Document

EX-99.1 2 bbucq12022ex991.htm EX-99.1 Document

UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF

BROOKFIELD BUSINESS CORPORATION

As at March 31, 2022 and December 31, 2021 and for the

three months ended March 31, 2022 and 2021

INDEX TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS OF BROOKFIELD BUSINESS CORPORATION



Unaudited Interim Condensed Consolidated Statements of Financial Position			3
Unaudited Interim Condensed Consolidated Statements of Operating Results			4
Unaudited Interim Condensed Consolidated Statements of Comprehensive Income (Loss)			5
Unaudited Interim Condensed Consolidated Statements of Changes in Equity			6
Unaudited Interim Condensed Consolidated Statements of Cash Flow			7
Notes to Unaudited Interim Condensed Consolidated Financial Statements			8

BROOKFIELD BUSINESS CORPORATION

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION


(US$ MILLIONS)	Notes	March 31, 2022		December 31, 2021
Assets
Current Assets
Cash and cash equivalents	4	$	667	$	894
Financial assets	5	102		88
Accounts and other receivable, net	7	2,041		1,602
Inventory, net	8	581		580
Other assets	9	710		702
		4,101		3,866
Non-Current Assets
Financial assets	5	306		261
Accounts and other receivable, net	7	821		679
Other assets	9	229		218
Property, plant and equipment	10	4,077		4,036
Deferred income tax assets		358		348
Intangible assets	11	4,593		4,226
Equity accounted investments	13	88		70
Goodwill	12	2,275		2,216
		$	16,848	$	15,920
Liabilities and Equity
Current Liabilities
Accounts payable and other	14	$	3,822	$	3,716
Loan payable to Brookfield Business Partners	21	—		1,860


Non-recourse borrowings in subsidiaries of the company	16	198		53
Exchangeable and class B shares	6	2,243		—
		6,263		5,629
Non-Current Liabilities
Accounts payable and other	14	3,523		3,475

Non-recourse borrowings in subsidiaries of the company	16	5,561		5,193
Deferred income tax liabilities		544		487
		$	15,891	$	14,784
Equity
Brookfield Business Partners (1)	20	$	(673)	$	(516)
Non-controlling interests		1,630		1,652
		957		1,136
		$	16,848	$	15,920

____________________________________

(1)Common equity is attributable to the partnership both prior to the special distribution and subsequent thereto as a result of the partnership holding all of the class C shares issued by the company. See Note 2(b), for further details.

The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.

BROOKFIELD BUSINESS CORPORATION

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATING RESULTS


		Three Months Ended March 31,
(US$ MILLIONS)	Notes	2022		2021
Revenues	19	$	2,251	$	2,369
Direct operating costs	18	(2,025)		(2,175)
General and administrative expenses		(68)		(62)
Interest income (expense), net		(107)		(99)
Equity accounted income (loss), net	13	1		1


Remeasurement of exchangeable and class B shares	6	(168)		—
Other income (expense), net		(43)		11
Income (loss) before income tax		(159)		45
Income tax (expense) recovery
Current		(16)		(23)
Deferred		12		14
Net income (loss)		$	(163)	$	36
Attributable to:
Brookfield Business Partners (1)		$	(164)	$	11

Non-controlling interests		1		25
		$	(163)	$	36

____________________________________

(1)Net income is attributable to Brookfield Business Partners both prior to the special distribution and subsequent thereto as a result of the partnership holding all of the class C shares issued by the company. See Note 2(b) 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 (“IAS 33”). See Note 2(b) for further details.

The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.

BROOKFIELD BUSINESS CORPORATION

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)


		Three Months Ended March 31,
(US$ MILLIONS)	Notes	2022		2021
Net income (loss)		$	(163)	$	36
Other comprehensive income (loss):
Items that may be reclassified subsequently to profit or loss:

Foreign currency translation		213		(150)
Net investment and cash flow hedges	4	80		54

Taxes on the above items		(3)		(4)
Reclassification to profit or loss		11		13






Total other comprehensive income (loss)		301		(87)
Comprehensive income (loss)		$	138	$	(51)
Attributable to:
Brookfield Business Partners (1)		$	(59)	$	(14)

Non-controlling interests		197		(37)
		$	138	$	(51)

____________________________________

(1)Comprehensive income is attributable to Brookfield Business Partners both prior to the special distribution and subsequently as a result of the partnership holding all of the class C shares issued by the company. See Note 2(b) for further details.

The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.

BROOKFIELD BUSINESS CORPORATION

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY


(US$ MILLIONS)	Capital		Retained earnings		Ownership changes		Accumulated other comprehensive income (loss) (1)		Brookfield Business Partners		Non-controlling interests		Total equity
Balance as at January 1, 2022	$	159	$	(712)	$	445	$	(408)	$	(516)	$	1,652	$	1,136
Net income (loss)	—		(164)		—		—		(164)		1		(163)
Other comprehensive income	—		—		—		105		105		196		301
Total comprehensive income (loss)	—		(164)		—		105		(59)		197		138
Contributions	7		—		—		—		7		—		7
Distributions	—		(81)		—		—		(81)		(219)		(300)

Ownership changes	—		—		(24)		—		(24)		—		(24)
Special distribution (2)	571		—		(571)		—		—		—		—
Balance as at March 31, 2022	$	737	$	(957)	$	(150)	$	(303)	$	(673)	$	1,630	$	957
Balance as at January 1, 2021	$	1,967	$	(730)	$	445	$	(455)	$	1,227	$	1,479	$	2,706


Net income (loss)	—		11		—		—		11		25		36
Other comprehensive income	—		—		—		(25)		(25)		(62)		(87)
Total comprehensive income (loss)	—		11		—		(25)		(14)		(37)		(51)
Contributions	5		—		—		—		5		—		5
Distributions	—		(18)		—		—		(18)		(47)		(65)




Balance as at March 31, 2021	1,972		(737)		445		(480)		1,200		$	1,395	$	2,595

____________________________________

(1)See Note 17 for additional information.

(2)See Note 1(b) for additional information.

The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.

BROOKFIELD BUSINESS CORPORATION

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW


		Three Months Ended March 31,
(US$ MILLIONS)	Notes	2022		2021
Operating Activities
Net income (loss)		$	(163)	$	36
Adjusted for the following items:
Equity accounted earnings, net of distributions	13	—		(1)

Depreciation and amortization expense	18	149		150

Provisions and other items		38		20
Deferred income tax expense (recovery)		(12)		(14)
Remeasurement of exchangeable and class B shares	6	168		—
Changes in non-cash working capital, net	24	(146)		(210)
Cash from (used in) operating activities		$	34	$	(19)
Financing Activities
Proceeds from non-recourse borrowings in subsidiaries of the company	16	257		166
Repayment of non-recourse borrowings in subsidiaries of the company	16	(66)		(52)


Proceeds from other financing		9		3
Repayment of other financing		(31)		(21)

Lease liability repayment		(24)		(23)






Proceeds received from loan with Brookfield Business Partners	1	271		—
Repayment and issuance of loans with Brookfield Business Partners	1, 21	(271)		—
Distributions to others who have interests in operating subsidiaries	20	(219)		(49)
Distributions to Brookfield Business Partners	20, 21	(81)		(18)
Cash from (used in) financing activities		$	(155)	$	6
Investing Activities
Acquisitions

Property, plant and equipment and intangible assets	10, 11	(144)		(77)
Equity accounted investments	13	—		(2)

Dispositions

Property, plant and equipment and intangible assets	10, 11	9		1


Net settlement of hedges	4	—		1
Restricted cash and deposits		—		3
Cash from (used in) investing activities		$	(135)	$	(74)
Cash and cash equivalents
Change during the period		(256)		(87)
Impact of foreign exchange		29		(25)

Balance, beginning of year		894		777
Balance, end of period		$	667	$	665

Supplemental cash flow information is presented in Note 24.

The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.

NOTE 1. ORGANIZATION AND DESCRIPTION OF THE COMPANY

(a)Brookfield Business Corporation

Brookfield Business Corporation and its subsidiaries (“BBUC” or the “company”), is an owner and operator of services and industrial operations on a global basis (the “businesses”). The company was formed as a corporation established under the British Columbia Business Corporations Act on June 21, 2021 and is a subsidiary of Brookfield Business Partners L.P. (“BBU”, or collectively with its subsidiaries, excluding the company, the “partnership”), which we also refer to as the parent company and Brookfield Business Partners. The partnership, the company and respective subsidiaries, are referred to collectively as the group. Brookfield Asset Management Inc. (“Brookfield Asset Management” or together with its controlled subsidiaries, excluding the partnership, “Brookfield”) is the ultimate parent of the company and the partnership. The partnership holds all the issued and outstanding class B shares and class C shares of the company as at March 31, 2022. The registered head office of Brookfield Business Corporation is 250 Vesey Street, New York, NY, United States. The Class A exchangeable subordinate voting shares (each, an “exchangeable share”) of the company are listed on the New York Stock Exchange (“NYSE”) and the Toronto Stock Exchange (“TSX”) under the symbol “BBUC”. The exchangeable shares are structured with the intention of being economically equivalent to the non-voting limited partnership units (“LP Units”) of Brookfield Business Partners L.P. (NYSE: BBU; TSX: BBU.UN). Given the economic equivalence, we expect that the market price of the exchangeable shares will be significantly impacted by the market price of the partnership’s LP Units and the combined business performance of the company and Brookfield Business Partners as a whole.

(b)Special Distribution of the Company

On March 15, 2022, the group completed a special distribution (the “special distribution”) whereby Brookfield Business Partners L.P. unitholders of record as of March 7, 2022 received one exchangeable share of BBUC for every two LP Units held.

Prior to the special distribution, the company amended its articles of incorporation to provide for the exchangeable shares, class B shares and class C shares. See Note 1(b) (i) and (ii) below for further details. The approximate 7 million common shares of the company were converted into approximately 26 million class C shares and a subsidiary of the partnership subscribed for one class B share of the company for nominal consideration. The conversion of common equity to class C shares is shown as “Special distribution” in the unaudited interim condensed consolidated statements of changes in equity and represents the value of the share capital which relates to the class C shares. Prior to filing the articles of amendment, a subsidiary of the partnership contributed cash of $271 million to the company in exchange for a non-interest bearing demand promissory note of the company. The company issued approximately 73 million exchangeable shares and $50 million cash to the subsidiary of the partnership to settle the $271 million non-interest bearing demand promissory note along with the approximately $1.9 billion of non-interest bearing demand promissory notes issued in November 2021. The subsidiary of the partnership then distributed the exchangeable shares to Brookfield Business L.P. (“Holding LP”).

