UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
 
FORM 6-K
 
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the date of May 13, 2019
Commission file number 001-33632
 
BROOKFIELD INFRASTRUCTURE PARTNERS L.P.
(Exact name of Registrant as specified in its charter)
 
73 Front Street
Fifth Floor Bermuda
Hamilton, HM 12,
Bermuda
(Address of principal executive office)
 
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F   x              Form 40-F  ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):   
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):   
The information contained in Exhibit 99.1 of this Form 6-K is incorporated by reference into the registrant’s following registration statements on Form F-3: File No. 333-213263 and 333-167860.
 





The following document, which is attached as an exhibit hereto, is incorporated by reference herein:

Exhibit
Title
99.1     Brookfield Infrastructure Partners L.P.’s interim report for the quarter ended March 31, 2019
99.2    Certification of Samuel Pollock, Chief Executive Officer, Brookfield Infrastructure Group L.P., pursuant to Canadian law
99.3    Certification of Bahir Manios, Chief Financial Officer, Brookfield Infrastructure Group L.P., pursuant to Canadian law






SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
 
BROOKFIELD INFRASTRUCTURE PARTNERS L.P.
by its general partner, BROOKFIELD
INFRASTRUCTURE PARTNERS LIMITED
Date:
May 13, 2019
 
By:
/s/ W ILLIAM  C OX                                                             
 
 
 
 
Name: William Cox
 
 
 
 
Title: Director






Exhibit 99.1
Brookfield Infrastructure Partners L.P.
Interim Report Q1 2019
UNAUDITED INTERIM CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2019 AND DECEMBER 31, 2018 AND
FOR THE THREE -MONTH PERIODS ENDED MARCH 31, 2019 AND 2018


INDEX
 
 
Page
Brookfield Infrastructure Partners L.P. (our “partnership” and together with its subsidiary and operating entities “Brookfield Infrastructure”) owns and operates high quality, long-life assets that generate stable cash flows, require relatively minimal maintenance capital expenditures and, by virtue of barriers to entry or other characteristics, tend to appreciate in value over time. Our current operations consist of utilities, transport, energy and data infrastructure businesses in North and South America, Asia Pacific and Europe.
Brookfield Asset Management Inc. (together with its affiliates other than Brookfield Infrastructure, “Brookfield”) has an approximate 30% interest in Brookfield Infrastructure. Brookfield Infrastructure has appointed Brookfield as its Service Provider to provide certain management, administrative and advisory services, for a fee, under the Master Services Agreement.






BROOKFIELD INFRASTRUCTURE PARTNERS L.P.
UNAUDITED INTERIM CONDENSED AND CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
 
 
 
As of
US$ MILLIONS, UNAUDITED
Notes
 
March 31, 2019
 
December 31, 2018
Assets
 
 
 
 
 
Cash and cash equivalents
6
 
$
720

 
$
540

Financial assets
6
 
973

 
424

Accounts receivable and other
6
 
1,310

 
1,171

Inventory
 
 
155

 
141

Assets classified as held for sale
9
 
125

 

Current assets
 
 
3,283

 
2,276

Property, plant and equipment
7
 
16,277

 
12,814

Intangible assets
8
 
11,889

 
11,635

Investments in associates and joint ventures
9
 
4,586

 
4,591

Investment properties
 
 
398

 
190

Goodwill
5
 
4,049

 
3,859

Financial assets
6
 
842

 
921

Other assets
 
 
216

 
219

Deferred income tax asset
 
 
85

 
75

Total assets
 
 
$
41,625

 
$
36,580

 
 
 
 
 
 
Liabilities and Partnership Capital
 
 
 
 
 
Liabilities
 
 
 
 
 
Accounts payable and other
6
 
$
1,946

 
$
1,308

Non-recourse borrowings
6,10
 
869

 
985

Financial liabilities
6
 
160

 
124

Current liabilities
 
 
2,975

 
2,417

Corporate borrowings
6,10
 
2,481

 
1,993

Non-recourse borrowings
6,10
 
13,454

 
12,128

Financial liabilities
6
 
1,122

 
1,156

Other liabilities
2
 
1,849

 
777

Deferred income tax liability
 
 
3,449

 
3,421

Preferred shares
6
 
20

 
20

Total liabilities
 
 
25,350

 
21,912

 
 
 
 
 
 
Partnership capital
 
 
 
 
 
Limited partners
14
 
4,633

 
4,513

General partner
14
 
22

 
22

Non-controlling interest attributable to:
 
 
 
 
 
Redeemable Partnership Units held by Brookfield
14
 
1,863

 
1,823

Exchange LP Units
14
 
23

 
71

Interest of others in operating subsidiaries
 
 
8,799

 
7,303

Preferred unitholders
14
 
935

 
936

Total partnership capital
 
 
16,275

 
14,668

Total liabilities and partnership capital
 
 
$
41,625

 
$
36,580


The accompanying notes are an integral part of the financial statements.

2 BROOKFIELD INFRASTRUCTURE PARTNERS L.P.




BROOKFIELD INFRASTRUCTURE PARTNERS L.P.
UNAUDITED INTERIM CONDENSED AND CONSOLIDATED STATEMENTS OF OPERATING RESULTS
 
 
 
For the three-month
period ended March 31
US$ MILLIONS, UNAUDITED
Notes
 
2019

 
2018

Revenues
13
 
$
1,593

 
$
1,013

Direct operating costs
 
 
(798
)
 
(409
)
General and administrative expenses
 
 
(61
)
 
(58
)
Depreciation and amortization expense
7,8
 
(292
)
 
(193
)
 
 
 
442

 
353

Interest expense
 
 
(212
)
 
(114
)
Share of earnings (losses) from investments in associates and joint ventures
9
 
18

 
(5
)
Mark-to-market on hedging items
6
 
(18
)
 
(36
)
Gain on sale of associate
9
 

 
338

Other income (expense)
 
 
10

 
(24
)
Income before income tax
 
 
240

 
512

Income tax expense
 
 
 
 
 
Current
 
 
(63
)
 
(170
)
Deferred
 
 
(12
)
 
(15
)
Net income
 
 
$
165

 
$
327

 
 
 
 
 
 
Attributable to:
 
 
 
 
 
Limited partners
 
 
$
(6
)
 
$
122

General partner
 
 
38

 
35

Non-controlling interest attributable to:
 
 
 
 
 
Redeemable Partnership Units held by Brookfield
 
 
(2
)
 
52

Exchange LP Units
 
 

 

Interest of others in operating subsidiaries
 
 
135

 
118

Basic and diluted (loss) earnings per limited partner unit:
14
 
$
(0.05
)
 
$
0.42

The accompanying notes are an integral part of the financial statements.
 

Q1 2019 INTERIM REPORT 3



BROOKFIELD INFRASTRUCTURE PARTNERS L.P.
UNAUDITED INTERIM CONDENSED AND CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 
 
 
For the three-month
period ended March 31
US$ MILLIONS, UNAUDITED
Notes
 
2019

 
2018

Net income
 
 
$
165

 
$
327

Other comprehensive income:
 
 
 
 
 
Items that will not be reclassified subsequently to profit or loss:
 
 
 
 
 
Marketable securities, net of tax
6
 
29

 
(16
)
Unrealized actuarial losses
 
 
(8
)
 

 
 
 
21

 
(16
)
Items that may be reclassified subsequently to profit or loss:
 
 
 
 
 
Foreign currency translation
 
 
118

 
113

Cash flow hedge
6
 
(13
)
 
(29
)
Net investment hedge
6
 
(23
)
 
(52
)
Taxes on the above items
 
 
7

 
3

Investment in associates and joint ventures
9
 
(32
)
 
13

 
 
 
57

 
48

Total other comprehensive income
 
 
78

 
32

Comprehensive income
 
 
$
243

 
$
359

 
 
 
 
 
 
Attributable to:
 
 
 
 
 
Limited partners
 
 
$
(3
)
 
$
138

General partner
 
 
38

 
35

Non-controlling interest attributable to:
 
 
 
 
 
Redeemable Partnership Units held by Brookfield
 
 
(1
)
 
57

Exchange LP Units
 
 

 

Interest of others in operating subsidiaries
 
 
209

 
129

The accompanying notes are an integral part of the financial statements.

4 BROOKFIELD INFRASTRUCTURE PARTNERS L.P.




BROOKFIELD INFRASTRUCTURE PARTNERS L.P.
UNAUDITED INTERIM CONDENSED AND CONSOLIDATED STATEMENTS OF PARTNERSHIP CAPITAL
 
 
Limited Partners
 
General Partner
 
Non-Controlling Interest – Redeemable
Partnership Units held by Brookfield
 
 
 
 
 
 
 
 
FOR THE THREE-MONTH PERIOD ENDED
MARCH 31, 2019
US$ MILLIONS
 
Limited
partners’
capital

 
(Deficit)

 
Ownership
changes

 
Accumulated
other
comprehensive
income (loss) (1)

 
Limited
partners

 
General
partner
capital

 
Retained
earnings

 
Accumulated
other
comprehensive
income (loss) (1)

 
General
partner

 
Redeemable
units held by
Brookfield

 
(Deficit)

 
Ownership
changes

 
Accumulated
other
comprehensive
income (loss) (1)

 
Non-controlling
interest – 
Redeemable
Partnership
Units held by
Brookfield

 
Non-controlling
interest – Exchange LP Units

 
Non-controlling
interest – in
operating
subsidiaries

 
Preferred
Unitholders
Capital

 
Total
partners’
capital

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance as at January 1, 2019
 
$
4,911

 
$
(856
)
 
$
249

 
$
209

 
$
4,513

 
$
19

 
$

 
$
3

 
$
22

 
$
2,078

 
$
(370
)
 
$
3

 
$
112

 
$
1,823

 
$
71

 
$
7,303

 
$
936

 
$
14,668

Net (loss) income
 

 
(6
)
 

 

 
(6
)
 

 
38

 

 
38

 

 
(2
)
 

 

 
(2
)
 

 
135

 

 
165

Other comprehensive
   income
 

 

 

 
3

 
3

 

 

 

 

 

 

 

 
1

 
1

 

 
74

 

 
78

Comprehensive (loss)
   income
 

 
(6
)
 

 
3

 
(3
)
 

 
38

 

 
38

 

 
(2
)
 

 
1

 
(1
)
 

 
209

 

 
243

Unit issuance (2)
 
2

 

 

 

 
2

 

 

 

 

 

 

 

 

 

 

 

 

 
2

Unit repurchases (2)
 
(28
)
 

 

 

 
(28
)
 

 

 

 

 

 

 

 

 

 

 

 
(1
)
 
(29
)
Partnership
   distributions (3)
 

 
(140
)
 

 

 
(140
)
 

 
(38
)
 

 
(38
)
 

 
(59
)
 

 

 
(59
)
 
(1
)
 

 

 
(238
)
Partnership preferred
   distributions (3)
 

 
(8
)
 

 

 
(8
)
 

 

 

 

 

 
(4
)
 

 

 
(4
)
 

 

 

 
(12
)
Acquisition of
   subsidiaries (4)
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
1,844

 

 
1,844

Subsidiary distributions
   to non-controlling
   interest
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
(368
)
 

 
(368
)
Other items (5)
 
50

 
(26
)
 
247

 
26

 
297

 

 

 

 

 

 
(12
)
 
104

 
12

 
104

 
(47
)
 
(189
)
 

 
165

Balance as at March 31, 2019
 
$
4,935

 
$
(1,036
)
 
$
496

 
$
238

 
$
4,633

 
$
19

 
$

 
$
3

 
$
22

 
$
2,078

 
$
(447
)
 
$
107

 
$
125

 
$
1,863

 
$
23

 
$
8,799

 
$
935

 
$
16,275

1.
Refer to Note 16 Accumulated Other Comprehensive Income.     2.     Refer to Note 14 Partnership Capital. 3.     Refer to Note 15 Distributions.
4. Refer to Note 5 Acquisition of Businesses. 5. Refer to Note 4 Partial Disposition of our Interest in the Chilean Toll Road Business.









Q1 2019 INTERIM REPORT 5


BROOKFIELD INFRASTRUCTURE PARTNERS L.P.
UNAUDITED INTERIM CONDENSED AND CONSOLIDATED STATEMENTS OF PARTNERSHIP CAPITAL
 
 
Limited Partners
 
General Partner
 
Non-Controlling Interest – Redeemable
Partnership Units held by Brookfield
 
 
 
 
 
 
FOR THE THREE-MONTH PERIOD ENDED
MARCH 31, 2018
US$ MILLIONS
 
Limited
partners’
capital

 
(Deficit)

 
Ownership
changes

 
Accumulated
other
comprehensive
income (1)

 
Limited
partners

 
General
partner
capital

 
Retained
earnings

 
Accumulated
other
comprehensive
income (1)

 
General
partner

 
Redeemable
units held by
Brookfield

 
(Deficit)

 
Ownership
changes

 
Accumulated
other
comprehensive
income (1)

 
Non-controlling
interest – 
Redeemable
Partnership
Units held by
Brookfield

 
Non-controlling
interest – in
operating
subsidiaries

 
Preferred
Unitholders
Capital

 
Total
partners’
capital

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance as at December 31, 2017
 
4,907

 
(953
)
 
149

 
864

 
4,967

 
19

 

 
6

 
25

 
2,078

 
(413
)
 
(40
)
 
387

 
2,012

 
5,875

 
595

 
13,474

Change in accounting policies (2)
 

 
4

 

 

 
4

 

 

 

 

 

 
2

 

 

 
2

 
10

 

 
16

Balance as at January 1, 2018
 
4,907

 
(949
)
 
149

 
864

 
4,971

 
19

 

 
6

 
25

 
2,078

 
(411
)
 
(40
)
 
387

 
2,014

 
5,885

 
595

 
13,490

Net income
 


 
122

 

 

 
122

 

 
35

 

 
35

 

 
52

 

 

 
52

 
118

 

 
327

Other comprehensive income
 

 

 

 
16

 
16

 

 

 

 

 

 

 

 
5

 
5

 
11

 

 
32

Comprehensive income
 

 
122

 

 
16

 
138

 

 
35

 

 
35

 

 
52

 

 
5

 
57

 
129

 

 
359

Unit issuance (3)
 
4

 

 

 

 
4

 

 

 

 

 

 

 

 

 

 

 

 
4

Partnership distributions (4)
 

 
(130
)
 

 

 
(130
)
 

 
(35
)
 

 
(35
)
 

 
(54
)
 

 

 
(54
)
 

 

 
(219
)
Partnership preferred
   distributions (4)
 

 
(6
)
 

 

 
(6
)
 

 

 

 

 

 
(3
)
 

 

 
(3
)
 

 

 
(9
)
Subsidiary distributions to
   non-controlling interest
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
(175
)
 

 
(175
)
Preferred units issued (3)
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 
157

 
157

Other items
 

 
450

 

 
(450
)
 

 

 
3

 
(3
)
 

 

 
188

 


 
(188
)
 

 

 

 

Balance as at March 31, 2018
 
$
4,911

 
$
(513
)
 
$
149

 
$
430

 
$
4,977

 
$
19

 
$
3

 
$
3

 
$
25

 
$
2,078

 
$
(228
)
 
$
(40
)
 
$
204

 
$
2,014

 
$
5,839

 
$
752

 
$
13,607

1.
Refer to Note 16 Accumulated Other Comprehensive Income.    2.     Refer to Note 2 Summary of Accounting Policies.
3.
Refer to Note 14 Partnership Capital.    4.     Refer to Note 15 Distributions.    
The accompanying notes are an integral part of the financial statements





6 BROOKFIELD INFRASTRUCTURE PARTNERS L.P.




BROOKFIELD INFRASTRUCTURE PARTNERS L.P.
UNAUDITED INTERIM CONDENSED AND CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 
 
For the three-month
period ended March 31
US$ MILLIONS, UNAUDITED
Notes
 
2019

 
2018

Operating Activities
 
 
 
 
 
Net income
 
 
$
165

 
$
327

Adjusted for the following items:
 
 
 
 
 
Earnings from investments in associates and joint ventures, net of distributions received
9
 
13

 
9

Depreciation and amortization expense
7,8
 
292

 
193

Mark-to-market on hedging items, provisions and other
6
 
54

 
69

Gain on sale of associate
9
 

 
(338
)
Deferred income tax expense
 
 
12

 
15

Changes in non-cash working capital, net
 
 
25

 
191

Cash from operating activities
 
 
561

 
466

 
 
 
 
 
 
Investing Activities
 
 
 
 
 
Acquisition of subsidiaries, net of cash acquired
5
 
(2,150
)
 

Investments in associates and joint ventures
9
 
(188
)
 
(15
)
Acquisition funded on behalf of parent
17
 
(581
)
 

Disposal of investments in associates and joint ventures
9
 

 
1,289

Purchase of long-lived assets
7,8
 
(244
)
 
(178
)
Disposal of long-lived assets
7,8
 
7

 
3

Purchase of financial assets
 
 
(5
)
 
(63
)
Sale of financial assets
 
 
5

 
38

Settlement of foreign exchange hedging items
6
 
(1
)
 
(54
)
Cash (used by) from investing activities
 
 
(3,157
)
 
1,020

 
 
 
 
 
 
Financing Activities
 
 
 
 
 
Distributions to general partner
15
 
(38
)
 
(35
)
Distributions to other unitholders
15
 
(212
)
 
(193
)
Subsidiary distributions to non-controlling interest
 
 
(368
)
 
(175
)
Capital provided by non-controlling interest
5
 
1,272

 

Proceeds from partial disposition of subsidiaries to non-controlling interest, net of taxes
4
 
165

 

Deposit received from parent
17
 
367

 

Proceeds from corporate credit facility
10
 
1,876

 
607

Repayment of corporate credit facility
10
 
(1,421
)
 
(1,396
)
Proceeds from subsidiary borrowings
10
 
1,899

 
868

Repayment of subsidiary borrowings
10
 
(777
)
 
(808
)
Lease liability repaid
2
 
(36
)
 

Preferred units and preferred shares issued, net of repurchases
14
 
72

 
157

Partnership units issued, net of issuance costs
14
 
2

 
4

Partnership units repurchased
14
 
(28
)
 

Cash from (used by) financing activities
 
 
2,773

 
(971
)
 
 
 
 
 
 
Cash and cash equivalents
 
 
 
 
 
Change during the period
 
 
177

 
515

Impact of foreign exchange on cash
 
 
3

 
1

Balance, beginning of period
 
 
540

 
374

Balance, end of period
 
 
$
720

 
$
890


The accompanying notes are an integral part of the financial statements.

Q1 2019 INTERIM REPORT 7


NOTES TO THE UNAUDITED INTERIM CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2019 AND DECEMBER 31, 2018 AND
FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2019 AND 2018
1. ORGANIZATION AND DESCRIPTION OF THE BUSINESS
Brookfield Infrastructure Partners L.P. (our “partnership” and, together with its subsidiaries and operating entities, “Brookfield Infrastructure”) owns and operates utilities, transport, energy and data infrastructure businesses in North and South America, Europe and the Asia Pacific region. Our partnership was formed as a limited partnership established under the laws of Bermuda, pursuant to a limited partnership agreement dated May 17, 2007, as amended and restated. Our partnership is a subsidiary of Brookfield Asset Management Inc. (“Brookfield”). Our partnership’s units are listed on the New York Stock Exchange and the Toronto Stock Exchange under the symbols “BIP” and “BIP.UN”, respectively. Our cumulative Class A preferred limited partnership units, Series 1, Series 3, Series 5, Series 7, Series 9, and Series 11 are listed on the Toronto Stock Exchange under the symbols “BIP.PR.A”, “BIP.PR.B”, “BIP.PR.C”, “BIP.PR.D”, “BIP.PR.E”, and “BIP.PR.F” respectively. Our partnership’s registered office is 73 Front Street, Hamilton, HM12, Bermuda.
In these notes to the interim condensed and consolidated financial statements, references to “units” are to the limited partnership units in our partnership other than the preferred units, references to our “preferred units” are to preferred limited partnership units in our partnership and references to our “unitholders” and “preferred unitholders” are to the holders of our units and preferred units, respectively. References to “Series 5 Preferred Units”, “Series 7 Preferred Units”, “Series 9 Preferred Units”, and “Series 11 Preferred Units” are to cumulative Class A preferred limited partnership units, Series 5, cumulative Class A preferred limited partnership units, Series 7, cumulative Class A preferred limited partnership units, Series 9, and cumulative Class A preferred limited partnership units, Series 11, in our partnership, respectively.
2 . SUMMARY OF ACCOUNTING POLICIES
a) Statement of compliance
These interim condensed and consolidated financial statements of our partnership and its subsidiaries (together “Brookfield Infrastructure”) have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting , (“IAS 34”) as issued by the International Accounting Standards Board (“IASB”) and using the accounting policies Brookfield Infrastructure applied in its consolidated financial statements as of and for the year ended December 31, 2018 , amended by the recently adopted accounting standards described in the section below. The accounting policies that our partnership applied in its annual consolidated financial statements as of and for the year ended December 31, 2018 are disclosed in Note 3 of such financial statements, with which reference should be made in reading these interim condensed and consolidated financial statements.
These interim condensed and consolidated financial statements were authorized for issuance by the Board of Directors of our partnership on May 13, 2019 .
b) Recently adopted accounting standards
Brookfield Infrastructure applied, for the first time, certain new standards applicable to our partnership that became effective January 1, 2019. The impact of adopting these new standards on our partnership’s accounting policies are as follows:
IFRS 16 Leases ( IFRS 16 )
In January 2016, the IASB published a new standard, IFRS 16. The new standard brings most leases on balance sheet, eliminating the distinction between operating and finance leases. Lessor accounting, however, remains largely unchanged and the distinction between operating and finance leases is retained. IFRS 16 supersedes IAS 17, Leases (“IAS 17”) and related interpretations and is effective for periods beginning on or after January 1, 2019.
The partnership adopted the standard using a modified retrospective approach, whereby any transitional impact is recorded in equity as at January 1, 2019, and comparative periods are not restated. In applying IFRS 16 for the first time, the partnership has applied the following practical expedients permitted by the standard on a lease-by-lease basis. These practical expedients are only available upon adoption and cannot be applied for any new lease executed after adoption:
The accounting for operating leases with a remaining lease term of less than 12 months as of January 1, 2019 as short-term leases; and
The application of a single discount rate to a portfolio of leases with reasonably similar characteristics. Furthermore, the partnership has applied the policy choice options on adoption to measure right-of-use assets at an amount equal to the lease liability.

8 BROOKFIELD INFRASTRUCTURE PARTNERS L.P.




The partnership has elected to apply the following practical expedients in its application of the standard:
To not allocate contract consideration between lease and non-lease components, but rather account for each lease and non-lease component as a single lease component;
To recognize the payments associated with short-term and low-value leases on a straight-line basis as an expense over the lease term.
The adoption of IFRS 16 resulted in the recognition of lease liabilities that are recorded in accounts payable and other, other liabilities, and right-of-use assets (“ROU”) that are classified as property, plant, and equipment of $1.2 billion. The adoption of IFRS 16 did not have an impact on partnership capital. The weighted average incremental borrowing rate used in determining the lease liabilities is approximately 5%. The difference between the present value of operating lease commitments disclosed applying IAS 17 as at December 31, 2018 and the lease liabilities recognized as at January 1, 2019 is due to finance lease liabilities recognized as at December 31, 2018, short-term and low-value leases recognized as expense, and adjustments as a result of different treatment for extension and termination options and variable lease payments relating to changes in indices or rates.
Our partnership assesses whether a contract is or contains a lease, at inception of a contract and recognizes an ROU asset and a corresponding lease liability with respect to all lease agreements in which it is the lessee, except for short-term leases and leases of low value. The lease liability is initially measured at the present value of future lease payments, discounted using the interest rate implicit in the lease, if that rate can be determined, or otherwise the incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise of i) fixed lease payments, including in-substance fixed payments, less any lease incentives; ii) variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date; iii) the amount expected to be payable by the lessee under residual value guarantees; iv) the exercise price of purchase options, if it is reasonably certain that the option will be exercised; and v) payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease. ROU assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement day and any initial direct costs. ROU assets are subsequently measured at cost less accumulated depreciation and impairment losses.
The partnership remeasures lease liabilities and makes a corresponding adjustment to the related ROU assets when i) the lease term has changed or there is a change in the assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate; ii) the lease payments have changed due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in which cases the lease liability is remeasured by discounting the revised lease payments using the initial discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a revised discount rate is used); or iii) a lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate.
The partnership has applied critical judgments in the application of IFRS 16, including: i) identifying whether a contract (or part of a contract) includes a lease; ii) determining whether it is reasonably certain that lease extension or termination option will be exercised in determining lease term; and iii) determining whether variable payments are in-substance fixed. The partnership also uses critical estimates in the application of IFRS 16, including the estimation of lease term and determination of the appropriate rate to discount the lease payments.
IFRIC 23 Uncertainty over Income Tax Treatments (“IFRIC 23”)
In June 2017, the IASB published IFRIC 23, effective for annual periods beginning on or after January 1, 2019. The interpretation requires an entity to assess whether it is probable that a tax authority will accept an uncertain tax treatment used, or proposed to be used, by an entity in its income tax filings and to exercise judgment in determining whether each tax treatment should be considered independently or whether some tax treatments should be considered together. The decision should be based on which approach provides better predictions of the resolution of the uncertainty. An entity also has to consider whether it is probable that the relevant authority will accept each tax treatment, or group of tax treatments, assuming that the taxation authority with the right to examine any amounts reported to it will examine those amounts and will have full knowledge of all relevant information when doing so. The interpretation may be applied on either a fully retrospective basis or a modified retrospective basis without restatement of comparative information. Our partnership has adopted the standard as of January 1, 2019 on a modified retrospective basis. The adoption did not have a significant impact on our partnership’s unaudited interim condensed consolidated financial statements.
IFRS 3 Business Combinations (“IFRS 3”)
In October 2018, the IASB issued an amendment to IFRS 3, effective for annual periods beginning on or after January 1, 2020. The amendment clarifies the definition of a business and assists companies in determining whether an acquisition is a business combination or an acquisition of a group of assets. The amendment emphasizes that to be considered a business, an acquired set of activities and assets must include an input and a substantive process that together significantly contribute to the ability to create outputs. Effective January 1, 2019, our partnership has early adopted the standard prospectively. The adoption did not have a significant impact on our partnership’s unaudited interim condensed consolidated financial statements.

Q1 2019 INTERIM REPORT 9


After the adoption of IFRS 3 amendments, the partnership continues to account for business combinations in which control is acquired under the acquisition method. When an acquisition is made, the partnership considers the inputs, processes and outputs of the acquiree in assessing whether it meets the definition of a business. When the acquired set of activities and assets lack a substantive process in place but will be integrated into the partnership’s existing operations, the acquisition ceases to meet the definition of a business and is accounted for as an asset acquisition. Assets acquired through asset acquisitions are initially measured at cost, which includes the transaction costs incurred for the acquisitions. Acquisitions that continue to meet the definition of a business combination are accounted for under the same acquisition method.



10 BROOKFIELD INFRASTRUCTURE PARTNERS L.P.




3 . SEGMENT INFORMATION
IFRS 8, Operating Segments, requires operating segments to be determined based on information that is regularly reviewed by the Executive Management and the Board of Directors for the purpose of allocating resources to the segment and to assess its performance. Key measures used by the Chief Operating Decision Maker (“CODM”) in assessing performance and in making resource allocation decisions are Funds from Operations (“FFO”) and earnings before interest, tax, depreciation and amortization (“Adjusted EBITDA”), which enable the determination of return on the equity deployed. FFO is calculated as net income excluding the impact of depreciation and amortization, deferred income taxes, breakage and transaction costs, and non-cash valuation gains or losses. Adjusted EBITDA is calculated as net income excluding the impact of depreciation and amortization, interest expense, current and deferred income taxes, breakage and transaction costs, and non-cash valuation gains or losses.
 
