UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF

BROOKFIELD BUSINESS PARTNERS L.P.

As at March 31, 2021 and December 31, 2020 and for the

three months ended March 31, 2021 and 2020

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, 2021		December 31, 2020
Current Assets
Cash and cash equivalents	4	$	2,637	$	2,743
Financial assets	5	3,348		2,575
Accounts and other receivable, net	6	4,508		4,306
Inventory, net	7	3,578		3,696
Other assets	9	1,616		1,173
		15,687		14,493
Financial assets	5	6,413		6,221
Accounts and other receivable, net	6	650		683
Other assets	9	375		411
Property, plant and equipment	10	13,066		13,982
Deferred income tax assets		713		761
Intangible assets	11	10,803		11,261
Equity accounted investments	13	1,725		1,690
Goodwill	12	5,273		5,244
		$	54,705	$	54,746
Liabilities and Equity
Current Liabilities
Accounts payable and other	14	$	10,520	$	10,416
Corporate borrowings	16	515		300
Non-recourse borrowings in subsidiaries of the partnership	16	2,101		1,417
		13,136		12,133
Accounts payable and other	14	7,143		7,516
Corporate borrowings	16	—		310
Non-recourse borrowings in subsidiaries of the partnership	16	20,058		21,749
Deferred income tax liabilities		1,567		1,701
		$	41,904	$	43,409
Equity
Limited partners	19	$	2,141	$	1,928
Non-controlling interests attributable to:
Redemption-Exchange Units, Preferred Shares and Special Limited Partnership Units held by Brookfield Asset Management Inc.	19	1,913		1,564
Interest of others in operating subsidiaries		8,747		7,845
		12,801		11,337
		$	54,705	$	54,746

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	2021		2020
Revenues	22	$	9,829	$	10,146
Direct operating costs	21	(8,436)		(8,901)
General and administrative expenses		(251)		(244)
Depreciation and amortization expense		(542)		(538)
Interest income (expense), net		(348)		(364)
Equity accounted income (loss), net	13	29		(9)
Impairment expense, net	10	(201)		(113)
Gain (loss) on acquisitions/dispositions, net	8	1,807		183
Other income (expense), net		39		(217)
Income (loss) before income tax		1,926		(57)
Income tax (expense) recovery
Current		(193)		(75)
Deferred		34		98
Net income (loss)		$	1,767	$	(34)
Attributable to:
Limited partners	19	$	281	$	(67)
Non-controlling interests attributable to:
Redemption-Exchange Units held by Brookfield Asset Management Inc.		249		(59)
Special Limited Partners	19	—		—
Interest of others in operating subsidiaries		1,237		92
		$	1,767	$	(34)
Basic and diluted earnings (loss) per limited partner unit	19	$	3.57	$	(0.84)

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	2021		2020
Net income (loss)		$	1,767	$	(34)
Other comprehensive income (loss):
Items that may be reclassified subsequently to profit or loss:
Fair value through other comprehensive income		(99)		8
Foreign currency translation		(330)		(1,080)
Net investment and cash flow hedges	4	234		57
Equity accounted investments	13	(2)		(11)
Taxes on the above items		18		(13)
Reclassification to profit or loss		1		1
		(178)		(1,038)
Items that will not be reclassified subsequently to profit or loss:
Fair value through other comprehensive income		100		(175)
Taxes on the above item		(12)		23
Total other comprehensive income (loss)		(90)		(1,190)
Comprehensive income (loss)		$	1,677	$	(1,224)
Attributable to:
Limited partners		$	271	$	(242)
Non-controlling interests attributable to:
Redemption-Exchange Units held by Brookfield Asset Management Inc.		240		(210)
Special Limited Partners		—		—
Interest of others in operating subsidiaries		1,166		(772)
		$	1,677	$	(1,224)

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.										Special Limited Partners		Preferred Shares
(US$ MILLIONS)	Capital		Retained earnings		Ownership changes		Accumulated other comprehensive income (loss) (1)		Limited Partners		Capital		Retained earnings		Ownership changes		Accumulated other comprehensive income (loss) (1)		Redemption- Exchange units		Retained earnings		Capital		Interest of others in operating subsidiaries		Total equity
Balance as at January 1, 2021	$	2,275	$	(235)	$	68	$	(180)	$	1,928	$	1,924	$	(222)	$	78	$	(231)	$	1,549	$	—	$	15	$	7,845	$	11,337
Net income (loss)	—		281		—		—		281		—		249		—		—		249		—		—		1,237		1,767
Other comprehensive income (loss)	—		—		—		(10)		(10)		—		—		—		(9)		(9)		—		—		(71)		(90)
Total comprehensive income (loss)	—		281		—		(10)		271		—		249		—		(9)		240		—		—		1,166		1,677
Contributions	—		—		—		—		—		—		—		—		—		—		—		—		997		997
Distributions (2)	—		(5)		—		—		(5)		—		(4)		—		—		(4)		—		—		(798)		(807)
Ownership changes (3)	—		43		(44)		(38)		(39)		—		38		37		38		113		—		—		(603)		(529)
Unit repurchases (2)	(14)		—		—		—		(14)		—		—		—		—		—		—		—		—		(14)
Acquisition of interest (4)	—		—		—		—		—		—		—		—		—		—		—		—		140		140
Balance as at March 31, 2021	$	2,261	$	84	$	24	$	(228)	$	2,141	$	1,924	$	61	$	115	$	(202)	$	1,898	$	—	$	15	$	8,747	$	12,801
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 changes (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

____________________________________

(1)See Note 20 for additional information.

(2)See Note 19 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.

(4)See Note 3 for additional information.