Immediately prior to the special distribution, the partnership received exchangeable shares through a distribution by Holding LP (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 the group) received approximately 35 million exchangeable shares and (ii) the partnership received approximately 38 million exchangeable shares, which it subsequently distributed to its unitholders pursuant to the special distribution. Immediately following the special distribution, (i) holders of LP Units, excluding Brookfield, held approximately 35.3% of the issued and outstanding exchangeable shares of the company, (ii) Brookfield and its affiliates held approximately 64.7% 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% voting interest in the company, and all of the issued and outstanding class C non-voting shares, or class C shares, of the company. The class C shares entitle the partnership to all of the residual value in the company after payment in full of the amount due to holders of exchangeable shares and class B shares.

Holders of exchangeable shares held an aggregate 25% voting interest in the company. Immediately after the special distribution, Brookfield, through its ownership of exchangeable shares, holds an approximate 16% voting interest in the company. Holders of exchangeable shares, excluding Brookfield, hold an approximate 9% aggregate voting interest in the company. Together, Brookfield and Brookfield Business Partners hold an approximate 91% voting interest in the company.

The following describes the agreements resulting from the special distribution:

(i)Class A exchangeable subordinate voting shares

At any time, holders of exchangeable shares shall have the right to exchange all or a portion of their exchangeable shares for one LP Unit of the partnership per exchangeable share held or its cash equivalent based on the NYSE closing price of one LP Unit on the date that the request for exchange is received. Due to their exchangeable features, the exchangeable shares are classified as liabilities.

The company 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.

The exchangeable shares of BBUC are listed on the NYSE and the TSX under the symbol “BBUC”.

(ii)Class B shares and class C shares

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 an LP Unit. Due to this cash redemption feature, both class B shares and class C shares will be classified as financial liabilities. However, class C shares, the most subordinated class of all common shares, meet certain qualifying criteria and will be presented as equity instruments given the narrow scope presentation exceptions existing in IAS 32, Financial instruments: presentation (“IAS 32”).

(iii)Credit facilities

The company entered into two credit agreements with Brookfield Business Partners, 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 the group. The credit facility will permit the company to borrow up to $1 billion from Brookfield Business Partners and the other will constitute an operating credit facility that will permit Brookfield Business Partners to borrow up to $1 billion from the 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.

(iv)Equity commitment

Brookfield Business Partners provided the company an equity commitment in the amount of $2 billion. The equity commitment may be called by the company in exchange for the issuance of a number of class C shares or preferred shares, as the case may be, to Brookfield Business Partners, 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 the 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 per share. The equity commitment will be available in minimum amounts of $10 million and the amount available under the equity commitment will be reduced permanently by the amount so called. Before funds may be called on the equity commitment, a number of conditions precedent must be met, including that Brookfield Business Partners continues to control the company and has the ability to elect a majority of the Board of Directors.

(v)Other arrangements with Brookfield

Wholly-owned subsidiaries of Brookfield provide management services to the company pursuant to the partnership’s existing master services agreement, or the Master Services Agreement. There was no change in how the base management fee and incentive distribution fees are calculated as a result of the special distribution. The company is responsible for reimbursing the partnership for its proportionate share of the total base management fee. The company’s proportionate share of the base management fee is calculated on the basis of the value of the company’s business relative to that of the partnership.

Further details of the Master Services Agreements are described in Note 21.

(vi)Credit guarantee agreement

A wholly-owned subsidiary of the company fully and unconditionally guaranteed the obligations of the partnership under the partnership’s $2,075 million bilateral credit facilities with global banks and its $1 billion revolving acquisition credit facility with Brookfield.

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES

(a)Statement of compliance

The unaudited interim condensed consolidated financial statements have been prepared in accordance with IAS 34, Interim financial reporting (“IAS 34”) as issued by the International Accounting Standards Board (“IASB”). Accordingly, certain information and footnote disclosures normally included in the annual audited financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the IASB, have been omitted or condensed.

The unaudited interim condensed consolidated financial statements were approved by the Board of Directors of the company and authorized for issue on May 13, 2022.

(b)Basis of presentation

These unaudited interim condensed consolidated financial statements should be read in conjunction with the company’s December 31, 2021 audited financial statements. The unaudited interim condensed consolidated financial statements have been prepared on a basis consistent with the accounting policies disclosed in the December 31, 2021 audited financial statements, unless otherwise noted.

The results reported in these unaudited interim condensed consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for an entire year. The policies set out below are consistently applied to all periods presented, unless otherwise noted.

All figures are presented in millions of U.S. dollars, unless otherwise noted.

The unaudited interim condensed consolidated financial statements have been prepared on the basis of historical cost. Cost is recorded based on the fair value of the consideration given in exchange for assets.

In advance of the special distribution, interests in the company’s operating businesses were transferred to the business on November 29, 2021 (“BBUC reorganization”). For the periods prior to the BBUC reorganization, the financial statements represent a combined carve-out of the assets, liabilities, revenues, expenses, and cash flows of the businesses that were contributed to the company. During this period, all of the assets and liabilities presented were controlled by the partnership. Subsequent to the BBUC reorganization, the assets and liabilities were transferred to the company at their carrying values. All intercompany balances, transactions, revenues and expenses within the 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 the company. These allocated general corporate costs are being recognized in general and administrative expenses on the consolidated statements of operating results. 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 the 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 the 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 the company been a stand-alone entity during the periods presented.

Subsequent to the BBUC reorganization, the company is no longer allocated general corporate expenses of the parent company.

Consolidation

These unaudited interim condensed consolidated financial statements include the accounts of the company and its subsidiaries, which are the entities over which the company has control. An investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Non-controlling interests in the equity of the company’s subsidiaries are shown separately in equity in the unaudited interim condensed consolidated statements of financial position.

Earnings per Share

The company’s basic and diluted earnings per share have not been presented in the interim financial statements. As outlined in Note 6, exchangeable shares 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 note for further details.

(i)Critical accounting judgements and measurement 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.

(c)Continuity of interests

As described above, the company was established on June 21, 2021 by the partnership. As part of the BBUC reorganization, the partnership contributed the businesses and a related receivable to the company in exchange for $1.9 billion of non-interest bearing demand promissory notes of the company and approximately 7 million common shares of the company. The partnership directly and indirectly controlled the company prior to the BBUC reorganization and continues to control the company subsequent to the BBUC reorganization through its interests in the company. As a result of this continuing common control, there is insufficient substance to justify a change in the measurement of the company. In accordance with the company’s and the partnership’s accounting policy, the company has reflected the businesses in the consolidated statements of financial position and financial performance using the partnership’s carrying values prior to the BBUC reorganization.

To reflect this continuity of interests, these unaudited interim condensed consolidated financial statements provide comparative information of the company for the periods prior to the BBUC reorganization, as previously reported by the partnership. The economic and accounting impact of contractual relationships created or modified in conjunction with the contribution of the businesses to the company have been reflected prospectively from the date of the contribution and have not been reflected in the results of operations or financial position of the company prior to the BBUC reorganization, as such items were in fact not created or modified prior thereto. Accordingly, the financial information for the periods prior to the BBUC reorganization is presented based on the historical financial information for the company as previously reported by the partnership. For the period after the BBUC reorganization, the results are based on the actual results of the company, including the impact of contractual relationships created or modified in association with the contribution of the businesses to the company. As the partnership holds all of the class C shares of the company, which is the only class of shares of the company presented as equity, net income and equity attributable to common equity have been allocated to the partnership prior to and after the BBUC reorganization.

(d)New accounting policies adopted

The company has applied certain new and revised standards issued by the IASB that are effective for the period beginning on or after January 1, 2022.

(i)Amendments to IAS 37 – Provisions, contingent liabilities and contingent assets (“IAS 37”)

These amendments specify which costs an entity needs to include when assessing whether a contract is onerous or loss-making. Costs that relate directly to a contract consist of both the incremental costs of fulfilling that contract and an allocation of other costs that relate directly to fulfilling contracts. The amendments apply to contracts for which the entity has not yet fulfilled all its obligations at the beginning of the annual reporting period in which the entity first applies the amendments. The entity shall recognize the cumulative effect of initially applying the amendments as an adjustment to the opening balance of retained earnings or other component of equity, as appropriate, at the date of initial application.

The company adopted these amendments on January 1, 2022, and the adoption did not have an impact on the company’s unaudited interim condensed consolidated financial statements.

(ii)Amendments to IFRS 3 – Business combinations (“IFRS 3”) – Reference to conceptual framework

The amendments add an exception to the recognition principle of IFRS 3 to avoid the issue of potential ‘day 2’ gains or losses arising for liabilities and contingent liabilities that would be within the scope of IAS 37 or IFRIC 21, Levies (“IFRIC 21”), if incurred separately. The exception requires entities to apply the criteria in IAS 37 or IFRIC 21, respectively, instead of the Conceptual Framework, to determine whether a present obligation exists at the acquisition date. At the same time, the amendments add a new paragraph to IFRS 3 to clarify that contingent assets do not qualify for recognition at the acquisition date.

The company adopted these amendments on January 1, 2022 and the adoption did not have an impact on the company’s unaudited interim condensed consolidated financial statements.

(iii)IFRS 9 – Financial instruments (“IFRS 9”) – Fees in the ‘10 per cent’ test for derecognition of financial liabilities

The amendment clarifies the fees that an entity includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability. These fees include only those paid or received between the borrower and the lender, including fees paid or received by either the borrower or lender on the other’s behalf. An entity applies the amendment to financial liabilities that are modified or exchanged on or after the beginning of the annual reporting period in which the entity first applies the amendment.

The company adopted this amendment on January 1, 2022 and the adoption did not have an impact on the company’s unaudited interim condensed consolidated financial statements.

(e)Future changes in accounting policies

(i)Amendments to IAS 1 – Presentation of Financial Statements (“IAS 1”)

The amendments clarify how to classify debt and other liabilities as current or non-current. The amendments to IAS 1 apply to annual reporting periods beginning on or after January 1, 2023. The company is currently assessing the impact of these amendments.

(ii)Amendment to IAS 12 – Income taxes (“IAS 12”)

The amendment clarifies that the initial recognition exception does not apply to the initial recognition of leases and decommissioning obligations. The amendment to IAS 12 applies to annual reporting periods beginning on or after January 1, 2023. The company is currently assessing the impact of these amendments.

There are currently no other future changes to IFRS with potential impact on the company.

NOTE 3 . ACQUISITION OF BUSINESSES

In March 2022, the company’s nuclear technology services operations closed the acquisition of a Spanish engineering and outage services business for cash consideration of $23 million, subject to purchase price adjustments, and accounted for the transaction as a business combination under IFRS 3.

NOTE 4. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following table provides the details of financial instruments and their associated financial instrument classifications as at March 31, 2022:


(US$ MILLIONS)
MEASUREMENT BASIS	FVTPL		FVOCI		Amortized cost		Total
Financial assets
Cash and cash equivalents	$	—	$	—	$	667	$	667
Accounts and other receivable, net (current and non-current)	—		—		2,862		2,862
Other assets (current and non-current) (1)	—		—		408		408
Financial assets (current and non-current) (2)	5		127		276		408
Total	$	5	$	127	$	4,213	$	4,345
Financial liabilities
Accounts payable and other (current and non-current) (2) (3)	$	2	$	56	$	4,372	$	4,430
Non-recourse borrowings in subsidiaries of the company (current and non-current)	—		—		5,759		5,759
Exchangeable and class B shares (4)	—		—		2,243		2,243
Total	$	2	$	56	$	12,374	$	12,432

____________________________________

(1)Excludes prepayments, other assets and assets held for sale of $531 million.

