||||
Financial liability | |||||||||
1. | Valuation technique: Discounted cash flow. Future cash flows are estimated based on forward exchange rates (from observable forward exchange rates at the end of the reporting period) and contract forward rates, discounted at a rate that reflects our credit risk and the credit risk of various counterparties. |
US$ MILLIONS | Gross carrying amount | Accumulated depreciation | Accumulated fair value adjustments | Total | |||||||||||
Balance at January 1, 2020 | $ | $ | ( | ) | $ | $ | |||||||||
Additions, net of disposals | |||||||||||||||
Depreciation expense | ( | ) | ( | ) | |||||||||||
Non-cash additions | |||||||||||||||
Net foreign currency exchange differences | ( | ) | ( | ) | ( | ) | |||||||||
Balance at June 30, 2020 | $ | $ | ( | ) | $ | $ | |||||||||
US$ MILLIONS | Gross carrying amount | Accumulated depreciation | Accumulated fair value adjustments | Total | |||||||||||
Balance at January 1, 2019 | $ | $ | ( | ) | $ | $ | |||||||||
Change in accounting policies | |||||||||||||||
Additions, net of disposals | |||||||||||||||
Depreciation expense | ( | ) | ( | ) | |||||||||||
Fair value adjustments | |||||||||||||||
Net foreign currency exchange differences | ( | ) | |||||||||||||
Balance at December 31, 2019 | $ | $ | ( | ) | $ | $ | |||||||||
As of | |||||||
US$ MILLIONS | June 30, 2020 | December 31, 2019 | |||||
Cost | $ | $ | |||||
Accumulated amortization | ( | ) | ( | ) | |||
Total | $ | $ | |||||
As of | |||||||
US$ MILLIONS | June 30, 2020 | December 31, 2019 | |||||
Brazilian regulated gas transmission operation | $ | $ | |||||
U.K. regulated distribution operation | |||||||
Total | $ | $ | |||||
US$ MILLIONS | For the six-month period ended June 30, 2020 | For the 12 month period ended December 31, 2019 | |||||
Cost at beginning of the period | $ | $ | |||||
Additions, net of disposals | |||||||
Foreign currency translation | ( | ) | ( | ) | |||
Ending Balance | $ | $ | |||||
US$ MILLIONS | For the six-month period ended June 30, 2020 | For the 12 month period ended December 31, 2019 | |||||
Accumulated amortization at beginning of the period | $ | ( | ) | $ | ( | ) | |
Amortization | ( | ) | ( | ) | |||
Foreign currency translation | |||||||
Ending Balance | $ | ( | ) | $ | ( | ) | |
As of | |||||||
US$ MILLIONS | June 30, 2020 | December 31, 2019 | |||||
Balance at beginning of the year | $ | $ | |||||
Foreign currency translation and other | ( | ) | ( | ) | |||
Ending Balance | $ | $ | |||||
As of | |||||||
US$ MILLIONS | June 30, 2020 | December 31, 2019 | |||||
Non-current | $ | $ | |||||
Total | $ | $ | |||||
As of | ||||||||
US$ MILLIONS | June 30, 2020 | December 31, 2019 | ||||||
Current: | ||||||||
Inflation swaps | $ | $ | ||||||
Total current financial liabilities | $ | $ | ||||||
Non-current: | ||||||||
Inflation swaps | $ | $ | ||||||
Deferred consideration | (a) | |||||||
Total non-current financial liabilities | $ | $ | ||||||
Exchangeable shares outstanding (Units) | Class B shares outstanding (Units) | BIP unit price (US$) | Exchangeable and class B shares (US$ Million) | ||||||||||
Balance at January 1, 2020 | $ | $ | |||||||||||
Share issuance / special distribution | |||||||||||||
Remeasurement of liability | — | — | — | ( | ) | ||||||||
Balance at March 31, 2020 | |||||||||||||
Share exchanges(1) | ( | ) | — | ( | ) | ||||||||
Remeasurement of liability | — | — | — | ||||||||||
Balance at June 30, 2020 | $ | $ | |||||||||||
1. | The unit price reflected here represents the weighted average price of the partnership units exchanged during the period and is calculated based on the NYSE closing price per unit on the date of exchange. |
a) | Revenues by service line |
For the three-month period ended June 30 | For the six-month period ended June 30 | ||||||||||||||
US$ MILLIONS | 2020 | 2019 | 2020 | 2019 | |||||||||||
Gas Transmission | $ | $ | $ | $ | |||||||||||
Distribution | |||||||||||||||
Connections | |||||||||||||||
Other | |||||||||||||||
Total | $ | $ | $ | $ | |||||||||||
b) | Revenues from external customers |
For the three-month period ended June 30 | For the six-month period ended June 30 | ||||||||||||||
US$ MILLIONS | 2020 | 2019 | 2020 | 2019 | |||||||||||
Brazil | $ | $ | $ | $ | |||||||||||
United Kingdom | |||||||||||||||
Total | $ | $ | $ | $ | |||||||||||
Class C shares | ||||||
Shares outstanding (Units) | Share capital (US$ Millions) | |||||
Balance at January 1, 2020 | $ | |||||
Share issuance / special distribution | ||||||
Balance at June 30, 2020 | $ | |||||
For the three-month period ended June 30 | For the six-month period ended June 30 | |||||||||||||||
US$ MILLIONS | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Interest paid | $ | $ | $ | $ | ||||||||||||
Income taxes paid | $ | $ | $ | $ | ||||||||||||
For the three-month period ended June 30 | For the six-month period ended June 30 | |||||||||||||||
US$ MILLIONS | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Accounts receivable | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Accounts payable and other | ( | ) | ||||||||||||||
Changes in non-cash working capital, net | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||
US$ MILLIONS | For the three-month period ended June 30 | For the six-month period ended June 30 | |||||||||||||
Summary Statements of Operating Results | 2020 | 2019 | 2020 | 2019 | |||||||||||
Revenues | $ | 322 | $ | 404 | $ | 706 | $ | 807 | |||||||
Direct operating costs | (54 | ) | (58 | ) | (116 | ) | (116 | ) | |||||||
General and administrative expenses | (8 | ) | (7 | ) | (14 | ) | (13 | ) | |||||||
Depreciation and amortization expense | (67 | ) | (77 | ) | (143 | ) | (156 | ) | |||||||
Interest expense | (62 | ) | (40 | ) | (94 | ) | (81 | ) | |||||||
Mark-to-market on hedging items and foreign currency revaluation | (20 | ) | (3 | ) | (22 | ) | (1 | ) | |||||||
Remeasurement of exchangeable and class B shares | (238 | ) | — | (140 | ) | — | |||||||||
Other expense | (15 | ) | (9 | ) | (25 | ) | (21 | ) | |||||||
Income tax expense | (52 | ) | (67 | ) | (145 | ) | (135 | ) | |||||||
Net (loss) income | (194 | ) | 143 | 7 | 284 | ||||||||||
Net (loss) income attributable to the partnership | (266 | ) | 48 | (149 | ) | 96 | |||||||||
US$ MILLIONS | As of | ||||||
Summary Statements of Financial Position Key Metrics | June 30, 2020 | December 31, 2019 | |||||
Cash and cash equivalents | $ | 161 | $ | 204 | |||
Property, plant and equipment | 4,309 | 4,497 | |||||
Intangible assets | 2,849 | 3,936 | |||||
Total assets | 8,354 | 9,853 | |||||
Exchangeable and class B shares | 1,851 | — | |||||
Non-recourse borrowings | 3,114 | 3,526 | |||||
Loans payable to Brookfield Infrastructure | 1,120 | — | |||||
Total liabilities | 8,871 | 6,576 | |||||
Equity in net assets attributable to the partnership | (1,611 | ) | 1,654 | ||||
Total equity | (517 | ) | 3,277 | ||||
Period End Rate | Average Rate | |||||||||||||||||||
As of | For the three-month period ended June 30 | For the six-month period ended June 30 | ||||||||||||||||||
June 30, 2020 | December 31, 2019 | Change | 2020 | 2019 | Change | 2020 | 2019 | Change | ||||||||||||
Brazilian real | 0.1826 | 0.2481 | (26 | )% | 0.1857 | 0.2550 | (27 | )% | 0.2032 | 0.2600 | (22 | )% | ||||||||
British pound | 1.2401 | 1.3255 | (6 | )% | 1.2416 | 1.2853 | (3 | )% | 1.2607 | 1.2938 | (3 | )% | ||||||||
For the three-month period ended June 30 | For the six-month period ended June 30 | ||||||||||||||
US$ MILLIONS | 2020 | 2019 | 2020 | 2019 | |||||||||||
Brazilian real | $ | (91 | ) | $ | 45 | $ | (649 | ) | $ | 28 | |||||
British pound | (2 | ) | (36 | ) | (104 | ) | (7 | ) | |||||||
(93 | ) | 9 | (753 | ) | 21 | ||||||||||
Currency hedges | — | 6 | 9 | 5 | |||||||||||
$ | (93 | ) | $ | 15 | $ | (744 | ) | $ | 26 | ||||||
Attributable to: | |||||||||||||||
The partnership | $ | (26 | ) | $ | (13 | ) | $ | (253 | ) | $ | 4 | ||||
Non-controlling interests | (67 | ) | 28 | (491 | ) | 22 | |||||||||
$ | (93 | ) | $ | 15 | $ | (744 | ) | $ | 26 | ||||||
US$ MILLIONS | For the three-month period ended June 30 | For the six-month period ended June 30 | |||||||||||||
IFRS measures | 2020 | 2019 | 2020 | 2019 | |||||||||||
Revenue | $ | 1,946 | $ | 1,685 | $ | 4,142 | $ | 3,278 | |||||||
Net income | 34 | 254 | 182 | 419 | |||||||||||
US$ MILLIONS | As of | ||||||
IFRS measures | June 30, 2020 | December 31, 2019 | |||||
Total assets | $ | 51,322 | $ | 56,308 | |||
Total liabilities | 32,579 | 34,131 | |||||
Total partnership capital | 18,743 | 22,177 | |||||
US$ MILLIONS | For the three-month period ended June 30 | For the six-month period ended June 30 | |||||||||||||
Non-IFRS measures | 2020 | 2019 | 2020 | 2019 | |||||||||||
Adjusted EBITDA(1) | $ | 438 | $ | 472 | $ | 940 | $ | 944 | |||||||
Funds from Operations (FFO)(1) | 333 | 337 | 691 | 688 | |||||||||||
Adjusted Funds from Operations (AFFO)(1) | 265 | 264 | 566 | 561 | |||||||||||
1. | The partnership’s definitions of these non-IFRS financial measures are consistent with that of our company. For a definition of each of these non-IFRS measures, please refer to the “Reconciliation of Non-IFRS Financial Measures” section within this MD&A. |
US$ MILLIONS | For the three-month period ended June 30, 2020 | ||||||||||
Key Metrics | Utilities | Corporate | Total | ||||||||
Adjusted EBITDA(1),(4) | $ | 124 | $ | (8 | ) | $ | 116 | ||||
Funds from Operations (FFO)(2),(4) | 98 | (8 | ) | 90 | |||||||
Adjusted Funds from Operations (AFFO)(3),(4) | 94 | (8 | ) | 86 | |||||||
US$ MILLIONS | For the six-month period ended June 30, 2020 | ||||||||||
Key Metrics | Utilities | Corporate | Total | ||||||||
Adjusted EBITDA(1),(4) | $ | 266 | $ | (14 | ) | $ | 252 | ||||
Funds from Operations (FFO)(2),(4) | 211 | (14 | ) | 197 | |||||||
Adjusted Funds from Operations (AFFO)(3),(4) | 203 | (14 | ) | 189 | |||||||
1. | Adjusted EBITDA is defined as net income excluding the impact of depreciation and amortization, interest expense, current and deferred income taxes, breakage and transaction costs, and non-cash valuation gains or losses. Refer to the “Reconciliation of Non-IFRS Financial Measures” section of this MD&A. |
2. | FFO is defined as net income excluding the impact of depreciation and amortization, deferred income taxes, breakage and transaction costs, and non-cash valuation gains or losses. We also exclude from FFO dividends paid on the exchangeable shares of our company that are presented as interest expense, as well as the interest expense on loans payable to the partnership which represent the partnership’s investment in our company. Refer to the “Reconciliation of Non-IFRS Financial Measures” section of this MD&A. |
3. | AFFO is defined as FFO less maintenance capital expenditures. Refer to the “Reconciliation of Non-IFRS Financial Measures” section of this MD&A. |
4. | Adjusted EBITDA, FFO and AFFO provided in the table above do not reflect the annual base management fee the partnership pays for the periods indicated to Brookfield pursuant to the Master Services Agreement as described below in this MD&A under “Corporate, General and Administrative Services.” |
As of | |||||||
US$ MILLIONS | June 30, 2020 | December 31, 2019 | |||||
Rate base | $ | 2,981 | $ | 3,371 | |||
For the three-month period ended June 30 | For the six-month period ended June 30 | ||||||||||||||
US$ MILLIONS | 2020 | 2019 | 2020 | 2019 | |||||||||||
Adjusted EBITDA(1),(4) | $ | 124 | $ | 146 | $ | 266 | $ | 288 | |||||||
Funds from Operations (FFO)(2),(4) | 98 | 115 | 211 | 226 | |||||||||||
Adjusted Funds from Operations (AFFO)(3),(4) | 94 | 111 | 203 | 219 | |||||||||||
1. | Adjusted EBITDA is defined as net income excluding the impact of depreciation and amortization, interest expense, current and deferred income taxes, breakage and transaction costs, and non-cash valuation gains or losses. Refer to the “Reconciliation of Non-IFRS Financial Measures” section of this MD&A. |
2. | FFO is defined as net income excluding the impact of depreciation and amortization, deferred income taxes, breakage and transaction costs, and non-cash valuation gains or losses. We also exclude from FFO dividends paid on the exchangeable shares of our company that are presented as interest expense, as well as the interest expense on loans payable to the partnership which represent the partnership’s investment in our company. Refer to the “Reconciliation of Non-IFRS Financial Measures” section of this MD&A. |
3. | AFFO is defined as FFO less maintenance capital expenditures. Refer to the “Reconciliation of Non-IFRS Financial Measures” section of this MD&A. |
4. | Adjusted EBITDA, FFO and AFFO provided in the table above do not reflect the annual base management fee the partnership pays for the periods indicated to Brookfield pursuant to the Master Services Agreement as described below in this MD&A under “Corporate, General and Administrative Services.” |
US$ MILLIONS | For the three-month period ended June 30, 2020 | For the six-month period ended June 30, 2020 | For the 12 month period ended December 31, 2019 | ||||||||
Rate base, start of period | $ | 3,011 | $ | 3,371 | $ | 3,012 | |||||
Capital expenditures commissioned | 33 | 108 | 287 | ||||||||
Inflation and other indexation | 14 | 14 | 168 | ||||||||
Regulatory depreciation | (10 | ) | (20 | ) | (40 | ) | |||||
Foreign exchange and other | (67 | ) | (492 | ) | (56 | ) | |||||
Rate base, end of period | $ | 2,981 | $ | 2,981 | $ | 3,371 | |||||
US$ MILLIONS | For the three-month period ended June 30, 2020 | For the six-month period ended June 30, 2020 | For the 12 month period ended December 31, 2019 | ||||||||
Capital backlog, start of period | $ | 411 | $ | 466 | $ | 551 | |||||
Additional capital project mandates | 40 | 104 | 332 | ||||||||
Less: capital expenditures | (45 | ) | (135 | ) | (334 | ) | |||||
Foreign exchange and other | (21 | ) | (50 | ) | (83 | ) | |||||
Capital backlog, end of period | 385 | 385 | 466 | ||||||||
Construction work in progress | 214 | 214 | 200 | ||||||||
Total capital to be commissioned | $ | 599 | $ | 599 | $ | 666 | |||||
US$ MILLIONS | For the three-month period ended June 30 | For the six-month period ended June 30 | |||||||||||||
Key Metrics | 2020 | 2019 | 2020 | 2019 | |||||||||||
Net (loss) income(1) | $ | (194 | ) | $ | 143 | $ | 7 | $ | 284 | ||||||
Net (loss) income attributable to the partnership | (266 | ) | 48 | (149 | ) | 96 | |||||||||
Funds from Operations (FFO)(2) | 90 | 108 | 197 | 213 | |||||||||||
Adjusted Funds from Operations (AFFO)(3) | 86 | 104 | 189 | 206 | |||||||||||
Adjusted EBITDA(4) | 116 | 139 | 252 | 275 | |||||||||||
1. | Net (loss) income includes net (losses) income attributable to the partnership and non-controlling interests. |
2. | FFO is defined as net income excluding the impact of depreciation and amortization, deferred income taxes, breakage and transaction costs, and non-cash valuation gains or losses. We also exclude from FFO dividends paid on the exchangeable shares of our company that are presented as interest expense, as well as the interest expense on loans payable to the partnership which represent the partnership’s investment in our company. Refer to the “Reconciliation of Non-IFRS Financial Measures” section of this MD&A. |
