EX-99.1 2 v409420_ex99-1.htm EXHIBIT 99.1

Exhibit 99.1

Pembina Pipeline Corporation

CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION

(unaudited)

($ millions)	Note		March 31 2015			December 31 2014
Assets
Current assets
Cash and cash equivalents		11		42			53
Trade receivables and other		11		443			447
Derivative financial instruments		11		38			52
Inventory				107			137
				630			689
Non-current assets
Property, plant and equipment		5		8,098			7,560
Intangible assets and goodwill				2,839			2,841
Investments in equity accounted investees				152			153
Deferred tax assets				19			19
				11,108			10,573
Total Assets				11,738			11,262

Liabilities and Equity
Current liabilities
Trade payables and accrued liabilities		11		529			550
Tax payable		11		5			58
Dividends payable		11		49			49
Loans and borrowings		6, 11		4			4
Derivative financial instruments		11		32			44
				619			705
Non-current liabilities
Loans and borrowings		6, 11		2,886			2,466
Convertible debentures		11		386			391
Derivative financial instruments		11		65			73
Employee benefits, share-based payments and other				31			44
Deferred revenue				45			44
Decommissioning provision		7		473			410
Deferred tax liabilities				829			793
				4,715			4,221
Total Liabilities				5,334			4,926
Equity
Equity attributable to shareholders of the Company
Common share capital		8		6,974			6,876
Preferred share capital				879			880
Deficit				(1,438	)		(1,400	)
Accumulated other comprehensive income				(11	)		(20	)
Total Equity				6,404			6,336
Total Liabilities and Equity				11,738			11,262

See accompanying notes to the condensed consolidated interim financial statements

Pembina Pipeline Corporation

CONDENSED CONSOLIDATED INTERIM STATEMENT OF EARNINGS AND COMPREHENSIVE INCOME

(unaudited)

3 Months Ended March 31 ($ millions, except per share amounts)	Note		2015			2014
Revenue				1,154			1,759
Cost of sales				942			1,459
Gain on commodity-related derivative financial instruments				16			2
Gross profit				228			302

General and administrative				49			37
Other (income) expense				(1	)		1
				48			38
Results from operating activities				180			264
Net finance costs		9		13			61
Earnings before income tax and equity accounted investees				167			203

Share of loss of investment in equity accounted investees, net of tax				2
Current tax expense				22			34
Deferred tax expense				23			22
Income tax expense				45			56

Earnings and comprehensive income attributable to shareholders				120			147
Other comprehensive income

Exchange differences on translation of foreign operations that will not be reclassified into earnings, net of tax				9
Other comprehensive income, net of tax				9
Total comprehensive income attributable to shareholders				129			147
Earnings per common share – basic (dollars)				0.32			0.44
Earnings per common share – diluted (dollars)				0.32			0.41
Weighted average number of common shares (millions)
Basic				339			319
Diluted				340			340

See accompanying notes to the condensed consolidated interim financial statements

Pembina Pipeline Corporation

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY

(unaudited)

			Attributable to Shareholders of the Company
($ millions)	Note		Common Shares		Preferred Shares			Deficit			Accumulated Other Comprehensive Income			Total			Non- controlling Interest		Total Equity
December 31, 2014				6,876		880			(1,400	)		(20	)		6,336					6,336
Earnings									120						120					120
Exchange difference on translation of foreign operation												9			9					9
Total Comprehensive Income									120			9			129					129
Transactions with shareholders of the Company
Common shares issued, net of issue costs
Dividend reinvestment plan		8		86											86					86
Debenture conversions		8		6											6					6
Share-based payment transactions and other		8		6		(1	)								5					5
Dividends declared – common		8							(148	)					(148	)				(148	)
Dividends declared – preferred		8							(10	)					(10	)				(10	)
Total transactions with shareholders of the Company				98		(1	)		(158	)					(61	)				(61	)
March 31, 2015				6,974		879			(1,438	)		(11	)		6,404					6,404

December 31, 2013				5,972		391			(1,189	)		(8	)		5,166			5		5,171
Earnings and total comprehensive income									147						147					147
Transactions with shareholders of the Company
Preferred shares issued, net of issue costs						245									245					245
Dividend reinvestment plan				77											77					77
Debenture conversions				118											118					118
Share-based payment transactions and other				5											5					5
Dividends declared – common									(134	)					(134	)				(134	)
Dividends declared - preferred									(6	)					(6	)				(6	)
Total transactions with shareholders of the Company				200		245			(140	)					305					305
March 31, 2014				6,172		636			(1,182	)		(8	)		5,618			5		5,623