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	2021		2020
Operating Activities
Net income (loss)		$	1,767	$	(34)
Adjusted for the following items:
Equity accounted earnings, net of distributions		(5)		27
Impairment expense, net	10	201		113
Depreciation and amortization expense		542		538
Gain on acquisitions/dispositions, net	8	(1,807)		(183)
Provisions and other items		(150)		93
Deferred income tax expense (recovery)		(34)		(98)
Changes in non-cash working capital, net	24	(399)		120
Cash from operating activities		115		576
Financing Activities
Proceeds from non-recourse subsidiary borrowings of the partnership		1,767		1,611
Repayment of non-recourse subsidiary borrowings of the partnership		(1,331)		(1,085)
Proceeds from corporate borrowings		260		283
Repayment of corporate borrowings		(355)		—
Proceeds from other financing		76		15
Repayment of other financing		(25)		(22)
Proceeds from (repayment of) other credit facilities, net		99		(156)
Lease liability repayment		(67)		(53)
Capital provided by others who have interests in operating subsidiaries		1,339		256
Capital paid to others who have interests in operating subsidiaries		—		(36)
Partnership units repurchased		(14)		(9)
Distributions to limited partners and Redemption-Exchange Unitholders		(9)		(9)
Distributions to others who have interests in operating subsidiaries	19	(797)		(667)
Cash from (used in) financing activities		943		128
Investing Activities
Acquisitions
Subsidiaries, net of cash acquired	3	(209)		(13)
Property, plant and equipment and intangible assets		(326)		(446)
Equity accounted investments	13	(3)		(445)
Financial assets and other		(641)		(363)
Dispositions
Subsidiaries, net of cash disposed		349		165
Property, plant and equipment and intangible assets		1		25
Financial assets and other		607		422
Net settlement of hedges		5		105
Restricted cash and deposits		(914)		65
Cash from (used in) investing activities		(1,131)		(485)
Cash
Change during the period		(73)		219
Impact of foreign exchange on cash		(33)		(156)
Balance, beginning of year		2,743		1,986
Balance, end of period		$	2,637	$	2,049

Supplemental cash flow information is presented in Note 24

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, 2021 and December 31, 2020 and for the three months ended

March 31, 2021 and2020

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 established as a limited partnership under the laws of Bermuda, and organized pursuant to a limited partnership agreement as amended on May 31, 2016, and as thereafter amended. 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 (“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, 2020, except for the impact of the adoption of the new accounting policies and standards described below. The accounting policies the partnership applied in its annual consolidated financial statements as at and for the year ended December 31, 2020 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, 2020. There have been no significant changes to the method of determining significant estimates and judgments since December 31, 2020.

These unaudited interim condensed consolidated financial statements were approved by the partnership’s Board of Directors and authorized for issue on May 6, 2021.

(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 has 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, 2021. 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, 2021. 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, 2021 and December 31, 2020 and for the three months ended

March 31, 2021 and 2020

(b)New accounting policies adopted

(i)    IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 amendments for IBOR reform

The amendments provide temporary relief which address the financial reporting effects when an interbank offered rate (“IBOR”) is replaced with an alternative nearly risk-free interest rate (“RFR”).

The amendments include the following practical expedients:

•A practical expedient to require contractual changes, or changes to cash flows that are directly required by the reform, to be treated as changes to a floating interest rate, equivalent to a movement in a market rate of interest;

•Permit changes required by IBOR reform to be made to hedge designations and hedge documentation without the hedging relationship being discontinued; and

•Provide temporary relief to entities from having to meet the separately identifiable requirement when an RFR instrument is designated as a hedge of a risk component.

These amendments had no impact on the unaudited interim condensed consolidated financial statements of the partnership. The partnership intends to use the practical expedients in future periods when they become applicable.

(c)Future changes in accounting policies

(i)Insurance contracts

In May 2017, the IASB published IFRS 17, Insurance contracts (“IFRS 17”), a comprehensive standard that establishes principles for the recognition, measurement, presentation and disclosure of insurance contracts. IFRS 17 will replace IFRS 4, Insurance contracts. In June 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:

•fulfillment cash flows which comprise:

◦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; and

◦a risk adjustment that measures the effects of uncertainty about the amount and timing of future cash flows;

•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.

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

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

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

9

NOTES TO UNAUDITED INTERIM CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS 

As at March 31, 2021 and December 31, 2020 and for the three months ended

March 31, 2021 and 2020

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, 2021

Business services

Everise Holdings Pte Ltd. (“Everise”)

On January 8, 2021, the partnership, together with institutional partners, acquired a 100% voting interest in Everise, a business process outsourcing company that specializes in managing customer interactions for large global healthcare and technology clients primarily based in the U.S. The partnership’s economic interest was 36% for total consideration of $103 million, comprising $80 million of cash consideration and $23 million of contingent consideration related to the achievement of near-term performance targets payable to the former shareholders. The partnership received 100% of the voting rights, which provided the partnership with control. Accordingly, the partnership has consolidated the business for financial reporting purposes.

The acquisition contributed $67 million of intangible assets, $20 million of equity accounted investments, net other assets of $6 million and $103 million of non-recourse borrowings. Goodwill of $293 million was recognized and represents growth the partnership expects to experience from the operations. The goodwill recognized is not deductible for income tax purposes. Non-controlling interests of $180 million recognized on business combination were measured at fair value. The initial fair values of acquired assets, liabilities, and goodwill for the acquisition have been determined on a preliminary basis at the end of the reporting period. Total acquisition costs of $7 million were recorded as other expenses in the unaudited interim condensed consolidated statements of operating results.

The partnership’s results from operations for the period ended March 31, 2021 includes revenues of $77 million contributed from Everise. If the acquisition had been effective January 1, 2021, the partnership would have recorded revenues of $85 million for the three months ended March 31, 2021.

(b)Acquisitions completed in 2020

The following summarizes the consideration transferred, assets acquired and liabilities assumed at the applicable acquisition dates for significant acquisitions:

Business Services

IndoStar Capital Finance Limited (“IndoStar”)

On May 27, 2020, the partnership, together with institutional partners, acquired a 31% ownership interest in IndoStar, an Indian financing company focused on commercial vehicle lending and affordable home finance, for consideration of $162 million. The partnership did not receive voting rights with its initial investment and on June 30, 2020 classified the investment as a financial asset measured at fair value through profit and loss.