(2)Refer to Hedging Activities in Note 4(a) below.

(3)Excludes provisions, decommissioning liabilities, deferred revenues, work in progress and post-employment benefits of $2,914 million.

(4)Class C shares are also classified as financial liabilities due to their cash redemption feature. As discussed in Note 1(b), the class C shares meet certain qualifying criteria and are presented as equity. Refer to Note 20.

Included in cash and cash equivalents as at March 31, 2022 is $482 million of cash (December 31, 2021: $704 million) and $185 million of cash equivalents (December 31, 2021: $190 million).

The following table provides the allocation of financial instruments and their associated financial instrument classifications as at December 31, 2021:


(US$ MILLIONS)
MEASUREMENT BASIS	FVTPL		FVOCI		Amortized cost		Total
Financial assets
Cash and cash equivalents	$	—	$	—	$	894	$	894
Accounts and other receivable, net (current and non-current)	—		—		2,281		2,281
Other assets (current and non-current) (1)	—		—		427		427
Financial assets (current and non-current) (2)	1		84		264		349
Total (3)	$	1	$	84	$	3,866	$	3,951
Financial liabilities
Accounts payable and other (2) (4)	$	4	$	90	$	4,158	$	4,252
Non-recourse borrowings in subsidiaries of the company (current and non-current)	—		—		5,246		5,246

Total	$	4	$	90	$	9,404	$	9,498

____________________________________

(1)Excludes prepayments, other assets and assets held for sale of $493 million.

(2)Refer to Hedging Activities in Note 4(a) below.

(3)Total financial assets include $1,392 million of assets pledged as collateral.

(4)Excludes provisions, decommissioning liabilities, deferred revenues, work in progress and post-employment benefits of $2,939 million.

(a)Hedging activities

The company uses foreign exchange derivative contracts to manage foreign currency exposures arising from net investments in foreign operations. For the three months ended March 31, 2022, a pre-tax net loss of $12 million (March 31, 2021: pre-tax net gain of $22 million), was recorded in other comprehensive income for the effective portion of hedges of net investments in foreign operations. As at March 31, 2022, there was a derivative asset balance of $30 million (December 31, 2021: $30 million) and derivative liability balance of $31 million (December 31, 2021: $13 million) relating to derivative contracts designated as net investment hedges.

The company uses foreign exchange contracts and option contracts to hedge highly probable future transactions and interest rate contracts to hedge the cash flows on its floating rate borrowings. A number of these contracts are designated as cash flow hedges. For the three months ended March 31, 2022, a pre-tax net gain of $92 million (March 31, 2021: pre-tax net gain of $32 million), was recorded in other comprehensive income for the effective portion of cash flow hedges. As at March 31, 2022, there was a derivative asset balance of $97 million (December 31, 2021: $54 million) and a derivative liability balance of $24 million (December 31, 2021: $76 million) relating to the derivative contracts designated as cash flow hedges.

Other derivative instruments not designated in a hedging relationship are measured at fair value, with changes in fair value recognized in the unaudited interim condensed consolidated statements of operating results.

As at March 31, 2022, financial instruments measured as FVOCI comprised derivatives in effective hedge accounting relationships and financial instruments measured at FVTPL comprised derivatives not designated in hedging relationship. In accordance with the fair value hierarchy of financial instruments, the derivatives are considered Level 2. As at March 31, 2022, the company reported $132 million of derivative assets (December 31, 2021: $85 million) and $58 million of derivative liabilities (December 31, 2021: $94 million) .

(b) Offsetting of financial assets and liabilities

Financial assets and liabilities are offset with the net amount reported in the unaudited interim condensed consolidated statements of financial position where the company currently has a legally enforceable right to offset and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. As at March 31, 2022, $nil of financial assets (December 31, 2021: $nil) and $nil of financial liabilities (December 31, 2021: $nil) were offset in the unaudited interim condensed consolidated statements of financial position.

NOTE 5. FINANCIAL ASSETS


(US$ MILLIONS)	March 31, 2022		December 31, 2021
Current

Restricted cash	$	55	$	47
Derivative contracts	46		40
Loans and notes receivable	1		1

Total current	$	102	$	88
Non-current

Restricted cash	$	212	$	209
Derivative contracts	86		45
Loans and notes receivable	8		7

Total non-current	$	306	$	261

NOTE 6. EXCHANGEABLE SHARES, CLASS B SHARES AND CLASS C SHARES

The exchangeable shares and the class B shares are classified as liabilities due to their exchangeable and cash redemption features. Upon issuance, the exchangeable shares and the class B shares are recognized at their fair value. Subsequent to initial recognition, the exchangeable shares and the 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 LP Unit.

During the three months ended March 31, 2022, there were no exchangeable shares exchanged for LP Units. As at March 31, 2022, the exchangeable shares and the class B shares were remeasured to reflect the closing price of one LP Unit, $30.72 per share. Remeasurement gains or losses associated with these shares are recorded within remeasurement of exchangeable and class B shares in the unaudited interim condensed consolidated statements of operating results. There were no declared dividends on the outstanding exchangeable shares of the company during the three months ended March 31, 2022.

The following table provides a continuity schedule of outstanding exchangeable shares, and the class B shares along with the carrying value of the corresponding liability and remeasurement gains and losses.


(US$ MILLIONS, except as noted)	Exchangeable shares outstanding (Shares)	Class B shares outstanding (Shares)	Exchangeable shares and class B shares
Balance at January 1, 2022	—	—	$	—
Share issuance	73,088,510	1	2,077
Converted to class C shares	(80,425)	—	(2)

Remeasurement (gains) losses	—	—	168
Balance at March 31, 2022	73,008,085	1	$	2,243

Similar to the class B shares, the 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 20 for further details related to class C shares.

NOTE 7. ACCOUNTS AND OTHER RECEIVABLE, NET


(US$ MILLIONS)	March 31, 2022		December 31, 2021
Current, net	$	2,041	$	1,602
Non-current, net
Accounts receivable	67		46
Retainer on customer contract	71		61
Billing rights	683		572
Total non-current, net	$	821	$	679
Total	$	2,862	$	2,281

Non-current billing rights primarily represent unbilled rights arising at the company’s water and wastewater operations from revenues earned from the construction on public concession contracts classified as financial assets, which are recognized when there is an unconditional right to receive cash or other financial assets from the concession authority for the construction services.

The company’s construction operations has a retention balance, which comprised amounts that have been earned but held back until the satisfaction of certain conditions specified in the contract.

NOTE 8. INVENTORY, NET


(US$ MILLIONS)	March 31, 2022		December 31, 2021

Raw materials and consumables	$	262	$	245

Work in progress	138		139

Finished goods and other	181		196
Carrying amount of inventories	$	581	$	580

NOTE 9. OTHER ASSETS


(US$ MILLIONS)	March 31, 2022		December 31, 2021
Current
Work in progress (1)	$	408	$	427
Prepayments and other assets	302		274
Assets held for sale	—		1
Total current	$	710	$	702
Non-current

Prepayments and other assets	$	229	$	218
Total non-current	$	229	$	218

____________________________________

(1)See Note 15 for additional information.

NOTE 10. PROPERTY, PLANT AND EQUIPMENT


(US$ MILLIONS)	March 31, 2022		December 31, 2021
Gross carrying amount
Balance at beginning of period	$	4,820	$	4,917
Additions (cash and non-cash)	60		315
Dispositions	(19)		(155)
Acquisitions through business combinations	36		—
Transfers and assets reclassified as held for sale	—		(3)

Foreign currency translation and other	45		(254)
Balance at end of period	$	4,942	$	4,820
Accumulated depreciation
Balance at beginning of period	$	(784)	$	(599)
Depreciation/depletion expense	(80)		(341)
Dispositions	10		138
Transfers and assets reclassified as held for sale	—		(14)

Foreign currency translation and other	(11)		32
Balance at end of period	$	(865)	$	(784)
Net book value (1)	$	4,077	$	4,036

____________________________________

(1)Includes right-of-use assets of $409 million as at March 31, 2022 (December 31, 2021: $409 million).

NOTE 11. INTANGIBLE ASSETS


(US$ MILLIONS)	March 31, 2022		December 31, 2021
Gross carrying amount
Balance at beginning of period	$	5,087	$	4,990
Additions	86		290
Dispositions	—		(2)


Foreign currency translation	400		(191)
Balance at end of period	$	5,573	$	5,087
Accumulated amortization
Balance at beginning of period	$	(861)	$	(625)
Amortization expense	(69)		(262)
Dispositions	—		2

Foreign currency translation	(50)		24
Balance at end of period	$	(980)	$	(861)
Net book value	$	4,593	$	4,226

NOTE 12. GOODWILL


(US$ MILLIONS)	March 31, 2022		December 31, 2021
Balance at beginning of year	$	2,216	$	2,331
Acquisitions through business combinations	—		6




Foreign currency translation	59		(121)
Balance at end of period	$	2,275	$	2,216

NOTE 13. EQUITY ACCOUNTED INVESTMENTS


(US$ MILLIONS)	March 31, 2022		December 31, 2021
Balance at beginning of year	$	70	$	73


Acquisitions through business combinations	9		—
Additions	—		1

Share of net income	1		5

Distributions received	(1)		(4)
Foreign currency translation	9		(5)



Balance at end of period	$	88	$	70

NOTE 14. ACCOUNTS PAYABLE AND OTHER


(US$ MILLIONS)	March 31, 2022		December 31, 2021
Current:
Accounts payable	$	1,381	$	1,360
Accrued and other liabilities (1)	510		410
Lease liabilities	72		68
Financial liabilities (2)	129		126

Work in progress (3)	1,378		1,397
Provisions and decommissioning liabilities	352		355

Total current	$	3,822	$	3,716
Non-current:
Accounts payable	$	76	$	84
Accrued and other liabilities (1)	579		520
Lease liabilities	400		401
Financial liabilities (2)	1,823		1,787

Work in progress (3)	10		1
Provisions and decommissioning liabilities	635		682
Total non-current	$	3,523	$	3,475

____________________________________

(1)Includes post-employment benefits of $447 million ($11 million current and $436 million non-current) as at March 31, 2022, and $446 million ($14 million current and $432 million non-current) as at December 31, 2021.

(2)Includes financial liabilities of $1,784 million ($67 million current and $1,717 million non-current) as at March 31, 2022, and $1,732 million ($66 million current and $1,666 million non-current) as at December 31, 2021 related to the sale and leaseback of hospitals.

(3)See Note 15 for additional information.

