Enhanced Investments - Financial Portal

Published: 2021-11-18

MANAGEMENT'S REPORT
The audited consolidated financial statements of Pembina Pipeline Corporation (the "Company" or "Pembina") are the responsibility of Pembina's management. The financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, using management's best estimates and judgments, where appropriate.
Management is responsible for the reliability and integrity of the financial statements, the notes to the financial statements and other financial information contained in this report. In the preparation of these financial statements, estimates are sometimes necessary because a precise determination of certain assets and liabilities is dependent on future events. Management believes such estimates have been based on careful judgments and have been properly reflected in the accompanying financial statements.
Management's Assessment of Internal Control over Financial Reporting
Pembina maintains internal control over financial reporting ("ICFR") which is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS, and include policies and procedures that: (a) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of Pembina; (b) are designed to provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS, and that receipts and expenditures of Pembina are being made only in accordance with authorizations of management and directors of Pembina; and (c) are designed to provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of Pembina's assets that could have a material effect on Pembina's financial statements. Management is responsible for establishing and maintaining disclosure controls and procedures ("DC&P") and ICFR, as defined in National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings and Rule 13a – 15(e) and 15(d) – 15(e) under the United States Securities Exchange Act of 1934.
Under the supervision and with the participation of the Chief Executive Officer ("CEO") and the Chief Financial Officer ("CFO"), management has designed internal control over financial reporting based on the framework set forth in Internal Control – Integrated Framework issued in 2013 by the Committee of Sponsoring Organizations of the Treadway Commission. A material weakness is a deficiency, or a combination of deficiencies, in ICFR, such that there is a reasonable possibility that a material misstatement of the annual financial statements, or interim financial statements, wil not be prevented or detected on a timely basis.
Due to its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of Pembina's financial statements would be prevented or detected. Further, the evaluation of the effectiveness of internal control over financial reporting was made as at a specific date, and continued effectiveness in future periods is subject to the risks that controls may become inadequate.
The Board of Directors of Pembina (the "Board") is responsible for ensuring management fulfil s its responsibilities for financial reporting and internal control. The Board is assisted in exercising its responsibilities through the Audit Committee, which consists of five non-management directors. The Audit Committee meets periodical y with management and the internal and external auditors to satisfy itself that management's responsibilities are properly discharged, to review the financial statements and to recommend approval of the financial statements to the Board.
KPMG LLP, the independent auditors, have audited Pembina's consolidated financial statements and the effectiveness of internal control over financial reporting as of December 31, 2020 in accordance with the standards of the Public Company Accounting Oversight Board (United States). The independent auditors have ful and unrestricted access to the Audit Committee to discuss their audit and their related findings.
	Pembina Pipeline Corporation 2020 Annual Report 67

As at December 31, 2020, the Company has identified a "material weakness" related to controls over contract assessment in its Marketing business. Specifical y, the Company did not have controls to identify al contracts where an accounting assessment was required and as a result lacked analysis of al relevant contract terms required to make the assessment in the Marketing business. Because of the deficiency, the Company presented revenue and cost of goods sold for certain crude contracts in the Marketing and New Ventures Division on a gross basis that should have been recorded on a net basis. Management has restated revenue and cost of goods sold for the years ended December 31, 2020 and December 31, 2019 with no impact on earnings, cash flows or financial position. Refer to Note 3 in these consolidated financial statements for details of the restatement.
Remediation of Material Weakness
The control deficiency described above was detected by management during the third quarter of 2021 prior to the filing of Pembina's interim financial statements for the three and nine months ended September 30, 2021. The Company has prioritized the remediation of the material weakness described above and is working under the oversight of the Audit Committee to resolve the issue.
Specific actions to remediate this material weakness include the fol owing:
i.	Revision of the process of identifying contracts to consult with internal experts to assist in the evaluation of technical accounting matters; and
i . Enhance contract analysis, including revision of the process used to assess accounting implications for complex
	contracts.
As the conclusion regarding the material weakness in ICFR was reached in late October 2021, Pembina has not had adequate time to implement and evaluate the controls and procedures described above, as limited complex and material transactions requiring an application of the foregoing remediation actions have occurred in this period. Pembina has, therefore, not had adequate time or opportunity to apply its proposed remediation actions to evidence the remediation of the material weakness described above and the material weakness wil continue to be addressed throughout the remainder of 2021.
Changes in Internal Control over Financial Reporting
Pembina previously excluded business processes acquired through the Kinder Acquisition on December 16, 2019, from the Company's evaluation of internal control over financial reporting as permitted by applicable securities laws in Canada and the United States. Effective May 1, 2020, Pembina completed the integration of the Kinder Acquisition into its existing enterprise resource planning ("ERP") system. As a result of the ERP system integration, certain processes supporting Pembina's ICFR for the Kinder Acquisition changed in the second quarter of 2020. The Company completed the evaluation of ICFR of the Kinder Acquisition in the fourth quarter of 2020 and the overal controls and procedures we fol ow in establishing ICFR were not significantly impacted.
Other than the Kinder Acquisition and the material weakness described above, there has been no change in Pembina's ICFR that occurred during the year ended December 31, 2020 that has material y affected, or are reasonably likely to material y affect, Pembina's internal control over financial reporting.
"M. H. Dilger"		"J. Scott Burrows"
M. H. Dilger		J. Scott Burrows
President and Chief Executive Officer		Senior Vice President and Chief Financial Officer
November 18, 2021
68 Pembina Pipeline Corporation 2020 Annual Report

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of Pembina Pipeline Corporation
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statements of financial position of Pembina Pipeline Corporation and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of earnings (loss) and comprehensive income (loss), changes in equity, and cash flows for each of the years then ended, and the related notes (col ectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in al material respects, the financial position of the Company as of December 31, 2020 and 2019, and its financial performance and its cash flows for the years then ended, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated November 18, 2021 expressed an adverse opinion on the effectiveness of the Company's internal control over financial reporting
	.
Change in Accounting Principle
As discussed in Note 3 to the consolidated financial statements, the Company has elected to change its method of accounting for decommissioning obligations as at December 31, 2020 and included the presentation of the statement of financial position as of January 1, 2019.
Correction of a Misstatement
As discussed in Note 3 to the consolidated financial statements, the 2020 and 2019 financial statements have been restated to correct a misstatement.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as wel as evaluating the overal presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
		Pembina Pipeline Corporation 2020 Annual Report 69

Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especial y chal enging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Goodwil impairment
As discussed in Note 11 to the consolidated financial statements, the goodwil balance as of December 31, 2020 was $4,694 mil ion. For the purpose of the impairment test, goodwil has been al ocated to the Company's operating segments which represents the lowest level within the Company at which the goodwil is monitored for management purposes. As discussed in Note 5 to the consolidated financial statements, the Company performs goodwil impairment testing on an annual basis and whenever events or changes in circumstances indicate that the carrying value of an operating segment exceeds its recoverable amount. The recoverable amounts were determined using a fair value less costs of disposal approach which is based on a discounted cash flow model.
We identified the assessment of the goodwil impairment as a critical audit matter. A high degree of subjective auditor judgment was required to evaluate the significant revenue assumptions such as contracted volumes and rates, projected commodity volumes and pricing, and growth rates ("forecasted cash flow assumptions") and discount rates used in the discounted cash flow model. Changes to those assumptions could have had a significant impact on the Company's assessment of the recoverable amount of the operating segments.
The fol owing are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the critical audit matter, including controls related to forecasted cash flow assumptions and the discount rates used in the determination of the recoverable amounts.We evaluated the Company's projected commodity pricing assumptions by comparing to publicly available forward price curves. We compared the Company's historical forecasted results, including contracted volumes and rates, and projected commodity volumes, to actual results to assess the Company's ability to accurately forecast and to assess the long-term growth rates. We evaluated the Company's forecasted cash flow assumptions by comparing them to actual results. In addition, we involved a valuation professional with specialized skil s and knowledge, who assisted in:
•	testing the recoverable amount for each operating segment using the operating segment's forecasted cash flow assumptions and discount rate, and comparing the result to the Company's calculated recoverable amounts
•	evaluating the discount rates used in the valuation for each operating segment by comparing the inputs against publicly available market data for comparable entities and assessing the resulting discount rates
•	evaluating the historical and forecasted cash flow multiples implied in the valuation for each operating segment by comparing them against publicly available historical and forecasted cash flow multiples for comparable entities.
Chartered Professional Accountants
We have served as the Company's auditor since 1997.
Calgary, Canada
November 18, 2021
70 Pembina Pipeline Corporation 2020 Annual Report

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of Pembina Pipeline Corporation
Opinion on Internal Control Over Financial Reporting
We have audited Pembina Pipeline Corporation’s (and subsidiaries') (the "Company") internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, because of the effect of the material weakness, described below, on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statements of financial position of the Company as of December 31, 2020 and 2019, the related consolidated statements of earnings (loss) and comprehensive income (loss), changes in equity, and cash flows for the years then ended, and the related notes (col ectively, the consolidated financial statements), and our report dated November 18, 2021 expressed an unqualified opinion on those consolidated financial statements.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements wil not be prevented or detected on a timely basis. A material weakness related to controls over contract assessment in the Marketing business has been identified and included in management's assessment. Specifical y, the Company did not have controls to identify al contracts where an accounting assessment was required and as a result lacked analysis of al relevant contract terms required to make the assessment in the Marketing business. The material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2020 consolidated financial statements, and this report does not affect our report on those consolidated financial statements.
Basis for Opinion
The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control over Financial Reporting included in Management's Discussion and Analysis. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in al material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
	Pembina Pipeline Corporation 2020 Annual Report 71

Definition and Limitations of Internal Control Over Financial Reporting

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with general y accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with general y accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Chartered Professional Accountants