 
Total attributable to Brookfield Infrastructure
 
 
 
 
 
 
FOR THE THREE-MONTH PERIOD ENDED
MARCH 31, 2019
US$ MILLIONS
 
Utilities

 
Transport

 
Energy

 
Data
Infrastructure
(1)

 
Corporate

 
Total

 
Contribution
from
investments
in associates

 
Attributable
to non-
controlling
interest

 
As per
IFRS
financials
(2)

 
 
 
 
 
 
 
 
Revenues
 
$
269

 
$
389

 
$
245

 
$
62

 
$

 
$
965

 
$
(368
)
 
$
996

 
$
1,593

Costs attributed to revenues
 
(88
)
 
(200
)
 
(118
)
 
(26
)
 

 
(432
)
 
177

 
(543
)
 
(798
)
General and administrative costs
 

 

 

 

 
(61
)
 
(61
)
 

 

 
(61
)
Adjusted EBITDA
 
181

 
189

 
127

 
36

 
(61
)
 
472

 
(191
)
 
453

 
 
Other (expense) income
 
(10
)
 
(1
)
 
8

 
1

 
21

 
19

 
3

 
(38
)
 
(16
)
Interest expense
 
(34
)
 
(49
)
 
(28
)
 
(9
)
 
(20
)
 
(140
)
 
41

 
(113
)
 
(212
)
FFO
 
137

 
139

 
107

 
28

 
(60
)
 
351

 
(147
)
 
302

 
 
Depreciation and amortization
 
(45
)
 
(91
)
 
(59
)
 
(25
)
 

 
(220
)
 
98

 
(170
)
 
(292
)
Deferred taxes
 
(13
)
 
6

 
(2
)
 
4

 
3

 
(2
)
 
(4
)
 
(6
)
 
(12
)
Mark-to-market on hedging items and other
 
(11
)
 
(40
)
 
(14
)
 
(6
)
 
(28
)
 
(99
)
 
35

 
9

 
(55
)
Share of earnings from associates
 

 

 

 

 

 

 
18

 

 
18

Net income attributable to non-controlling interest and preferred unitholders
 

 

 

 

 

 

 

 
(135
)
 
(135
)
Net income (loss) attributable to partnership (3)
 
$
68

 
$
14

 
$
32

 
$
1

 
$
(85
)
 
$
30

 
$

 
$

 
$
30


 
 
Total attributable to Brookfield Infrastructure
 
 
 
 
 
 
FOR THE THREE-MONTH PERIOD ENDED
MARCH 31, 2018
US$ MILLIONS
 
Utilities

 
Transport

 
Energy

 
Data
Infrastructure
(1)

 
Corporate

 
Total

 
Contribution
from
investments
in associates

 
Attributable to non-controlling
interest

 
As per IFRS
financials
(2)

 
 
 
 
 
 
 
 
 
Revenues
 
$
272

 
$
424

 
$
153

 
$
43

 
$

 
$
892

 
$
(423
)
 
$
544

 
$
1,013

Costs attributed to revenues
 
(69
)
 
(246
)
 
(74
)
 
(20
)
 

 
(409
)
 
220

 
(220
)
 
(409
)
General and administrative costs
 

 

 

 

 
(58
)
 
(58
)
 

 

 
(58
)
Adjusted EBITDA
 
203

 
178

 
79

 
23

 
(58
)
 
425

 
(203
)
 
324

 
 
Other (expense) income
 
(3
)
 
2

 
5

 
(1
)
 
17

 
20

 

 
(25
)
 
(5
)
Interest expense
 
(31
)
 
(43
)
 
(18
)
 
(3
)
 
(17
)
 
(112
)
 
42

 
(44
)
 
(114
)
FFO
 
169

 
137

 
66

 
19

 
(58
)
 
333

 
(161
)
 
255

 
 
Depreciation and amortization
 
(58
)
 
(99
)
 
(33
)
 
(20
)
 

 
(210
)
 
111

 
(94
)
 
(193
)
Deferred taxes
 
(15
)
 
13

 
(2
)
 
2

 

 
(2
)
 
(9
)
 
(4
)
 
(15
)
Mark-to-market on hedging items and other
 
(47
)
 
(39
)
 
(18
)
 

 
(146
)
 
(250
)
 
64

 
(39
)
 
(225
)
Gain on sale of associates
 

 

 

 

 
338

 
338

 

 

 
338

Share of losses from associates
 

 

 

 

 

 

 
(5
)
 

 
(5
)
Net income attributable to non-controlling interest and preferred unitholders
 

 

 

 

 

 

 

 
(118
)
 
(118
)
Net income attributable to partnership (3)
 
$
49

 
$
12

 
$
13

 
$
1

 
$
134

 
$
209

 
$

 
$

 
$
209

1.
During the second quarter of 2018, our Communications Infrastructure segment was renamed to Data Infrastructure. There was no concurrent change in the operations which comprise the segment.
2.
The above table provides each segment’s results in the format that management organizes its segments to make operating decisions and assess performance. Each segment is presented on a proportionate basis, taking into account Brookfield Infrastructure’s ownership in operations accounted for using the consolidation and equity methods under IFRS. The above table reconciles Brookfield Infrastructure’s proportionate results to our partnership’s Consolidated Statements of Operating Results on a line by line basis by aggregating the components comprising the earnings from our partnership’s investments in associates and reflecting the portion of each line item attributable to non-controlling interests.
3.
Includes net income (loss) attributable to non-controlling interests—Redeemable Partnership Units held by Brookfield, non-controlling interests—Exchange LP Units, general partner and limited partners.

Q1 2019 INTERIM REPORT 11


Segment assets
For the purpose of monitoring segment performance and allocating resources between segments, the CODM monitors the assets, including investments accounted for using the equity method, attributable to each segment.
The following is an analysis of Brookfield Infrastructure’s assets by reportable operating segment for the periods under review:
 
Total Attributable to Brookfield Infrastructure
 
 
 
 
 
 
 
 
AS OF MARCH 31, 2019
Utilities

 
Transport

 
Energy

 
Data
Infrastructure

 
Corporate

 
Total

 
Contribution
from
investments
in associates

 
Attributable
to non-
controlling
interest

 
Working
capital
adjustment
and other

 
As per
IFRS
financials (1)

US$ MILLIONS
 
 
 
 
 
 
 
 
 
Total assets
$
4,937

 
$
6,435

 
$
5,196

 
$
2,355

 
$
(1,642
)
 
$
17,281

 
$
(2,556
)
 
$
20,681

 
$
6,219

 
$
41,625

 
Total Attributable to Brookfield Infrastructure
 
 
 
 
 
 
 
 
AS OF DECEMBER 31, 2018
Utilities

 
Transport

 
Energy

 
Data
Infrastructure

 
Corporate

 
Total

 
Contribution
from
investments
in associates

 
Attributable
to non-
controlling
interest

 
Working
capital
adjustment
and other

 
As per
IFRS
financials (1)

US$ MILLIONS
 
 
 
 
 
 
 
 
 
Total assets
$
4,864

 
$
6,424

 
$
4,722

 
$
1,446

 
$
(929
)
 
$
16,527

 
$
(2,350
)
 
$
17,545

 
$
4,858

 
$
36,580

1.
The above table provides each segment’s assets in the format that management organizes its segments to make operating decisions and assess performance. Each segment is presented on a proportionate basis, taking into account Brookfield Infrastructure’s ownership in operations using consolidation and the equity method whereby our partnership either controls or exercises significant influence over the investment respectively. The above table reconciles Brookfield Infrastructure’s proportionate assets to total assets presented on our partnership’s Consolidated Statements of Financial Position by removing net liabilities contained within investments in associates and joint ventures and reflecting the assets attributable to non-controlling interests, and adjusting for working capital assets which are netted against working capital liabilities.
4 . PARTIAL DISPOSITION OF OUR INTEREST IN CHILEAN TOLL ROAD BUSINESS
On February 7, 2019, Brookfield Infrastructure completed the sale of a 17% interest in its Chilean toll road business for total after-tax proceeds of $365 million. Proceeds included a $200 million distribution from a local financing completed at the business prior to the sale of our interest. Our partnership received $165 million . Brookfield Infrastructure will retain control over the business subsequent to the sale. As a result of the disposition, a gain of $354 million (net of taxes) was recognized directly in equity and accumulated other comprehensive losses of $38 million were reclassified directly to retained earnings (deficit) on the Consolidated Statements of Partnership Capital.
5 . ACQUISITION OF BUSINESSES
a) Acquisition of East-West Pipeline

On March 22, 2019 , Brookfield Infrastructure, along with institutional partners (the “EWPL consortium”), acquired an effective 24% interest in an Indian cross country gas pipeline business, East-West Pipeline Limited (“EWPL”), for total consideration of $443 million (EWPL consortium total of $1,879 million). The partnership’s share of the acquisition was funded through equity of $226 million (EWPL consortium total of $959 million ) and $ 217 million (EWPL consortium total of $920 million ) of asset level debt raised on closing. Concurrently, Brookfield Infrastructure entered into a voting agreement with an affiliate of Brookfield, providing Brookfield Infrastructure the right to direct the relevant activities of the entity, thereby providing Brookfield Infrastructure with control. Accordingly, Brookfield Infrastructure consolidated the entity effective March 22, 2019 . Acquisition costs of $2 million were recorded as Other income (expense) within the Consolidated Statements of Operating Results.

12 BROOKFIELD INFRASTRUCTURE PARTNERS L.P.




Consideration transferred
US$ MILLIONS
 
Cash
$
443

Total Consideration
$
443

Fair values of assets and liabilities acquired as of March 22, 2019 (provisional) (1) :
US$ MILLIONS
 
Accounts receivable and other
64

Property, plant and equipment
2,074

Intangible assets
257

Goodwill
98

Accounts payable and other liabilities
(36
)
Net assets acquired before non-controlling interest
2,457

Non-controlling interest (2)
(2,014
)
Net assets acquired
$
443

1.
The fair values of all acquired assets and liabilities for this operation have been determined on a provisional basis given the proximity of the acquisition to the reporting date, pending finalization of the determination of the fair values of the acquired assets and liabilities. Our partnership is in the process of obtaining additional information in order to assess the fair value of property, plant and equipment, goodwill, and provisions, as at the date of acquisition.
2.
Non-controlling interest represents the consideration paid for the interest not acquired by Brookfield Infrastructure, measured at fair value at the acquisition date.

The goodwill recorded on acquisition is largely reflective of potential customer growth, arising from the business’ position as the only East-West natural gas pipeline business in India. None of the goodwill recognized is deductible for income tax purposes.
b) Acquisition of DCI Data Centers

On January 4, 2019 , Brookfield Infrastructure, alongside institutional partners (the “DCI consortium”), acquired an effective 29% interest in DCI Data Centers (“DCI”), an Australian data storage business, for total consideration of $78 million (DCI consortium total of $272 million ). The partnership’s share of the acquisition was funded through equity of $48 million (DCI consortium total of $166 million ) and the remainder with asset level debt raised on closing. Concurrently, Brookfield Infrastructure entered into a voting agreement with an affiliate of Brookfield, providing Brookfield Infrastructure the right to direct the relevant activities of the entity, thereby providing Brookfield Infrastructure with control. Accordingly, Brookfield Infrastructure consolidated the entity effective January 4, 2019 . Acquisition costs of $1 million were recorded as Other income (expense) within the Consolidated Statements of Operating Results.
Consideration transferred
US$ MILLIONS
 
Cash
$
78

Total Consideration
$
78

Fair values of assets and liabilities acquired as of January 4, 2019 (provisional) (1) :
US$ MILLIONS
 
Accounts receivable and other
3

Investment properties
200

Intangible assets
11

Goodwill
62

Accounts payable and other liabilities
(4
)
Net assets acquired before non-controlling interest
272

Non-controlling interest (2)
(194
)
Net assets acquired
$
78

1.
The fair values of all acquired assets and liabilities for this operation have been determined on a provisional basis given the proximity of the acquisition to the reporting date, pending finalization of the determination of the fair values of the acquired assets and liabilities. Our partnership is in the process of obtaining additional information in order to assess the fair value of investment properties, intangible assets, goodwill and provisions as at the date of acquisition.
2.
Non-controlling interest represents the consideration paid for the interest not acquired by Brookfield Infrastructure, measured at fair value at the acquisition date.


Q1 2019 INTERIM REPORT 13


The goodwill recorded on acquisition is largely reflective of potential customer growth, arising from the business’ position as one of the key data storage providers in Australia, and the increasing rate of worldwide data consumption. None of the goodwill recognized is deductible for income tax purposes.
c) Acquisition of Evoque Data Center Solutions

On December 31, 2018 , Brookfield Infrastructure, alongside institutional partners (the “Evoque consortium”), acquired an effective 29% interest in AT&T’s large-scale data center business for total consideration of $315 million (Evoque consortium total of $1,103 million). Under Brookfield’s ownership, the business was renamed Evoque Data Center Solutions (“Evoque”). The acquisition was funded through equity of $164 million (Evoque consortium total of $577 million of which $413 million was provided by non-controlling interests subsequent to year-end), and $151 million (Evoque consortium total of $526 million) of asset level debt raised on closing. Concurrently, Brookfield Infrastructure entered into a voting agreement with an affiliate of Brookfield, providing Brookfield Infrastructure the right to direct the relevant activities of the entity, thereby providing Brookfield Infrastructure with control. Accordingly, Brookfield Infrastructure consolidated the entity effective December 31, 2018. Acquisition costs of $10 million were recorded as Other income (expense) income within the Consolidated Statements of Operating Results in 2018.
Consideration transferred
US$ MILLIONS
 
Cash
$
315

Total Consideration
$
315

Fair values of assets and liabilities acquired as of December 31, 2018 (provisional) (1) :
US$ MILLIONS
 
Accounts receivable and other
3

Property, plant and equipment
440

Intangible assets
221

Goodwill
463

Accounts payable and other liabilities
(24
)
Net assets acquired before non-controlling interest
1,103

Non-controlling interest (2)
(788
)
Net assets acquired
$
315

1.
The fair values of all acquired assets and liabilities for this operation have been determined on a provisional basis given the proximity of the acquisition to the reporting date. Our partnership is in the process of obtaining additional information primarily related to the fair value of property, plant and equipment, intangible assets, goodwill and provisions as at the date of acquisition.
2.
Non-controlling interest represents the consideration paid for the interest not acquired by Brookfield Infrastructure, measured at fair value at the acquisition date.

The goodwill recorded on acquisition is largely reflective of potential customer growth, arising from the business’ position as one of the largest colocation providers in the United States and the increasing rate of worldwide data consumption. All of the goodwill recognized is deductible for income tax purposes.
d) Acquisition of Rayalseema Expressway Private Limited (“REPL”)

On November 5, 2018 , Brookfield Infrastructure, alongside institutional partners (the “REPL consortium”), acquired an effective 26% interest in an Indian toll road business, REPL, for total consideration of $5 million (REPL consortium total of $16 million). The consideration consists of $3 million in cash (REPL consortium total of $10 million) and contingent consideration of $2 million (REPL consortium total of $6 million), measured at fair value based on a probability-weighted average. Brookfield Infrastructure entered into a voting agreement with an affiliate of Brookfield, providing Brookfield Infrastructure the right to direct the relevant activities of the entity, thereby providing Brookfield Infrastructure with control. Accordingly, Brookfield Infrastructure consolidated the entity effective November 5, 2018 . Acquisition costs of less than $1 million were recorded as Other income (expense) income within the Consolidated Statements of Operating Results in 2018.

14 BROOKFIELD INFRASTRUCTURE PARTNERS L.P.




Consideration transferred
US$ MILLIONS
 
Cash
$
3

Contingent consideration
2

Total Consideration
$
5


Fair values of assets and liabilities acquired as of November 5, 2018 (provisional) (1) :
US$ MILLIONS
 
Accounts receivable and other
$
3

Intangible assets
226

Accounts payable and other liabilities
(60
)
Non-recourse borrowings
(151
)
Net assets acquired before non-controlling interest
18

Non-controlling interest (2)
(13
)
Net assets acquired
$
5

1.
The fair values of certain acquired assets and liabilities for this operation have been determined on a provisional basis given the proximity of the acquisition to the reporting date. Our partnership is in the process of obtaining additional information primarily related to the fair value of intangible assets and provisions as at the date of acquisition.
2.
Non-controlling interest represents the consideration paid for the interest not acquired by Brookfield Infrastructure, measured at fair value at the acquisition date.
e) Acquisition of Enercare Inc.
On October 16, 2018 , Brookfield Infrastructure, alongside institutional partners (the “Enercare consortium”), acquired an effective 30% interest in Enercare Inc. (“Enercare”), a North American residential energy infrastructure business, for total consideration of $723 million (Enercare consortium total of $2.4 billion). As part of the transaction, certain Enercare shareholders were given the right to elect to receive, in lieu of cash consideration, 0.5509 exchangeable units (“Exchange LP Units”) to be issued by a subsidiary of our partnership (“Exchange LP”) for each share of Enercare Inc. The Exchange LP Units provide holders with economic terms that are substantially equivalent to those of our units and are exchangeable, on a one-for-one basis, for units of our partnership. The acquisition was funded through equity of $427 million (Enercare consortium total of $2.0 billion), $232 million of Exchange LP Units (5.7 million units issued by Exchange LP), and $64 million (Enercare consortium total of $216 million) of asset level debt raised on closing. Concurrently, Brookfield Infrastructure entered into a voting agreement with an affiliate of Brookfield, providing Brookfield Infrastructure the right to direct the relevant activities of the entity, thereby providing Brookfield Infrastructure with control. Accordingly, Brookfield Infrastructure consolidated the entity effective October 16, 2018. Acquisition costs of $4 million were recorded as Other income (expense) income within the Consolidated Statements of Operating Results in 2018.

Consideration transferred
US$ MILLIONS
 
Cash
$
491

Exchange LP Units
232

Total Consideration
$
723



Q1 2019 INTERIM REPORT 15


Fair values of assets and liabilities acquired as of October 16, 2018 (provisional) (1) :
US$ MILLIONS
 
Cash and cash equivalents
$
24

Accounts receivable and other
187

Property, plant and equipment
669

Intangible assets
1,863

Inventory
23

Goodwill
1,260

Accounts payable and other liabilities
(235
)
Deferred income tax liabilities
(472
)
Non-recourse borrowings
(877
)
Net assets acquired before non-controlling interest
2,442

Non-controlling interest (2)
(1,719
)
Net assets acquired
$
723

1.
The fair values of certain acquired assets and liabilities for this operation have been determined on a provisional basis given the proximity of the acquisition to the reporting date. Our partnership is in the process of obtaining additional information primarily related to the measurement of provisions, the deferred income tax liabilities and resulting impact to goodwill as at the date of acquisition.
2.
Non-controlling interest represents the consideration paid for the interest not acquired by Brookfield Infrastructure, measured at fair value at the acquisition date.

The goodwill recorded on acquisition reflects potential growth prospects and a strong market position as a key provider of residential energy infrastructure in North America. None of the goodwill recognized is deductible for income tax purposes.
f) Acquisition of Western Canadian natural gas midstream business

On October 1, 2018, Brookfield Infrastructure, alongside institutional partners (the “NorthRiver consortium”), acquired an effective 29% interest in the provincially regulated portion of Enbridge Inc.’s Canadian natural gas midstream business for total consideration of $559 million (NorthRiver consortium total of $2.0 billion). Under Brookfield’s ownership, the business was renamed NorthRiver Midstream Inc. (“NorthRiver”). The acquisition was funded through equity of $281 million (NorthRiver consortium total of $982 million) and $278 million (NorthRiver consortium total of $974 million) of asset level debt raised on closing. Concurrently, Brookfield Infrastructure entered into a voting agreement with an affiliate of Brookfield, providing Brookfield Infrastructure the right to direct the relevant activities of the entity, thereby providing Brookfield Infrastructure with control. Accordingly, Brookfield Infrastructure consolidated the entity effective October 1, 2018. Acquisition costs of $3 million were recorded as Other income (expense) income within the Consolidated Statements of Operating Results in 2018.

Consideration transferred
US$ MILLIONS
 
Cash
$
559

Total consideration
$
559



16 BROOKFIELD INFRASTRUCTURE PARTNERS L.P.




Fair value of assets and liabilities acquired as of October 1, 2018 (provisional) (1) :
US$ MILLIONS
 
Cash and cash equivalents
$
10

Accounts receivable and other
55

Property, plant and equipment
1,442

Intangible assets
157

Goodwill
524

Accounts payable and other liabilities
(46
)
Deferred income tax liabilities
(186
)
Net assets acquired before non-controlling interest
1,956

Non-controlling interest (2)
(1,397
)
Net assets acquired
$
559


1.
The fair values of certain acquired assets and liabilities for this operation have been determined on a provisional basis given the proximity of the acquisition to the reporting date. Our partnership is in the process of obtaining additional information primarily related to the acquired tax pools and balances. This information will be used to finalize the measurement of the deferred income tax liabilities and other liabilities acquired, and related impacts on the consideration paid and resulting goodwill as at the date of acquisition.
2.
Non-controlling interest represents the consideration paid for the interest not acquired by Brookfield Infrastructure, measured at fair value at the acquisition date.

The goodwill recorded on acquisition is largely reflective of the potential to obtain long-term contracts for the business’ unutilized capacity and production growth in certain locations. None of the goodwill recognized is deductible for income tax purposes.
g) Acquisition of Simhapuri Expressway Limited (“SEL”)

On September 7, 2018 , Brookfield Infrastructure, along with institutional partners (the “SEL consortium”), expanded its toll road operations through the acquisition of an effective 29% interest in an Indian toll road business, SEL, for total consideration by Brookfield Infrastructure of $53 million (SEL consortium total of $182 million). Concurrently, Brookfield Infrastructure entered into a voting agreement with an affiliate of Brookfield, providing Brookfield Infrastructure the right to direct the relevant activities of the entity, thereby providing Brookfield Infrastructure with control. Accordingly, Brookfield Infrastructure consolidated the entity effective September 7, 2018. Acquisition costs of $1 million were recorded as Other income (expense) income within the Consolidated Statements of Operating Results in 2018.

Consideration transferred
US$ MILLIONS
 
Cash
$
53

Total consideration
$
53


Fair value of assets and liabilities acquired as of September 7, 2018 (provisional) (1) :

US$ MILLIONS
 
Cash and cash equivalents
$
1

Accounts receivable and other
33

Intangible assets
488

Goodwill
23

Accounts payable and other liabilities
(61
)
Deferred income tax liabilities
(23
)
Non-recourse borrowings
(279
)
Net assets acquired before non-controlling interest
182

Non-controlling interest (2)
(129
)
Net assets acquired
$
53

1.
The fair values of certain acquired assets and liabilities for this operation have been determined on a provisional basis given the proximity of the acquisition to the reporting date. Our partnership is in the process of obtaining additional information primarily related to the fair value of intangible assets, goodwill and provisions as at the date of acquisition.
2.
Non-controlling interest represents the consideration paid for the interest not acquired by Brookfield Infrastructure, measured at fair value at the acquisition date.


Q1 2019 INTERIM REPORT 17


Upon consolidation of SEL, a deferred tax liability of $23 million was recorded. The deferred income tax liability arose as the tax bases of the net assets acquired were lower than their fair values. The inclusion of this liability in the net book value of the acquired business gave rise to goodwill of $23 million, which is recoverable so long as the tax circumstances that gave rise to the goodwill do not change. To date, no such changes have occurred. None of the goodwill recognized is deductible for income tax purposes.
h) Acquisition of Colombian natural gas distribution business

On June 1, 2018 , Brookfield Infrastructure, alongside institutional partners (the “GN consortium”), acquired an effective 16% interest in Gas Natural, S.A. ESP (“GN”), a Colombian natural gas distribution business, for total consideration of $150 million (GN consortium total of $522 million). The acquisition was funded through equity of $88 million (GN consortium total of $309 million) and $62 million (GN consortium total of $213 million) with asset level debt raised concurrently on closing. On acquisition, Brookfield Infrastructure entered into a voting agreement with an affiliate of Brookfield, providing Brookfield Infrastructure the right to direct the relevant activities of the entity, thereby providing Brookfield Infrastructure with control. Accordingly, Brookfield Infrastructure consolidated the entity effective June 1, 2018. Acquisition costs of $2 million were recorded as Other income (expenses) income within the Consolidated Statements of Operating Results in 2018.

Consideration transferred
US$ MILLIONS
 
Cash
$
118

Pre-existing interest of GN (1)
32

Total consideration
$
150

1.
Brookfield Infrastructure acquired a 3% interest in GN in December 2017, which had a fair market value of $32 million as at the date of acquisition. No gain or loss resulted from the deemed disposition of this interest upon acquisition of control.

Fair value of assets and liabilities acquired as of June 1, 2018 (provisional) (1) :
US$ MILLIONS
 
Cash and cash equivalents
$
36

Accounts receivable and other
245

Property, plant and equipment
394

Intangible assets
253

Goodwill
621

Accounts payable and other liabilities
(165
)
Deferred income tax liabilities
(143
)
Non-recourse borrowings
(177
)
Net assets acquired before non-controlling interest
1,064

Non-controlling interest (2)
(914
)
Net assets acquired
$
150

1.
The fair values of certain acquired assets and liabilities for this operation have been determined on a provisional basis given the proximity of the acquisition to the reporting date. Our partnership is in the process of obtaining additional information primarily related to the fair value of property, plant and equipment, intangible assets, goodwill and provisions as at the date of acquisition.
2.
Non-controlling interest represents the interest not acquired by Brookfield Infrastructure, measured at fair value at the acquisition date.

The goodwill recorded on acquisition is largely reflective of potential customer growth and growth under existing contracts arising from the business’ position as a key distributor of natural gas in various markets of Colombia. None of the goodwill recognized is deductible for income tax purposes.

18 BROOKFIELD INFRASTRUCTURE PARTNERS L.P.




i) Supplemental information

Had the acquisitions of DCI and EWPL been effective January 1, 2019, the revenue and net income of Brookfield Infrastructure would have been $1,683 million and $171 million , respectively, for the three months ended March 31, 2019 .
In determining the pro-forma revenue and net income attributable to our partnership, management has:
Calculated depreciation of property, plant and equipment and amortization of intangible assets acquired on the basis of the fair values at the time of the business combination rather than the carrying amounts recognized in the pre-acquisition financial statements and;
Based borrowing costs on the funding levels, credit ratings and debt and equity position of Brookfield Infrastructure after the business combination.
6 . FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair values are determined by reference to quoted bid or ask prices, as appropriate. Where bid and ask prices are unavailable, the closing price of the most recent transaction of that instrument is used. In the absence of an active market, fair values are determined based on prevailing market rates such as bid and ask prices, as appropriate for instruments with similar characteristics and risk profiles or internal or external valuation models, such as option pricing models and discounted cash flow analyses, using observable market inputs.
Fair values determined using valuation models require the use of assumptions concerning the amount and timing of estimated future cash flows and discount rates. In determining those assumptions, Brookfield Infrastructure looks primarily to external readily observable market inputs such as interest rate yield curves, currency rates, and price and rate volatilities as applicable. The fair value of interest rate swap contracts which form part of financing arrangements is calculated by way of discounted cash flows using market interest rates and applicable credit spreads.
Classification of Financial Instruments
Financial instruments classified as fair value through profit or loss are carried at fair value on the Consolidated Statements of Financial Position. Changes in the fair values of financial instruments classified as fair value through profit or loss are recognized in profit or loss. Mark-to-market adjustments on hedging items for those in an effective hedging relationship and changes in the fair value of securities designated as fair value through other comprehensive income are recognized in other comprehensive income.

Q1 2019 INTERIM REPORT 19


Carrying Value and Fair Value of Financial Instruments
The following table provides the allocation of financial instruments and their associated classifications as at March 31, 2019 :
US$ MILLIONS
Financial Instrument Classification
MEASUREMENT BASIS
Fair value through profit or loss
 
Fair value through OCI
 
Amortized Cost
 
Total
Financial assets
 
 
 
 
 
 
 
Cash and cash equivalents
$

 
$

 
$
720

 
$
720

Accounts receivable and other

 

 
1,310

 
1,310

Financial assets (current and non-current) (1)
851

 
19

 
763

 
1,633

Marketable securities
96

 
86

 

 
182

Total
$
947

 
$
105

 
$
2,793

 
$
3,845

 
 
 
 
 
 
 
 
Financial liabilities
 
 
 
 
 
 
 
Corporate borrowings
$

 
$

 
$
2,481

 
$
2,481

Non-recourse borrowings (current and non-current)

 

 
14,323

 
14,323

Accounts payable and other

 

 
1,946

 
1,946

Preferred shares (2)

 

 
20

 
20

Financial liabilities (current and non-current) (1)
294

 

 
988

 
1,282

Total
$
294

 
$

 
$
19,758

 
$
20,052

1.
Derivative instruments which are elected for hedge accounting totaling $659 million are included in financial assets and $84 million of derivative instruments are included in financial liabilities.
2.
$20 million of preferred shares issued to wholly-owned subsidiaries of Brookfield.

20 BROOKFIELD INFRASTRUCTURE PARTNERS L.P.




The following table provides the allocation of financial instruments and their associated classifications as at December 31, 2018 :
US$ MILLIONS
Financial Instrument Classification
MEASUREMENT BASIS
Fair value through profit or loss
 
Fair value through OCI
 
Amortized Cost
 
Total
Financial assets
 
 
 
 
 
 
 
Cash and cash equivalents
$

 
$

 
$
540

 
$
540

Accounts receivable and other

 

 
1,171

 
1,171

Financial assets (current and non-current) (1)
989

 
17

 
166

 
1,172

Marketable securities
126

 
47

 

 
173

Total
$
1,115

 
$
64

 
$
1,877

 
$
3,056

 
 
 
 
 
 
 
 
Financial liabilities
 
 
 
 
 
 
 
Corporate borrowings
$

 
$

 
$
1,993

 
$
1,993

Non-recourse borrowings (current and non-current)

 

 
13,113

 
13,113

Accounts payable and other

 

 
1,308

 
1,308

Preferred shares (2)

 

 
20

 
20

Financial liabilities (current and non-current) (1)
373

 

 
907

 
1,280

Total
$
373

 
$

 
$
17,341

 
$
17,714

1.
Derivative instruments which are elected for hedge accounting totaling $718 million are included in financial assets and $109 million of derivative instruments are included in financial liabilities.
2.
$20 million of preferred shares issued to wholly-owned subsidiaries of Brookfield.
The following table provides the carrying values and fair values of financial instruments as at March 31, 2019 and December 31, 2018 :
 
March 31, 2019
 
December 31, 2018
US$ MILLIONS
Carrying Value
 
Fair Value
 
Carrying Value
 
Fair Value
Financial assets
 
 
 
 
 
 
 
Cash and cash equivalents
$
720

 
$
720

 
$
540

 
$
540

Accounts receivable and other
1,310

 
1,310

 
1,171

 
1,171

Financial assets (current and non-current)
1,633

 
1,633

 
1,172

 
1,172

Marketable securities
182

 
182

 
173

 
173

Total
$
3,845

 
$
3,845

 
$
3,056

 
$
3,056

 
 
 
 
 
 
 
 
Financial liabilities
 
 
 
 
 
 
 
Corporate borrowings (1)
$
2,481

 
$
2,506

 
$
1,993

 
$
1,978

Non-recourse borrowings (2)
14,323

 
14,684

 
13,113

 
13,372

Accounts payable and other (current and non-current)
1,946

 
1,946

 
1,308

 
1,308

Preferred shares (3)
20

 
20

 
20

 
20

Financial liabilities (current and non-current)
1,282

 
1,282

 
1,280

 
1,280

Total
$
20,052

 
$
20,438

 
$
17,714

 
$
17,958

1.
Corporate borrowings are classified under level 1 of the fair value hierarchy; quoted prices in an active market are available.
2.
Non-recourse borrowings are classified under level 2 of the fair value hierarchy with the exception of certain borrowings at the U.K. port operation and at our North American residential energy infrastructure operation which are classified under level 1. For level 2 fair values, future cash flows are estimated based on observable forward interest rates at the end of the reporting period.
3.
$20 million of preferred shares issued to wholly-owned subsidiaries of Brookfield.