Uncertain Tax Position

In May 2021, the Australian Taxation Office (“ATO”) provided the company’s healthcare services operations with conclusions of an internal ATO review related to a historical tax matter. The company’s healthcare services operations disagrees with the conclusions and lodged an objection with the ATO in August 2021. As at March 31, 2022, the ATO internal review was pending resolution. The company’s healthcare services operations is regularly subject to information requests and audit activities by revenue authorities. The outcome of these reviews depends upon various factors which may result in further tax payments or refunds of tax payments already made. Provisions for potential further payments will be recognized if a present obligation in relation to a tax liability is assessed as probable and can be reliably estimated and measured using the guidance in IFRIC 23.

NOTE 15. CONTRACTS IN PROGRESS


(US$ MILLIONS)	March 31, 2022		December 31, 2021
Contract costs incurred to date	$	21,674	$	21,290
Profit recognized to date (less recognized losses)	1,774		1,760
	23,448		23,050
Less: progress billings	(24,428)		(24,021)
Contract work in progress (liability)	$	(980)	$	(971)
Comprising:
Amounts due from customers – work in progress	$	408	$	427
Amounts due to customers – creditors	(1,388)		(1,398)
Net work in progress	$	(980)	$	(971)

NOTE 16. BORROWINGS

Total non-recourse borrowings in subsidiaries of the company as at March 31, 2022 were $5,759 million (December 31, 2021: $5,246 million).

Some of the company’s subsidiaries have credit facilities in which they borrow and repay on a monthly basis. These movements have been shown on a net basis in the unaudited interim condensed consolidated statements of cash flow.

The company has financing arrangements within its operating businesses that trade in public markets or are held at major financial institutions. The financing arrangements are primarily composed of term loans, credit facilities, and notes and debentures which are subject to fixed or floating interest rates. Most of these borrowings are not subject to financial maintenance covenants, however, some are subject to fixed charge coverage, leverage ratios and minimum equity or liquidity covenants.

The company’s operations are currently in compliance with all material covenant requirements, and the company continues to work with its subsidiaries to monitor performance against such covenant requirements.

NOTE 17. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Attributable to Brookfield Business Partners


(US$ MILLIONS)	Foreign currency translation		Other (1)		Accumulated other comprehensive income (loss)
Balance as at January 1, 2022	$	(440)	$	32	$	(408)
Other comprehensive income (loss)	85		20		105


Balance as at March 31, 2022	$	(355)	$	52	$	(303)

____________________________________

(1)Represents net investment hedges, cash flow hedges and other reserves.


(US$ MILLIONS)	Foreign currency translation		Other (1)		Accumulated other comprehensive income (loss)
Balance as at January 1, 2021	$	(371)	$	(84)	$	(455)
Other comprehensive income (loss)	(42)		17		(25)


Balance as at March 31, 2021	$	(413)	$	(67)	$	(480)

____________________________________

(1)Represents net investment hedges, cash flow hedges and other reserves.

NOTE 18. DIRECT OPERATING COSTS

The company has no key employees or directors and does not remunerate key management personnel. Details of the allocations of costs incurred by Brookfield on behalf of the company are disclosed in Note 21. Key decision makers of the company are all employees of the ultimate parent company or its subsidiaries, which provides management services under the Master Services Agreement with Brookfield.

Direct operating costs are costs incurred to earn revenues and include all attributable expenses. The following table presents direct operating costs by nature for the three months ended March 31, 2022 and 2021.


	Three Months Ended March 31,
(US$ MILLIONS)	2022		2021
Inventory costs	$	247	$	391
Subcontractor and consultant costs	681		740
Concession construction materials and labor costs	79		33
Depreciation and amortization expense	149		150
Compensation	626		638
Other direct costs	243		223
Total	$	2,025	$	2,175

Expected credit loss provisions on financial assets are included within other direct costs.

NOTE 19. REVENUES

(a)Revenues by type

The table below summarizes the company’s segment revenues by type of revenue for the three months ended March 31, 2022:


	Three Months Ended March 31, 2022
(US$ MILLIONS)	Business services		Infrastructure services		Industrials		Total
Revenues by type
Revenues from contracts with customers	$	1,228	$	799	$	204	$	2,231
Other revenues	20		—		—		20
Total revenues	$	1,248	$	799	$	204	$	2,251

The table below summarizes the company’s segment revenues by type of revenue for the three months ended March 31, 2021:


	Three Months Ended March 31, 2021
(US$ MILLIONS)	Business services		Infrastructure services		Industrials		Total
Revenues by type
Revenues from contracts with customers	$	1,398	$	852	$	118	$	2,368
Other revenues	1		—		—		1
Total revenues	$	1,399	$	852	$	118	$	2,369

(b)Timing of recognition of revenues from contracts with customers

The table below summarizes the company’s segment revenues by timing of revenue recognition for the total revenues from contracts with customers for the three months ended March 31, 2022:


	Three Months Ended March 31, 2022
(US$ MILLIONS)	Business services		Infrastructure services		Industrials		Total
Timing of revenue recognition
Goods and services provided at a point in time	$	444	$	348	$	124	$	916
Services transferred over a period of time	784		451		80		1,315
Total revenues from contracts with customers	$	1,228	$	799	$	204	$	2,231

The table below summarizes the company’s segment revenues by timing of revenue recognition for the total revenues from contracts with customers for the three months ended March 31, 2021:


	Three Months Ended March 31, 2021
(US$ MILLIONS)	Business services		Infrastructure services		Industrials		Total
Timing of revenue recognition
Goods and services provided at a point in time	$	498	$	423	$	84	$	1,005
Services transferred over a period of time	900		429		34		1,363
Total revenues from contracts with customers	$	1,398	$	852	$	118	$	2,368

The table below summarizes the company’s segment revenues by geography for revenues from contracts with customers for the three months ended March 31, 2022:


	Three Months Ended March 31, 2022
(US$ MILLIONS)	Business services		Infrastructure services		Industrials		Total
United Kingdom	$	160	$	46	$	—	$	206
United States of America	—		445		—		445
Europe	—		215		—		215
Australia	1,040		—		—		1,040
Canada	28		10		—		38
Brazil	—		2		204		206
Other	—		81		—		81
Total revenues from contracts with customers	$	1,228	$	799	$	204	$	2,231
Other revenues	20		—		—		20
Total revenues	$	1,248	$	799	$	204	$	2,251

The table below summarizes the company’s segment revenues by geography for revenues from contracts with customers for the three months ended March 31, 2021:


	Three Months Ended March 31, 2021
(US$ MILLIONS)	Business services		Infrastructure services		Industrials		Total
United Kingdom	$	271	$	52	$	—	$	323
United States of America	—		377		—		377
Europe	—		240		—		240
Australia	1,040		—		—		1,040

Brazil	—		4		118		122
Other	87		179		—		266
Total revenues from contracts with customers	$	1,398	$	852	$	118	$	2,368
Other revenues	1		—		—		1
Total revenues	$	1,399	$	852	$	118	$	2,369

NOTE 20. EQUITY

The following table provides a continuity of the company’s outstanding common equity:


	Class C shares
(US$ MILLIONS, except as noted)	Shares outstanding (Shares)	Share capital
Balance at January 1, 2022	—	$	—
Share issuance	25,853,695	735
Converted from class A shares	80,425	2
Balance at March 31, 2022	25,934,120	$	737

In connection with the special distribution, the company issued approximately 73 million exchangeable shares, 1 class B share and approximately 26 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 6, for further details related to exchangeable shares and class B shares.

The value of share capital, which relates to the class C shares, is determined based on the opening price of an LP Unit, $28.41 on March 15, 2022, the date of special distribution.

NOTE 21. RELATED PARTY TRANSACTIONS

In the normal course of operations, the company entered into the transactions below with related parties. The ultimate parent of the company is Brookfield. Other related parties of the company represent Brookfield’s subsidiaries and operating entities.

Since inception, the partnership has had a management agreement (the “Master Services Agreement”) with a subsidiary of Brookfield (the “Service Provider”).

Pursuant to the Master Services Agreement, on a quarterly basis, the partnership pays a base management fee to the Service Provider equal to 0.3125% per quarter (1.25% annually) of the market value of the partnership. For purposes of calculating the base management fee, the market value of the partnership is equal to the aggregate value of all the outstanding LP Units (assuming full conversion of the redemption-exchange units into LP Units), plus the value of securities of the other recipients of services under the Master Services Agreement (including exchangeable shares), plus all outstanding debt with recourse to recipients of services under the Master Services Agreement, less all cash held by such entities.

Prior to the BBUC reorganization, the company’s consolidated financial statements include general corporate expenses of the parent company which were not historically allocated to the company’s operations. These expenses relate to management fees payable to Brookfield. These allocated expenses have been included as appropriate in the company’s consolidated statements 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 the company’s consolidated 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 the company been a standalone business during the periods presented as this would depend on multiple factors, including organizational structure and infrastructure.

Subsequent to the BBUC reorganization, the company is no longer allocated general corporate expenses of the parent company. Following the completion of the special distribution, the functions which the allocated general corporate expenses related to will be provided through the amended and restated master services agreement, among the Service Recipients (as defined therein), Brookfield, the Service Providers (as defined therein) and others. The expense related to the services received under the Master Services Agreement has been recorded as part of general and administrative expenses in the unaudited interim condensed consolidated statements of operating results.

The company reimburses the partnership for its proportionate share of the base management fee. The base management fee allocated to the company for the three months ended March 31, 2022 was $1 million.

Brookfield has entered into indemnity agreements with the company related to certain projects in the Middle East region. Under these indemnity agreements, Brookfield has agreed to indemnify or refund the company, as appropriate, for the receipt of payments relating to such projects.

During the three months ended March 31, 2022, the company entered into a commitment agreement with Brookfield whereby Brookfield agreed to subscribe for up to $1 billion of preferred equity securities of the company and the partnership. The preferred equity securities bear fixed preferential cumulative dividends or distributions at 6% per annum and are redeemable at the option of Brookfield to the extent the company completes asset sales, financings or equity issuances. As at March 31, 2022, the amount subscribed from Brookfield was $nil.

As discussed in Note 1(b), prior to the special distribution, the company entered into two credit agreements with Brookfield Business Partners, 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 the group. The credit facility will permit the company to borrow up to $1 billion from Brookfield Business Partners and the other will constitute an operating credit facility that will permit Brookfield Business Partners to borrow up to $1 billion from the 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.

In connection with the special distribution, Brookfield Business Partners provided the company an equity commitment in the amount of $2 billion. The equity commitment may be called by the company in exchange for the issuance of a number of class C shares or preferred shares, as the case may be, to Brookfield Business Partners, 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 the 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, by $25.00 per share. The equity commitment will be available in minimum amounts of $10 million and the amount available under the equity commitment will be reduced permanently by the amount so called. Before funds may be called on the equity commitment, a number of conditions precedent must be met, including that Brookfield Business Partners continues to control the company and has the ability to elect a majority of the Board of Directors.

