Welcome to the Brookfield Infrastructure Partners’ First Quarter 2016 Conference Call and Webcast. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. [Operator Instructions] I'd now like to turn the conference over to Melissa Low, Vice President Investor Relations and Communication. Please go ahead.

Thank you, operator, and good morning. Thank you all for joining us for Brookfield Infrastructure Partners' first quarter earnings conference call for 2016. On the call today is Bahir Manios, our Chief Financial Officer, and Sam Pollock, Chief Executive Officer. Following their remarks, we look forward to taking your questions and comments. At this time, I would like to remind you that in responding to questions and in talking about our growth initiatives, and our financial and operating performance, we may make forward-looking statements. These statements are subject to known and unknown risks, and future results may differ materially. For further information on known risk factors, I would encourage you to review our Annual Report on Form 20-F, which is available on our website. With that, I would like to turn the call over to Bahir Manios, Bahir?

Thank you, Melissa, and good morning, everyone. We're pleased to report that we're off to a great start to the year. We generated strong first quarter results that continued to reflect the benefit of our overall diversification and the regulated and contractual nature of our cash flows. We generated funds from operations or FFO of $234 million or $1.02 on a per unit basis which was 15% higher than the prior year. Taking into account our recent 7.5% distribution increase, our payout ratio for the quarter was approximately 65% of FFO which is well within our long-term target range of 60% to 70%. The overall results for the quarter benefited from strong organic growth as the business delivered yet another impressive period of same-store constant currency growth of 11%. Additionally, the contribution from our new acquired investments and dividends received from our toehold interest in Asciano led to the strong results for the quarter. I'll now touch on the financial results and operating performance for our various operating segments and then conclude my remarks with an update on our balance sheet and liquidity position. So first off, on our financial results, and specifically, our utilities operating group posted solid results reporting FFO of $100 million for the quarter compared to $95 million last year. The increase was the result of continued strength in connection activity in our UK regulated distribution business, inflation indexation and commissioning of capital into the rate base in the last 12 months. While we're pleased with the overall performance and reliability of our utilities business, the regulated return at our Australian terminal will decrease over the next cycle, reflecting the movement in interest rates since the last reset period five years ago. Despite this from an overall utilities perspective, any reduction in FFO from our regulated…

Great, thanks, Bahir, and good morning, everyone. As Bahir mentioned, I’d make a few brief comments on our various growth initiatives and conclude with an outlook for the business. First off, I want to spend a few minutes to spotlight the various organic capital projects we [indiscernible] 00:09:15] which has traditionally been a meaningful contributor to FFO and distribution growth since our inception. The amount of our capital backlog has varied over the years and we currently have about $1.7 billion pipeline of committed growth projects that will be accretive to our results. This level of activity has nearly doubled in the last two years and now exceeds our annual target of reinvesting 15% to 20% of our annual FFO back into our businesses. We see this as a very positive development as our organic growth investments virtually always generate the best risk-adjusted returns for us. The next year or two we expect to invest an additional $250 million per annum over and above the approximately $130 million to $150 million we would typically reinvest from our FFO. Let me highlight some of the key updates on this front. First, at our UK regulated distribution business which continues to perform well as Bahir mentioned, we added 76,000 new connections to our backlog in the first quarter and that's 36% ahead of the prior year. We also acquired 200,000 of accredited smart meters during the quarter and we expect the number of smart meters will be ramped up to 700,000 over the next year or two at a total capital spend of approximately $220 million. Not only do we expect to generate solid returns from deployment of these smart meters, we expect this to be a major growth driver for the business. In Chile, we are growing our franchise by expanding…

[Operator Instructions] Our first question today is from Bert Powell of BMO. Please go ahead.

Yes, thanks. Just a question on DBCT and the change in the rate base and the offset with smart meters, can you just help us figure out how that pieces out over time, are you talking about the $220 million of capital for 700,000 meters mitigating it or are you talking about matching it overtime and starting with the first 200,000 that kind of covers it off for 2016?

Hey, Bert, it’s Bahir. So I can at least on this one. So we commissioned of the total 700,000 meters that we signed up in late last year, we commissioned about 200,000 in the quarter and the way you should think, that should generate about $2 million in quarterly FFO. And then there is about another 480,000 to 500,000 in our backlog, and that will slowly be ramped up over time, it should take about four to five quarters but on a run rate basis should lead to another $3 million a quarter once it's all set and done, so probably about $5 million a quarter, once it's all fully ramped up over the next four to five quarters.

And that Bahir that $5 million is an exact offset for the recalculation of the rate base or the terminal you know does the terminal go down, just trying to figure out how to line that up with the new rate base or the rate of return on the DBCT, does that come off right away and these kind of meet up four quarters from now or is just how the DBCT rate base folds into the FFO?

So Bert, we put in our supplemental just an estimate of how much our FFO at DBCT could likely be going down by, we’re still in negotiations mode with the regulator in Queensland there but probably you’ll see happening is effective July 1, our FFO at DBCT will decline by $3 million to $5 million and so with then with the 2 million of smart meters that are already online that negates a good chunk of it and then as we ramp up the smart meters in the next three, four, five quarters, it should at least offset the entire impact at the high end of the range for DBCT.

Sorry, if that’s in the supplemental, kind of a busy morning today.

Oh no, no.

And just the other clarification, on the access agreements in Australia for [indiscernible] or are there other that are contemplated as part of meeting some sort of relief?

Hi Bert, this is Sam. So Carrara [ph] is the only one that's significant, there are discussions with customers on a special basis. At this price, all our other customers are comfortably profitable to the extent that prices go lower again, then we may have do have other conversations with people, but they tend to be profitable except for Carrara which has a bit of higher cost. They tend to be profitable down even in the low 40s, it's once the price gets below low 40s that some of our other customers tend to have, and at US$40 they tend to have some challenges.

So based on the grid or the scale that you have with them today, I mean obviously we’ve had some recovery in iron ore price, I'm not sure what was contemplated when you did the deal with them at call it whatever we are today, $57. Is there much relief you have to give them here with the contemplated at 40, just try to give us a sense of what the impact is just in the context of the volatility we’ve seen and these commodity prices in literally the last month?

Its relative de minimis at these price levels that there at today, it really was contemplated to the extent that prices stay at much lower levels.

So if iron ore stayed here today at the current price level, there is no impact relative to what you have seen -

It’s manageable. Due to sliding scale so there may be a modest amount but you wouldn't probably notice it in numbers.

So as of today, we expect kind of steady state there?

That’s correct.

[Operator Instructions] Your next question is from Rupert Merer of National Bank Financial. Please go head. Mr. Merer your line is open.

This is Ryan filling in for Rupert. I actually have a couple of questions here, the first one is, are you still considering capital recycling initiatives and if so what type of assets would kind of be at the top of the list?

Hi Ryan, I’ll tackle that one. So the short answer is, we are always contemplating capital recycling, so we are evaluating sort of life-cycle of the businesses and if there are some that have matured, have limited growth prospects and where we think other investors might value them materially higher than we value them. Having said all of that at this particular moment in time we don't have any projects underway, so we're not looking to sell anything in the foreseeable future but that’s something we’ll continue to evaluate as the year goes on and probably once we get to budget season in the fall we’ll contemplate whether or not that there will some recycling opportunities in 2017.

Just one last question here about Asciano, with the restructuring deal, are you going to see any regulatory hurdles here that are foreseeable and also can you discuss some of the potential synergy opportunities going on in the operational cost and market access?

Okay, I will tackle that one as well. So on your first part of your question regarding whether or not we think that there will be any regulatory hurdles, I really hope not given it's been a year of dancing through those hurdles but it's impossible to say, we haven't received the market feedback yet from the regulator, we do have interactions with them and I think the discussions have all been very constructive. So it feels like many of the concerns that they had have been addressed but until we are done, I don't want to say we are done. So, I will leave at that for that question. With respect to synergies and market access, look I don't think there is anything in market access that I can really comment on. With respect to synergies, I think there is no real opportunities to combine our businesses or Qube’s businesses into Patrick's, so I don't think there is synergies from that perspective. I think there is cost that we can take out from a corporate perspective that Asciano had in running a large public company that will share what the other consortiums as that it gets dismantled. So I think there will be cost synergies from that perspective. I know, Qube, given their previous history with the business have some interesting operating strategies that they want to deploy and so we will, I think that will generate lots of value. And we are having good conversations with some of our customers in North America and Europe and figuring out ways where we can drive more volumes through the terminal. So I think there is lots of ways we can create value but they are not necessarily from a combination of businesses.

The next question is from Frederic Bastien of Raymond James. Please go ahead.

I appreciate that your energy platform enjoyed solid year over year growth in Q1 but it came in a little light relative to our expectations, was there anything unusual about the quarter, may be timing differences that might have impacted the performance?

Hey Frederick, it's Bahir, I will stand and maybe Sam will jump in as well but with respect to NGPL, we obviously had the study in interest as a result of our additional acquisition that we did there. In addition to that we saw pretty solid same-store growth in the business that was really driven by operational gains, but that work offset by a milder winter. And so, what we would expect is towards the latter part of the year, as we bring online some of the organic CapEx initiatives that we have on the go, you should see more of a ramp-up in that business in the second half and then in addition to that, the district energy also saw some pretty meaningful growth but we’re also bringing online a few projects in that business as well and there was a bit of seasonality to do with the results in Q1 as well. So again, on that, I expect in the second half of the year results should be better, albeit, we still enjoy some pretty decent growth organically on a same store basis compared to the prior year.

Okay. That’s helpful now. Understanding NGPL will obviously grow in size and contribution, how should we think about the seasonality of the business, is it similar to what most and LNG related names experience in Canada or is it more smooth across quarters?

It does have - NGPL does tend to have a little bit of seasonality. I mean, if you look at BIP from an overall perspective, there is a lot of - there are some pluses and some minuses and generally they all sort of wash each other out, but with respect to NGPL, typically Q2 and Q3 are a little lighter than Q4 and Q1.

Okay, great. Just now feel free not to answer that or just deviate from my question, but you have roughly 3 billion in liquidity, how much of that amount do you have currently earmarked you’re comfortable that you can redeploy or deploy into acquisitions?

So not sure entirely the direction of the question, but we feel pretty good that that level of liquidity sets us up well for all the things that we have in front of us. So as we talked about, we’ve got the initial deployment of capital of plus or minus $500 million. We’ve got a big program of organic projects over the next two years. And then we’ve got a couple of interesting opportunities that we haven’t really got into much detail on this call, because they’re just not quite at an advanced enough stage, but we think that that could also provide meaningful opportunities to deploy anywhere between $500 million to $1 billion in the next short while. So I’m actually happy with what we have, because we could be pretty opportunistic at this period of time.

The next question is from Robert Kwan of RBC Capital Markets. Please go ahead.

Good morning. If I can just turn back to NGPL and whether it’s specific to Q1 or just as we look forward, Bahir, you talked about some of the operational gains this quarter, and then the new projects, I’m also just wondering though with some of the contracting you’ve done on the FG side, how do we think about those contracts kind of phasing in over the next little bit and how does that change the FFO progression?

Hey, Robert. Maybe, I’ll start and Bahir can jump in. So look, I think what we’ve tried to convey to people that we’re expecting growth in underlying EBITDA for the business over the next year or two up about 25%. I think that’s what we mentioned last time and it’s pretty much all backed up by new contracts. One of the more meaningful ones will start in Q2, which is with this being passed and the LNG terminal down there. We’ve got the contract for the Chicago expansion that kicks in probably mid fourth quarter. And then, we’ve got a couple of others that will come into 2017 and then even a few today, related to that self-done expansion that are related to some of the LNG terminals that are coming online in 2018. So, I’m not sure I can give you much more specificity than that, but the way I would think about it is it’s over the next two years, you’ll just gradually see a number of new customers come online.

And Robert, maybe I’ll just add to that, so those are the sort of the good EBITDA wins that you’re going to see in our results going forward, just coming down to FFO, in April, we injected or paid down about $310 million our share of debt and so that should lead to lower interest expense and so you’ll see a pickup in our FFO immediately going forward as a result of that and due to other future deleveraging activities.

And what was the interest rate on that though?

It was about 6.5%, 7%.

The one thing I think too there is an opportunity is that as we refinance debt next year, 2017 is probably mid-year, much of the debt that we’ll be refinancing is all in the 7.5% to 9% range. And so if our plans play out as we expect and we’re refinancing as an investment grade issuer, then we should see that cost of debt come down materially.

Great. And then just following on NGPL, you talked about potential projects for gas infrastructure on the system, I’m wondering do you have any thoughts on investment directly in Mexican gas pipes, either existing or some of the new tenders that are out?

We’ve been looking at a couple and there is assets for sale obviously, where we’re probably aware of. The - so far we’ve just not found an opportunity that met our return thresholds. Surprisingly, the availability of capital in the Mexican market is actually pretty robust and with the type of structure they’ve had, I’d say, a lot of the structures down there are much more robust than what we’ve seen in the past in North America and as a result, they tend to attract lower return investors. So long winded way of saying that we haven’t found anything yet, we’re still looking and hopefully overtime, we’ll find something.

Okay. And if I can ask one last question, just on reinvestment in the existing business, those tend to be great returns, you discussed that that’s kind of now reached a rate that’s higher than the 15% to 20% of FFO, so how does this change or does it change how you think about your payout ratio. I think the idea in the past was a lot of the reinvestment activity could be done out of free cash flow, is there any kind of additional thoughts as we go forward here?

Well, at this stage, it doesn’t change our approach. This may be just a relatively short period of time where we have this mismatch and we have all the available liquidity in our balance sheet to deal with it. This is something that is more perpetual or sustainable over longer period of time. Then we’ll maybe revisit our payout ratios, but at this stage, I don’t think given, it’s just recently happened, doesn’t make sense to change our policy.

This concludes the time allocated for questions on today’s call. I would now like to turn the conference back over to Mr. Sam Pollock. Please go ahead.

Thank you, operator and thank you everyone for joining our call today. We look forward to updating again next quarter.

This concludes today’s conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.