Q1 2019 INTERIM REPORT 21


Hedging Activities
Brookfield Infrastructure uses derivatives and non-derivative financial instruments to manage or maintain exposures to interest and currency risks. For certain derivatives which are used to manage exposures, Brookfield Infrastructure determines whether hedge accounting can be applied. When hedge accounting can be applied, a hedge relationship can be designated as a fair value hedge, cash flow hedge or a hedge of foreign currency exposure of a net investment in a foreign operation with a functional currency other than the U.S. dollar. To qualify for hedge accounting, the derivative must be designated as a hedge of a specific exposure and the hedging relationship must meet all of the hedge effectiveness requirements in accomplishing the objective of offsetting changes in the fair value or cash flows attributable to the hedged risk both at inception and over the life of the hedge. If it is determined that the hedging relationship does not meet all of the hedge effectiveness requirements, hedge accounting is discontinued prospectively.
Cash Flow Hedges
Brookfield Infrastructure uses interest rate swaps to hedge the variability in cash flows related to a variable rate asset or liability and highly probable forecasted issuances of debt. The settlement dates coincide with the dates on which the interest is payable on the underlying debt, and the amount accumulated in equity is reclassified to profit or loss over the period that the floating rate interest payments on debt affect profit or loss. For the three -month period ended March 31, 2019 , pre-tax net unrealized losses of $13 million ( 2018 : losses of $29 million ) were recorded in other comprehensive income for the effective portion of the cash flow hedges. As of March 31, 2019 , there was a net derivative asset balance of $530 million relating to derivative contracts designated as cash flow hedges (December 31, 2018:  $542 million ).
Net Investment Hedges
Brookfield Infrastructure uses foreign exchange contracts and foreign currency denominated debt instruments to manage its foreign currency exposures arising from net investments in foreign operations having a functional currency other than the U.S. dollar. For the three -month period ended March 31, 2019 , losses of $23 million (2018: losses of $52 million ) were recorded in other comprehensive income relating to the effective portion of hedges of net investments in foreign operations. Further, for the three -month period ended March 31, 2019 , Brookfield Infrastructure paid $1 million ( 2018 : $54 million ) relating to the settlement of foreign exchange contracts in the period. Consistent with our risk management objectives, these contracts are replaced at expiration; therefore, no reclassification to profit or loss has been recorded during the period. As of March 31, 2019 , there was a net unrealized derivative asset balance of $45 million relating to derivative contracts designated as net investment hedges (December 31, 2018: net unrealized derivative asset balance of $67 million ).
Fair Value Hierarchical Levels—Financial Instruments
Fair value hierarchical levels are directly determined by the amount of subjectivity associated with the valuation inputs of these assets and liabilities, and are as follows:
Level 1 – Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.
Level 2 – Inputs other than quoted prices included in Level 1 are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life. Fair valued assets and liabilities that are included in this category are primarily certain derivative contracts and other financial assets carried at fair value in an inactive market.
Level 3 – Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to determining the estimate. Fair valued assets and liabilities that are included in this category are interest rate swap contracts, derivative contracts, certain equity securities carried at fair value which are not traded in an active market and the non-controlling interest’s share of net assets of limited life funds.

22 BROOKFIELD INFRASTRUCTURE PARTNERS L.P.




The fair value of our partnership’s financial assets and financial liabilities are measured at fair value on a recurring basis. The following table summarizes the valuation techniques and significant inputs for Brookfield Infrastructure’s financial assets and financial liabilities:
US$ MILLIONS
Fair value
hierarchy
 
March 31, 2019
 
December 31, 2018
Marketable securities
Level 1 (1)
 
$
182

 
$
173

Foreign currency forward contracts
Level 2 (2)
 
 
 
 
Financial asset
 
 
$
164

 
$
241

Financial liability
 
 
22

 
23

Interest rate swaps & other
Level 2 (2)
 
 
 
 
Financial asset
 
 
$
660

 
$
718

Financial liability
 
 
191

 
257

Other contracts
Level 3 (3)
 
 
 
 
Financial asset
 
 
$
46

 
$
47

Financial liability
 
 
81

 
93

1.
Valuation technique: Quoted bid prices in an active market.
2.
Valuation technique: Discounted cash flow. Future cash flows are estimated based on forward exchange rates (from observable forward exchange rates at the end of the reporting period) and contract forward rates, discounted at a rate that reflects our credit risk and the credit risk of various counterparties.
3.
Valuation technique: Discounted cash flow. Future cash flows primarily driven by assumptions concerning the amount and timing of estimated future cash flows and discount rates.
Assets and liabilities measured at fair value on a recurring basis include $1,052 million ( 2018 : $1,179 million ) of financial assets and $294 million ( 2018 : $373 million ) of financial liabilities which are measured at fair value using valuation inputs based on management’s best estimates.
During the three-month period ended March 31, 2019 , no transfers were made between level 1 and 2 or level 2 and 3. The following table categorizes financial assets and liabilities, which are carried at fair value, based upon the level of input.
 
March 31, 2019
 
December 31, 2018
US$ MILLIONS
Level 1
 
Level 2
 
Level 3
 
Level 1
 
Level 2
 
Level 3
Financial assets
 
 
 
 
 
 
 
 
 
 
 
Marketable securities
$
182

 
$

 
$

 
$
173

 
$

 
$

Financial assets (current and non-current)

 
824

 
46

 

 
959

 
47

Financial liabilities
 
 
 
 
 
 
 
 
 
 
 
Financial liabilities (current and non-current)
$

 
$
213

 
$
81

 
$

 
$
280

 
$
93



Q1 2019 INTERIM REPORT 23


7 . PROPERTY, PLANT AND EQUIPMENT
US$ MILLIONS
Utilities
Assets
 
Transport
Assets
 
Energy
Assets
 
Data Infrastructure Assets
 
Total
Assets
Gross Carrying Amount:
 
 
 
 
 
 
 
 
 
Balance at January 1, 2018
$
3,471

 
$
2,657

 
$
2,629

 
$

 
$
8,757

Additions, net of disposals
441

 
77

 
140

 
4

 
662

Non-cash (disposals) additions
(19
)
 
(4
)
 
6

 

 
(17
)
Acquisitions through business combinations (2)
394

 

 
2,111

 
440

 
2,945

Net foreign currency exchange differences
(267
)
 
(245
)
 
(205
)
 

 
(717
)
Balance at December 31, 2018
$
4,020

 
$
2,485

 
$
4,681

 
$
444

 
$
11,630

Change in accounting policies (1)
21

 
356

 
197

 
633

 
1,207

Additions, net of disposals
117

 
27

 
65

 
1

 
210

Acquisitions through business combinations (2)

 

 
2,074

 

 
2,074

Non-cash (disposals), net of additions
(16
)
 
(2
)
 
(15
)
 
(14
)
 
(47
)
Net foreign currency exchange differences
88

 
27

 
61

 
1

 
177

Balance at March 31, 2019
$
4,230

 
$
2,893

 
$
7,063

 
$
1,065

 
$
15,251

Accumulated depreciation:
 
 
 
 
 
 
 
 
 
Balance at January 1, 2018
$
(510
)
 
$
(687
)
 
$
(383
)
 
$

 
$
(1,580
)
Depreciation expense
(149
)
 
(147
)
 
(134
)
 

 
(430
)
Non-cash disposals
(2
)
 

 
(1
)
 

 
(3
)
Disposals
7

 
22

 
8

 

 
37

Net foreign currency exchange differences
41

 
68

 
18

 

 
127

Balance at December 31, 2018
$
(613
)
 
$
(744
)
 
$
(492
)
 
$

 
$
(1,849
)
Depreciation expense
(43
)
 
(45
)
 
(70
)
 
(19
)
 
(177
)
Disposals
2

 

 

 

 
2

Non-cash additions
(1
)
 

 

 

 
(1
)
Net foreign currency exchange differences
(12
)
 
(5
)
 
(11
)
 

 
(28
)
Balance at March 31, 2019
$
(667
)
 
$
(794
)
 
$
(573
)
 
$
(19
)
 
$
(2,053
)
Accumulated fair value adjustments:
 
 
 
 
 
 
 
 
 
Balance at January 1, 2018
$
1,258

 
$
873

 
$
629

 
$

 
$
2,760

Fair value adjustments
220

 
18

 
224

 

 
462

Net foreign currency exchange differences
(77
)
 
(81
)
 
(31
)
 

 
(189
)
Balance at December 31, 2018
$
1,401

 
$
810

 
$
822

 
$

 
$
3,033

Net foreign currency exchange differences
31

 
7

 
8

 

 
46

Balance at March 31, 2019
$
1,432

 
$
817

 
$
830

 
$

 
$
3,079

Net book value:
 
 
 
 
 
 
 
 
 
December 31, 2018
4,808

 
2,551

 
5,011

 
444

 
12,814

March 31, 2019 (3)
$
4,995

 
$
2,916

 
$
7,320

 
$
1,046

 
$
16,277

1.
Refer to Note 2 Summary of Accounting Policies.
2.
Refer to Note 5 Acquisition of Businesses.
3.
Includes right-of-use assets of $ 23 million in our utilities segment, $ 353 million in our transport segment, $ 237 million in our energy segment and $ 606 million in our data infrastructure segment. Current lease liabilities of $111 million has been included in accounts payable and other and non-current lease liabilities of $ 1,127 million have been included in other liabilities in the Consolidated Statement of Financial Position.

24 BROOKFIELD INFRASTRUCTURE PARTNERS L.P.




8 . INTANGIBLE ASSETS
 
As of
US$ MILLIONS
March 31, 2019
 
December 31, 2018
Cost
$
12,887

 
$
12,515

Accumulated amortization
(998
)
 
(880
)
Total
$
11,889

 
$
11,635

Intangible assets are allocated to the following cash generating units:
 
As of
US$ MILLIONS
March 31, 2019
 
December 31, 2018
Brazilian regulated gas transmission operation
$
4,139

 
$
4,211

Australian regulated terminal
1,777

 
1,766

North American residential energy infrastructure operation
1,780

 
1,763

Peruvian toll roads
1,141

 
1,118

Chilean toll roads
937

 
928

U.K. port operation
278

 
273

Indian toll roads (1)
838

 
843

Other (2)
999

 
733

Total
$
11,889

 
$
11,635

1.
Indian toll roads include $736 million of intangible assets at our investment in Simhapuri Expressway Ltd and Rayalseema Expressway Private Limited and $102 million at BIF India Holdings Pte Ltd.
2.
Other intangibles are comprised of customer contracts at our Australian port operation and contracted order book at our U.K. regulated distribution operation.
The following table presents the change in the cost balance of intangible assets:
 
For the three-month
period ended March 31
US$ MILLIONS
2019

 
2018

Cost at beginning of the period
$
12,515

 
$
10,470

Additions through business combinations
268

 

Additions, net of disposals
25

 
15

Foreign currency translation
79

 
(17
)
Ending Balance
$
12,887

 
$
10,468

The following table presents the accumulated amortization for Brookfield Infrastructure’s intangible assets:
 
For the three-month
period ended March 31
US$ MILLIONS
2019

 
2018

Accumulated amortization at beginning of the period
$
(880
)
 
$
(576
)
Amortization
(115
)
 
(89
)
Foreign currency translation
(3
)
 
2

Ending Balance
$
(998
)
 
$
(663
)


Q1 2019 INTERIM REPORT 25


9 . INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
The following table represents the change in the balance of investments in associates and joint ventures:
US$ MILLIONS
For the three-month period ended March 31, 2019
 
For the 12 month period ended December 31, 2018
Balance at the beginning of the period
$
4,591

 
$
5,572

Share of earnings (loss) for the period (1)
18

 
(13
)
Foreign currency translation and other
(23
)
 
(296
)
Share of other reserves for the period—OCI
(32
)
 
260

Distributions
(31
)
 
(59
)
Disposition of interest (1)

 
(951
)
Investments reclassified as held for sale (2)
(125
)
 

Acquisitions (3)
188

 
78

Ending Balance
$
4,586

 
$
4,591

1.
In March 2018, Brookfield Infrastructure sold its ownership in ETC Transmission Holdings, a Chilean electricity transmission operation, for $1.3 billion. On disposition, Brookfield Infrastructure recognized a gain on sale of $338 million ( $209 million , net of taxes) presented within gain on sale of associate on the Consolidated Statements of Operating Results. In association with the gain, $35 million of accumulated other comprehensive losses were reclassified to share of losses from associates and joint ventures on the Consolidated Statements of Operating Results.
2.
In February 2019, Brookfield Infrastructure agreed to sell its 40% interest in its European port operation to a third party. The sale is expected to generate net proceeds of approximately $130 million, with closing to occur in the second quarter of 2019.
3.
In March 2019, Brookfield Infrastructure, alongside other subsidiaries of Brookfield, acquired an effective 12% interest in a Brazilian data center operation, Ascenty Participacoes S.A (“Ascenty”), for total consideration of $188 million . Concurrently, Brookfield Infrastructure, on behalf of Brookfield and in exchange for a promissory note, acquired a further 37% interest in Ascenty. Please refer to Note 17 , Related Party Transactions for additional information. Brookfield maintains 50% of the voting rights of Ascenty in a joint venture with Digital Realty Trust Inc. Brookfield Infrastructure has joint control through its position in the business. Accordingly, our partnership equity accounts for the entity.
The following table represents the carrying value of our partnership’s investments in associates and joint ventures:
 
As of
US$ MILLIONS
March 31, 2019
 
December 31, 2018
Utilities
$
95

 
$
92

Transport
2,355

 
2,497

Energy
1,187

 
1,183

Data infrastructure
889

 
710

Corporate
60

 
109

Ending Balance
$
4,586

 
$
4,591


26 BROOKFIELD INFRASTRUCTURE PARTNERS L.P.




The following tables summarize the aggregate balances of investments in associates on a 100% basis:
 
As of
US$ MILLIONS
March 31, 2019
 
December 31, 2018
Financial position:
 
 
 
Total assets
$
37,248

 
$
33,043

Total liabilities
(19,488
)
 
(16,570
)
Net assets
$
17,760

 
$
16,473

 
For the three-month
period ended March 31
US$ MILLIONS
2019

 
2018

Financial performance:
 
 
 
Total revenue
$
1,531

 
$
1,567

Total income for the period
51

 
64

Brookfield Infrastructure’s share of net income before reclassification
18

 
30

Reclassification of previously recognized foreign currency movements (1)

 
(35
)
Brookfield Infrastructure’s share of net income (loss)
$
18

 
$
(5
)
1.
In March 2018, Brookfield Infrastructure sold its ownership in ETC Transmission Holdings. In conjunction with the sale, $35 million of accumulated other comprehensive losses were reclassified to the Consolidated Statement of Operating Results and recorded within share of earnings (losses) from associates and joint ventures.
10 . BORROWINGS
a) Corporate Borrowings
Brookfield Infrastructure has a $1.975 billion senior unsecured revolving credit facility used for general working capital purposes including acquisitions. The $1.975 billion is available on a revolving basis for the full term of the facility. All amounts outstanding under this facility will be repayable on June 30, 2023 . All obligations of Brookfield Infrastructure under the facility are guaranteed by our partnership. Loans under this facility accrue interest at a floating rate based on LIBOR plus  1.2% . Brookfield Infrastructure is required to pay an unused commitment fee under the facility of 18 basis points per annum. As at March 31, 2019 , draws on the credit facility were $965 million ( 2018 : $510 million ) and $48 million of letters of credit were issued ( 2018 : $47 million ).
 
Maturity
 
Annual Rate
 
Currency
 
As of
March 31, 2019
 
December 31, 2018
Corporate revolving credit facility
June 30, 2023
 
LIBOR plus 1.2%
 
US$
 
$
965

 
$
510

Medium-term notes (1) :
 
 
 
 
 
 
 
 
 
Non-current:
 
 
 
 
 
 
 
 
 
Public - Canadian
October 30, 2020
 
3.5%
 
C$
 
281

 
275

Public - Canadian
March 11, 2022
 
3.5%
 
C$
 
337

 
330

Public - Canadian
February 22, 2024
 
3.3%
 
C$
 
225

 
220

Public - Canadian
February 22, 2024
 
3.3%
 
C$
 
300

 
293

Public - Canadian
September 11, 2028
 
4.2%
 
C$
 
373

 
365

Total
 
 
 
 
 
 
$
2,481

 
$
1,993

1.
See Note 12 Subsidiary Public Issuers for further details.
On September 10, 2018, Brookfield Infrastructure Finance ULC issued C$500 million of medium-term notes maturing September 11, 2028 with a coupon of 4.2% . The proceeds were swapped into U.S. dollars on a matched maturity basis at an all-in rate of 4.7% .
Brookfield Infrastructure has entered into a $500 million revolving credit facility with Brookfield to provide additional liquidity for general corporate purposes and capital expenditures, if required. The revolving credit facility automatically renews for four consecutive one-year terms, which would result in the facility ultimately maturing on February 8, 2023. Brookfield has the option to terminate the agreement prior to February 8 each year by providing Brookfield Infrastructure with written notice. Loans under this facility accrued interest on LIBOR plus 2.0% and no commitment fees were incurred for any undrawn balance. As of March 31, 2019 , there were $nil (2018: $nil ) borrowings outstanding.

Q1 2019 INTERIM REPORT 27


The increase in corporate borrowings of $488 million during the three -month period ended March 31, 2019 is due to draws on the corporate revolving credit facility to fund new investments, and the appreciation of the Canadian dollar against the U.S. dollar.
b) Non-Recourse Borrowings
 
As of
US$ MILLIONS
March 31, 2019
 
December 31, 2018
Current
$
869

 
$
985

Non-current
13,454

 
12,128

Total
$
14,323

 
$
13,113

Non-recourse borrowings have increased by $1.2 billion since year-end. The increase is attributable to additional net borrowings of $1.1 billion primarily associated with our recent acquisitions and an increase in foreign denominated debt as most currencies we operated in appreciated relative to the U.S. dollar during the three -month period ended March 31, 2019 .
11 . CAPITAL MANAGEMENT
Our partnership’s approach to capital management is focused on maximizing returns to unitholders and ensuring capital is deployed in a manner consistent with achieving our investment return objectives.
Invested Capital, which tracks the amount of capital that has been contributed to our partnership, is a measure we utilize to assess returns on capital deployed, relative to targeted returns. Investment decisions are based on, amongst other measures and factors, targeted returns on Invested Capital of 12% to 15% annually over the long-term. We measure return on Invested Capital as Adjusted Funds from Operations (“AFFO”), less estimated returns of capital on operations that are not perpetual in life, divided by the weighted average Invested Capital for the period.
We define Invested Capital as partnership capital removing the impact of the following items: non-controlling interest in operating subsidiaries, retained earnings or deficit, accumulated other comprehensive income and ownership changes.
 
As of
US$ MILLIONS
March 31, 2019
 
December 31, 2018
Partnership Capital
$
16,275

 
$
14,668

Remove impact of the following items since inception:
 
 
 
Non-controlling interest - in operating subsidiaries
(8,799
)
 
(7,303
)
Deficit
1,486

 
1,228

Accumulated other comprehensive income
(370
)
 
(328
)
Ownership changes and other
(390
)
 
(109
)
Invested Capital
$
8,202

 
$
8,156

The following table presents the change in Invested Capital during the three-month period ended March 31, 2019 :
 
For the three-month
period ended March 31
US$ MILLIONS
2019

 
2018

Opening balance
$
8,156

 
$
7,599

Issuance of preferred units and preferred shares, net of repurchases
72

 
157

Repurchases of limited partnership units and redeemable partnership units, net of issuances
(26
)
 
4

Ending balance
$
8,202

 
$
7,760

Weighted Average Invested Capital
$
8,180

 
$
7,716

12 . SUBSIDIARY PUBLIC ISSUERS
An indenture dated as of October 10, 2012 between certain wholly-owned subsidiaries of our partnership, Brookfield Infrastructure Finance ULC, Brookfield Infrastructure Finance LLC, Brookfield Infrastructure Finance Pty Ltd and Brookfield Infrastructure Finance Limited (collectively, the “Debt Issuers”, and Computershare Trust Company of Canada, as supplemented and amended from time to time (“Indenture”) provides for the issuance of one or more series of unsecured notes of the Debt Issuers.

28 BROOKFIELD INFRASTRUCTURE PARTNERS L.P.




On September 10, 2018, the Debt Issuers issued C$500 million of medium-term notes under the Indenture maturing September 11, 2028 in the Canadian bond market with a coupon of 4.2% , which was swapped into U.S. dollars on a matched maturity basis at an all-in rate of 4.7% .
On April 17, 2017, the Debt Issuers issued C $400 million of medium-term notes under the Indenture maturing February 22, 2024 in the Canadian bond market with a coupon of 3.3% , which was swapped into U.S. dollars on a matched maturity basis at an all-in rate of 4.0% .
On February 22, 2017, the Debt Issuers issued C $300 million of medium-term notes under the Indenture maturing February 22, 2024 in the Canadian bond market with a coupon of 3.3% , which was swapped into U.S. dollars on a matched maturity basis at an all-in rate of  4.1% .
As they matured, the Debt Issuers repaid C $400 million of medium-term notes on October 10, 2017 and C $125 million of medium term notes on October 30, 2018.
These notes are fully and unconditionally guaranteed by our partnership and its subsidiaries, Brookfield Infrastructure L.P. (the “Holding LP”), Brookfield Infrastructure Holdings (Canada) Inc., Brookfield Infrastructure US Holdings I Corporation and BIP Bermuda Holdings I Limited (collectively, the “Guarantors”).
The Guarantors will also fully and unconditionally guarantee the payment obligations of Brookfield Infrastructure Preferred Equity Inc. (“Pref Finco” and collectively with the Debt Issuers, the “Fincos”) in respect of any Class A preference shares issued to the public by the Pref Finco, if and when issued.

A base shelf prospectus of BIP Investment Corporation (“BIPIC”) dated as of November 23, 2018 provides for the issuance of one or more series of senior preferred shares of BIPIC. The Guarantors will fully and unconditionally guarantee the payment obligations of BIPIC in respect of any senior preferred shares issued by BIPIC under the prospectus.

Each of the Fincos and BIPIC are subsidiaries of our partnership. In the tables below, information relating to the Fincos has been combined. The Fincos have not guaranteed the obligations of BIPIC, nor has BIPIC guaranteed the obligations of the Fincos.

On February 5, 2019, BIPIC issued 4 million Series 1 Senior Preferred Shares at C$25 per share with a quarterly fixed dividend at a rate of 5.85% annually for the initial period ending March 31, 2024. In total, C$100 million or $75 million of gross proceeds were raised, $2 million in underwriting costs were incurred and less than $1 million in issuance costs were incurred. The preferred shares are retractable at the option of the holders and are therefore classified as liabilities.

Q1 2019 INTERIM REPORT 29


The following tables set forth consolidated summary financial information for our partnership, the Fincos, and BIPIC:
FOR THE THREE-MONTH PERIOD ENDED
MARCH 31, 2019
US$ MILLIONS
 
Our partnership (2)
 
The Fincos
 
BIPIC
 
Subsidiaries of our
partnership other
than the Fincos and BIPIC (3)
 
Consolidating
adjustments (4)
 
Our
partnership
consolidated
 
 
 
 
 
 
Revenues
 
$

 
$

 
$

 
$

 
$
1,593

 
$
1,593

Net (loss) income attributable to partnership (1)
 
(6
)
 

 

 
30

 
6

 
30

 
 
 
 
 
 
 
 
 
 
 
 
 
FOR THE THREE-MONTH PERIOD ENDED
MARCH 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
 
$

 
$

 
$

 
$

 
$
1,013

 
$
1,013

Net income (loss) attributable to partnership (1)
 
122

 

 

 
209

 
(122
)
 
209

 
 
 
 
 
 
 
 
 
 
 
 
 
AS OF MARCH 31, 2019
 
 
 
 
 
 
 
 
 
 
 
 
Current assets
 
$

 
$

 
$

 
$

 
$
3,283

 
$
3,283

Non-current assets
 
5,568

 

 
659

 
8,409

 
23,706

 
38,342

Current liabilities
 

 

 

 

 
2,975

 
2,975

Non-current liabilities
 

 
1,516

 
76

 

 
20,783

 
22,375

Non-controlling interests – Redeemable Partnership Units held by Brookfield
 

 

 

 

 
1,863

 
1,863

Non-controlling interests – Exchange LP Units
 

 

 

 

 
23

 
23

Non-controlling interests – in operating subsidiaries
 

 

 

 

 
8,799

 
8,799

Preferred unitholders
 

 

 

 

 
935

 
935

 
 
 
 
 
 
 
 
 
 
 
 
 
AS OF DECEMBER 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
Current assets
 
$

 
$

 
$

 
$

 
$
2,276

 
$
2,276

Non-current assets
 
5,449

 

 
568

 
8,281

 
20,006

 
34,304

Current liabilities
 

 

 

 

 
2,417

 
2,417

Non-current liabilities
 

 
1,483

 

 

 
18,012

 
19,495

Non-controlling interests – Redeemable Partnership Units held by Brookfield
 

 

 

 

 
1,823

 
1,823

Non-controlling interests – Exchange LP Units
 

 

 

 

 
71

 
71

Non-controlling interests – in operating subsidiaries
 

 

 

 

 
7,303

 
7,303

Preferred unitholders
 
$

 
$

 
$

 
$

 
$
936

 
$
936

1.
Includes net income attributable to non-controlling interest Redeemable Partnership Units held by Brookfield, general partner and limited partners.
2.
Includes investments in all subsidiaries of our partnership under the equity method.
3.
Includes investments in all subsidiaries of the Holding LP, Brookfield Infrastructure Holdings (Canada) Inc., Brookfield Infrastructure US Holdings I Corporation and BIP Bermuda Holdings I Limited under the equity method.
4.
Includes elimination of intercompany transactions and balances necessary to present our partnership on a consolidated basis.
13. REVENUE
The following table disaggregates revenues by segment:
US$ MILLIONS
For the three-month period ended March 31, 2019
 
For the three-month period ended March 31, 2018
Utilities
$
728

 
$
535

Transport
336

 
339

Energy
450

 
139

Data Infrastructure
79

 

Total
$
1,593

 
$
1,013

Substantially all of our partnership’s revenues are recognized over time as services are rendered.

30 BROOKFIELD INFRASTRUCTURE PARTNERS L.P.




The following table disaggregates revenues by geographical region:
US$ MILLIONS
For the three-month period ended March 31, 2019
 
For the three-month period ended March 31, 2018
Brazil
$
289

 
$
305

Canada
272

 
77

Australia
269

 
284

Colombia
249

 
44

United States of America
212

 
41

United Kingdom
162

 
159

Chile
42

 
45

India
40

 
13

Peru
29

 
26

Other
29

 
19

Total
$
1,593

 
$
1,013

14 . PARTNERSHIP CAPITAL
As at March 31, 2019 , our partnership’s capital structure was comprised of three classes of partnership units: limited partnership units, preferred units and general partnership units. Limited partnership units entitle the holder to their proportionate share of distributions. Preferred units entitle the holder to cumulative preferential cash distributions in accordance with their terms. General partnership units entitle the holder to the right to govern the financial and operating policies of our partnership. The Holding LP’s capital structure is composed of four classes of partnership units: special general partner units, Holding LP Class A preferred units, managing general partner units and redeemable partnership units held by Brookfield.
(a) Special General and Limited Partnership Capital
 
Special General Partner Units
 
Limited Partnership Units
 
Total
UNITS MILLIONS
As of and for the three-month period ended
Mar. 31, 2019

 
As of and for the 12 month period ended
Dec. 31, 2018

 
As of and for the three-month period ended
Mar. 31, 2019

 
As of and for the 12 month period ended
Dec. 31, 2018

 
As of and for the three-month period ended
Mar. 31, 2019

 
As of and for the 12 month period ended
Dec. 31, 2018

Opening balance
1.6

 
1.6

 
277.3

 
276.6

 
278.9

 
278.2

Issued for cash

 

 
0.1

 
0.3

 
0.1

 
0.3

Conversion from Exchange LP Units

 

 
3.1

 
1.3

 
3.1

 
1.3

Repurchased and cancelled

 

 
(0.8
)
 
(0.9
)
 
(0.8
)
 
(0.9
)
Ending balance
1.6

 
1.6

 
279.7

 
277.3

 
281.3

 
278.9

The weighted average number of special general partner units outstanding for the three-month period ended March 31, 2019 was 1.6 million ( 2018 1.6 million ). The weighted average number of limited partnership units outstanding for the three -month period ended March 31, 2019 was 278.1 million ( 2018 : 276.6 million ).
 
Special General Partner
 
Limited Partners
 
Total
US$ MILLIONS
As of and for the three-month period ended
Mar. 31, 2019

 
As of and for the 12 month period ended
Dec. 31, 2018

 
As of and for the three-month period ended
Mar. 31, 2019

 
As of and for the 12 month period ended
Dec. 31, 2018

 
As of and for the three-month period ended
Mar. 31, 2019

 
As of and for the 12 month period ended
Dec. 31, 2018

Opening balance
$
19

 
$
19

 
$
4,911

 
$
4,907

 
$
4,930

 
$
4,926

Unit issuance

 

 
2

 
14

 
2

 
14

Conversion from Exchange LP Units

 

 
50

 
20

 
50

 
20

Repurchased and cancelled

 

 
(28
)
 
(30
)
 
(28
)
 
(30
)
Ending balance
$
19

 
$
19

 
$
4,935

 
$
4,911

 
$
4,954

 
$
4,930

During the three months ended March 31, 2019 , our partnership repurchased and cancelled 0.8 million units for $28 million , and incurred less than $1 million in commission costs.