See accompanying notes to the condensed consolidated interim financial statements

Pembina Pipeline Corporation

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS

(unaudited)

3 Months Ended March 31 ($ millions)	Note		2015			2014
Cash provided by (used in)
Operating activities
Earnings				120			147
Adjustments for
Depreciation and amortization				57			54
Net finance costs		9		13			61
Share of loss of investment in equity accounted investees, net of tax				2
Income tax expense				45			56
Share-based compensation expense				13			10
Unrealized loss (gain) on commodity-related derivative financial instruments				2			(4	)
Change in non-cash operating working capital				(32	)		23
Other				16
Share-based compensation payment				(27	)		(30	)
Net interest paid				(14	)		(11	)
Tax paid				(75	)		(45	)
Cash flow from operating activities				120			261
Financing activities
Bank borrowings and issuance of debt				280
Repayment of loans and borrowings				(461	)		(50	)
Issuance of medium term notes				600			250
Issue costs and financing fees				(2	)		(8	)
Exercise of stock options				2			4
Dividends paid (net of shares issued under the dividend reinvestment plan)				(72	)		(62	)
Cash flow from financing activities				347			134
Investing activities
Capital expenditures				(498	)		(287	)
Changes in non-cash investing working capital and other				28			(1	)
Interest paid during construction				(13	)		(4	)
Recovery of assets or proceeds from sale				24			1
Contributions to equity accounted investees				(19	)		(2	)
Cash flow used in investing activities				(478	)		(293	)
Change in cash				(11	)		102
Cash, beginning of period				53			51
Cash and cash equivalents, end of period				42			153

See accompanying notes to the condensed consolidated interim financial statements

Pembina Pipeline Corporation

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

1. REPORTING ENTITY

Pembina Pipeline Corporation ("Pembina" or the "Company") is an energy transportation and service provider domiciled in Canada. The condensed consolidated unaudited interim financial statements ("Interim Financial Statements") include the accounts of the Company, its subsidiary companies, partnerships and any interests in associates and joint arrangements as at and for the three months ended March 31, 2015. These Interim Financial Statements and the notes thereto have been prepared in accordance with IAS 34 – Interim Financial Reporting, and should be read in conjunction with the consolidated financial statements of the Company as at and for the year ended December 31, 2014. The Interim Financial Statements were authorized for issue by Pembina's Board of Directors on May 5, 2015.

Pembina owns or has interests in conventional crude oil, condensate and natural gas liquids ("NGL") pipelines, oil sands and heavy oil pipelines, gas gathering and processing facilities, an NGL infrastructure and logistics business and midstream services that span across its operations. The Company's assets are located in Canada and in the United States.

2. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies are set out in the December 31, 2014 consolidated financial statements. Those policies have been applied consistently to all periods presented in these Interim Financial Statements.

New standards adopted in 2015

The following amendments to existing standards issued by the International Accounting Standards Board ("IASB") were adopted as of January 1, 2015, without any material impact to Pembina's Interim Financial Statements: IAS 24 Related Party Disclosures and IFRS 8 Operating Segments.

New Standards and Interpretations not yet adopted

Certain new standards, interpretations, amendments and improvements to existing standards were issued by the IASB or International Financial Reporting Standards Interpretations Committee ("IFRIC") and are effective for accounting periods beginning on or after January 1, 2016. These standards have not been applied in preparing these Interim Financial Statements. Those which may be relevant to Pembina are described below:

IFRS 9 Financial Instruments (2014) is effective for annual periods beginning on or after January 1, 2018 and must be applied retrospectively, with some exemptions. Early adoption is permitted. The Company intends to adopt IFRS 9 (2014) in its financial statements for the annual period beginning on January 1, 2018. The extent of the impact of adoption of the standard has not yet been determined.

IFRS 15 Revenue from Contracts with Customers is effective for annual periods beginning on or after January 1, 2017; however, the IASB has proposed to defer to January 1, 2018. The Company intends to adopt IFRS 15 in its financial statements for the annual period beginning on January 1, 2017, or when determined effective. The extent of the impact of adoption of the standard has not yet been determined.

3. DETERMINATION OF FAIR VALUES

A number of the Company's accounting policies and disclosures require the determination of fair value for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure based on methods as set out in the December 31, 2014 consolidated financial statements. These methods have been applied consistently to all periods presented in these Interim Financial Statements.

Pembina Pipeline Corporation

4. ACQUISITION

On October 24, 2014, the acquisition date, Pembina acquired the Vantage pipeline system ("Vantage") and Mistral Midstream Inc.'s interest in the Saskatchewan Ethane Extraction Plant for total consideration of $733 million (U.S.$653 million).