Calgary, Canada

November 18, 2021

72 Pembina Pipeline Corporation 2020 Annual Report

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
	December 31,	January 1,
As at			December 31,	2019	2019
($ mil ions)					2020	(Restated Note 4)					(Restated Note 4)
Assets
Current assets
Cash and cash equivalents								81	129			157
Trade receivables and other (Note 8)								662	694			605
Inventory (Note 9)								221	126			198
Derivative financial instruments (Note 27)								25	40			54
								989	989	1,014
Non-current assets
Property, plant and equipment (Note 10)								18,549	18,362	14,408
Intangible assets and goodwil (Note 11)								6,340	6,444	4,409
Investments in equity accounted investees (Note 12)								4,377	5,974	6,383
Right-of-use assets (Note 16)								651	691			427
Finance lease receivable (Note 16)								138	145			—
Deferred tax assets (Note 14)								322	—			—
Advances to related parties and other assets (Note 30)								50	150			170
								30,427	31,766	25,797
Total assets								31,416	32,755	26,811
Liabilities and equity
Current liabilities
Trade payables and other (Note 15)								780	1,005			796
Loans and borrowings (Note 17)								600	74			472
Dividends payable								115	110			97
Lease liabilities								99	112			64
Contract liabilities (Note 20)								62	39			37
Taxes payable								56	103			67
Derivative financial instruments (Note 27)								69	6			6
								1,781	1,449	1,539
Non-current liabilities
Loans and borrowings (Note 17)								10,276	10,078	7,046
Lease liabilities								675	707			416
Decommissioning provision (Note 18)								348	337			158
Contract liabilities (Note 20)								230	192			131
Deferred tax liabilities (Note 14)								2,925	2,945	2,814
Other liabilities								166	179			198
								14,620	14,438	10,763
Total liabilities								16,401	15,887	12,302
Equity
Attributable to shareholders								14,955	16,808	14,449
Attributable to non-control ing interest								60	60			60
Total equity								15,015	16,868	14,509
Total liabilities and equity								31,416	32,755	26,811
See accompanying notes to the consolidated financial statements
Approved on behalf of the Board of Directors:
"Gordon J. Kerr"							"Randal J. Findlay"
Gordon J. Kerr							Randal J. Findlay
DirectorDirector
			Pembina Pipeline Corporation 2020 Annual Report 73

CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) AND COMPREHENSIVE INCOME (LOSS)
For the years ended December 31	2020	2019
($ mil ions, except per share amounts)			(Restated Note 3)	(Restated Note 3)
Revenue (Note 20)				5,953	6,372
Cost of sales (Note 22)				3,883	4,325
Loss (gain) on commodity-related derivative financial instruments (Note 27)				30	(20)
Share of profit from equity accounted investees - operations (Note 12)				282	375
Impairment in share of profit from equity accounted investees (Note 12)				(314)	—
Gross profit				2,008	2,442
General and administrative				246	296
Other (income) expense				(18)	15
Impairment expense (Note 13)				1,776	300
Results from operating activities				4	1,831
Net finance costs (Note 21)				420	289
Earnings (loss) before income tax				(416)	1,542
Current tax expense (Note 14)				240	210
Deferred tax recovery (Note 14)				(340)	(175)
Income tax (recovery) expense (Note 14)				(100)	35
Earnings (loss)				(316)	1,507
Other comprehensive income (loss), net of tax (Note 26 & 27)
Exchange loss on translation of foreign operations				(117)	(213)
Impact of hedging activities				31	—
Re-measurement of defined benefit liability (Note 24)				(10)	(6)
Total comprehensive income (loss) attributable to shareholders				(412)	1,288
Earnings (loss) attributable to common shareholders, net of preferred share dividends (Note 23)				(476)	1,376
Earnings (loss) per common share – basic (dol ars) (Note 23)				(0.86)	2.69
Earnings (loss) per common share – diluted (dol ars) (Note 23)				(0.86)	2.68
Weighted average number of common shares (mil ions)
Basic (Note 23)				550	512
Diluted (Note 23)				550	514
See accompanying notes to the consolidated financial statements
74 Pembina Pipeline Corporation 2020 Annual Report

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
	Attributable to Shareholders of the Company
		Total
		Equity	Common	Preferred				Deficit		Total	Non-
		(Restated	Share			Share	(Restated		(Restated		Control ing
		Note 4)	($ mil ions)	Capital			Capital	Note 4)	AOCI(1)	Note 4)	Interest
December 31, 2019				15,539			2,956	(1,785)	98	16,808	60	16,868
Total comprehensive (loss) income
Loss				—			—	(316)	—	(316)	—	(316)
Other comprehensive loss (Note 26)				—			—	—	(96)	(96)	—	(96)
Total comprehensive loss				—			—	(316)	(96)	(412)	—	(412)
Transactions with shareholders of the Company
Part VI.1 tax on preferred shares (Note 19)				—			(10)	—	—	(10)	—	(10)
Share-based payment transactions (Note 19)				105			—	—	—	105	—	105
Dividends declared – common (Note 19)				—			—	(1,385)	—	(1,385)	—	(1,385)
Dividends declared – preferred (Note 19)				—			—	(151)	—	(151)	—	(151)
Total transactions with shareholders of the Company				105			(10)	(1,536)	—	(1,441)	—	(1,441)
December 31, 2020				15,644			2,946	(3,637)	2	14,955	60	15,015
Opening value January 1, 2019				13,662			2,423	(1,953)	317	14,449	60	14,509
Total comprehensive income
Earnings				—			—	1,507	—	1,507	—	1,507
Other comprehensive income
Exchange loss on translation of foreign operations				—			—	—	(213)	(213)	—	(213)
Remeasurements of defined benefit liability, net of
tax (Note 24)				—			—	—	(6)	(6)	—	(6)
Total comprehensive income				—			—	1,507	(219)	1,288	—	1,288
Transactions with shareholders of the Company
Common shares issued, net of issue costs (Note 19)				1,710			—	—	—	1,710	—	1,710
Preferred shares issued, net of issue costs (Note 19)				—			533	—	—	533	—	533
Share-based payment transactions (Note 19)				167			—	—	—	167	—	167
Dividends declared – common (Note 19)				—			—	(1,213)	—	(1,213)	—	(1,213)
Dividends declared – preferred (Note 19)				—			—	(126)	—	(126)	—	(126)
Total transactions with shareholders of the Company				1,877			533	(1,339)	—	1,071	—	1,071
December 31, 2019				15,539			2,956	(1,785)	98	16,808	60	16,868
(1)	Accumulated Other Comprehensive Income ("AOCI").
See accompanying notes to the consolidated financial statements
					Pembina Pipeline Corporation 2020 Annual Report 75

CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31	2019
($ mil ions)		2020	(Restated Note 3)
Cash provided by (used in)Operating activitiesEarnings (loss)
				(316)	1,507
Adjustments for:
Share of profit from equity accounted investees - operations (Note 12)				(282)	(375)
Impairment in share of profit from equity accounted investees (Note 12)				314	—
Distributions from equity accounted investees (Note 12)				459	575
Depreciation and amortization				700	507
Impairment expense (Note 13)				1,776	300
Unrealized loss on commodity-related derivative financial instruments (Note 27)				84	13
Net finance costs (Note 21)				420	289
Net interest paid (Note 21)				(383)	(269)
Income tax (recovery) expense (Note 14)				(100)	35
Taxes paid				(295)	(141)
Share-based compensation expense (Note 25)				28	66
Share-based compensation payment				(45)	(50)
Net change in contract liabilities				(1)	(30)
Other				(14)	(1)
Change in non-cash operating working capital				(93)	106
Cash flow from operating activities				2,252	2,532
Financing activities
Bank borrowings and issuance of debt (Note 17)				1,581	2,153
Repayment of loans and borrowings				(2,421)	(1,866)
Repayment of lease liability				(94)	(68)
Issuance of medium-term notes (Note 17)				1,578	2,318
Issue costs and financing fees				(11)	(14)
Exercise of stock options				88	151
Dividends paid				(1,530)	(1,323)
Cash flow (used in) provided by financing activities				(809)	1,351
Investing activities
Capital expenditures				(1,029)	(1,645)
Contributions to equity accounted investees (Note 12)				(202)	(206)
Acquisitions (Note 7)				—	(2,009)
Receipt of finance lease payments				9	—
Interest paid during construction (Note 21)				(46)	(42)
Advances to related parties				(32)	(63)
Changes in non-cash investing working capital and other				(183)	55
Cash flow used in investing activities				(1,483)	(3,910)
Change in cash and cash equivalents				(40)	(27)
Effect of movement in exchange rates on cash held				(8)	(1)
Cash and cash equivalents, beginning of period				129	157
Cash and cash equivalents, end of period				81	129
See accompanying notes to the consolidated financial statements
76 Pembina Pipeline Corporation 2020 Annual Report

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. REPORTING ENTITY
Pembina Pipeline Corporation ("Pembina" or the "Company") is a Calgary-based, leading transportation and midstream service provider serving North America's energy industry. The consolidated financial statements include the accounts of Pembina, its subsidiary companies, partnerships and any investments in associates and joint arrangements as at and for the year ended December 31, 2020.
Pembina owns an integrated system of pipelines that transport various hydrocarbon liquids and natural gas products produced primarily in western Canada. Pembina also owns gas gathering and processing facilities and an oil and natural gas liquids infrastructure, storage and logistics business; and is growing an export terminals business. Pembina's integrated assets and commercial operations along the majority of the hydrocarbon value chain al ow it to offer a ful spectrum of midstream and marketing services to the energy sector.
2. BASIS OF PREPARATION
a. Basis of Measurement and Statement of Compliance
The consolidated financial statements have been prepared on a historical cost basis with some exceptions, as detailed in the accounting policies set out below in accordance with International Financial Reporting Standards ("IFRS"), as issued by the International Accounting Standards Board ("IASB"). Except for the changes described in Note 3, these accounting policies have been applied consistently for al periods presented in these consolidated financial statements.
Certain insignificant comparative amounts have been reclassified to conform to the presentation adopted in the current year.
These consolidated financial statements were authorized for issue by Pembina's Board of Directors on November 18, 2021.
b. Functional and Presentation Currency
The consolidated financial statements are presented in Canadian dol ars. Al financial information presented in Canadian dol ars has been disclosed in mil ions, except where noted. The assets and liabilities of subsidiaries, and investments in equity accounted investees, whose functional currencies are other than Canadian dol ars are translated into Canadian dol ars at the foreign exchange rate at the balance sheet date, while revenues and expenses of such subsidiaries are translated using average monthly foreign exchange rates, which approximate the foreign exchange rates on the dates of the transactions. Foreign exchange differences arising on translation of subsidiaries and investments in equity accounted investees with a functional currency other than the Canadian dol ar are included in other comprehensive income.
c. Use of Estimates and Judgments
The preparation of the Consolidated Financial Statements in conformity with IFRS requires management to make judgments, estimates and assumptions that are based on the facts and circumstances and estimates at the date of the Consolidated Financial Statements and affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Judgments, estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
	Pembina Pipeline Corporation 2020 Annual Report 77

Ongoing Impact of the COVID-19 Pandemic

Fol owing the World Health Organization declaring the COVID-19 outbreak to be a pandemic, many governments have imposed restrictions on individuals and businesses, resulting in a significant slowdown of the global economy. While these restrictions have been relaxed in certain jurisdictions, a resurgence of COVID-19 cases (including cases resulting from variants of the COVID-19 virus) in certain geographic areas and the risk that this could occur in other areas has caused governments in certain jurisdictions to sustain and, in some cases, re-impose restrictions. In addition, while vaccines are beginning to be distributed, there is ongoing uncertainty as to the timing, level of adoption, duration of efficacy and overal effectiveness of the vaccine, including against variants of the COVID-19 virus. As a result, there remains significant uncertainty as to the extent and duration of the global economic slowdown. This uncertainty has created volatility in asset and commodity prices, currency exchange rates and a marked decline in long-term interest rates. In addition, the resulting decrease in demand for crude oil has resulted in a decline in global crude oil prices. Management applied judgment and wil continue to assess the situation in determining the impact of the significant uncertainties created by these events and conditions on the carrying amounts of assets and liabilities in the Consolidated Financial Statements.