Q1 2019 INTERIM REPORT 31


In June 2010, we implemented a distribution reinvestment plan (the “Plan”) that allows eligible holders of our partnership to purchase additional units by reinvesting their cash distributions. Under the Plan, units are acquired at a price per unit calculated by reference to the volume weighted average of the trading price for our units on the New York Stock Exchange for the five trading days immediately preceding the relevant distribution date. During the three -month period ending March 31, 2019 , our partnership issued less than 0.1 million units for proceeds of $2 million (2018: less than 1 million units for proceeds of $4 million ).
(b) Non-controlling interest – Redeemable Partnership Units held by Brookfield
 
Non-controlling interest –
Redeemable Partnership Units held
by Brookfield
UNITS MILLIONS
As of and for the three-month period ended
Mar. 31, 2019

 
As of and for the 12 month period ended
Dec. 31, 2018

Opening balance
115.8

 
115.8

Ending balance
115.8

 
115.8

The weighted average number of Redeemable Partnership Units outstanding for the three-month period ended March 31, 2019 was 115.8 million ( 2018 : 115.8 million ).
 
Non-controlling interest – 
Redeemable Partnership Units held 
by Brookfield
US$ MILLIONS
As of and for the three-month period ended
Mar. 31, 2019

 
As of and for the 12 month period ended
Dec. 31, 2018

Opening balance
$
2,078

 
$
2,078

Ending balance
$
2,078

 
$
2,078

(c) Non-controlling interest – Exchange LP Units
 
Non-controlling interest – 
Exchange LP Units
UNITS MILLIONS
As of and for the three-month period ended
Mar. 31, 2019

 
As of and for the 12 month period ended
Dec. 31, 2018

Opening balance
4.4

 

Issued for cash

 
5.7

Exchange LP conversion
(3.1
)
 
(1.3
)
Ending balance
1.3

 
4.4

 
Non-controlling interest – 
Exchange LP Units
US$ MILLIONS
As of and for the three-month period ended
Mar. 31, 2019

 
As of and for the 12 month period ended
Dec. 31, 2018

Opening balance
$
212

 
$

Unit issuance

 
232

Exchange LP conversion
(50
)
 
(20
)
Ending balance
$
162

 
$
212


On October 16, 2018, Brookfield Infrastructure Partners Exchange LP (“Exchange LP”), a subsidiary of our partnership, issued 5.7 million Exchange LP Units for proceeds of $232 million in connection with the privatization of Enercare Inc. The Exchange LP Units provide holders with economic terms that are substantially equivalent to those of our units and are exchangeable, on a one-for-one basis, for our units. Given the exchangeable feature, we present the Exchange LP Units as a component of non-controlling interests.
During the three months ended March 31, 2019 , Exchange LP unitholders exchanged 3.1 million Exchange LP units for $50 million limited partners’ capital.

32 BROOKFIELD INFRASTRUCTURE PARTNERS L.P.




(d) Preferred Unitholders’ Capital
 
Preferred Units
UNITS MILLIONS
As of and for the three-month period ended
Mar. 31, 2019

 
As of and for the 12 month period ended
Dec. 31, 2018

Opening balance
49.9

 
32.0

Issued for cash

 
18.0

Repurchased and cancelled

 
(0.1
)
Ending balance
49.9

 
49.9

 
Preferred Units
US$ MILLIONS
As of and for the three-month period ended
Mar. 31, 2019

 
As of and for the 12 month period ended
Dec. 31, 2018

Opening balance
$
936

 
$
595

Unit issuance

 
342

Repurchased and cancelled
(1
)
 
(1
)
Ending balance
$
935

 
$
936

During the three months ended March 31, 2019 , our partnership repurchased and cancelled less than 0.1 million preferred units for $ 1 million .
In September 2018, our partnership issued 10 million Series 11 Preferred Units, at C $25 per unit with a quarterly fixed distribution at a rate of 5.10% annually for the initial period ending December 31, 2023. In total, $ 190 million or C $250 million of gross proceeds were raised and $5 million in underwriting and issuance costs were incurred.
In January 2018, our partnership issued 8 million Series 9 Preferred Units, at C $25 per unit with a quarterly fixed distribution at a rate of 5.00% annually for the initial period ending March 31, 2023. In total, $ 161 million or C $200 million of gross proceeds were raised and $4 million in underwriting and issuance costs were incurred.
15 . DISTRIBUTIONS
For the three-month period ended March 31, 2019 , distributions to partnership and Exchange LP unitholders were $200 million ( 2018 : $ 185 million ). This represents a quarterly distribution of $0.5025 per partnership unit ( 2018 : $0.47 per partnership unit), a 7% increase from December 31, 2018.
Additionally, incentive distributions were made to the special general partner of $38 million for the three-month period ended March 31, 2019 ( 2018 : $34 million ).
For the three-month period ended March 31, 2019 , our partnership declared preferred unit distributions of $12 million ( 2018 : $9 million ). This represented a distribution of $0.24 per preferred unit ( 2018 : $0.23 per preferred unit).

Q1 2019 INTERIM REPORT 33


16 . ACCUMULATED OTHER COMPREHENSIVE INCOME
a) Attributable to Limited Partners
US$ MILLIONS
Revaluation
surplus

 
Foreign
currency
translation

 
Net
investment
hedges

 
Cash flow
hedges

 
Marketable securities

 
Unrealized
actuarial
losses

 
Equity
accounted
investments

 
Accumulated
other
comprehensive
income

Balance at January 1, 2019
$
667

 
$
(1,336
)
 
$
95

 
$
(96
)
 
$
(33
)
 
$
(18
)
 
$
930

 
$
209

Other comprehensive (loss) income

 
7

 
(16
)
 
17

 
20

 
(2
)
 
(23
)
 
3

Other items

 
20

 
6

 

 

 

 

 
26

Balance at March 31, 2019
$
667

 
$
(1,309
)
 
$
85

 
$
(79
)
 
$
(13
)
 
$
(20
)
 
$
907

 
$
238

US$ MILLIONS
Revaluation
surplus

 
Foreign
currency
translation

 
Net
investment
hedges

 
Cash flow
hedges

 
Marketable securities

 
Unrealized
actuarial
losses

 
Equity
accounted
investments

 
Accumulated
other
comprehensive
income

Balance at January 1, 2018
$
976

 
$
(835
)
 
$
28

 
$
(26
)
 
$

 
$
(27
)
 
$
748

 
$
864

Other comprehensive income (loss) (1)

 
76

 
(37
)
 
(21
)
 
(11
)
 

 
9

 
16

Other items (1)
(450
)
 

 

 

 

 

 

 
(450
)
Balance at March 31, 2018
$
526

 
$
(759
)
 
$
(9
)
 
$
(47
)
 
$
(11
)
 
$
(27
)
 
$
757

 
$
430

b) Attributable to General Partner
US$ MILLIONS
Revaluation
surplus

 
Foreign
currency
translation

 
Net
investment
hedges

 
Cash flow
hedges

 
Marketable securities

 
Unrealized
actuarial
losses

 
Equity
accounted
investments

 
Accumulated
other
comprehensive
income

Balance at January 1, 2019
$
5

 
$
(9
)
 
$
2

 
$

 
$

 
$

 
$
5

 
$
3

Other items

 

 

 

 

 

 

 

Balance at March 31, 2019
$
5

 
$
(9
)
 
$
2

 
$

 
$

 
$

 
$
5

 
$
3

US$ MILLIONS
Revaluation
surplus

 
Foreign
currency
translation

 
Net
investment
hedges

 
Cash flow
hedges

 
Marketable securities

 
Unrealized
actuarial
losses

 
Equity
accounted
investments

 
Accumulated
other
comprehensive
income

Balance at January 1, 2018
$
7

 
$
(6
)
 
$
1

 
$

 
$

 
$

 
$
4

 
$
6

Other items (1)
(3
)
 

 

 

 

 

 

 
(3
)
Balance at March 31, 2018
$
4

 
$
(6
)
 
$
1

 
$

 
$

 
$

 
$
4

 
$
3


34 BROOKFIELD INFRASTRUCTURE PARTNERS L.P.




c) Attributable to Non-controlling interest – Redeemable Partnership Units held by Brookfield
US$ MILLIONS
Revaluation
surplus

 
Foreign
currency
translation

 
Net
investment
hedges

 
Cash flow
hedges

 
Marketable securities

 
Unrealized
actuarial
losses

 
Equity
accounted
investments

 
Accumulated
other
comprehensive
income

Balance at January 1, 2019
$
296

 
$
(552
)
 
$
40

 
$
(43
)
 
$
(16
)
 
$
(4
)
 
$
391

 
$
112

Other comprehensive (loss) income

 
2

 
(7
)
 
7

 
9

 
(1
)
 
(9
)
 
1

Other items


 
9

 
3

 

 

 

 

 
12

Balance at March 31, 2019
$
296

 
$
(541
)
 
$
36

 
$
(36
)
 
$
(7
)
 
$
(5
)
 
$
382

 
$
125

US$ MILLIONS
Revaluation
surplus

 
Foreign
currency
translation

 
Net
investment
hedges

 
Cash flow
hedges

 
Marketable securities

 
Unrealized
actuarial
losses

 
Equity
accounted
investments

 
Accumulated
other
comprehensive
income

Balance at January 1, 2018
$
425

 
$
(339
)
 
$
11

 
$
(14
)
 
$
(2
)
 
$
(8
)
 
$
314

 
$
387

Other comprehensive income (loss) (1)

 
29

 
(15
)
 
(8
)
 
(5
)
 

 
4

 
5

Other items (1)
(188
)
 

 

 

 

 

 

 
(188
)
Balance at March 31, 2018
$
237

 
$
(310
)
 
$
(4
)
 
$
(22
)
 
$
(7
)
 
$
(8
)
 
$
318

 
$
204

d) Attributable to Non-controlling interest – Exchange LP Units
US$ MILLIONS
Revaluation
surplus

 
Foreign
currency
translation

 
Net
investment
hedges

 
Cash flow
hedges

 
Marketable securities

 
Unrealized
actuarial
losses

 
Equity
accounted
investments

 
Accumulated
other
comprehensive
income

Balance at January 1, 2019
$
2

 
$
1

 
$

 
$
(1
)
 
$

 
$

 
$
2

 
$
4

Other comprehensive income (loss)

 

 

 

 

 

 

 

Balance at March 31, 2019
$
2

 
$
1

 
$

 
$
(1
)
 
$

 
$

 
$
2

 
$
4

1.
In relation to the sale of our Chilean electricity transmission business, $641 million of revaluation surplus previously recognized within accumulated other comprehensive income was reclassified directly to retained earnings in the Consolidated Statements of Partnership Capital. Additionally, $127 million of deferred tax expense previously recognized within accumulated other comprehensive income was reclassified as current income tax expense within accumulated other comprehensive income.
17 . RELATED PARTY TRANSACTIONS
In the normal course of operations, Brookfield Infrastructure entered into the transactions below with related parties. The immediate parent of Brookfield Infrastructure is our partnership. The ultimate parent of Brookfield Infrastructure is Brookfield. Other related parties of Brookfield Infrastructure represent its subsidiary and operating entities.
a) Transactions with the immediate parent
Throughout the year, the General Partner, in its capacity as our partnership’s general partner, incurs director fees, a portion of which are charged at cost to our partnership in accordance with the limited partnership agreement. Less than $1 million in director fees were incurred during the three-month period ended March 31, 2019 ( 2018 : less than $1 million ).
As of March 31, 2019, Brookfield Infrastructure had financial assets balance of $601 million from Brookfield, $581 million of which relates to the acquisition of Ascenty funded by our partnership on behalf of future institutional investment partners. The financial asset yields a return of 8% per annum and repayment is expected to occur following the first close of Brookfield’s private infrastructure fund. Brookfield Infrastructure also has loans payable of $73 million to subsidiaries of Brookfield (December 31, 2018: $73 million ). The loans are repayable in full between 2019 and 2026 with interest rates ranging from 3.8% to 8.5% per annum .
b) Transactions with other related parties
Since inception, Brookfield Infrastructure has had a management agreement (the “Master Services Agreement”) with certain service providers (the “Service Provider”), which are wholly-owned subsidiaries of Brookfield.
Pursuant to the Master Services Agreement, on a quarterly basis, Brookfield Infrastructure pays a base management fee, referred to as the Base Management Fee, to the Service Provider equal to 0.3125% per quarter ( 1.25% annually) of the market value of our partnership. The Base Management Fee was $59 million for the three-month period ended March 31, 2019 ( 2018 : $56 million ). As of March 31, 2019, $59 million was outstanding as payable to the Service Provider (December 31, 2018: $51 million ).

Q1 2019 INTERIM REPORT 35


For purposes of calculating the Base Management Fee, the market value of our partnership is equal to the aggregate value of all the outstanding units of our partnership (assuming full conversion of Brookfield’s Redeemable Partnership Units in the Holdings LP into units of our partnership), preferred units and securities of the other Service Recipients (as defined in Brookfield Infrastructure’s Master Services Agreement) that are not held by Brookfield Infrastructure, plus all outstanding third party debt with recourse to a Service Recipient, less all cash held by such entities.
Brookfield Infrastructure, from time to time, will place deposits with, or receive deposits from, Brookfield. As of March 31, 2019 , Brookfield Infrastructure’s deposit balance from Brookfield was $367 million ( December 31, 2018 : deposit with Brookfield of less than $1 million ) . The deposit bears interest at market rates and was provided to Brookfield Infrastructure to fund our partnership’s acquisition of Ascenty completed on behalf of future institutional partners. Brookfield Infrastructure incurred interest expense of  less than $ 1 million for the three-month period ended March 31, 2019 ( 2018 : interest income of less than $1 million ).
Brookfield Infrastructure has entered into a $500 million revolving credit facility with Brookfield to provide additional liquidity for general corporate purposes and capital expenditures, if required. As of March 31, 2019 , there were $nil (December 31, 2018: $nil ) borrowings outstanding.
Brookfield Infrastructure’s subsidiaries provide heating, cooling and connection services in the normal course of operations on market terms to subsidiaries and associates of Brookfield Property Partners L.P. In addition, our subsidiaries lease office space and obtain construction, consulting and engineering services in the normal course of operations on market terms from subsidiaries and associates of Brookfield Property Partners L.P. For the three-month period ended March 31, 2019 , revenues of $4 million were generated ( 2018 : $2 million ) and expenses of $2 million were incurred ( 2018 : less than $1 million ).
Brookfield Infrastructure utilizes a wholly-owned subsidiary of Brookfield to negotiate and purchase insurance and assess the adequacy of insurance on behalf of our partnership and certain subsidiaries. During the three-month period ended March 31, 2019 , Brookfield Infrastructure paid less than $1 million for these services ( 2018 : less than $1 million ).
Brookfield Infrastructure’s U.K. port operation provides port marine services on market terms to a subsidiary acquired by Brookfield Business Partners L.P. For the three-month period ended March 31, 2019 , revenues of $1 million were generated ( 2018 : $1 million ) .
Brookfield Infrastructure’s subsidiaries purchase electricity from, and distribute electricity on behalf of, a subsidiary of Brookfield Renewable Partners L.P. in the normal course of operations on market terms. For the three-month period ended March 31, 2019 , revenues of less than $1 million were generated ( 2018 : $nil ) and expenses of $11 million were incurred ( 2018 : $3 million ).
18. SUBSEQUENT EVENT
On April 12, 2019, Brookfield Infrastructure, alongside institutional partners (the “Esperanza consortium”), exercised its option to acquire an additional 15% interest in Esperanza Transmissora de Energia S.A. (“Esperanza”), a Brazilian electricity transmission operation, increasing Brookfield Infrastructure’s ownership of Esperanza to 31%. Prior to April 12, 2019, our partnership’s existing interest in Esperanza was accounted using the equity method.
On closing, Brookfield Infrastructure entered into a voting agreement with an affiliate of Brookfield, providing Brookfield Infrastructure the right to direct the relevant activities of the entity, thereby providing Brookfield Infrastructure with control. Accordingly, Brookfield Infrastructure will consolidate the entity effective April 12, 2019. At the date of the acquisition, Brookfield Infrastructure recognized $207 million of assets and $134 million of liabilities. Non-controlling interest, reflecting the fair value of the portion of the business not acquired by Brookfield Infrastructure, of approximately $50 million was also recognized.
Due to the recent closing of the acquisition, the initial purchase price accounting for the business combination is not available as at the date of issuance of these consolidated financial statements. As a result, the partnership has not provided amounts recognized as at the acquisition date for certain classes of assets acquired and liabilities assumed and has not disclosed the pro-forma revenue and net income attributable to the partnership as if the acquisition had been effective January 1, 2019.




36 BROOKFIELD INFRASTRUCTURE PARTNERS L.P.




MANAGEMENT’S DISCUSSION AND ANALYSIS
AS OF MARCH 31, 2019 AND DECEMBER 31, 2018 AND
FOR THE THREE -MONTHPERIOD ENDED MARCH 31, 2019 AND 2018
INTRODUCTION
The following Management’s Discussion and Analysis (“MD&A”) is the responsibility of management of Brookfield Infrastructure Partners L.P. (our “partnership” collectively with its subsidiary and operating entities “Brookfield Infrastructure”). This MD&A is dated May 13, 2019 and has been approved by the Board of Directors of the general partner of our partnership 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 document, pursuant to the authority delegated to it by the Board of Directors. The terms “Brookfield Infrastructure,” “we,” “us” and “our” refer to Brookfield Infrastructure Partners L.P., and our partnership’s direct and indirect subsidiaries and operating entities as a group. This MD&A should be read in conjunction with Brookfield Infrastructure Partners L.P.’s most recently issued annual and interim financial statements. Additional information, including Brookfield Infrastructure’s Form 20-F, is available on its website at www.brookfieldinfrastructure.com, on SEDAR’s website at www.sedar.com and on EDGAR’s website at www.sec.gov/edgar.shtml.
Business Overview
Brookfield Infrastructure owns and operates high quality, long-life assets that generate stable cash flows, require relatively minimal maintenance capital expenditures and, by virtue of barriers to entry and other characteristics, tend to appreciate in value over time. Our current operations consist of utilities, transport, energy and data infrastructure businesses in North and South America, Asia Pacific and Europe. Our mission is to own and operate a globally diversified portfolio of high-quality infrastructure assets that will generate sustainable and growing distributions over the long term for our unitholders. To accomplish this objective, we will seek to leverage our operating segments to acquire infrastructure assets and actively manage them to extract additional value following our initial investment. An integral part of our strategy is to participate with institutional investors in Brookfield Asset Management Inc. (together with its affiliated entities other than us, “Brookfield”) sponsored partnerships that target acquisitions that suit our profile. We will focus on partnerships in which Brookfield has sufficient influence or control to deploy an operations-oriented approach.
Performance Targets and Key Measures
We target a total return of 12% to 15% per annum on the infrastructure assets that we own, measured over the long term. We intend to generate this return from the in-place cash flows from our operations plus growth through investments in upgrades and expansions of our asset base, as well as acquisitions. We determine our distributions to unitholders based primarily on an assessment of our operating performance. FFO is used to assess our operating performance and can be used on a per unit basis as a proxy for future distribution growth over the long-term. In addition, we have performance measures that track the key value drivers for each of our operating segments. See “ Segmented Disclosures ” on page 47 for more detail.
Distribution Policy
Our distributions are underpinned by stable, highly regulated and contracted cash flows generated from operations. The partnership’s objective is to pay a distribution that is sustainable on a long-term basis. The partnership has set its target payout ratio target at 60-70% of Funds from Operations. In sizing what we believe to be a conservative payout ratio, we typically retain approximately 15-20% of AFFO that we utilize to fund some or all of our internally funded growth capital expenditures.
In light of the current prospects for our business, the Board of Directors of our General Partner approved a 7% increase in our annual distribution to $2.01 per unit, or $0.5025 per unit quarterly, starting with the distribution paid in March 2019. This increase reflects the forecasted contribution from our recently commissioned capital projects, as well as the expected cash yield on acquisitions that we closed in the past year. Since inception, we have increased our quarterly distribution from $0.18 per unit to $0.5025 per unit, a compound annual growth rate of 10% . We target 5% to 9% annual distribution growth in light of the per unit growth we foresee in our operations.


Q1 2019 INTERIM REPORT 37


Basis of Presentation
Our unaudited interim condensed and consolidated financial statements are prepared in accordance with International Accounting Standard 34, Interim Financial Reporting (“IAS 34”) as issued by the International Accounting Standards Board (“IASB”) and using the accounting policies Brookfield Infrastructure applied in its consolidated financial statements as of and for the year ended December 31, 2018 , with the exception of newly adopted accounting standards described in Note 2 , Summary of Accounting Policies. Our unaudited interim condensed and consolidated financial statements include the accounts of Brookfield Infrastructure and the entities over which it has control. Brookfield Infrastructure accounts for investments over which it exercises significant influence, but does not control, using the equity method.
Our partnership’s equity interests include units held by public unitholders and redeemable partnership units (“Redeemable Partnership Units”) held by Brookfield. Our units and the Redeemable Partnership Units have the same economic attributes in all respects, except that the Redeemable Partnership Units provide Brookfield the right to request that its units be redeemed for cash consideration. In the event that Brookfield exercises this right, our partnership has the right, at its sole discretion, to satisfy the redemption request with our units, rather than cash, on a one-for-one basis. As a result, Brookfield, as holder of Redeemable Partnership Units, participates in earnings and distributions on a per unit basis equivalent to the per unit participation of our partnership. However, given the redeemable feature referenced above, we present the Redeemable Partnership Units as a component of non-controlling interests.
When we discuss the results of our operating segments, we present Brookfield Infrastructure’s proportionate share of results for operations accounted for using consolidation and the equity method, in order to demonstrate the impact of key value drivers of each of these operating segments on our partnership’s overall performance. As a result, segment revenues, costs attributable to revenues, other income, interest expense, depreciation and amortization, deferred taxes, fair value adjustments and other items will differ from results presented in accordance with IFRS as they (1) include Brookfield Infrastructure’s proportionate share of earnings from investments in associates and joint ventures attributable to each of the above noted items, and (2) exclude the share of earnings (losses) of consolidated investments not held by Brookfield Infrastructure apportioned to each of the above noted items. However, net income for each segment is consistent with results presented in accordance with IFRS. See “ Reconciliation of Operating Segment Measures ” on page 71 for a reconciliation of segment results to our partnership’s statement of operating results in accordance with IFRS.
Our presentation currency and functional currency is the U.S. dollar. Except for the adoption of IFRS 16, there were no changes in accounting policies that have had a material impact on the comparability of the results between financial years since the adoption of IFRS.

38 BROOKFIELD INFRASTRUCTURE PARTNERS L.P.




OUR OPERATIONS
We own a portfolio of infrastructure assets that are diversified by sector and by geography. We have a stable cash flow profile with approximately 95% of our Adjusted EBITDA supported by regulated or contracted revenues. In order to assist our unitholders and preferred unitholders in evaluating our performance and assessing our value, we group our businesses into operating segments based on similarities in their underlying economic drivers.
Our operating segments are summarized below:
 
 
 
 
 
Operating Segment
 
Asset Type
 
Primary Location
Utilities
 
 
 
 
Regulated or contractual businesses
which earn a return on their asset base
 
•   Regulated Transmission
 
•   North & South America
 
•   Regulated Distribution
 
•   Europe & South America
 
•   Regulated Terminal
 
•   Asia Pacific
 
 
 
Transport
 
 
 
 
Provide transportation for freight,
bulk commodities and passengers
 
•   Rail
 
•   Asia Pacific & South America
 
•   Toll Roads
 
•   Asia Pacific & South America
 
•   Ports
 
•   Europe, North America & Asia
 Pacific
 
 
 
 
 
Energy
 
 
 
 
Systems that provide energy transmission, gathering, processing and storage services
 
•   Natural Gas Midstream and Storage
 
•   North America & Asia Pacific
 
•   Distributed Energy
 
•   North America & Asia Pacific
 
 
 
 
 
Data Infrastructure (1)
 
 
 
 
Provide critical infrastructure and services to global communication companies
 
•   Telecommunications and Fiber
 
•   Europe
 
•   Data Storage
 
•   North & South America, Asia
 Pacific
1.
During the second quarter of 2018, our Communications Infrastructure segment was renamed to Data Infrastructure. There was no concurrent change in the operations which comprise the segment.


Q1 2019 INTERIM REPORT 39


REVIEW OF CONSOLIDATED FINANCIAL RESULTS
In this section we review our consolidated performance and financial position as of March 31, 2019 and December 31, 2018 and for the three-month periods ended March 31, 2019 and 2018 . Further details on the key drivers of our operations and financial position are contained within the “ Segmented Disclosures ” section on page 47 .
 
For the three-month
period ended March 31
US$ MILLIONS, EXCEPT PER UNIT INFORMATION
2019

 
2018

Summary Statements of Operating Results
 
 
 
Revenues
$
1,593

 
$
1,013

Direct operating costs
(798
)
 
(409
)
General and administrative expenses
(61
)
 
(58
)
Depreciation and amortization expense
(292
)
 
(193
)
Interest expense
(212
)
 
(114
)
Share of earnings (losses) from investments in associates and joint ventures
18

 
(5
)
Mark-to-market on hedging items
(18
)
 
(36
)
Gain on sale of associate

 
338

Income tax expense
(75
)
 
(185
)
Net income
165

 
327

Net income attributable to our partnership (1)
30

 
209

Net (loss) income per limited partnership unit
$
(0.05
)
 
$
0.42

1.
Includes net income attributable to non-controlling interests—Redeemable Partnership Units held by Brookfield, non-controlling interests—Exchange LP Units, general partner and limited partners.
Three-month periods ended March 31, 2019 and 2018
Net income for the three-month period ended March 31, 2019 was $ 165 million , of which $30 million was attributable to our partnership. This compares to net income of $ 327 million in the prior year, of which $ 209 million was attributable to our partnership. Net income for the period benefited from organic growth across the majority of our operations and contributions from new investments made in the past 12 months. These increases were more than offset by the gain of $209 million (net of tax) realized on the sale of our investment in an electricity transmission business in the prior year, and the impact of foreign exchange.
Revenues for the three-month period ended March 31, 2019 were $ 1,593 million , which represents an increase of $580 million compared to the same period in 2018 . Our utilities segment contributed additional revenue of $259 million as a result of the recent acquisition of a Colombian natural gas distribution business, the benefit of inflation-indexation and various growth initiatives, primarily at our U.K. regulated distribution operation. Our energy segment contributed additional revenue of $ 323 million as a result of acquisitions of a North American residential energy infrastructure operation and a Western Canadian natural gas gathering and processing operation in the fourth quarter of 2018. Our Data Infrastructure segment contributed additional revenue of $ 79 million from recently acquired data center operations in the U.S. and Australia. Organic growth initiatives within our transport businesses further contributed incremental revenue of $26 million compared to the prior year. These items were partially offset by $107 million of foreign exchange, predominantly associated with a 14% depreciation of the Brazilian real.
Direct operating expenses for the three-month period ended March 31, 2019 were $ 798 million , an increase of $389 million compared to the three-month period ended March 31, 2018 . The current period includes $411 million of incremental costs related to our recently completed acquisitions and $25 million of costs associated with the organic growth initiatives. These increases were partially offset by the impact of IFRS 16 which reduced direct costs from existing businesses by $15 million and the impact of foreign exchange of $32 million .
General and administrative expenses totaled $ 61 million for the three-month period ended March 31, 2019 , an increase of $3 million compared to the same period in 2018 . This line item primarily consists of the base management fee that is paid to Brookfield, which is equal to 1.25% of our partnership’s market value plus preferred units outstanding and net recourse debt . The base management fee increased from the prior year due to a larger capitalization as a result of higher net debt.
Depreciation and amortization expense for the three-month period ended March 31, 2019 was $ 292 million , an increase of $99 million from the prior year. This increase is predominantly a result of incremental charges from recently completed acquisitions, the impact of higher asset values from our most recent annual revaluation process, and the adoption of IFRS 16. These increases were partially offset by the impact of foreign exchange.

40 BROOKFIELD INFRASTRUCTURE PARTNERS L.P.




Interest expense for the three-month period ended March 31, 2019 was $212 million , an increase of $98 million compared to the same period in 2018 . Interest expense increased due to the issuance of $1.5 billion of five-year senior notes at our Brazilian regulated gas transmission business in May of 2018, the issuance of C$500 million of medium term notes in September 2018, the adoption of IFRS 16, and additional borrowings used to fund new investments and organic growth opportunities.
Our partnership’s share of earnings from investments in associates and joint ventures was $ 18 million for the three-month period ended March 31, 2019 , representing an increase of $23 million relative to the same period in 2018 . Prior year results were impacted by the reclassification of previously recognized foreign exchange losses from accumulated other comprehensive income related to our investment in a Chilean electricity transmission business sold in March 2018.
Mark-to-market losses on hedging items for the three-month period ended March 31, 2019 were $18 million , compared to losses of $36 million for the three-month period ended March 31, 2018 . Amounts in both the current and comparative periods consist primarily of mark-to-market movements relating to foreign exchange hedging activities at the corporate level relating to the Australian dollar, British pound and Euro.
Income tax expense for the three-month period ended March 31, 2019 was $ 75 million compared to $ 185 million for the same period in 2018 . The decrease is primarily due to taxes associated with the gain on sale of our 28% interest in a Chilean electricity transmission business in the prior year and the impact of foreign exchange, partially offset by higher taxable income generated by our operations.