The purchase price equation, which was finalized during the first quarter of 2015, is based on assessed fair values and is as follows:

($ millions)
Cash	10
Trade receivables and other	4
Property, plant and equipment	451
Intangible assets	204
Goodwill	137
Other long-term assets	2
Trade payables and accrued liabilities	(23	)
Deferred tax liabilities	(52	)
	733

For more information, please see Note 6 of the consolidated financial statements for the year ended December 31, 2014. Goodwill as originally presented was $130 million; adjustments to goodwill in the table above are due to the recognition of additional deferred tax liabilities of $11 million and property, plant and equipment of $4 million.

5. PROPERTY, PLANT AND EQUIPMENT

($ millions)	Land and Land Rights		Pipelines			Facilities and Equipment			Linefill and Other			Assets Under Construction			Total
Cost
Balance at December 31, 2014		148		3,419			3,276			795			1,211			8,849
Additions				7			49			6			436			498
Acquisition (Note 4)													4			4
Change in decommissioning provision				39			22									61
Capitalized interest													16			16
Transfers				20			214			9			(243	)
Disposals and other				6			(3	)		(2	)					1
Balance at March 31, 2015		148		3,491			3,558			808			1,424			9,429

Depreciation
Balance at December 31, 2014		5		872			320			92						1,289
Depreciation				15			21			8						44
Disposals				(1	)		(1	)								(2	)
Balance at March 31, 2015		5		886			340			100						1,331

Carrying amounts
December 31, 2014		143		2,547			2,956			703			1,211			7,560
March 31, 2015		143		2,605			3,218			708			1,424			8,098

Commitments

At March 31, 2015, the Company has contractual construction commitments for property, plant and equipment of $1,659 million (December 31, 2014: $1,978 million), excluding significant projects awaiting regulatory approval.

Pembina Pipeline Corporation

6. LOANS AND BORROWINGS

This note provides information about the contractual terms of the Company's interest-bearing loans and borrowings, which are measured at amortized cost.

Carrying value, terms and conditions, and debt maturity schedule

							Carrying value
($ millions)	Available facilities at March 31, 2015		Nominal interest rate	Year of maturity			March 31, 2015			December 31, 2014
Operating facility⁽¹⁾		30	prime + 0.45 or BA⁽²⁾+ 1.45		2015	⁽³⁾
Revolving unsecured credit facility⁽¹⁾		1,500	prime + 0.45 or BA⁽²⁾ + 1.45		2019			326			506
Senior unsecured notes – Series C		200	5.58		2021			198			197
Senior unsecured notes – Series D		267	5.91		2019			266			266
Senior unsecured medium-term notes 1		250	4.89		2021			249			249
Senior unsecured medium-term notes 2		450	3.77		2022			448			448
Senior unsecured medium-term notes 3		350	4.75		2043			350			198
Senior unsecured medium-term notes 4		600	4.81		2044			596			596
Senior unsecured medium-term notes 5		450	3.54		2025			448
Finance lease liabilities								9			10
Total interest bearing liabilities		4,097						2,890			2,470
Less current portion								(4	)		(4	)
Total non-current								2,886			2,466

⁽¹⁾

The nominal interest rate is based on the Company's credit rating at March 31, 2015.

⁽²⁾

Bankers' Acceptance.

⁽³⁾

Operating facility expected to be renewed on an annual basis.

On February 2, 2015, Pembina issued $600 million of senior unsecured medium-term notes conducted in two tranches consisting of $450 million in senior unsecured medium-term notes, series 5 having a fixed coupon of 3.54 percent per annum, paid semi-annually, and maturing on February 3, 2025, and $150 million through the re-opening of its 4.75 percent medium-term notes, series 3, due April 30, 2043.

On April 16, 2015, Pembina received commitments from its bank syndicate to increase the Company's unsecured revolving credit facility to $2 billion and to retain the accordion feature, at Pembina's option, for an additional $750 million. The unsecured revolving credit facility maturity date was extended to May 31, 2020.

All facilities are governed by specific debt covenants which Pembina was in compliance with as at March 31, 2015 (December 31, 2014: in compliance).