The following table summarizes other transactions and balances the company has entered into with related parties:


	Three Months Ended March 31,
(US$ MILLIONS)	2022		2021
Transactions during the period
Revenues (1)	$	71	$	152

____________________________________

(1)Within the business services segment, the company provides construction services to affiliates of Brookfield.


(US$ MILLIONS)	March 31, 2022		December 31, 2021
Balances at end of period

Accounts and other receivable, net (1)	$	327	$	106
Accounts payable and other	32		5
Loan payable to Brookfield Business Partners (2)	—		1,860

____________________________________

(1)Includes a $221 million note receivable from the partnership bearing interest at a rate of LIBOR plus 250 bps.

(2)On November 29, 2021, the company issued a non-interest bearing demand promissory note of $1,860 million to a subsidiary of the partnership in connection with the BBUC reorganization, which has been fully repaid as of March 31, 2022. See Note 1 for additional details.

NOTE 22. DERIVATIVE FINANCIAL INSTRUMENTS

The company’s activities expose it to a variety of financial risks, including market risk, currency risk, interest rate risk and other price risks. The company and its subsidiaries selectively use derivative financial instruments principally to manage these risks.

The aggregate fair values of the company’s derivative financial instruments are as follows:


	March 31, 2022				December 31, 2021
(US$ MILLIONS)	Financial Asset		Financial Liability		Financial Asset		Financial Liability
Foreign exchange contracts	$	66	$	40	$	65	$	22

Interest rate derivatives	67		18		20		72



Total	$	133	$	58	$	85	$	94
Total current	$	46	$	9	$	40	$	19
Total non-current	$	87	$	49	$	45	$	75

NOTE 23. SEGMENT INFORMATION

The company’s operations are organized into three operating segments which are regularly reviewed by the Chief Operating Decision Makers (“CODM”) for the purpose of assessing its performance. The key measure used by the CODM in assessing the performance of the company is adjusted net operating income. Adjusted net operating income is calculated as revenues less direct operating costs (excluding depreciation and amortization expense), less general and administrative expenses of the operating businesses.

The tables below provide each segment’s results in the format that the CODM organizes reporting segments to assess performance. The tables below reconcile to the IFRS unaudited interim condensed consolidated financial statements.


	Three Months Ended March 31, 2022

(US$ MILLIONS)	Business services		Infrastructure services		Industrials		Total
Revenues	$	1,248	$	799	$	204	$	2,251
Direct operating costs (1)	(1,153)		(580)		(143)		(1,876)
General and administrative expenses (2)	(27)		(33)		(6)		(66)
Adjusted net operating income	68		186		55		309
Unallocated corporate expenses (2)							(2)
Depreciation and amortization expense (1)							(149)
Interest income (expense), net							(107)
Equity accounted income (loss), net							1


Remeasurement of exchangeable and class B shares							(168)
Other income (expense), net							(43)
Income (loss) before income tax							(159)
Income tax (expense) recovery:
Current							(16)
Deferred							12
Net income (loss)							$	(163)
Attributable to:
Brookfield Business Partners							(164)

Non-controlling interests							1
Net income (loss)							$	(163)

____________________________________

(1)The sum of these amounts equates to direct operating costs of $2,025 million as per the unaudited interim consolidated statements of operating results.

(2)The sum of these amounts equates to general and administrative expenses of $68 million as per the unaudited interim consolidated statements of operating results.


	Three Months Ended March 31, 2021

(US$ MILLIONS)	Business services		Infrastructure services		Industrials		Total
Revenues	$	1,399	$	852	$	118	$	2,369
Direct operating costs (1)	(1,291)		(663)		(71)		(2,025)
General and administrative expenses (2)	(22)		(27)		(7)		(56)
Adjusted net operating income	86		162		40		$	288
Unallocated corporate expenses (2)							(6)
Depreciation and amortization expense (1)							(150)
Interest income (expense), net							(99)
Equity accounted income (loss), net							1


Remeasurement of exchangeable and class B shares							—
Other income (expense), net							11
Income (loss) before income tax							45
Income tax (expense) recovery:
Current							(23)
Deferred							14
Net income (loss)							$	36
Attributable to:
Brookfield Business Partners							11

Non-controlling interests							25
Net income (loss)							$	36

____________________________________

(1)The sum of these amounts equates to direct operating costs of $2,175 million as per the unaudited interim consolidated statements of operating results.

(2)The sum of these amounts equates to general and administrative expenses of $62 million as per the unaudited interim consolidated statements of operating results.

Segment Assets

For the purpose of monitoring segment performance and allocating resources between segments, the CODM monitors assets attributable to each segment.

The following is tables summarize the company’s assets by reportable operating segment as at March 31, 2022 and December 31, 2021:


	As at March 31, 2022
(US$ MILLIONS)	Business services		Infrastructure services		Industrials		Other		Total
Total assets	$	7,425	$	5,567	$	3,635	$	221	$	16,848


	As at December 31, 2021
(US$ MILLIONS)	Business services		Infrastructure services		Industrials		Other		Total
Total assets	$	7,122	$	5,762	$	3,036	$	—	$	15,920

NOTE 24. SUPPLEMENTAL CASH FLOW INFORMATION


	Three Months Ended March 31,
(US$ MILLIONS)	2022		2021
Interest paid	$	76	$	68
Income taxes paid (received)	4		6

Amounts paid and received for interest were reflected as operating cash flows in the unaudited interim condensed consolidated statements of cash flow.

Details of “Changes in non-cash working capital, net” on the unaudited interim condensed consolidated statements of cash flow are as follows:


	Three Months Ended March 31,
(US$ MILLIONS)	2022		2021
Accounts receivable	$	(25)	$	(49)
Inventory	—		90
Prepayments and other	(33)		(58)
Accounts payable and other	(88)		(193)
Changes in non-cash working capital, net	$	(146)	$	(210)

NOTE 25. SUBSEQUENT EVENTS

(a)Distribution

On May 5, 2022, the Board of Directors declared a quarterly dividend in the amount of $0.0625 per exchangeable share, payable on June 30, 2022 to shareholders of record as at the close of business on May 31, 2022.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Introduction

The following Management’s Discussion and Analysis (“MD&A”) is the responsibility of management of Brookfield Business Corporation (our “company”). This MD&A is dated May 13, 2022 and has been approved by the Board of Directors of our company for issuance as of that date. The Board of Directors carries out its responsibility for review of this document principally through its audit committee, comprised exclusively of independent directors. The audit committee reviews and, prior to its publication, approves this MD&A, pursuant to the authority delegated to it by the Board of Directors. The terms “we,” “us” and “our” refer to Brookfield Business Corporation, and our company’s direct and indirect operating entities as a group. This MD&A should be read in conjunction with our company’s most recently issued annual financial statements. Additional information is available on our website at bbu.brookfield.com/bbuc/overview, on SEDAR’s website at www.sedar.com and on EDGAR’s website at www.sec.gov.

The class A exchangeable subordinate voting shares (each, an “exchangeable share”) of our company are structured with the intention of being economically equivalent to the non-voting limited partnership units (“LP Units”) of Brookfield Business Partners L.P. (the “partnership”, the “parent company” or, collectively with its subsidiaries, but excluding our company, “Brookfield Business Partners”) (NYSE: BBU; TSX: BBU.UN). We believe economic equivalence is achieved through targeting identical dividends and distributions on the exchangeable shares and the partnership’s LP Units and each exchangeable share being exchangeable at the option of the holder for one LP Unit of the partnership at any time. Given the economic equivalence, we expect that the market price of the exchangeable shares will be significantly impacted by the market price of the partnership’s LP Units and the combined business performance of our company and Brookfield Business Partners as a whole. In addition to carefully considering the disclosure made in this document, shareholders are strongly encouraged to carefully review the partnership’s periodic reporting. The partnership is required to file reports, including annual reports on Form 20-F, and other information with the United States Securities and Exchange Commission (the “SEC”). The partnership’s SEC filings are available to the public from the SEC’s website at http://www.sec.gov. Copies of documents that have been filed with the Canadian securities authorities can be obtained at www.sedar.com. Information about the partnership, including its SEC filings, is also available on its website at https://bbu.brookfield.com. The information found on, or accessible through, https:// bbu.brookfield.com is not incorporated into and does not form a part of this MD&A.

In addition to historical information, this MD&A contains forward-looking statements. Readers are cautioned that these forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements. See “Cautionary Statements Regarding Forward-Looking Statements”.

Cautionary Statement Regarding Forward-looking Statements

This MD&A contains “forward-looking information” within the meaning of Canadian securities laws and “forward-looking statements” within the meaning of applicable Canadian and U.S. securities laws. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, include statements regarding the operations, business, financial condition, expected financial results, performance, prospects, opportunities, priorities, targets, goals, ongoing objectives, strategies and outlook of our company, as well as the outlook for North American and international economies for the current period and subsequent periods, and include words such as “expects”, “anticipates”, “plans”, “believes”, “estimates”, “seeks”, “intends”, “targets”, “projects”, “forecasts”, “views”, “potential”, “likely”, or negative versions thereof and other similar expressions, or future or conditional verbs such as “may”, “will”, “should”, “would” and “could”.

Although we believe that our anticipated future results, performance or achievements expressed or implied by the forward-looking statements and information are based upon reasonable assumptions and expectations, investors and other readers should not place undue reliance on forward-looking statements and information because they involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, which may cause the actual results, performance or achievements of our company to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements and information.

Factors that could cause actual results to differ materially from those contemplated or implied by forward-looking statements include, but are not limited to:

•the impact or unanticipated impact of general economic, political and market factors in the countries in which we do business; including as a result of the ongoing novel coronavirus (SARS-CoV-2) pandemic and any SARS-CoV-2 variants (collectively, “COVID-19”);

•the behavior of financial markets, including fluctuations in interest and foreign exchange rates;

•global equity and capital markets and the availability of equity and debt financing and refinancing within these markets;

•strategic actions including dispositions;

•the ability to complete and effectively integrate acquisitions into existing operations and the ability to attain expected benefits;

•changes in accounting policies and methods used to report financial condition (including uncertainties associated with critical accounting assumptions and estimates);

•the ability to appropriately manage human capital;

•the effect of applying future accounting changes;

•business competition;

•operational and reputational risks;

•technological change;

•changes in government regulation and legislation within the countries in which we operate;

•governmental investigations;

•litigation;

•changes in tax laws;

•ability to collect amounts owed;

•catastrophic events, such as earthquakes, hurricanes and pandemics/epidemics;

•the possible impact of international conflicts, wars and related developments including Russia’s military operation in Ukraine, terrorist acts and cyber terrorism; and

•other risks and factors detailed from time to time in our documents filed with the securities regulators in Canada and the United States including in the “Risk Factors” section included in our Management Discussion and Analysis of Financial Condition and Results of Operations in our Form 20-F for the year ended December 31, 2021 (“2021 Annual Report”).