On July 8 and 9, 2020, the partnership, together with institutional partners, acquired an additional 26% interest in IndoStar through a Mandatory Tender Offer and a secondary offering, for $114 million and $19 million, respectively, for a total ownership interest of 57%. Upon completion of the additional investment, the partnership received 57% of the voting rights which provided the partnership with control over the business on July 9, 2020. Accordingly, the partnership has consolidated the business for financial reporting purposes. Total consideration for the acquisition, inclusive of the May 27, 2020 transaction, was $105 million attributable to the partnership, representing a 20% economic interest. Total acquisition costs of $4 million were recorded as other expenses within the consolidated statements of operating results in 2020.

10

NOTES TO UNAUDITED INTERIM CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS 

As at March 31, 2021 and December 31, 2020 and for the three months ended

March 31, 2021 and 2020

The transaction was accounted for as a business combination achieved in stages. The partnership’s previously held investment in IndoStar was remeasured to fair value prior to the acquisition of additional interests. The fair value approximated carrying value and no cumulative gain or loss arising from changes in the fair value of the investment was recognized. The initial fair values of acquired assets, liabilities, and goodwill for the acquisition have been determined on a preliminary basis at the end of the reporting period.

The acquisition contributed $1,112 million of loans receivable, $78 million of cash and cash equivalents, $227 million of financial assets, intangible assets of $20 million, net other assets of $30 million and non-recourse borrowings of $988 million. Goodwill of $29 million was recognized and represents the benefits the partnership expects to receive from the integration of the operations. Non-controlling interests of $403 million recognized on business combination were measured at the proportionate share of the fair value of assets acquired and liabilities assumed.

The partnership’s results from operations for the year ended December 31, 2020 includes revenues of $86 million and $3 million of net income attributable to the partnership from the acquisition. If the acquisition had been effective January 1, 2020, the partnership would have recorded revenues of $175 million for the year ended December 31, 2020 and a net loss of $7 million attributable to the partnership for the year ended December 31, 2020.

NOTE 4.    FAIR VALUE OF FINANCIAL INSTRUMENTS

The following table provides the details of financial instruments and their associated classifications as at March 31, 2021:

(US$ MILLIONS)
MEASUREMENT BASIS	FVTPL		FVOCI		Amortized cost		Total
Financial assets
Cash and cash equivalents	$	—	$	—	$	2,637	$	2,637
Accounts and other receivable, net (current and non-current)	—		—		5,158		5,158
Other assets (current and non-current) (1)	—		—		558		558
Financial assets (current and non-current) (2)	787		5,795		3,179		9,761
Total	$	787	$	5,795	$	11,532	$	18,114
Financial liabilities
Accounts payable and other (current and non-current) (3)	$	245	$	290	$	9,314	$	9,849
Borrowings (current and non-current)	—		—		22,674		22,674
Total	$	245	$	290	$	31,988	$	32,523

____________________________________

(1)Excludes prepayments, subrogation recoverable, deferred policy acquisition costs and assets held for sale of $1,433 million.

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

(3)Includes derivatives liabilities, and excludes provisions, decommissioning liabilities, deferred revenues, unearned premium reserve, work in progress, post-employment benefits, liabilities held for sale and various taxes and duties of $7,814 million.

Included in cash and cash equivalents as at March 31, 2021 is $2,195 million of cash (December 31, 2020: $2,269 million) and $442 million of cash equivalents (December 31, 2020: $474 million).

Included in financial assets as at March 31, 2021 is $961 million (December 31, 2020: $850 million) of equity instruments and $4,724 million (December 31, 2020: $4,041 million) of debt instruments designated as measured at fair value through other comprehensive income. The remaining balance of instruments designated as measured at fair value through other comprehensive income relates primarily to derivatives designated in hedging relationships.

The fair value of all financial assets and liabilities as at March 31, 2021 were consistent with carrying value, with the exception of the borrowings at Altera Infrastructure L.P. (“Altera”) measured at amortized cost, where fair value determined using Level 1 and Level 2 inputs resulted in a fair value of $2,755 million (December 31, 2020: $2,753 million) versus a carrying value of $2,747 million (December 31, 2020: $2,769 million).

11

NOTES TO UNAUDITED INTERIM CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS 

As at March 31, 2021 and December 31, 2020 and for the three months ended

March 31, 2021 and 2020

The following table provides the allocation of financial instruments and their associated classifications as at December 31, 2020:

(US$ MILLIONS)
MEASUREMENT BASIS	FVTPL		FVOCI		Amortized cost		Total
Financial assets
Cash and cash equivalents	$	—	$	—	$	2,743	$	2,743
Accounts and other receivable, net (current and non-current)	—		—		4,989		4,989
Other assets (current and non-current) (1)	—		—		536		536
Financial assets (current and non-current) (2)	933		5,561		2,302		8,796
Total (3)	$	933	$	5,561	$	10,570	$	17,064
Financial liabilities
Accounts payable and other (2) (4)	$	435	$	370	$	9,063	$	9,868
Borrowings (current and non-current)	—		—		23,776		23,776
Total	$	435	$	370	$	32,839	$	33,644

____________________________________

(1)Excludes prepayments, subrogation recoverable and other assets of $1,048 million.

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

(3)Total financial assets include $4,704 million of assets pledged as collateral.

(4)Excludes provisions, decommissioning liabilities, deferred revenues, unearned premium reserve, work in progress, post-employment benefits, liabilities held for sale and various taxes and duties of $8,064 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, 2021, a pre-tax net gain of $167 million (March 31, 2020: pre-tax net gain of $319 million) was recorded in other comprehensive income for the effective portion of hedges of net investments in foreign operations. As at March 31, 2021, there was a derivative asset balance of $28 million (December 31, 2020: $17 million) and derivative liability balance of $54 million (December 31, 2020: $59 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, 2021, a pre-tax net gain of $67 million (March 31, 2020: pre-tax net loss of $262 million) was recorded in other comprehensive income for the effective portion of cash flow hedges. As at March 31, 2021, there was a derivative asset balance of $82 million (December 31, 2020: $82 million) and derivative liability balance of $234 million (December 31, 2020: $311 million) relating to the derivative contracts designated as cash flow hedges.