The fol owing judgment and estimation uncertainties are those management considers material to the Consolidated Financial Statements:

Judgments

(i) Business Combinations

Business combinations are accounted for using the acquisition method of accounting. The determination of fair value often requires management to make judgments about future possible events. The assumptions with respect to lease identification, classification and measurement, the fair value of property plant and equipment, intangible assets, decommissioning provisions and contract liabilities acquired, as wel as the determination of deferred taxes, general y require the most judgment.

(i ) Depreciation and Amortization

Depreciation and amortization of property, plant and equipment and intangible assets are based on management's judgment of the most appropriate method to reflect the pattern of an asset's future economic benefit expected to be consumed by Pembina. Among other factors, these judgments are based on industry standards and historical experience.

(i i) Impairment

Assessment of impairment of non-financial assets is based on management's judgment of whether or not events or changes in circumstances indicate that the carrying value of an asset, investment, cash generating unit ("CGU") or group of CGUs exceeds its recoverable amount. The determination of a CGU is based on management's judgment and is an assessment of the smal est group of assets that generate cash inflows independently of other assets. In addition, management applies judgment to assign goodwil acquired as part of a business combination to the CGU or group of CGUs that is expected to benefit from the synergies of the business combination for purposes of impairment testing. When an impairment test is performed, the carrying value of a CGU or group of CGUs is compared to its recoverable amount, defined as the greater of fair value less costs of disposal and value in use. As such, the asset composition of a CGU or group of CGUs directly impacts both the carrying value and recoverability of the assets included therein.

(iv) Assessment of Joint Control Over Joint Arrangements

The determination of joint control requires judgment about the influence Pembina has over the financial and operating decisions of an arrangement and the extent of the benefits it obtains based on the facts and circumstances of the arrangement during the reporting period. Joint control exists when decisions about the relevant activities require the unanimous consent of the parties that control the arrangement col ectively. Ownership percentage alone may not be a determinant of joint control.

78 Pembina Pipeline Corporation 2020 Annual Report

(v) Pattern of Revenue Recognition
The pattern of revenue recognition is impacted by management's judgments as to the nature of Pembina's performance obligations, the amount of consideration al ocated to performance obligations that are not sold on a stand-alone basis, the valuation of material rights and the timing of when those performance obligations have been satisfied.
(vi) Leases
Management applies judgment to determine whether a contract is, or contains, a lease from both a lessee and lessor perspective. This assessment is based on whether the contract conveys a right to control the use of an identified asset for a period of time in exchange for consideration. Key judgments include whether a contract identifies an asset (or portion of an asset), whether the lessee obtains substantial y al the economic benefits of the asset over the contract term and whether the lessee has the right to direct the asset's use. Judgment is also applied in determining the rate used to discount the lease payments.
Estimates
(i) Business Combinations
Estimates of future cash flows, forecast prices, interest rates, discount rates, cost, market values and useful lives are made in determining the fair value of assets acquired and liabilities assumed. Changes in any of the assumptions or estimates used in determining the fair value of acquired assets and liabilities could impact the amounts assigned to assets, liabilities, intangible assets, goodwil and deferred taxes in the purchase price equation. Future earnings can be affected as a result of changes in future depreciation and amortization, asset or goodwil impairment.
(i ) Provisions and Contingencies
Management uses judgment in determining the likelihood of realization of contingent assets and liabilities to determine the outcome of contingencies. Provisions recognized are based on management's best estimate of the timing, scope and amount of expected future cash outflows to settle the obligation.
Based on the long-term nature of the decommissioning provision, the most significant uncertainties in estimating the provision are the determination of whether a present obligation exists, the discount and inflation rates used, the costs that wil be incurred and the timing of when these costs wil occur.
(i i) Deferred Taxes
The calculation of the deferred tax asset or liability is based on assumptions about the timing of many taxable events and the enacted or substantively enacted rates anticipated to be applicable to income in the years in which temporary differences are expected to be realized or reversed. Deferred income tax assets are recognized to the extent that it is probable that the deductible temporary differences wil be recoverable in future periods. The assessment of future recoverability involves significant estimates to be made by management.
(iv) Depreciation and Amortization
Estimated useful lives of property, plant and equipment and intangible assets are based on management's assumptions and estimates of the physical useful lives of the assets, the economic lives, which may be associated with the reserve lives and commodity type of the production area, in addition to the estimated residual value.
(v) Impairment of Non-Financial Assets
In determining the recoverable amount of a CGU, a group of CGUs or an individual asset, management uses its best estimates of future cash flows, and assesses discount rates to reflect management's best estimate of a rate that reflects a current market assessment of the time value of money and the specific risks associated with the underlying assets and cash flows.
	Pembina Pipeline Corporation 2020 Annual Report 79

(vi) Impairment of Financial Assets

The measurement of financial assets carried at amortized cost includes management's estimates regarding the expected credit losses that wil be realized on these financial assets.

(vi ) Revenue from Contracts with Customers

In estimating the contract value, management makes assessments as to whether variable consideration is constrained or not reasonably estimable, such that an amount or portion of an amount cannot be included in the estimate of the contract value. Management's estimates of the likelihood of a customer's ability to use outstanding make-up rights may impact the timing of revenue recognition. In addition, in determining the amount of consideration to be al ocated to performance obligations that are not sold on a stand-alone basis, management estimates the stand-alone sel ing price of each performance obligation under the contract, taking into consideration the location and volume of goods or services being provided, the market environment, and customer specific considerations.

(vi i) Fair Value of Financial Instruments

For Level 2 valued financial instruments, management makes assumptions and estimates value based on observable inputs such as quoted forward prices, time value and volatility factors. For Level 3 valued financial instruments, management uses estimates of financial forecasts, expected cash flows and risk adjusted discount rates to measure fair value.

(ix) Employee Benefit Obligations

An actuarial valuation is prepared to measure Pembina's net employee benefit obligations using management's best estimates with respect to longevity, discount and inflation rates, compensation increases, market returns on plan assets, retirement and termination rates.

(x) Leases

In measuring its lease liabilities, management makes assessments of the stand-alone sel ing prices of each lease and non-lease component for the purposes of al ocating consideration to each component. Management applies its best estimate with respect to the likelihood of renewal, extension and termination option exercise in determining the lease term.

3. CHANGES IN ACCOUNTING POLICIES & RESTATEMENT

Voluntary change in accounting policy

Pembina re-assessed its policy for the measurement of its decommissioning provision. Previously, Pembina's decommissioning provision was measured at the present value of the expected costs to settle the obligations using a risk-free interest rate based on the Government of Canada's benchmark long-term bond yield. Effective December 31, 2020, Pembina elected to change its policy for the measurement of its decommissioning obligations to utilize a credit-adjusted risk-free interest rate. As a result of this change in policy, Pembina's decommissioning provision is now measured using a risk-free interest rate based on the Government of Canada's benchmark long-term bond yield, adjusted for Pembina's credit risk. The use of a credit-adjusted risk-free rate results in reliable and more relevant information for the readers of the Company's Consolidated Financial Statements as this methodology results in a more accurate representation of the value at which such liabilities could be transferred to a third party, provides a better indication of the risk associated with such obligations, and increases the comparability of Pembina's financial statements to those of its peers.

Management has applied the change in accounting policy retrospectively. The Consolidated Financial Statements have been restated to reflect adjustments made as a result of this change in accounting policy. The fol owing tables present the impacts of the change in accounting policy for decommissioning provisions to the statement of financial position, the statement of earnings (loss) and comprehensive income (loss), and the statement of cash flows, for each of the line items affected.