Pembina Pipeline Corporation

7. DECOMMISSIONING PROVISION

($ millions)	Total
Balance at December 31, 2014		410
Unwinding of discount rate		2
Change in rates		56
Additions		15
Change in estimates and other		(10	)
Balance at March 31, 2015		473

The Company applied a 2 percent inflation rate per annum (December 31, 2014: 2 percent) and a risk free rate of 1.99 percent (December 31, 2014: 2.33 percent) to calculate the present value of the decommissioning provision. Changes in the measurement of the decommissioning provision were added to, or deducted from, the cost of the related asset in property, plant and equipment. When a re-measurement reduction of the decommissioning provision is in excess of the carrying amount of the related asset, the amount is credited to depreciation expense. No re-measurements were credited to depreciation expense for the three months ended March 31, 2015 (December 31, 2014: $8 million).

8. SHARE CAPITAL

Common Share Capital

($ millions, except as noted)	Number of Common Shares (thousands)		Common Share Capital
Balance at December 31, 2014		337,924		6,876
Dividend reinvestments		2,258		86
Debenture conversions		203		6
Share-based payment transactions		72		6
Balance at March 31, 2015		340,457		6,974

Dividends

The following dividends were declared by the Company:

3 Months Ended March 31 ($ millions)	2015		2014
Common shares
$0.435 per qualifying share (2014: $0.42)		148		134

Preferred shares
$0.265625 per qualifying Series 1 share (2014: $0.265625)		3		3
$0.29375 per qualifying Series 3 share (2014: $0.29375)		2		2
$0.3125 per qualifying Series 5 share (2014: $0.1507)		3		1
$0.28125 per qualifying Series 7 share (2014: $nil)		2
		10		6

On April 10, 2015, Pembina announced that the Board of Directors declared a dividend for April of $0.145 per qualifying common share ($1.74 annualized) in the total amount of $49 million. On the same date, Pembina announced that the Board of Directors had declared a quarterly dividend of $0.265625 per qualifying Series 1 preferred share, $0.29375 per qualifying Series 3 preferred share, $0.3125 per qualifying Series 5 preferred share and $0.28125 per qualifying Series 7 preferred share in the total amount of $10 million payable on June 1, 2015.

Pembina Pipeline Corporation

9. NET FINANCE COSTS

3 months Ended March 31 ($ millions)	2015			2014
Interest expense on financial liabilities measured at amortized cost:
Loans and borrowings		15			14
Convertible debentures		7			10
Unwinding of discount rate		2			3
Loss in fair value of non-commodity-related derivative financial instruments		3			2
(Gain) loss on revaluation of conversion feature of convertible debentures		(11	)		34
Foreign exchange gain and other		(3	)		(2	)
Net finance costs		13			61

10. OPERATING SEGMENTS

3 Months Ended March 31, 2015 ($ millions)	Conventional Pipelines⁽¹⁾⁽⁴⁾		Oil Sands & Heavy Oil			Gas Services		Midstream⁽²⁾⁽³⁾			Corporate & Intersegment Eliminations			Total
Revenue:
Pipeline transportation		154		55								(20	)		189
Terminalling, storage and hub services									911						911
Gas services							54								54
Total revenue		154		55			54		911			(20	)		1,154
Operating expenses		56		20			17		18			(2	)		109
Cost of goods sold, including product purchases									798			(19	)		779
Realized gain on commodity-related derivative financial instruments									18						18
Operating margin		98		35			37		113			1			284
Depreciation and amortization included in operations		19		4			8		23						54
Unrealized loss on commodity-related derivative financial instruments		1							1						2
Gross profit		78		31			29		89			1			228
Depreciation included in general and administrative												3			3
Other general and administrative		2		3			2		7			32			46
Other expenses (income)		3		(3	)				(1	)					(1	)
Reportable segment results from operating activities		73		31			27		83			(34	)		180
Net finance (income) costs									(1	)		14			13
Reportable segment earnings (loss) before tax		73		31			27		84			(48	)		167
Share of loss of investment equity accounted investees, net of tax									2						2
Capital expenditures		285		5			72		123			13			498

⁽¹⁾

8 percent of Conventional Pipelines revenue is under regulated tolling arrangements.

⁽²⁾

NGL product and services, terminalling, storage and hub services revenue includes $54 million associated with U.S. midstream sales.

⁽³⁾

Pembina aggregates its NGL and crude oil midstream activities based on shared economic risk characteristics.

⁽⁴⁾

Conventional Pipelines revenue includes $2 million associated with U.S. pipeline sales.