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

Fair value hierarchical levels – financial instruments

Level 3 assets and liabilities measured at fair value on a recurring basis include $371 million (December 31, 2020: $341 million) of financial assets and $77 million (December 31, 2020: $11 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.

12

NOTES TO UNAUDITED INTERIM CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS 

As at March 31, 2021 and December 31, 2020 and for the three months ended

March 31, 2021 and 2020

There were no transfers between levels during the three months ended March 31, 2021. The following table categorizes financial assets and liabilities, which are carried at fair value, based upon the level of input as at March 31, 2021 and December 31, 2020:

	March 31, 2021						December 31, 2020
(US$ MILLIONS)	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Financial assets
Common shares	$	541	$	—	$	—	$	481	$	—	$	—
Corporate and government bonds	66		4,031		—		—		4,049		—
Derivative assets	9		225		—		46		231		—
Other financial assets (1)	685		654		371		775		571		341
	$	1,301	$	4,910	$	371	$	1,302	$	4,851	$	341
Financial liabilities
Derivative liabilities	$	14	$	443	$	—	$	72	$	722	$	—
Other financial liabilities	—		1		77		—		—		11
	$	14	$	444	$	77	$	72	$	722	$	11

____________________________________

(1)Other financial assets include secured debentures, asset-backed securities and preferred shares in our business services segment. Level 1 other financial assets are primarily publicly traded securities. Level 2 other financial assets are primarily asset-backed securities and Level 3 financial assets are primarily secured debentures.

The following table presents the change in the balance of financial assets classified as Level 3 as at March 31, 2021 and December 31, 2020:

(US$ MILLIONS)	March 31, 2021		December 31, 2020
Balance at beginning of period	$	341	$	287
Fair value change recorded in net income	1		(2)
Fair value change recorded in other comprehensive income	9		(3)
Additions	20		221
Disposals	—		(162)
Balance at end of period	$	371	$	341

(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, 2021, $28 million of financial assets (December 31, 2020: $68 million) and $6 million of financial liabilities (December 31, 2020: $14 million) were offset in the unaudited interim condensed consolidated statements of financial position.

13

NOTES TO UNAUDITED INTERIM CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS 

As at March 31, 2021 and December 31, 2020 and for the three months ended

March 31, 2021 and 2020

NOTE 5.    FINANCIAL ASSETS

(US$ MILLIONS)	March 31, 2021		December 31, 2020
Current
Marketable securities	$	1,064	$	995
Restricted cash (1)	1,727		833
Derivative contracts	128		167
Loans and notes receivable	186		195
Other financial assets (2)	243		385
Total current	$	3,348	$	2,575
Non-current
Marketable securities	$	3,471	$	3,535
Restricted cash	279		272
Derivative contracts	106		110
Loans and notes receivable	968		1,002
Other financial assets (2)	1,589		1,302
Total non-current	$	6,413	$	6,221

____________________________________

(1)Restricted cash includes $1,297 million related to the privatization of Sagen MI Canada Inc. (“Sagen”) that closed on April 1, 2021. See Note 26 for additional details.

(2)Other financial assets include secured debentures, asset-backed securities and preferred shares in the partnership’s business services segment.

NOTE 6.    ACCOUNTS AND OTHER RECEIVABLE, NET

(US$ MILLIONS)	March 31, 2021		December 31, 2020
Current, net	$	4,508	$	4,306
Non-current, net
Accounts receivable	55		60
Retainer on customer contract	78		68
Billing rights	517		555
Total non-current, net	$	650	$	683
Total	$	5,158	$	4,989

Non-current billing rights primarily represent unbilled rights arising at BRK Ambiental Participações S.A. (“BRK Ambiental”) from revenues earned from the construction on public concession contracts classified as financial assets, which are recognized when there is an unconditional right to receive cash or other financial assets from the concession authority for the construction services.

The partnership’s construction services business has a retention balance, which comprises amounts that have been earned but held back until the satisfaction of certain conditions specified in the contract are met.

14

NOTES TO UNAUDITED INTERIM CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS 

As at March 31, 2021 and December 31, 2020 and for the three months ended

March 31, 2021 and 2020

NOTE 7.    INVENTORY, NET

(US$ MILLIONS)	March 31, 2021		December 31, 2020
Raw materials and consumables	$	930	$	980
Fuel products (1)	680		648
Work in progress	585		638
RTFO certificates (2)	423		365
Finished goods and other (3)	960		1,065
Carrying amount of inventories	$	3,578	$	3,696

____________________________________

(1)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.

(2)Renewable Transport Fuel Obligations (“RTFO”) certificates held for trading as at March 31, 2021 have a fair value of $6 million (December 31, 2020: $25 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.

(3)Finished goods and other are mainly composed of finished goods inventory in the infrastructure services and industrials segments.

NOTE 8.    DISPOSITIONS

For the three month period ended March 31, 2021, the partnership recognized a net gain on dispositions of $1,807 million (March 31, 2020: net gain of $183 million), primarily due to the deconsolidation of its investment in GrafTech International Limited (“GrafTech”).

On January 14, 2021 the partnership, together with institutional partners, sold 20 million common shares of GrafTech as part of a block trade transaction for total proceeds of $214 million. The transaction decreased the partnership’s voting interest in GrafTech to 48% but did not result in a loss of control. The partnership recorded a pre-tax gain of $239 million in the unaudited interim condensed consolidated statements of changes in equity, of which $82 million was attributable to the partnership.

On March 1, 2021, the partnership, together with institutional partners, sold an additional 30 million common shares as part of a block trade for total proceeds of $350 million, which decreased the partnership’s voting interest to 37% and resulted in a loss of control of GrafTech (the “GrafTech Deconsolidation”). As a result of the loss of control, a pre-tax gain of $1,764 million was recorded in the unaudited interim condensed consolidated statements of operating results. The partnership’s share of the total pre-tax gain recorded in gain (loss) on acquisitions/dispositions was $609 million. The gain on deconsolidation was calculated as the fair value of the interest retained by the partnership, together with institutional investors, in GrafTech shares, cash proceeds received on the sale of GrafTech shares to third parties, net of the derecognition of net assets and non-controlling interests in GrafTech.