80 Pembina Pipeline Corporation 2020 Annual Report

i.	Impacts on the Consolidated Statements of Financial Position
As at	December 31, 2020	December 31, 2019	January 1, 2019
($ mil ions)				Policy change	Policy change	Policy change
AssetsProperty, plant and equipment
						(546)	(372)	(304)
Investments in equity accounted investees						24	20	15
Right-of-use assets						(51)	(39)	—
Advances to related parties and other assets						(7)	(7)	(7)
Total assets						(580)	(398)	(296)
LiabilitiesDecommissioning provision
						(734)	(527)	(411)
Deferred tax liabilities						37	31	32
Total liabilities						(697)	(496)	(379)
EquityDeficit
						117	98	83
Total equity attributable to Shareholders						117	98	83
A reconciliation for each of the line items affected in the restated Consolidated Statements of Financial Position is presented in Note 4.
i . Reconciliation of the Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss)
						2020	2019
For the years ended December 31($ mil ions, except per share amounts)
		Previously
				Policy change	reported Policy change					Restated
Cost of sales						(18)	5,187	(4)			5,183
Share of profit from equity accounted investees					4			370	5			375
Gross profit					22			2,433	9			2,442
Net finance costs					(3)			294	(5)			289
Earnings (loss) before income tax					25			1,528	14			1,542
Deferred tax (recovery) expense					6			(174)	(1)			(175)
Earnings (loss) attributable to shareholders					19			1,492	15			1,507
Total comprehensive income (loss) attributable to shareholders					19			1,273	15			1,288
Earnings (loss) attributable to common shareholders, net of preferred share
dividends					19			1,361	15			1,376
Earnings (loss) per common share - basic						0.04	2.66	0.03			2.69
Earnings (loss) per common share - diluted						0.04	2.65	0.03			2.68
i i. Reconciliation of the Consolidated Statement of Cash Flows
						2020	2019
For the years ended December 31($ mil ions)
		Previously
				Policy change	reported Policy change					Restated
Earnings (loss)					19			1,492	15			1,507
Share of profit from equity accounted investees					(4)			(370)	(5)			(375)
Adjustments for depreciation and amortization						(18)	511	(4)			507
Adjustments for net finance costs					(3)			294	(5)			289
Adjustments for income tax expense					6			36	(1)			35
Cash flow from operating activities					—			2,532	—			2,532
	Pembina Pipeline Corporation 2020 Annual Report 81

Restatement of revenue and cost of goods sold
During the third quarter of 2021, Pembina identified certain contract types that were recorded incorrectly within Marketing & New Ventures. Revenue and cost of goods sold associated with the contracts were recorded on a gross basis but should have been recorded on a net basis. As a result, Pembina restated its 2020 Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss) and the associated comparative periods by decreasing revenue and cost of goods sold, with no impact to earnings, cash flows or financial position.
i.	Reconciliation of the Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss)
	2020	2019
For the years ended December 31($ mil ions, except per share amounts)
			Previously	Restatement			Previously	Restatement
			reported	adjustment		Restated	reported	adjustment				Restated
Revenue				6,202	(249)		5,953	7,230	(858)				6,372
Cost of sales				4,132	(249)		3,883	5,183	(858)				4,325
Gross profit				2,008			—	2,008	2,442			—	2,442
Earnings (loss) per common share - basic			0.86			—	0.86					2.69	—	2.69
Earnings (loss) per common share - diluted			0.86			—	0.86					2.68	—	2.68
4. CONSOLIDATED RESTATEMENT OF COMPARATIVE PERIOD STATEMENT OF FINANCIAL POSITION
The fol owing table presents the combined impact on the Company's Consolidated Statement of Financial Position of the change in accounting policy for decommissioning provisions presented in Note 3, and the acquisition adjustments related to the finalization of the purchase price al ocation presented in Note 7.
									December 31, 2019	January 1, 2019
									Accounting	Accounting
									policy change	Acquisition	policy change
As at											Previously adjustments adjustments	Previously	adjustments
($ mil ions)											reported	(Note 3)	(Note 7)	Restated	reported	(Note 3)				Restated
AssetsTrade receivables and other
												692	—	2			694	605	—			605
Property, plant and equipment												18,775	(372)	(41)			18,362	14,712	(304)			14,408
Intangible assets and goodwil												6,429	—	15			6,444	4,409	—			4,409
Investments in equity accounted
investees												5,954	20	—			5,974	6,368	15			6,383
Right-of-use assets												822	(39)	(92)			691	427	—			427
Finance lease receivable												29	—	116			145	—	—				—
Advances to related parties and
other assets												157	(7)	—			150	177	(7)			170
Total assets											33,153	(398)	—			32,755	27,107	(296)			26,811
LiabilitiesTrade payables and other
												1,013	—	(8)			1,005	796	—			796
Decommissioning provision												864	(527)	—			337	569	(411)			158
Deferred tax liabilities												2,906	31	8			2,945	2,782	32			2,814
Total liabilities												16,383	(496)	—			15,887	12,681	(379)			12,302
EquityDeficit
												(1,883)	98	—			(1,785)	(2,036)	83			(1,953)
Total equity												16,770	98	—			16,868	14,426	83			14,509
82 Pembina Pipeline Corporation 2020 Annual Report

5. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies as set out below have been applied consistently to al periods presented in these Consolidated Financial Statements.
a. Basis of Consolidation
i) Business Combinations
Pembina measures goodwil as the fair value of the consideration transferred including the recognized amount of any non-control ing interest in the acquiree, less the fair value of the identifiable assets acquired and liabilities assumed, al measured as of the acquisition date. When the excess is negative, a bargain purchase gain is recognized immediately in earnings.
Non-control ing interests represent existing outside owned equity interests in an acquired subsidiary. The non-control ing interests were recognized at fair value on the acquisition date and are presented as a separate component of equity. The equity interests bear conditional non-discretionary distributions and wil continue to be held as a non-control ing interest in equity at their acquisition date fair value until derecognition, either when the conditions are met for reclassification from equity to financial liabilities, or when the equity interests are cancel ed or on a loss of control of the relevant subsidiary.
Transaction costs, other than those associated with the issue of debt or equity securities, that Pembina incurs in connection with a business combination are expensed as incurred.
i ) Subsidiaries
Subsidiaries are entities, including unincorporated entities such as partnerships, control ed by Pembina. The financial results of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries are aligned with the policies adopted by Pembina.
Changes in Pembina's ownership interest in subsidiaries that do not result in a loss of control are accounted for as equity transactions. No adjustments are made to goodwil and no gain or loss is recognized in earnings.
i i) Joint Arrangements
Joint arrangements represent activities where Pembina has joint control established by a contractual agreement. Joint control requires unanimous consent for the relevant financial and operational decisions. A joint arrangement is either a joint operation, whereby the parties have rights to the assets and obligations for the liabilities, or a joint venture, whereby the parties have rights to the net assets.
For a joint operation, the consolidated financial statements include Pembina's proportionate share of the assets, liabilities, revenues, expenses and cash flows of the arrangement with items of a similar nature on a line-by-line basis, from the date that joint control commences until the date that joint control ceases.
Joint ventures are accounted for using the equity method of accounting and are initial y recognized at cost, or fair value if acquired as part of a business combination. Joint ventures are adjusted thereafter for the post-acquisition change in the Company's share of the equity accounted investment's net assets. Pembina's consolidated financial statements include its share of the equity accounted investment's profit or loss and other comprehensive income, or income equal to preferred distributions for certain preferred share interests in equity accounted investees, until the date that joint control ceases. When Pembina's share of losses exceeds its interest in an equity accounted investee, the carrying amount of that interest, including any long-term investments, is reduced to nil, and the recognition of further losses is discontinued except to the extent that Pembina has an obligation or has made payments on behalf of the investee. Distributions from and contributions to investments in equity accounted investees are recognized when received or paid.
Acquisition of an incremental ownership in a joint arrangement where Pembina maintains joint control is recorded at cost or fair value if acquired as part of a business combination. Where Pembina has a partial disposal, including a deemed disposal, of a joint arrangement and maintains joint control, the resulting gains or losses are recorded in earnings at the time of disposal.
	Pembina Pipeline Corporation 2020 Annual Report 83

iv) Transactions Eliminated on Consolidation

Balances and transactions, and any revenue and expenses arising from transaction with or between subsidiaries are eliminated in preparing the consolidated financial statements. Gains arising from transactions with investments in equity accounted investees are eliminated against the investment to the extent of Pembina's interest in the investee. Losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment.

v) Foreign Currency

Transactions in foreign currencies are translated to Pembina's functional currency at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to Pembina's functional currency at the exchange rate at that date, with exchange differences recognized in earnings.

Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

The assets and liabilities of subsidiaries, and investments in equity accounted investees, whose functional currencies are other than Canadian dol ars are translated into Canadian dol ars at the foreign exchange rate at the balance sheet date, while revenues and expenses of such subsidiaries are translated using average monthly foreign exchange rates, which approximate the foreign exchange rates on the dates of the transactions. Foreign exchange differences arising on translation of subsidiaries and investments in equity accounted investees with a functional currency other than the Canadian dol ar are included in other comprehensive income.

b. Cash and Cash Equivalents

Cash and cash equivalents comprise cash balances, cal deposits and short-term investments with original maturities of ninety days or less, and are used by Pembina in the management of its short-term commitments.

c. Inventories

Inventories are measured at the lower of cost and net realizable value and consist primarily of crude oil, natural gas liquids ("NGL") and spare parts. The cost of inventories is determined using the weighted average costing method and includes direct purchase costs and when applicable, costs of production, extraction, fractionation, and transportation. Net realizable value is the estimated sel ing price in the ordinary course of business less the estimated sel ing costs. Al changes in the value of inventories are reflected in earnings.

d. Financial Instruments

Financial assets and liabilities are offset and the net amount presented in the consolidated statement of financial position when, and only when, Pembina has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.

i) Non-Derivative Financial Assets

Pembina initial y recognizes loans, receivables, advances to related parties and deposits on the date that they are originated. Al other financial assets are recognized on the trade date at which Pembina becomes a party to the contractual provisions of the instrument.

Pembina derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantial y al the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by Pembina is recognized as a separate asset or liability. On derecognition, the difference between the carrying amount of the financial asset and the consideration received is recognized in earnings.

84 Pembina Pipeline Corporation 2020 Annual Report

Pembina classifies non-derivative financial assets into the fol owing categories:
Financial Assets at Amortized Cost
A financial asset is classified in this category if the asset is held within a business model whose objective is to col ect contractual cash flows on specified dates that are solely payments of principal and interest. At initial recognition, financial assets at amortized cost are recognized at fair value plus directly attributable transaction costs. Subsequent to initial recognition, these financial assets are recorded at amortized cost using the effective interest method less any impairment loss al owances.
Financial Assets at Fair Value Through Other Comprehensive Income
A financial asset is classified in this category if the asset is held within a business model whose objective is met by both col ecting contractual cash flows and sel ing financial assets. Pembina did not have any financial assets classified as fair value through other comprehensive income during the years covered in these financial statements.
Financial Assets at Fair Value Through Earnings
A financial asset is classified in this category if it is not classified as a financial asset at amortized cost or a financial asset at fair value through other comprehensive income, or it is an equity instrument designated as such on initial recognition. At initial recognition, and subsequently, these financial assets are recognized at fair value.
i ) Non-Derivative Financial Liabilities
Pembina initial y recognizes financial liabilities on the trade date at which Pembina becomes a party to the contractual provisions of the instrument.
Non-derivative financial liabilities are recognized initial y at fair value plus any directly attributable transaction costs. Subsequent to initial recognition these financial liabilities are measured at amortized cost using the effective interest method.
Pembina derecognizes a financial liability when its contractual obligations are discharged, cancel ed or expire. On derecognition, the difference between the carrying value of the liability and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in earnings.
Pembina records a modification or exchange of an existing liability as a derecognition of the financial liability if the terms are substantial y different, resulting in a difference of more than 10 percent when comparing the present value of the remaining cash flows of the existing liability to the present value of the discounted cash flows under the new terms using the original effective interest rate.
If a modification to an existing liability causes a revision to the estimated payments of the liability but is not treated as a derecognition, Pembina adjusts the gross carrying amount of the liability to the present value of the estimated contractual cash flows using the instrument’s original effective interest rate, with the difference recorded in earnings.
Pembina's non-derivative financial liabilities are comprised of the fol owing: bank overdrafts, trade payables and accrued liabilities, taxes payable, dividends payable, loans and borrowings, lease liabilities and other liabilities.
Bank overdrafts that are repayable on demand and form an integral part of Pembina's cash management are included as a component of cash and cash equivalents for the purpose of the consolidated statements of cash flows.
i i) Common Share Capital
Common shares are classified as equity. Incremental costs directly attributable to the issue of common shares and share options are recognized as a deduction from equity, net of any tax effects.
	Pembina Pipeline Corporation 2020 Annual Report 85

iv) Preferred Share Capital

Preferred shares are classified as equity because they bear discretionary dividends and do not contain any obligations to deliver cash or other financial assets. Discretionary dividends are recognized as equity distributions on approval by Pembina's Board of Directors. Incremental costs directly attributable to the issue of preferred shares are recognized as a deduction from equity, net of any tax effects.

