EX-99.1 2 bbuq12020ex991.htm EXHIBIT 99.1 Exhibit
Brookfield Business Partners L.P.


UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF

BROOKFIELD BUSINESS PARTNERS L.P.

As at March 31, 2020 and December 31, 2019 and for the
three months ended March 31, 2020 and 2019




1

INDEX TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS OF BROOKFIELD BUSINESS PARTNERS L.P.

 
 
Unaudited Interim Condensed Consolidated Statements of Financial Position
3

Unaudited Interim Condensed Consolidated Statements of Operating Results
4

Unaudited Interim Condensed Consolidated Statements of Comprehensive Income (Loss)
5

Unaudited Interim Condensed Consolidated Statements of Changes in Equity
6

Unaudited Interim Condensed Consolidated Statements of Cash Flow
7

Notes to Unaudited Interim Condensed Consolidated Financial Statements
8



2

BROOKFIELD BUSINESS PARTNERS L.P.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS
OF FINANCIAL POSITION


(US$ MILLIONS)
 
Notes
 
March 31, 2020
 
December 31, 2019
Current Assets
 
 
 
 
 
 
Cash and cash equivalents
 
4
 
$
2,049

 
$
1,986

Financial assets
 
5
 
1,071

 
1,148

Accounts and other receivable, net
 
6
 
4,350

 
4,808

Inventory, net
 
7
 
3,484

 
3,490

Other assets
 
8, 10
 
1,356

 
1,363

 
 
 
 
12,310

 
12,795

Financial assets
 
5
 
4,517

 
5,095

Accounts and other receivable, net
 
6
 
692

 
823

Other assets
 
10
 
439

 
429

Property, plant and equipment
 
11
 
13,429

 
13,892

Deferred income tax assets
 
 
 
757

 
667

Intangible assets
 
12
 
10,840

 
11,559

Equity accounted investments
 
14
 
1,635

 
1,273

Goodwill
 
13
 
4,800

 
5,218

 
 
 
 
$
49,419

 
$
51,751

Liabilities and equity
 
 
 
 
 
 
Current Liabilities
 
 
 
 
 
 
Accounts payable and other
 
15
 
$
9,158

 
$
9,881

Non-recourse borrowings in subsidiaries of the partnership
 
17
 
1,175

 
1,143

 
 
 
 
10,333

 
11,024

Accounts payable and other
 
15
 
6,494

 
6,615

Non-recourse borrowings in subsidiaries of the partnership
 
17
 
21,605

 
21,256

Corporate borrowings
 
17
 
283

 
—

Deferred income tax liabilities
 
 
 
1,650

 
1,803

 
 
 
 
$
40,365

 
$
40,698

Equity
 
 
 
 
 
 
Limited partners
 
20
 
$
1,718

 
$
2,116

Non-controlling interests attributable to:
 
 
 
 
 
 
Redemption-Exchange Units, Preferred Shares and Special Limited Partnership Units held by Brookfield Asset
 
20
 
1,343

 
1,676

Interest of others in operating subsidiaries
 
 
 
5,993

 
7,261

 
 
 
 
9,054

 
11,053

 
 
 
 
$
49,419

 
$
51,751




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

3

BROOKFIELD BUSINESS PARTNERS L.P.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS
OF OPERATING RESULTS


 
 
 
 
Three Months Ended
March 31,
(US$ MILLIONS, except per unit amounts)
 
Notes
 
2020
 
2019
Revenues
 
23, 24
 
$
10,146

 
$
9,201

Direct operating costs
 
22
 
(8,901
)
 
(8,193
)
General and administrative expenses
 
24
 
(244
)
 
(178
)
Depreciation and amortization expense
 
24
 
(538
)
 
(311
)
Interest income (expense), net
 
24
 
(364
)
 
(184
)
Equity accounted income (loss), net
 
14
 
(9
)
 
7

Impairment expense, net
 
11
 
(113
)
 
—

Gain (loss) on acquisitions/dispositions, net
 
9
 
183

 
(2
)
Other income (expenses), net
 
 
 
(217
)
 
(90
)
Income (loss) before income tax
 
 
 
(57
)
 
250

Income tax (expense) recovery
 
 
 
 
 
 
Current
 
 
 
(75
)
 
(30
)
Deferred
 
 
 
98

 
(19
)
Net income (loss)
 
 
 
$
(34
)
 
$
201

Attributable to:
 
 
 
 
 
 
Limited partners
 
 
 
$
(67
)
 
$
32

Non-controlling interests attributable to:
 
 
 
 
 
 
Redemption-Exchange Units held by Brookfield Asset Management Inc.
 
 
 
(59
)
 
30

Special Limited Partners
 
20
 
—

 
—

Interest of others in operating subsidiaries
 
 
 
92

 
139

 
 
 
 
$
(34
)
 
$
201

Basic and diluted earnings per limited partner unit
 
20
 
$
(0.84
)
 
$
0.48





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


4

BROOKFIELD BUSINESS PARTNERS L.P.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS
OF COMPREHENSIVE INCOME (LOSS)


 
 
 
 
Three Months Ended
March 31,
(US$ MILLIONS)
 
Notes
 
2020
 
2019
Net income (loss)
 
 
 
$
(34
)
 
$
201

Other comprehensive income (loss):
 
 
 
 
 
 
Items that may be reclassified subsequently to profit or loss:
 
 
 
 
 
 
Fair value through other comprehensive income
 
 
 
$
8

 
$
—

Foreign currency translation
 
 
 
(1,080
)
 
16

Net investment and cash flow hedges
 
4
 
57

 
24

Equity accounted investment
 
14
 
(11
)
 
—

Taxes on the above items
 
 
 
(13
)
 
(7
)
Reclassification to profit or loss on disposal
 
 
 
1

 
—

 
 
 
 
(1,038
)
 
33

 
 
 
 
 
 
 
Items that will not be reclassified subsequently to profit or loss:
 
 
 
 
 
 
Revaluation of pension obligations
 
 
 
—

 
4

Fair value through other comprehensive income
 
 
 
(175
)
 
37

Taxes on the above item
 
 
 
23

 
—

Total other comprehensive income (loss)
 
 
 
(1,190
)
 
74

Comprehensive income (loss)
 
 
 
$
(1,224
)
 
$
275

Attributable to:
 
 
 
 
 
 
Limited partners
 
 
 
$
(242
)
 
$
42

Non-controlling interests attributable to:
 
 
 
 
 
 
Redemption-Exchange Units held by Brookfield Asset Management Inc.
 
 
 
(210
)
 
39

Special Limited Partners
 
 
 
—

 
—

Interest of others in operating subsidiaries
 
 
 
(772
)
 
194

 
 
 
 
$
(1,224
)
 
$
275





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



5

BROOKFIELD BUSINESS PARTNERS L.P.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
 
 
 
 
 
 
 
 
Non-Controlling Interests
 
 
 
 
Limited Partners
 
Redemption-Exchange Units held by
Brookfield Asset Management Inc.
 