In addition, our future results may be impacted by various government-mandated economic restrictions resulting from the ongoing COVID-19 pandemic and the related global reduction in commerce and travel and substantial volatility in stock markets worldwide, which may negatively impact our revenues, affect our ability to identify and complete future transactions, impact our liquidity position and result in a decrease of cash flows and impairment losses and/or revaluations on our investments and assets, and therefore we may be unable to achieve our expected returns. See “Risks Associated with the COVID-19 Pandemic” in the “Risk Factors” section included in our 2021 Annual Report.

We caution that the foregoing list of important factors that may affect future results is not exhaustive. When relying on our forward-looking statements and information, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements or information, whether written or oral, that may be as a result of new information, future events or otherwise.

These risk factors and others are discussed in detail under the heading “Risk Factors” in our 2021 Annual Report. New risk factors may arise from time to time and it is not possible to predict all of those risk factors or the extent to which any factor or combination of factors may cause actual results, performance or achievements of the partnership to be materially different from those contained in forward-looking statements or information. Given these risks and uncertainties, investors and other readers should not place undue reliance on forward-looking statements or information as a prediction of actual results. Although the forward-looking statements and information contained in this MD&A are based upon what we believe to be reasonable assumptions, we cannot assure investors that actual results will be consistent with these forward-looking statements and information, particularly in light of government mandated economic restrictions resulting from the COVID-19 pandemic in certain jurisdictions in which we operate. These forward-looking statements and information are made as of the date of this MD&A.

For a more comprehensive list of risks and uncertainties, please refer to our 2021 Annual Report under the heading “Risk Factors” available on SEDAR at www.sedar.com and EDGAR at www.sec.gov.

Continuity of Interests

On November 29, 2021, a subsidiary of the partnership transferred its direct and indirect interests in healthcare services operations, constructions operations, water and wastewater operations, and a portion of its indirect interest in nuclear technology services operations (collectively, the “Business”) to our company (the “BBUC reorganization”). The partnership directly and indirectly controlled the Business prior to November 29, 2021 and will continue to control the Business through its interests in our company. Accordingly, our company and its financial position and results of operations have been reflected using the partnership’s historical carrying values.

To reflect this continuity of interests, this MD&A provides comparative information of our company for the periods prior to the acquisition of the Business. Accordingly, the financial information for the periods prior to November 29, 2021 are presented based on the historical financial information for our company as previously reported by the partnership. For the period after acquisition of the Business from the partnership, the results are based on the actual results of our company. As the partnership holds all of the class C shares of our company, net income and equity attributable to common equity have been allocated to the partnership prior to and after the acquisition of the Business.

Basis of Presentation

The unaudited interim condensed consolidated financial statements of the company have been prepared in accordance with IFRS as issued by the IASB. The unaudited interim condensed consolidated financial statements are prepared on a going concern basis and have been presented in U.S. dollars rounded to the nearest million unless otherwise indicated. The unaudited interim condensed consolidated financial statements include the accounts of our company and its consolidated subsidiaries, which are the entities over which our company has control.

For the periods prior to the BBUC Reorganization, the financial statements include a combined carve-out of the assets, liabilities, revenues, expenses, and cash flows of the Business that were contributed to our company effective November 29, 2021. Effective November 29, 2021, 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 acquisition of the Business, our company is no longer allocated general corporate expenses of the partnership. In connection with the completion of the special distribution, the Master Services Agreement was amended to contemplate our company receiving management services comparable to the services currently provided to the partnership by the Service Providers. Our company is responsible for reimbursing the partnership for its proportionate share of the base management fee paid for by the partnership pursuant to the Master Services Agreement.

Overview of our Company

Our company is a Canadian corporation established by Brookfield Business Partners as an alternative vehicle for investors who prefer investing in our group’s operations through a corporate structure. Each exchangeable share of our company is exchangeable at the option of the holder for one LP Unit of the partnership or its cash equivalent and structured with the intention of providing an economic return equivalent to one LP Unit. Through our operating subsidiaries, we own and operate high-quality services and industrial operations that benefit from barriers to entry and/or are low-cost producers. We seek to build value by pursuing an operations-oriented approach to enhancing cash flows and opportunistically recycling capital to grow our existing operations and make new acquisitions. We strive to ensure that all our operations have a clear, concise business strategy built on competitive advantages, while focusing on profitability and the sustainability of cash flows.

Operating Segments

We have three operating segments which are organized based on how management views business activities within particular sectors:

i.Business services, including healthcare services and construction operations;

ii.Infrastructure services, including nuclear technology services; and

iii.Industrials, including water and wastewater operations.

The tables below provide a breakdown of total assets of $16.8 billion as at March 31, 2022 and revenues of $2.3 billion for the three months ended March 31, 2022 by operating segment and region.


Operating segments	Assets		Revenues
	As at		For the Three Months Ended
(US$ MILLIONS)	March 31, 2022		March 31, 2022
Business services	$	7,425	$	1,248
Infrastructure services	5,567		799
Industrials	3,635		204
Other	221		—
Total	$	16,848	$	2,251


Regions	Assets		Revenues
	As at		For the Three Months Ended
(US$ MILLIONS)	March 31, 2022		March 31, 2022
United Kingdom	$	1,096	$	206
United States of America	3,827		445
Europe	1,092		215
Australia	6,057		1,060
Canada	341		38
Brazil	3,647		206
Other	788		81
Total	$	16,848	$	2,251

Business services

Our healthcare services operations are a leading private hospital operator and provider of essential social infrastructure to the Australian healthcare system. We operate 41 private hospitals, providing doctors and patients with access to operating theaters, nursing staff, accommodations, and other critical care and consumables primarily in support of elective surgery activity. The majority of our healthcare services operations’ revenues are generated from private health insurance funds and government-related bodies under Hospital Purchaser-Provider Agreements. These revenues are generally based on a pricing schedule set out in the agreements and is either on a case payment or per diem basis, depending on the type of service provided.

Our construction operations are a global contractor with a focus on high-quality construction, primarily on large scale and complex landmark buildings and social infrastructure. Construction projects are generally delivered through contracts for design, program, procurement and construction for a defined price. Most construction activity is typically subcontracted to reputable specialists whose obligations generally mirror those contained within the main construction contract. A smaller part of the business is construction management, whereby we charge a fee for coordination of the sub-trades employed by the client. We are typically required to provide warranties for completed works, either as specifically defined in a client contract or required under local regulatory requirements. We issue bank guarantees, insurance bonds or cash retentions to clients and receive guarantees and/or cash retentions from subcontractors as security against their performance.

We recognize revenues when it is highly probable that economic benefits will flow to the business, when it can be reliably measured, and collection is assured. Revenues are recognized over time as performance obligations are satisfied, by reference to the stage of completion of the contract activity at the reporting date, measured as the proportion of contract costs incurred for work performed to date relative to the estimated total contract costs. A large portion of construction revenues and costs are earned and incurred in Australia and the U.K. and may be impacted by the fluctuations in the Australian dollar and British pound. A significant portion of our revenues are generated from large projects, and the results from our construction operations can fluctuate quarterly and annually, depending on the level of work during a period. Our business is impacted by the general economic conditions and economic growth of the particular region in which we provide construction services.

Infrastructure services

Our nuclear technology services operations are a leading supplier of services to the global nuclear power generation industry that generates a significant majority of its earnings from regularly recurring refueling and maintenance services. We generate revenues from our nuclear technology services operations through the entire life of the nuclear power plant. Our products and services include mission-critical fuel, ongoing maintenance services, engineering solutions, instrumentation and control systems and manufactured components. We also participate in the decontamination, decommissioning and remediation of power plant sites, primarily at the end of their useful lives, as well as provide technology, equipment, and engineering and design services to new power plants on a global basis.

On March 15, 2022, our nuclear technology services operations entered into an agreement to acquire a services business which provides technical services to the nuclear sector and select strategic adjacencies. The acquisition is expected to close during 2022.

Most of the profitability from our nuclear technology services operations is generated by the core operating plants business, driven by regularly recurring refueling and maintenance services. While seasonal in nature, outage periods and services provided are required by regulatory standards, creating a stable business demand. We expect there will be some inter-year and intra-year seasonality, given the planned timing of the outage cycles at customer plants. The majority of fuel operations’ revenue is generated as we make shipments to customers ahead of the spring and fall when power plants go offline to perform maintenance and replenish their fuel. In addition to performing recurring services, we deliver upgrades and perform event-driven work for operating plants; manufacture equipment and instrumentation and controls for new power plants. We also perform decontamination, decommissioning and remediation to plants as they cease operations and come offline.

Industrials

Our water and wastewater operations, in Brazil provide water and wastewater collection, treatment and distribution services to a broad range of residential and governmental customers through long-term, inflation-adjusted concessions, private public partnership and take-or-pay contracts. We provide services that benefit more than 16 million people in over 100 municipalities in Brazil.

OPERATING RESULTS

Review of Consolidated Results of Operations

The table below summarizes our results of operations for the three months ended March 31, 2022 and 2021.


	Three Months Ended March 31,
(US$ MILLIONS)	2022		2021
Revenues	$	2,251	$	2,369
Direct operating costs	(2,025)		(2,175)
General and administrative expenses	(68)		(62)
Interest income (expense), net	(107)		(99)
Equity accounted income (loss), net	1		1


Remeasurement of exchangeable and class B shares	(168)		—
Other income (expense), net	(43)		11
Income (loss) before income tax	(159)		45
Income tax (expense) recovery
Current	(16)		(23)
Deferred	12		14
Net income (loss)	$	(163)	$	36
Attributable to:
Brookfield Business Partners	$	(164)	$	11
Non-controlling interests	1		25
Net income (loss)	$	(163)	$	36

Comparison of the three months ended March 31, 2022 and 2021

For the three months ended March 31, 2022, net loss was $163 million, with $164 million of net loss attributable to Brookfield Business Partners. For the three months ended March 31, 2021, net income was $36 million, with $11 million of net income attributable to Brookfield Business Partners. The net loss in the current quarter was primarily due to revaluation losses recognized on exchangeable and class B shares which are classified as liabilities in accordance with IFRS.

Revenues

For the three months ended March 31, 2022, revenues decreased by $118 million to $2,251 million, compared to $2,369 million for the three months ended March 31, 2021. Revenues from our business services segment decreased by $151 million, primarily due to lower contributions from our construction operations due to the impact of severe wet weather on our operations in Australia which more than offset strong contributions from our operations in the U.K., and reduced contributions from our healthcare services operations as a result of government mandated restrictions on elective surgeries in Victoria and New South Wales. Admissions at our hospitals are recovering as restrictions were lifted in early March. Revenues from our infrastructure services segment decreased by $53 million due to lower contribution from our nuclear technology services operations which was partially offset by an increase in revenues in our industrials segment, which increased by $86 million, primarily due to contributions from the recently acquired Maceiό concession and higher pricing.

Direct operating costs

For the three months ended March 31, 2022, direct operating costs decreased by $150 million to $2,025 million, compared to $2,175 million for the three months ended March 31, 2021. The decrease was primarily due to lower activity at our construction operations and healthcare services operations combined with ongoing cost saving initiatives at our nuclear technology services operations. The increase was partially offset by higher costs at our water and wastewater operations.