v) Derivative Financial Instruments and Hedge Accounting

Pembina holds derivative financial instruments to manage its interest rate, commodity, power costs and foreign exchange risk exposures. Derivatives are recognized initial y at fair value. Subsequent to initial recognition, derivatives are measured at fair value with changes recognized immediately in earnings, unless hedge accounting is applied.

Pembina applies hedge accounting to certain financial instruments that qualify for and are designated for hedge accounting treatment. At inception of a designated hedging relationship, formal documentation is prepared and includes the risk management objective and strategy for undertaking the hedge, identification of the hedged item and the hedging instrument, the nature of the risk being hedged and how Pembina wil assess the hedging instrument's effectiveness in offsetting the exposure to changes in the hedged item.

For derivatives that are designated and qualified cash flow hedges, the effective portion of changes in fair value is accumulated in other comprehensive income. The amount accumulated is reclassified to earnings in the same period or periods during which the hedged expected future cash flows occur. Any ineffective portion of changes in fair value of hedges are recorded in earnings.

For non-derivative financial liabilities designated as hedging instruments in a hedge of the net investment in foreign operations, the effective portion of foreign exchange gains and losses arising on translation of the financial liability is recognized in other comprehensive income. Any ineffective portion of the foreign exchange gains and losses arising from the translation of the financial liability is recognized immediately in earnings. The amount accumulated in other comprehensive income is reclassified to earnings on disposal of the foreign operation.

Hedge accounting is discontinued prospectively when the hedging relationship no longer qualifies for hedge accounting or the hedging instrument is sold or terminated.

e. Property, Plant and Equipment

i) Recognition and Measurement

Items of property, plant and equipment are measured initial y at cost, unless they are acquired as part of a business combination in which case they are initial y measured at fair value. Thereafter, property, plant and equipment are recorded net of accumulated depreciation and accumulated impairment losses.

Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition for their intended use, estimated decommissioning provisions and borrowing costs on qualifying assets.

Cost may also include any gain or loss realized on foreign currency transactions directly attributable to the purchase or construction of property, plant and equipment. Purchased software that is integral to the functionality of the related equipment is capitalized as part of that equipment.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate components of property, plant and equipment.

The gain or loss on disposal of an item of property, plant and equipment is determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and is recognized in earnings.

86 Pembina Pipeline Corporation 2020 Annual Report

i ) Subsequent Costs
The cost of replacing a part of an item of property, plant and equipment is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part wil flow to Pembina, and its cost can be measured reliably. The carrying amount of the replaced part is derecognized and recorded as depreciation expense. The cost of maintenance and repair expenses of the property, plant and equipment are recognized in earnings as incurred.
i i) Depreciation
Depreciation is based on the cost of an asset less its residual value. Significant components of individual assets are assessed and if a component has a useful life that is different from the remainder of the asset, that component is depreciated separately. Land and linefil are not depreciated.
Depreciation is recognized in earnings over an asset's useful life on a straight line or declining balance basis, which most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. An asset's useful life is determined as the lower of its physical life and economic life. Depreciation commences once an asset is available for use.
Depreciation methods, useful lives and residual values are reviewed annual y and adjusted if appropriate.
f. Intangible Assets
i) Goodwil
Goodwil that arises upon acquisitions is included in intangible assets and goodwil . See Note 5(a)(i) for the policy on measurement of goodwil at initial recognition.
Subsequent Measurement
Goodwil is measured at cost less accumulated impairment losses.
In respect of investments in equity accounted investees, goodwil is included in the carrying amount of the investment, and an impairment loss on such an investment is al ocated to the investment and not to any asset, including goodwil , that forms the carrying amount of the investment in equity accounted investee.
i ) Other Intangible Assets
Other intangible assets acquired individual y by Pembina are initial y recognized and measured at cost, unless they are acquired as part of a business combination in which case they are initial y measured at fair value. Thereafter, intangible assets with finite useful lives are recorded net of accumulated amortization and accumulated impairment losses.
i i) Subsequent Expenditures
Subsequent expenditures are capitalized only when they increase the future economic benefits embodied in the specific asset to which they relate. Al other expenditures are recognized in earnings as incurred.
iv) Amortization
Amortization is based on the cost of an asset less its residual value.
Amortization is recognized in earnings over the estimated useful lives of intangible assets, other than goodwil , from the date that they are available for use. Amortization is included in cost of sales and general and administrative expense.
Amortization methods, useful lives and residual values are reviewed annual y and adjusted if appropriate.
	Pembina Pipeline Corporation 2020 Annual Report 87

g. Leases

A specific asset is the subject of a lease if the contract conveys the right to control the use of that identified asset for a period of time in exchange for consideration. This determination is made at inception of a contract, and is reassessed when the terms and conditions of the contract are amended.

At inception or on reassessment of a contract that contains a lease component, Pembina al ocates contract consideration to the lease and non-lease components on the basis of their relative stand-alone prices. The consideration al ocated to the lease components is recognized in accordance with the policies for lessee and lessor leases, as described below. The consideration al ocated to non-lease components is recognized in accordance with its nature.

i) Lessee

Leased assets are recognized as right-of-use assets, with corresponding lease liabilities recognized on the statement of financial position at the lease commencement date.

Right-of-use assets are initial y recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset and restore the site of an underlying asset to the condition required by the terms of the lease, less any lease incentives received. Right-of-use assets recognized as a result of business combination are initial y measured in the same manner, plus an adjustment to reflect favourable or unfavourable lease terms compared to market terms. Right-of-use assets are subsequently measured at cost less any accumulated depreciation and accumulated impairment losses, adjusted for remeasurements of the lease liability. The right-of-use asset is depreciated over the lesser of the asset's useful life and the lease term on a straight-line basis.

The lease liability is initial y measured at the present value of the lease payments, discounted using the interest rate implicit in the lease if readily determinable, or at a rate Pembina would be required to pay to borrow over a similar term with a similar security to obtain an asset of a similar value to the right-of-use asset. Lease payments in an optional renewal period are included in the lease liability if Pembina is reasonably certain to exercise such option. The lease liability is subsequently increased by interest expense on the lease liability and decreased by lease payments made. Interest expense is recorded in earnings at an amount that represents a constant periodic rate of interest on the remaining balance of the lease liability.

The lease liability is remeasured when there is a change in future lease payments arising from a change in an index or rate, a change in the estimated guaranteed residual value to be paid, or a change in the assessment of whether a purchase option, extension option or termination option is reasonably certain to be exercised. A corresponding adjustment is made to the right of use asset when a liability is remeasured, or the adjustment is recorded in earnings if the right of use asset has been reduced to zero.

Pembina has elected to apply the recognition exemptions for short-term and low value leases. Pembina recognizes lease payments associated with these leases as an expense on a straight-line basis over the lease term.

88 Pembina Pipeline Corporation 2020 Annual Report

i ) Lessor
Lessor leases are classified as either operating leases or finance leases according to the substance of the contract. Leases transferring substantial y al of the risks incidental to asset ownership are classified as finance leases, while al other leases are classified as operating leases. Subleases are classified as either operating or finance leases in reference to the right-of-use asset arising from the head lease.
Assets under finance lease are recognized in finance lease receivables at the value of the net investment in the lease. The net investment in the lease is measured at the net present value of the future lease payments and the unguaranteed residual values of the underlying assets, discounted using the interest rate implicit in the lease. Finance income is recognized over the lease term in a pattern reflecting a consistent rate of return on the finance lease receivable. Finance lease income generated from physical assets in the normal course of operations is recorded as a component of revenue. Al other finance lease income is recorded in net finance costs.
Lease payments from operating leases are recognized in revenue on either a straight-line basis or a systematic basis representative of the pattern of economic benefit transfer.
h. Impairment
i) Non-Derivative Financial Assets
Impairment of financial assets carried at amortized cost is assessed using the lifetime expected credit loss of the financial asset at initial recognition and throughout the life of the financial asset, except where credit risk has not increased significantly since initial recognition, in which case impairment is assessed at the 12 month expected credit loss of the financial asset at the reporting date.
Impairment losses are recognized in earnings and reflected as a reduction in the related financial asset.
i ) Non-Financial Assets
The carrying amounts of Pembina's non-financial assets, other than: inventory, assets arising from employee benefits and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated.
For goodwil and intangible assets that have indefinite useful lives or that are not yet available for use, the recoverable amount is estimated annual y in connection with the annual goodwil impairment test.
For the purpose of impairment testing, assets that cannot be tested individual y are grouped together into CGUs, the smal est group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets. CGUs may incorporate integrated assets from multiple operating segments. For the purpose of goodwil impairment testing, CGUs are aggregated to the operating segment level, which reflects the lowest level at which goodwil is monitored for management purposes. Goodwil acquired in a business combination is al ocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the combination.
An impairment loss is recognized if the carrying amount of an asset, CGU or group of CGUs exceeds its estimated recoverable amount.
The recoverable amount of an asset, CGU or group of CGUs is the greater of its value in use and its fair value less costs of disposal. In assessing the recoverable amount, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset, CGU or group of CGUs.
	Pembina Pipeline Corporation 2020 Annual Report 89

Pembina's corporate assets do not generate separate cash inflows and are utilized by more than one CGU. Corporate assets are al ocated to CGUs on a reasonable and consistent basis and tested for impairment as part of the testing of the CGU to which the corporate asset is al ocated. If there is an indication that a corporate asset may be impaired, then the recoverable amount is determined for the CGU to which the corporate asset has been al ocated.