3. | AFFO is defined as FFO less maintenance capital expenditures. Refer to the “Reconciliation of Non-IFRS Financial Measures” section of this MD&A. |
4. | Adjusted EBITDA is defined as net income excluding the impact of depreciation and amortization, interest expense, current and deferred income taxes, breakage and transaction costs, and non-cash valuation gains or losses. Refer to the “Reconciliation of Non-IFRS Financial Measures” section of this MD&A. |
• | The amounts shown on the individual line items were derived by applying our overall economic ownership interest percentage and do not necessarily represent our legal claim to the assets and liabilities, or the revenues and expenses; |
• | Other companies may calculate proportionate results differently than we do. |
• | FFO does not include depreciation and amortization expense; because we own capital assets with finite lives, depreciation and amortization expense recognizes the fact that we must maintain or replace our asset base in order to preserve our revenue generating capability; |
• | FFO does not include deferred income taxes, which may become payable if we own our assets for a long period of time; and |
• | FFO does not include certain non-recurring charges such as breakage and transaction costs or non-cash valuation gains and losses. |
• | Proportionate debt amounts do not represent our consolidated obligation for debt underlying a consolidated investment. If an individual project does not generate sufficient cash flows to service the entire amount of its debt payments, our company may determine, in our discretion, to pay the shortfall through an equity injection to avoid defaulting on the obligation. Such a shortfall may not be apparent from or may not equal the difference between aggregate proportionate Adjusted EBITDA for all of our portfolio investments and aggregate proportionate debt for all of our portfolio investments; and |
• | Other companies may calculate proportionate debt differently than we do. |
For the three-month period ended June 30 | For the six-month period ended June 30 | ||||||||||||||
US$ MILLIONS | 2020 | 2019 | 2020 | 2019 | |||||||||||
Net (loss) income | $ | (194 | ) | $ | 143 | $ | 7 | $ | 284 | ||||||
Add back or deduct the following: | |||||||||||||||
Depreciation and amortization | 67 | 77 | 143 | 156 | |||||||||||
Income tax expense | 52 | 67 | 145 | 135 | |||||||||||
Mark-to-market losses and other expenses | 35 | 12 | 47 | 22 | |||||||||||
Remeasurement of exchangeable and class B shares | 238 | — | 140 | — | |||||||||||
Other expenses | (33 | ) | (42 | ) | (75 | ) | (90 | ) | |||||||
Consolidated Funds from Operations | 165 | 257 | 407 | 507 | |||||||||||
FFO attributable to non-controlling interests(1) | (75 | ) | (149 | ) | (210 | ) | (294 | ) | |||||||
FFO | 90 | 108 | 197 | 213 | |||||||||||
Maintenance capital expenditures | (4 | ) | (4 | ) | (8 | ) | (7 | ) | |||||||
AFFO | $ | 86 | $ | 104 | $ | 189 | $ | 206 | |||||||
1. | By adjusting FFO attributable to non-controlling interests, our company is able to remove the portion of FFO earned at non-wholly owned affiliates that is not attributable to the partnership. We believe our proportionate financial information, when read in conjunction with the reported results of our company under IFRS, provides the most meaningful assessment of how our operations are performing. Please refer to the discussion of limitations of the proportional results as an analytical tool within this section. |
For the three-month period ended June 30 | For the six-month period ended June 30 | ||||||||||||||
US$ MILLIONS(1) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Net (loss) income | $ | (194 | ) | $ | 143 | $ | 7 | $ | 284 | ||||||
Add back or deduct the following: | |||||||||||||||
Depreciation and amortization | 67 | 77 | 143 | 156 | |||||||||||
Interest expense | 62 | 40 | 94 | 81 | |||||||||||
Income tax expense | 52 | 67 | 145 | 135 | |||||||||||
Mark-to-market losses and other expenses | 35 | 12 | 47 | 22 | |||||||||||
Remeasurement of exchangeable and class B shares | 238 | — | 140 | — | |||||||||||
Consolidated Adjusted EBITDA | 260 | 339 | 576 | 678 | |||||||||||
Adjusted EBITDA attributable to non-controlling interests | (144 | ) | (200 | ) | (324 | ) | (403 | ) | |||||||
Adjusted EBITDA | $ | 116 | $ | 139 | $ | 252 | $ | 275 | |||||||
1. | By adjusting Adjusted EBITDA attributable to non-controlling interests, our company is able to remove the portion of Adjusted EBITDA earned at non-wholly owned subsidiaries that is not attributable to the partnership. We believe our proportionate financial information, when read in conjunction with the reported results of our company under IFRS, provides the most meaningful assessment of how our operations are performing. Please refer to the discussion of the limitations of proportional results as an analytical tool within this section. |
As of | |||||||
US$ MILLIONS | June 30, 2020 | December 31, 2019 | |||||
Cash | $ | 161 | $ | 204 | |||
Credit facilities | 163 | 437 | |||||
Drawn amounts | — | (373 | ) | ||||
324 | 268 | ||||||
Partnership group liquidity | 3,947 | 2,699 | |||||
Total | $ | 4,271 | $ | 2,967 | |||
US$ MILLIONS | Average Term (years) | 2020 | 2021 | 2022 | 2023 | 2024 | Beyond | Total | |||||||||||||||||||||
Non-recourse borrowing | 9 | $ | — | $ | — | $ | — | $ | 1,281 | $ | — | $ | 1,842 | $ | 3,123 | ||||||||||||||
US$ MILLIONS | Average Term (years) | 2020 | 2021 | 2022 | 2023 | 2024 | Beyond | Total | ||||||||||||||||||||||
Utilities | 10 | $ | — | $ | — | $ | — | $ | 528 | $ | — | $ | 1,473 | $ | 2,001 | |||||||||||||||
Total proportionate non-recourse borrowings(1) | 10 | $ | — | $ | — | $ | — | $ | 528 | $ | — | $ | 1,473 | $ | 2,001 | |||||||||||||||
Proportionate cash retained in businesses | ||||||||||||||||||||||||||||||
Utilities | $ | 46 | ||||||||||||||||||||||||||||
Total proportionate cash retained in businesses | $ | 46 | ||||||||||||||||||||||||||||
Proportionate net debt | ||||||||||||||||||||||||||||||
Utilities | $ | 1,955 | ||||||||||||||||||||||||||||
Proportionate net debt | $ | 1,955 | ||||||||||||||||||||||||||||
Proportionate net debt | — | % | — | % | — | % | 26 | % | — | % | 74 | % | 100 | % | ||||||||||||||||
1. | Represents non-recourse debt to our company as the holders have recourse only to the underlying operations. |
As of | |||||||
US$ MILLIONS | June 30, 2020 | December 31, 2019 | |||||
Consolidated debt | $ | 3,114 | $ | 3,526 | |||
Less: borrowings attributable to non-controlling interest | (1,113 | ) | (1,400 | ) | |||
Proportionate debt | $ | 2,001 | $ | 2,126 | |||
• | We leverage any natural hedges that may exist within our operations |
• | We utilize local currency debt financing to the extent possible |
• | We may utilize derivative contracts to the extent that natural hedges are insufficient |
US$ MILLIONS | GBP | BRL | |||||
Equity Investment – US$ | $ | 1,220 | $ | 149 | |||
FX contracts – US$ | — | — | |||||
Net unhedged – US$ | $ | 1,220 | $ | 149 | |||
% of equity investment hedged | — | % | — | % | |||
i) | Growth capital expenditures: capital outlays underpinned by incremental revenues that will enhance our company’s returns. These projects are eligible for inclusion in the rate base of our utilities businesses; |
ii) | Maintenance capital expenditures: required capital outlays to maintain the current operating state and reliability of the system while ensuring regulatory and safety requirements are upheld |
For the three-month period ended June 30 | For the six-month period ended June 30 | ||||||||||||||
US$ MILLIONS | 2020 | 2019 | 2020 | 2019 | |||||||||||
Cash from operating activities | $ | 168 | $ | 255 | $ | 348 | $ | 519 | |||||||
Cash used by investing activities | (63 | ) | (103 | ) | (184 | ) | (198 | ) | |||||||
Cash used by financing activities | (87 | ) | (117 | ) | (166 | ) | (209 | ) | |||||||
As of | |||||
UNITS MILLIONS | June 30, 2020 | December 31, 2019 | |||
Exchangeable shares | 45,023,109 | — | |||
Class B shares | 1 | — | |||
Class C shares | 1,402,451 | — | |||
Units | ||||||||
High (C$) | Low (C$) | Volume | ||||||
2020 | ||||||||
January 1, 2020 - March 31, 2020 | 67.56 | 35.30 | 39,585,409 | |||||
April 1, 2020 - June 30, 2020 | 59.56 | 49.07 | 31,084,436 | |||||
2019 | ||||||||
January 1, 2019 - March 31, 2019 | 50.55 | 43.10 | 29,127,353 | |||||
April 1, 2019 - June 30, 2019 | 51.91 | 49.74 | 22,502,301 | |||||
July 1, 2019 - September 30, 2019 | 59.41 | 51.00 | 22,378,844 | |||||
October 1, 2019 - December 31, 2019 | 63.53 | 57.30 | 19,906,261 | |||||
2018 | ||||||||
January 1, 2018 - March 31, 2018 | 50.56 | 46.01 | 14,752,921 | |||||
April 1, 2018 - June 30, 2018 | 48.53 | 44.18 | 9,762,469 | |||||
July 1, 2018 - September 30, 2018 | 48.71 | 45.16 | 10,938,673 | |||||
October 1, 2018 - December 31, 2018 | 48.34 | 40.05 | 14,970,701 | |||||
Units | ||||||||
High ($) | Low ($) | Volume | ||||||
2020 | ||||||||
January 1, 2020 - March 31, 2020 | 50.56 | 24.36 | 32,598,382 | |||||
April 1, 2020 - June 30, 2020 | 44.59 | 34.39 | 33,318,393 | |||||
2019 | ||||||||
January 1, 2019 - March 31, 2019 | 37.63 | 31.42 | 19,733,181 | |||||
April 1, 2019 - June 30, 2019 | 38.59 | 36.94 | 15,302,587 | |||||
July 1, 2019 - September 30, 2019 | 44.59 | 38.81 | 22,721,853 | |||||
October 1, 2019 - December 31, 2019 | 47.35 | 43.00 | 16,413,269 | |||||
2018 | ||||||||
January 1, 2018 - March 31, 2018 | 40.12 | 36.05 | 21,940,437 | |||||
April 1, 2018 - June 30, 2018 | 37.72 | 33.86 | 17,313,360 | |||||
July 1, 2018 - September 30, 2018 | 37.14 | 34.51 | 15,876,586 | |||||
October 1, 2018 - December 31, 2018 | 36.29 | 29.23 | 19,637,088 | |||||
• | Key value creation lever - most infrastructure assets reach a maturity point, where the pace of capital appreciation or same-store growth levels out. Capital appreciation is maximized in periods where there are operational improvements, increased capacity utilization and capital expansion. Absent these factors, we would generally consider these assets to have mature income streams. At this point we will look to sell them at attractive returns and redeploy the proceeds into new income streams that will earn our 12-15% target returns. |
• | Alternative source of capital - we sometimes issue equity to fund growth, however capital markets are not always available and thus capital recycling becomes an important alternative source of funding. We believe that capital recycling allows us to be more strategic and focus on selling bond-like businesses at a very low discount rate, while potentially increasing returns to shareholders by avoiding dilution on our high-growth businesses. |
• | Institutes capital discipline - to us, it is imperative that businesses are sold to maximize proceeds, not when cash is needed as selling under duress almost never optimizes value. While our approach may result in periods where we have substantial liquidity that results in a short-term drag on results, as long-term investors, we believe it is the best way to create value over the long run. |
Payments due by period | |||||||||||||||||||||||
US$ MILLIONS | Less than 1 year | 1-2 years | 2-3 years | 3-5 years | 5+ years | Total contractual cash flows | |||||||||||||||||
Accounts payable and other liabilities | $ | 223 | $ | 2 | $ | — | $ | — | $ | — | $ | 225 | |||||||||||
Non-recourse borrowings | — | — | 1,281 | 143 | 1,699 | 3,123 | |||||||||||||||||
Financial liabilities | 6 | 22 | 6 | 977 | 2 | 1,013 | |||||||||||||||||
Exchangeable and class B shares | 1,851 | — | — | — | — | 1,851 | |||||||||||||||||
Loans payable to Brookfield Infrastructure | — | — | — | — | 1,120 | 1,120 | |||||||||||||||||
Interest expense: | |||||||||||||||||||||||
Non-recourse borrowings | 87 | 78 | 76 | 127 | 453 | 821 | |||||||||||||||||
Loans payable to Brookfield Infrastructure | 42 | 53 | 53 | 106 | 265 | 519 | |||||||||||||||||
i) | Common control transactions |
ii) | Financial instruments |
iii) | Revaluation of property, plant and equipment |
iv) | Fair values in business combinations |
v) | Impairment of goodwill, intangibles with indefinite lives |
1. | Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Brookfield Infrastructure Corporation (the “issuer”) for the interim period ended June 30, 2020. |
2. | No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings. |
3. | Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings. |
4. | Responsibility: The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer. |
5. | Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer and I have, as at the end of the period covered by the interim filings |
a) | designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that |
i) | material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and |
ii) | information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and |
b) | designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP. |
5.1. | Control framework: The control framework the issuer’s other certifying officer and I used to design the issuer’s ICFR is the Internal Control - Integrated Framework (COSO 2013 Framework) published by The Committee of Sponsoring Organizations of the Treadway Commission (COSO). |
5.2. | ICFR – material weakness relating to design: N/A |
5.3. | Limitation on scope of design: N/A |
6. | Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on April 1, 2020 and ended on June 30, 2020, that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR. |
1. | Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Brookfield Infrastructure Corporation (the “issuer”) for the interim period ended June 30, 2020. |
2. | No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings. |
3. | Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings. |
4. | Responsibility: The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer. |
5. | Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer and I have, as at the end of the period covered by the interim filings |
a) | designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that |
i) | material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and |
ii) | information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and |
b) | designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP. |
5.1. | Control framework: The control framework the issuer’s other certifying officer and I used to design the issuer’s ICFR is the Internal Control - Integrated Framework (COSO 2013 Framework) published by The Committee of Sponsoring Organizations of the Treadway Commission (COSO). |
5.2. | ICFR – material weakness relating to design: N/A |
5.3. | Limitation on scope of design: N/A |
6. | Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on April 1, 2020 and ended on June 30, 2020, that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR. |
Document Entity Information Document Entity Information |
6 Months Ended |
|---|---|
Jun. 30, 2020 | |
| Document Information [Abstract] | |
| Document Type | 6-K |
| Entity File Number | 001-39250 |
| Entity Registrant Name | BROOKFIELD INFRASTRUCTURE CORPORATION |
| Entity Address, Address Line One | 250 Vesey Street |
| Entity Address, Address Line Two | 15th Floor |
| Entity Address, City or Town | New York |
| Entity Address, State or Province | NY |
| Entity Address, Postal Zip Code | 10281 |
Document and Entity Information |
6 Months Ended |