Preferred
Shares
 
 
 
 
(US$ MILLIONS)
 
Capital
Retained
earnings
Ownership
change
Accumulated
other
comprehensive
income (loss) (1)
Limited
partners
 
Capital
Retained
earnings
Ownership
change
Accumulated
other
comprehensive
income (loss) (1)
Redemption-
exchange
units
 
Capital
 
Interest of
others in
operating
subsidiaries
 
Total
equity
Balance as at January 1, 2020
 
$
2,331

$
(217
)
$
220

$
(218
)
$
2,116

 
$
1,924

$
(209
)
$
210

$
(264
)
$
1,661

 
$
15

 
$
7,261

 
$
11,053

Net income (loss)
 
—

(67
)
—

—

(67
)
 
—

(59
)
—

—

(59
)
 
—

 
92

 
(34
)
Other comprehensive income (loss)
 
—

—

—

(175
)
(175
)
 
—

—

—

(151
)
(151
)
 
—

 
(864
)
 
(1,190
)
Total comprehensive income (loss)
 
—

(67
)
—

(175
)
(242
)
 
—

(59
)
—

(151
)
(210
)
 
—

 
(772
)
 
(1,224
)
Contributions
 
—

—

—

—

—

 
—

—

—

—

—

 
—

 
281

 
281

Distributions (2)
 
—

(5
)
—

—

(5
)
 
—

(4
)
—

—

(4
)
 
—

 
(675
)
 
(684
)
Ownership change (3)
 
—

—

(143
)
1

(142
)
 
—

—

(120
)
1

(119
)
 
—

 
(102
)
 
(363
)
Unit repurchases (2)
 
(9
)
—

—

—

(9
)
 
—

—

—

—

—

 
—

 
—

 
(9
)
Balance as at March 31, 2020
 
$
2,322

$
(289
)
$
77

$
(392
)
$
1,718

 
$
1,924

$
(272
)
$
90

$
(414
)
$
1,328

 
$
15

 
$
5,993

 
$
9,054

Balance as at January 1, 2019
 
$
1,766

$
(237
)
$
205

$
(186
)
$
1,548

 
$
1,674

$
(234
)
$
195

$
(235
)
$
1,400

 
$
15

 
$
3,531

 
$
6,494

Net income (loss)
 
—

32

—

—

32

 
—

30

—

—

30

 
—

 
139

 
201

Other comprehensive income (loss)
 
—

—

—

10

10

 
—

—

—

9

9

 
—

 
55

 
74

Total comprehensive income (loss)
 
—

32

—

10

42

 
—

30

—

9

39

 
—

 
194

 
275

Contributions
 
—

—

—

—

—

 
—

—

—

—

—

 
—

 
24

 
24

Distributions (2)
 
—

(4
)
—

—

(4
)
 
—

(4
)
—

—

(4
)
 
—

 
(333
)
 
(341
)
Unit repurchases (2)
 
(3
)
—

—

—

(3
)
 
—

—

—

—

—

 
—

 
—

 
(3
)
Balance as at March 31, 2019
 
$
1,763

$
(209
)
$
205

$
(176
)
$
1,583

 
$
1,674

$
(208
)
$
195

$
(226
)
$
1,435

 
$
15

 
$
3,416

 
$
6,449

____________________________________

(1) 
See Note 21 for additional information.
(2) 
See Note 20 for additional information on distributions and for additional information on unit repurchases.
(3) 
Includes gains or losses on changes in ownership interests of consolidated subsidiaries.








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

6

BROOKFIELD BUSINESS PARTNERS L.P.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
 
 
 
 
Three Months Ended March 31,
(US$ MILLIONS)
 
Notes
 
2020
 
2019
Operating Activities
 
 
 
 
 
 
Net income (loss)
 
 
 
$
(34
)
 
$
201

Adjusted for the following items:
 
 
 
 
 
 
Equity accounted earnings, net of distributions
 
 
 
27

 
1

Impairment expense, net
 
11
 
113

 
—

Depreciation and amortization expense
 
 
 
538

 
311

Gain on acquisitions/dispositions, net
 
3
 
(183
)
 
2

Provisions and other items
 
 
 
93

 
91

Deferred income tax expense (recovery)
 
 
 
(98
)
 
19

Changes in non-cash working capital, net
 
25
 
120

 
(471
)
Cash from operating activities
 
 
 
576

 
154

Financing Activities
 
 
 
 

 
 

Proceeds from non-recourse subsidiary borrowings
 
 
 
1,611

 
174

Repayment of non-recourse subsidiary borrowings
 
 
 
(1,085
)
 
(485
)
Proceeds from corporate borrowings
 
 
 
283

 
—

Proceeds from other financing
 
 
 
15

 
—

Repayment of other financing
 
 
 
(22
)
 
—

Proceeds from (repayment of) other credit facilities, net
 
 
 
(156
)
 
302

Lease liability repayment
 
 
 
(53
)
 
(38
)
Capital provided by others who have interests in operating subsidiaries
 
 
 
256

 
24

Capital paid to others who have interests in operating subsidiaries
 
 
 
(36
)
 
—

Partnership units repurchased
 
 
 
(9
)
 
(3
)
Distributions to limited partners and Redemption-Exchange Unitholders
 
 
 
(9
)
 
(8
)
Distributions to others who have interests in operating subsidiaries
 
20
 
(667
)
 
(333
)
Cash from (used in) financing activities
 
 
 
128

 
(367
)
Investing Activities
 
 
 
 

 
 

Acquisitions
 
 
 
 

 
 

Subsidiaries, net of cash acquired
 
3
 
(13
)
 
(103
)
Property, plant and equipment and intangible assets
 
 
 
(446
)
 
(198
)
Equity accounted investments
 
 
 
(445
)
 
—

Financial assets and other
 
 
 
(363
)
 
—

Dispositions
 
 
 
 
 
 
Subsidiaries, net of cash disposed
 
 
 
165

 
—

Property, plant and equipment
 
 
 
25

 
6

Equity accounted investments
 
 
 
—

 
—

Financial assets and other
 
 
 
422

 
—

Net settlement of hedges
 
 
 
105

 
46

Restricted cash and deposits
 
 
 
65

 
98

Cash from (used in) investing activities
 
 
 
(485
)
 
(151
)
Cash
 
 
 
 
 
 
Change during the period
 
 
 
219

 
(364
)
Impact of foreign exchange on cash
 
 
 
(156
)
 
(1
)
Net change in cash classified within assets held for sale
 
8
 
—

 
(44
)
Balance, beginning of year
 
 
 
1,986

 
1,949

Balance, end of period
 
 
 
$
2,049

 
$
1,540


Supplemental cash flow information is presented in Note 25
The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.