The partnership retained significant influence and recorded an investment in associate for its 13% ownership interest in GrafTech at its fair value of $420 million based on the closing market price of GrafTech shares on March 1, 2021 and is accounting for the investment using the equity method.

Additionally, the partnership recognized a pre-tax gain of $41 million from the disposition of a portion of the partnership’s investment in public securities. The prior period unrealized fair value changes related to these securities were recorded in other income (expense), net in the unaudited interim condensed consolidated statements of operating results.

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.

15

NOTES TO UNAUDITED INTERIM CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS 

As at March 31, 2021 and December 31, 2020 and for the three months ended

March 31, 2021 and 2020

NOTE 9.    OTHER ASSETS

(US$ MILLIONS)	March 31, 2021		December 31, 2020
Current
Work in progress (1)	$	514	$	488
Prepayments and other assets	666		650
Assets held for sale	436		35
Total current	$	1,616	$	1,173
Non-current
Work in progress (1)	$	44	$	48
Prepayments and other assets	331		363
Total non-current	$	375	$	411

____________________________________

(1)See Note 15 for additional information.

NOTE 10.    PROPERTY, PLANT AND EQUIPMENT

(US$ MILLIONS)	March 31, 2021		December 31, 2020
Gross carrying amount
Balance at beginning of period	$	18,004	$	16,502
Additions	237		1,526
Dispositions (1)	(857)		(599)
Acquisitions through business combinations (2)	41		79
Assets reclassified as held for sale	(18)		(56)
Foreign currency translation and other	(139)		552
Balance at end of period	$	17,268	$	18,004
Accumulated depreciation and impairment
Balance at beginning of period	$	(4,022)	$	(2,610)
Depreciation/depletion/impairment expense	(523)		(1,686)
Dispositions (1)	324		316
Assets reclassified as held for sale	11		26
Foreign currency translation and other	8		(68)
Balance at end of period	$	(4,202)	$	(4,022)
Net book value (3)	$	13,066	$	13,982

____________________________________

(1)The partnership derecognized $505 million of property, plant and equipment, net of accumulated amortization, related to the GrafTech Deconsolidation. Refer to Note 8 for additional information.

(2)See Note 3 for additional information.

(3)Includes right-of-use assets of $1,240 million as at March 31, 2021 and $1,252 million as at December 31, 2020.

During the quarter, the partnership recorded total impairment expense, net of $201 million in the unaudited interim condensed consolidated statements of operating results which primarily related to the closure of one of the partnership’s North American recycling facilities within the industrials segment.

16

NOTES TO UNAUDITED INTERIM CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS 

As at March 31, 2021 and December 31, 2020 and for the three months ended

March 31, 2021 and 2020

NOTE 11.    INTANGIBLE ASSETS

(US$ MILLIONS)	March 31, 2021		December 31, 2020
Gross carrying amount
Balance at beginning of period	$	12,874	$	12,504
Additions	42		610
Dispositions (1)	(143)		(173)
Acquisitions through business combinations (2)	67		171
Assets reclassified as held for sale	—		(1)
Foreign currency translation	(338)		(237)
Balance at end of period	$	12,502	$	12,874
Accumulated amortization and impairment
Balance at beginning of period	$	(1,613)	$	(945)
Amortization/impairment expense	(195)		(752)
Dispositions (1)	73		90
Foreign currency translation	36		(6)
Balance at end of period	$	(1,699)	$	(1,613)
Net book value	$	10,803	$	11,261

____________________________________

(1)The partnership derecognized $71 million of intangible assets, net of accumulated amortization, related to the GrafTech Deconsolidation. Refer to Note 8 for additional information.

(2)See Note 3 for additional information.

NOTE 12.    GOODWILL

(US$ MILLIONS)	March 31, 2021		December 31, 2020
Balance at beginning of period	$	5,244	$	5,218
Acquisitions through business combinations (1)	301		(83)
Dispositions (2)	(171)		(215)
Foreign currency translation	(101)		324
Balance at end of period	$	5,273	$	5,244

____________________________________

(1)See Note 3 for additional information.

(2)Relates to the GrafTech Deconsolidation. Refer to Note 8 for additional information.

17

NOTES TO UNAUDITED INTERIM CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS 

As at March 31, 2021 and December 31, 2020 and for the three months ended

March 31, 2021 and 2020

NOTE 13.    EQUITY ACCOUNTED INVESTMENTS

(US$ MILLIONS)	March 31, 2021		December 31, 2020
Balance at beginning of year	$	1,690	$	1,273
Acquisitions through business combinations (1)	20		(5)
Additions (2)	422		446
Dispositions	(29)		(30)
Share of net income	29		57
Share of other comprehensive income (loss)	(2)		6
Distributions received	(24)		(41)
Foreign currency translation	(8)		(16)
Reclassification to assets held for sale (3)	(373)		—
Balance at end of period	$	1,725	$	1,690

____________________________________

(1)See Note 3 for additional information.

(2)Includes an equity accounted investment in GrafTech recorded upon deconsolidation of the investment on March 1, 2021. Refer to Note 8 for additional information.

(3)As at March 31, 2021, assets held for sale included an equity accounted investment in the partnership’s industrials segment.

18

NOTES TO UNAUDITED INTERIM CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS 

As at March 31, 2021 and December 31, 2020 and for the three months ended

March 31, 2021 and 2020

NOTE 14.    ACCOUNTS PAYABLE AND OTHER

(US$ MILLIONS)	March 31, 2021		December 31, 2020
Current:
Accounts payable	$	3,060	$	2,971
Accrued and other liabilities (1) (2)	4,228		3,864
Lease liabilities	226		222
Financial liabilities (5)	505		727
Unearned premiums reserve (3)	550		533
Work in progress (4)	1,422		1,539
Provisions and decommissioning liabilities	512		560
Liabilities held for sale	17		—
Total current	$	10,520	$	10,416
Non-current:
Accounts payable	$	78	$	82
Accrued and other liabilities (2)	1,204		1,325
Lease liabilities	1,106		1,142
Financial liabilities (5)	2,360		2,457
Unearned premiums reserve (3)	1,394		1,356
Work in progress (4)	18		23
Provisions and decommissioning liabilities	983		1,131
Total non-current	$	7,143	$	7,516

____________________________________

(1)Includes bank overdrafts of $505 million as at March 31, 2021 (December 31, 2020: $400 million).