|---|---|
Jun. 30, 2020 | |
| Document And Entity Information [Abstract] | |
| Entity Central Index Key | 0001788348 |
| Current Fiscal Year End Date | --12-31 |
| Document Type | 6-K |
| Document Period End Date | Jun. 30, 2020 |
| Document Fiscal Year Focus | 2020 |
| Document Fiscal Period Focus | Q2 |
| Amendment Flag | false |
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
|---|---|---|
| Assets | ||
| Cash and cash equivalents | $ 161 | $ 204 |
| Accounts receivable and other | 351 | 390 |
| Current assets | 512 | 594 |
| Property, plant and equipment | 4,309 | 4,497 |
| Intangible assets other than goodwill | 2,849 | 3,936 |
| Goodwill | 499 | 667 |
| Non-current financial assets | 56 | 29 |
| Other non-current assets | 89 | 89 |
| Deferred tax assets | 40 | 41 |
| Assets | 8,354 | 9,853 |
| Liabilities | ||
| Accounts payable and other | 419 | 487 |
| Financial liabilities | 6 | 6 |
| Exchangeable and Class B Shares | 1,851 | 0 |
| Current liabilities | 2,276 | 493 |
| Non-current Portion Of Non-current Non-recourse Borrowings | 3,114 | 3,526 |
| Loans Payable to Parent | 1,120 | 0 |
| Financial liabilities | 1,007 | 1,002 |
| Other liabilities | 82 | 90 |
| Deferred income tax liability | 1,272 | 1,465 |
| Total liabilities | 8,871 | 6,576 |
| Partnership capital | ||
| Equity attributable to parent | (1,611) | 1,654 |
| Non-controlling interests | 1,094 | 1,623 |
| Total partnership capital | (517) | 3,277 |
| Total liabilities and partnership capital | $ 8,354 | $ 9,853 |
CONSOLIDATED STATEMENTS OF OPERATING RESULTS - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
| Profit or loss [abstract] | ||||
| Revenues | $ 322 | $ 404 | $ 706 | $ 807 |
| Direct operating costs | (54) | (58) | (116) | (116) |
| General and administrative expenses | (8) | (7) | (14) | (13) |
| Depreciation and amortization expense | (67) | (77) | (143) | (156) |
| Profit (loss) from operating activities | 193 | 262 | 433 | 522 |
| Interest expense | (62) | (40) | (94) | (81) |
| Remeasurement of Exchangeable and Class B Shares | (238) | 0 | (140) | 0 |
| Mark-to-market on hedging items | (20) | (3) | (22) | (1) |
| Other expense | (15) | (9) | (25) | (21) |
| Income before income tax | (142) | 210 | 152 | 419 |
| Income tax (expense) recovery | ||||
| Current | (35) | (43) | (79) | (87) |
| Deferred | (17) | (24) | (66) | (48) |
| Net (loss) income | (194) | 143 | 7 | 284 |
| Attributable to: | ||||
| Profit (loss), attributable to parent | (266) | 48 | (149) | 96 |
| Profit (loss), attributable to non-controlling interests | $ 72 | $ 95 | $ 156 | $ 188 |
CONSOLIDATED STATEMENTS OF PARTNERSHIP CAPITAL - USD ($) $ in Millions |
Total |
Non-controlling interests [member] |
Parent [member] |
Parent [member]
Issued capital [member]
|
Parent [member]
Retained earnings [member]
|
Parent [member]
Ownership Changes [Member]
|
Parent [member]
Accumulated other comprehensive income [member]
|
|---|---|---|---|---|---|---|---|
| Balance as at Dec. 31, 2018 | $ 3,249 | $ 1,787 | $ 1,462 | $ 681 | $ 388 | $ 115 | $ 278 |
| Net (loss) income | 284 | 188 | 96 | 96 | |||
| Other comprehensive income | 25 | 21 | 4 | 4 | |||
| Comprehensive income | 309 | 209 | 100 | 96 | 4 | ||
| Decrease from Affiliate Distributions to Non-controlling Interest | (204) | (204) | |||||
| Balance as at Jun. 30, 2019 | 3,282 | 1,792 | 1,490 | 609 | 484 | 115 | 282 |
| Decrease From Distributions to Parent | (72) | (72) | (72) | ||||
| Balance as at Mar. 31, 2019 | 3,272 | 1,778 | 1,494 | 648 | 436 | 115 | 295 |
| Net (loss) income | 143 | 95 | 48 | 48 | |||
| Other comprehensive income | 14 | 27 | (13) | (13) | |||
| Comprehensive income | 157 | 122 | 35 | 48 | (13) | ||
| Decrease from Affiliate Distributions to Non-controlling Interest | (108) | (108) | |||||
| Balance as at Jun. 30, 2019 | 3,282 | 1,792 | 1,490 | 609 | 484 | 115 | 282 |
| Decrease From Distributions to Parent | (39) | (39) | (39) | ||||
| Balance as at Dec. 31, 2019 | 3,277 | 1,623 | 1,654 | 431 | 585 | 115 | 523 |
| Net (loss) income | 7 | 156 | (149) | (149) | |||
| Other comprehensive income | (773) | (497) | (276) | (276) | |||
| Comprehensive income | (766) | (341) | (425) | (149) | (276) | ||
| Decrease from Affiliate Distributions to Non-controlling Interest | (188) | (188) | |||||
| Balance as at Jun. 30, 2020 | (517) | 1,094 | (1,611) | 53 | 436 | (2,347) | 247 |
| Decrease From Distributions to Parent | (33) | (33) | (33) | ||||
| Special Distribution/Reorganization | (2,807) | (2,807) | (345) | (2,462) | |||
| Balance as at Mar. 31, 2020 | (143) | 1,176 | (1,319) | 53 | 702 | (2,347) | 273 |
| Net (loss) income | (194) | 72 | (266) | (266) | |||
| Other comprehensive income | (93) | (67) | (26) | (26) | |||
| Comprehensive income | (287) | 5 | (292) | (266) | (26) | ||
| Decrease from Affiliate Distributions to Non-controlling Interest | (87) | (87) | |||||
| Balance as at Jun. 30, 2020 | $ (517) | $ 1,094 | $ (1,611) | $ 53 | $ 436 | $ (2,347) | $ 247 |
ORGANIZATION AND DESCRIPTION OF THE BUSINESS |
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Jun. 30, 2020 | |||||||||||||||||||||||||||||
| Corporate Information And Statement Of IFRS Compliance [Abstract] | |||||||||||||||||||||||||||||
| ORGANIZATION AND DESCRIPTION OF THE BUSINESS | ORGANIZATION AND DESCRIPTION OF OUR COMPANY
Brookfield Infrastructure Corporation and its subsidiaries, own and operate regulated utilities investments in Brazil and the United Kingdom (the “businesses”). Our company was formed as a corporation established under the British Columbia Business Corporation Act on August 30, 2019 and is a subsidiary of Brookfield Infrastructure Partners L.P. (the “partnership”), which we also refer to as the parent company and Brookfield Infrastructure. The partnership, our company and our respective subsidiaries, are referred to collectively as our group. Brookfield Asset Management Inc. (“Brookfield”) is our company’s ultimate parent. The class A exchangeable subordinate voting shares (“exchangeable shares”) of Brookfield Infrastructure Corporation are listed on the New York Stock Exchange and the Toronto Stock Exchange under the symbol “BIPC”. The registered head office of Brookfield Infrastructure Corporation is 250 Vesey Street, New York, NY, United States.
On March 31, 2020, the partnership completed a special distribution (the “special distribution”) whereby limited partnership unitholders of Brookfield Infrastructure Partners L.P. as of March 20, 2020 (the “Record Date”) received one exchangeable share for every nine limited partnership units (“units”) held. Immediately prior to the special distribution, the partnership received exchangeable shares through a distribution by Brookfield Infrastructure L.P. (“Holding LP”), or the Holding LP Distribution, of the exchangeable shares to all the holders of its equity units. As a result of the Holding LP Distribution, (i) Brookfield and its subsidiaries (other than entities within our group) received approximately 13.7 million exchangeable shares and (ii) the partnership received approximately 32.6 million exchangeable shares, which it subsequently distributed to unitholders pursuant to the special distribution. Immediately following the special distribution, (i) holders of units held approximately 70.4% of the issued and outstanding exchangeable shares of our company, (ii) Brookfield and its affiliates held approximately 29.6% of the issued and outstanding exchangeable shares, and (iii) a subsidiary of the partnership owned all of the issued and outstanding class B multiple voting shares, or class B shares, which represent a 75.0% voting interest in our company, and all of the issued and outstanding class C non-voting shares, or class C shares, of our company. The class C shares entitle the partnership to all of the residual value in our company after payment in full of the amount due to holders of exchangeable shares and class B shares. Holders of exchangeable shares hold an aggregate 25.0% voting interest in our company. Immediately after the special distribution, Brookfield, through its ownership of exchangeable shares, hold an approximate 7.4% voting interest in our company. Holders of exchangeable shares, excluding Brookfield, hold an approximate 17.6% aggregate voting interest in our company. Together, Brookfield and Brookfield Infrastructure hold an approximate 82.4% voting interest in our company. The following describes the agreements resulting from the special distribution:
At any time, holders of exchangeable shares shall have the right to exchange all or a portion of their exchangeable shares for one unit of the partnership per exchangeable share held or its cash equivalent based on the NYSE closing price of one unit on the date that the request for exchange is received. Due to their exchangeable features, the exchangeable shares are classified as liabilities. Our board has the right upon sixty (60) days’ prior written notice to holders of exchangeable shares to redeem all of the then outstanding exchangeable shares at any time and for any reason, in its sole discretion and subject to applicable law, including without limitation following the occurrence of certain redemption events.
At any time, holders of class B shares and class C shares will have the right to redeem for cash in an amount equal to the market price of a unit. Due to this cash redemption feature, both class B shares and class C shares are classified as financial liabilities. However, class C shares, the most subordinated class of all common shares, meet certain qualifying criteria and are presented as equity instruments given the narrow scope presentation exceptions existing in IAS 32.
Prior to the special distribution, the company entered into two credit agreements with Brookfield Infrastructure, one as borrower and one as lender, each providing for a ten-year revolving $1 billion credit facility to facilitate the movement of cash within our group. Our credit facility will permit our company to borrow up to $1 billion from Brookfield Infrastructure and the other will constitute an operating credit facility that will permit Brookfield Infrastructure to borrow up to $1 billion from our company. Each credit facility will contemplate potential deposit arrangements pursuant to which the lender thereunder would, with the consent of the borrower, deposit funds on a demand basis to such borrower’s account at a reduced rate of interest. Further details of the credit agreements with Brookfield Infrastructure are described in Note 11, Related Party Transactions.
Prior to the completion of the special distribution, Brookfield Infrastructure provided our company an equity commitment in the amount of $1 billion. The equity commitment may be called by our company in exchange for the issuance of a number of class C shares or preferred shares, as the case may be, to Brookfield Infrastructure, corresponding to the amount of the equity commitment called divided (i) in the case of a subscription for class C shares, by the volume-weighted average of the trading price for one exchangeable share on the principal stock exchange on which our exchangeable shares are listed for the five (5) days immediately preceding the date of the call, and (ii) in the case of a subscription for preferred shares, $25.00. The equity commitment will be reduced permanently by the amount so called. The rationale for the equity commitment is to provide our company with access to equity capital on an as-needed basis and to maximize our flexibility.
Wholly-owned subsidiaries of Brookfield will provide management services to our company pursuant to the partnership’s existing master services agreement, or the Master Services Agreement. There will be no change in how the base management fee and incentive distribution fees are calculated, though our company is responsible for reimbursing the partnership for our proportionate share of the total base management fee. Further details of the Master Services Agreements are described in Note 11, Related Party Transactions.
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SIGNIFICANT ACCOUNTING POLICIES |
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| Corporate Information And Statement Of IFRS Compliance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SIGNIFICANT ACCOUNTING POLICIES | BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
These unaudited interim condensed and consolidated financial statements, (“interim financial statements”) of our company and its subsidiaries have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting (“IAS 34”) as issued by the International Accounting Standards Board (“IASB”) and using the accounting policies described below. These interim financial statements should be read in conjunction with our company’s Combined Carve-Out Financial Statements for the year ended December 31, 2019 as included in our prospectus dated March 12, 2020. These interim financial statements were authorized for issuance by the Board of Directors of our company on August 13, 2020.
The interim financial statements are prepared on a going concern basis. For the periods prior to March 30, 2020, the financial statements represent a combined carve-out of the assets, liabilities, revenues, expenses, and cash flows of the businesses that were contributed to our company effective March 30, 2020. During this period, all of the assets and liabilities presented were controlled by the partnership. Effective March 30, 2020, the assets and liabilities were transferred to our company at their carrying values. All intercompany balances, transactions, revenues and expenses within our company have been eliminated. Additionally, certain corporate costs have been allocated on the basis of direct usage where identifiable, with the remainder allocated based on management’s best estimate of costs attributable to our company. Management believes the assumptions underlying the historical financial information, including the assumptions regarding allocated expenses, reasonably reflect the utilization of services provided to or the benefit received by our company during the periods presented. However, due to the inherent limitations of carving out the assets, liabilities, operations and cash flows from larger entities, the historical financial information may not necessarily reflect our company’s financial position, operations and cash flow for future periods, nor do they reflect the financial position, results of operations and cash flow that would have been realized had our company been a stand-alone entity during the periods presented. Subsequent to the special distribution, our company is no longer allocated general corporate expenses of the parent company as the functions which they related are now provided through the amended and restated master services agreement dated as of March 13, 2015, among the Service Recipients (as defined therein), Brookfield Asset Management Inc. (“Brookfield”), the Service Providers (as defined therein) and others, as amended (the “Master Services Agreement”). The base management fee related to the services received under the Master Services Agreement has been recorded as part of general and administrative expenses in the interim condensed and consolidated financial statements.