Impairment losses are recognized in earnings. Impairment losses recognized in respect of a CGU (group of CGUs) are al ocated first to reduce the carrying amount of any goodwil al ocated to the CGU (group of CGUs), and then to reduce the carrying amounts of the other assets in the CGU (group of CGUs) on a pro rata basis.

An impairment loss in respect of goodwil is not reversed. In respect of other assets, impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

Goodwil that forms part of the carrying amount of an investment in an equity accounted investee is not recognized separately, and therefore is not tested for impairment separately. Instead, the entire amount of the investment is tested for impairment as a single asset when there is objective evidence that the equity accounted investee may be impaired, unless the equity accounted investee does not generate cash flows that are largely independent of those from other assets of the entity in which case it is combined in a CGU with the related assets.

i. Employee Benefits

i) Defined Contribution Plans

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and wil have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognized as an employee benefit expense in earnings in the periods during which services are rendered by employees. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in future payments is available.

i ) Defined Benefit Pension Plans

A defined benefit pension plan is a post-employment benefit plan other than a defined contribution plan. Pembina's net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods, discounted to determine its present value, less the fair value of any plan assets. The discount rate used to determine the present value is established by referencing market yields on high-quality corporate bonds on the measurement date with cash flows that match the timing and amount of expected benefits.

The calculation is performed, at a minimum, every three years by a qualified actuary using the actuarial cost method. When the calculation results in a benefit to Pembina, the recognized asset is limited to the present value of economic benefits available in the form of future expenses payable from the plan, any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any minimum funding requirements that apply to any plan in Pembina. An economic benefit is available to Pembina if it is realizable during the life of the plan or on settlement of the plan liabilities.

When the benefits of a plan are improved, the portion of the increased benefit relating to past service by employees is recognized in earnings immediately.

Pembina recognizes al actuarial gains and losses arising from defined benefit plans in other comprehensive income and expenses related to defined benefit plans in earnings.

90 Pembina Pipeline Corporation 2020 Annual Report

Pembina recognizes gains or losses on the termination or settlement of a defined benefit plan when the termination or settlement occurs. The gain or loss on termination comprises any resulting change in the fair value of plan assets, change in the present value of defined benefit obligation and any related actuarial gains or losses and past service cost that had not previously been recognized.
i i) Short-Term Employee Benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.
A liability is recognized for the amount expected to be paid if Pembina has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably.
iv) Share-Based Payment Transactions
For equity settled share-based payment plans, the fair value of the share-based payment at grant date is recognized as an expense, with a corresponding increase in equity, over the period that the employees unconditional y become entitled to the awards. The amount recognized as an expense is adjusted to reflect the number of awards for which the related service and non-market vesting conditions are expected to be met, such that the amount ultimately recognized as an expense is based on the number of awards that meet the related service conditions at the vesting date.
For cash settled share-based payment plans, the fair value of the amount payable to employees is recognized as an expense with a corresponding increase in liabilities, over the period that the employees unconditional y become entitled to payment. The liability is remeasured at each reporting date and at settlement date. Any changes in the fair value of the liability are recognized as an expense in earnings.
j. Provisions
A provision is recognized if, as a result of a past event, Pembina has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic resources wil be required to settle the obligation. Provisions are measured at each reporting date based on the best estimate of the settlement amount. Where the effect of the time value of money is material, provisions are discounted at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount rate is recognized as accretion in finance costs.
i) Decommissioning Provision
Pembina's activities give rise to certain dismantling, decommissioning, environmental reclamation and remediation obligations at the end of an asset's economic life. A provision is made for the estimated cost of site restoration and capitalized as part of the cost of the underlying asset to which the provision relates.
Decommissioning obligations are measured at the present value, based on a credit-adjusted risk-free rate, of management's best estimate of what is reasonably expected to be incurred to settle the obligation at the end of an asset's economic life. Subsequent to the initial measurement, the obligation is adjusted at the end of each period to reflect the passage of time, changes in the credit-adjusted risk-free rate and changes in the estimated future cash flows underlying the obligation. The increase in the provision due to the passage of time is recognized as accretion in finance costs whereas increases or decreases due to changes in the estimated future cash flows or credit adjusted risk-free rate are added to or deducted from the cost of the related asset.
Decommissioning obligations assumed in a business combination are initial y recorded at fair value and remeasured using a credit-adjusted risk-free rate subsequent to acquisition. This remeasurement is added to or deducted from the cost of the related asset.
	Pembina Pipeline Corporation 2020 Annual Report 91

k. Revenue

i) Take-or-Pay

Pembina provides transportation, gas processing, fractionation, terminal ing, and storage services under take-or-pay contracts. In a take-or-pay contract, Pembina is entitled to a minimum fee for the firm service promised to a customer over the contract period, regardless of actual volumes transported, processed, terminal ed, or stored. This minimum fee can be represented as a set fee for an annual minimum volume, or an annual minimum revenue requirement. In addition, these contracts may include variable consideration for operating costs that are flow through to the customer.

Pembina satisfies its performance obligations and recognizes revenue for services under take-or-pay commitments when volumes are transported, processed, terminal ed, or stored. Make-up rights may arise when a customer does not fulfil their minimum volume commitment in a certain period, but is al owed to use the delivery of past or future volumes to meet this commitment. These make-up rights are subject to expiry and have varying conditions associated with them. When contract terms al ow a customer to exercise their make-up rights using firm volume commitments, revenue is not recognized until these make-up rights are used, expire, or management determines that it is remote that they wil be utilized. If Pembina bil s a customer for unused service in an earlier period and the customer utilizes available make-up rights, Pembina records a refund liability for the amount to be returned to the customer through an annual adjustment process. For contracts where no make-up rights exist, revenue is recognized to take-or-pay levels once Pembina has an enforceable right to payment for the take-or-pay volumes. Make-up rights general y expire within a contract year, and a majority of the related contract years fol ow the calendar year.

When customers are transporting, processing, terminal ing, or storing volumes below their take-or-pay commitments early in a contract year, and the customer has the right to exercise make up rights against future firm volume commitments, the timing of revenue recognition may not be even throughout the year. Where Pembina has a right to invoice to take-or-pay levels throughout the contract year, revenue is deferred and a contract liability is recorded for the volumes invoiced that were not utilized by the customer. Once the customer has used its make-up rights or it is determined to be remote that a customer wil use them, the previously deferred revenue is recognized. In these instances, there wil be a deferral of revenue in early quarters of the year, with subsequent recognition occurring in later quarters although there is no impact on cash flows.

For certain arrangements where the customer does not have make-up rights, where the make-up rights have been determined to be insignificant, and for cost of service agreements, revenue is recognized using the practical expedient to recognize revenue in an amount equal to Pembina's right to invoice. For these arrangements, the consideration Pembina is entitled to invoice in each period is representative of the value provided to the customer.

When up-front payments or non-cash consideration is received in exchange for future services to be performed, revenue is deferred as a contract liability and recognized over the period the performance obligation is expected to be satisfied. Non-cash consideration is measured at the fair value of the non-cash consideration received.

i ) Fee-for-Service

Fee-for-service revenue includes firm contracted revenue that is not subject to take-or-pay commitments and interruptible revenue. Pembina satisfies its performance obligations for transportation, gas processing, fractionation, terminal ing, and storage as volumes of product are transported, processed, or stored. Revenue is based on a contracted fee and consideration is variable with respect to volumes. Payment is due in the month fol owing Pembina's provision of service.

i i) Product Sales

Pembina satisfies its performance obligation on product sales at the time legal title to the product is transferred to the customer. Certain commodity buy/sel arrangements where control of the product has not transferred to Pembina are recognized on a net basis.

92 Pembina Pipeline Corporation 2020 Annual Report

For product sales, revenue is recognized using the practical expedient to recognize revenue in an amount equal to Pembina's right to invoice as the consideration Pembina is entitled to invoice in each period is representative of the value provided to the customer.
l. Government GrantsGovernment grants are recognized in earnings as other income on a systematic basis over the periods in which Pembina recognizes expenses for the related costs for which the grant is intended to compensate. Government grants are recognized only when there is reasonable assurance that Pembina wil comply with the conditions attached to the grant, and the grant wil be received. Government grants received during 2020 associated with the Canadian Emergency Wage Subsidy ("CEWS") were recognized in other income.
m. Finance Income and Finance Costs
Finance income comprises interest income on funds deposited and invested, finance lease receivables, advances to related parties, gains on non-commodity-related derivatives measured at fair value through earnings and foreign exchange gains. Interest income is recognized as it accrues in earnings, using the effective interest rate method.
Finance costs comprise interest expense on loans and borrowings and lease liabilities, accretion on provisions, losses on disposal of available for sale financial assets, losses on non-commodity-related derivatives and foreign exchange losses.
Borrowing costs that are not directly attributable to the acquisition or construction of a qualifying asset are recognized in earnings using the effective interest rate method.
n. Income Tax
Income tax expense comprises current and deferred tax. Current and deferred taxes are recognized in earnings except to the extent that they relate to a business combination, or items are recognized directly in equity or in other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the period, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for:
•	temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable earnings;
•	temporary differences relating to investments in subsidiaries and joint arrangements to the extent that it is probable that they wil not reverse in the foreseeable future; and
•	taxable temporary differences arising on the initial recognition of goodwil .
The measurement of deferred tax reflects the tax consequences that would fol ow the manner in which Pembina expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.
Deferred tax assets and liabilities are offset only if there is a legal y enforceable right to offset, and they relate to income taxes levied by the same taxation authority on either: i) the same taxable entity; or i ) different tax entities where the intent is to settle current tax liabilities and assets on a net basis, or where tax liabilities and assets wil be realized simultaneously in each future period.
	Pembina Pipeline Corporation 2020 Annual Report 93