US$ MILLIONS
Summary Statements of Financial Position Key Metrics
As of
March 31, 2019
 
December 31, 2018
Cash and cash equivalents
$
720

 
$
540

Total assets
41,625

 
36,580

Corporate borrowings
2,481

 
1,993

Non-recourse borrowings
14,323

 
13,113

Total liabilities
25,350

 
21,912

Limited Partners’ capital
4,633

 
4,513

General Partner capital
22

 
22

Non-controlling interest – Redeemable Partnership Units held by Brookfield
1,863

 
1,823

Non-controlling interest – Exchange LP Units
23

 
71

Non-controlling interest – in operating subsidiaries
8,799

 
7,303

Preferred unitholders
935

 
936

Total assets were $ 41.6 billion at March 31, 2019 , compared to $ 36.6 billion at December 31, 2018 . The increase was primarily due to recently completed acquisitions and organic growth initiatives which increased total assets by $3.8 billion. The adoption of IFRS 16 resulted in the recognition of $1.2 billion of right-of-use assets and the impact of foreign exchange increased total assets by $ 0.3 billion . These increases were partially offset by depreciation and amortization charges of $0.3 billion .
Corporate borrowings increased to $2.5 billion at March 31, 2019 , compared to $2.0 billion  at December 31, 2018 . The increase is due to additional borrowings of $0.5 billion on our corporate credit facility to fund recently completed acquisitions.
Non-recourse borrowings increased by $1.2 billion to $ 14.3 billion at March 31, 2019 . The increase is attributable to additional net borrowings of $1.1 billion primarily associated with acquisitions completed during the year, and the impact of foreign exchange of $0.1 billion as the majority of the currencies we operate in strengthened relative to the U.S. dollar during the three-month period ended March 31, 2019 .
Partnership capital was $ 6.5 billion at March 31, 2019 , compared to $6.4 billion at December 31, 2018 , an increase of $0.1 billion . The increase was primarily due to earnings for the period and a gain of $0.4 billion recognized on the partial disposition of our Chilean toll road operations. These increases were partially offset by distributions paid to our unitholders and preferred unitholders of $0.3 billion .

Q1 2019 INTERIM REPORT 41


Foreign Currency Translation
Due to the nature of our global operations, current period financial results may be impacted by foreign currency movements. The most significant currency exchange rates that impact our business are shown in the following table:
 
Period End Rate
 
Average Rate
 
As of
 
For the three-month
period ended March 31
 
March 31, 2019

 
December 31, 2018
 
Change

 
2019

 
2018
 
Change

Brazilian real
0.2566
 
0.2581
 
(1
)%
 
0.2654
 
0.3083
 
(14
)%
Canadian dollar
0.7490

 
0.7331
 
2
 %
 
0.7521

 
0.7909
 
(5
)%
British pound
1.3038
 
1.2760
 
2
 %
 
1.3024
 
1.3915
 
(6
)%
Australian dollar
0.7097
 
0.7050
 
1
 %
 
0.7125
 
0.7860
 
(9
)%
As at March 31, 2019 , our consolidated partnership capital of $16.3 billion was invested in the following currencies: Brazilian reais - 23% ; Canadian dollars - 22% ; Australian dollars - 11% ; British pounds - 11% ; United States dollars - 7% ; and other currencies - 26% . Currency exchange rates relative to the U.S. dollar at the end of the first quarter of 2019 were higher than December 31, 2018 for most of our significant non-U.S. dollar investments, which increased the carrying values of the assets and liabilities from our subsidiaries or investments in these regions.
The following table disaggregates the impact of foreign currency translation on our partnership capital by the most significant non-U.S. currencies:
 
For the three-month
period ended March 31
 
2019

 
2018

Australian dollar
$
12

 
$
(30
)
Brazilian real
(27
)
 
(31
)
British pound
39

 
59

Canadian dollar
76

 
23

Other
18

 
92

 
118

 
113

Currency hedges
(36
)
 
(81
)
 
$
82

 
$
32

Attributable to:
 
 
 
Unitholders
$
7

 
$
19

Non-controlling interests
75

 
13

 
$
82

 
$
32

The impact of foreign currency translation on partnership capital, including those attributable to non-controlling interests for the three-month period ended March 31, 2019 was an increase to partnership capital of $0.1 billion .
We use financial contracts and locally denominated debt to reduce most foreign currency exposures. We are largely hedged against the Australian, British and European currencies and as a result, the income in the quarter was partially offset by the depreciation of the currency hedges. We have also entered into hedges to reduce foreign currency exposures to Canadian, Chilean, and Peruvian currencies.
Average currency exchange rates impact the U.S. dollar equivalents of revenues and net income from non-U.S. operations on a comparative basis. During the three-month period ended March 31, 2019 , the Australian dollars, Brazilian real and British pound have weakened relative to the U.S. dollar comparing to the prior year, decreasing the U.S. dollar equivalents of revenue and net income in these currencies in the current period.

42 BROOKFIELD INFRASTRUCTURE PARTNERS L.P.




Summary of Quarterly Results
Quarterly results for the eight most recent quarters are as follows:
US$ MILLIONS, EXCEPT PER UNIT AMOUNTS
2019
 
2018
 
2017
Three-month period ended
Q1

 
Q4

 
Q3

 
Q2

 
Q1

 
Q4

 
Q3

 
Q2

Revenues
$
1,593

 
$
1,428

 
$
1,167

 
$
1,044

 
$
1,013

 
$
984

 
$
961

 
$
934

Direct operating costs
(798
)
 
(729
)
 
(603
)
 
(467
)
 
(409
)
 
(399
)
 
(394
)
 
(373
)
Earnings (losses) from investment in associates and joint ventures
18

 
23

 
(32
)
 
1

 
(5
)
 
35

 
24

 
36

Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest
(212
)
 
(176
)
 
(140
)
 
(125
)
 
(114
)
 
(113
)
 
(114
)
 
(107
)
General and administrative expenses
(61
)
 
(54
)
 
(57
)
 
(54
)
 
(58
)
 
(66
)
 
(63
)
 
(59
)
Valuation items
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair value changes and other
(8
)
 
(45
)
 
5

 
80

 
(60
)
 
6

 
(18
)
 
(34
)
Depreciation and amortization
(292
)
 
(232
)
 
(188
)
 
(188
)
 
(193
)
 
(130
)
 
(215
)
 
(206
)
Gain on sale of associates

 

 

 

 
338

 

 

 

Income tax expense
(75
)
 
(42
)
 
(65
)
 
(72
)
 
(185
)
 
(75
)
 
(30
)
 
(56
)
Net income
165

 
173

 
87

 
219

 
327

 
242

 
151

 
135

Net income attributable to others
171

 
147

 
107

 
155

 
205

 
212

 
156

 
145

Net (loss) income attributable to limited partners
(6
)
 
26

 
(20
)
 
64

 
122

 
30

 
(5
)
 
(10
)
Net (loss) income per limited partnership unit
$
(0.05
)
 
$
0.06

 
$
(0.10
)
 
$
0.21

 
$
0.42

 
$
0.09

 
$
(0.04
)
 
$
(0.06
)
A significant driver of our results continues to be organic growth from inflation, volume growth and reinvested capital, which add to the ongoing earnings profile of our current businesses, as well as new investments. On a constant currency basis, these items contributed to increases in our revenues, operating and interest costs, as well as depreciation expense. In addition to the aforementioned items, net income is impacted by fair value adjustments, and other income and expenses.
We do not consider the effects of seasonality to be significant to the business overall. This is primarily due to the diversification of our business from a geographic and a segment perspective.

Q1 2019 INTERIM REPORT 43


SELECTED STATEMENTS OF OPERATING RESULTS AND FINANCIAL POSITION INFORMATION
To measure performance, we focus on net income, an IFRS measure, as well as certain non-IFRS measures, including but not limited to FFO, AFFO, Adjusted EBITDA, Adjusted Earnings and Invested Capital. We define FFO as net income excluding the impact of depreciation and amortization, deferred income taxes, breakage and transaction costs, and non-cash valuation gains or losses. We define AFFO as FFO less capital expenditures required to maintain the current performance of our operations (maintenance capital expenditures). We define Adjusted EBITDA as net income excluding the impact of depreciation and amortization, interest expense, current and deferred income taxes, breakage and transaction costs, and non-cash valuation gains or losses. We define Adjusted Earnings as net income attributable to our partnership, excluding the impact of depreciation and amortization expense from revaluing property, plant and equipment and the effects of purchase price accounting, mark-to-market on hedging items and disposition gains or losses. We define Invested Capital as partnership capital removing the following items: non-controlling interest - in operating subsidiaries, retained earnings or deficit, accumulated other comprehensive income and ownership changes.
Along with net income and other IFRS measures, FFO, Adjusted EBITDA, Adjusted Earnings and Invested Capital are key measures of our financial performance that we use to assess the results and performance of our operations on a segmented basis. AFFO is also a measure of operating performance and represents the ability of our businesses to generate sustainable earnings. Adjusted Earnings is a measure of operating performance used to assess the ability of our businesses to generate recurring earnings which allows users to better understand and evaluate the underlying financial performance of our partnership. Invested Capital, which tracks the amount of capital that has been contributed to our partnership, is a measure we utilize to assess returns on capital deployed, relative to targeted returns.
Since they are not calculated in accordance with, and do not have any standardized meanings prescribed by IFRS, FFO, AFFO, Adjusted EBITDA, Adjusted Earnings and Invested Capital are unlikely to be comparable to similar measures presented by other issuers and have limitations as analytical tools. Specifically, our definition of FFO may differ from the definition used by other organizations, as well as the definition of Funds from Operations used by the Real Property Association of Canada (“REALPAC”) and the National Association of Real Estate Investment Trusts, Inc. (“NAREIT”), in part because the NAREIT definition is based on U.S. GAAP, as opposed to IFRS.
For further details regarding our use of FFO, AFFO, Adjusted EBITDA, Adjusted Earnings and Invested Capital, as well as a reconciliation of the most directly comparable IFRS measures to these measures, see the “ Reconciliation of Non-IFRS Financial Measures ” section of this MD&A.

44 BROOKFIELD INFRASTRUCTURE PARTNERS L.P.




US$ MILLIONS, EXCEPT PER UNIT INFORMATION
For the three-month
period ended March 31
 
Key Metrics
2019

 
2018

 
Net income attributable to partnership (1)
$
30

 
$
209

 
Net (loss) income per limited partnership unit (2)
(0.05
)
 
0.42

 
Funds from Operations (FFO) (3),(4)
351

 
333

 
Per unit FFO (5)
0.88

 
0.85

 
Adjusted Funds from Operations (AFFO) (6)
297

 
284

 
Return on invested capital (7)
13

%
13

%
Adjusted EBITDA (8)
472

 
425

 
Adjusted earnings (9)
164

 
154

 
Adjusted earnings per unit (5)
0.41

 
0.39

 
Distributions per unit
0.5025

 
0.4700

 
Payout ratio (10)
71

%
68

%
1.
Net income attributable to partnership includes net income attributable to non-controlling interests—Redeemable Partnership Units held by Brookfield, non-controlling interests—Exchange LP Units, general partner and limited partners.
2.
Average number of limited partnership units outstanding on a time weighted average basis for the three-month period was 278.1 million ( 2018 : 276.6 million ).
3.
FFO is defined as net income excluding the impact of depreciation and amortization, deferred income taxes, breakage and transaction costs, and non-cash valuation gains or losses. Refer to the “ Reconciliation of Non-IFRS Financial Measures ” section of this MD&A for reconciliation from net income to FFO.
4.
As a result of the application of IFRS 16, EBITDA and FFO were $13 million and $7 million higher than the comparative period.
5.
Average units outstanding during the three-month period were 398.7 million ( 2018 : 394.0 million ) being inclusive of limited partnership units, the Redeemable Partnership Units, the Exchange LP Units and the general partner units.
6.
AFFO is defined as FFO less maintenance capital expenditures. Refer to the “ Reconciliation of Non-IFRS Financial Measures ” section of this MD&A for reconciliation from net income to AFFO.
7.
Return on invested capital is calculated as AFFO adjusted for an estimate of the portion of earnings that represent a return of capital on concession-based businesses, divided by Invested Capital. The return of capital estimate for the three-month period ended March 31, 2019 was $26 million ( 2018 : $25 million ). Refer to the “ Reconciliation of Non-IFRS Financial Measures ” section of this MD&A for reconciliation from partnership capital to Invested Capital.
8.
Adjusted EBITDA is defined as net income excluding the impact of depreciation and amortization, interest expense, current and deferred income taxes, breakage and transaction costs, and non-cash valuation gains or losses. Refer to the “ Reconciliation of Non-IFRS Financial Measures ” section of this MD&A for reconciliation from net income to Adjusted EBITDA.
9.
Adjusted Earnings is defined as net income attributable to our partnership, excluding the impact of depreciation and amortization expense from revaluing property, plant and equipment and the effects of purchase price accounting, mark-to-market on hedging items and disposition gains or losses. Refer to the “ Reconciliation of Non-IFRS Financial Measures ” section of this MD&A for reconciliation from net income to Adjusted Earnings.
10.
Payout ratio is defined as distributions paid per unit (inclusive of GP incentive and preferred unit distributions) divided by FFO.
For the three months ended March 31, 2019 , FFO totaled $ 351 million ($ 0.88 per unit) compared to FFO of $ 333 million ($ 0.85  per unit) for the same quarter in 2018 . FFO increased by 4% on a per unit basis compared to 2018 , due to organic growth of 10% and incremental earnings on capital deployed over the past 12 months, partially offset by the impact of foreign exchange which reduced results by $ 13 million . Organic growth was generated by inflation-indexation across approximately 75% of our businesses, solid GDP-driven volume growth, predominantly at our transport operations, and contributions from accretive capital projects commissioned during the period. Current quarter results also incorporated the effects of the adoption of IFRS 16, which increased FFO by $7 million compared to the prior year. The partnership paid distributions of $0.5025 per unit, an increase of 7% compared to the prior year, which represents a payout ratio of 71% . Holding foreign currencies constant over the period would lower our partnership’s payout ratio to 69% , within our target range.

Q1 2019 INTERIM REPORT 45


The following tables present selected statement of operating results and financial position information by operating segment on a proportionate basis:
US$ MILLIONS
For the three-month
period ended March 31
Statements of Operating Results
2019

 
2018

Net income (loss) by segment
 
 
 
Utilities
$
68

 
$
49

Transport
14

 
12

Energy
32

 
13

Data Infrastructure
1

 
1

Corporate
(85
)
 
134

Net income
$
30

 
$
209

Adjusted EBITDA by segment
 
 
 
Utilities
$
181

 
$
203

Transport
189

 
178

Energy
127

 
79

Data Infrastructure
36

 
23

Corporate
(61
)
 
(58
)
Adjusted EBITDA
$
472

 
$
425

FFO by segment
 
 
 
Utilities
$
137

 
$
169

Transport
139

 
137

Energy
107

 
66

Data Infrastructure
28

 
19

Corporate
(60
)
 
(58
)
FFO
$
351

 
$
333

US$ MILLIONS
As of
Statements of Financial Position
March 31, 2019
 
December 31, 2018
Total assets by segment
 
 
 
Utilities
$
4,937

 
$
4,864

Transport
6,435

 
6,424

Energy
5,196

 
4,722

Data Infrastructure
2,355

 
1,446

Corporate
(1,642
)
 
(929
)
Total assets
$
17,281

 
$
16,527

Net debt by segment
 
 
 
Utilities
$
3,131

 
$
3,077

Transport
2,833

 
2,797

Energy
2,113

 
1,905

Data Infrastructure
664

 
564

Corporate
1,999

 
1,755

Net debt
$
10,740

 
$
10,098

Partnership capital by segment
 
 
 
Utilities
$
1,806

 
$
1,787

Transport
3,602

 
3,627

Energy
3,083

 
2,817

Data Infrastructure
1,691

 
882

Corporate
(3,641
)
 
(2,684
)
Partnership capital
$
6,541

 
$
6,429


46 BROOKFIELD INFRASTRUCTURE PARTNERS L.P.




SEGMENTED DISCLOSURES
In this section, we review the results of our principal operating segments: utilities, transport, energy and data infrastructure. Each segment is presented on a proportionate basis, taking into account Brookfield Infrastructure’s ownership in operations accounted for using the consolidation and equity methods, whereby our partnership either controls or exercises significant influence or joint control over its investments. See “ Discussion of Segment Reconciling Items ” on page  72 for a reconciliation of segment results to our partnership’s statement of operating results in accordance with IFRS.
UTILITIES1A09.JPG
Our utilities segment is comprised of regulated transmission (natural gas and electricity), regulated utilities businesses, including regulated distribution (electricity and natural gas connections), and a regulated terminal (coal export terminal). These businesses earn a return on a regulated or notionally stipulated asset base, which we refer to as rate base, or from revenues in accordance with long-term concession agreements, private bilateral contracts approved or ratified by the regulator, or price control frameworks. Our rate base increases with capital that we invest to upgrade and expand our systems. Depending on the jurisdiction, our rate base may also increase by inflation and maintenance capital expenditures and decrease by regulatory depreciation. The return that we earn is typically determined by a regulator for prescribed periods of time. Thereafter, it may be subject to customary reviews based upon established criteria. Our diversified portfolio of assets allows us to mitigate exposure to any single regulatory regime. In addition, due to the franchise frameworks and economies of scale of our businesses, we often have significant competitive advantages in competing for projects to expand our rate base and earn incremental revenues. Accordingly, we expect this segment to produce stable revenue and margins over time that should increase with investment of additional capital and inflation. Nearly all of our utilities segment’s Adjusted EBITDA is supported by regulated or contractual revenues.

The objectives for our utilities segment are to invest capital in the expansion of our rate base, as well as to provide safe and reliable service for our customers on a cost-efficient basis. If we do so, we will be in a position to earn an appropriate return on our rate base. Our performance can be measured by the growth in our rate base, the return on our rate base, and the growth in our AFFO.
Our utilities segment is comprised of the following:
Regulated Transmission
Approximately  2,000 kilometers of natural gas pipelines in Brazil
Approximately 2,200 kilometers of operating transmission lines in North and South America along with an additional 2,700 kilometers of greenfield electricity transmission under development in South America
Regulated Distribution
Approximately 6.7 million connections, predominantly electricity and natural gas, and approximately 1.2 million acquired smart meters
Regulated Terminal
One of the world’s largest metallurgical coal export terminals, with 85 million  tons per annum (“mtpa”) of capacity




Q1 2019 INTERIM REPORT 47


Results of Operations
The following table presents our proportionate share of the key metrics of our utilities segment:
 
For the three-month
period ended March 31
 
US$ MILLIONS
2019

 
2018

 
Rate base
$
4,728

 
$
4,808

 
Funds from Operations (FFO) (1)
137

 
169

 
Maintenance capital expenditures
(3
)
 
(5
)
 
Adjusted Funds from Operations (AFFO) (1)
$
134

 
$
164

 
Return on rate base (2),(3)
12

%
11

%
1.
Non-IFRS measure. Refer to the Reconciliation of Non-IFRS Financial Measures and Reconciliation of Operating Segment Measures sections of this MD&A for reconciliation from net income.
2.
Return on rate base is Adjusted EBITDA divided by time weighted average rate base.
3.
Return on rate base excludes impact of connections revenues at our U.K. regulated distribution operation.
For the three-month period ended March 31, 2019 , our utilities segment generated FFO of $137 million , compared with $169 million for the same period in the prior year. FFO reflects organic growth of 5%, primarily due to inflation-indexation and capital commissioned at our U.K. regulated distribution business in the last twelve months. These increases were more than offset by the impact of the sale of our Chilean electricity transmission operation, higher borrowing costs from the recently completed financing at our Brazilian regulated gas transmission business and the impact of foreign exchange which lowered results by $9 million.
The following table presents our proportionate Adjusted EBITDA and FFO for the businesses in this operating segment:
 
Adjusted EBITDA (1)
 
FFO (1)
 
For the three-month
period ended March 31
 
For the three-month
period ended March 31
US$ MILLIONS
2019

 
2018

 
2019

 
2018

Regulated Transmission
$
76

 
$
108

 
$
58

 
$
96

Regulated Distribution
77

 
68

 
61

 
56

Regulated Terminal
28

 
27

 
18

 
17

Total
$
181

 
$
203

 
$
137

 
$
169

1.
Non-IFRS measure. Refer to the Reconciliation of Non-IFRS Financial Measures and Reconciliation of Operating Segment Measures sections of this MD&A for reconciliation from net income.
For the three-month period ended March 31, 2019 , our regulated transmission operations generated Adjusted EBITDA of $76 million and FFO of $58 million , compared to $108 million and $96 million , respectively, in the prior year. Adjusted EBITDA and FFO decreased as the benefits from inflation indexation and additions to our rate base were more than offset by the impact of the sale of our Chilean electricity transmission operation, the recently completed financing at our Brazilian regulated gas transmission business and the impact of foreign exchange.
For the three-month period ended March 31, 2019 , our regulated distribution operations generated Adjusted EBITDA of $77 million and FFO of $61 million , compared to $68 million and $56 million , respectively, in the 2018 period. Adjusted EBITDA and FFO increased due to inflation indexation and contributions from new connections and smart meters adopted in the last twelve months at our U.K. regulated distribution business.
For the three-month period ended March 31, 2019 , our regulated terminal reported Adjusted EBITDA of $28 million and FFO of $18 million , compared to $27 million and $17 million , respectively, in the same period of 2018 . Adjusted EBITDA and FFO increased compared with the prior year as we benefited from inflation indexation, additions to rate base and the positive impact of higher hedge rates on our Australian dollar contracts.

48 BROOKFIELD INFRASTRUCTURE PARTNERS L.P.




The following table presents the roll-forward of our proportionate rate base:
US$ MILLIONS
For the three-month period
ended March 31, 2019
 
For the 12 month period
ended December 31, 2018
Rate base, start of period
$
4,511

 
$
5,638

Acquisitions

 
63

Impact of asset sales

 
(969
)
Capital expenditures commissioned
64

 
395

Inflation and other indexation
124

 
65

Regulatory depreciation
(11
)
 
(68
)
Foreign exchange and other
40

 
(613
)
Rate base, end of period
$
4,728

 
$
4,511

As of March 31, 2019 , rate base was $4.7 billion compared to $4.5 billion as of December 31, 2018 . Our rate base has increased as a result of new connections at our U.K. regulated distribution business, inflation-indexation at our regulated Brazilian regulated gas transmission business and impact of foreign exchange.
The following table presents the roll-forward of our proportionate share of capital backlog and capital to be commissioned:
US$ MILLIONS
For the three-month period
ended March 31, 2019
 
For the 12 month period
ended December 31, 2018
Capital backlog, start of period
$
815

 
$
1,140

Impact of asset sales

 
(124
)
Additional capital project mandates
132

 
365

Less: capital expenditures
(92
)
 
(402
)
Foreign exchange and other
(11
)
 
(164
)
Capital backlog, end of period
844

 
815

Construction work in progress
225

 
190

Total capital to be commissioned
$
1,069

 
$
1,005

As of March 31, 2019 , capital backlog was $844 million compared to $815 million as of December 31, 2018 . Capital backlog relates to projects that have been awarded or filed with regulators with anticipated commissioning into rate base in the next two to three years. Total capital backlog increased as a result of new connections and smart meters awarded at our U.K. regulated distribution business, partially offset by the impact of foreign exchange. Our U.K. regulated distribution business and Brazil electricity transmission system are the largest contributors to our capital expected to be commissioned to rate base; comprised of $770 million and $240 million of total projects, respectively.

Q1 2019 INTERIM REPORT 49


TRANSPORTNEWA07.JPG
Our transport segment is comprised of open access systems that provide transportation, storage and handling services for freight, bulk commodities and passengers, for which we are paid an access fee or for services provided. Profitability is based on the volume and price achieved for the provision of these services. This operating segment is comprised of businesses with price ceilings as a result of regulation, such as our rail and toll road operations, as well as unregulated businesses, such as our ports. Transport businesses typically have high barriers to entry and, in many instances, have very few substitutes in their local markets. While these businesses have greater sensitivity to market prices and volume than our utilities segment, revenues are generally stable and, in many cases, are supported by contracts or customer relationships. The diversification within our transport segment mitigates the impact of fluctuations in demand from any particular sector, commodity or customer. Approximately 85% of our transport segment’s Adjusted EBITDA is supported by contractual or regulated revenues.

Our objectives for our transport segment are to provide safe and reliable service to our customers and to satisfy their growth requirements by increasing the utilization of our assets and expanding our capacity in a capital efficient manner. If we do so, we will be able to charge an appropriate price for our services and earn an attractive return on the capital deployed. Our performance can be measured by our revenue growth and our Adjusted EBITDA margin.
Our transport segment is comprised of the following:
Rail
Sole provider of rail network in southern half of Western Australia with approximately 5,500 kilometers of track and operator of approximately 4,800 kilometers of rail in South America
Toll Roads
Approximately 4,200 kilometers of motorways in Brazil, Chile, Peru and India
Ports
37  terminals in North America, U.K., Australia and across Europe
Results of Operations
The following table presents our proportionate share of the key metrics of our transport segment:
 
For the three-month
period ended March 31
 
US$ MILLIONS
2019

 
2018

 
Growth capital expenditures
$
53

 
$
44

 
Adjusted EBITDA margin (1)
49

%
42

%
Funds from Operations (FFO) (2)
139

 
137

 
Maintenance capital expenditures
(41
)
 
(36
)
 
Adjusted Funds from Operations (AFFO) (2)
$
98

 
$
101

 
1.
Adjusted EBITDA margin is Adjusted EBITDA divided by revenues. It is calculated net of construction revenues and costs which are incurred at our Peruvian toll road operation during the construction of our toll roads. Adjusted EBITDA margin is a non-IFRS measure. Refer to the “ Reconciliation of Non-IFRS Financial Measures ” and “ Reconciliation of Operating Segment Measures ” sections of this MD&A for reconciliation from net income to Adjusted EBITDA.
2.
Non-IFRS measure. Refer to the “ Reconciliation of Non-IFRS Financial Measures ” and “ Reconciliation of Operating Segment Measures ” sections of this MD&A for reconciliation from net income.
For the three-month period ended March 31, 2019 , our transport segment generated FFO of $ 139 million compared to $ 137 million for the same period in the prior year. Underlying results grew 6% organically, primarily from higher agricultural volumes at our rail operations, GDP-linked volume growth at our port operations and higher traffic and tariffs across our global toll road portfolio. These positive factors were partially offset by the impacts of the expiry of a state concession at our Brazilian toll road business, the sale of a 33% interest in our Chilean toll road operation and a 14% depreciation of the Brazilian real.

50 BROOKFIELD INFRASTRUCTURE PARTNERS L.P.




The following table presents proportionate Adjusted EBITDA and FFO for each business in this operating segment:
 
Adjusted EBITDA (1)
 
FFO (1)
 
For the three-month
period ended March 31
 
For the three-month
period ended March 31
US$ MILLIONS
2019

 
2018

 
2019

 
2018

Rail
$
72

 
$
67

 
$
55

 
$
51

Toll Roads
79

 
90

 
56

 
67

Ports
38

 
21

 
28

 
19

Total
$
189

 
$
178

 
$
139

 
$
137

1.
Non-IFRS measure. Refer to the “ Reconciliation of Non-IFRS Financial Measures ” and “ Reconciliation of Operating Segment Measures ” sections of this MD&A for reconciliation from net income.
For the three-month period ended March 31, 2019 , our rail business generated Adjusted EBITDA of $72 million and FFO of $55 million compared to $67 million and $51 million , respectively, in the prior year. Adjusted EBITDA and FFO increased compared to prior year due to the benefits of higher agricultural volumes in Brazil and Australia, lower tariff relief extended to one of our clients at our Australian operation, and higher hedge rates on our Australian dollar earnings. These positive impacts were partially offset by the loss of two mineral customer contracts in the prior year and the impact of a weaker Brazilian real.
For the three-month period ended March 31, 2019 , our toll roads contributed Adjusted EBITDA of $79 million and FFO of $56 million compared to $90 million and $67 million , respectively, in the prior year. Adjusted EBITDA and FFO decreased compared to prior year as inflationary tariff increases and strong traffic levels were more than offset by the impacts of the expiry of one of our Brazilian state concessions, the sale of a partial interest in our Chilean operation and the impact of foreign exchange.
For the three-month period ended March 31, 2019 , our port operations reported Adjusted EBITDA of $38 million and FFO of $28 million compared to $21 million and $19 million , respectively, in 2018 . Adjusted EBTIDA and FFO increased compared to prior year as volumes benefited from record levels at our U.K. operation, the contribution from newly secured services in Australia and higher moves and capacity utilization at our North American container terminal.
The following table presents the roll-forward of our proportionate share of capital backlog and capital to be commissioned:
US$ MILLIONS
For the three-month period
ended March 31, 2019
 
For the 12 month period
ended December 31, 2018
Capital backlog, start of period
$
500

 
$
637

Additional capital project mandates
4

 
174

Less: capital expenditures
(53
)
 
(208
)
Foreign exchange and other
(20
)
 
(103
)
Capital backlog, end of period
431

 
500

Construction work in progress
144

 
162

Total capital to be commissioned
$
575

 
$
662

As of March 31, 2019 , capital backlog was $431 million compared to $500 million as of December 31, 2018 . Capital to be commissioned includes projects such as upgrading and expanding our rail networks, increasing and widening lanes on certain routes to support traffic growth, and deepening berths and enhancing and modernizing existing infrastructure at our ports. Capital backlog decreased as mandates awarded were more than offset by capital expenditures made during the period and the impact of foreign exchange. Our South American toll road businesses and Brazilian rail operation are the largest contributors to capital to be commissioned at approximately $490 million and $60 million , respectively.