As described above, Brookfield Infrastructure Corporation was established on August 30, 2019 by the partnership. On March 30, 2020, the partnership contributed the businesses to our company in exchange for loans receivable, exchangeable shares, class B shares and class C shares. On March 31, 2020, the partnership completed the special distribution of the exchangeable shares to holders of units and continues to hold all of the class B and class C shares of our company. The partnership directly and indirectly controlled our company prior to the special distribution and continues to control our company subsequent to the special distribution through its interests in our company. As a result of this continuing common control, there is insufficient substance to justify a change in the measurement of our company. In accordance with our company’s and the partnership’s accounting policy, our company has reflected the businesses in its financial position and financial performance using the partnership’s carrying values prior to the special distribution. To reflect this continuity of interests, these interim financial statements provide comparative information of our company for the periods prior to the special distribution, as previously reported by the partnership. The economic and accounting impact of contractual relationships created or modified in conjunction with the special distribution (see Note 1(b) Organization and Description of our Company) have been reflected prospectively from the date of the special distribution and have not been reflected in the results of operations or financial position of the company prior to March 31, 2020, as such items were in fact not created or modified prior thereto. Accordingly, the financial information for the periods prior to March 31, 2020 is presented based on the historical financial information for our company as previously reported by the partnership. For the period after completion of the special distribution, the results are based on the actual results of our company, including the adjustments associated with the special distribution and the execution of several new and amended agreements. As the partnership holds all of the class C shares of our company, which is the only class of shares presented as equity, net income and equity attributable to common equity have been allocated to the partnership prior to and after the special distribution. Prior to March 31, 2020, intercompany transactions between the partnership and our company have been included in these financial statements and are considered to be forgiven at the time the transaction is recorded and reflected as “Distributions to, net of contributions from, Brookfield Infrastructure Partners L.P.”. “Distributions to, net of contributions from, Brookfield Infrastructure Partners L.P.” as shown in the interim condensed and consolidated statements of changes in equity represents the parent company’s historical investment in our company, accumulated net income and the net effect of the transactions and allocations from the parent company. The total net effect of transactions with the parent company is reflected in the interim condensed and consolidated statements of cash flows as a financing activity and in the interim condensed and consolidated statements of financial position as equity attributable to Brookfield Infrastructure Partners L.P.
The U.S dollar is the functional and presentation currency of the company. Each of the company’s affiliates determines its own functional currency and items included in the financial statements of each affiliate are measured using that functional currency. Assets and liabilities of foreign operations having a functional currency other than the U.S. dollar are translated at the rate of exchange prevailing at the reporting date and revenues and expenses at average rates during the period. Gains or losses on translation are included as a component of other comprehensive income. On disposal of a foreign operation resulting in the loss of control, the component of other comprehensive income due to accumulated foreign currency translation relating to that foreign operation is reclassified to net income. On partial disposal of a foreign operation in which control is retained, the proportionate share of the component of other comprehensive income or loss relating to that foreign operation is reclassified to non-controlling interests in that foreign operation. Foreign currency denominated monetary assets and liabilities are translated using the rate of exchange prevailing at the reporting date and non-monetary assets and liabilities measured at fair value are translated at the rate of exchange prevailing at the date when the fair value was determined. Revenues and expenses are measured at average rates during the period. Gains or losses on translation of these items are included in net income. Gains and losses on transactions which hedge these items are also included in net income or loss. Foreign currency denominated non-monetary assets and liabilities, measured at historic cost, are translated at the rate of exchange at the transaction date.
Business acquisitions in which control is acquired are accounted for using the acquisition method, other than those between and among entities under common control. The consideration of each acquisition is measured at the aggregate of the fair values at the acquisition date of assets transferred by the acquirer, liabilities incurred or assumed, and equity instruments issued by the company in exchange for control of the acquiree. Acquisition related costs are recognized in the Statement of Operating Results as incurred and included in other expenses. Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent consideration arrangement, measured at its acquisition-date fair value. Subsequent changes in fair values are adjusted against the cost of the acquisition where they qualify as measurement period adjustments. All other subsequent changes in the fair value of contingent consideration classified as liabilities will be recognized in the Statements of Operating Results, whereas changes in the fair values of contingent consideration classified within share capital are not subsequently re-measured. Where a business combination is achieved in stages, the company’s previously held interests in the acquired entity are remeasured to fair value at the acquisition date, that is, the date the company attains control and the resulting gain or loss, if any, is recognized in the Statements of Operating Results. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognized in other comprehensive income are reclassified to the Statements of Operating Results, where such treatment would be appropriate if that interest were disposed of. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the company reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period, or additional assets or liabilities are recognized, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognized as of that date. The measurement period is the period from the date of acquisition to the date the company obtains complete information about facts and circumstances that existed as of the acquisition date. The measurement period is subject to a maximum of one year subsequent to the acquisition date. If, after reassessment, the company’s interest in the fair value of the acquiree’s identifiable net assets exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held equity interest in the acquiree if any, the excess is recognized immediately in profit or loss as a bargain purchase gain. Contingent liabilities acquired in a business combination are initially measured at fair value at the date of acquisition. At the end of subsequent reporting periods, such contingent liabilities are measured at the higher of the amount that would be recognized in accordance with IAS 37, Provisions, Contingent Liabilities and Contingent Assets (“IAS 37”) and the amount initially recognized less the cumulative amount of income recognized in accordance with IFRS 15, Revenue from Contracts with Customers.
Cash and cash equivalents include short-term highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less any loss allowance for expected credit losses.
The company uses the revaluation method of accounting for all classes of property, plant and equipment. Property, plant and equipment is initially measured at cost and subsequently carried at its revalued amount, being the fair value at the date of the revaluation less any subsequent accumulated depreciation and any accumulated impairment losses. Revaluations are made on at least an annual basis, and on a sufficient basis to ensure that the carrying amount does not differ significantly from fair value. Where the carrying amount of an asset is increased as a result of a revaluation, the increase is recognized in other comprehensive income or loss and accumulated in equity within the revaluation surplus reserve, unless the increase reverses a previously recognized impairment recorded through net income, in which case that portion of the increase is recognized in net income. Where the carrying amount of an asset is decreased, the decrease is recognized in other comprehensive income to the extent of any balance existing in revaluation surplus in respect of the asset, with the remainder of the decrease recognized in net income. Revaluation gains are included in other comprehensive income but are not subsequently recycled into profit or loss. An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. The gain or loss arising on disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in the Statements of Operating Results. However, any balance accumulated in revaluation surplus is subsequently recorded in retained earnings when an asset is derecognized and not transferred to profit or loss. Depreciation of an asset commences when it is available for use. Property, plant and equipment are depreciated on a straight line or declining-balance basis over the estimated useful lives of each component of the assets as follows:
Depreciation on property, plant and equipment is calculated on a straight-line or declining-balance basis so as to depreciate the net cost of each asset over its expected useful life to its estimated residual value. The estimated useful lives, residual values and depreciation methods are reviewed at the end of each annual reporting period, with the effect of any changes recognized on a prospective basis.
At each reporting date the company assesses whether for assets, other than those measured at fair value with changes in values recorded in profit or loss, there is any indication that such assets are impaired. This assessment includes a review of internal and external factors which includes, but is not limited to, changes in the technological, political, economic or legal environment in which the entity operates in, structural changes in the industry, changes in the level of demand, physical damage and obsolescence due to technological changes. An impairment is recognized if the recoverable amount, determined as the higher of the estimated fair value less costs of disposal or the discounted future cash flows generated from use and eventual disposal from an asset or cash generating unit is less than its carrying value. The projections of future cash flows take into account the relevant operating plans and management’s best estimate of the most probable set of conditions anticipated to prevail. Where an impairment loss subsequently reverses, the carrying amount of the asset or cash generating unit is increased to the lesser of the revised estimate of recoverable amount and the carrying amount that would have been recorded had no impairment loss been recognized previously.
Intangible assets acquired in a business combination and recognized separately from goodwill are initially recognized at their fair value at the acquisition date. The company’s intangible assets are comprised primarily of service concession arrangements and customer order backlogs. Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortization unless indefinite-lived and accumulated impairment losses, on the same basis as intangible assets acquired separately. Public service concessions that provide the company the right to charge users for a service in which the service and fee is regulated by the grantor are accounted for as an intangible asset under IFRIC 12, Service Concession Arrangements. Concession arrangements were acquired as part of the acquisition of the Brazilian regulated gas transmission operation and were initially recognized at their fair values. The intangible assets at the Brazilian regulated gas transmission operation relate to pipeline concession contracts, amortized on a straight-line basis over the life of the contractual arrangement. The customer order backlog was acquired as part of the acquisition of the U.K. regulated distribution operation and was initially recorded at its fair value. The customer order backlog represents the present value of future earnings derived from the build out of contracted connections at the acquisition date of the U.K. regulated distribution operation. The customer order backlog is amortized over its estimated useful life of 15 years. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in profit or loss when the asset is derecognized.
Goodwill represents the excess of the price paid for the acquisition of an entity over the fair value of the net tangible and intangible assets and liabilities acquired. Goodwill is allocated to the cash generating unit or units to which it relates. The company identifies cash generating units as identifiable groups of assets that are largely independent of the cash inflows from other assets or groups of assets. Goodwill is evaluated for impairment annually or more often if events or circumstances indicate there may be impairment. Impairment is determined for goodwill by assessing if the carrying value of a cash generating unit or group of cash generating units, including the allocated goodwill, exceeds its recoverable amount determined as the greater of the estimated fair value less costs of disposal or the value in use. Impairment losses recognized in respect of a cash generating unit are first allocated to the carrying value of goodwill and any excess is allocated to the carrying amount of assets in the cash generating unit. Any goodwill impairment is recognized in period in which the impairment is identified. Impairment losses on goodwill are not subsequently reversed. On disposal of an affiliate, the attributable amount of goodwill is included in the determination of the gain or loss on disposal of the operation.
The company recognizes revenue when it transfers control of a product or service to a customer. Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. The company recognizes revenue when the specific criteria set out below have been met. Cash received by the company from customers is recorded as deferred revenue until the revenue recognition criteria set out below are met. Revenue from utilities infrastructure is derived from the transmission of natural gas and the distribution of energy. Distribution and transmission revenue each contain a single performance obligation that is recognized over time. The connection revenue relating to the company’s regulated distribution operation contains a distinct performance obligation that is recognized over the period that the connection is constructed, based on an input method of progress recognition on the basis that this methodology is most reflective of the underlying transfer of control. The payment terms for all of our revenue streams require payment upon completion, except for connections income whereby payment is typically collected up-front prior to the completion of any services.
The company classifies cash and cash equivalents and accounts receivable and other as amortized cost. Derivative assets are classified as FVTPL, except for derivatives in certain hedging relationships. Other financial assets are classified as either amortized cost or FVTOCI. Financial assets classified as FVTPL or FVTOCI are subsequently measured at fair value at each reporting date. For financial assets classified as FVTPL, the change in fair value is recorded through profit or loss. For financial assets classified as FVTOCI, the change in fair value is recorded in other comprehensive income. The cumulative gains or losses related to FVTOCI equity instruments are not reclassified to profit or loss on disposal, whereas the cumulative gains or losses on all other FVTOCI assets are reclassified to profit or loss on disposal. For financial instruments at amortized cost or debt instruments at FVTOCI, the company assesses if there have been significant increases in credit risk since initial recognition to determine whether lifetime or 12-month expected credit losses should be recognized. Any related loss allowances are recorded through profit or loss. Non-recourse borrowings and accounts payable and other, are classified as amortized cost, except for derivatives embedded in related financial instruments. Embedded derivatives and any other derivative liabilities are classified as FVTPL and are subsequently measured at fair value, except for derivatives in certain hedging relationships. Other financial liabilities are classified as either FVTPL or amortized cost. Financial instruments classified as amortized cost upon adoption of IFRS 9-Financial Instruments (“IFRS 9”) were previously classified as loans and receivables. Financial assets classified as FVTOCI were previously classified as available-for-sale securities. The changes in classification had no impact on the carrying values and there were no changes to the classification of the remainder of financial assets classified as FVTPL.
The company selectively utilizes derivative financial instruments primarily to manage financial risks, including interest rate and foreign exchange risks. Derivative financial instruments are recorded at fair value. Hedge accounting is applied when the derivative is designated as a hedge of a specific exposure and that the hedging relationship meets all of the hedge effectiveness requirements. Hedge accounting is discontinued prospectively when the derivative no longer qualifies as a hedge or the hedging relationship is terminated. Once discontinued, the cumulative change in fair value of a derivative that was previously recorded in other comprehensive income by the application of hedge accounting is recognized in profit or loss over the remaining term of the original hedging relationship as amounts related to the hedged item are recognized in profit or loss. The assets or liabilities relating to unrealized mark-to-market gains and losses on derivative financial instruments are recorded in financial assets and financial liabilities, respectively. Unrealized gains and losses on interest rate contracts designated as hedges of future variable interest payments are included in equity as a cash flow hedge when the interest rate risk relates to an anticipated variable interest payment. The periodic exchanges of payments on interest rate swap contracts designated as hedges of debt are recorded on an accrual basis as an adjustment to interest expense.
Income tax expense represents the sum of the tax accrued in the period and deferred income tax.
Current income tax assets and liabilities are measured at the amount expected to be paid to tax authorities, net of recoveries based on the tax rates and laws enacted or substantively enacted at the reporting date. Current income tax relating to items recognized directly in share capital are also recognized directly in share capital and other comprehensive income.
Deferred income tax liabilities are provided for using the liability method on temporary differences between the tax bases used in the computation of taxable income and carrying amounts of assets and liabilities in the interim financial statements. Deferred income tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that deductions, tax credits and tax losses can be utilized. Such deferred income tax assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the taxable income nor the accounting income, other than in a business combination. The carrying amount of deferred income tax assets are reviewed at each reporting date and reduced to the extent it is no longer probable that the income tax asset will be recovered. Deferred income tax liabilities are recognized for taxable temporary differences associated with investments in affiliates, except where the company is able to control the reversal of the temporary difference and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred income tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable income against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred income tax liabilities and assets reflect the tax consequences that would follow from the manner in which the company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred income tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority within a single taxable entity or the company intends to settle its current tax assets and liabilities on a net basis in the case where there exist different taxable entities in the same taxation authority and when there is a legally enforceable right to set off current tax assets against current tax liabilities.
Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the non-current asset or disposal group is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification subject to limited exceptions. When the company is committed to a sale plan involving loss of control of a subsidiary, all of the assets and liabilities of that subsidiary are classified as held for sale when the criteria described above are met, regardless of whether the company will retain a non-controlling interest in its former subsidiary after the sale. Non-current assets and disposal groups classified as held for sale are measured at the lower of their previous carrying amount and fair value less costs to sell. Non-current assets classified as held for sale and the assets of a disposal group are presented separately from other assets in the Statements of Financial Position and are classified as current. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the Statements of Financial Position. Once classified as held for sale, property, plant and equipment and intangible assets are not depreciated or amortized, respectively.
Provisions are recognized when the company has a present obligation, either legal or constructive, as a result of a past event, it is probable that the company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the obligation, its carrying amount is the present value of those cash flows. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
Our company‘s basic and diluted earnings per share have not been presented in the interim financial statements. As outlined in Note 8, Financial Liabilities, and Note 10, Equity, exchangeable and class B shares are classified as financial liabilities, while class C shares are classified as financial liabilities, but presented as equity instruments given the narrow scope presentation exceptions existing in IAS 32. As each share classification represents a financial liability, they do not constitute ordinary shares. Refer to the aforementioned notes for further details.
The preparation of financial statements requires management to make critical judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses that are not readily apparent from other sources, during the reporting period. These estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Critical judgments and estimates made by management and utilized in the normal course of preparing our company’s interim financial statements are outlined below.
IFRS 3 (2008) Business Combinations does not include specific measurement guidance for transfers of businesses or subsidiaries between entities under common control. Accordingly, our company has developed a policy to account for such transactions taking into consideration other guidance in the IFRS framework and pronouncements of other standard-setting bodies. Our company’s policy is to record assets and liabilities recognized as a result of transactions between entities under common control at the carrying value on the transferor’s financial statements, and to have the interim statements of financial position, operating results, changes in equity and cash flows reflect the results of combining entities for all periods presented for which the entities were under the transferor’s common control, irrespective of when the combination takes place.
Our company’s accounting policies relating to derivative financial instruments are described in Note 2(m) Financial Instruments and Hedge Accounting. The critical judgments inherent in these policies relate to applying the criteria to the assessment of the effectiveness of hedging relationships. Estimates and assumptions used in determining the fair value of financial instruments are equity and commodity prices; future interest rates; the credit worthiness of our company relative to its counterparties; the credit risk of our company and counterparty; estimated future cash flows; and discount rates.
Property, plant and equipment is revalued on a regular basis. Our company’s property, plant, and equipment is measured at fair value on a recurring basis with an effective date of revaluation for all asset classes of December 31, 2019 and 2018. Our company determined fair value under the income method with due consideration to significant inputs such as the discount rate, terminal value multiple and overall investment horizon.
Our company accounts for business combinations using the acquisition method of accounting. This method requires the application of fair values for both the consideration given and the assets and liabilities acquired. The calculation of fair values is often predicated on estimates and judgments including future cash flows discounted at an appropriate rate to reflect the risk inherent in the acquired assets and liabilities. The determination of the fair values may remain provisional for up to 12 months from the date of acquisition due to the time required to obtain independent valuations of individual assets and to complete assessments of provisions. When the accounting for a business combination has not been completed as at the reporting date, this is disclosed in the financial statements, including observations on the estimates and judgments made as of the reporting date.
The impairment assessment of goodwill and intangible assets with indefinite lives requires estimation of the value-in-use or fair value less costs of disposal of the cash-generating units or groups of cash generating units to which goodwill or the intangible asset has been allocated. Our company uses the following critical assumptions and estimates: the circumstances that gave rise to the goodwill, timing and amount of future cash flows expected from the cash-generating units; discount rates; terminal capitalization rates; terminal valuation dates and useful lives. Other estimates utilized in the preparation of our company’s financial statements are: depreciation and amortization rates and useful lives; recoverable amount of goodwill and intangible assets; ability to utilize tax losses and other tax measurements. Other critical judgments utilized in the preparation of our company’s financial statements include the methodologies for calculating amortization, determination of operating segments and determination of control. In March 2020, the World Health Organization declared a global pandemic related to COVID-19. To date, there has been significant stock market volatility, significant fluctuations in the commodity and foreign exchange markets, restrictions on the conduct of business in many jurisdictions, and the global movement of people and some goods has become restricted. Our company has assessed the impact of the current economic environment on our asset valuations. In making these assessments, we have assumed that the sharp curtailment of economic activities, as a result of social distancing rules imposed by governments worldwide, will not materially persist in the long-term. As a provider of essential services, our businesses have remained in operations while we continue to safeguard the health of our employees. In addition, our businesses are subject to regulated cash flows with minimal volume risk. Based on our company’s assessment, no impairments to our asset values were required as at June 30, 2020. Please refer to Note 4, Property Plant and Equipment and Note 5, Intangible Assets.
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| Fair Value Measurement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FAIR VALUE OF FINANCIAL INSTRUMENTS | FAIR VALUE OF FINANCIAL INSTRUMENTS The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair values are determined by reference to quoted bid or ask prices, as appropriate. Where bid and ask prices are unavailable, the closing price of the most recent transaction of that instrument is used. In the absence of an active market, fair values are determined based on prevailing market rates such as bid and ask prices, as appropriate for instruments with similar characteristics and risk profiles or internal or external valuation models, such as option pricing models and discounted cash flow analyses, using observable market inputs. Fair values determined using valuation models require the use of assumptions concerning the amount and timing of estimated future cash flows and discount rates. In determining those assumptions, the company looks primarily to external readily observable market inputs such as interest rate yield curves, currency rates, and price and rate volatilities as applicable. The fair value of interest rate swap contracts which form part of financing arrangements is calculated by way of discounted cash flows using market interest rates and applicable credit spreads. Classification of Financial Instruments Financial instruments classified as fair value through profit or loss are carried at fair value on the Statements of Financial Position. Changes in the fair values of financial instruments classified as fair value through profit or loss are recognized in profit or loss. Mark-to-market adjustments on hedging items for those in an effective hedging relationship and changes in the fair value of securities designated as fair value through other comprehensive income are recognized in other comprehensive income. Carrying Value and Fair Value of Financial Instruments The following table provides the allocation of financial instruments and their associated financial instrument classifications as at June 30, 2020:
The following table provides the allocation of financial instruments and their associated financial instrument classifications as at December 31, 2019:
The following table provides the carrying values and fair values of financial instruments as at June 30, 2020 and December 31, 2019:
Hedging Activities The company uses derivatives and non-derivative financial instruments to manage or maintain exposures to interest and currency risks. For certain derivatives which are used to manage exposures, the company determines whether hedge accounting can be applied. When hedge accounting can be applied, a hedge relationship can be designated as a fair value hedge, cash flow hedge or a hedge of foreign currency exposure of a net investment in a foreign operation with a functional currency other than the U.S. dollar. To qualify for hedge accounting, the derivative must be designated as a hedge of a specific exposure and the hedging relationship must meet all of the hedge effectiveness requirements in accomplishing the objective of offsetting changes in the fair value or cash flows attributable to the hedged risk both at inception and over the life of the hedge. If it is determined that the hedging relationship does not meet all of the hedge effectiveness requirements, hedge accounting is discontinued prospectively. Cash Flow Hedges The company uses interest rate swaps to hedge the variability in cash flows related to a variable rate asset or liability and highly probable forecasted issuances of debt. The settlement dates coincide with the dates on which the interest is payable on the underlying debt, and the amount accumulated in equity is reclassified to profit or loss over the period that the floating rate interest payments on debt affect profit or loss. For the three and six-month period ended June 30, 2020, pre-tax net unrealized gains of $nil and $9 million, respectively (2019: $6 million and $5 million, respectively) were recorded in other comprehensive income for the effective portion of the cash flow hedges. As of June 30, 2020, there was a net derivative asset balance of $56 million relating to derivative contracts designated as cash flow hedges (December 31, 2019: $29 million). Fair Value Hierarchical Levels—Financial Instruments Fair value hierarchical levels are directly determined by the amount of subjectivity associated with the valuation inputs of these assets and liabilities, and are as follows:
The fair value of the company’s financial assets and financial liabilities are measured at fair value on a recurring basis. The following table summarizes the valuation techniques and significant inputs for the company’ financial assets and financial liabilities:
Assets and liabilities measured at fair value on a recurring basis include $56 million (2019: $29 million) of financial assets and $66 million (2019: $77 million) of financial liabilities which are measured at fair value using valuation inputs based on management’s best estimates. During the three and six-month period ended June 30, 2020, no transfers were made between level 1 and 2 or level 2 and 3.
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PROPERTY, PLANT AND EQUIPMENT |
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| PROPERTY, PLANT AND EQUIPMENT | PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment of our company is predominantly comprised of last mile utility connections at our U.K. regulated distribution operation which provides essential services and generate regulated cash flows. Tariffs are set on the basis of a regulated asset base, provides inflation protection, and are typically adjusted annually. Our U.K. operation has a diverse customer base throughout England, Scotland, and Wales, which underpins its cash flows. The company’s property, plant, and equipment is measured at fair value on a recurring basis with an effective date of revaluation for all asset classes of December 31, 2019 and 2018. Our company determined fair value under the income method. Assets under development were revalued where fair value could be reliably measured. Due to the recent volatility observed in capital market prices and the interruption to global supply chains, our company reviewed the significant inputs to the valuation of our property, plant, and equipment. In our assessment, we considered the nature of the operations’ cash flows, whether the asset is exposed to volume risk, the applicable regulatory framework and the business’ actual performance against plan, amongst other factors. While some of the assumptions used in determining fair values have changed, the overall valuation of our assets have not been significantly impacted. In making the assessment, we have also assumed that the economic impact of COVID-19 will not materially persist in the long-term. Our company undertook a process to assess the appropriateness of the discount rates considering changes to risk-free rates, changes to credit spreads as well as changes to our businesses’ operating cash flows and changes to any risk premium inherent in such cash flows. These considerations led us to conclude the discount rates for the current period should remain consistent with year end rates. Our company considered changes to risk-free borrowing rates, equity risk premiums as well as any impact to asset level cash flows built into the models which we believe at this time addresses future cash flow risks. Terminal values and investment horizons are largely unaffected as our company employs a long-term investment strategy for critical infrastructure assets. In addition, our company has had to make assumptions with respect to the length and severity of these restrictions and closures as well as the recovery period in estimating the impact and timing of future cash flows. Based on our analysis, no impairments to our property, plant and equipment were required as at June 30, 2020.
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INTANGIBLE ASSETS |
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| Intangible Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| INTANGIBLE ASSETS | INTANGIBLE ASSETS
Intangible assets are allocated to the following cash generating units:
Our company’s intangible assets are primarily related to concession arrangements operated by the local energy regulator, Agência Nacional do Petróleo, Gás Natural e Biocombustíveis (“ANP”), at our Brazilian gas transmission operation. The terms and conditions of concession arrangements are regulated by the Agência Nacional do Petróleo, Gás Natural e Biocombustíveis (“ANP”). Each gas transportation agreement (“GTA”) took into account a return on regulatory asset base (“RAB”), and the tariffs were calculated on an inflation adjusted regulatory weighted average cost of capital (“WACC”) fixed for the life of GTAs. Upon expiry of the authorizations, the assets shall be returned to the government and will be subject to concession upon public bidding. These assets expire between 2039 and 2041. The total capacity is fully contracted under long-term “ship-or-pay” GTAs and therefore the business is exposed to no volume or price risk. The intangible assets at our U.K. regulated distribution operation relate to customer order backlogs, which represents the present value of future earnings derived from the build out of contracted connections at the acquisition date of the U.K. regulated distribution operation. Due to the recent volatility observed in capital market prices and the interruption to global supply chains as a result of COVID-19, our company performed an evaluation of potential impairment indicators on each of our intangible assets during the six-month period ended June 30, 2020. Based on the analysis performed, our intangible assets remain largely unaffected, with no impairment required. Our intangible assets represent long-term critical infrastructure supported by regulated or highly contracted revenues which help protect value over the long term. The following table presents the change in the cost balance of intangible assets:
The following table presents the accumulated amortization for the company’s intangible assets:
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GOODWILL |
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| Disclosure of reconciliation of changes in goodwill [abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Disclosure of goodwill [text block] | GOODWILL The following table presents the carrying amount for our company’s goodwill:
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BORROWINGS |
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| Financial Instruments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
| Disclosure of borrowings [text block] | BORROWINGS Non-Recourse Borrowings
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FINANCIAL LIABILITIES |
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| Financial Instruments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial Liabilities | The following table provides the allocation of financial instruments and their associated financial instrument classifications as at June 30, 2020:
The following table provides the allocation of financial instruments and their associated financial instrument classifications as at December 31, 2019:
1. Derivative instruments which are elected for hedge accounting totaling $29 million are included in financial assets and $nil of derivative instruments are included in financial liabilitiesFINANCIAL LIABILITIES
a) Deferred consideration Deferred consideration is related to the April 4, 2017 acquisition of Nova Transportadora do Sudeste S.A. (“NTS”), our Brazilian regulated gas transmission business. The deferred consideration is denominated in U.S. dollars and accrues interest at 3.35% compounded annually. The financial liability is measured at amortized cost and is payable on the fifth anniversary of the date of acquisition. Exchangeable shares, class B shares and class C shares The exchangeable and class B shares are classified as liabilities due to their exchangeable and cash redemption features. Upon issuance on March 31, 2020, exchangeable and class B shares were recognized at their fair value of $38.09 per share. The fair value was based on the NYSE opening price of one partnership unit. Subsequent to initial recognition, the exchangeable and class B shares are recognized at amortized cost and remeasured to reflect changes in the contractual cash flows associated with the shares. These contractual cash flows are based on the price of one BIP unit. As at June 30, 2020, the exchangeable and class B shares were remeasured to reflect the NYSE closing price of one BIP unit, $41.11 per share. Remeasurement gains or losses associated with these shares are recorded in the statements of operating results. During the three and six-month period ended June 30, 2020, our shareholders exchanged 1.3 million exchangeable shares for an equal number of partnership units resulting in a decrease of $54 million in our financial liability. Our company declared and paid dividends at a rate of $0.485 per share on its 45.2 million exchangeable shares outstanding as at May 29, 2020 (record date) resulting in total dividends paid of $22 million. Dividends paid on exchangeable shares are presented as interest expense in the statement of operating results. The following table provides a continuity schedule of outstanding exchangeable shares and class B shares along with our corresponding liability and remeasurement gains and losses.
Similar to class B shares, class C shares are classified as liabilities due to their cash redemption feature. However, class C shares, the most subordinated class of all common shares, meet certain qualifying criteria and are presented as equity instruments given the narrow scope presentation exceptions existing in IAS 32. Refer to Note 10, Equity, for further details related to class C shares.
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REVENUES |
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| Disclosure of disaggregation of revenue from contracts with customers [text block] | REVENUE
Substantially all of these revenues are recognized over time as services are rendered. The following table disaggregates revenues by service line:
Gas transmission revenues decreased compared to the prior year as the benefit of inflationary tariff increase at our Brazilian regulated gas transmission business was more than offset by depreciation of the Brazilian real, which lowered U.S. revenues by $80 million and $129 million during the three and six-month periods ended June 30, 2020, respectively.
The following table disaggregates revenues by geographical region:
Our company’s customer base is comprised predominantly of investment grade companies, with only one customer that makes up greater than 10% of our company’s consolidated revenues. For the three and six-month period ended June 30, 2020, revenue generated from this customer was $216 million and $478 million, respectively, (2019: $288 million and $578 million, respectively). Our company has completed a review of the credit risk of key counterparties. Based on their liquidity position, business performance, and aging of our accounts receivable, we do not have any significant changes in expected credit losses at this time. Our company continues to monitor the credit risk of our counterparties in light of the economic impact of COVID-19 but has experienced no issues to date.
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EQUITY EQUITY |
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| Equity [abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Disclosure of issued capital [text block] | EQUITY Our company’s equity is comprised of the following shares:
In conjunction with the special distribution, our company issued approximately 46.3 million exchangeable shares, 1 class B share and 1.4 million class C shares. Due to the exchange feature of the exchangeable shares and the cash redemption feature of the class B and class C shares, the exchangeable shares, the class B shares, and the class C shares are classified as financial liabilities. However, class C shares, the most subordinated of all common shares, meet certain qualifying criteria and are presented as equity instruments given the narrow scope presentation exceptions existing in IAS 32. Refer to Note 8, Financial Liabilities, for further details related to exchangeable and class B shares. The value of share capital, which relates to the class C shares, is determined based on the opening price of a unit on March 31, 2020, the date of special distribution.
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RELATED PARTY TRANSACTIONS |
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| Related Party [Abstract] | |
| RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS In the normal course of operations, our company entered into the transactions below with related parties. The ultimate parent of our company is Brookfield. Other related parties of our company represent Brookfield’s subsidiary and operating entities. Since inception, our partnership has had a management agreement (the “Master Services Agreement”) with certain service providers (the “Service Providers”), which are wholly-owned subsidiaries of Brookfield. For the periods prior to March 30, 2020, our company’s financial statements include general corporate expenses of the parent company which were not historically allocated to our company’s operations. These expenses relate to management fees payable to Brookfield. These allocated expenses have been included as appropriate in our company’s Consolidated Statement of Operating Results. Key decision makers of the company are employees of Brookfield. However, the financial statements may not include all of the expenses that would have been incurred and may not reflect our company’s combined results of operations, financial position and cash flows had it been a standalone company during the periods presented. It is not practicable to estimate the actual costs that would have been incurred had our company been a standalone company during the periods presented as this would depend on multiple factors, including organizational structure and infrastructure. Subsequent to the special distribution on March 31, 2020, our company is no longer allocated general corporate expenses of the parent company as the functions which they related are now provided through the Master Services Agreement. The base management fee related to the services received under the Master Services Agreement has been recorded as part of general and administrative expenses in the interim condensed and consolidated financial statements. Pursuant to the Master Services Agreement, on a quarterly basis, the partnership pays a base management fee, referred to as the Base Management Fee, to the Service Provider equal to 0.3125% per quarter (1.25% annually) of the combined market value of the partnership and our company. The amount attributable to our company is based on weighted average units and shares outstanding, after retroactively adjusting for the special distribution. The Base Management Fee was $7 million and 13 million for the three and six-month periods ended June 30, 2020, respectively (2019: $7 million and $13 million, respectively). Our company’s affiliates provide connection services in the normal course of operations on market terms to affiliates and associates of Brookfield Property Partners L.P. For the three and six-month period ended June 30, 2020, revenues of less than $1 million were generated (2019: less than $1 million) and $nil expenses were incurred (2019: $nil). As discussed in Note 1(b)(iii) Organization and Description of our Company in our unaudited interim financial statements, our company entered into two credit agreements with Brookfield Infrastructure, one as borrower and one as lender, each providing for a ten-year revolving $1 billion credit facility for purposes of providing our company and Brookfield Infrastructure with access to debt financing on an as-needed basis and to maximize our flexibility and facilitate the movement of cash within our group. We intend to use the liquidity provided by the credit facilities for working capital purposes and to fund growth capital investments and acquisitions. The determination of which of these sources of funding our company will access in any particular situation will be a matter of optimizing needs and opportunities at that time. The credit facilities are available in U.S. or Canadian dollars, and advances will be made by way of LIBOR, base rate, CDOR, or prime rate loans. Both operating facilities bear interest at the benchmark rate plus an applicable spread, in each case subject to adjustment from time to time as the parties may agree. In addition, each credit facility contemplates potential deposit arrangements pursuant to which the lender thereunder would, with the consent of a borrower, deposit funds on a demand basis to such borrower’s account at a reduced rate of interest. As of June 30, 2020, $nil was drawn on the credit facilities under the credit agreements with Brookfield Infrastructure. Prior to the completion of the special distribution, BIPC Holdings Inc., a wholly owned subsidiary of our company, fully and unconditionally guaranteed (i) any unsecured debt securities issued by Brookfield Infrastructure Finance ULC, Brookfield Infrastructure Finance LLC, Brookfield Infrastructure Finance Limited and Brookfield Infrastructure Finance Pty Ltd., which we refer to collectively as the Brookfield Infrastructure Debt Issuers, in each case as to payment of principal, premium (if any) and interest when and as the same will become due and payable under or in respect of the trust indenture dated October 10, 2012 among the Debt Issuers and Computershare Trust Company of Canada under which such securities are issued, (ii) the senior preferred shares of BIP Investment Corporation (“BIPIC”), as to the payment of dividends when due, the payment of amounts due on redemption and the payment of amounts due on the liquidation, dissolution or winding up of BIPIC, (iii) from time to time, certain of the partnership’s preferred units, as to payment of distributions when due, the payment of amounts due on redemption and the payment of amounts due on the liquidation, dissolution or winding up of the partnership, and (iv) the obligations of Brookfield Infrastructure under its bilateral credit facilities. These arrangements do not have or are not reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. As of June 30, 2020, our company had loans payable of $1,120 million (2019: $nil) to subsidiaries of Brookfield Infrastructure. The loans are payable in 10 years and bear a weighted average interest of 5% annually. Interest incurred during the three and six-month period ended June 30, 2020 was $13 million (2019: $nil) of which $2 million remains unpaid. The carrying value of the loan approximates its fair value. On July 29, 2020, Brookfield completed a secondary offering of approximately 5 million exchangeable shares, inclusive of the over-allotment option, for net proceeds of approximately C$305 million. Subsequent to the offering, Brookfield holds approximately 19.3% of the issued and outstanding exchangeable shares of our company.
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SUPPLEMENTAL CASH FLOW INFORMATION |
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| Cash Flow Statement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Supplemental Cash Flow Information | SUPPLEMENTAL CASH FLOW INFORMATION
Amounts paid and received for interest were reflected as operating cash flows in the Consolidated Statements of Cash Flows. Interest paid is net of debt related hedges. Amounts paid for income taxes were reflected as either operating cash flows or investing cash flows in the Consolidated Statements of Cash Flows depending upon the nature of the underlying transaction. Details of “Changes in non-cash working capital, net” on the Consolidated Statements of Cash Flows are as follows:
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SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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| Corporate Information And Statement Of IFRS Compliance [Abstract] | |||||||||||||||||||||
| Statement of Compliance | a) Statement of Compliance These unaudited interim condensed and consolidated financial statements, (“interim financial statements”) of our company and its subsidiaries have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting (“IAS 34”) as issued by the International Accounting Standards Board (“IASB”) and using the accounting policies described below. These interim financial statements should be read in conjunction with our company’s Combined Carve-Out Financial Statements for the year ended December 31, 2019 as included in our prospectus dated March 12, 2020. These interim financial statements were authorized for issuance by the Board of Directors of our company on August 13, 2020.
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| Basis of Presentation | b) Basis of presentation The interim financial statements are prepared on a going concern basis. For the periods prior to March 30, 2020, the financial statements represent a combined carve-out of the assets, liabilities, revenues, expenses, and cash flows of the businesses that were contributed to our company effective March 30, 2020. During this period, all of the assets and liabilities presented were controlled by the partnership. Effective March 30, 2020, the assets and liabilities were transferred to our company at their carrying values. All intercompany balances, transactions, revenues and expenses within our company have been eliminated. Additionally, certain corporate costs have been allocated on the basis of direct usage where identifiable, with the remainder allocated based on management’s best estimate of costs attributable to our company. Management believes the assumptions underlying the historical financial information, including the assumptions regarding allocated expenses, reasonably reflect the utilization of services provided to or the benefit received by our company during the periods presented. However, due to the inherent limitations of carving out the assets, liabilities, operations and cash flows from larger entities, the historical financial information may not necessarily reflect our company’s financial position, operations and cash flow for future periods, nor do they reflect the financial position, results of operations and cash flow that would have been realized had our company been a stand-alone entity during the periods presented. Subsequent to the special distribution, our company is no longer allocated general corporate expenses of the parent company as the functions which they related are now provided through the amended and restated master services agreement dated as of March 13, 2015, among the Service Recipients (as defined therein), Brookfield Asset Management Inc. (“Brookfield”), the Service Providers (as defined therein) and others, as amended (the “Master Services Agreement”). The base management fee related to the services received under the Master Services Agreement has been recorded as part of general and administrative expenses in the interim condensed and consolidated financial statements.
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| Continuity of Interests | c) Continuity of Interests As described above, Brookfield Infrastructure Corporation was established on August 30, 2019 by the partnership. On March 30, 2020, the partnership contributed the businesses to our company in exchange for loans receivable, exchangeable shares, class B shares and class C shares. On March 31, 2020, the partnership completed the special distribution of the exchangeable shares to holders of units and continues to hold all of the class B and class C shares of our company. The partnership directly and indirectly controlled our company prior to the special distribution and continues to control our company subsequent to the special distribution through its interests in our company. As a result of this continuing common control, there is insufficient substance to justify a change in the measurement of our company. In accordance with our company’s and the partnership’s accounting policy, our company has reflected the businesses in its financial position and financial performance using the partnership’s carrying values prior to the special distribution. To reflect this continuity of interests, these interim financial statements provide comparative information of our company for the periods prior to the special distribution, as previously reported by the partnership. The economic and accounting impact of contractual relationships created or modified in conjunction with the special distribution (see Note 1(b) Organization and Description of our Company) have been reflected prospectively from the date of the special distribution and have not been reflected in the results of operations or financial position of the company prior to March 31, 2020, as such items were in fact not created or modified prior thereto. Accordingly, the financial information for the periods prior to March 31, 2020 is presented based on the historical financial information for our company as previously reported by the partnership. For the period after completion of the special distribution, the results are based on the actual results of our company, including the adjustments associated with the special distribution and the execution of several new and amended agreements. As the partnership holds all of the class C shares of our company, which is the only class of shares presented as equity, net income and equity attributable to common equity have been allocated to the partnership prior to and after the special distribution. Prior to March 31, 2020, intercompany transactions between the partnership and our company have been included in these financial statements and are considered to be forgiven at the time the transaction is recorded and reflected as “Distributions to, net of contributions from, Brookfield Infrastructure Partners L.P.”. “Distributions to, net of contributions from, Brookfield Infrastructure Partners L.P.” as shown in the interim condensed and consolidated statements of changes in equity represents the parent company’s historical investment in our company, accumulated net income and the net effect of the transactions and allocations from the parent company. The total net effect of transactions with the parent company is reflected in the interim condensed and consolidated statements of cash flows as a financing activity and in the interim condensed and consolidated statements of financial position as equity attributable to Brookfield Infrastructure Partners L.P.
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| Foreign Currency Translation | d) Foreign Currency Translation The U.S dollar is the functional and presentation currency of the company. Each of the company’s affiliates determines its own functional currency and items included in the financial statements of each affiliate are measured using that functional currency. Assets and liabilities of foreign operations having a functional currency other than the U.S. dollar are translated at the rate of exchange prevailing at the reporting date and revenues and expenses at average rates during the period. Gains or losses on translation are included as a component of other comprehensive income. On disposal of a foreign operation resulting in the loss of control, the component of other comprehensive income due to accumulated foreign currency translation relating to that foreign operation is reclassified to net income. On partial disposal of a foreign operation in which control is retained, the proportionate share of the component of other comprehensive income or loss relating to that foreign operation is reclassified to non-controlling interests in that foreign operation. Foreign currency denominated monetary assets and liabilities are translated using the rate of exchange prevailing at the reporting date and non-monetary assets and liabilities measured at fair value are translated at the rate of exchange prevailing at the date when the fair value was determined. Revenues and expenses are measured at average rates during the period. Gains or losses on translation of these items are included in net income. Gains and losses on transactions which hedge these items are also included in net income or loss. Foreign currency denominated non-monetary assets and liabilities, measured at historic cost, are translated at the rate of exchange at the transaction date.
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| Business Combinations | e) Business Combinations Business acquisitions in which control is acquired are accounted for using the acquisition method, other than those between and among entities under common control. The consideration of each acquisition is measured at the aggregate of the fair values at the acquisition date of assets transferred by the acquirer, liabilities incurred or assumed, and equity instruments issued by the company in exchange for control of the acquiree. Acquisition related costs are recognized in the Statement of Operating Results as incurred and included in other expenses. Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent consideration arrangement, measured at its acquisition-date fair value. Subsequent changes in fair values are adjusted against the cost of the acquisition where they qualify as measurement period adjustments. All other subsequent changes in the fair value of contingent consideration classified as liabilities will be recognized in the Statements of Operating Results, whereas changes in the fair values of contingent consideration classified within share capital are not subsequently re-measured. Where a business combination is achieved in stages, the company’s previously held interests in the acquired entity are remeasured to fair value at the acquisition date, that is, the date the company attains control and the resulting gain or loss, if any, is recognized in the Statements of Operating Results. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognized in other comprehensive income are reclassified to the Statements of Operating Results, where such treatment would be appropriate if that interest were disposed of. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the company reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period, or additional assets or liabilities are recognized, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognized as of that date. The measurement period is the period from the date of acquisition to the date the company obtains complete information about facts and circumstances that existed as of the acquisition date. The measurement period is subject to a maximum of one year subsequent to the acquisition date. If, after reassessment, the company’s interest in the fair value of the acquiree’s identifiable net assets exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held equity interest in the acquiree if any, the excess is recognized immediately in profit or loss as a bargain purchase gain. Contingent liabilities acquired in a business combination are initially measured at fair value at the date of acquisition. At the end of subsequent reporting periods, such contingent liabilities are measured at the higher of the amount that would be recognized in accordance with IAS 37, Provisions, Contingent Liabilities and Contingent Assets (“IAS 37”) and the amount initially recognized less the cumulative amount of income recognized in accordance with IFRS 15, Revenue from Contracts with Customers.
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| Cash and Cash Equivalents | f) Cash and Cash Equivalents Cash and cash equivalents include short-term highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
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| Accounts Receivable | g) Accounts Receivable Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less any loss allowance for expected credit losses.
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| Property, Plant and Equipment | h) Property, Plant and Equipment The company uses the revaluation method of accounting for all classes of property, plant and equipment. Property, plant and equipment is initially measured at cost and subsequently carried at its revalued amount, being the fair value at the date of the revaluation less any subsequent accumulated depreciation and any accumulated impairment losses. Revaluations are made on at least an annual basis, and on a sufficient basis to ensure that the carrying amount does not differ significantly from fair value. Where the carrying amount of an asset is increased as a result of a revaluation, the increase is recognized in other comprehensive income or loss and accumulated in equity within the revaluation surplus reserve, unless the increase reverses a previously recognized impairment recorded through net income, in which case that portion of the increase is recognized in net income. Where the carrying amount of an asset is decreased, the decrease is recognized in other comprehensive income to the extent of any balance existing in revaluation surplus in respect of the asset, with the remainder of the decrease recognized in net income. Revaluation gains are included in other comprehensive income but are not subsequently recycled into profit or loss. An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. The gain or loss arising on disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in the Statements of Operating Results. However, any balance accumulated in revaluation surplus is subsequently recorded in retained earnings when an asset is derecognized and not transferred to profit or loss. Depreciation of an asset commences when it is available for use. Property, plant and equipment are depreciated on a straight line or declining-balance basis over the estimated useful lives of each component of the assets as follows:
Depreciation on property, plant and equipment is calculated on a straight-line or declining-balance basis so as to depreciate the net cost of each asset over its expected useful life to its estimated residual value. The estimated useful lives, residual values and depreciation methods are reviewed at the end of each annual reporting period, with the effect of any changes recognized on a prospective basis.
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| Asset Impairment | i) Asset Impairment At each reporting date the company assesses whether for assets, other than those measured at fair value with changes in values recorded in profit or loss, there is any indication that such assets are impaired. This assessment includes a review of internal and external factors which includes, but is not limited to, changes in the technological, political, economic or legal environment in which the entity operates in, structural changes in the industry, changes in the level of demand, physical damage and obsolescence due to technological changes. An impairment is recognized if the recoverable amount, determined as the higher of the estimated fair value less costs of disposal or the discounted future cash flows generated from use and eventual disposal from an asset or cash generating unit is less than its carrying value. The projections of future cash flows take into account the relevant operating plans and management’s best estimate of the most probable set of conditions anticipated to prevail. Where an impairment loss subsequently reverses, the carrying amount of the asset or cash generating unit is increased to the lesser of the revised estimate of recoverable amount and the carrying amount that would have been recorded had no impairment loss been recognized previously.
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| Intangible Assets | j) Intangible Assets Intangible assets acquired in a business combination and recognized separately from goodwill are initially recognized at their fair value at the acquisition date. The company’s intangible assets are comprised primarily of service concession arrangements and customer order backlogs. Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortization unless indefinite-lived and accumulated impairment losses, on the same basis as intangible assets acquired separately. Public service concessions that provide the company the right to charge users for a service in which the service and fee is regulated by the grantor are accounted for as an intangible asset under IFRIC 12, Service Concession Arrangements. Concession arrangements were acquired as part of the acquisition of the Brazilian regulated gas transmission operation and were initially recognized at their fair values. The intangible assets at the Brazilian regulated gas transmission operation relate to pipeline concession contracts, amortized on a straight-line basis over the life of the contractual arrangement. The customer order backlog was acquired as part of the acquisition of the U.K. regulated distribution operation and was initially recorded at its fair value. The customer order backlog represents the present value of future earnings derived from the build out of contracted connections at the acquisition date of the U.K. regulated distribution operation. The customer order backlog is amortized over its estimated useful life of 15 years. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in profit or loss when the asset is derecognized.
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| Goodwill | k) Goodwill Goodwill represents the excess of the price paid for the acquisition of an entity over the fair value of the net tangible and intangible assets and liabilities acquired. Goodwill is allocated to the cash generating unit or units to which it relates. The company identifies cash generating units as identifiable groups of assets that are largely independent of the cash inflows from other assets or groups of assets. Goodwill is evaluated for impairment annually or more often if events or circumstances indicate there may be impairment. Impairment is determined for goodwill by assessing if the carrying value of a cash generating unit or group of cash generating units, including the allocated goodwill, exceeds its recoverable amount determined as the greater of the estimated fair value less costs of disposal or the value in use. Impairment losses recognized in respect of a cash generating unit are first allocated to the carrying value of goodwill and any excess is allocated to the carrying amount of assets in the cash generating unit. Any goodwill impairment is recognized in period in which the impairment is identified. Impairment losses on goodwill are not subsequently reversed. On disposal of an affiliate, the attributable amount of goodwill is included in the determination of the gain or loss on disposal of the operation.
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| Revenue Recognition | l) Revenue Recognition The company recognizes revenue when it transfers control of a product or service to a customer. Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. The company recognizes revenue when the specific criteria set out below have been met. Cash received by the company from customers is recorded as deferred revenue until the revenue recognition criteria set out below are met. Revenue from utilities infrastructure is derived from the transmission of natural gas and the distribution of energy. Distribution and transmission revenue each contain a single performance obligation that is recognized over time. The connection revenue relating to the company’s regulated distribution operation contains a distinct performance obligation that is recognized over the period that the connection is constructed, based on an input method of progress recognition on the basis that this methodology is most reflective of the underlying transfer of control. The payment terms for all of our revenue streams require payment upon completion, except for connections income whereby payment is typically collected up-front prior to the completion of any services.
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| Financial Instruments and Hedge Accounting | m) Financial Instruments and Hedge Accounting
The company classifies cash and cash equivalents and accounts receivable and other as amortized cost. Derivative assets are classified as FVTPL, except for derivatives in certain hedging relationships. Other financial assets are classified as either amortized cost or FVTOCI. Financial assets classified as FVTPL or FVTOCI are subsequently measured at fair value at each reporting date. For financial assets classified as FVTPL, the change in fair value is recorded through profit or loss. For financial assets classified as FVTOCI, the change in fair value is recorded in other comprehensive income. The cumulative gains or losses related to FVTOCI equity instruments are not reclassified to profit or loss on disposal, whereas the cumulative gains or losses on all other FVTOCI assets are reclassified to profit or loss on disposal. For financial instruments at amortized cost or debt instruments at FVTOCI, the company assesses if there have been significant increases in credit risk since initial recognition to determine whether lifetime or 12-month expected credit losses should be recognized. Any related loss allowances are recorded through profit or loss. Non-recourse borrowings and accounts payable and other, are classified as amortized cost, except for derivatives embedded in related financial instruments. Embedded derivatives and any other derivative liabilities are classified as FVTPL and are subsequently measured at fair value, except for derivatives in certain hedging relationships. Other financial liabilities are classified as either FVTPL or amortized cost. Financial instruments classified as amortized cost upon adoption of IFRS 9-Financial Instruments (“IFRS 9”) were previously classified as loans and receivables. Financial assets classified as FVTOCI were previously classified as available-for-sale securities. The changes in classification had no impact on the carrying values and there were no changes to the classification of the remainder of financial assets classified as FVTPL.
The company selectively utilizes derivative financial instruments primarily to manage financial risks, including interest rate and foreign exchange risks. Derivative financial instruments are recorded at fair value. Hedge accounting is applied when the derivative is designated as a hedge of a specific exposure and that the hedging relationship meets all of the hedge effectiveness requirements. Hedge accounting is discontinued prospectively when the derivative no longer qualifies as a hedge or the hedging relationship is terminated. Once discontinued, the cumulative change in fair value of a derivative that was previously recorded in other comprehensive income by the application of hedge accounting is recognized in profit or loss over the remaining term of the original hedging relationship as amounts related to the hedged item are recognized in profit or loss. The assets or liabilities relating to unrealized mark-to-market gains and losses on derivative financial instruments are recorded in financial assets and financial liabilities, respectively. Unrealized gains and losses on interest rate contracts designated as hedges of future variable interest payments are included in equity as a cash flow hedge when the interest rate risk relates to an anticipated variable interest payment. The periodic exchanges of payments on interest rate swap contracts designated as hedges of debt are recorded on an accrual basis as an adjustment to interest expense.
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| Income Taxes | n) Income Taxes Income tax expense represents the sum of the tax accrued in the period and deferred income tax.
Current income tax assets and liabilities are measured at the amount expected to be paid to tax authorities, net of recoveries based on the tax rates and laws enacted or substantively enacted at the reporting date. Current income tax relating to items recognized directly in share capital are also recognized directly in share capital and other comprehensive income.
Deferred income tax liabilities are provided for using the liability method on temporary differences between the tax bases used in the computation of taxable income and carrying amounts of assets and liabilities in the interim financial statements. Deferred income tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that deductions, tax credits and tax losses can be utilized. Such deferred income tax assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the taxable income nor the accounting income, other than in a business combination. The carrying amount of deferred income tax assets are reviewed at each reporting date and reduced to the extent it is no longer probable that the income tax asset will be recovered. Deferred income tax liabilities are recognized for taxable temporary differences associated with investments in affiliates, except where the company is able to control the reversal of the temporary difference and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred income tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable income against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred income tax liabilities and assets reflect the tax consequences that would follow from the manner in which the company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred income tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority within a single taxable entity or the company intends to settle its current tax assets and liabilities on a net basis in the case where there exist different taxable entities in the same taxation authority and when there is a legally enforceable right to set off current tax assets against current tax liabilities.
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| Assets Held for Sale | o) Assets Held for Sale Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the non-current asset or disposal group is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification subject to limited exceptions. When the company is committed to a sale plan involving loss of control of a subsidiary, all of the assets and liabilities of that subsidiary are classified as held for sale when the criteria described above are met, regardless of whether the company will retain a non-controlling interest in its former subsidiary after the sale. Non-current assets and disposal groups classified as held for sale are measured at the lower of their previous carrying amount and fair value less costs to sell. Non-current assets classified as held for sale and the assets of a disposal group are presented separately from other assets in the Statements of Financial Position and are classified as current. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the Statements of Financial Position. Once classified as held for sale, property, plant and equipment and intangible assets are not depreciated or amortized, respectively.
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| Provisions | p) Provisions Provisions are recognized when the company has a present obligation, either legal or constructive, as a result of a past event, it is probable that the company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the obligation, its carrying amount is the present value of those cash flows. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
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| Earnings per Share | q) Earnings per share Our company‘s basic and diluted earnings per share have not been presented in the interim financial statements. As outlined in Note 8, Financial Liabilities, and Note 10, Equity, exchangeable and class B shares are classified as financial liabilities, while class C shares are classified as financial liabilities, but presented as equity instruments given the narrow scope presentation exceptions existing in IAS 32. As each share classification represents a financial liability, they do not constitute ordinary shares. Refer to the aforementioned notes for further details.
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| Critical Accounting Judgments and Key Sources of Estimation Uncertainty | r) Critical Accounting Judgments and Key Sources of Estimation Uncertainty The preparation of financial statements requires management to make critical judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses that are not readily apparent from other sources, during the reporting period. These estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Critical judgments and estimates made by management and utilized in the normal course of preparing our company’s interim financial statements are outlined below.
IFRS 3 (2008) Business Combinations does not include specific measurement guidance for transfers of businesses or subsidiaries between entities under common control. Accordingly, our company has developed a policy to account for such transactions taking into consideration other guidance in the IFRS framework and pronouncements of other standard-setting bodies. Our company’s policy is to record assets and liabilities recognized as a result of transactions between entities under common control at the carrying value on the transferor’s financial statements, and to have the interim statements of financial position, operating results, changes in equity and cash flows reflect the results of combining entities for all periods presented for which the entities were under the transferor’s common control, irrespective of when the combination takes place.
Our company’s accounting policies relating to derivative financial instruments are described in Note 2(m) Financial Instruments and Hedge Accounting. The critical judgments inherent in these policies relate to applying the criteria to the assessment of the effectiveness of hedging relationships. Estimates and assumptions used in determining the fair value of financial instruments are equity and commodity prices; future interest rates; the credit worthiness of our company relative to its counterparties; the credit risk of our company and counterparty; estimated future cash flows; and discount rates.
Property, plant and equipment is revalued on a regular basis. Our company’s property, plant, and equipment is measured at fair value on a recurring basis with an effective date of revaluation for all asset classes of December 31, 2019 and 2018. Our company determined fair value under the income method with due consideration to significant inputs such as the discount rate, terminal value multiple and overall investment horizon.
Our company accounts for business combinations using the acquisition method of accounting. This method requires the application of fair values for both the consideration given and the assets and liabilities acquired. The calculation of fair values is often predicated on estimates and judgments including future cash flows discounted at an appropriate rate to reflect the risk inherent in the acquired assets and liabilities. The determination of the fair values may remain provisional for up to 12 months from the date of acquisition due to the time required to obtain independent valuations of individual assets and to complete assessments of provisions. When the accounting for a business combination has not been completed as at the reporting date, this is disclosed in the financial statements, including observations on the estimates and judgments made as of the reporting date.
The impairment assessment of goodwill and intangible assets with indefinite lives requires estimation of the value-in-use or fair value less costs of disposal of the cash-generating units or groups of cash generating units to which goodwill or the intangible asset has been allocated. Our company uses the following critical assumptions and estimates: the circumstances that gave rise to the goodwill, timing and amount of future cash flows expected from the cash-generating units; discount rates; terminal capitalization rates; terminal valuation dates and useful lives. Other estimates utilized in the preparation of our company’s financial statements are: depreciation and amortization rates and useful lives; recoverable amount of goodwill and intangible assets; ability to utilize tax losses and other tax measurements. Other critical judgments utilized in the preparation of our company’s financial statements include the methodologies for calculating amortization, determination of operating segments and determination of control. In March 2020, the World Health Organization declared a global pandemic related to COVID-19. To date, there has been significant stock market volatility, significant fluctuations in the commodity and foreign exchange markets, restrictions on the conduct of business in many jurisdictions, and the global movement of people and some goods has become restricted. Our company has assessed the impact of the current economic environment on our asset valuations. In making these assessments, we have assumed that the sharp curtailment of economic activities, as a result of social distancing rules imposed by governments worldwide, will not materially persist in the long-term. As a provider of essential services, our businesses have remained in operations while we continue to safeguard the health of our employees. In addition, our businesses are subject to regulated cash flows with minimal volume risk. Based on our company’s assessment, no impairments to our asset values were required as at June 30, 2020. Please refer to Note 4, Property Plant and Equipment and Note 5, Intangible Assets.
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FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) |
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| Fair Value Measurement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Disclosure of financial assets | The following table provides the allocation of financial instruments and their associated financial instrument classifications as at June 30, 2020:
The following table provides the allocation of financial instruments and their associated financial instrument classifications as at December 31, 2019:
1. Derivative instruments which are elected for hedge accounting totaling $29 million are included in financial assets and $nil of derivative instruments are included in financial liabilities
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| Financial Liabilities | The following table provides the allocation of financial instruments and their associated financial instrument classifications as at June 30, 2020:
The following table provides the allocation of financial instruments and their associated financial instrument classifications as at December 31, 2019:
1. Derivative instruments which are elected for hedge accounting totaling $29 million are included in financial assets and $nil of derivative instruments are included in financial liabilitiesFINANCIAL LIABILITIES
a) Deferred consideration Deferred consideration is related to the April 4, 2017 acquisition of Nova Transportadora do Sudeste S.A. (“NTS”), our Brazilian regulated gas transmission business. The deferred consideration is denominated in U.S. dollars and accrues interest at 3.35% compounded annually. The financial liability is measured at amortized cost and is payable on the fifth anniversary of the date of acquisition. Exchangeable shares, class B shares and class C shares The exchangeable and class B shares are classified as liabilities due to their exchangeable and cash redemption features. Upon issuance on March 31, 2020, exchangeable and class B shares were recognized at their fair value of $38.09 per share. The fair value was based on the NYSE opening price of one partnership unit. Subsequent to initial recognition, the exchangeable and class B shares are recognized at amortized cost and remeasured to reflect changes in the contractual cash flows associated with the shares. These contractual cash flows are based on the price of one BIP unit. As at June 30, 2020, the exchangeable and class B shares were remeasured to reflect the NYSE closing price of one BIP unit, $41.11 per share. Remeasurement gains or losses associated with these shares are recorded in the statements of operating results. During the three and six-month period ended June 30, 2020, our shareholders exchanged 1.3 million exchangeable shares for an equal number of partnership units resulting in a decrease of $54 million in our financial liability. Our company declared and paid dividends at a rate of $0.485 per share on its 45.2 million exchangeable shares outstanding as at May 29, 2020 (record date) resulting in total dividends paid of $22 million. Dividends paid on exchangeable shares are presented as interest expense in the statement of operating results. The following table provides a continuity schedule of outstanding exchangeable shares and class B shares along with our corresponding liability and remeasurement gains and losses.
Similar to class B shares, class C shares are classified as liabilities due to their cash redemption feature. However, class C shares, the most subordinated class of all common shares, meet certain qualifying criteria and are presented as equity instruments given the narrow scope presentation exceptions existing in IAS 32. Refer to Note 10, Equity, for further details related to class C shares.
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| Carrying and fair values of financial assets |
1. Valuation technique: Discounted cash flow. Future cash flows are estimated based on forward exchange rates (from observable forward exchange rates at the end of the reporting period) and contract forward rates, discounted at a rate that reflects our credit risk and the credit risk of various counterparties. The following table provides the carrying values and fair values of financial instruments as at June 30, 2020 and December 31, 2019:
2. Class C shares are also classified as financial liabilities due to their cash redemption feature. As discussed in Note 1(b)(ii) Organization and Description of our Company, the class C shares meet certain qualifying criteria and are presented as equity. For the purpose of the disclosure above, the class C shares have a fair value of $58 million as at June 30, 2020.
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| Carrying and fair values of financial liabilities |
1. Valuation technique: Discounted cash flow. Future cash flows are estimated based on forward exchange rates (from observable forward exchange rates at the end of the reporting period) and contract forward rates, discounted at a rate that reflects our credit risk and the credit risk of various counterparties. The following table provides the carrying values and fair values of financial instruments as at June 30, 2020 and December 31, 2019:
2. Class C shares are also classified as financial liabilities due to their cash redemption feature. As discussed in Note 1(b)(ii) Organization and Description of our Company, the class C shares meet certain qualifying criteria and are presented as equity. For the purpose of the disclosure above, the class C shares have a fair value of $58 million as at June 30, 2020.
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PROPERTY, PLANT AND EQUIPMENT (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, plant and equipment [abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Disclosure of detailed information about property, plant and equipment |
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INTANGIBLE ASSETS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Intangible Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Disclosure of detailed information about intangible assets |
Intangible assets are allocated to the following cash generating units:
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| Disclosure of reconciliation of changes in intangible assets and goodwill | The following table presents the accumulated amortization for the company’s intangible assets:
The following table presents the change in the cost balance of intangible assets:
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GOODWILL GOODWILL (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Disclosure of reconciliation of changes in goodwill [abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Disclosure of goodwill [Table Text Block] | The following table presents the carrying amount for our company’s goodwill:
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BORROWINGS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Financial Instruments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
| Disclosure of detailed information about borrowings |
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FINANCIAL LIABILITIES FINANCIAL LIABILTIES (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial Instruments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Disclosure of financial liabilities | The following table provides a continuity schedule of outstanding exchangeable shares and class B shares along with our corresponding liability and remeasurement gains and losses.
1. The unit price reflected here represents the weighted average price of the partnership units exchanged during the period and is calculated based on the NYSE closing price per unit on the date of exchange.
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REVENUES (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue [abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Disclosure of revenues | Substantially all of these revenues are recognized over time as services are rendered. The following table disaggregates revenues by service line:
The following table disaggregates revenues by geographical region:
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EQUITY EQUITY (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity [abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Disclosure of classes of share capital [text block] | Our company’s equity is comprised of the following shares:
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SUPPLEMENTAL CASH FLOW INFORMATION SUPPLEMENTAL CASH FLOW INFORMATION (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash Flow Statement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Disclosure Of Interest And Income Taxes Paid [Table Text Block] |
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| Disclosure Of Changes In Non-cash Working Capital [Table Text Block] | Details of “Changes in non-cash working capital, net” on the Consolidated Statements of Cash Flows are as follows:
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FAIR VALUE OF FINANCIAL INSTRUMENTS- Allocation of Financial Instruments - Additional Information (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
|---|---|---|
| Financial assets (current and non-current) | ||
| Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items] | ||
| Financial instruments designated as hedging instruments, at fair value | $ 56 | $ 29 |
| Financial liabilities (current and non-current) | ||
| Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items] | ||
| Financial instruments designated as hedging instruments, at fair value | $ 0 | $ 0 |
FAIR VALUE OF FINANCIAL INSTRUMENTS - Valuation Techniques and Significant Inputs (Details) - Recurring fair value measurement - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
|---|---|---|
| Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items] | ||
| Financial assets | $ 56 | $ 29 |
| Financial liabilities (current and non-current) | 66 | 77 |
| Interest rate swaps & other | Level 2 | Discounted cash flow | ||
| Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items] | ||
| Financial liabilities (current and non-current) | 66 | 77 |
| Interest rate swaps & other | Level 2 | Discounted cash flow | ||
| Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items] | ||
| Financial assets | $ 56 | $ 29 |
FAIR VALUE OF FINANCIAL INSTRUMENTS - Additional Information (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
|---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Dec. 31, 2019 |
|
| Recurring fair value measurement | |||||
| Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items] | |||||
| Financial assets | $ 56 | $ 56 | $ 29 | ||
| Financial liabilities (current and non-current) | 66 | 66 | 77 | ||
| Cash flow hedges | Financial assets at fair value through other comprehensive income, category | |||||
| Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items] | |||||
| Gains (losses) on hedging instrument, fair value hedges | 0 | $ 6 | 9 | $ 5 | |
| Derivative financial assets | $ 56 | $ 56 | $ 29 | ||
INTANGIBLE ASSETS - Net Amounts (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|---|---|---|---|
| Disclosure of detailed information about intangible assets [line items] | |||
| Net intangible assets | $ 2,849 | $ 3,936 | |
| Cost | |||
| Disclosure of detailed information about intangible assets [line items] | |||
| Net intangible assets | 3,326 | 4,479 | $ 4,631 |
| Accumulated amortization | |||
| Disclosure of detailed information about intangible assets [line items] | |||
| Net intangible assets | $ (477) | $ (543) | $ (364) |
INTANGIBLE ASSETS - Cash Generating Units (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
|---|---|---|
| Disclosure of information for cash-generating units [line items] | ||
| Total | $ 2,849 | $ 3,936 |
| Brazilian Regulated Gas Transmission Operation [Member] | ||
| Disclosure of information for cash-generating units [line items] | ||
| Total | 2,805 | 3,885 |
| U.K. Regulated Distribution Operation [Member] | ||
| Disclosure of information for cash-generating units [line items] | ||
| Total | $ 44 | $ 51 |
INTANGIBLE ASSETS - Reconciliation (Details) - USD ($) $ in Millions |
6 Months Ended | 12 Months Ended |
|---|---|---|
Jun. 30, 2020 |
Dec. 31, 2019 |
|
| Reconciliation of changes in intangible assets other than goodwill | ||
| Cost at beginning of the year | $ 3,936 | |
| Cost at end of year | 2,849 | $ 3,936 |
| Cost | ||
| Reconciliation of changes in intangible assets other than goodwill | ||
| Cost at beginning of the year | 4,479 | 4,631 |
| Additions, net of disposals | 16 | 21 |
| Foreign currency translation | (1,169) | (173) |
| Cost at end of year | $ 3,326 | $ 4,479 |
INTANGIBLE ASSETS - Accumulated Amortization (Details) - USD ($) $ in Millions |
6 Months Ended | 12 Months Ended |
|---|---|---|
Jun. 30, 2020 |
Dec. 31, 2019 |
|
| Disclosure of detailed information about intangible assets [line items] | ||
| Cost at beginning of the year | $ 3,936 | |
| Cost at end of year | 2,849 | $ 3,936 |
| Accumulated amortization | ||
| Disclosure of detailed information about intangible assets [line items] | ||
| Cost at beginning of the year | (543) | (364) |
| Amortization | (80) | (195) |
| Foreign currency translation | 146 | 16 |
| Cost at end of year | $ (477) | $ (543) |
GOODWILL GOODWILL (Details) - USD ($) $ in Millions |
6 Months Ended | 12 Months Ended |
|---|---|---|
Jun. 30, 2020 |
Dec. 31, 2019 |
|
| Disclosure of reconciliation of changes in goodwill [line items] | ||
| Balance at beginning of year | $ 667 | |
| Balance at end of year | 499 | $ 667 |
| Goodwill [member] | ||
| Disclosure of reconciliation of changes in goodwill [line items] | ||
| Balance at beginning of year | 667 | 691 |
| Increase (decrease) through net exchange differences, intangible assets and goodwill | (168) | (24) |
| Balance at end of year | $ 499 | $ 667 |
BORROWINGS - Non-Recourse Borrowings (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
|---|---|---|
| Disclosure of detailed information about borrowings [line items] | ||
| Non-current Portion Of Non-current Non-recourse Borrowings | $ 3,114 | $ 3,526 |
| Non-recourse borrowings | ||
| Disclosure of detailed information about borrowings [line items] | ||
| Borrowings | $ 3,114 | $ 3,526 |
BORROWINGS - Additional Information (Details) $ in Millions |
6 Months Ended |
|---|---|
|
Jun. 30, 2020
USD ($)
| |
| Disclosure of detailed information about borrowings [line items] | |
| Increase (decrease) through financing cash flows, liabilities arising from financing activities | $ 55 |
| Non-recourse borrowings | |
| Disclosure of detailed information about borrowings [line items] | |
| Decrease in borrowings | $ (400) |
FINANCIAL LIABILITIES FINANCIAL LIABILITIES (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
|---|---|---|
| Current: | ||
| Current Derivative Inflation Swaps Financial Liabilities | $ 6 | $ 6 |
| Total current financial liabilities | 6 | 6 |
| Non-current: | ||
| Noncurrent Derivative Inflation Swaps Financial Liabilities | 60 | 71 |
| Noncurrent Deferred Consideration | 947 | 931 |
| Total non-current financial liabilities | $ 1,007 | $ 1,002 |
REVENUES (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
| Disclosure of operating segments [line items] | ||||
| Revenue | $ 322 | $ 404 | $ 706 | $ 807 |
| Impact on Revenue from Change in Average Foreign Exchange Rate | 80 | 129 | ||
| Gas Transmission [Member] | ||||
| Disclosure of operating segments [line items] | ||||
| Revenue | 216 | 288 | 478 | 578 |
| Distribution [Member] | ||||
| Disclosure of operating segments [line items] | ||||
| Revenue | 79 | 73 | 164 | 147 |
| Connections [Member] | ||||
| Disclosure of operating segments [line items] | ||||
| Revenue | 23 | 36 | 55 | 69 |
| Service Line, Other [Member] | ||||
| Disclosure of operating segments [line items] | ||||
| Revenue | $ 4 | $ 7 | $ 9 | $ 13 |
REVENUES REVENUES (Geographic Information) (Details) $ in Millions |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
|
Jun. 30, 2020
USD ($)
|
Jun. 30, 2019
USD ($)
|
Jun. 30, 2020
USD ($)
customer
|
Jun. 30, 2019
USD ($)
|
|
| Disclosure of geographical areas [line items] | ||||
| Revenues | $ 322 | $ 404 | $ 706 | $ 807 |
| BRAZIL | ||||
| Disclosure of geographical areas [line items] | ||||
| Revenues | 216 | 288 | 478 | 578 |
| UNITED KINGDOM | ||||
| Disclosure of geographical areas [line items] | ||||
| Revenues | 106 | 116 | 228 | 229 |
| Partnership's Sales Revenue, Net [Member] | Customer Concentration Risk 1 [Member] | ||||
| Disclosure of geographical areas [line items] | ||||
| Revenues | $ 216 | $ 288 | $ 478 | $ 578 |
| Concentration Risk, Number of Customers | customer | 1 | |||
| Bottom of range [member] | Partnership's Sales Revenue, Net [Member] | Customer Concentration Risk 1 [Member] | ||||
| Disclosure of geographical areas [line items] | ||||
| Percentage of entity's revenue | 10.00% | |||
EQUITY EQUITY (Details) - USD ($) $ in Millions |
6 Months Ended | |||||
|---|---|---|---|---|---|---|
Jun. 30, 2020 |
Mar. 31, 2020 |
Dec. 31, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Dec. 31, 2018 |
|
| Schedule of Partnership Units [Line Items] | ||||||
| Equity | $ (517) | $ (143) | $ 3,277 | $ 3,282 | $ 3,272 | $ 3,249 |
| Issued capital [member] | Class C Shares [Member] | ||||||
| Schedule of Partnership Units [Line Items] | ||||||
| Number of shares outstanding | 1,402,451 | 0 | ||||
| Equity | $ 53 | $ 0 | ||||
| Share Issuance | 1,402,451 | |||||
| Issue of equity | $ 53 |
EQUITY EQUITY - Additional Information (Details) - Issued capital [member] |
Mar. 31, 2020
shares
|
|---|---|
| Exchangeable Shares [Member] | |
| Schedule of Partnership Units [Line Items] | |
| Number of shares outstanding, special distribution | 46,300,000 |
| Class B Shares [Member] | |
| Schedule of Partnership Units [Line Items] | |
| Number of shares outstanding, special distribution | 1 |
| Class C Shares [Member] | |
| Schedule of Partnership Units [Line Items] | |
| Number of shares outstanding, special distribution | 1,400,000 |
SUPPLEMENTAL CASH FLOW INFORMATION SUPPLEMENTAL CASH FLOW INFORMATION (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
| Cash Flow Statement [Abstract] | ||||
| Interest paid | $ 84 | $ 71 | $ 95 | $ 80 |
| Income taxes paid | 100 | 62 | 100 | 62 |
| Changes In Non-cash Working Capital [Abstract] | ||||
| Adjustments for decrease (increase) in trade accounts receivable | (11) | (18) | (42) | (51) |
| Adjustments for increase (decrease) in trade and other payables | 16 | 11 | (14) | 55 |
| Increase (decrease) in working capital | $ 5 | $ (7) | $ (56) | $ 4 |
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