General and administrative expenses

For the three months ended March 31, 2022, general and administrative, or G&A expenses decreased by $6 million to $68 million, compared to $62 million for the three months ended March 31, 2021.

Summary of Results

Total revenues and net income (loss) attributable to Brookfield Business Partners for the eight most recent quarters were as follows:























	2022		2021								2020
(US$ MILLIONS)	Q1		Q4		Q3		Q2		Q1		Q4		Q3		Q2
Revenues	$	2,251	$	2,488	$	2,340	$	2,452	$	2,369	$	2,420	$	2,453	$	2,322
















Net income (loss) attributable to Brookfield Business Partners	(164)		36		1		(12)		11		3		(24)		(64)

Revenues and direct operating costs vary from quarter to quarter primarily due to acquisitions and dispositions of businesses, fluctuations in foreign exchange rates, business and economic cycles, weather and seasonality, broader economic factors and commodity market volatility. The majority of cyclical fluctuations are driven by our nuclear technology services operations which generates the majority of its revenues during the fall and spring when power plants go offline to perform maintenance and replenish their fuel.

Review of Consolidated Financial Position

The following is a summary of the unaudited interim condensed consolidated statements of financial position as at March 31, 2022 and December 31, 2021:


(US$ MILLIONS)	March 31, 2022		December 31, 2021
Assets
Cash and cash equivalents	$	667	$	894
Financial assets	408		349
Accounts and other receivable, net	2,862		2,281
Inventory, net	581		580
Other assets	939		920

Property, plant and equipment	4,077		4,036
Deferred income tax assets	358		348
Intangible assets	4,593		4,226
Equity accounted investments	88		70
Goodwill	2,275		2,216
Total assets	$	16,848	$	15,920
Liabilities and equity
Liabilities
Accounts payable and other	$	7,345	$	7,191
Loan payable to Brookfield Business Partners	—		1,860


Non-recourse borrowings in subsidiaries of the company	5,759		5,246
Exchangeable and class B shares	2,243		—
Deferred income tax liabilities	544		487
	$	15,891	$	14,784
Equity
Brookfield Business Partners	$	(673)	$	(516)
Non-controlling interests	1,630		1,652
	957		1,136
Total liabilities and equity	$	16,848	$	15,920

Financial assets

Financial assets increased by $59 million to $408 million as at March 31, 2022, compared to $349 million as at December 31, 2021. The balance comprised loans and notes receivable, derivative contracts, restricted cash, and other financial assets. The increase was primarily due to hedging at our nuclear technology services operations and healthcare services operations.

The following table presents financial assets by segment as at March 31, 2022 and December 31, 2021:


(US$ MILLIONS)	Business services		Infrastructure services		Industrials		Total
March 31, 2022	$	92	$	298	$	18	$	408
December 31, 2021	72		263		14		349

Accounts receivable and other, net

Accounts receivable and other, net increased by $581 million to $2,862 million as at March 31, 2022, compared to $2,281 million as at December 31, 2021. The increase was primarily due to foreign currency movements at our water and wastewater operations and higher accounts receivable due to timing at our construction operations.

Inventory, net

Inventory, net increased by $1 million to $581 million as at March 31, 2022, compared to $580 million as at December 31, 2021.

Property, plant & equipment (PP&E) and intangible assets

PP&E increased by $41 million to $4,077 million as at March 31, 2022, compared to $4,036 million as at December 31, 2021. The increase was primarily due to capital expenditures in the period and foreign exchange impacts at our healthcare services operations, partially offset by regular depreciation of PP&E. As at March 31, 2022, PP&E included $409 million of right-of-use assets.

Intangible assets increased by $367 million to $4,593 million as at March 31, 2022, compared to $4,226 million as at December 31, 2021. The increase was primarily due to the impact of foreign exchange movements at our water and wastewater operations, partially offset by regular amortization of intangible assets.

Capital expenditures represent additions to PP&E and certain intangible assets. Included in capital expenditures are maintenance capital expenditures, which are required to sustain the current performance of our operations, and growth capital expenditures, which are made for incrementally new assets that are expected to expand existing operations. Capital expenditures were primarily related to maintenance and improvements on hospital facilities and new hospital equipment at our healthcare services operations and equipment refurbishment, tooling and new fuel design at our nuclear technology services operations. In addition, we include additions to intangible assets in our water and wastewater operations within capital expenditures due to the nature of its concession agreements. Maintenance and growth capital expenditures for the three months ended March 31, 2022 were $42 million and $97 million, respectively. Maintenance and growth capital expenditures for the three months ended March 31, 2021 were $34 million and $27 million, respectively.

Deferred income tax assets

Deferred income tax assets increased by $10 million to $358 million as at March 31, 2022, compared to $348 million as at December 31, 2021. The increase was primarily due to foreign currency movements at our water and wastewater operations and our healthcare services operations.

Goodwill

Goodwill increased by $59 million to $2,275 million as at March 31, 2022, compared to $2,216 million as at December 31, 2021. The increase was primarily due to foreign exchange movements at our healthcare services operations.

Accounts payable and other

Accounts payable and other increased by $154 million to $7,345 million as at March 31, 2022, compared to $7,191 million as at December 31, 2021. The increase was primarily due to higher accounts payables in our construction operations, partially offset by the timing of accounts payables and a decrease in decommissioning liabilities at our nuclear technology services operations.

Deferred income tax liabilities

Deferred income tax liabilities increased by $57 million to $544 million as at March 31, 2022, compared to $487 million as at December 31, 2021. The increase was primarily due to foreign currency movements at our water and wastewater operations.

Corporate and non-recourse borrowings

Borrowings are discussed in “Liquidity and Capital Resources”.

Review of Segment Results

Our operations are organized into three operating segments which are regularly reviewed by the CODM for the purpose of reviewing the results of the company. The key measure used by the CODM in assessing performance is adjusted net operating income, reported in accordance with IFRS 8, Operating segments, and is calculated as revenues less direct operating costs (excluding depreciation and amortization expense), less general and administrative expenses of our operating businesses.

Segment Analysis

Business services

The following table presents adjusted net operating income in our business services segment for the three months ended March 31, 2022 and 2021:


	Three Months Ended March 31,
(US$ MILLIONS)	2022		2021



Adjusted net operating income	$	68	$	86

The following table presents equity attributable to the parent company for our business services segment as at March 31, 2022 and December 31, 2021:


(US$ MILLIONS)	March 31, 2022		December 31, 2021
Total assets	$	7,425	$	7,122
Total liabilities	5,469		5,177
Non-controlling interests	903		889
Equity attributable to Brookfield Business Partners	1,053		1,056
Total equity	$	1,956	$	1,945

Comparison of the three months ended March 31, 2022 and 2021

Adjusted net operating income in our business services segment for the three months ended March 31, 2022 was $68 million, representing a decrease of $18 million compared to $86 million for the three months ended March 31, 2021. Our healthcare services operations contributed $19 million lower adjusted net operating income. Performance was impacted by government mandated restrictions on elective surgeries in Victoria and New South Wales. During the quarter, the business also received government support to cover certain operating costs which partially offset the impact of reduced activity levels.

Infrastructure services

The following table presents adjusted net operating income in our infrastructure services segment for the three months ended March 31, 2022 and 2021:


	Three Months Ended March 31,
(US$ MILLIONS)	2022		2021



Adjusted net operating income	$	186	$	162

The following table presents equity attributable to Brookfield Business Partners for our infrastructure services segment as at March 31, 2022 and December 31, 2021:


(US$ MILLIONS)	March 31, 2022		December 31, 2021
Total assets	$	5,567	$	5,762
Total liabilities	5,726		5,718
Non-controlling interests	(114)		34
Equity attributable to Brookfield Business Partners	(45)		10
Total equity	$	(159)	$	44

Comparison of the three months ended March 31, 2022 and 2021

Adjusted net operating income in our infrastructure services segment for the three months ended March 31, 2022 was $186 million, representing an increase of $24 million compared to $162 million for the three months ended March 31, 2021. Timing of fuel shipments for the spring outage season as well as increased scope and volumes of customer outage activity in the Americas contributed to strong results in the quarter. New plant project execution and the benefit of ongoing cost savings initiatives also contributed to performance during the quarter.

Industrials

The following table presents adjusted net operating income in our industrials segment for the three months ended March 31, 2022 and 2021:


	Three Months Ended March 31,
(US$ MILLIONS)	2022		2021



Adjusted net operating income	$	55	$	40

The following table presents equity attributable to Brookfield Business Partners for our industrials segment as at March 31, 2022 and December 31, 2021:


(US$ MILLIONS)	March 31, 2022		December 31, 2021
Total assets	$	3,635	$	3,036
Total liabilities	2,449		2,029
Non-controlling interests	841		729
Equity attributable to Brookfield Business Partners	345		278
Total equity	$	1,186	$	1,007

Comparison of the three months ended March 31, 2022 and 2021

Adjusted net operating income in our industrials segment for the three months ended March 31, 2022 was $55 million, representing an increase of $15 million compared to $40 million for the three months ended March 31, 2021. The increase in adjusted net operating income was due to contributions from the recently acquired Maceiό concession and higher pricing.

Summary Financial Information Related to the Partnership

As the market price of our exchangeable shares is expected to be significantly impacted by the market price of the LP Units and the combined business performance of our group as a whole, we are providing the following summary financial information regarding the partnership. For further details, please review the partnership’s periodic reporting referenced in the introductory section of this MD&A.


(US$ MILLIONS)	Three Months Ended March 31,
IFRS Measures	2022		2021



Revenues	$	13,472	$	9,829
Net Income (loss)	19		1,767


(US$ MILLIONS)	As at
IFRS Measures	March 31, 2022		December 31, 2021
Total assets	$	66,162	$	64,219
Total liabilities	53,139		51,219
Non-controlling interests	11,546		10,748



Limited Partners	1,477		2,252
Total equity	$	13,023	$	13,000


(US$ MILLIONS)	Three Months Ended March 31,
Non-IFRS Measure	2022		2021



Adjusted EBITDA (1)	$	506	$	387

____________________________________

(1)The partnership’s definition of these non-IFRS financial measures are included within the partnership’s periodic reporting referenced in the introductory section of this MD&A.

Liquidity and Capital Resources

Liquidity and capital requirements are managed through cash flows from operations, use of credit facilities, opportunistically monetizing mature operations and refinancing existing debt. We aim to maintain sufficient financial liquidity to meet our ongoing operating requirements and to fund debt service payments, recurring expenses, required capital expenditures, and acquisition opportunities as they arise. In addition, an integral part of our strategy is to pursue acquisitions through Brookfield-led consortium arrangements with institutional investors or strategic partners, and to form partnerships to pursue acquisitions on a specialized or global basis. Brookfield has an established track record of leading such consortiums and partnerships and actively managing underlying assets to improve performance. Overall, our liquidity profile is strong, positioning us and our businesses well to take advantage of accretive investment opportunities.