Q1 2019 INTERIM REPORT 51


NEWENERGY11.JPG
Our energy segment is comprised of systems that provide natural gas midstream (transmission, gathering and processing) and storage services, as well as distributed energy. Profitability is based on the volume and price achieved for the provision of these services. This operating segment is comprised of businesses that are subject to regulation, such as our natural gas transmission business whose services are subject to price ceilings, and businesses that are essentially unregulated like our district energy business. Energy businesses typically have high barriers to entry as a result of significant fixed costs combined with economies of scale or unique positions in their local markets. Our energy segment is expected to benefit from forecasted increases in demand for energy. Although these businesses have greater sensitivity to market prices and volume than our utilities segment, revenues are typically contracted with varying durations and are relatively stable.

Our objectives for our energy segment are to provide safe and reliable service to our customers and to satisfy their growth requirements by increasing the utilization of our assets and expanding our capacity in a capital efficient manner. If we do so, we will be able to charge an appropriate price for our services and earn an attractive return on the capital deployed. Our performance can be measured by our revenue growth, our Adjusted EBITDA margin and our growth in AFFO.
Our energy segment is comprised of the following:
Natural Gas Midstream and Storage
Approximately 15,000  kilometers and 1,500 kilometers of natural gas transmission pipelines in the U.S. and India, respectively
Approximately 600  billion cubic feet (“Bcf”) of natural gas storage in the U.S. and Canada
13 natural gas processing plants with approximately 1.0 Bcf per day of total processing capacity and approximately 1,200 kilometers of gas gathering pipelines in Canada
Distributed Energy
Delivers heating and cooling to customers from centralized systems including heating plants capable of delivering 3,380,000  pounds per hour of steam heating capacity, centralized gas distribution and cogeneration for heating, cooling and energy, 336,000 tons of contracted cooling capacity, as well as servicing approximately 26,100 natural gas, water and wastewater connections
Provides residential energy infrastructure, including water heater rentals, heating, ventilation, and air conditioner (“HVAC”) rentals, as well as other essential home services to approximately 1.6 million customers annually in Canada and the United States, and delivers approximately 270,000 contracted sub-metering services within Canada
Results of Operations
The following table presents our proportionate share of the key metrics of our energy segment:
 
For the three-month
period ended March 31
 
US$ MILLIONS
2019

 
2018

 
Growth capital expenditures
$
22

 
$
15

 
Adjusted EBITDA margin (1)
51

%
52

%
Funds from Operations (FFO) (2)
107

 
66

 
Maintenance capital expenditures
(8
)
 
(5
)
 
Adjusted Funds from Operations (AFFO) (2)
$
99

 
$
61

 
1.
Adjusted EBITDA margin is Adjusted EBITDA divided by revenues. Adjusted EBITDA margin is a non-IFRS measure. Refer to the “ Reconciliation of Non-IFRS Financial Measures ” and “ Reconciliation of Operating Segment Measures ” sections of this MD&A for reconciliation from net income to Adjusted EBITDA.
2.
Non-IFRS measure. Refer to the “ Reconciliation of Non-IFRS Financial Measures ” and “ Reconciliation of Operating Segment Measures ” sections of this MD&A for reconciliation from net income.

52 BROOKFIELD INFRASTRUCTURE PARTNERS L.P.




For the three-month period ended March 31, 2019 , our energy segment generated FFO of $ 107 million compared with $66 million in the same period of the prior year. FFO benefited from higher transportation volumes and capital commissioned at our North American natural gas transmission business, higher revenues at our gas storage operation due to colder weather and contributions from two recently acquired North American energy businesses.
The following table presents proportionate Adjusted EBITDA and FFO for each business in this operating segment:
 
Adjusted EBITDA (1)
 
FFO (1)
 
For the three-month
period ended March 31
 
For the three-month
period ended March 31
US$ MILLIONS
2019

 
2018

 
2019

 
2018

Natural Gas Midstream and Storage
$
97

 
$
68

 
$
83

 
$
56

Distributed Energy
30

 
11

 
24

 
10

Total
$
127

 
$
79

 
$
107

 
$
66

1.
Non-IFRS measure. Refer to the “ Reconciliation of Non-IFRS Financial Measures ” and “ Reconciliation of Operating Segment Measures ” sections of this MD&A for reconciliation from net income.
For the three-month period ended March 31, 2019 , our natural gas midstream and storage operations generated Adjusted EBITDA of $97 million and FFO of $83 million compared to $68 million and $56 million , respectively, during the same period of 2018 . Adjusted EBITDA and FFO increased relative to the prior year due to strong transportation volumes and contribution from the Gulf Coast expansion project at our North American natural gas transmission business. Additionally, current period results benefited from higher revenues at our gas storage business and contribution from the first phase of our Canadian midstream energy business acquired in the second half of 2018.
For the three-month period ended March 31, 2019 , our distributed energy operations generated Adjusted EBITDA of $30 million and FFO of $24 million , compared to $11 million and $10 million , respectively, during the comparative period. Adjusted EBITDA and FFO increased compared to the prior year, benefiting from the contribution of our North American residential energy infrastructure business acquired in October of last year and higher heating volumes associated with new customer connections at our North America district energy operations.
The following table presents the roll-forward of our proportionate share of capital backlog and capital to be commissioned:
US$ MILLIONS
For the three-month period
ended March 31, 2019
 
For the 12 month period
ended December 31, 2018
Capital backlog, start of period
$
290

 
$
143

Impact of acquisitions

 
102

Additional capital project mandates
4

 
195

Less: capital expenditures
(22
)
 
(135
)
Foreign exchange and other
(16
)
 
(15
)
Capital backlog, end of period
256

 
290

Construction work in progress
36

 
72

Total capital to be commissioned
$
292

 
$
362

As of March 31, 2019 , capital backlog was $256 million compared to $290 million as of December 31, 2018 . Capital backlog decreased as additional capital project mandates were more than offset by the commissioning of the first phase of an expansion project at our Western Canadian midstream energy business. Total capital to be commissioned includes $ 230 million within our Natural Gas Midstream and Storage operation and $ 60 million in our Distributed Energy segment.

Q1 2019 INTERIM REPORT 53


DATAINFRASTRUCTURENEWA07.JPG

Our data infrastructure segment is comprised of critical infrastructure servicing customers in the telecommunications, fiber and data storage sectors. Our telecommunications and fiber operations provide essential services and infrastructure to the media broadcasting and telecom sectors, while our data storage operations provide services and infrastructure to enterprise customers. These services and access to infrastructure are contracted on a medium to long-term basis with inflation escalation mechanisms, leading to predictable recurring revenues and cash flows.

These operations generate stable, inflation-linked cash flows, which are underpinned by medium to long-term contracts (up to 20 years in both our telecommunications business and data center operations). Our telecommunications and fiber customer base includes large, prominent telecommunications companies in France. Within our data storage operations, our customers include approximately 1,100 colocation customers predominantly in the United States that are diversified across multiple industries, and global hyperscale customers in Asia Pacific and South America.

Our objectives for the data infrastructure segment are to invest capital to enhance and expand our service offerings while providing safe, reliable and secure access to our properties. If we are able to achieve these objectives, we will be able to attract new customers and maintain low levels of churn on existing customers. Our performance in both our telecommunications and fiber and data storage businesses can be measured by the growth in revenues and Adjusted EBITDA margin improvements.
Our data infrastructure segment is comprised of the following:
Telecommunications and Fiber
    Approximately 7,000  multi-purpose towers and active rooftop sites
     5,500  kilometers of fiber backbone located in France
Data Storage
     41 data centers, with approximately 1.7 million square feet of raised floors
     139 megawatts (“MWs”) of critical load capacity
Results of Operations
The following table presents our proportionate share of the key metrics of our data infrastructure segment:
 
For the three-month
period ended March 31
 
US$ MILLIONS
2019

 
2018

 
Growth capital expenditures
$
13

 
$
12

 
Adjusted EBITDA margin (1)
58

%
53

%
Funds from Operations (FFO) (2)
28

 
19

 
Maintenance capital expenditures
(2
)
 
(3
)
 
Adjusted Funds from Operations (AFFO) (2)
$
26

 
$
16

 
1.
Adjusted EBITDA margin is Adjusted EBITDA divided by revenues. Adjusted EBITDA margin is a non-IFRS measure. Refer to the “ Reconciliation of Non-IFRS Financial Measures ” and “ Reconciliation of Operating Segment Measures ” sections of this MD&A for reconciliation from net income to Adjusted EBITDA.
2.
Non-IFRS measure. Refer to the “ Reconciliation of Non-IFRS Financial Measures ” and “ Reconciliation of Operating Segment Measures ” sections of this MD&A for reconciliation from net income.
For the three-month period ended March 31, 2019 , our data infrastructure segment generated FFO of $28 million compared with $19 million in the same period of the prior year. Results benefited from organic growth of 13% in local currencies due to inflation-indexation and the contribution from capital commissioned at our French telecom business. Results also benefited from the initial contributions from recently acquired data centers in Asia Pacific and the United States.


54 BROOKFIELD INFRASTRUCTURE PARTNERS L.P.




The following table presents our data infrastructure segment’s proportionate share of financial results:
 
Adjusted EBITDA (1)
 
FFO (1)
 
For the three-month
period ended March 31
 
For the three-month
period ended March 31
US$ MILLIONS
2019

 
2018

 
2019

 
2018

Telecommunications and Fiber
$
25

 
$
23

 
$
21

 
$
19

Data Storage
11

 

 
7

 

Total
$
36

 
$
23

 
$
28

 
$
19

1.
Non-IFRS measure. Refer to the “ Reconciliation of Non-IFRS Financial Measures ” and “ Reconciliation of Operating Segment Measures ” sections of this MD&A for reconciliation from net income.
For the three-month period ended March 31, 2019 , our telecommunication and fiber operations generated Adjusted EBITDA of $25 million and FFO of $21 million compared to $23 million and $19 million , respectively, during the same period of 2018 . Adjusted EBITDA and FFO increased relative to the prior year due to the contribution from new points-of-presence added to our existing tower portfolio and the roll-out of our build-to-suit strategy targeted towards large telecom customers.
For the three-month period ended March 31, 2019 , our data storage operations generated Adjusted EBITDA of $11 million and FFO of $7 million , respectively. Results include the initial contributions from recently completed data center acquisitions in the U.S. and Asia Pacific.
In March 2019, Brookfield Infrastructure acquired a co-controlling interest in a South American data center operation, Ascenty, for approximately $770 million. Brookfield Infrastructure’s share of the investment was approximately $190 million. The residual amount of approximately $580 million was funded on behalf of future institutional investors.
As of March 31, 2019 , total capital to be commissioned was approximately $180 million compared to approximately $210 million as of December 31, 2018 . The decrease is primarily due to new towers commissioned as we continue to progress the roll-out of our built-to-suit strategy.
CORPORATENEWA05.JPG
The following table presents the components of the Corporate segment on a proportionate basis:
 
For the three-month
period ended March 31
US$ MILLIONS
2019

 
2018

Adjusted EBITDA (1)
$
(61
)
 
$
(58
)
Funds from Operations (FFO) (1)
(60
)
 
(58
)
1.
Non-IFRS measure. Refer to the “ Reconciliation of Non-IFRS Financial Measures ” and “ Reconciliation of Operating Segment Measures ” sections of this MD&A for reconciliation from net income.
For the three-month period ended March 31, 2019 , Adjusted EBITDA and FFO for our Corporate segment were losses of $61 million and $60 million , respectively, compared to losses of $58 million and $58 million , respectively, in the prior year. Adjusted EBITDA and FFO decreased from prior year primarily as a result of a higher management fee and higher financing costs due to higher average net debt balances.
Pursuant to our Master Services Agreement, we pay Brookfield an annual base management fee equal to 1.25% of our partnership’s market value plus preferred units outstanding and net recourse debt . The base management fee of $59 million has increased from the prior year due to a higher capitalization as a result of additional recourse debt and preferred shares issued in the past 12 months.

Q1 2019 INTERIM REPORT 55


CAPITAL RESOURCES AND LIQUIDITY
The nature of our asset base and the quality of our associated cash flows enable us to maintain a stable and low-cost capital structure. We attempt to maintain sufficient financial liquidity at all times so that we are able to participate in attractive opportunities as they arise, better withstand sudden adverse changes in economic circumstances and maintain our distribution to unitholders. Our principal sources of liquidity are cash flows from our operations, undrawn credit facilities and access to public and private capital markets. We also structure the ownership of our assets to enhance our ability to monetize them to provide additional liquidity, if necessary. In certain instances, subsidiaries may be subject to limitations on their ability to declare and pay dividends to our partnership. However, no significant limits existed at March 31, 2019 and December 31, 2018 .
Our group-wide liquidity at March 31, 2019 consisted of the following:
 
As of
US$ MILLIONS
March 31, 2019
 
December 31, 2018
Corporate cash and financial assets
$
482

 
$
238

Committed corporate credit facility
1,975

 
1,975

Subordinate corporate credit facility
500

 
500

Draws under corporate credit facility
(965
)
 
(510
)
Commitments under corporate credit facility
(48
)
 
(47
)
Proportionate cash retained in businesses
398

 
404

Proportionate availability under subsidiary credit facilities
723

 
817

Group-wide liquidity
$
3,065

 
$
3,377

At March 31, 2019 , we believe that group-wide liquidity is sufficient to meet Brookfield Infrastructure’s present requirements. We finished the quarter with group-wide liquidity of $3.1 billion , down from $3.4 billion at December 31, 2018 . The decrease is primarily a result of draws from our credit facilities to fund new investments in our data infrastructure and energy segments. This decrease is partially offset by the proceeds received from the partial sale of our interest in a Chilean toll road business, the issuance of C$100 million in BIPIC preferred shares, and cash generated by our businesses.

56 BROOKFIELD INFRASTRUCTURE PARTNERS L.P.




We finance our assets principally at the operating company level with debt that generally has long-term maturities, few restrictive covenants and no recourse to either Brookfield Infrastructure or our other operations. On a proportionate basis as of March 31, 2019 , scheduled principal repayments over the next five years are as follows:
US$ MILLIONS
Average
Term
(years)
 
2019
 
2020
 
2021
 
2022
 
2023
 
Beyond
 
Total
 
Recourse borrowings
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate borrowings
5
 
$

 
$
281

 
$

 
$
337

 
$
965

 
$
898

 
$
2,481

 
Total recourse borrowings
5
 

 
281

 

 
337

 
965

 
898

 
2,481

 
Non-recourse borrowings (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Utilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Regulated Transmission
6
 
31

 
31

 
6

 
6

 
379

 
112

 
565

 
Regulated Distribution
11
 
16

 
7

 
23

 
110

 
276

 
1,235

 
1,667

 
Regulated Terminal
3
 

 
150

 
291

 
177

 
150

 
221

 
989

 
 
8
 
47

 
188

 
320

 
293

 
805

 
1,568

 
3,221

 
Transport
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rail
5
 
32

 
104

 
115

 
165

 
180

 
459

 
1,055

 
Toll Roads
8
 
136

 
186

 
167

 
180

 
119

 
706

 
1,494

 
Ports
3
 
49

 
233

 
57

 
58

 
12

 
96

 
505

 
 
6
 
217

 
523

 
339

 
403

 
311

 
1,261

 
3,054

 
Energy
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Energy Transmission, Distribution & Storage
8
 
2

 
9

 
7

 
353

 
160

 
1,055

 
1,586

 
Distributed Energy
7
 

 
89

 

 
61

 
168

 
259

 
577

 
 
7
 
2

 
98

 
7

 
414

 
328

 
1,314

 
2,163

 
Data Infrastructure
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Telecommunications Infrastructure
4
 

 
104

 

 
142

 

 
190

 
436

 
Data Storage
6
 
1

 
2

 
46

 
20

 
47

 
149

 
265

 
 
5
 
1

 
106

 
46

 
162

 
47

 
339

 
701

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total non-recourse borrowings (1)
7
 
267

 
915

 
712

 
1,272

 
1,491

 
4,482

 
9,139

 
Total borrowings (2)
7
 
$
267

 
$
1,196

 
$
712

 
$
1,609

 
$
2,456

 
$
5,380

 
$
11,620

 
Cash retained in businesses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Utilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
90

 
Transport
 
 
 
 
 
 
 
 
 
 
 
 
 
 
221

 
Energy
 
 
 
 
 
 
 
 
 
 
 
 
 
 
50

 
Data Infrastructure
 
 
 
 
 
 
 
 
 
 
 
 
 
 
37

 
Corporate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
482

 
Total cash retained
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
880

 
Net debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Utilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
3,131

 
Transport
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,833

 
Energy
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,113

 
Data Infrastructure
 
 
 
 
 
 
 
 
 
 
 
 
 
 
664

 
Corporate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,999

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
10,740

 
Total net debt
 
 
2

%
10

%
6

%
14

%
21

%
47

%
100

%
1.
Represents non-recourse debt to Brookfield Infrastructure as the holders have recourse only to the underlying operations.
2.
As of March 31, 2019 , approximately 38% has been issued as floating rate debt. Brookfield Infrastructure and its subsidiaries have entered into interest rate swaps whereby the floating rate debt has been converted to fixed rate debt, effectively reducing floating rate debt maturities to approximately 23% of our total borrowings. Excluding working capital and capital expenditure facilities, floating rate debt maturities approximate 21% of our total borrowings, inclusive of the impact of interest rate swaps. Debt maturity weighted average excludes the impact of temporary borrowings on the Partnership’s corporate credit facility.

Q1 2019 INTERIM REPORT 57


Our debt has an average term of seven years. On a proportionate basis, our net debt-to-capitalization ratio as of March 31, 2019 was 57% . The weighted average cash interest rate is 5.0% for the overall business ( March 31, 2018 : 5.0% ), in which our utilities, transport, energy, data infrastructure and corporate segments were 4.3%, 6.8%, 5.7%, 3.5%, and 3.9% , respectively ( March 31, 2018 : 4.3%, 6.8%, 5.3%, 3.6% and 3.9% ).
Proportionate debt, a non-IFRS measure to assess liquidity, can be reconciled to consolidated debt as follows:
 
As of
US$ MILLIONS
March 31, 2019
 
December 31, 2018
Consolidated debt
$
16,804

 
$
15,106

Add: proportionate share of debt of investments in associates:
 
 
 
Utilities
196

 
180

Transport
1,312

 
1,330

Energy
929

 
929

Data Infrastructure
436

 
445

Less: borrowings attributable to non-controlling interest
(7,599
)
 
(6,346
)
Premium on debt and cross currency swaps
(458
)
 
(904
)
Proportionate debt
$
11,620

 
$
10,740

CONTRACTUAL OBLIGATIONS
The table below outlines Brookfield Infrastructure’s contractual obligations as at March 31, 2019 :
 
Payments due by period
US$ MILLIONS
Less than
1 year
 
1-2 years
 
3-5 years
 
5+ years
 
Total
contractual
cash flows
Accounts payable and other liabilities
$
1,539

 
$
68

 
$
19

 
$
183

 
$
1,809

Corporate borrowings

 
281

 
1,302

 
898

 
2,481

Non-recourse borrowings
878

 
794

 
5,110

 
7,624

 
14,406

Financial liabilities
162

 
27

 
1,014

 
79

 
1,282

Capital leases
118

 
116

 
278

 
1,181

 
1,693

Interest expense:
 
 
 
 
 
 
 
 
 
Corporate borrowings
74

 
51

 
108

 
70

 
303

Non-recourse borrowings
529

 
487

 
1,225

 
1,471

 
3,712

In addition, pursuant to the Master Services Agreement, on a quarterly basis we pay a base management fee to Brookfield equal to 0.3125% ( 1.25% annually) of the market value of our partnership plus net recourse debt. This fee is estimated to be approximately $236 million per year based on the March 31, 2019 market capitalization of our partnership plus preferred units and recourse corporate net debt.
An integral part of our partnership’s strategy is to participate with institutional investors in Brookfield-sponsored private infrastructure funds that target acquisitions that suit Brookfield Infrastructure’s profile. In the normal course of business, our partnership has made commitments to Brookfield-sponsored private infrastructure funds to participate in these target acquisitions in the future, if and when identified.
FINANCIAL INSTRUMENTS
Foreign Currency Hedging Strategy
To the extent that we believe it is economic to do so, our strategy is to hedge a portion of our equity investments and/or cash flows exposed to foreign currencies. The following key principles form the basis of our foreign currency hedging strategy:
We leverage any natural hedges that may exist within our operations
We utilize local currency debt financing to the extent possible
We may utilize derivative contracts to the extent that natural hedges are insufficient

58 BROOKFIELD INFRASTRUCTURE PARTNERS L.P.




The following table presents our hedged position in foreign currencies as of March 31, 2019 :
 
Net Investment Hedges
 
US$ MILLIONS
USD
 
AUD
 
GBP
 
BRL
 
CLP
 
CAD
 
EUR
 
COP
 
PEN
 
INR
 
Equity Investment – US$
$
57

 
$
1,353

 
$
1,358

 
$
2,289

 
$
55

 
$
1,016

 
$
840

 
$
132

 
$
120

 
$
329

 
FX contracts – US$
4,854

 
(1,353
)
 
(1,358
)
 

 
(196
)
 
(1,016
)
 
(840
)
 
(80
)
 
(11
)
 

 
Net unhedged – US$
$
4,911

 
$

 
$

 
$
2,289

 
$
(141
)
 
$

 
$

 
$
52

 
$
109

 
$
329

 
% of equity investment hedged
N/A

%
100

%
100

%

%
100

%
N/A

%
100

%
61

%
9

%

%
At March 31, 2019 , 65% of our net equity investment is U.S. dollar functional currency. For the three-month period ended March 31, 2019 , we recorded losses in comprehensive income of $23 million ( March 31, 2018 : losses of $52 million ) related to these contracts.
CAPITAL REINVESTMENT
We fund growth capital expenditures with cash flow generated from operations, supplemented by non-recourse debt sized to investment grade coverage and covenant thresholds. This is designed to ensure that our investments have stable capital structures supported by a substantial level of equity and that cash flows at the asset level can be remitted freely to the partnership. This strategy also underpins our investment grade profile.
To fund large scale development projects and acquisitions, we will evaluate a variety of capital sources including proceeds from selling mature businesses, in addition to raising money in the capital markets through equity, debt and preferred share issuances. Furthermore, the partnership has a $1.975 billion committed revolving credit facility available for investments and acquisitions, as well as funding the equity component of organic growth initiatives. The facility is intended, and has historically been used, as a bridge to a long-term financing strategy rather than a permanent source of capital.
The following table reconciles changes in our proportionate cash for the year:
 
For the three-month
period ended March 31
US$ MILLIONS
2019

 
2018

Funds from Operations (FFO)
$
351

 
$
333

Maintenance capital
(54
)
 
(49
)
Funds available for distribution (AFFO)
297

 
284

Distributions paid
(250
)
 
(228
)
Funds available for reinvestment
47

 
56

Growth capital expenditures
(180
)
 
(174
)
Debt funding of growth capex
79

 
113

Non-recourse debt repayments
(48
)
 
(37
)
Proceeds from capital recycling
365

 
1,033

New investments
(474
)
 
(11
)
Draws (repayments) on corporate credit facility
455

 
(789
)
Partnership unit (repurchases) issuances
(26
)
 
4

Preferred unit and preferred shares issued, net of repurchases
72

 
157

Impact of foreign currency movements
(28
)
 
(71
)
Changes in working capital and other
(24
)
 
155

Change in proportionate cash
238

 
436

Opening, proportionate cash
642

 
597

Closing, proportionate cash
$
880

 
$
1,033


We present cash flows generated by our businesses on a proportionate basis as over 40% of our FFO is generated by investments that are not consolidated in our financial statements. The partnership participates in arrangements such as joint ventures or consortiums which provide it with access to partners with local strategic expertise and substantial amounts of capital. When investing in such arrangements, which are not consolidated for financial statement purposes, the partnership nevertheless maintains joint control or significant influence over the business, and is therefore, not a passive investor. We structure governance arrangements to require each of our businesses to distribute all available cash (which is generally defined as cash on hand less any amounts reserved for committed growth projects as approved by the investment’s Board of Directors), ensuring that any decision to not distribute all available cash flow requires our express consent. Consequently, the partnership has access to operating cash flows generated by all of our businesses, including joint ventures and any non-consolidated investments.

Q1 2019 INTERIM REPORT 59


The following table highlights the significance of operating cash flow generated from investments which are not consolidated in our financial statements and reconciles consolidated cash flow from operations to AFFO.
 
For the three-month
period ended March 31
US$ MILLIONS
2019

 
2018

Cash from operating activities
$
561

 
$
466

Add: FFO from associates and joint ventures
147

 
161

Remove:
 
 
 
Distributions received from associates and joint ventures
(31
)
 
(4
)
Cash from operating activities attributable to non-controlling interests (1)
(335
)
 
(329
)
 
342

 
294

Less: Maintenance capital expenditures
(54
)
 
(49
)
Change in working capital and other items
9

 
39

AFFO (2)
$
297

 
$
284

1.
By removing cash from operating activities attributable to non-controlling interests, the partnership is able to present AFFO attributable to the partnership. We believe our proportionate financial information, when read in conjunction with the partnership’s reported results under IFRS, provides the most meaningful assessment of how our operations are performing. Please refer to the discussion of the limitations of proportional results as an analytical tool within the “ Reconciliation of Non-IFRS Financial Measures ” section on page 65 .
2.
The most closely related IFRS measure to AFFO is net income. However, occasionally we believe the alternative reconciliation can be useful and have therefore provided this reconciliation of consolidate cash flow from operations to AFFO. Please see the “ Reconciliation of Non-IFRS Financial Measures ” section on page 65 for a reconciliation of AFFO to net income.
From a treasury management perspective, the partnership manages its cash reserves with a view to minimizing foreign exchange and administrative costs, as well as enhancing our ability to secure asset level debt financing. While capital is primarily raised at the corporate level to fund the equity component of organic growth capital expenditures, actual funding of projects may be executed by injecting cash into subsidiaries or utilizing operating cash flow generated and retained by the business. Importantly, the physical movement of cash has no relevance on Brookfield Infrastructure’s ability to fund capital expenditures or make distributions.
DISTRIBUTION POLICY

Our distributions are underpinned by stable, highly regulated and contracted cash flows generated from operations. The partnership’s objective is to pay a distribution that is sustainable on a long-term basis. The partnership has set its target payout ratio at 60-70% of Funds from Operations. In sizing what we believe to be a conservative payout ratio, we typically retain approximately 15-20% of AFFO that we utilize to fund some or all of our internally funded growth capital expenditures.

The following table presents the partnership’s payout ratios:
 
For the three-month
period ended March 31
US$ MILLIONS
2019

 
2018

Funds from Operations (FFO)
$
351

 
$
333

Adjusted Funds from Operations (AFFO)
297

 
284

Distributions (Limited partner, general partner, Exchange LP units, preferred and incentive distributions)
250

 
228

FFO payout ratio
71
%
 
68
%
AFFO payout ratio
84
%
 
80
%

The partnership’s annual distribution is reviewed with the Board of Directors in the first quarter of each year considering the following:
The results from the prior year as well as the budget for the upcoming year and the five-year business plan based on the partnership’s share of Funds from Operations generated by our assets
The partnership’s group-wide liquidity and its ability to fund committed capital investments

60 BROOKFIELD INFRASTRUCTURE PARTNERS L.P.




CAPITAL EXPENDITURES
Due to the capital-intensive nature of our partnership’s asset base, ongoing capital investment is required for additions and enhancements, life-cycle maintenance and repair of plant and equipment related to our operations. Our partnership reviews all capital expenditures and classifies them in one of the two following categories:
i)
Growth capital expenditures: capital outlays underpinned by incremental revenues that will enhance our partnerships’ returns. These projects are eligible for inclusion in the rate base of our utilities segment, or they are meant to add capacity to further expand our existing infrastructure networks in our transport, energy and data infrastructure operations;
ii)
Maintenance capital expenditures: required capital outlays to maintain the current operating state and reliability of the system while ensuring regulatory and safety requirements are upheld
We manage separate review and approval processes for each of the two categories of capital expenditures. Growth capital expenditures are underwritten in isolation and must meet our partnership’s target after-tax equity return threshold of 12-15%. Projects that meet these return targets are presented to the Capital Expenditure Committee which comprises senior personnel of the General Partner of our partnership. The committee reviews proposed project plans considering the target returns and funding plans, in addition to analyzing the various execution risks associated with these projects. Once a project receives approval from the Capital Expenditure Committee, it is generally added to the backlog.
Maintenance capital expenditures follow a different, though equally robust process, as failure to make necessary investment to maintain our operations could impair the ability of our businesses to serve our customer base or continue existing operations. Firstly, the operations teams involved with a particular business performs a detailed review of all planned and proposed maintenance capital expenditures during the annual budgeting process. These plans are reviewed in the context of the business’s maintenance capital approach that is agreed upon with the partnership at the time of acquisition and take into account drivers of performance that include public and worker health and safety, environmental and regulatory compliance, system reliability and integrity. Maintenance capital projects that receive approval at the asset level are then presented to the partnership’s corporate asset management teams that are responsible for overseeing the partnership’s operations, and have ample experience in managing utilities, transport, energy and data infrastructure assets. Through an iterative process with the companies’ senior operating executives, the plan is refined through a comprehensive review including prioritization of non-discretionary projects and comparisons to industry benchmarks. Once agreed, maintenance capital expenditure plans are approved and form part of the annual and five-year business plans that are presented to the partnership’s senior executive team. Once approved, these maintenance plans are executed on in the following year and performance relative to these plans is closely monitored by both the operations and asset management teams.
In addition to the various levels of internal reviews, our partnership engages a reputable, globally recognized engineering services firm annually to perform an independent review of its overall approach to maintenance capital expenditures and detailed capital program. Each year the engineering services firm will review a portion of the portfolio, covering all assets on a three-year rotating basis. For each asset under review in a given year, the engineering services firm will review the historical and forecasted spend against industry standards, regulatory requirements or other benchmarking data, and determine the reasonableness of the maintenance capex program based on the nature of the business and the age and condition of the assets. We have also engaged a Big 4 accounting firm to review the findings of the report provided by the engineering services firm and to assess the control activities around our process for compiling the annual sustaining maintenance capital expenditure ranges by segment.
Over the last two years, reviews were completed at a number of operations that together make up approximately 75% of our partnership’s FFO. The results from both engagements conducted by the firms confirm that our stated ranges of annual sustaining maintenance capital expenditures are reasonable and in-line with industry standard for assets of a similar nature. In the next 2-3 years, the partnership intends to complete reviews at the remainder of its existing operations, and for newly acquired businesses it will endeavor to have reviews conducted within 2-3 years of acquisition.
The following table presents the components of growth capital expenditures by operating segment:
 
For the three-month
period ended March 31
US$ MILLIONS
2019

 
2018

Growth capital expenditures by segment
 
 
 
Utilities
$
92

 
$
103

Transport
53

 
44

Energy
22

 
15

Data Infrastructure
13

 
12

 
$
180

 
$
174


Q1 2019 INTERIM REPORT 61


Growth capital expenditures for the three-month period ended March 31, 2019 were $180 million , an increase from $174 million in the same period in 2018 . The increase in growth capital expenditures is primarily due to the recent acquisition of two North American energy businesses, partially offset by the impact of the sale of our Chilean electricity transmission business.
The following table presents the components of maintenance capital expenditures by operating segment:
 
 
 
Actual Capex
 
Annual Ongoing Estimated
Maintenance Capex
 
For the three-month
period ended March 31
US$ MILLIONS
Low

 
High

 
2019

 
2018

Maintenance capital expenditures by segment
 
 
 
 
 
 
 
Utilities
$
20

 
$
25

 
$
3

 
$
5

Transport
170

 
180

 
41

 
36

Energy
110

 
120

 
8

 
5

Data Infrastructure
10

 
15

 
2

 
3

 
$
310

 
$
340

 
$
54

 
$
49

Maintenance capital expenditures for the three-month period ended March 31, 2019 were $54 million , an increase compared to the same period in 2018 due to the recent acquisition of two North American energy businesses. We estimate annual maintenance capital expenditures to be $20 - 25 million , $170 - 180 million , $110 - 120 million , and $10 - 15 million for our utilities, transport, energy, and data infrastructure segments, respectively, for a total range between $310 - 340 million . For the three -month period ended March 31, 2019 , our maintenance capital expenditures were below our estimated range primarily due to timing of maintenance spend in our Energy segment, as the first quarter is typically the lowest due to highest utilization. Our partnership leverages industry data and benchmarks provided by a global engineering services firm to determine the appropriate maintenance capital ranges as disclosed above.

REVIEW OF CONSOLIDATED STATEMENTS OF CASH FLOWS
The following table summarizes the consolidated statements of cash flows:
 
For the three-month
period ended March 31
US$ MILLIONS
2019

 
2018

Cash from operating activities
$
561

 
$
466

Cash (used by) from investing activities
(3,157
)
 
1,020

Cash from (used by) financing activities
2,773

 
(971
)

This statement reflects activities within our consolidated operations and therefore excludes activities within non-consolidated entities.

Cash from operating activities
Cash from operating activities totaled $0.6 billion for the three months ended March 31, 2019 , an increase of $0.1 billion from 2018. The increase was primarily due to contributions from recently completed acquisitions and increased cash flows from organic growth initiatives at our existing operations, partially offset by the impact of foreign exchange and a decrease in changes in non-cash working capital.
Cash used by investing activities
Cash used by investing activities was $3.2 billion  in 2019 , as compared to cash from investing activities of $1.0 billion in 2018. The increase in cash used reflect a higher level of capital deployment. Net investment activity, inclusive of strategic partnership accounted for using the equity method and financial assets, increased by $2.9 billion . The prior year also included proceeds from the disposal of our investment in a Chilean electricity transmission operation for $1.3 billion .
Cash from financing activities
Cash from financing activities was $2.8 billion during 2019 , as compared to cash used by financing activities of $1.0 billion in 2018 . The change was primarily due to additional net borrowings $2.3 billion , capital provided by non-controlling interests net of distributions of $1.1 billion , primarily associated with acquisitions completed during the quarter, and deposit received from Brookfield of $0.4 billion .

62 BROOKFIELD INFRASTRUCTURE PARTNERS L.P.




PARTNERSHIP CAPITAL
The total number of partnership units in the Holding LP outstanding is comprised of the following:
 
As of
 
March 31, 2019
 
December 31, 2018
Redeemable Partnership Units, held by Brookfield
115,824,992

 
115,824,992

Special General Partner Units
1,600,410

 
1,600,410

Managing General Partner Units
279,687,927

 
277,347,890

Total
397,113,329

 
394,773,292

An affiliate of Brookfield in its capacity as the special general partner of the Holding LP is entitled to incentive distributions which are based on the amount by which quarterly distributions on the limited partnership units exceed specified target levels. To the extent distributions on limited partnership units exceed $0.203 per quarter, the incentive distribution rights entitle the special general partner to 15% of incremental distributions above this threshold to $0.22 per unit.
To the extent that distributions on limited partnership units exceed $0.22 per unit, the incentive distribution rights entitled the special general partner to 25% of incremental distributions above this threshold. During the three -month period ended March 31, 2019 , an incentive distribution of $38 million was paid to the special general partner ( 2018 : $34 million ).
CAPITAL MANAGEMENT
Our partnership’s approach to capital management is focused on maximizing returns to unitholders and ensuring capital is deployed in a manner consistent with achieving our investment return objectives.

Invested Capital, which tracks the amount of capital that has been contributed to our partnership, is a measure we utilize to assess returns on capital deployed, relative to targeted returns. Investment decisions are based on, amongst other measures and factors, targeted returns on Invested Capital of 12% to 15% annually over the long-term. We measure return on Invested Capital as Adjusted Funds from Operations (“AFFO”), less estimated returns of capital on operations that are not perpetual in life, divided by the weighted average Invested Capital for the period.
We define Invested Capital as partnership capital removing the impact of the following items: non-controlling interest in operating subsidiaries, retained earnings or deficit, accumulated other comprehensive income and ownership changes.
Weighted average Invested Capital for the three-month period ended March 31, 2019 was $8,180 million . See “ Reconciliation of Non-IFRS Financial Measures ” on page 65 for more details.

Q1 2019 INTERIM REPORT 63


ENTERPRISE VALUE
The following section contains information to assist users in the calculation of the enterprise value of our partnership.
Enterprise Value
We define Enterprise Value as the market value of our partnership plus preferred units and proportionate debt, net of proportionate cash.
The following table presents Enterprise Value as of March 31, 2019 and December 31, 2018 :
 
As of
US$ MILLIONS
March 31, 2019
 
December 31, 2018
Partnership units outstanding, end of period (1)
398.5

 
399.2

Price (2)
$
41.00

 
$
34.53

Market capitalization
16,339

 
13,784

Preferred units (3)
1,008

 
936

Proportionate net debt (4)
10,740

 
10,098

Enterprise value
$
28,087

 
$
24,818

1.
Includes limited partner, general partner and redeemable partnership units held by Brookfield and Exchange LP units.
2.
Market value of our partnership is calculated based on the closing price our units on the New York Stock Exchange.
3.
Preferred units on Brookfield Infrastructure’s Consolidated Statements of Financial Position.
4.
Please see “Capital Resources and Liquidity” for a detailed reconciliation of Brookfield Infrastructure’s proportionate net debt to our partnership’s consolidated debt on the Consolidated Statements of Financial Position.
RELATED PARTY TRANSACTIONS
In the normal course of operations, Brookfield Infrastructure entered into the transactions below with related parties. The immediate parent of Brookfield Infrastructure is our partnership. The ultimate parent of Brookfield Infrastructure is Brookfield. Other related parties of Brookfield Infrastructure represent its subsidiary and operating entities.
a) Transactions with the immediate parent
Throughout the year, the General Partner, in its capacity as our partnership’s general partner, incurs director fees, a portion of which are charged at cost to our partnership in accordance with the limited partnership agreement. Less than $1 million in director fees were incurred during the three-month period ended March 31, 2019 ( 2018 : less than $1 million ).
As of March 31, 2019, Brookfield Infrastructure had financial assets balance of $601 million from Brookfield, $581 million of which relates to the acquisition of Ascenty funded by our partnership on behalf of future institutional investment partners. The financial asset yields a return of 8% per annum and repayment is expected to occur following the first close of Brookfield’s private infrastructure fund. Brookfield Infrastructure also has loans payable of $73 million to subsidiaries of Brookfield (December 31, 2018: $73 million ). The loans are repayable in full between 2019 and 2026 with interest rates ranging from 3.8% to 8.5% per annum .
b) Transactions with other related parties
Since inception, Brookfield Infrastructure has had a management agreement (the “Master Services Agreement”) with certain service providers (the “Service Provider”), which are wholly-owned subsidiaries of Brookfield.
Pursuant to the Master Services Agreement, on a quarterly basis, Brookfield Infrastructure pays a base management fee, referred to as the Base Management Fee, to the Service Provider equal to 0.3125% per quarter ( 1.25% annually) of the market value of our partnership. The Base Management Fee was $59 million for the three-month period ended March 31, 2019 ( 2018 : $56 million ). As of March 31, 2019, $59 million was outstanding as payable to the Service Provider (December 31, 2018: $51 million ).
For purposes of calculating the Base Management Fee, the market value of our partnership is equal to the aggregate value of all the outstanding units of our partnership (assuming full conversion of Brookfield’s Redeemable Partnership Units in the Holdings LP into units of our partnership), preferred units and securities of the other Service Recipients (as defined in Brookfield Infrastructure’s Master Services Agreement) that are not held by Brookfield Infrastructure, plus all outstanding third party debt with recourse to a Service Recipient, less all cash held by such entities.

64 BROOKFIELD INFRASTRUCTURE PARTNERS L.P.




Brookfield Infrastructure, from time to time, will place deposits with, or receive deposits from, Brookfield. As of March 31, 2019 , Brookfield Infrastructure’s deposit balance from Brookfield was $367 million ( December 31, 2018 : deposit with Brookfield of less than $1 million ) . The deposit bears interest at market rates and was provided to Brookfield Infrastructure to fund our partnership’s acquisition of Ascenty completed on behalf of future institutional partners. Brookfield Infrastructure incurred interest expense of  less than $ 1 million for the three-month period ended March 31, 2019 ( 2018 : interest income of less than $1 million ).
Brookfield Infrastructure has entered into a $500 million revolving credit facility with Brookfield to provide additional liquidity for general corporate purposes and capital expenditures, if required. As of March 31, 2019 , there were $nil ( December 31, 2018 : $nil ) borrowings outstanding.
Brookfield Infrastructure’s subsidiaries provide heating, cooling and connection services in the normal course of operations on market terms to subsidiaries and associates of Brookfield Property Partners L.P. In addition, our subsidiaries lease office space and obtain construction, consulting and engineering services in the normal course of operations on market terms from subsidiaries and associates of Brookfield Property Partners L.P. For the three-month period ended March 31, 2019 , revenues of $4 million were generated ( 2018 : $2 million ) and expenses of $2 million were incurred ( 2018 : less than $1 million ).
Brookfield Infrastructure utilizes a wholly-owned subsidiary of Brookfield to negotiate and purchase insurance and assess the adequacy of insurance on behalf of our partnership and certain subsidiaries. During the three-month period ended March 31, 2019 , Brookfield Infrastructure paid less than $1 million for these services ( 2018 : less than $1 million ).
Brookfield Infrastructure’s U.K. port operation provides port marine services on market terms to a subsidiary acquired by Brookfield Business Partners L.P. For the three-month period ended March 31, 2019 , revenues of $1 million were generated ( 2018 : $1 million ).
Brookfield Infrastructure’s subsidiaries purchase electricity from, and distribute electricity on behalf of, a subsidiary of Brookfield Renewable Partners L.P. in the normal course of operations on market terms. For the three-month period ended March 31, 2019 , revenues of less than $1 million were generated ( 2018 : $nil ) and expenses of $11 million were incurred ( 2018 : $3 million ).
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
We, on behalf of our subsidiaries, provide letters of credit, which include, but are not limited to, guarantees for debt service reserves, capital reserves, construction completion and performance. As at March 31, 2019 , letters of credit issued by our subsidiaries amounted to $48 million ( December 31, 2018 : $47 million ).
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.
RECONCILIATION OF NON-IFRS FINANCIAL MEASURES
We focus on FFO to measure operating performance, along with IFRS measures such as net income. In addition, we also assess AFFO, Adjusted EBITDA, Adjusted Earnings and Invested Capital.
Adjusted EBITDA, FFO, AFFO, Adjusted Earnings and Invested Capital are presented based on our proportionate share of results in operations accounted for using the consolidation and the equity method whereby we either control or exercise significant influence or joint control over the investment, respectively. Proportionate financial information is not, and is not intended to be, presented in accordance with IFRS. Under IFRS, we are not considered to control those entities that have not been consolidated and as such, have been presented as investments in associates or joint ventures in Note 9 of the partnership’s financial statements. The presentation of the assets and liabilities and revenues and expenses do not represent our legal claim to such items, and the removal of financial statement amounts that are attributable to non-controlling interests does not extinguish the partnership’s legal claims or exposures to such items.

Q1 2019 INTERIM REPORT 65


As a result, segment revenues, costs attributable to revenues, general and administrative costs, interest expense, other income, depreciation and amortization, deferred income taxes, breakage and transaction costs, and non-cash valuation gains or losses are reconciling items that will differ from results presented in accordance with IFRS as these reconciling items include our proportionate share of earnings from investments in associates attributable to each of the above-noted items, and exclude the proportionate share of earnings (loss) of consolidated investments not held by the partnership apportioned to each of the above-noted items.
We provide proportionate financial results because we believe it assists investors and analysts in estimating our overall performance and understanding the partnership’s share of results from its underlying investments which have varying economic ownership interests and financial statement presentations when determined in accordance with IFRS. We believe our proportionate financial information, when read in conjunction with the partnership’s reported results under IFRS, provides the most meaningful assessment of how our operations are performing and capital is being managed. The presentation of proportionate results has limitations as an analytical tool, including the following:
The amounts shown on the individual line items were derived by applying our overall economic ownership interest percentage determined when applying the equity method of accounting and do not necessarily represent our legal claim to the assets and liabilities, or the revenues and expenses;
Other companies may calculate proportionate results differently than we do.
Because of these limitations, our proportionate financial information should not be considered in isolation or as a substitute for our financial statements as reported under IFRS.
The following tables present each segment’s results in the format that management organizes its segments to make operating decisions and assess performance. These tables reconcile our proportionate results to our partnership’s consolidated statements of operating results on a line by line basis by aggregating the components comprising the earnings from our investments in associates and reflecting the portion of each line item attributable to non-controlling interests.
See “ Discussion of Segment Reconciling Items ” beginning on page 72 for a reconciliation of segment results to our statement of operating results in accordance with IFRS along with a break-down of each of the reconciling items by type and by operating segment.
Net income is the most directly comparable IFRS measure to FFO, AFFO, Adjusted EBITDA and Adjusted Earnings. Partnership capital is the most directly comparable IFRS measure to Invested Capital. We urge you to review the IFRS financial measures within the MD&A and to not rely on any single financial measure to evaluate our partnership.
We define FFO as net income excluding the impact of depreciation and amortization, deferred income taxes, breakage and transaction costs, and non-cash valuation gains or losses.
FFO has limitations as an analytical tool:
FFO does not include depreciation and amortization expense; because we own capital assets with finite lives, depreciation and amortization expense recognizes the fact that we must maintain or replace our asset base in order to preserve our revenue generating capability;
FFO does not include deferred income taxes, which may become payable if we own our assets for a long period of time; and
FFO does not include certain non-recurring charges such as breakage and transaction costs or non-cash valuation gains, losses and impairment charges.
FFO is a key measure that we use to evaluate the performance of our operations and forms the basis for our partnership’s distribution policy.
We believe that FFO, when viewed in conjunction with our IFRS results, provides a more complete understanding of factors and trends affecting our underlying operations. FFO allows us to evaluate our businesses on the basis of cash return on invested capital by removing the effect of non-cash and other items.
We add back depreciation and amortization to remove the implication that our assets decline in value over time since we believe that the value of most of our assets will be sustained over time, provided we make all necessary maintenance expenditures. We add back deferred income taxes because we do not believe this item reflects the present value of the actual cash tax obligations we will be required to pay, particularly if our operations are held for a long period of time. We add back non-cash valuation gains or losses recorded in net income as they are non-cash and indicate a point-in-time approximation of value on items we consider long-term. We also add back breakage and transaction costs as they are capital in nature.

66 BROOKFIELD INFRASTRUCTURE PARTNERS L.P.




In addition, we focus on Adjusted Funds from Operations or AFFO, which is defined as FFO less capital expenditures required to maintain the current performance of our operations (maintenance capital expenditures). While FFO provides a basis for assessing current operating performance, it does not take into consideration the cost to sustain the operating performance of our partnership’s asset base. In order to assess the long-term, sustainable operating performance of our businesses, we observe that in addition to FFO, investors use AFFO by taking into account the impact of maintenance capital expenditures.
We also focus on Adjusted EBITDA which we define as net income excluding the impact of depreciation and amortization, interest expense, current and deferred income taxes, breakage and transaction costs and non-cash valuation gains or losses. Adjusted EBITDA provides a supplemental understanding of the performance of our business and enhanced comparability across periods and relative to our peers. Adjusted EBITDA excludes the impact of interest expense and current income taxes to remove the effect of the current capital structure and tax profile in assessing the operating performance of our businesses.
Adjusted Earnings is a measure that can be used to evaluate the performance of our operations, defined as net income attributable to our partnership, excluding any incremental depreciation and amortization expense associated with the revaluation of our property, plant and equipment and the impact of purchase price accounting, mark-to-market on hedging items and disposition gains or losses. While we believe that maintenance capital expenditures are the best measure of the cost to preserve our revenue generating capability, we acknowledge that investors may view historical depreciation as a more relevant proxy. Adjusted Earnings also excludes mark-to-market on hedging items recorded in net income or disposition gains or losses as we believe these items are not reflective of the ongoing performance of our underlying operations.
When viewed with our IFRS results, we believe that Adjusted Earnings provides a supplemental understanding of the performance of our underlying operations and also gives users enhanced comparability of our ongoing performance relative to peers in certain jurisdictions and across periods.
Invested Capital, which tracks the amount of capital that has been contributed to our partnership, is a measure we utilize to assess returns on capital deployed, relative to targeted returns. Investment decisions are based on, amongst other measures and factors, targeted returns on Invested Capital of 12% to 15% annually over the long-term. We define Invested Capital as partnership capital removing the following items: non-controlling interest - in operating subsidiaries, retained earnings or deficit, accumulated other comprehensive income and ownership changes. We measure return on Invested Capital as AFFO, less estimated returns of capital on operations that are not perpetual in life, divided by the weighted average Invested Capital for the period.

Q1 2019 INTERIM REPORT 67


FFO is a measure of operating performance that is not calculated in accordance with and does not have any standardized meaning prescribed by IFRS as issued by the IASB. FFO is therefore unlikely to be comparable to similar measures presented by other issuers. FFO has limitations as an analytical tool. Specifically, our definition of FFO may differ from the definition used by other organizations, as well as the definition of Funds from Operations used by the REALPAC and the NAREIT, in part because the NAREIT definition is based on U.S. GAAP, as opposed to IFRS. A reconciliation of the most closely-related IFRS measure, net income, to FFO and AFFO is as follows:
 
For the three-month
period ended March 31
US$ MILLIONS (1)
2019

 
2018

Net income
$
165

 
$
327

Add back or deduct the following:
 
 
 
Depreciation and amortization
292

 
193

Share of (earnings) losses from investments in associates and joint ventures (2)
(18
)
 
5

FFO contribution from investments in associates and joint ventures (2)
147

 
161

Income tax expense
75

 
185

Mark-to-market on hedging items and other
8

 
60

Gain on sale of associate

 
(338
)
Other expense
(16
)
 
(5
)
Consolidated Funds from Operations
653

 
588

FFO attributable to non-controlling interests (3)
(302
)
 
(255
)
FFO
351

 
333

Maintenance capital expenditures
(54
)
 
(49
)
AFFO
297

 
284

Return of capital
(26
)
 
(25
)
AFFO less return of capital
$
271

 
$
259

1.
Please see “ Reconciliation of Operating Segment Measures ” for a detailed reconciliation of Brookfield Infrastructure’s proportionate results to our partnership’s Consolidated Statements of Operating Results.
2.
These adjustments have the combined effect of excluding the impact of depreciation and amortization, deferred income taxes, breakage and transaction costs, and non-cash valuation gains or losses recorded within our investments in associates and joint ventures in accordance with our definition of FFO.
3.
By adjusting FFO attributable to non-controlling interests, the partnership is able to remove the portion of FFO earned at non-wholly owned subsidiaries that is not attributable to the partnership. We believe our proportionate financial information, when read in conjunction with the partnership’s reported results under IFRS, provides the most meaningful assessment of how our operations are performing. Please refer to the discussion of limitations of the proportional results as an analytical tool within the “ Reconciliation of Non-IFRS Financial Measures ” on page 65 .
All reconciling amounts from net income to FFO presented above are taken directly from the partnership’s consolidated financial statements, and in the case of “Contribution from investments in associates and joint ventures” and “Attributable to non-controlling interests”, the partnership’s proportionate share of FFO relating thereto are derived using the accounting policies consistent with those applied in the partnership’s consolidated financial statements. FFO for these items is calculated on the same basis as consolidated entities, as disclosed above, and is calculated by applying the same ownership percentages used in calculating the partnership’s share of equity accounted income and the corresponding elimination of non-controlling interests in accordance with IAS 28, Investments in Associates and Joint Ventures and IFRS 10, Consolidated Financial Statements , respectively.
For the three-month period ended March 31, 2019 , the difference between net income and FFO is predominantly due to depreciation and amortization, non-cash items included within earnings from our investments in associates and joint ventures and income tax expense. Depreciation and amortization increased from prior year due to incremental charges from recently completed acquisitions, higher asset values following our annual revaluation process, the adoption of IFRS 16, and capital expenditures made during the year. FFO contribution from investments in associates and joint ventures decreased from prior year mainly due to the sale of our Chilean electricity transmission business and a weaker Brazilian real. Income taxes decreased from prior year due to taxes associated with the gain on the sale of our Chilean electricity transmission business in March 2018, partially offset by higher taxable income generated from our operations.
The difference between net income and AFFO is due to the aforementioned items, in addition to maintenance capital expenditures of $54 million ( 2018 : $49 million ).

68 BROOKFIELD INFRASTRUCTURE PARTNERS L.P.




The following table reconciles net income, the most directly comparable IFRS measure, to Adjusted EBITDA, a non-IFRS measure. Adjusted EBITDA is presented based on our proportionate share of results in operations accounted for using the consolidation and the equity methods.
 
For the three-month
period ended March 31
US$ MILLIONS (1)
2019

 
2018

Net income
$
165

 
$
327

Add back or deduct the following:
 
 
 
Depreciation and amortization
292

 
193

Interest expense
212

 
114

Share of losses (earnings) from investments in associates and joint ventures (2)
(18
)
 
5

Adjusted EBITDA contributions from investments in associates and joint ventures (2)
191

 
203

Income tax expense
75

 
185

Mark-to-market on hedging items and other
8

 
60

Gain on sale of associates

 
(338
)
Consolidated Adjusted EBITDA
925

 
749

Adjusted EBITDA attributable to non-controlling
interests (3)
(453
)
 
(324
)
Adjusted EBITDA
$
472

 
$
425

1.
Please see “ Reconciliation of Operating Segment Measures ” for a detailed reconciliation of Brookfield Infrastructure’s proportionate results to our partnership’s Consolidated Statements of Operating Results.
2.
These adjustments have the combined effect of excluding the impact of depreciation and amortization, interest expense, current and deferred income taxes, breakage and transaction costs, and non-cash valuation gains or losses recorded within our investments in associates and joint ventures in accordance with our definition of FFO.
3.
By adjusting Adjusted EBITDA attributable to non-controlling interests, the partnership is able to remove the portion of Adjusted EBITDA earned at non-wholly owned subsidiaries that is not attributable to the partnership. We believe our proportionate financial information, when read in conjunction with the partnership’s reported results under IFRS, provides the most meaningful assessment of how our operations are performing. Please refer to the discussion of limitations of the proportional results as an analytical tool within the “ Reconciliation of Non-IFRS Financial Measures ” on page 65 .
All reconciling amounts presented above are taken directly from the partnership’s consolidated financial statements, and in the case of “Contribution from investments in associates and joint ventures” and “Attributable to non-controlling interests”, the partnership’s proportionate share of Adjusted EBITDA relating thereto are derived using the accounting policies consistent with those applied in the partnership’s consolidated financial statements. Adjusted EBITDA for these items is calculated on the same basis as consolidated entities, as disclosed above, and is calculated by applying the same ownership percentages used in calculating the partnership’s share of equity accounted income and the corresponding elimination of non-controlling interests in accordance with IAS 28, Investments in Associates and Joint Ventures and IFRS 10, Consolidated Financial Statements , respectively.
For the three-month period ended March 31, 2019 , the difference between net income and Adjusted EBITDA is predominantly due to depreciation and amortization, interest expense and Adjusted EBITDA from investments in associates and joint ventures. Depreciation and amortization increased from prior year due to incremental charges from recently completed acquisitions, higher asset values following our annual revaluation process, the adoption of IFRS 16, and capital expenditures made during the year. Interest expense increased from the prior year due to the issuance of $1.5 billion senior notes at our Brazilian regulated gas transmission business and additional borrowings associated with businesses acquired during the year. Adjusted EBITDA from investments in associates and joint ventures decreased compared to the prior year mainly due to the sale of our Chilean electricity transmission business and the impact of a weaker Brazilian real. Income taxes decreased from the prior year due to taxes associated with the gain recorded on the sale of our Chilean electricity transmission business in March 2018, partially offset by higher taxable income generated at our businesses.

Q1 2019 INTERIM REPORT 69


The following table reconciles net income attributable to our partnership, the most directly comparable IFRS measure, to Adjusted Earnings, a non-IFRS financial metric:
 
For the three-month
period ended March 31
US$ MILLIONS
2019

 
2018

Net income attributable to partnership (1)
$
30

 
$
209

Add back or deduct the following:
 
 
 
Depreciation and amortization expense due to application of revaluation model and acquisition accounting
102

 
85

Mark-to-market on hedging items and other
32

 
198

Gain on sale of subsidiaries or ownership changes

 
(338
)
Adjusted earnings
$
164

 
$
154

1.
Includes net income attributable to non-controlling interest—Redeemable Partnership Units held by Brookfield, general partner and limited partners.
For the three-month period ended March 31, 2019 , the difference between net income attributable to partnership and Adjusted Earnings is due to depreciation and amortization expense attributable to the application of the revaluation model and acquisition accounting of $102 million ( 2018 : $85 million ), and mark-to-market gains on hedging items and other of $32 million ( 2018 : $198 million ). Adjusted earnings for the period benefited from organic growth across the majority of our operations and acquisitions completed in the past 12 months. These increases were partially offset by the impact of the sale of our Chilean electricity transmission operation in 2018 and foreign exchange.
The following table reconciles net (loss) income per limited partnership unit, the most directly comparable IFRS measure, to FFO per unit, a non-IFRS financial metric:
 
For the three-month
period ended March 31
US$ MILLIONS, EXCEPT PER UNIT AMOUNTS (1)
2019

 
2018

Net (loss) income per limited partnership unit (2)
$
(0.05
)
 
$
0.42

Add back or deduct the following:
 
 
 
Depreciation and amortization
0.55

 
0.53

Deferred income taxes
0.01

 
0.01

Mark-to-market on hedging items
0.04

 
0.09

Gain on sale of associate

 
(0.86
)
Valuation losses and other
0.33

 
0.66

Per unit FFO (3)
$
0.88

 
$
0.85


1.
Please see “ Reconciliation of Operating Segment Measures ” for a detailed reconciliation of Brookfield Infrastructure’s proportionate results to our partnership’s Consolidated Statements of Operating Results.
2.
During the three-month period ended March 31, 2019 , on average there were 278.1 million  limited partnership units outstanding ( 2018 : 276.6 million ).
3.
During the three-month period ended March 31, 2019 , on average there were 398.7 million units outstanding ( 2018 : 394.0 million ), being inclusive of our units, the Redeemable Partnership Units, the Exchange LP Units and the Special General Partner Units.

70 BROOKFIELD INFRASTRUCTURE PARTNERS L.P.




The following table reconciles net (loss) income per limited partnership unit, the most directly comparable IFRS measure, to Adjusted Earnings per unit, a non-IFRS financial metric:
 
For the three-month
period ended March 31
US$ MILLIONS, EXCEPT PER UNIT AMOUNTS
2019

 
2018

Net (loss) income per limited partnership unit (1)
$
(0.05
)
 
$
0.42

Add back or deduct the following:
 
 
 
Depreciation and amortization expense due to application of revaluation model & acquisition accounting
0.26

 
0.22

Mark-to-market on hedging items and other
0.20

 
0.61

Gains on sale of subsidiaries or ownership changes

 
(0.86
)
Adjusted earnings per unit (2)
$
0.41

 
$
0.39


1.
During the three-month period ended March 31, 2019 , on average there were 278.1 million  limited partnership units outstanding ( 2018 : 276.6 million ).
2.
During the three-month period ended March 31, 2019 , on average there were 398.7 million units outstanding ( 2018 : 394.0 million ), being inclusive of our units, the Redeemable Partnership Units, the Exchange LP Units and the Special General Partner Units.
The following reconciles partnership capital, the most directly comparable IFRS measure, to Invested Capital, a non-IFRS financial metric:
 
As of
US$ MILLIONS
March 31, 2019
 
December 31, 2018
Partnership Capital
$
16,275

 
$
14,668

Remove impact of the following items since inception:
 
 
 
Non-controlling interest - in operating subsidiaries
(8,799
)
 
(7,303
)
Deficit
1,486

 
1,228

Accumulated other comprehensive income
(370
)
 
(328
)
Ownership changes and other
(390
)
 
(109
)
Invested Capital
$
8,202

 
$
8,156

Invested capital has decreased as a result of repurchases made during the quarter of $29 million , partially offset by $2 million related to units issued in March 2019 under our partnership’s distribution reinvestment plan.
The following table presents the change in Invested Capital during the three-month period ended March 31, 2019 :
 
For the three-month
period ended March 31
US$ MILLIONS
2019

 
2018

Opening balance
$
8,156

 
$
7,599

Issuance of preferred units, net of repurchases
72

 
157

Repurchases of limited partnership units and redeemable partnership units, net of issuances
(26
)
 
4

Ending balance
$
8,202

 
$
7,760

Weighted Average Invested Capital
$
8,180

 
$
7,716

AFFO is defined as FFO (defined in Note 3 , Segment Information) less maintenance capital expenditures. AFFO for the three-month period ended March 31, 2019 was $297 million (2018: $284 million ). Estimated returns of capital for the three-month period ended March 31, 2019 were $26 million ( 2018 : $25 million ).
Our partnership has met its investment return objectives for the three-month period ended March 31, 2019 with returns on Invested Capital of 13% (2018: 13% ).

Q1 2019 INTERIM REPORT 71


Reconciliation of Operating Segment Measures
Adjusted EBITDA, FFO and AFFO are presented based on our proportionate share of results in operations accounted for using consolidation and the equity method whereby we either control or exercise significant influence over the investment respectively, in order to demonstrate the impact of key value drivers of each of these operating segments on our overall performance. As a result, segment depreciation and amortization, deferred income taxes, breakage and transaction costs, and non-cash valuation gains or losses are reconciling items that will differ from results presented in accordance with IFRS as these reconciling items (1) include our proportionate share of earnings from investments in associates attributable to each of the above-noted items, and (2) exclude the proportionate share of earnings (loss) of consolidated investments not held by us apportioned to each of the above-noted items.
The following tables present each segment’s results in the format that management organizes its segments to make operating decisions and assess performance. Each segment is presented on a proportionate basis, taking into account our ownership in operations accounted for using the consolidation and equity method whereby we either control or exercise significant influence over the investment, respectively. These tables reconcile our proportionate results to our partnership’s consolidated statements of operating results on a line by line basis by aggregating the components comprising the earnings from our investments in associates and reflecting the portion of each line item attributable to non-controlling interests. See “ Discussion of Segment Reconciling Items ” on page 72 for a reconciliation of segment results to our statement of operating results in accordance with IFRS.
 
 
Total attributable to Brookfield Infrastructure
 
 
 
 
 
 
FOR THE THREE-MONTH PERIOD ENDED
MARCH 31, 2019
US$ MILLIONS
 
Utilities

 
Transport

 
Energy

 
Data
Infrastructure
(1)

 
Corporate

 
Total
 
Contribution
from
investments
in associates

 
Attributable
to non-
controlling
interest

 
As per
IFRS
financials
(2)

 
 
 
 
 
 
 
 
Revenues
 
$
269

 
$
389

 
$
245

 
$
62

 
$

 
$
965

 
$
(368
)
 
$
996

 
$
1,593

Costs attributed to revenues
 
(88
)
 
(200
)
 
(118
)
 
(26
)
 

 
(432
)
 
177

 
(543
)
 
(798
)
General and administrative costs
 

 

 

 

 
(61
)
 
(61
)
 

 

 
(61
)
Adjusted EBITDA
 
181

 
189

 
127

 
36

 
(61
)
 
472

 
(191
)
 
453

 
 
Other (expense) income
 
(10
)
 
(1
)
 
8

 
1

 
21

 
19

 
3

 
(38
)
 
(16
)
Interest expense
 
(34
)
 
(49
)
 
(28
)
 
(9
)
 
(20
)
 
(140
)
 
41

 
(113
)
 
(212
)
FFO
 
137

 
139

 
107

 
28

 
(60
)
 
351

 
(147
)
 
302

 
 
Depreciation and amortization
 
(45
)
 
(91
)
 
(59
)
 
(25
)
 

 
(220
)
 
98

 
(170
)
 
(292
)
Deferred taxes
 
(13
)
 
6

 
(2
)
 
4

 
3

 
(2
)
 
(4
)
 
(6
)
 
(12
)
Mark-to-market on hedging items and other
 
(11
)
 
(40
)
 
(14
)
 
(6
)
 
(28
)
 
(99
)
 
35

 
9

 
(55
)
Share of earnings from associates
 

 

 

 

 

 

 
18

 

 
18

Net income attributable to non-controlling interest and preferred unitholders
 

 

 

 

 

 

 

 
(135
)
 
(135
)
Net income (loss) attributable to
partnership (3)
 
$
68

 
$
14

 
$
32

 
$
1

 
$
(85
)
 
$
30

 
$

 
$

 
$
30

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total attributable to Brookfield Infrastructure
 
 
 
 
 
 
FOR THE THREE-MONTH PERIOD ENDED
MARCH 31, 2018
US$ MILLIONS
 
Utilities

 
Transport

 
Energy

 
Data
Infrastructure
(1)

 
Corporate

 
Total
 
Contribution
from
investments
in associates

 
Attributable to non-controlling
interest

 
As per IFRS
financials
(2)

 
 
 
 
 
 
 
 
 
Revenues
 
$
272

 
$
424

 
$
153

 
$
43

 
$

 
$
892

 
$
(423
)
 
$
544

 
$
1,013

Costs attributed to revenues
 
(69
)
 
(246
)
 
(74
)
 
(20
)
 

 
(409
)
 
220

 
(220
)
 
(409
)
General and administrative costs
 

 

 

 

 
(58
)
 
(58
)
 

 

 
(58
)
Adjusted EBITDA
 
203

 
178

 
79

 
23

 
(58
)
 
425

 
(203
)
 
324

 
 
Other (expense) income
 
(3
)
 
2

 
5

 
(1
)
 
17

 
20

 

 
(25
)
 
(5
)
Interest expense
 
(31
)
 
(43
)
 
(18
)
 
(3
)
 
(17
)
 
(112
)
 
42

 
(44
)
 
(114
)
FFO
 
169

 
137

 
66

 
19

 
(58
)
 
333

 
(161
)
 
255

 
 
Depreciation and amortization
 
(58
)
 
(99
)
 
(33
)
 
(20
)
 

 
(210
)
 
111

 
(94
)
 
(193
)
Deferred taxes
 
(15
)
 
13

 
(2
)
 
2

 

 
(2
)
 
(9
)
 
(4
)
 
(15
)
Mark-to-market on hedging items and other
 
(47
)
 
(39
)
 
(18
)
 

 
(146
)
 
(250
)
 
64

 
(39
)
 
(225
)
Gain on sale of associates
 

 

 

 

 
338

 
338

 

 

 
338

Share of losses from associates
 

 

 

 

 

 

 
(5
)
 

 
(5
)
Net income attributable to non-controlling interest and preferred unitholders
 

 

 

 

 

 

 

 
(118
)
 
(118
)
Net income attributable to
partnership (3)
 
$
49

 
$
12

 
$
13

 
$
1

 
$
134

 
$
209

 
$

 
$

 
$
209



72 BROOKFIELD INFRASTRUCTURE PARTNERS L.P.




1.
During the second quarter of 2018, our Communications Infrastructure segment was renamed to Data Infrastructure. There was no concurrent change in the operations which comprise the segment.
2.
The above table provides each segment’s results in the format that management organizes its segments to make operating decisions and assess performance. Each segment is presented on a proportionate basis, taking into account Brookfield Infrastructure’s ownership in operations accounted for using the consolidation and equity methods under IFRS. The above table reconciles Brookfield Infrastructure’s proportionate results to our partnership’s Consolidated Statements of Operating Results on a line by line basis by aggregating the components comprising the earnings from our partnership’s investments in associates and reflecting the portion of each line item attributable to non-controlling interests.
3.
Includes net income (loss) attributable to non-controlling interests - Redeemable Partnership Units held by Brookfield, non-controlling interests—Exchange LP Units, general partners and limited partners.
The following tables provide each segment’s assets in the format that management organizes its segments to make operating decisions and assess performance. Each segment is presented on a proportionate basis, taking into account our ownership in operations using consolidation and the equity method whereby we either control or exercise significant influence over the investment respectively. These tables reconcile our proportionate assets to total assets presented on our Consolidated Statements of Financial Position by removing net liabilities contained within investments in associates, reflecting the assets attributable to non-controlling interests, and adjusting for working capital assets which are netted against working capital liabilities.
 
 
Total Attributable to Brookfield Infrastructure
 
 
 
 
 
 
 
 
AS OF MARCH 31, 2019
US$ MILLIONS
 
Utilities

 
Transport

 
Energy

 
Data
Infrastructure

 
Corporate

 
Total

 
Contribution
from
investments
in associates

 
Attributable 
to non-
controlling
interest

 
Working
capital
adjustment
and other

 
As per
IFRS
financials

Total assets
 
$
4,937

 
$
6,435

 
$
5,196

 
$
2,355

 
$
(1,642
)
 
$
17,281

 
$
(2,556
)
 
$
20,681

 
$
6,219

 
$
41,625

 
 
Total Attributable to Brookfield Infrastructure
 
 
 
 
 
 
 
 
AS OF DECEMBER 31, 2018
US$ MILLIONS
 
Utilities

 
Transport

 
Energy

 
Data
Infrastructure

 
Corporate

 
Total

 
Contribution
from
investments
in associates

 
Attributable 
to non-
controlling
interest

 
Working
capital
adjustment
and other

 
As per
IFRS
financials

Total assets
 
$
4,864

 
$
6,424

 
$
4,722

 
$
1,446

 
$
(929
)
 
$
16,527

 
$
(2,350
)
 
$
17,545

 
$
4,858

 
$
36,580

Discussion of Segment Reconciling Items
The following tables detail and provide discussion, where applicable, of material changes between reporting periods for each operating segment, the reconciliation of contributions from investments in associates and attribution of non-controlling interest in the determination of Adjusted EBITDA, FFO and net income attributable to our partnership in order to facilitate the understanding of the nature of and changes to reconciling items.
FOR THE THREE-MONTH PERIOD ENDED
MARCH 31, 2019
US$ MILLIONS
 
Utilities

 
Transport

 
Energy

 
Data
Infrastructure

 
Corporate

 
Total

Adjustments to items comprising Adjusted EBITDA (1)
 
 
 
 
 
 
 
 
 
 
 
 
 Contributions from investments in associates
 
$
(5
)
 
$
(96
)
 
$
(65
)
 
$
(25
)
 
$

 
$
(191
)
Attribution to non-controlling interest
 
254

 
59

 
112

 
28

 

 
453

Adjusted EBITDA
 
249

 
(37
)
 
47

 
3

 

 
262

Adjustments to items comprising FFO (2)
 
 
 
 
 
 
 
 
 
 
 
 
 Contributions from investments in associates
 
3

 
25

 
13

 
3

 

 
44

Attribution to non-controlling interest
 
(69
)
 
(28
)
 
(33
)
 
(21
)
 

 
(151
)
FFO
 
183

 
(40
)
 
27

 
(15
)
 

 
155

Adjustments to items comprising net income attributable to partnership (3)
 
 
 
 
 
 
 
 
 
 
 
 
 Contributions from investment in associates
 
2

 
71

 
52

 
22

 

 
147

Attribution to non-controlling interest
 
(185
)
 
(31
)
 
(79
)
 
(7
)
 

 
(302
)
Net income attributable to partnership
 
$

 
$

 
$

 
$

 
$

 
$


Q1 2019 INTERIM REPORT 73


FOR THE THREE-MONTH PERIOD ENDED
MARCH 31, 2018
US$ MILLIONS
 
Utilities

 
Transport

 
Energy

 
Data
Infrastructure

 
Corporate

 
Total

Adjustments to items comprising Adjusted EBITDA (1)
 
 
 
 
 
 
 
 
 
 
 
 
 Contributions from investment in associates
 
$
(33
)
 
$
(92
)
 
$
(55
)
 
$
(23
)
 
$

 
$
(203
)
Attribution to non-controlling interest
 
244

 
44

 
36

 

 

 
324

Adjusted EBITDA
 
211

 
(48
)
 
(19
)
 
(23
)
 

 
121

Adjustments to items comprising FFO (2)
 
 
 
 
 
 
 
 
 
 
 
 
 Contributions from investments in associates
 
6

 
21

 
11

 
4

 

 
42

Attribution to non-controlling interest
 
(36
)
 
(20
)
 
(14
)
 
1

 

 
(69
)
FFO
 
181

 
(47
)
 
(22
)
 
(18
)
 

 
94

Adjustments to items comprising net income attributable to partnership (3)
 
 
 
 
 
 
 
 
 
 
 
 
 Contributions from investment in associates
 
27

 
71

 
44

 
19

 

 
161

Attribution to non-controlling interest
 
(208
)
 
(24
)
 
(22
)
 
(1
)
 

 
(255
)
Net income attributable to partnership
 
$

 
$

 
$

 
$

 
$

 
$

1.
Revenues, costs attributed to revenues, general and administrative costs.
2.
Other income, interest expense and cash taxes.
3.
Depreciation and amortization, deferred taxes, fair value adjustments, other expenses, share of earnings from associates, net income attributable to non-controlling interest.
Contributions from investments in associates and joint ventures decreased compared to prior year predominantly due to the sale of our Chilean electricity transmission business and the impact of foreign exchange. Attribution to non-controlling interest decreased compared to the prior year primarily due to acquisitions completed over the past 12 months.
Critical Accounting Policies and Estimates
The preparation of financial statements requires management to make critical judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses that are not readily apparent from other sources, during the reporting period. These estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.
Critical judgments made by management and utilized in the normal course of preparing Brookfield Infrastructure’s consolidated financial statements are outlined below.
Revaluation of property, plant and equipment
Property, plant and equipment is revalued on a regular basis. The critical estimates and assumptions underlying the valuation of property, plant and equipment are set out in Note 13, Property, Plant and Equipment in our December 31, 2018 audited consolidated financial statements. Our partnership’s property, plant, and equipment are measured at fair value on a recurring basis with an effective date of revaluation for all asset classes as of December 31, 2018. Brookfield Infrastructure determined fair value under the income method with due consideration to significant inputs such as the discount rate, terminal value multiple and overall investment horizon.
Impairment of goodwill, intangibles with indefinite lives and investment in associates and joint ventures
Our partnership assesses the impairment of goodwill and intangible assets with indefinite lives by reviewing the value-in-use or fair value less costs of disposal of the cash-generating units to which goodwill or the intangible asset has been allocated. Brookfield Infrastructure uses the following critical assumptions and estimates: the circumstances that gave rise to the goodwill, timing and amount of future cash flows expected from the cash-generating unit; discount rates; terminal capitalization rates; terminal valuation dates; useful lives and residual values.
The impairment assessment of investments in associates and joint ventures requires estimation of the recoverable amount of the asset.

74 BROOKFIELD INFRASTRUCTURE PARTNERS L.P.




Other estimates utilized in the preparation of our partnership’s financial statements are: depreciation and amortization rates and useful lives; recoverable amount of goodwill and intangible assets; ability to utilize tax losses and other tax measurements.
Recently adopted accounting standards
Brookfield Infrastructure applied, for the first time, certain new standards applicable to our partnership that became effective January 1, 2019. The impact of adopting these new standards on our partnership’s accounting policies are as follows:
IFRS 16 Leases (“IFRS 16”)
In January 2016, the IASB published a new standard, IFRS 16. The new standard brings most leases on balance sheet, eliminating the distinction between operating and finance leases. Lessor accounting, however, remains largely unchanged and the distinction between operating and finance leases is retained. IFRS 16 supersedes IAS 17, Leases (“IAS 17”) and related interpretations and is effective for periods beginning on or after January 1, 2019.
The partnership adopted the standard using a modified retrospective approach, whereby any transitional impact is recorded in equity as at January 1, 2019, and comparative periods are not restated. In applying IFRS 16 for the first time, the partnership has applied the following practical expedients permitted by the standard on a lease-by-lease basis. These practical expedients are only available upon adoption and cannot be applied for any new lease executed after adoption:
The accounting for operating leases with a remaining lease term of less than 12 months as of January 1, 2019 as short-term leases; and
The application of a single discount rate to a portfolio of leases with reasonably similar characteristics. Furthermore, the partnership has applied the policy choice options on adoption to measure right-of-use assets at an amount equal to the lease liability.
The partnership has elected to apply the following practical expedients in its application of the standard:
To not allocate contract consideration between lease and non-lease components, but rather account for each lease and non-lease component as a single lease component;
To recognize the payments associated with short-term and low-value leases on a straight-line basis as an expense over the lease term.
The adoption of IFRS 16 resulted in the recognition of lease liabilities that are recorded in accounts payable and other, other liabilities, and right-of-use assets (“ROU”) that are classified as property, plant, and equipment of $1.2 billion. The adoption of IFRS 16 did not have an impact on partnership capital. The weighted average incremental borrowing rate used in determining the lease liabilities is approximately 5%. The difference between the present value of operating lease commitments disclosed applying IAS 17 as at December 31, 2018 and the lease liabilities recognized as at January 1, 2019 is due to finance lease liabilities recognized as at December 31, 2018, short-term and low-value leases recognized as expense, and adjustments as a result of different treatment for extension and termination options and variable lease payments relating to changes in indices or rates. When comparing results to prior periods, the new standard resulted in a reduction of our direct operating costs by $15 million ( $2 million attributable to the partnership) and an increase to our interest and depreciation expense of $9 million and $13 million , respectively ( $1 million and $4 million attributable to the partnership, respectively), thereby reducing net income by $7 million. Additionally, the new standard had no impact on our partnership’s share of earnings from equity accounted investments, but did increase proportionate EBITDA and FFO by $11 million , and $6 million , respectively.
Our partnership assesses whether a contract is or contains a lease, at inception of a contract and recognizes an ROU asset and a corresponding lease liability with respect to all lease agreements in which it is the lessee, except for short-term leases and leases of low value. The lease liability is initially measured at the present value of future lease payments, discounted using the interest rate implicit in the lease, if that rate can be determined, or otherwise the incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise of i) fixed lease payments, including in-substance fixed payments, less any lease incentives; ii) variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date; iii) the amount expected to be payable by the lessee under residual value guarantees; iv) the exercise price of purchase options, if it is reasonably certain that the option will be exercised; and v) payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease. ROU assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement day and any initial direct costs. ROU assets are subsequently measured at cost less accumulated depreciation and impairment losses.

Q1 2019 INTERIM REPORT 75


The partnership remeasures lease liabilities and makes a corresponding adjustment to the related ROU assets when i) the lease term has changed or there is a change in the assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate; ii) the lease payments have changed due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in which cases the lease liability is remeasured by discounting the revised lease payments using the initial discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a revised discount rate is used); or iii) a lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate.
The partnership has applied critical judgments in the application of IFRS 16, including: i) identifying whether a contract (or part of a contract) includes a lease; ii) determining whether it is reasonably certain that lease extension or termination option will be exercised in determining lease term; and iii) determining whether variable payments are in-substance fixed. The partnership also uses critical estimates in the application of IFRS 16, including the estimation of lease term and determination of the appropriate rate to discount the lease payments.
IFRIC 23 Uncertainty over Income Tax Treatments (“IFRIC 23”)
In June 2017, the IASB published IFRIC 23, effective for annual periods beginning on or after January 1, 2019. The interpretation requires an entity to assess whether it is probable that a tax authority will accept an uncertain tax treatment used, or proposed to be used, by an entity in its income tax filings and to exercise judgment in determining whether each tax treatment should be considered independently or whether some tax treatments should be considered together. The decision should be based on which approach provides better predictions of the resolution of the uncertainty. An entity also has to consider whether it is probable that the relevant authority will accept each tax treatment, or group of tax treatments, assuming that the taxation authority with the right to examine any amounts reported to it will examine those amounts and will have full knowledge of all relevant information when doing so. The interpretation may be applied on either a fully retrospective basis or a modified retrospective basis without restatement of comparative information. Our partnership has adopted the standard as of January 1, 2019 on a modified retrospective basis. The adoption did not have a significant impact on our partnership’s unaudited interim condensed consolidated financial statements.
IFRS 3 Business Combinations (“IFRS 3”)
In October 2018, the IASB issued an amendment to IFRS 3, effective for annual periods beginning on or after January 1, 2020. The amendment clarifies the definition of a business and assists companies in determining whether an acquisition is a business combination or an acquisition of a group of assets. The amendment emphasizes that to be considered a business, an acquired set of activities and assets must include an input and a substantive process that together significantly contribute to the ability to create outputs. Effective January 1, 2019, our partnership has early adopted the standard prospectively. The adoption did not have a significant impact on our partnership’s unaudited interim condensed consolidated financial statements.
After the adoption of IFRS 3 amendments, the partnership continues to account for business combinations in which control is acquired under the acquisition method. When an acquisition is made, the partnership considers the inputs, processes and outputs of the acquiree in assessing whether it meets the definition of a business. When the acquired set of activities and assets lack a substantive process in place but will be integrated into the partnership’s existing operations, the acquisition ceases to meet the definition of a business and is accounted for as an asset acquisition. Assets acquired through asset acquisitions are initially measured at cost, which includes the transaction costs incurred for the acquisitions. Acquisitions that continue to meet the definition of a business combination are accounted for under the same acquisition method.
CONTROLS AND PROCEDURES
No changes were made in our internal control over financial reporting during the three-month period ended March 31, 2019 , that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Excluded from our evaluation were internal controls over financial reporting at DCI and EWPL for which control was acquired on January 4, 2019 and March 22, 2019 , respectively. The financial statements of these entities constitute 7% of total assets, 11% of partnership capital, 1% of revenue and less than 1% of net income of the consolidated financial statements of our partnership as of and for the three-month period ended March 31, 2019 .

76 BROOKFIELD INFRASTRUCTURE PARTNERS L.P.




CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Management’s Discussion and Analysis contains forward-looking information and forward-looking statements within the meaning of applicable securities laws. We may make such statements in this report, in other filings with Canadian regulators or the SEC and in other public communications. The words “tend”, “seek”, “target”, “foresee”, “believe,” “expect,” “could”, “aim to,” “intend,” “objective”, “outlook”, “endeavour”, “estimate”, “likely”, “continue”, “plan”, derivatives thereof and other expressions of similar import, or the negative variations thereof, and similar expressions of future or conditional verbs such as “will”, “may”, “should,” which are predictions of or indicate future events, trends or prospects and which do not relate to historical matters, identify forward-looking statements. Forward-looking statements in this Management’s Discussion and Analysis include among others, statements with respect to our assets tending to appreciate in value over time, growth in our assets and operations, increases in FFO per unit and resulting capital appreciation, returns on capital and on equity, increasing demand for commodities and global movement of goods, expected capital expenditures, the impact of planned capital projects by customers of our businesses as on the performance and growth of those businesses, the extent of our corporate, general and administrative expenses, our ability to close acquisitions (including acquisitions referred to in this Management’s Discussion and Analysis and other planned transactions), our capacity to take advantage of opportunities in the marketplace, the future prospects of the assets that we operate or will operate, partnering with institutional investors, ability to identify, acquire and integrate new acquisition opportunities, long-term target return on our assets, sustainability of distribution levels, distribution growth and payout ratios, operating results and margins for our business and each operation, future prospects for the markets for our products, our plans for growth through internal growth and capital investments, ability to achieve stated objectives, ability to drive operating efficiencies, return on capital expectations for the business, contract prices and regulated rates for our operations, our expected future maintenance and capital expenditures, ability to deploy capital in accretive investments, impact on the business resulting from our view of future economic conditions, our ability to maintain sufficient financial liquidity, our ability to draw down funds under our bank credit facilities, our ability to secure financing through the issuance of equity or debt, expansions of existing operations, likely sources of future opportunities in the markets in which we operate, financing plans for our operating companies, foreign currency management activities and other statements with respect to our beliefs, outlooks, plans, expectations and intentions. Although we believe that the partnership’s anticipated future results, performance or achievements expressed or implied by the forward-looking statements and information are based upon reasonable assumptions and expectations, the reader should not place undue reliance on forward-looking statements and information because they involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the partnership 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 the forward-looking statements contained herein include general economic conditions in the jurisdictions in which we operate and elsewhere which may impact the markets for our products or services, the ability to achieve growth within Brookfield Infrastructure’s businesses, our ability to achieve the milestones necessary to deliver the targeted returns to our unitholders, which is uncertain, some of which depends on access to capital and continuing favourable commodity prices, the impact of market conditions on our businesses, the fact that success of Brookfield Infrastructure is dependent on market demand for an infrastructure company, which is unknown, the availability of equity and debt financing for Brookfield Infrastructure, the ability to effectively complete new acquisitions in the competitive infrastructure space (including the potential acquisitions referred to in this letter to unitholders, some of which remain subject to the satisfaction of conditions precedent, and the inability to reach final agreement with counterparties to transactions referred to herein as being currently pursued, given that there can be no assurance that any such transaction will be agreed to or completed) and to integrate acquisitions into existing operations, changes in technology which have the potential to disrupt the businesses and industries in which we invest, the market conditions of key commodities, the price, supply or demand for which can have a significant impact upon the financial and operating performance of our business, regulatory decisions affecting our regulated businesses, our ability to secure favourable contracts, weather events affecting our business, traffic volumes on our toll road businesses and other risks and factors described in the documents filed by us with the securities regulators in Canada and the United States, including under “Risk Factors” in our most recent Annual Report on Form 20-F and other risks and factors that are described therein.
We caution that the foregoing list of important factors that may affect future results is not exhaustive. When relying on our forward-looking statements to make decisions with respect to Brookfield Infrastructure, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Except as required by law, the partnership undertakes no obligation to publicly update or revise any forward-looking statements or information, whether written or oral, that may be as a result of new information, future events or otherwise.

Q1 2019 INTERIM REPORT 77


Exhibit 99.2
FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
FULL CERTIFICATE
I, Samuel Pollock, Chief Executive Officer of Brookfield Infrastructure Group L.P., service provider of Brookfield Infrastructure Partners L.P., certify the following:
1.
Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Brookfield Infrastructure Partners L.P. (the “issuer”) for the interim period ended March 31, 2019 .
2.
No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
3.
Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
4.
Responsibility: The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings , for the issuer.
5.
Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer and I have, as at the end of the period covered by the interim filings
a)
designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that
i)
material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and
ii)
information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and
b)
designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.
5.1.
Control framework: The control framework the issuer’s other certifying officer and I used to design the issuer’s ICFR is the Internal Control - Integrated Framework (COSO 2013 Framework) published by The Committee of Sponsoring Organizations of the Treadway Commission (COSO).
5.2.
ICFR – material weakness relating to design: N/A
5.3.
Limitation on scope of design: The issuer has disclosed in its interim MD&A
a)
the fact that the issuer’s other certifying officer(s) and I have limited scope of our design of the DC&P and ICFR to exclude controls, policies and procedures of
i)
a business that the issuer acquired not more than 365 days before the last day of the period covered by the interim filings; and
b)
summary financial information about the proportionately consolidated entity, special purpose entity or business that the issuer acquired that has been proportionately consolidated or consolidated in the issuer’s financial statements
6.
Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1, 2019 and ended on March 31, 2019 , that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.
Date: May 13, 2019
/s/ Samuel Pollock
Samuel Pollock
Chief Executive Officer,
Brookfield Infrastructure Group L.P.




Exhibit 99.3
FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
FULL CERTIFICATE
I, Bahir Manios, Chief Financial Officer of Brookfield Infrastructure Group L.P., service provider of Brookfield Infrastructure Partners L.P., certify the following:
1.
Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Brookfield Infrastructure Partners L.P. (the “issuer”) for the interim period ended March 31, 2019 .
2.
No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
3.
Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
4.
Responsibility: The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings , for the issuer.
5.
Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer and I have, as at the end of the period covered by the interim filings
a)
designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that
i)
material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and
ii)
information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and
b)
designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.
5.1.
Control framework: The control framework the issuer’s other certifying officer and I used to design the issuer’s ICFR is the Internal Control - Integrated Framework (COSO 2013 Framework) published by The Committee of Sponsoring Organizations of the Treadway Commission (COSO).
5.2.
ICFR – material weakness relating to design: N/A
5.3.
Limitation on scope of design: The issuer has disclosed in its interim MD&A
a)
the fact that the issuer’s other certifying officer(s) and I have limited scope of our design of the DC&P and ICFR to exclude controls, policies and procedures of
i)
a business that the issuer acquired not more than 365 days before the last day of the period covered by the interim filings; and
b)
summary financial information about the proportionately consolidated entity, special purpose entity or business that the issuer acquired that has been proportionately consolidated or consolidated in the issuer’s financial statements
6.
Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1, 2019 and ended on March 31, 2019 , that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.
Date: May 13, 2019
/s/ Bahir Manios
Bahir Manios
Chief Financial Officer,
Brookfield Infrastructure Group L.P.