7

NOTES TO UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS

As at March 31, 2020 and December 31, 2019 and for the three months ended
March 31, 2020 and 2019
NOTE 1.    NATURE AND DESCRIPTION OF THE PARTNERSHIP
Brookfield Business Partners L.P. and its subsidiaries, (collectively, “the partnership”) own and operate business services and industrial operations (“the Business”) on a global basis. Brookfield Business Partners L.P. was registered as a limited partnership established under the laws of Bermuda, and organized pursuant to a limited partnership agreement as amended on May 31, 2016, and as further amended on June 17, 2016. Brookfield Business Partners L.P. is a subsidiary of Brookfield Asset Management Inc. (“Brookfield Asset Management” or “Brookfield” or the “parent company”). Brookfield Business Partners L.P.’s limited partnership units are listed on the New York Stock Exchange and the Toronto Stock Exchange under the symbols “BBU” and “BBU.UN”, respectively. The registered head office of Brookfield Business Partners L.P. is 73 Front Street, 5th Floor, Hamilton HM 12, Bermuda.
NOTE 2.    SIGNIFICANT ACCOUNTING POLICIES
(a)
Basis of presentation
These unaudited interim condensed consolidated financial statements of the partnership have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting, or IAS 34, as issued by the International Accounting Standards Board, or the IASB, and using the accounting policies the partnership applied in its annual consolidated financial statements as at and for the year ended December 31, 2019, except for the impact of the adoption of the accounting standards described below. The accounting policies the partnership applied in its annual consolidated financial statements as at and for the year ended December 31, 2019 are disclosed in Note 2 of such consolidated financial statements, with which reference should be made in reading these unaudited interim condensed consolidated financial statements. All defined terms are also described in the annual consolidated financial statements. The unaudited interim condensed consolidated financial statements are prepared on a going concern basis and have been presented in U.S. dollars rounded to the nearest million unless otherwise indicated.
The preparation of financial statements in accordance with IAS 34 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the accounting policies. The critical accounting estimates and judgments have been set out in Note 2 to the partnership’s consolidated financial statements as at and for the year ended December 31, 2019. There have been no significant changes to the method of determining significant estimates and judgments since December 31, 2019, other than changes required as a result of adopting new standards as discussed below.
These unaudited interim condensed consolidated financial statements were approved by the partnership’s Board of Directors and authorized for issue on May 8, 2020.
(i)    Critical accounting judgments and measurement uncertainty
The preparation of financial statements requires management to make critical judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses that are not readily apparent from other sources, during the reporting period. These estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
In March 2020, the World Health Organization declared a global pandemic related to COVID-19. To date, there have been significant volatility in capital markets, commodity prices and foreign currencies, restrictions on the conduct of business in many jurisdictions, and the global movement of people and some goods has become restricted. The partnership considered the impacts of these circumstances on the key critical judgments, estimates and assumptions that affect the reported and contingent amount of assets, liabilities, revenues and expenses, including whether goodwill, intangible assets and property, plant and equipment needed to be reevaluated for impairment as of March 31, 2020.  The partnership has a diversified portfolio of operating businesses, many of which provide essential products and services to their customers.  Based on its assessments, no additional impairments were required as at March 31, 2020.  The partnership will continue to monitor the situation and review its critical estimates and judgments as circumstances evolve.


8
NOTES TO UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS 

As at March 31, 2020 and December 31, 2019 and for the three months ended
March 31, 2020 and 2019

(b)
New accounting policies adopted
(i)     Definition of material
In October 2018, the IASB issued amendments to IAS 1 Presentation of Financial Statements and IAS 8 Accounting policies, changes in accounting estimates and errors. These amendments clarify and align the definition of material and provide guidance to help improve consistency in the application of materiality when used in other IFRS standards. The partnership adopted these amendments on January 1, 2020 and the adoption did not have an impact on the partnership’s unaudited interim condensed consolidated financial statements.
(c)
Future changes in accounting policies
(i)     Insurance contracts
In May 2017, the IASB published IFRS 17, Insurance contracts a comprehensive standard that establishes principles for the recognition, measurement, presentation and disclosure of insurance contracts. In June 2019, the IASB published an exposure draft that proposes targeted amendments to IFRS 17 and will replace IFRS 4, Insurance contracts (“IFRS 4”). In March 2020, the IASB decided on a further deferral of the effective date of IFRS 17 from annual periods beginning on or after January 1, 2021 to annual periods beginning on or after January 1, 2023.
The measurement approach under IFRS 17 is based on the following:
•
a current, unbiased probability-weighted estimate of future cash flows expected to arise as the insurer fulfills the contract;
•
the effect of the time value of money;
•
a risk adjustment that measures the effects of uncertainty about the amount and timing of future cash flows; and
•
a contractual service margin which represents the unearned profit in a contract and that is recognized in profit or loss over time as the insurance coverage is provided.
There will also be a new financial statement presentation for insurance contracts and additional disclosure requirements.
IFRS 17 requires the partnership to distinguish between groups of contracts expected to be profit-making and groups of contracts expected to be onerous. IFRS 17 is to be applied retrospectively to each group of insurance contracts. If full retrospective application to a group of contracts is impracticable, the modified retrospective or fair value method may be used. The partnership is currently assessing the impact of IFRS 17 on its financial statements.
NOTE 3.    ACQUISITION OF BUSINESSES
When determining the basis of accounting for the partnership’s investees, the partnership evaluates the degree of influence that the partnership exerts directly or through an arrangement over the investees’ relevant activities. Control is obtained when the partnership has power over the acquired entities and an ability to use its power to affect the returns of these entities.
The partnership accounts for business combinations using the acquisition method of accounting, pursuant to which the cost of acquiring a business is allocated to its identifiable tangible and intangible assets and liabilities on the basis of the estimated fair values at the date of acquisition.
(a)
Acquisitions completed in the three months ended March 31, 2020
There were no significant acquisitions for the three months ended March 31, 2020.
(b)
Acquisitions completed in 2019
The following summarizes the consideration transferred, assets acquired and liabilities assumed at the applicable acquisition dates for significant acquisitions:

9
NOTES TO UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS 

As at March 31, 2020 and December 31, 2019 and for the three months ended
March 31, 2020 and 2019

(US$ MILLIONS)
 
Business services
 
Infrastructure services
 
Industrials
 
Total (1)
Cash
 
$
2,024

 
$
7

 
$
3,651

 
$
5,682

Non-cash consideration
 
15

 
1

 
—

 
16

Total consideration (2)
 
$
2,039

 
$
8

 
$
3,651

 
$
5,698

 
 
 
 
 
 
 
 