A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits wil be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit wil be realized.
In determining the amount of current and deferred tax, Pembina takes into account income tax exposures and whether additional taxes and interest may be due. This assessment relies on estimates and assumptions and may involve a series of judgments about future events. New information may become available that causes Pembina to change its judgment regarding the adequacy of existing tax liabilities, such changes to tax liabilities wil impact tax expense in the period that such a determination is made.
o. Earnings Per Common Share
Pembina presents basic and diluted earnings per common share ("EPS") data for its common shares. Basic EPS is calculated by dividing the earnings attributable to common shareholders of Pembina by the weighted average number of common shares outstanding during the period. To calculate earnings attributable to common shareholders, earnings are adjusted for accumulated preferred dividends. Diluted EPS is determined by adjusting the earnings attributable to common shareholders and the weighted average number of common shares outstanding, for the effects of al potential y dilutive common shares, which comprise share options granted to employees. Only outstanding share options that wil have a dilutive effect are included in ful y diluted calculations.
The dilutive effect of share options is determined whereby outstanding share options at the end of the period are assumed to have been converted at the beginning of the period or at the time issued if issued during the year. Amounts charged to earnings relating to the outstanding share options are added back to earnings for the diluted calculations. The shares issued upon conversion are included in the denominator of per share basic calculations for the date of issue.
p. Segment Reporting
An operating segment is a component of Pembina that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company's other components. Al operating segments' operating results are reviewed regularly by Pembina's Chief Executive Officer ("CEO"), Chief Financial Officer ("CFO") and other Senior Vice Presidents ("SVPs") to make decisions about resources to be al ocated to the segment and assess its performance, and for which discrete financial information is available.
Segment results that are reported to the CEO, CFO and other SVPs include items directly attributable to a segment as wel as those that can be al ocated on a reasonable basis.
q. New Standards and Interpretations Not Yet Adopted
The International Accounting Standards Board have issued a standard and amendments to existing standards that are effective for periods on or after January 1, 2021, with early application permitted. Assessment of the impacts of these standards is ongoing, however, no material impacts on Pembina's Consolidated Financial Statements have been identified.
•	Interbank Offered Rates ("IBOR") Reform - Phase 2 (Amendments to IFRS 9, IFRS 7, and IFRS 16);
•	Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16);
•	Onerous Contracts - Cost of Fulfil ing a Contract (Amendments to IAS 37);
•	Updating a Reference to the Conceptual Framework (Amendments to IFRS 3);
•	Annual Improvements to IFRS Standards 2018-2020;
•	Classification of Liabilities as Current or Non-Current (Amendments to IAS 1); and
•	IFRS 17: Insurance Contracts.
94 Pembina Pipeline Corporation 2020 Annual Report

6. DETERMINATION OF FAIR VALUES
A number of Pembina's accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. When measuring fair value, Pembina uses observable market data to the extent possible. Fair value measurements are categorized into levels in a fair value hierarchy based on the degree to which inputs are observable and significant.
Level 1: Unadjusted quoted prices are available in active markets for identical assets or liabilities as the reporting date.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs). Level 3 valuations use unobservable inputs, such as a financial forecast developed using the entity's own data for expected cash flows and risk adjusted discount rates, to measure fair value to the extent that relevant observable inputs are not available. The unobservable inputs reflect the assumptions that market participants would use when pricing the asset or liability, including assumptions about risk. In developing unobservable inputs, the entity's own data is used and adjusted for reasonably available information that would be used by other market participants.
Ongoing Impact of the COVID-19 Pandemic
Measuring fair values using significant unobservable inputs has become more chal enging in the current environment, where events and conditions related to the COVID-19 pandemic are driving significant disruption of business operations and a significant increase in economic uncertainty. Management applied its judgment in determining the impact of the significant uncertainties created by these events and conditions on the assessed fair values of assets and liabilities in these consolidated financial statements.
Fair values have been determined for measurement and/or disclosure purposes based on the fol owing methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.
i) Property, Plant and Equipment
The fair value of property, plant and equipment recognized as a result of a business combination or transferred from a customer is based on market values when available, income approach and depreciated replacement cost when appropriate. Depreciated replacement cost reflects adjustments for physical deterioration as wel as functional and economic obsolescence.
When the recoverable value of an item of property, plant and equipment is estimated for impairment purposes, fair value is determined using comparable market transactions if available, or using a combination of internal and external estimates of the value that the assets could be sold for in an orderly manner.
i ) Equity Investments
When the recoverable value of the Company's equity investments is estimated for impairment purposes, fair value is determined using comparable market transactions if available, or using estimates of the discounted cash flows a market participant would expect to derive from the use and eventual sale of the investments.
i i) Intangible Assets
The fair value of intangible assets acquired in a business combination is determined by an active market value or using the multi-period excess earnings method, whereby the subject asset is valued after deducting a fair return on al other assets that are part of creating the related cash flows.
	Pembina Pipeline Corporation 2020 Annual Report 95

iv) Derivatives

Fair value of derivatives are estimated by reference to independent monthly forward prices, interest rate yield curves, and currency rates at the reporting dates.

Fair values reflect the credit risk of the instrument and include adjustments to take account of the credit risk of the company, entity and counterparty when appropriate.

v) Non-Derivative Financial Assets and Liabilities

The fair value of non-derivative financial assets and liabilities is determined on initial recognition, on a recurring basis, or for disclosure purposes. Fair values of financial assets at amortized cost are calculated based on the present value of estimated future principal and interest cash flows, discounted at the market rate of interest at the reporting date. Fair values of financial assets held at fair value are calculated using a probability-weighted income approach based on current market expectations for future cash flows. For other financial liabilities where market rates are not readily available, a risk adjusted market rate is used which incorporates the nature of the instrument as wel as the risk associated with the underlying cash payments.

vi) Decommissioning Provision

The fair value of decommissioning obligations assumed as part of a business combination are measured as the present value of management's best estimate of what is reasonably expected to be incurred to settle the obligation at the end of an asset's economic life. The obligation is discounted using a risk adjusted rate corresponding to the underlying assets to which the obligation relates.

vi ) Share-Based Compensation Transactions

The fair value of employee share options is measured using the Black-Scholes formula on grant date. Measurement inputs include share price on measurement date, exercise price of the instrument, expected volatility (based on weighted average historic volatility adjusted for changes expected due to publicly available information), weighted average expected life of the instruments (based on historical experience and general option holder behaviour), expected dividends, expected forfeitures and the risk-free interest rate (based on government bonds). Service and non-market performance conditions attached to the transactions are not taken into account in determining fair value.

The fair value of the long-term share unit award incentive plan and associated distribution units are measured based on the volume-weighted average price for 20 days ending at the reporting date of Pembina's shares.

96 Pembina Pipeline Corporation 2020 Annual Report

7. ACQUISITION
On December 16, 2019, Pembina acquired al of the issued and outstanding shares of Kinder Morgan Canada Limited ("Kinder Morgan Canada") by way of a plan of arrangement and the U.S. portion of the Cochin Pipeline system (col ectively, the "Kinder Acquisition") for total consideration of $4.3 bil ion.
During the year ended December 31, 2020, Pembina continued to obtain and verify information required to determine the fair value of certain assets and liabilities and the amount of deferred income taxes arising on their recognition. Pembina adjusted the purchase price al ocation to reflect updated assumptions for the identification and classification of leases and the verification of information supporting the valuation of certain assets, provisions and liabilities.
The purchase price al ocation is based on assessed fair values, including adjustments determined during the year ended December 31, 2020 is as fol ows:
As at December 16, 2019($ mil ions)
	Previously Reported	Adjustments	Restated
Purchase price considerationCommon shares
				1,710	—	1,710
Cash (net of cash acquired)				2,009	—	2,009
Preferred shares				536	—	536
				4,255	—	4,255
Current assets				68	2	70
Property, plant and equipment				2,660	(41)	2,619
Intangible assets				1,254	—	1,254
Right-of-use assets				348	(92)	256
Finance lease receivable				—	116	116
Goodwil				809	15	824
Other assets				9	—	9
Current liabilities				(124)	8	(116)
Deferred tax liabilities				(281)	(8)	(289)
Decommissioning provision				(74)	—	(74)
Lease liability				(348)	—	(348)
Other liabilities				(66)	—	(66)
				4,255	—	4,255
8. TRADE RECEIVABLES AND OTHER
As at December 31			2019
($ mil ions)					2020		(Restated Note 4)
Trade receivables from customers								578	575
Other receivables								60	94
Prepayments								24	25
Total trade receivables and other								662	694
9. INVENTORY
As at December 31 ($ mil ions)
					2020	2019
Crude oil and NGL								127	42
Materials, supplies and other								94	84
Total inventory								221	126
	Pembina Pipeline Corporation 2020 Annual Report 97

10. PROPERTY, PLANT AND EQUIPMENT
				Cavern
	Land and		Facilities and	Storage and	Assets Under
($ mil ions)	Land Rights	Pipelines	Equipment	Other	Construction(1)	Total
CostBalance at December 31, 2018 (Restated Note 4)
	340	7,174					6,807	1,478			939	16,738
Reclassification on adoption of IFRS 16									—	—			—	(44)		—	(44)
Additions and transfers									32	215				691	203		534	1,675
Acquisition (Note 7)									70	1,434				772	315		28	2,619
Change in decommissioning provision									—	(13)				98	(3)		—	82
Foreign exchange adjustments									(2)	(17)				(4)	—		(11)	(34)
Disposals and other									—	(3)			(31)	(12)		3	(43)
Balance at December 31, 2019 (Restated Note 4)	440	8,790					8,333	1,937			1,493	20,993
Additions and transfers									8	454				622	57		(40)	1,101
Impairment (Note 13)		(17)		—				—	—			(340)	(357)
Change in decommissioning provision									—	(10)				(17)	16		—	(11)
Foreign exchange adjustments									(2)	(18)				(9)	(1)		(7)	(37)
Disposals and other									—	(10)				(22)	(16)		3	(45)
Balance at December 31, 2020		429	9,206					8,907	1,993			1,109	21,644
DepreciationBalance at December 31, 2018 (Restated Note 4)
									12	1,223				827	250		—	2,312
Reclassification on adoption of IFRS 16									—	—			—	(26)		—	(26)
Depreciation									4	155				174	59		—	392
Disposals and other									—	(13)				(34)	—		—	(47)
Balance at December 31, 2019 (Restated Note 4)									16	1,365				967	283		—	2,631
Depreciation									5	187				156	135		—	483
Disposals and other									—	(5)			(5)	(9)		—	(19)
Balance at December 31, 2020									21	1,547				1,118	409		—	3,095
Carrying amountsBalance at December 31, 2019 (Restated Note 4)
	424	7,425					7,366	1,654			1,493	18,362
Balance at December 31, 2020		408	7,659					7,789	1,584			1,109	18,549
Assets subject to operating leasesBalance at December 31, 2019 (Restated Note 4)
									9	295				542	191		—	1,037
Balance at December 31, 2020									8	301				537	185		—	1,031
(1)	Includes capitalized borrowing costs.
Property, Plant and Equipment Under Construction
For the year ended December 31, 2020, included in additions and transfers are capitalized borrowing costs related to the construction of new pipelines or facilities amounting to $46 mil ion (2019: $42 mil ion), with capitalization rates ranging from 3.63 percent to 3.91 percent (2019: 3.91 percent to 4.05 percent).
Depreciation
Pipeline assets are depreciated using the straight-line method over three to 75 years with the majority of assets depreciated over 40 years. Facilities and equipment are depreciated using the straight-line method over three to 75 years with the majority of assets depreciated over 40 years. Cavern storage and other assets are depreciated using the straight-line method over three to 40 years with the majority of assets depreciated over 40 years. These rates are established to depreciate remaining net book value over the shorter of their useful lives or economic lives.
98 Pembina Pipeline Corporation 2020 Annual Report