Our principal sources of liquidity are financial assets, undrawn credit facilities, cash flow from our operations and monetizations of mature businesses, and access to public and private capital markets.

As at March 31, 2022, the outstanding non-recourse borrowings were $5,759 million compared to $5,246 million as at December 31, 2021. Non-recourse borrowings comprised the following:


(US$ MILLIONS)	March 31, 2022		December 31, 2021
Term loans and credit facilities	$	3,789	$	3,761
Project financing	620		518
Notes and debentures	1,015		835
Credit facilities	335		132
Total non-recourse borrowings in subsidiaries	$	5,759	$	5,246

We principally finance our assets at the operating company level with debt that is non-recourse to both our company and to our other operations and is generally secured against assets within the respective operating companies. Moreover, debt instruments at the operating company level do not cross-accelerate or cross-default to debt at other operating companies. This debt is in the form of revolving credit facilities and term loans with variable interest rates, and notes and debentures with fixed interest rates, with varying maturities, ranging from on demand to 20 years. Borrowings increased by $513 million between March 31, 2022 and December 31, 2021, primarily due to net increased borrowings at our water and wastewater operations.

The use of the credit facilities, term loans and debt securities is primarily related to ongoing operations, capital expenditures and to fund acquisitions. Interest rates charged on these facilities are based on market interest rates. These borrowings are not subject to financial maintenance covenants, with the exception of certain non-recourse borrowings at our healthcare services operations and our water and wastewater operations which are subject to fixed charge coverage and leverage ratios. For the three months ended March 31, 2022 and the year ended December 31, 2021, the financial performance of our businesses was in line with covenants and we took proactive measures, where necessary, to ensure compliance. Our operations are currently in compliance with all other material covenant requirements, and we continue to work with our portfolio companies to monitor performance against such covenant requirements.

The partnership has provided our company with an equity commitment in the amount of $2 billion in order to provide our company with access to equity capital on an as-needed basis and to maximize our flexibility.

Our company has also entered into two credit facilities with the partnership, one as borrower and one as lender, each providing for a ten-year revolving credit facility for purposes of providing our company and the partnership with access to debt financing on an as-needed basis and to maximize our flexibility and facilitate the movement of cash within our group. Our company may also establish credit facilities with one or more arm’s length banks. We intend to use the liquidity provided by the equity commitment and credit facilities for working capital purposes, and we may use the proceeds from the equity commitment 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.

On February 4, 2022, Brookfield entered into an agreement to subscribe for up to $1 billion of 6% perpetual preferred equity securities of the partnership, our company or our respective subsidiaries. Proceeds will be available for us to draw upon for future growth opportunities as they arise. Brookfield will have the right to cause the partnership or our company to redeem the preferred securities at par to the extent of any asset sales, financings or equity issuances. Brookfield has the right to waive its redemption option. Subsequent to quarter end, we also received an additional commitment for $500 million of perpetual preferred equity from Brookfield to support our growth. This financing is non-dilutive, long-term perpetual equity.

Dividend Policy

The board may declare dividends at its discretion. However, each exchangeable share has been structured with the intention of providing an economic return equivalent to one LP Unit of the partnership. Our company will target to declare and pay dividends on the exchangeable shares at the same time as distributions are declared and paid on the units and that dividends on each exchangeable share will be declared and paid in the same amount as distributions are declared and paid on each unit to provide holders of exchangeable shares with an economic return equivalent to holders of the units.

The Board of Directors has declared a quarterly dividend in the amount of $0.0625 per exchangeable share, payable on June 30, 2022 to shareholders of record as at the close of business on May 31, 2022. This dividend is identical in amount per share and has identical record and payment dates to the quarterly distribution declared by the Board of Directors of the general partner of Brookfield Business Partners on its units.

Cash Flow

We believe that we have sufficient access to capital resources and will continue to use our available capital resources to fund our operations. Our future capital resources include cash flow from operations, borrowings and proceeds from potential future debt issues or equity offerings, if required.

As at March 31, 2022, we had cash and cash equivalents of $667 million, compared to $894 million as at December 31, 2021. The net cash flows for the three months ended March 31, 2022 and March 31, 2021, were as follows:


	Three Months Ended March 31,
(US$ MILLIONS)	2022		2021
Cash flow provided by (used in) operating activities	$	34	$	(19)
Cash flow provided by (used in) financing activities	(155)		6
Cash flow provided by (used in) investing activities	(135)		(74)
Effect of foreign exchange rates on cash	29		(25)

Change in cash and cash equivalents	$	(227)	$	(112)

Cash flow provided by (used in) operating activities

Total cash flow provided by operating activities for the three months ended March 31, 2022 was $34 million compared to cash flow used in operating activities of $19 million for the three months ended March 31, 2021. The cash flow provided by operating activities during the three months ended March 31, 2022 was primarily attributable to the cash generated by our nuclear technology services operations.

Cash flow provided by (used in) financing activities

Total cash flow used in financing activities for the three months ended March 31, 2022 was $155 million, compared to cash flow provided from financing activities of $6 million for the three months ended March 31, 2021. During the three months ended March 31, 2022, proceeds from borrowings, net of repayments, were $191 million, which primarily consisted of net increased borrowings at our nuclear technology services operations. Distributions to non-controlling interests and Brookfield Business Partners were $219 million and $81 million, respectively, which was primarily attributable to the distributions from our nuclear technology services operations.

Cash flow provided by (used in) investing activities

Total cash flow used in investing activities was $135 million for the three months ended March 31, 2022, compared to $74 million for the three months ended March 31, 2021. Our investing activities were primarily related to the acquisition of property, plant and equipment and intangible assets within our water and wastewater operations and our nuclear technology services operations.

Off-Balance Sheet Arrangements

In the normal course of operations our operating subsidiaries have bank guarantees, insurance bonds and letters of credit outstanding to third parties. As at March 31, 2022, the total outstanding amounts were approximately $1.7 billion. If these letters of credit or bonds are drawn upon, we will be obligated to reimburse the issuer of the letter of credit or bonds. The company does not conduct its operations, other than those of equity accounted investments, through entities that are not consolidated in the financial statements and has not guaranteed or otherwise contractually committed to support any material financial obligations not reflected in the financial statements.

Our construction operations and other operations may be called upon to give, in the ordinary course of business, guarantees and indemnities in respect of the performance of controlled entities, associates and related parties of their contractual obligations. Any known losses have been brought to account.

In the normal course of operations, we execute agreements that provide for indemnification and guarantees to third parties in transactions such as business dispositions and acquisitions, construction projects, capital projects, and sales and purchases of assets and services. We have also agreed to indemnify our directors and certain of our officers and employees. The nature of substantially all of the indemnification undertakings prevents us from making a reasonable estimate of the maximum potential amount that we could be required to pay third parties, as many of the agreements do not specify a maximum amount and the amounts are dependent upon the outcome of future contingent events, the nature and likelihood of which cannot be determined at this time. Historically, we have made no significant payments under such indemnification agreements. In addition, we have also entered into indemnity agreements with Brookfield that relate to certain construction projects in the Middle East region that have been in place for several years. Under these indemnity agreements, Brookfield has agreed to indemnify us or refund us, as appropriate, for the receipt of payments relating to such projects.

From time to time, we may be contingently liable with respect to litigation and claims that arise in the normal course of operations. In our construction operations, this may include litigation and claims from clients or subcontractors, in addition to our associated counterclaims. On an ongoing basis, we assess the potential impact of these events. We have determined that the potential loss amount of these claims cannot be measured and is not probable at this time.

Contractual Obligations

An integral part of our company’s strategy is to participate with institutional investors in Brookfield-sponsored private equity funds that target acquisitions that suit Brookfield private equity’s profile. In the normal course of business, our company may make commitments to Brookfield-sponsored private equity funds to participate in these target acquisitions in the future, if and when identified.

In the ordinary course of business, we enter into contractual arrangements that may require future cash payments. The table below outlines our undiscounted contractual obligations as at March 31, 2022:


	Payments as at March 31, 2022
(US$ MILLIONS)	Total		< 1 Year		1-2 Years		2-5 Years		5+ Years
Borrowings	$	5,889	$	239	$	697	$	4,423	$	530
Lease liabilities	852		74		70		149		559
Interest expense	994		217		212		512		53
Decommissioning liabilities	729		2		—		—		727
Pension obligations	3,489		81		85		270		3,053
Exchangeable and class B shares	2,243		2,243		—		—		—

Total	$	14,196	$	2,856	$	1,064	$	5,354	$	4,922

Related Party Transactions

We entered into a number of related party transactions with Brookfield as described in Note 21 of the unaudited interim condensed consolidated financial statements.

Critical Accounting Policies, Estimates and Judgments

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 made by management and utilized in the normal course of preparing our company’s consolidated financial statements are outlined below.

Due to the circumstances surrounding the global economic shutdown, such as significant volatility in capital markets, commodity prices and foreign currencies, restrictions on the conduct of business in many jurisdictions, and other impacts, we considered the impacts of these circumstances on the key critical judgments, estimates and assumptions that affect the reported and contingent amount of assets, liabilities, revenues and expenses, including whether goodwill, intangible assets and PP&E needed to be reevaluated for impairment as of March 31, 2022 and December 31, 2021. Our company has a diversified portfolio of operating businesses, many of which provide essential products and services to their customers. Based on our assessments, no additional impairments were required as at March 31, 2022 and December 31, 2021. Our company continues to monitor the situation and review our critical estimates and judgments as circumstances evolve.

For further reference on accounting policies, critical judgments and estimates, see our “Significant Accounting Policies” contained in Note 2 of our audited financial statements as at December 31, 2021 and 2020 and for the years ended December 31, 2021, 2020 and 2019.

Recently adopted accounting standards

(i)Amendments to IAS 37 – Provisions, contingent liabilities and contingent assets (“IAS 37”)

The company adopted these amendments on January 1, 2022 and the adoption did not have an impact on the company’s unaudited interim condensed consolidated financial statements.

(ii)IFRS 9 – Financial instruments (“IFRS 9”) – Fees in the ‘10 per cent’ test for derecognition of financial liabilities

The company adopted this amendment on January 1, 2022.

(iii)Amendments to IFRS 3 – Business combinations (“IFRS 3”) – Reference to conceptual framework

The company adopted these amendments on January 1, 2022.

Quick Links

Exhibit 99.1

UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF B ROOKFIELD BUSINESS CORPORATION .

INDEX TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF BROOKFIELD BUSINESS C ORPOR ATION .

BROOKFIELD BUSINESS CORPORATION UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

BROOKFIELD BUSINESS CORPORATION UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATING RESULTS

BROOKFIELD BUSINESS CORPORATION . UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

BROOKFIELD BUSINESS CORPORATION UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS AT MARCH 31, 2022 AND DECEMBER 31, 2021 AND FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS