Enbridge Income Fund Holdings Inc. Reports 2018 First Quarter Results

CALGARY, May 10, 2018 /CNW/ - Enbridge Income Fund Holdings Inc. (TSX: ENF) (ENF or the Company) today reported first quarter 2018 financial results and provided a quarterly business update.

FIRST QUARTER HIGHLIGHTS
(all financial figures are unaudited and in Canadian dollars unless otherwise noted)

• Loss of $184 million, or $1.06 per common share for the first quarter, materially impacted by a non-operating factor as a result of the adoption of a new International Financial Reporting Standards (IFRS) accounting policy
  
  
• Adjusted earnings of $111 million, or $0.64 per common share for the first quarter
  
  
• $691 million in Fund Group Distributable Cash Flow (DCF)
  
  
• Increased dividend 10% to $0.1883 per common share effective with the January dividend and extended 10% annual dividend growth guidance by an additional year, through 2020
  
  
• Line 3 Replacement Project construction underway in Canada; with respect to the US portion of the project, Administrative Law Judge (ALJ) confirms need for project but recommends alternative route; Minnesota Public Utilities Commission (MPUC) permit decisions expected in the second quarter of 2018
  
  
• Announcement of a binding open season for expansion capacity commitments on Alliance Pipeline
  
  
• Fund Group announced agreement to sell 49% of its interest in renewable power assets for $1,050 million

PRESIDENT'S COMMENT

"The year is shaping up very well so far, our strong performance in the first quarter would suggest our full year results are trending towards the upper end of our DCF Guidance range of $2.45 to $2.65 billion," said Perry Schuldhaus, Company President. "This is a reflection of the strength of our asset base. Throughput on the Mainline System was at record average levels this quarter and is expected to remain highly utilized throughout 2018 and beyond as WCSB crude oil production volumes continue to grow. In addition, the Regional Oil Sands assets delivered solid EBITDA growth this quarter from new assets that were placed into service in 2017."

"In Gas Pipelines, we continue to see strong contributions from the Alliance Pipeline System from increased demand for both seasonal firm and interruptible service driven by a wide Alberta-Chicago basis differential. During the first quarter, Alliance Pipeline announced a binding open season for an expansion of its pipeline system. We expect to see strong interest from shippers looking for additional WCSB takeaway capacity and access to the premium U.S. Midwest market."

"Progress on the Line 3 Replacement project continues following the report from the ALJ who concluded that there was clear need for this important integrity replacement project. However, we disagree with the recommendation of an in-trench replacement along the existing route. Enbridge's preferred route would have less environmental impact, is safer to execute, respects Tribal sovereignty, and would result in significantly less disruption to local crude oil supply. Enbridge will continue to make the case for its preferred route as we await the MPUC vote on the Certificate of Need and Route Permit which is expected in June."

Mr. Schuldhaus concluded, "The strong first quarter financial results and growth in our EBITDA sets us up well to achieve our target credit metrics by the end of this year and supports a strong, investment grade credit rating for the Fund Group. The strength of this financial outlook underpins our annual 10 percent dividend growth guidance through 2020."

FINANCIAL RESULTS

The Company reported financial results for the three months ended March 31, 2018, compared to the same period in 2017, as summarized in the table below:

				Three months ended
				March 31,
				2018	2017
(millions of Canadian dollars)
Loss^1				(184)	(110)
Loss per common share^1				(1.06)	(0.88)
Adjusted earnings^2				111	67
Adjusted earnings per common share				0.64	0.54
EIPLP adjusted EBITDA^2				907	623
Fund Group DCF				691	422
Fund Group payout ratio				72%	95%

1	Comparative information for the three months ended March 31, 2017 has been retrospectively adjusted to reflect the adoption of IFRS 9.
2	Schedules reconciling adjusted earnings and Enbridge Income Partners LP (EIPLP) adjusted earnings before interest, income taxes and depreciation and amortization (adjusted EBITDA) are available at www.enbridgeincomefund.com and as Appendices to this news release.

The decrease in the Company's first quarter GAAP earnings was primarily due to a non-operating factor, specifically the adoption of a new IFRS accounting policy resulting in gains and losses arising from changes in the fair value of the Company's investment in the Fund being recognized in earnings, rather than in other comprehensive income. Adjusted earnings for the first quarter increased by $44 million as a result of a higher number of ordinary trust units (Fund Units) of Enbridge Income Fund (the Fund) held by the Company and an increase in the Fund Unit distribution in January 2018.

First quarter EIPLP adjusted EBITDA was up by $284 million over the prior year. Period-over-period growth was driven largely by the Canadian Mainline and by incremental earnings from new projects that were brought into service throughout 2017. Alliance Pipeline and the Fund Group's portfolio of green power assets also contributed to EBITDA growth. See EIPLP operating results for further detail.

Fund Group DCF increased as a result of the same factors noted above.

PROJECT UPDATES
The Line 3 Replacement project is a critical integrity replacement project that will enhance the safety and reliability of the Enbridge liquids Mainline System and provide incremental export capacity to Western Canadian producers and increased security of supply for key refining markets along the Mainline system as well as to markets further downstream.

The project continues to progress well on several fronts. The Canadian portion of the Line 3 Replacement project continues to advance with the first phase of pipeline construction wrapped up earlier this quarter, with approximately 40% of the pipe now laid. The U.S. portion of the Line 3 Replacement project is being constructed by Enbridge Energy Partners L.P. (EEP), a subsidiary of Enbridge. In the U.S., the pipeline replacement work in Wisconsin is complete and that segment of the line is expected to be commissioned in May.

In Minnesota, on April 23rd an Administrative Law Judge issued Findings of Fact, Conclusions of Law and Recommendation to the MPUC in connection with EEP's applications for a Certificate and Route Permit. The ALJ recommended that the MPUC grant EEP's application for a Certificate, but only if the MPUC also selects a route that would require in-trench replacement of the existing Line 3, which is not EEP's preferred route. The ALJ's recommendation is not binding on the MPUC. EEP believes that its preferred route remains the best solution for Minnesota and it intends to continue its effort to secure its approval by the MPUC. On May 9, 2018 EEP filed its exceptions to the ALJ Report with the MPUC, in which they set out their proposed revisions to the ALJ's summary of the evidentiary record, as well as EEP's points of disagreement with the conclusions on route recommendation. The MPUC is expected to issue a ruling on the Certificate of Need and Route Permit dockets at the end of the second quarter of 2018. Management continues to anticipate an in-service date for the project in the second half of 2019.

Alliance Pipeline announced an open season for binding bids for additional long term firm transportation service contracts on the Alliance Pipeline Canada and Alliance Pipeline US systems in support of up to 400 million cubic feet per day (mmcf/d) of expanded services on Alliance Pipeline Canada and up to 430 mmcf/d of expanded services on Alliance Pipeline US. The open season closes on May 30, 2018. Subject to the results of the open season, this project is expected to cost roughly $2 billion related to the addition of compression on the pipeline with a projected in-service date in the fourth quarter of 2021.

OTHER BUSINESS

On March 15, 2018, the Federal Energy Regulatory Commission (FERC) changed its long-standing policy on the treatment of income tax amounts included in the rates of pipelines and other entities subject to cost of service rate regulation within a Master Limited Partnership (MLP). Although the Company is not directly impacted by the FERC actions, under the International Joint Tariff mechanism, a reduction in EEP's Lakehead System Local Toll would create an offsetting revenue increase on the Canadian Mainline system owned by the Fund Group. This impact is subject to the outcome of any alternatives that may mitigate the impacts of the policy change at EEP as well as further clarification from the FERC on the application of its new policy.

On May 9, 2018, affiliates of the Fund entered into agreements with the Canadian Pension Plan Investment Board whereby the Fund will monetize a 49% interest in wind and solar facilities included within the Green Power business (the "Assets") for cash proceeds of approximately $1.05 billion. This transaction enables the Fund to monetize an interest in its renewable assets at an accretive value to the Company while enhancing financial strength and flexibility. The Fund will continue to own a 51% interest in these Assets and Enbridge will continue to manage, operate and provide administrative services for the Assets.  The transaction is subject to closing adjustments and conditions customary in transactions of this nature. Closing is expected to occur during the third quarter of 2018 subject to the receipt of all necessary regulatory approvals and consents.

Upon closing, the Fund will utilize the proceeds to redeem Fund Units and pay back debt, as determined closer to closing, in order to provide further assurance that targeted credit metrics are achieved by the end of 2018. There are no plans to use any proceeds to redeem publicly held shares of ENF at this time.

DIVIDENDS AND OWNERSHIP STRUCTURE

The ENF Board of Directors announced a cash dividend of $0.1883 per common share to be paid on June 15, 2018 to shareholders of record at the close of business on May 31, 2018, representing a 10% increase year over year.

These dividends are designated eligible dividends for Canadian tax purposes, which qualify for the enhanced dividend tax credit. Eligible shareholders may elect to participate in the Company's Dividend Reinvestment and Share Purchase Plan (DRIP), where they may automatically reinvest their dividends in additional shares at a two percent discount to the share price without brokerage fees. Details of the DRIP are available on the Company's website. Shareholders who wish to participate in the DRIP should contact their investment dealer for further information and to enroll.

The Company holds a 70.7 percent Fund Unit interest in the Fund and an approximate 21.8 percent overall economic interest in the Fund Group. The Fund Group is comprised of the Fund, Enbridge Commercial Trust (ECT), EIPLP and the subsidiaries and investees of EIPLP. EIPLP holds the operating entities of the Fund Group.

FIRST QUARTER 2018 FINANCIAL RESULTS

For more information on the operating results of the Company, the Fund and EIPLP, please see the respective Management's Discussion and Analysis on the Company's website at http://www.enbridgeincomefund.com/Find-Shareholder-Information/Reports-and-Filings/English.aspx. The documents are also filed on SEDAR under Enbridge Income Fund Holding Inc.'s profile for the Company and under Enbridge Income Fund's profile for the Fund and EIPLP.

EIPLP OPERATING RESULTS
			Three months ended
			March 31,
			2018		2017
Liquids Pipelines - Average deliveries (thousands of barrels per day)
	Canadian Mainline^1		2,625		2,593
	Regional Oil Sands System^2		1,629		1,318
	Canadian Mainline International Joint Tariff (IJT) Residual Toll^3		$1.64		$1.47
	Canadian Mainline Effective FX Rate		$1.25		$1.04
Gas Pipelines - Average throughput (millions of cubic feet per day)
	Alliance Pipeline Canada		1,637		1,629
	Alliance Pipeline US		1,749		1,724
Green Power (thousands of megawatt hours produced)
	Wind Facilities		782		706
	Solar Facilities		28		26
	Waste Heat Facilities		30		28

1	Canadian Mainline average throughput volume represents deliveries ex-Gretna, Manitoba, which is made up of United States and eastern Canada deliveries originating from western Canada.
2	Volumes are for the Athabasca mainline, Athabasca Twin, Waupisoo Pipeline and Woodland Pipeline and exclude laterals on the Regional Oil Sands System.
3	US dollars per barrel.

EIPLP Adjusted EBITDA^1
	Three months ended
	March 31,
	2018		2017
(unaudited; millions of Canadian dollars)
Liquids Pipelines	751		493
Gas Pipelines	63		57
Green Power	81		66
Eliminations and Other	12		7
Adjusted EBITDA	907		623

1	The above table summarizes adjusting items by segment. For a detailed listing of adjusting items by segment, refer to segment discussions and the appendices to this news release.

EIPLP adjusted EBITDA for the quarter ended March 31, 2018 increased by $284 million. The key period-over-period performance drivers included:

• Higher contribution from the Canadian Mainline due to the combination of higher throughput, in part facilitated by capacity optimization initiatives implemented in 2017, a higher Canadian Mainline IJT residual toll, higher toll surcharges for the recovery of costs related to certain expansion projects, as well as a higher average rate on foreign exchange hedges used to convert United States dollar denominated Canadian Mainline revenues. Adjusted EBITDA generated by the Canadian Mainline for the balance of the year will reflect the positive effect of an increase in the Canadian Mainline IJT Residual Benchmark Toll from US$1.64 to US$1.89 effective April 1, 2018, reflecting, among other things, the effect of the reduced US corporate tax rate in EEP's tariff. An increase in adjusted EBITDA also reflects a higher average foreign exchange hedge rate when compared to 2017.
• Growth in Regional Oil Sands was driven by contributions from new projects placed into service in 2017; in particular the Wood Buffalo Extension Pipeline, Athabasca Pipeline Twin and the Norlite diluent pipeline.
• Higher contributions from the Alliance Pipeline driven by increased demand for seasonal firm and interruptible service due to colder than average weather in the U.S Midwest.
• Stronger contributions from EIPLP's Green Power segment which included a positive arbitration settlement of $11 million from a warrantee claim received in the first quarter of 2018.

FUND GROUP Distributable Cash Flow^1
		Three months ended
		March 31,
		2018		2017
(unaudited; millions of Canadian dollars)
EIPLP adjusted earnings before interest, income taxes and depreciation and
	amortization	907		623
	Cash distributions less than equity earnings^2	(5)		(11)
	Maintenance capital expenditures^3	(18)		(19)
	Interest expense^2	(110)		(94)
	Current income taxes^2	(44)		(24)
	Special interest rights distributions - IDR^4	(32)		(12)
	Other receipts of cash not recognized in revenue^5	29		8
	Other adjusting items	15		4
EIPLP DCF		742		475
	Fund and ECT interest expense, net	(17)		(21)
	ECT incentive fee	(32)		(31)
	Fund and ECT operating and administrative expense	(2)		(1)
Fund Group DCF		691		422
Distributions paid to Enbridge Inc.		387		336
Distributions paid to ENF		111		67
Fund Group distributions declared		498		403
Fund Group payout ratio		72%		95%

1	DCF is a non-GAAP measure that does not have any standardized meaning prescribed by generally accepted accounting principles in the United States of America (U.S. GAAP). See definition within Non-GAAP Reconciliations Appendices.
2	These balances are presented net of adjusting items.
3	Maintenance capital expenditures are expenditures that are required for the ongoing support and maintenance of the existing pipeline system or that are necessary to maintain the service capability of the existing assets (including the replacement of components that are worn, obsolete or completing their useful lives). For the purpose of DCF, maintenance capital excludes expenditures that extend asset useful lives, increase capacities from existing levels or reduce costs to enhance revenues or provide enhancements to the service capability of the existing assets. Maintenance capital expenditures occur primarily within EIPLP's Liquids Pipelines segment.
4	Incentive Distribution Right (IDR) refers to the cash component of the Special Interest Rights (SIR) distributions. IDR distributions are declared monthly and paid in cash to holders of the SIR in the following month.
5	Consists of cash received net of revenue recognized for contracts under make-up rights and deferred revenue arrangements. As a result of the new revenue recognition standard, also included in this balance are certain payments received from customers to offset the costs of constructing assets required to provide services to those customers, referred to as Contributions in Aid of Constructions.

Fund Group DCF underpins the Fund Group's ability to pay distributions to holders of Fund Units, including the Company. The Fund Group's DCF increased by $269 million for the three months ended March 31, 2018. The key period-over-period performance drivers included:

• The same business performance factors as discussed in the EIPLP Adjusted EBITDA section above, as well as the net effect of the following:
• Higher cash distributions received from Alliance Pipeline; and
• Higher cash receipts net of revenue recognized for contracts under deferred revenue arrangements; partially offset by
• Higher interest expense due to lower capitalized interest and higher levels of debt outstanding in 2018;
• Higher adjusted current income taxes primarily due to an increase in adjusted earnings before income taxes in 2018; and
• Greater IDR cash distributions paid, which increase as Fund Unit distributions increase.

ENBRIDGE INCOME FUND HOLDINGS INC.
	Three months ended
	March 31,
	2018	2017
(unaudited; millions of Canadian dollars)
Distribution income	111	67
Dividends declared	98	64

The Company's distribution income represents substantially all of the Company's adjusted earnings and cash flows and is derived from the Fund Unit distributions paid to the Company. For the quarter ended March 31, 2018, distribution income increased over the comparable period of 2017, as a result of a higher monthly Fund Unit distribution of $0.2134 per unit that commenced in January 2018 and an increased number of Fund Units held by the Company following the secondary offering of ENF common equity in April 2017 and the ENF common equity issuance in December 2017.

CONFERENCE CALL

The Company will hold a joint conference call and webcast on May 10, 2018 at 9:00 a.m. Eastern Time (7:00 a.m. Mountain Time) with Enbridge Inc., Enbridge Energy Partners, L.P. and Spectra Energy Partners, LP to provide an enterprise wide business update and review 2018 first quarter financial results. Analysts, members of the media and other interested parties can access the call toll free at [phone] or within and outside North America at [phone] using the access code of 4849907#. The call will be audio webcast live at https://edge.media-server.com/m6/p/6pm7mqpf. A webcast replay and podcast will be available approximately two hours after the conclusion of the event and a transcript will be posted to the website within 24 hours. The replay will be available for seven days after the call toll-free [phone] or within and outside North America at [phone] (access code 4849907#).

The conference call format will include prepared remarks from the executive team followed by a question and answer session for the analyst and investor community only. The Company's media and investor relations teams will be available after the call for any additional questions.

FORWARD-LOOKING INFORMATION
Forward-looking information, or forward-looking statements, have been included in this news release to provide information about the Company and its investee, the Fund, and the Fund's direct and indirect investments and joint ventures (collectively, the Fund Group), including management's assessment of future plans and operations of the Company and the Fund Group. This information may not be appropriate for other purposes. Forward-looking statements are typically identified by words such as "anticipate", "expect", "project", "estimate", "forecast", "plan", "intend", "target", "believe", "likely" and similar words suggesting future outcomes or statements regarding an outlook. Forward-looking information or statements included or incorporated by reference in this document include, but are not limited to, statements with respect to the following: 2018 guidance; expected or target DCF; cash flows; financial strength and flexibility; target credit metrics and credit ratings; expected performance of the Fund Group's businesses; in-service dates of projects; expected capital expenditures; safety and reliability of pipeline systems; regulatory and customer approvals, including with respect to the Line 3 Replacement project and the expansion of the Alliance Pipeline System; shareholder returns; future dividends and distributions by the Company and the Fund; and dividend increases.

Although the Company and the Fund Group believe these forward-looking statements are reasonable based on the information available on the date such statements are made and processes used to prepare the information, such statements are not guarantees of future performance and readers are cautioned against placing undue reliance on forward-looking statements. By their nature, these statements involve a variety of assumptions, known and unknown risks and uncertainties and other factors, which may cause actual results, levels of activity and achievements to differ materially from those expressed or implied by such statements. Material assumptions include assumptions about the following: expected supply of and demand for crude oil, natural gas, natural gas liquids (NGL) and renewable energy; prices of crude oil, natural gas, NGL and renewable energy; exchange rates; inflation; interest rates; availability and price of labor and construction materials; operational reliability; customer and regulatory approvals; maintenance of support and regulatory approvals for the Fund Group's projects; government legislation; anticipated in-service dates; weather; the impact of the dividend policy on the Company's or the Fund Group's future cash flows; capital project funding; the Fund Group's credit ratings; EBITDA or adjusted EBITDA; earnings/(loss) or adjusted earnings/(loss); earnings/(loss) per share; future cash flows and future DCF; and dividends or distributions. Assumptions regarding the expected supply of and demand for crude oil, natural gas, NGL and renewable energy, and the prices of these commodities, are material to and underlie all forward-looking statements as they may impact current and future levels of demand for the Fund Group's services. Similarly, exchange rates, inflation and interest rates impact the economies and business environments in which the Company and the Fund Group operate and may impact levels of demand for the Fund Group's services and cost of inputs, and are therefore inherent in all forward-looking statements. Due to the interdependencies and correlation of these macroeconomic factors, the impact of any one assumption on a forward-looking statement cannot be determined with certainty, particularly with respect to earnings/(loss), adjusted EBITDA, DCF and associated per share amounts or estimated dividends or distributions. The most relevant assumptions associated with forward-looking statements on announced projects and projects under construction, including completion dates and capital expenditures include the following: availability and price of labor and construction materials; effects of inflation and foreign exchange rates on labor and material costs; effects of interest rates on borrowing costs; and the impact of weather and customer, government and regulatory approvals on construction and in-service schedules and cost recovery regimes.

The Company's and the Fund Group's forward-looking statements are subject to risks and uncertainties pertaining to future dividends, DCF guidance, operating performance, regulatory parameters, project approval and support, weather, economic and competitive conditions, public opinion, changes in tax laws and tax rates, changes in trade agreements, exchange rates, interest rates, commodity prices, political decisions and supply of and demand for commodities, including but not limited to those risks and uncertainties discussed in this news release and in the Company's and the Fund Group's other filings with Canadian securities regulators. The impact of any one risk, uncertainty or factor on a particular forward-looking statement is not determinable with certainty as these are interdependent and the Company's or the Fund Group's future course of action depends on management's assessment of all information available at the relevant time. Except to the extent required by applicable law, the Company and the Fund Group assume no obligation to publicly update or revise any forward-looking statements made in this news release or otherwise, whether as a result of new information, future events or otherwise. All subsequent forward-looking statements, whether written or oral, attributable to the Company or the Fund Group or persons acting on the Company's or the Fund Group's behalf, are expressly qualified in their entirety by these cautionary statements.

ABOUT ENBRIDGE INCOME FUND HOLDINGS INC.
Enbridge Income Fund Holdings Inc., through its investment in the Fund, indirectly holds high quality, low-risk energy infrastructure assets. The Fund's assets consist of a portfolio of Canadian liquids transportation and storage businesses, including the Canadian Mainline, the Regional Oil Sands System, the Canadian segment of the Southern Lights Pipeline, Class A units entitling the holder to receive defined cash flows from the United States segment of the Southern Lights Pipeline, a 50 percent interest in the Alliance Pipeline, which transports natural gas from Canada to the United States, and interests in more than 1,400 megawatts of renewable and alternative power generation assets. Enbridge Income Fund Holdings Inc. is a publicly traded corporation on the Toronto stock exchange under the symbol ENF; information about the Company is available on the Company's website at www.enbridgeincomefund.com.

None of the information contained in, or connected to, the Company's website is incorporated in or otherwise forms part of this news release.

FOR FURTHER INFORMATION PLEASE CONTACT:

Media

Suzanne Wilton
Toll Free: [phone]       
Email: [email protected]  

Investment Community

Nafeesa Kassam
Toll Free: [phone]
Email: [email protected]

NON-GAAP RECONCILATIONS APPENDICES

This news release contains references to adjusted earnings, adjusted EBITDA and DCF. Adjusted earnings represent the Company's earnings adjusted for non-operating factors. Adjusted EBITDA represents EIPLP earnings before interest, income taxes and depreciation and amortization (EBITDA), adjusted for unusual, non-recurring or non-operating factors on both a consolidated and segmented basis. These factors, referred to as adjusting items, are reconciled and discussed in the financial results sections of this news release and in these appendices.

Fund Group DCF consists of adjusted EBITDA further adjusted for non-cash items, representing cash flow from the Fund Group's underlying businesses, less deductions for maintenance capital expenditures, interest expense, and applicable taxes and further adjusted for unusual, non-recurring or non-operating factors not indicative of the underlying or sustainable cash flows of the business. DCF is important to unitholders as the Fund Group's objective is to provide a predictable flow of distributions to unitholders. DCF represents the Fund Group's cash available to fund distributions to unitholders, as well as for debt repayments and reserves.

Management believes the presentation of adjusted earnings, adjusted EBITDA and DCF are useful to investors and unitholders as they provide increased transparency and insight into the performance of the Company and the Fund Group. Management uses adjusted earnings, adjusted EBITDA and DCF to set targets, including the distribution payout target, and to assess the performance of the Company and the Fund Group. Adjusted earnings, adjusted EBITDA and DCF are not measures that have standardized meanings prescribed by generally accepted accounting principles in the United States of America (U.S. GAAP) and are not U.S. GAAP measures. Therefore, these measures may not be comparable with similar measures presented by other issuers.

The table below provides a reconciliation of the GAAP and non-GAAP measures.

APPENDIX A ENBRIDGE INCOME PARTNERS LP
EBITDA to Adjusted EBITDA
		Three months ended
		March 31,
		2018		2017
(unaudited; millions of Canadian dollars)
Liquids Pipelines		335		650
Gas Pipelines		63		59
Green Power		61		68
Eliminations and Other		25		1
Earnings before interest, income taxes and depreciation and amortization		484		778
Adjusting items:
	Changes in unrealized derivative fair value (gain)/loss^1	293		(165)
	Asset write-down loss	98		—
	Equity investment asset impairment	22		—
	Unrealized loss on translation of United States dollar intercompany loan receivable	(13)		6
	Lease termination costs	23		—
	Leak remediation costs	—		7
	Leak insurance recoveries	—		(3)
Adjusted earnings before interest, income taxes and
	depreciation and amortization	907		623

1	Changes in unrealized derivative fair value gains and losses are presented net of amounts realized on the settlement of derivative contracts during the applicable period.

APPENDIX B
ENBRIDGE INCOME FUND HOLDINGS INC.
Loss to Adjusted Earnings
		Three months ended
		March 31,
		2018		2017
(millions of Canadian dollars)
Loss^1		(184)		(110)
Adjusting items:
	Unrealized fair value change in investment, net of tax^2	295		177
Adjusted earnings		111		67

1	Comparative information for the three months ended March 31, 2017 has been retrospectively adjusted to reflect the adoption of IFRS 9.
2	Represents unrealized fair value changes arising from the fair value of our investment in the Fund, which is referenced to our common share price. Effective January 1, 2018, ENF adopted IFRS 9 Financial Instruments on a retrospective basis, resulting in the unrealized fair value change being recognized in earnings, rather than in other comprehensive income.

APPENDIX C
FUND GROUP
Cash Provided by Operating Activities to DCF
		Three months ended
		March 31,
		2018		2017
(unaudited; millions of Canadian dollars)
EIPLP cash provided by operating activities		798		562
Adjusted for changes in operating assets and liabilities		(77)		(65)
		721		497
Maintenance capital expenditures^1		(18)		(19)
Significant adjusting items:
	Special interest rights distributions - IDR^2	(32)		(12)
	Other receipts of cash not recognized in revenue^3	29		8
	Lease termination costs	23		—
	Leak remediation costs	—		7
	Leak insurance recoveries	—		(3)
	Other adjusting items	19		(3)
EIPLP DCF		742		475
	Fund and ECT interest expense, net	(17)		(21)
	ECT incentive fee	(32)		(31)
	Fund and ECT operating and administrative expense	(2)		(1)
Fund Group DCF		691		422

1	Maintenance capital expenditures are expenditures that are required for the ongoing support and maintenance of the existing pipeline system or that are necessary to maintain the service capability of the existing assets (including the replacement of components that are worn, obsolete or completing their useful lives). For the purpose of DCF, maintenance capital excludes expenditures that extend asset useful lives, increase capacities from existing levels or reduce costs to enhance revenues or provide enhancements to the service capability of the existing assets. Maintenance capital expenditures occur primarily within EIPLP's Liquids Pipelines segment.
2	IDR refers to the cash component of the SIR distributions. IDR distributions are declared monthly and paid in cash to holders of the SIR in the following month.
3	Consists of cash received net of revenue recognized for contracts under make-up rights and similar deferred revenue arrangements.

SOURCE Enbridge Income Fund Holdings Inc.