 
(US$ MILLIONS)
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
319

 
$
—

 
$
11

 
$
330

Accounts and other receivable, net
 
297

 
2

 
1,129

 
1,428

Inventory, net
 
41

 
—

 
1,775

 
1,816

Assets held for sale
 
6

 
—

 
—

 
6

Equity accounted investments
 
9

 
—

 
838

 
847

Property, plant and equipment
 
3,030

 
3

 
3,582

 
6,615

Intangible assets
 
542

 
—

 
6,420

 
6,962

Goodwill (3)
 
1,567

 
12

 
1,775

 
3,354

Deferred income tax assets
 
136

 
—

 
179

 
315

Financial assets
 
4,735

 
—

 
27

 
4,762

Other assets
 
48

 
—

 
347

 
395

Acquisition gain
 
(4
)
 
—

 
—

 
(4
)
Accounts payable and other
 
(2,732
)
 
(1
)
 
(1,998
)
 
(4,731
)
Borrowings
 
(709
)
 
—

 
—

 
(709
)
Deferred income tax liabilities
 
(152
)
 
—

 
(959
)
 
(1,111
)
Net assets acquired before non-controlling interests
 
7,133

 
16

 
13,126

 
20,275

Non-controlling interests (4) (5)
 
(5,094
)
 
(8
)
 
(9,475
)
 
(14,577
)
Net assets acquired
 
$
2,039

 
$
8

 
$
3,651

 
$
5,698

____________________________________
(1) 
The initial fair values of acquired assets, liabilities and goodwill for the acquisitions have been determined on a preliminary basis at the end of the reporting period.  Due to ongoing negotiations with the seller, adjustments to a purchase price allocation within our industrials segment resulted in a decrease to consideration of $113 million with a corresponding reduction to goodwill and deferred income tax.   
(2) 
Excludes consideration attributable to non-controlling interests, which represents the interest of others in operating subsidiaries.
(3) 
Adjustments to purchase price allocations within our business services segment and industrials segment resulted in an increase to goodwill of $93 million and $40 million, respectively.
(4) 
Non-controlling interests recognized on business combination were measured at fair value for business services, industrials and infrastructure services.
(5) 
Non-controlling interests recognized on business combination were measured at the proportionate share of fair value of the assets acquired and liabilities assumed for mortgage insurance services in our business services segment.

Business Services
Genworth MI Canada Inc. (“Genworth”)
On December 12, 2019, together with institutional partners, the partnership acquired Genworth, a Canadian based mortgage insurance company. The partnership’s economic interest prior to syndication to institutional partners was 31% and was acquired for consideration of $854 million. The partnership has a 57% voting interest in this business, which provides the partnership with control. Accordingly, the partnership consolidates this business for financial reporting purposes.
On acquisition, a bargain purchase gain of $4 million was recognized. Intangible assets of $243 million were acquired, primarily comprised of the value of insurance contracts in force as at the date of acquisition.

10
NOTES TO UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS 

As at March 31, 2020 and December 31, 2019 and for the three months ended
March 31, 2020 and 2019

The partnership’s results from operations for the year ended December 31, 2019 includes $10 million of revenue and $9 million of net income attributable to the partnership from the acquisition. If this acquisition had been effective January 1, 2019, the partnership would have recorded revenue of $207 million and net income of $98 million attributable to the partnership for the year ended December 31, 2019.
Healthscope Limited (“Healthscope”)
On June 6, 2019, together with institutional partners, the partnership acquired Healthscope, an Australian based healthcare provider that operates private hospitals and provides pathology services. The partnership’s economic interest prior to syndication to institutional partners was 28% and was acquired for consideration of $1,156 million. The partnership has a 100% voting interest in this business, which provides the partnership with control. Accordingly, the partnership consolidates this business for financial reporting purposes.
Acquisition costs of approximately $22 million were recorded as other expense on the consolidated statements of operating results. Goodwill of $1,543 million was acquired, which represents the expected growth the partnership expects to receive from the integration of the operations. The goodwill recognized is not deductible for income tax purposes. Intangible assets of $286 million were acquired, primarily comprised of customer contracts.
The partnership’s results from operations for the year ended December 31, 2019 includes $297 million of revenue and $7 million of net loss attributable to the partnership from the acquisition. If this acquisition had been effective January 1, 2019, the partnership would have recorded revenue of $453 million and net loss of $23 million attributable to the partnership for the year ended December 31, 2019.
Ouro Verde Locação e Seviços S.A. (“Ouro Verde”)
On July 8, 2019, the partnership, together with institutional partners, acquired Ouro Verde, a Brazilian heavy equipment and light fleet vehicle management company. The partnership’s economic interest prior to syndication to institutional partners was 38% and was acquired for total consideration of $16 million. The partnership has a 100% voting interest in this business, which provides the partnership with control. Accordingly, the partnership consolidates this business for financial reporting purposes.
Others
On August 20, 2019, the partnership, through its road fuel storage and distribution business, completed an acquisition for consideration of $12 million, acquiring the remaining ownership interests in a terminal storage operator in which it previously had an equity interest. The partnership has a 100% voting interest in this business, which provides the partnership with control. Accordingly, the partnership consolidates this business for financial reporting purposes.
Industrials
Clarios
On April 30, 2019, together with institutional partners, the partnership acquired Clarios (formerly known as the “Power Solutions Business of Johnson Controls International plc”), a global producer and distributor of automotive batteries. The partnership’s economic interest prior to syndication to institutional partners was 29% and was acquired for consideration of $3,652 million. The partnership has a 100% voting interest in this business, which provides the partnership with control. Accordingly, the partnership consolidates this business for financial reporting purposes.
Acquisition costs of approximately $41 million were recorded as other expense on the consolidated statements of operating results. Goodwill of $1,775 million was acquired, which is largely reflective of the potential to innovate and grow the business. $20 million of the goodwill recognized is deductible for income tax purposes. Intangible assets of $6,420 million were acquired, primarily comprised of customer relationships, patented technology, and trademarks.
The partnership’s results from operations for the year ended December 31, 2019 includes $1,668 million of revenue and $89 million of net loss attributable to the partnership from the acquisition. If this acquisition had been effective January 1, 2019, the partnership would have recorded revenue of $2,414 million and net loss of $21 million attributable to the partnership for the year ended December 31, 2019.

11
NOTES TO UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS 

As at March 31, 2020 and December 31, 2019 and for the three months ended
March 31, 2020 and 2019

NOTE 4.    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 analysis, using observable market inputs.
Fair values determined using valuation models require the use of assumptions concerning the amount and timing of estimated future cash flows and discount rates. In determining those assumptions, the partnership looks primarily to external readily observable market inputs such as interest rate yield curves, currency rates, and price and rate volatilities as applicable. Financial instruments classified as fair value through profit or loss are carried at fair value in the unaudited interim condensed consolidated statements of financial position and changes in fair values are recognized in profit or loss.
The following table provides the details of financial instruments and their associated classifications as at March 31, 2020:
(US$ MILLIONS)
 
 
 
 
 
 
 
 
MEASUREMENT BASIS
 
FVTPL
 
FVOCI
 
Amortized Cost
 
Total
Financial assets
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
—

 
$
—

 
$
2,049

 
$
2,049

Accounts and other receivable, net (current and non-current)
 
—

 
—

 
5,042

 
5,042

Other assets (current and non-current) (1)
 
—

 
—

 
514

 
514

Financial assets (current and non-current) (2)
 
685

 
4,405

 
498

 
5,588

Total
 
$
685

 
$
4,405

 
$
8,103

 
$
13,193

Financial liabilities
 
 
 
 
 
 
 
 
Accounts payable and other (current and non-current) (3)
 
$
549

 
$
393

 
$
8,275

 
$
9,217

Borrowings (current and non-current)
 
—

 
—

 
23,063

 
23,063

Total
 
$
549

 
$
393

 
$
31,338

 
$
32,280

____________________________________
(1) 
Excludes prepayments and other assets of $1,281 million.
(2) 
Refer to Hedging Activities in Note 4(a) below.
(3) 
Excludes provisions, decommissioning liabilities, deferred revenue, unearned premium reserve, work in progress, post-employment benefits, liabilities held for sale and various taxes and duties of $6,435 million.
Included in cash and cash equivalents as at March 31, 2020 is $1,722 million of cash (December 31, 2019: $1,570 million) and $327 million of cash equivalents (December 31, 2019: $416 million) which includes $nil on deposit with Brookfield (December 31, 2019: $4 million), as described in Note 18.
The fair value of all financial assets and liabilities as at March 31, 2020 were consistent with carrying value, with the exception of the borrowings at Altera Infrastructure L.P. (“Altera”), formerly referred to as Teekay Offshore, where fair value determined using Level 1 and Level 2 inputs resulted in a fair value of $2,782 million (December 31, 2019: $2,787 million) versus a carrying value $2,711 million (December 31, 2019: $2,767 million).
Included in financial assets as at March 31, 2020 is $383 million (December 31, 2019: $264 million) of equity instruments designated as measured at fair value through other comprehensive income.

12
NOTES TO UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS 

As at March 31, 2020 and December 31, 2019 and for the three months ended
March 31, 2020 and 2019

The following table provides the allocation of financial instruments and their associated classifications as at December 31, 2019:
(US$ MILLIONS)
 
 
 
 
 
 
 
 
MEASUREMENT BASIS
 
FVTPL
 
FVOCI
 
Amortized Cost
 
Total
Financial assets
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
—

 
$
—

 
$
1,986

 
$
1,986

Accounts and other receivable, net (current and non-current)
 
—

 
—

 
5,631

 
5,631

Other assets (current and non-current) (1)
 
—

 
—

 
577

 
577

Financial assets (current and non-current) (2)
 
883

 
4,612

 
748

 
6,243

Total
 
$
883

 
$
4,612

 
$
8,942

 
$
14,437

Financial liabilities
 
 

 
 

 
 

 
 

Accounts payable and other (3) (4)
 
$
385

 
$
159

 
$
9,039

 
$
9,583

Borrowings (current and non-current)
 
—

 
—

 
22,399

 
22,399

Total
 
$
385

 
$
159

 
$
31,438

 
$
31,982

____________________________________
(1) 
Excludes prepayments, subrogation recoverable and other assets of $1,215 million.
(2) 
Refer to Hedging Activities in Note 4(a) below.
(3) 
Total financial assets include $3,832 million of assets pledged as collateral.
(4) 
Excludes provisions, decommissioning liabilities, deferred revenue, unearned premium reserve, work in progress, post-employment benefits, liabilities held for sale and various taxes and duties of $6,913 million.

(a)
Hedging activities

Net Investment Hedges
The partnership uses foreign exchange contracts and foreign currency denominated debt instruments to manage foreign currency exposures arising from net investments in foreign operations. For the three months ended March 31, 2020, pre-tax net gain of $319 million (March 31, 2019: pre-tax net loss of $14 million) was recorded in other comprehensive income for the effective portion of hedges of net investments in foreign operations. As at March 31, 2020, there was a derivative asset balance of $117 million (December 31, 2019: $13 million) and derivative liability balance of $10 million (December 31, 2019: $35 million) relating to derivative contracts designated as net investment hedges.
Cash Flow Hedges
The partnership uses commodity swap contracts to hedge the sale price of its gas contracts, purchase price of decant oil, lead, polypropylene, tin, foreign exchange contracts and option contracts to hedge highly probable future transactions, and interest rate contracts to hedge the cash flows on its floating rate borrowings. A number of these contracts are designated as cash flow hedges. For the three months ended March 31, 2020, pre-tax net loss of $262 million (March 31, 2019: pre-tax net gains of $38 million) was recorded in other comprehensive income for the effective portion of cash flow hedges. As at March 31, 2020, there was a derivative asset balance of $31 million (December 31, 2019: $22 million) and derivative liability balance of $383 million (December 31, 2019: $123 million) relating to the derivative contracts designated as cash flow hedges.
Other derivative instruments are measured at fair value, with changes in fair value recognized in the consolidated statements of operating results.
Fair value hierarchical levels - financial instruments
Level 3 assets and liabilities measured at fair value on a recurring basis include $252 million (December 31, 2019: $287 million) of financial assets and $21 million (December 31, 2019: $36 million) of financial liabilities, which are measured at fair value using valuation inputs based on management’s best estimates of what market participants would use in pricing the asset or liability at the measurement date.

13
NOTES TO UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS 

As at March 31, 2020 and December 31, 2019 and for the three months ended
March 31, 2020 and 2019

There were no transfers between levels during the three months ended March 31, 2020. The following table categorizes financial assets and liabilities, which are carried at fair value, based upon the level of input as at March 31, 2020 and December 31, 2019:
 
 
March 31, 2020
 
December 31, 2019
(US$ MILLIONS)
 
Level 1
 
Level 2
 
Level 3
 
Level 1
 
Level 2
 
Level 3
Financial assets
 
 
 
 
 
 
 
 
 
 
 
 
Common shares
 
$
294

 
$
—

 
$
—

 
$
255

 
$
—

 
$
—

Corporate and government bonds
 
—

 
3,496

 
—

 
—

 
3,914

 
—

Derivative assets
 
41

 
349

 
—

 
4

 
234

 
—

Other financial assets (1)
 
280

 
378

 
252

 
401

 
400

 
287

Total
 
$
615

 
$
4,223

 
$
252

 
$
660

 
$
4,548

 
$
287

Financial liabilities
 
 

 
 

 
 

 
 

 
 

 
 

Derivative liabilities
 
$
14

 
$
907

 
$
—

 
$
18

 
$
489

 
$
—

Other financial liabilities
 
—

 
—

 
21

 
—

 
—

 
36

Total
 
$
14

 
$
907

 
$
21

 
$
18

 
$
489

 
$
36

____________________________________
(1) 
Other financial assets include secured debentures to homebuilding companies, asset-backed securities and preferred shares in our business services segment. Level 1 other financial assets are primarily preferred shares. Level 2 other financial assets are primarily asset-backed securities and Level 3 financial assets are primarily secured debentures to homebuilding companies.
The following table presents the change in the balance of financial assets and financial liabilities classified as Level 3 as at March 31, 2020 and December 31, 2019:
(US$ MILLIONS)
 
March 31, 2020
 
December 31, 2019
Balance at beginning of year
 
$
251

 
$
230

Fair value change recorded in net income
 
(5
)
 
8

Fair value change recorded in other comprehensive income
 
(13
)
 
—

Net additions (disposals)
 
(2
)
 
13

Balance at end of period
 
$
231

 
$
251


(b)
Offsetting of financial assets and liabilities
Financial assets and liabilities are offset with the net amount reported in the unaudited interim condensed consolidated statements of financial position where the partnership currently has a legally enforceable right to offset and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. As at March 31, 2020, $59 million gross, of financial assets (December 31, 2019: $1 million) and $56 million gross, of financial liabilities (December 31, 2019: $3 million) were offset in the unaudited interim condensed consolidated statements of financial position.

14
NOTES TO UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS 

As at March 31, 2020 and December 31, 2019 and for the three months ended
March 31, 2020 and 2019

NOTE 5.    FINANCIAL ASSETS
(US$ MILLIONS)
 
March 31, 2020
 
December 31, 2019
Current
 
 
 
 
Marketable securities
 
$
652

 
$
734

Restricted cash
 
105

 
172

Derivative contracts
 
242

 
176

Loans and notes receivable
 
72

 
66

Total current
 
$
1,071

 
$
1,148

Non-current
 
 
 
 
Marketable securities
 
$
3,138

 
$
3,435

Restricted cash
 
199

 
201

Derivative contracts
 
148

 
62

Loans and notes receivable
 
122

 
309

Other financial assets (1)
 
910

 
1,088

Total non-current
 
$
4,517

 
$
5,095

____________________________________
(1) 
Other financial assets include secured debentures to homebuilding companies, asset-backed securities and preferred shares in our business services segment.    
NOTE 6.    ACCOUNTS AND OTHER RECEIVABLES, NET
(US$ MILLIONS)
 
March 31, 2020
 
December 31, 2019
Current, net
 
$
4,350

 
$
4,808

Non-current, net
 
 
 
 
Accounts receivable
 
80

 
40

Retainer on customer contract
 
107

 
102

Billing rights
 
505

 
681

Total Non-current, net
 
$
692

 
$
823

Total
 
$
5,042

 
$
5,631

Billing rights represent unbilled rights arising at BRK Ambiental from revenue earned from the construction on public concessions contracts classified as financial assets, which are recognized when there is an unconditional right to receive cash or other financial assets from the concession authority for the construction services.
The construction services business has a retention balance which comprises amounts that have been earned but held back until certain conditions specified in the contract are satisfied.

15
NOTES TO UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS 

As at March 31, 2020 and December 31, 2019 and for the three months ended
March 31, 2020 and 2019

NOTE 7.    INVENTORY, NET
(US$ MILLIONS)
 
March 31, 2020
 
December 31, 2019
Raw materials and consumables (1)
 
$
1,078

 
$
941

Fuel products (2)
 
396

 
688

Work in progress
 
829

 
674

RTFO certificates (3)
 
250

 
342

Finished goods and other (4)
 
931

 
845

Carrying amount of inventories
 
$
3,484

 
$
3,490

____________________________________
(1) 
Raw materials and consumables are mainly composed of raw materials in the industrials segment.
(2) 
Fuel products are traded in active markets and are purchased with a view to resell in the near future. As a result, stocks of fuel products are recorded at fair value based on quoted market prices.
(3) 
Renewable Fuel Transport Obligations (“RTFO”) certificates held for trading as at March 31, 2020 have a fair value of $5 million (December 31, 2019: $66 million). There is no externally quoted marketplace for the valuation of RTFO certificates. In order to value these contracts, the partnership has adopted a pricing methodology combining both observable inputs based on market data and assumptions developed internally based on observable market activity.
(4) 
Finished goods and other are mainly composed of finished goods inventory in the infrastructure services and industrials segments.
NOTE 8.    ASSETS HELD FOR SALE
As at March 31, 2020, the partnership had assets held for sale of $42 million and liabilities held for sale of $15 million. The balance consisted primarily of vessels held for sale at Altera and assets and liabilities at our infrastructure support products manufacturing operation classified as held for sale.
As at December 31, 2019, the partnership had assets held for sale of $139 million and liabilities held for sale of $94 million. The balance consisted primarily of assets and liabilities from our cold storage logistics business in our business services segment classified as held for sale. The sale of our cold storage logistics business closed on January 2, 2020. Refer to Note 9 for further details.
NOTE 9.    DISPOSITIONS
For the three month period ended March 31, 2020, the partnership recognized a net gain on dispositions of $183 million (March 31, 2019: loss of $2 million).
The gain recognized in the three month period ended March 31, 2020 is primarily related to the partnership’s sale of its cold storage logistics business for gross proceeds of approximately $255 million, resulting in a $186 million pre-tax gain recognized by the partnership.

16
NOTES TO UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS 

As at March 31, 2020 and December 31, 2019 and for the three months ended
March 31, 2020 and 2019

NOTE 10.    OTHER ASSETS
(US$ MILLIONS)
 
March 31, 2020
 
December 31, 2019
Current
 
 
 
 
Work in progress (1)
 
$
444

 
$
505

Prepayments and other assets
 
870

 
719

Assets held for sale (2)
 
42

 
139

Total current
 
$
1,356

 
$
1,363

Non-current
 
 
 
 
Work in progress (1)
 
$
70

 
$
72

Prepayments and other assets
 
369

 
357

Total non-current
 
$
439

 
$
429

____________________________________
(1) 
See Note 16 for additional information.
(2) 
See Note 8 for additional information.
NOTE 11.    PROPERTY, PLANT AND EQUIPMENT
(US$ MILLIONS)
 
March 31, 2020
 
December 31, 2019
Gross Carrying Amount
 
 
 
 
Beginning Balance
 
$
16,502

 
$
8,415

Additions (1)
 
724

 
1,529

Dispositions
 
(70
)
 
(772
)
Acquisitions through business combinations (2)
 
16

 
6,577

Assets reclassified as held for sale (3)
 
(15
)
 
(332
)
Changes in accounting policy
 
—

 
978

Foreign currency translation
 
(762
)
 
107

Ending Balance
 
$
16,395

 
$
16,502

Accumulated Depreciation and Impairment
 
 
 
 
Beginning Balance
 
$
(2,610
)
 
$
(1,468
)
Depreciation/depletion/impairment expense (4)
 
(492
)
 
(1,407
)
Dispositions
 
16

 
263

Assets reclassified as held for sale (3)
 
3

 
62

Foreign currency translation
 
117

 
(60
)
Ending Balance
 
$
(2,966
)
 
$
(2,610
)
Net Book Value (5)
 
$
13,429

 
$
13,892

____________________________________
(1) 
Includes assets acquired in a common control transaction. See Note 18 for additional information.
(2) 
See Note 3 for additional information.
(3) 
Includes assets that were reclassified as held for sale and subsequently disposed. See Note 8 and Note 9 for additional information.
(4) 
Includes an impairment expense resulting primarily from a write-down of certain vessels within Altera due to changes in underlying assumptions such as the impact of contract modifications, changes in lay-up cost estimates, expected values on the sale of vessels, revenue forecasts, and vessel re-contracting.
(5) 
Includes right-of-use assets of $1,235 million as at March 31, 2020.

17
NOTES TO UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS 

As at March 31, 2020 and December 31, 2019 and for the three months ended
March 31, 2020 and 2019

NOTE 12.    INTANGIBLE ASSETS
(US$ MILLIONS)
 
March 31, 2020
 
December 31, 2019
Gross Carrying Amount
 
 
 
 
Beginning Balance
 
$
12,504

 
$
6,001

Additions (1)
 
101

 
231

Dispositions
 
(1
)
 
(32
)
Acquisitions through business combinations (2)
 
7

 
6,816

Assets reclassified as held for sale (3)
 
—

 
(436
)
Foreign currency translation
 
(708
)
 
(76
)
Ending Balance
 
$
11,903

 
$
12,504

Accumulated Amortization and Impairment
 
 
 
 
Beginning Balance
 
$
(945
)
 
$
(478
)
Amortization/impairment expense
 
(190
)
 
(582
)
Dispositions
 
1

 
22

Assets reclassified as held for sale (3)
 
—

 
97

Foreign currency translation
 
71

 
(4
)
Ending Balance
 
$
(1,063
)
 
$
(945
)
Net Book Value
 
$
10,840

 
$
11,559

____________________________________
(1) 
Includes assets acquired in a common control transaction. See Note 18 for additional information.
(2) 
See Note 3 for additional information.
(3) 
Includes assets that were reclassified as held for sale and subsequently disposed. See Note 8 and Note 9 for additional information.
NOTE 13.    GOODWILL
(US$ MILLIONS)
 
March 31, 2020
 
December 31, 2019
Balance at beginning of period
 
$
5,218

 
$
2,411

Acquisitions through business combinations (1)
 
(124
)
 
3,444

Impairment losses
 
—

 
(418
)
Dispositions
 
—

 
(21
)
Assets reclassified as held for sale (2)
 
—

 
(212
)
Foreign currency translation
 
(294
)
 
14

Balance at end of period
 
$
4,800

 
$
5,218

____________________________________
(1) 
See Note 3, Acquisitions completed in 2019, for additional information.
(2) 
Includes assets that were reclassified as held for sale and subsequently disposed. See Note 8 and Note 9 for additional information.

18
NOTES TO UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS 

As at March 31, 2020 and December 31, 2019 and for the three months ended
March 31, 2020 and 2019

NOTE 14.    EQUITY ACCOUNTED INVESTMENTS
(US$ MILLIONS)
 
March 31, 2020
 
December 31, 2019
Balance at beginning of year
 
$
1,273

 
$
541

Acquisitions through business combinations (1)
 
—

 
847

Additions
 
445

 
25

Dispositions (2)
 
—

 
(162
)
Share of net income
 
(9
)
 
114

Share of other comprehensive income (loss)
 
(11
)
 
—

Distributions received
 
(18
)
 
(62
)
Foreign currency translation
 
(45
)
 
(30
)
Balance at end of period
 
$
1,635

 
$
1,273

____________________________________
(1) 
See Note 3 for additional information.
(2) 
Includes derecognition of an equity accounted investment within Greenergy that was consolidated in 2019.
On January 31, 2020, the partnership completed the acquisition of a 17% economic interest in Brand Industrial Holdings Inc. (“BrandSafway”) for consideration of $445 million. The partnership has joint control over BrandSafway and has accounted for its investment as an equity accounted investment.

NOTE 15.    ACCOUNTS PAYABLE AND OTHER
(US$ MILLIONS)
 
March 31, 2020
 
December 31, 2019
Current
 
 
 
 
Accounts payable
 
$
2,749

 
$
2,919

Accrued and other liabilities (1) (2)
 
3,484

 
3,978

Lease liability
 
232

 
224

Financial liabilities
 
526

 
327

Unearned premiums reserve
 
439

 
482

Work in progress (3)
 
1,346

 
1,415

Provisions and decommissioning liabilities
 
367

 
442

Liabilities held for sale
 
15

 
94

Total current
 
$
9,158

 
$
9,881

Non-current
 
 
 
 
Accounts payable
 
$
117

 
$
116

Accrued and other liabilities (2)
 
1,076

 
1,110

Lease liability
 
1,066

 
1,109

Financial liabilities
 
2,021

 
2,048

Unearned premiums reserve
 
1,022

 
1,143

Work in progress (3)
 
52

 
60

Provisions and decommissioning liabilities
 
1,140

 
1,029

Total non-current
 
$
6,494

 
$
6,615

____________________________________
(1) 
Includes bank overdrafts of $698 million as at March 31, 2020 (December 31, 2019: $921 million).
(2) 
Includes post-employment benefits of $850 million ($14 million current and $836 million non-current) as at March 31, 2020.
(3) 
See Note 16 for additional information.

19
NOTES TO UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS 

As at March 31, 2020 and December 31, 2019 and for the three months ended
March 31, 2020 and 2019

As part of the acquisition of Healthscope in 2019, the partnership received approximately $1.7 billion as proceeds for the sale and leaseback of 22 wholly owned freehold hospital properties. The partnership did not relinquish control of these hospital properties and the hospital properties were not derecognized from property, plant, and equipment. The proceeds received were recognized as a financial liability. The liability is drawn down as payments are made to the lender.
NOTE 16.    CONTRACTS IN PROGRESS
(US$ MILLIONS)
 
March 31, 2020
 
December 31, 2019
Contract costs incurred to date
 
$
22,635

 
$
23,041

Profit recognized to date (less recognized losses)
 
1,594

 
1,843

 
 
24,229

 
24,884

Less: progress billings
 
(25,113
)
 
(25,782
)
Contract work in progress (liability)
 
$
(884
)
 
$
(898
)
Comprising:
 
 
 
 
Amounts due from customers - work in progress
 
$
514

 
$
577

Amounts due to customers - creditors
 
(1,398
)
 
(1,475
)
Net work in progress
 
$
(884
)
 
$
(898
)
NOTE 17.    BORROWINGS
(a)
Corporate borrowings
The partnership has bilateral credit facilities across a diverse group of global banks with an aggregate borrowing capacity of $1,575 million. Advances under the facilities are available in Euros, Sterling, Australian, U.S. and Canadian dollars, and advances bear interest at the specified LIBOR, EURIBOR, CDOR, BBSY or bankers’ acceptance rate plus 2.50%, or the specified base rate or prime rate plus 1.50%. The credit facilities are used for general corporate purposes. As at March 31, 2020, $283 million was drawn on the credit facilities and the partnership was in compliance with all covenants.
As at March 31, 2020, the partnership also has a revolving credit facility with Brookfield that permits borrowings of up to $500 million. The credit facility is available in U.S. or Canadian dollars, and advances are made by way of LIBOR, base rate, bankers’ acceptance rate or prime rate loans. The credit facility bears interest at the specified LIBOR or bankers’ acceptance rate plus 3.45%, or the specified base rate or prime rate plus 2.45%. As at March 31, 2020, the credit facility remains undrawn.

(b)
Non-recourse subsidiary borrowings of the partnership
Total current and non-current borrowings as at March 31, 2020 were $22,780 million (December 31, 2019: $22,399 million). The increase of $381 million compared to December 31, 2019 is primarily due to the consolidation of Cardone Industries, Inc. (“Cardone”) during the quarter and increased borrowings at Genworth, combined with an increase in short term borrowings at Westinghouse. The increase is partially offset by foreign exchange movements at BRK Ambiental and Healthscope.
Some of the partnership’s businesses have credit facilities in which they borrow and repay on a monthly basis. This movement has been shown on a net basis in the partnership’s unaudited interim condensed consolidated statements of cash flow.
The partnership has credit facilities within its operating businesses with major financial institutions. The credit facilities are primarily composed of revolving term credit facilities and revolving operating facilities with variable interest rates. In certain cases, the facilities may have financial covenants which are generally in the form of interest coverage ratios and leverage ratios.
Our operations are currently in compliance with or have obtained waivers related to all material covenant requirements of their term loans and credit facilities.

20
NOTES TO UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS 

As at March 31, 2020 and December 31, 2019 and for the three months ended
March 31, 2020 and 2019

NOTE 18.    RELATED PARTY TRANSACTIONS
In the normal course of operations, the partnership entered into the transactions below with related parties on exchange value. These transactions have been measured at fair value and are recognized in the unaudited interim condensed consolidated financial statements.
(a)
Transactions with the parent company
As at March 31, 2020, $nil (December 31, 2019: $nil) was drawn on the credit facilities under the Brookfield Credit Agreements.
The partnership has in place a Deposit Agreement with Brookfield whereby it may place funds on deposit with Brookfield, as approved by the Board of Directors. Any deposit balance is due on demand and earns an agreed upon rate of interest based on market terms. As at March 31, 2020, the amount of the deposit was $nil (December 31, 2019: $4 million) and was included in cash and cash equivalents. For the three months ended March 31, 2020, the partnership earned interest income of $nil (March 31, 2019: $3 million) on these deposits.
The partnership pays Brookfield a quarterly base management fee. For purposes of calculating the base management fee, the total capitalization of Brookfield Business Partners L.P. is equal to the quarterly volume-weighted average trading price of a unit on the principal stock exchange for the partnership units (based on trading volumes) multiplied by the number of units outstanding at the end of the quarter (assuming full conversion of the redemption-exchange units into units of Brookfield Business Partners L.P.), plus the value of securities of the other service recipients that are not held by the partnership, plus all outstanding third party debt with recourse to a service recipient, less all cash held by such entities. The base management fee for the three months ended March 31, 2020 was $16 million (March 31, 2019: $12 million).
In its capacity as the holder of the special limited partnership units (“Special LP units”) of Holding LP, Brookfield is entitled to incentive distribution rights. The incentive distribution for the three months ended March 31, 2020 was $nil (March 31, 2019: $nil).
In addition, at the time of spin-off, the partnership entered into indemnity agreements with Brookfield related to certain contracts that were in place prior to the spin-off. Under these indemnity agreements, Brookfield has agreed to indemnify the partnership for the receipt of payments relating to such contracts.
On February 5, 2020, the partnership entered into a voting agreement with a Brookfield subsidiary who had the power to direct the relevant activities of Cardone. The partnership consolidated Cardone commencing February 5, 2020. This transaction was accounted for as a common control transaction where the partnership recognized Cardone’s assets and liabilities at their carrying values. The assets, liabilities, and deficit in shareholder’s equity recognized on February 5, 2020 were $609 million, $910 million, and $301 million, respectively. The liabilities included $224 million of loans between Cardone and the partnership which eliminated upon consolidation. The partnership did not pay any consideration nor incur any expenses related to this transaction.
(b)Other
The following table summarizes other transactions the partnership has entered into with related parties:
 
 
Three Months Ended
(US$ MILLIONS)
 
March 31, 2020
 
March 31, 2019
Transactions during the period
 
 
 
 
Business services revenues (1)
 
$
120

 
$
91

____________________________________
(1) 
Within our business services segment, the partnership provides construction services to affiliates of Brookfield.
(US$ MILLIONS)
 
March 31, 2020
 
December 31, 2019
Balances at end of period
 
 
 
 
Financial assets
 
$
—

 
$
174

Accounts and other receivable, net
 
$
83

 
$
36

Accounts payable and other
 
$
337

 
$
210


21
NOTES TO UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS 

As at March 31, 2020 and December 31, 2019 and for the three months ended
March 31, 2020 and 2019

NOTE 19.    DERIVATIVE FINANCIAL INSTRUMENTS
The partnership’s activities expose it to a variety of financial risks, including market risk, currency risk, interest rate risk, commodity risk and other price risks. The partnership and its subsidiaries selectively use derivative financial instruments principally to manage these risks.
The aggregate amount of the partnership derivatives financial instrument position is as follows:
 
 
March 31, 2020
 
December 31, 2019
(US$ MILLIONS)
 
Financial Asset
 
Financial Liability
 
Financial Asset
 
Financial Liability
Foreign exchange contracts
 
$
224

 
$
153

 
$
59

 
$
96

Cross Currency Swaps
 
—

 
32

 
1

 
7

Interest Rate Derivatives
 
70

 
595

 
52

 
274

Equity Derivatives
 
16

 
9

 
2

 
—

Commodities Contracts
 
80

 
132

 
124

 
130

Total
 
$
390

 
$
921

 
$
238

 
$
507

 
 
 
 
 
 
 
 
 
Total Current
 
$
242