(2)Includes post-employment benefits of $960 million ($13 million current and $947 million non-current) as at March 31, 2021 and $1,018 million ($19 million current and $999 million non-current) as at December 31, 2020.

(3)See Note 25 for additional information.

(4)See Note 15 for additional information.

(5)Includes financial liabilities of $1,819 million ($65 million current and $1,754 million non-current) as at March 31, 2021 and $1,847 million ($56 million current and $1,791 million non-current) as at December 31, 2020 related to the sale and leaseback of hospitals.

NOTE 15.    CONTRACTS IN PROGRESS

(US$ MILLIONS)	March 31, 2021		December 31, 2020
Contract costs incurred to date	$	26,082	$	26,411
Profit recognized to date (less recognized losses)	1,454		1,476
	27,536		27,887
Less: progress billings	(28,418)		(28,913)
Contract work in progress (liability)	$	(882)	$	(1,026)
Comprising:
Amounts due from customers – work in progress	$	558	$	536
Amounts due to customers – creditors	(1,440)		(1,562)
Net work in progress	$	(882)	$	(1,026)

19

NOTES TO UNAUDITED INTERIM CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS 

As at March 31, 2021 and December 31, 2020 and for the three months ended

March 31, 2021 and 2020

NOTE 16.    BORROWINGS

(a)Corporate borrowings

The partnership has bilateral credit facilities backed by global banks. The credit facilities are available in euros, sterling, Australian, U.S. and Canadian dollars. Advances under the credit facilities 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 require the partnership to maintain a minimum tangible net worth and deconsolidated debt-to-capitalization ratio at the corporate level. At March 31, 2021, the partnership had $2,075 million available on its bilateral credit facilities with a maturity date of June 29, 2026. The balance drawn on the bilateral credit facility at March 31, 2021 is $nil (December 31, 2020: $310 million).

The partnership has a revolving acquisition credit facility with Brookfield that permits borrowings of up to $500 million. The credit facility is guaranteed by the partnership, Brookfield Business L.P. (“Holding LP”), and the holding entities. 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%. The credit facility requires the partnership to maintain a minimum deconsolidated net worth and contains restrictions on the ability of the borrowers and the guarantors to, among other things, incur liens, engage in certain mergers and consolidations or enter into speculative hedging arrangements. Net proceeds above a specified threshold that are received by the borrowers from asset dispositions, debt incurrences or equity issuances by the borrowers or their subsidiaries must be used to pay down the credit facility (which can then be redrawn to fund future investments). The facility automatically renews for consecutive one-year periods until June 30, 2024. As at March 31, 2021, the credit facility remains undrawn.

The partnership is currently in compliance with or has obtained waivers related to all material covenant requirements, and the partnership continues to monitor performance against such covenant requirements.

Refer to Note 17 for further details on the Deposit Agreement with Brookfield. As at March 31, 2021, the balance on deposit from Brookfield was $515 million.

(b)Non-recourse subsidiary borrowings of the partnership

Total non-recourse subsidiary borrowings of the partnership as at March 31, 2021 were $22,159 million (December 31, 2020: $23,166 million).

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

The partnership’s operations are currently in compliance with or have obtained waivers related to all material covenant requirements, and the partnership continues to work with its businesses to monitor performance against such covenant requirements.

20

NOTES TO UNAUDITED INTERIM CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS 

As at March 31, 2021 and December 31, 2020 and for the three months ended

March 31, 2021 and 2020

NOTE 17.    RELATED PARTY TRANSACTIONS

In the normal course of operations, the partnership entered into the transactions below with related parties at 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

The partnership has in place a Deposit Agreement with Brookfield whereby it may place funds on deposit with Brookfield and whereby Brookfield may place funds on deposit with the partnership. The deposit balance is due on demand and bears interest at LIBOR plus 1.50%. As at March 31, 2021, the amount of the deposit from Brookfield was $515 million (December 31, 2020: $300 million). For the three months ended March 31, 2021, the partnership paid interest expense of $2 million on these deposits.

The partnership pays Brookfield a quarterly base management fee, which is reflected within general and administrative expenses. 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, 2021 was $18 million (March 31, 2020: $16 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, 2021 was $nil (March 31, 2020: $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.

(b)Subsidiary recapitalization

On March 24, 2021, the partnership funded the remaining capital committed to Cardone Industries, Inc. (“Cardone”) in connection with the debt restructuring agreement entered into on May 13, 2020. As part of the debt restructuring agreement, former debtholders of Cardone agreed to participate in an equity rights offering, in exchange for extinguishment of their existing debt from Cardone. As part of this debt restructuring agreement Cardone received capital commitments of up to $180 million from some of its former debtholders. The partnership has funded $95 million to date, representing its total commitment.

(c)Other

The following tables summarize other transactions and balances the partnership has entered into with related parties:

	Three months ended
(US$ MILLIONS)	March 31, 2021		March 31, 2020
Transactions during the period
Business services revenues (1)	$	153	$	120

____________________________________

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

(US$ MILLIONS)	March 31, 2021		December 31, 2020
Balances at end of period
Accounts and other receivable, net	$	191	$	98
Accounts payable and other	$	100	$	97

21

NOTES TO UNAUDITED INTERIM CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS 

As at March 31, 2021 and December 31, 2020 and for the three months ended

March 31, 2021 and 2020

NOTE 18.    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 fair values of the partnership’s derivative financial instruments positions are as follows:

	March 31, 2021				December 31, 2020
(US$ MILLIONS)	Financial Asset		Financial Liability		Financial Asset		Financial Liability
Foreign exchange contracts	$	117	$	102	$	129	$	122
Cross currency swaps	4		—		3		1
Interest rate derivatives	75		318		65		553
Equity derivatives	—		3		—		28
Commodities contracts	38		34		80		90
Total	$	234	$	457	$	277	$	794
Total current	$	128	$	129	$	167	$	340
Total non-current	$	106	$	328	$	110	$	454

NOTE 19.    EQUITY

The partnership’s consolidated equity interests include the non-voting publicly traded limited partnership units (“LP Units”) held by public unitholders and Brookfield, general partner units held by Brookfield (“GP Units”), redemption-exchange partnership units (“Redemption-Exchange Units”) in Holding LP, a holding subsidiary of Brookfield Business Partners L.P., held by Brookfield, and Special LP Units in Holding LP held by Brookfield.

For the three months ended March 31, 2021, the partnership made distributions to LP Units, GP Units and Redemption-Exchange Units of $9 million, or approximately $0.0625 per unit (March 31, 2020: $9 million, or approximately $0.0625 per unit). For the three months ended March 31, 2021, the partnership distributed $798 million (March 31, 2020: $675 million) to others who have interests in the operating subsidiaries, primarily resulting from the distributions of proceeds from the sale of GrafTech common shares, combined with the distribution of proceeds from the sale of investments in public securities.

During the three month period ended March 31, 2021, the partnership repurchased and canceled 363,102 LP Units (March 31, 2020: 382,920 LP Units).

(a)Earnings per limited partner unit

Net income attributable to limited partnership unitholders for the three months ended March 31, 2021 was $281 million (March 31, 2020: net loss of $67 million). The weighted average number of LP Units was 78.8 million for the three months ended March 31, 2021 (March 31, 2020: 81.0 million).

(b)Incentive distribution to Special LP units

In its capacity as the holder of the Special LP Units of Holding LP, the special limited partner is entitled to incentive distribution rights which are based on a 20% increase in the LP Unit price over an initial threshold based on the volume-weighted average price of the LP Units, subject to a high water mark. During the three months ended March 31, 2021, the volume-weighted average price was $39.88 per LP Unit, which was below the previous incentive distribution threshold of $41.96 per LP Unit, resulting in an incentive distribution of $nil (March 31, 2020: $nil).

22

NOTES TO UNAUDITED INTERIM CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS 

As at March 31, 2021 and December 31, 2020 and for the three months ended

March 31, 2021 and 2020

(c)GP Units and LP Units

UNITS	GP Units	LP Units	Total
Balance as at January 1, 2021	4	79,031,984	79,031,988
Repurchased and canceled	—	(363,102)	(363,102)
Balance as at March 31, 2021	4	78,668,882	78,668,886

(d)Redemption-Exchange Units

UNITS	Redemption-Exchange Units
Balance as at January 1, 2021	69,705,497
Repurchased and canceled	—
Balance as at March 31, 2021	69,705,497

NOTE 20.    ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

(a)Attributable to Limited Partners

(US$ MILLIONS)	Foreign currency translation		FVOCI		Other (1)		Accumulated other comprehensive income (loss)
Balance as at January 1, 2021	$	(144)	$	52	$	(88)	$	(180)
Other comprehensive income (loss)	(52)		7		35		(10)
Ownership changes	—		—		(38)		(38)
Balance as at March 31, 2021	$	(196)	$	59	$	(91)	$	(228)

____________________________________

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

(US$ MILLIONS)	Foreign currency translation		FVOCI		Other (1)		Accumulated other comprehensive income (loss)
Balance as at January 1, 2020	$	(169)	$	11	$	(60)	$	(218)
Other comprehensive income (loss)	(179)		(19)		23		(175)
Ownership changes	—		1		—		1
Balance as at March 31, 2020	$	(348)	$	(7)	$	(37)	$	(392)

____________________________________

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

(b)Attributable to non-controlling interests – Redemption-Exchange Units held by Brookfield Asset Management Inc.

(US$ MILLIONS)	Foreign currency translation		FVOCI		Other (1)		Accumulated other comprehensive income (loss)
Balance as at January 1, 2021	$	(199)	$	45	$	(77)	$	(231)
Other comprehensive income (loss)	(46)		6		31		(9)
Ownership changes	—		—		38		38
Balance as at March 31, 2021	$	(245)	$	51	$	(8)	$	(202)

____________________________________

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

23

NOTES TO UNAUDITED INTERIM CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS 

As at March 31, 2021 and December 31, 2020 and for the three months ended

March 31, 2021 and 2020

(US$ MILLIONS)	Foreign currency translation		FVOCI		Other (1)		Accumulated other comprehensive income (loss)
Balance as at January 1, 2020	$	(221)	$	9	$	(52)	$	(264)
Other comprehensive income (loss)	(155)		(16)		20		(151)
Ownership changes	$	—	$	1	$	—	$	1
Balance as at March 31, 2020	$	(376)	$	(6)	$	(32)	$	(414)

____________________________________

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

NOTE 21.    DIRECT OPERATING COSTS

The partnership has no key employees or directors and does not remunerate key management personnel. Details of the allocation of costs incurred by Brookfield on behalf of the partnership are disclosed in Note 17. Key decision makers of the partnership are all employees of the ultimate parent company or its subsidiaries, which provides management services under the Master Services Agreement with Brookfield.

Direct operating costs include all attributable expenses except interest, depreciation and amortization, impairment expense, other expenses, and taxes and primarily relate to cost of sales and compensation at the subsidiary level. The following table lists direct operating costs for the three months ended March 31, 2021, and March 31, 2020 by nature. Comparative figures have been reclassified to conform to current period’s presentation.

	Three months ended
(US$ MILLIONS)	March 31, 2021		March 31, 2020
Cost of sales	$	7,435	$	8,023
Compensation	991		868
Property taxes, sales taxes and other	10		10
Total	$	8,436	$	8,901

Inventories recognized as cost of sales during the three month period ended March 31, 2021 amounted to $6,295 million (March 31, 2020: $6,109 million).

NOTE 22.    REVENUES

(a)Revenues by type

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

	Three months ended March 31, 2021
(US$ MILLIONS)	Business services		Infrastructure services		Industrials		Corporate and other		Total
Revenues by type
Revenues from contracts with customers	$	5,660	$	978	$	2,813	$	—	$	9,451
Other revenues	242		133		3		—		378
Total revenues	$	5,902	$	1,111	$	2,816	$	—	$	9,829

24

NOTES TO UNAUDITED INTERIM CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS 

As at March 31, 2021 and December 31, 2020 and for the three months ended

March 31, 2021 and 2020

The table below summarizes the partnership’s segment revenues by type of revenue for the three months ended March 31, 2020:

	Three months ended March 31, 2020
(US$ MILLIONS)	Business services		Infrastructure services		Industrials		Corporate and other		Total
Revenues by type
Revenues from contracts with customers	$	6,340	$	1,002	$	2,445	$	—	$	9,787
Other revenues	189		168		2		—		359
Total revenues	$	6,529	$	1,170	$	2,447	$	—	$	10,146

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

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

	Three months ended March 31, 2021
(US$ MILLIONS)	Business services		Infrastructure services		Industrials		Corporate and other		Total
Timing of revenue recognition
Goods and services provided at a point in time	$	4,662	$	423	$	2,779	$	—	$	7,864
Services transferred over a period of time	998		555		34		—		1,587
Total revenues from contracts with customers	$	5,660	$	978	$	2,813	$	—	$	9,451

The table below summarizes the partnership’s segment revenues by timing of revenue recognition for the total revenues from contracts with customers for the three months ended March 31, 2020:

	Three months ended March 31, 2020
(US$ MILLIONS)	Business services		Infrastructure services		Industrials		Corporate and other		Total
Timing of revenue recognition
Goods and services provided at a point in time	$	5,336	$	395	$	2,405	$	—	$	8,136
Services transferred over a period of time	1,004		607		40		—		1,651
Total revenues from contracts with customers	$	6,340	$	1,002	$	2,445	$	—	$	9,787

25

NOTES TO UNAUDITED INTERIM CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS 

As at March 31, 2021 and December 31, 2020 and for the three months ended

March 31, 2021 and 2020

(c)     Revenues by geography

The tables below summarize the partnership’s segment revenues by geography for revenues from contracts with customers for the three months ended March 31, 2021 and March 31, 2020:

	Three months ended March 31, 2021
(US$ MILLIONS)	Business services		Infrastructure services		Industrials		Corporate and other		Total
United Kingdom	$	3,538	$	52	$	49	$	—	$	3,639
United States of America	77		377		1,060		—		1,514
Europe	303		313		769		—		1,385
Australia	1,043		7		11		—		1,061
Canada	519		31		135		—		685
Brazil	48		4		193		—		245
Mexico	—		—		188		—		188
India	2		—		5		—		7
Other	130		194		403		—		727
Total revenues from contracts with customers	$	5,660	$	978	$	2,813	$	—	$	9,451
Other revenues	$	242	$	133	$	3	$	—	$	378
Total revenues	$	5,902	$	1,111	$	2,816	$	—	$	9,829

	Three months ended March 31, 2020
(US$ MILLIONS)	Business services		Infrastructure services		Industrials		Corporate and other		Total
United Kingdom	$	4,257	$	75	$	47	$	—	$	4,379
United States of America	1		546		887		—		1,434
Europe	262		229		719		—		1,210
Australia	987		4		11		—		1,002
Canada	494		19		128		—		641
Brazil	143		23		206		—		372
Mexico	—		—		192		—		192
India	—		—		3		—		3
Other	196		106		252		—		554
Total revenues from contracts with customers	$	6,340	$	1,002	$	2,445	$	—	$	9,787
Other revenues	$	189	$	168	$	2	$	—	$	359
Total revenues	$	6,529	$	1,170	$	2,447	$	—	$	10,146

26

NOTES TO UNAUDITED INTERIM CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS 

As at March 31, 2021 and December 31, 2020 and for the three months ended

March 31, 2021 and 2020

NOTE 23.    SEGMENT INFORMATION

The partnership’s operations are organized into four operating segments which are regularly reviewed by the Chief Operating Decision Makers (“CODM”) for the purpose of allocating resources to the segment and to assess its performance. The key measures used by the CODM in assessing performance and in making resource allocation decisions are company funds from operations (“Company FFO”) and Company EBITDA. Company FFO is calculated as the partnership’s share of net income and equity accounted income excluding the impact of depreciation and amortization, deferred income taxes, transaction costs, non-cash valuation gains or losses, impairment expense and other items. In order to provide additional insight regarding performance on a cumulative realized basis, Company FFO includes realized disposition gains or losses, along with associated tax impacts, recorded in net income, other comprehensive income, or directly in equity, such as ownership changes. These include gains or losses arising from transactions during the reporting period together with fair value changes recorded in prior periods. Company EBITDA is calculated as Company FFO excluding the impact of the partnership’s share of realized disposition gains and losses, interest income and expense, and current income taxes.

The tables below provide each segment’s results in the format that the CODM organizes reporting segments to make resource allocation decisions and assess performance. Each segment is presented on a proportionate basis, taking into account the partnership’s ownership in operations accounted for using the consolidation and equity methods under IFRS. The tables below reconcile the partnership’s share of its consolidated results to the partnership’s IFRS consolidated statements of operating results on a line by line basis.

27

NOTES TO UNAUDITED INTERIM CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS 

As at March 31, 2021 and December 31, 2020 and for the three months ended

March 31, 2021 and 2020

	Three months ended March 31, 2021
	Total attributable to Unitholders										Attributable to non-controlling interests		As per IFRS Financials
(US$ MILLIONS)	Business services		Infrastructure services		Industrials		Corporate and other		Total (1)
Revenues	$	1,922	$	480	$	771	$	—	$	3,173	$	6,656	$	9,829
Direct operating costs	(1,787)		(355)		(596)		(3)		(2,741)		(5,695)		(8,436)
General and administrative expenses	(34)		(17)		(23)		(22)		(96)		(155)		(251)
Equity accounted Company EBITDA (2)	3		28		20		—		51		45