Pembina Pipeline Corporation

3 Months Ended March 31, 2014 ($ millions)	Conventional Pipelines⁽¹⁾		Oil Sands & Heavy Oil		Gas Services		Midstream⁽²⁾⁽³⁾		Corporate & Intersegment Eliminations			Total
Revenue:
Pipeline transportation		117		52						(13	)		156
Terminalling, storage and hub services								1,561					1,561
Gas services						42							42
Total revenue		117		52		42		1,561		(13	)		1,759
Operating expenses		40		18		13		25		(1	)		95
Cost of goods sold, including product purchases								1,325		(13	)		1,312
Realized loss on commodity-related derivative financial instruments								2					2
Operating margin		77		34		29		209		1			350
Depreciation and amortization included in operations		13		5		6		28					52
Unrealized gain on commodity-related derivative financial instruments		1						3					4
Gross profit		65		29		23		184		1			302
Depreciation included in general and administrative										2			2
Other general and administrative		3		1		1		6		24			35
Other expenses						1							1
Reportable segment results from operating activities		62		28		21		178		(25	)		264
Net finance costs		1						2		58			61
Reportable segment earnings (loss) before tax		61		28		21		176		(83	)		203
Capital expenditures		141		5		72		65		4			287

⁽¹⁾

6 percent of Conventional Pipelines revenue is under regulated tolling arrangements.

⁽²⁾

NGL product and services, terminalling, storage and hub services revenue includes $86 million associated with U.S. midstream sales.

⁽³⁾

Pembina aggregates its NGL and crude oil midstream activities based on shared economic risk characteristics.

Pembina Pipeline Corporation

11. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT

Fair values

The fair values of financial assets and liabilities, together with the carrying amounts shown in the Statement of Financial Position, are as follows:

	March 31, 2015					December 31, 2014
($ millions)	Carrying Value			Fair Value		Carrying value			Fair Value
Financial assets carried at fair value
Derivative financial instruments		38			38		52			52

Financial assets carried at amortized cost
Cash and cash equivalents		42			42		53			53
Trade and other receivables		443			443		447			447
		485			485		500			500

Financial liabilities carried at fair value
Derivative financial instruments		97			97		117			117

Financial liabilities carried at amortized cost
Trade payables and accrued liabilities		529			529		550			550
Tax payable		5			5		58			58
Dividends payable		49			49		49			49
Loans and borrowings		2,890			3,114		2,470			2,590
Convertible debentures		386	⁽¹⁾		578		391	⁽¹⁾		592
		3,859			4,275		3,518			3,839


	(1)	Carrying value excludes conversion feature of convertible debentures.

The basis for determining fair value is disclosed in Note 3.

12. SUBSEQUENT EVENTS

On April 10, 2015 Pembina issued 9,000,000 cumulative redeemable rate reset class A preferred shares, Series 9 ("Series 9 Preferred Shares") for aggregate gross proceeds of $225 million (the "Offering"). The Series 9 Preferred Shares are trading on the Toronto Stock Exchange under the symbol PPL.PR.I.

Dividends on the Series 9 Preferred Shares are expected to be $0.2969 quarterly, or $1.1875 per share on an annualized basis, payable on the 1st day of March, June, September and December, as and when declared by the Board of Directors of Pembina, for the initial fixed rate period to but excluding December 1, 2020. The first dividend, if declared, will be payable September 1, 2015, in the amount of $0.4685 per share.

On May 5, 2015, Pembina announced that it increased its monthly dividend on its common shares by 5.2 percent from $0.145 per common share per month (or $1.74 annualized) to $0.1525 per common share per month (or $1.83 annualized) effective as of the May 25, 2015 record date, payable June 15, 2015.

Pembina Pipeline Corporation

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CORPORATE INFORMATION

HEAD OFFICE

Pembina Pipeline Corporation

Suite 4000, 585 – 8th Avenue SW

Calgary, Alberta T2P 1G1

AUDITORS

KPMG LLP

Chartered Accountants

Calgary, Alberta

TRUSTEE, REGISTRAR & TRANSFER AGENT

Computershare Trust Company of Canada

Suite 600, 530 – 8th Avenue SW

Calgary, Alberta T2P 3S8

1-800-564-6253

STOCK EXCHANGE

Pembina Pipeline Corporation

Toronto Stock Exchange listing symbols for:

Common shares: PPL

Convertible debentures: PPL.DB.C, PPL.DB.E, PPL.DB.F

Preferred shares: PPL.PR.A, PPL.PR.C, PPL.PR.E, PPL.PR.G, PPL.PR.I

New York Stock Exchange listing symbol for:

Common shares: PBA

INVESTOR INQUIRIES

Phone:	(403) 231-3156
Fax:	(403) 237-0254
Toll Free:	1-855-880-7404
Email:	investor-relations@pembina.com
Website:	www.pembina.com