11. INTANGIBLE ASSETS AND GOODWILL
	Intangible Assets
			Purchase and
				Sale			Total Goodwil
			Contracts and		Customer		& Intangible
($ mil ions)		Goodwil		Other	Relationships				Total		Assets
CostBalance at December 31, 2018
									3,878	227						639	866		4,744
Additions and other										—	13						—	13		13
Acquisition (Note 7)									824	—			1,254	1,254	2,078
Foreign exchange adjustments										(3)	—						(12)	(12)		(15)
Balance at December 31, 2019 (Restated Note 4)									4,699	240			1,881	2,121	6,820
Additions and other										—	22						—	22		22
Foreign exchange adjustments										(5)	(1)						(12)	(13)		(18)
Balance at December 31, 2020									4,694	261			1,869	2,130	6,824
AmortizationBalance at December 31, 2018
										—	164						171	335		335
Amortization										—	10						31	41		41
Balance at December 31, 2019										—	174						202	376		376
Amortization										—	6						102	108		108
Balance at December 31, 2020										—	180						304	484		484
Carrying amountsBalance at December 31, 2019 (Restated Note 4)
									4,699	66			1,679	1,745	6,444
Balance at December 31, 2020									4,694	81			1,565	1,646	6,340
Intangible assets have a finite useful life and are amortized using the straight-line method over 7 to 40 years.
The aggregate carrying amount of goodwil al ocated to each operating segment is as fol ows:
As at December 31
								2019
						2020	(Restated Note 4)	($ mil ions)Pipelines
										2,713		2,718
Facilities										541		541
Marketing & New Ventures										1,440		1,440
Total goodwil										4,694		4,699
				Pembina Pipeline Corporation 2020 Annual Report 99

Goodwil Impairment Testing
For the purpose of impairment testing, goodwil is al ocated to Pembina's operating segments which represent the lowest level within Pembina at which goodwil is monitored for management purposes. Consistent with prior year, impairment testing for goodwil is performed in the fourth quarter.
The recoverable amount was determined using a fair value less costs of disposal approach by discounting each operating segment's expected future cash flows (Level 3). The key assumptions that influence the calculation of the recoverable amounts include:
• Cash flows for the first five years are projected based on past experience, actual operating results and the business plan
approved by management. Cash flows for Pipelines and Facilities incorporate assumptions regarding contracted volumes and rates, which are based on market expectations. In addition, revenue and cost of product projections for Marketing & New Ventures incorporate assumptions regarding commodity volumes and pricing, which are sensitive to changes in the commodity price environment.
• Cash flows for the remaining years of the useful lives of the assets within each operating segment are extrapolated for
periods up to 75 years (2019: 75 years) using a long-term growth rate, except where contracted, long-term cash flows indicate that no growth rate should be applied or a specific reduction in cash flows was more appropriate.
• After-tax discount rates were applied in determining the recoverable amount of operating segments. Discount rates were
estimated based on past experience, the risk free rate and average cost of debt, targeted debt to equity ratio, in addition to estimates of the specific operating segment's equity risk premium, size premium, projection risk and betas.
For each operating segment, key assumptions and discount rate sensitivity are presented below:
	Operating Segments
2020
				Marketing & New
		Pipelines	Facilities		Ventures	(Percent)Key assumptions usedAfter-tax discount rate
	5.9		5.9		10.1
Long-term growth rate	0.6		0.8			1.8
Incremental change in rates that would result in carrying value equal to
recoverable amountIncrease in after-tax discount rate
	2.7		3.2			1.6
100 Pembina Pipeline Corporation 2020 Annual Report

12. INVESTMENTS IN EQUITY ACCOUNTED INVESTEES
		Share of Profit (Loss) from Equity
			Investments
	Ownership Interest			Investment in Equity Accounted
	at December 31 (percent)			Investees at December 31	12 Months Ended December 31
						2019		2019
($ mil ions)	2020				2019	2020			(Restated Note 3)	2020		(Restated Note 4)
Al iance										50	50	105		153	2,498	2,638
Aux Sable	42.7 - 50				42.7 - 50	—		51		401	426
Ruby(1)										—	—	122		120	—	1,273
Veresen Midstream										45	45.3	50		49	1,374	1,350
CKPC(2)										50	50	(314)		(1)	—	171
Other	50 - 75				50 - 75	5		3		104	116
			(32)			375	4,377	5,974
(1)	Pembina owns a 50 percent convertible, cumulative preferred interest in Ruby.
(2)	Includes $314 mil ion (2019: nil) of impairment in share of profit from equity accounted investees.
Investments in equity accounted investees include the unamortized excess of the purchase price over the underlying net book value of the investee's assets and liabilities at the purchase date, which is comprised of $98 mil ion (2019: $98 mil ion) Goodwil , $2.8 bil ion (2019: $2.9 bil ion) in property, plant and equipment and intangibles and $33 mil ion in long-term debt (2019: $42 mil ion).
Pembina has U.S. $1.3 bil ion in Investments in Equity Accounted Investees that is held by entities whose functional currency is the U.S. dol ar. The resulting foreign exchange loss for the year ended December 31, 2020 of $51 mil ion (2019: $169 mil ion loss) has been included in Other Comprehensive Income.
In December 2020, Pembina recognized impairment on its 50 percent convertible, cumulative preferred interest in Ruby and within its investment in CKPC. Refer to Note 13 for further information on impairments.
Distributions and Contributions
The fol owing table summarizes distributions from and contributions to Pembina's investments in equity accounted investees:
For the years ended December 31		Distributions					Contributions
($ mil ions)		2020									2019	2020	2019
Al iance						217			268		—	13
Aux Sable						19			84		3	4
Ruby						122			121		—	—
Veresen Midstream						97			96		69	73
CKPC						—			—		152	173
Other						4			6		—	—
Total						459			575		224	263
Distributions received from equity investments are included in operating activities in the Consolidated Statement of Cash Flows. Distributions from Al iance and Veresen Midstream are subject to satisfying certain financing conditions including a minimum debt service coverage ratio requirement.
Contributions made to investments in equity accounted investees are included in investing activities in the Consolidated Statement of Cash Flows. Contributions for 2020 include a $22 mil ion non-cash financial guarantee liability associated with CKPC's credit facility and 2019 contributions include the conversion of $57 mil ion in related party advances to CKPC into equity contributions.
			Pembina Pipeline Corporation 2020 Annual Report 101

Financing Activities
On December 31, 2020, CKPC provided notice to cancel its U.S. $1.7 bil ion term facility and its U.S. $150 mil ion revolving credit facility. As a result, Pembina accelerated the recognition of the previously recorded financial guarantee liability.
On April 27, 2020, Ruby ful y repaid its 364-day term loan. Concurrent to repayment, Ruby entered into a new amortizing term loan that matures on March 31, 2021. At December 31, 2020, U.S. $32 mil ion (U.S. $16 mil ion net to Pembina) remained outstanding.
Summarized Financial Information
Financial information for Pembina's equity accounted investees (presented at 100 percent) is presented in the fol owing tables and is prepared under the financial reporting framework adopted by each equity accounted investee (U.S. GAAP except for CKPC). Differences between the equity accounted investee's earning (loss) and earnings (loss) attributable to Pembina relate to the different accounting standards applied and amortization of the excess of the purchase price over the underlying net book value of the investee's assets and liabilities at the purchase date, with the exception of Ruby which Pembina owns a 50 percent convertible, cumulative preferred interest and recognizes its share of earnings based on its distribution.
Al iance
For the years ended December 31($ mil ions)
	2020	2019
Earnings and Comprehensive IncomeRevenue
			840	965
Expenses			(296)	(262)
Depreciation and amortization			(141)	(108)
Finance costs and other(1)(2)			(61)	(58)
Earnings			342	537
Earnings attributable to Pembina			105	153
(1)	Includes interest income of $2 mil ion (2019:$4 mil ion).
(2)	Includes interest expense of $66 mil ion (2019: $81 mil ion).
As at December 31($ mil ions)
	2020	2019
Statements of Financial PositionCurrent assets(1)
			122	132
Non-current assets			1,816	1,944
Current liabilities(2)			206	21
Non-current liabilities(3)			1,121	1,147
(1)	Includes cash and cash equivalents of $25 mil ion (2019:$29 mil ion).
(2)	Includes trade, other payables and provisions of $71 mil ion (2019: $77 mil ion).
(3)	Includes trade, other payables and provisions of $128 mil ion (2019:$106 mil ion).
102 Pembina Pipeline Corporation 2020 Annual Report

Aux Sable
For the years ended December 31($ mil ions)
	2020	2019
Earnings and Comprehensive IncomeRevenue
			1,059	1,028
Expenses			(1,019)	(868)
Depreciation and amortization			(49)	(55)
Earnings (loss)			(9)	105
Earnings attributable to Pembina			—	51
As at December 31($ mil ions)
	2020	2019
Statements of Financial PositionCurrent assets(1)
			162	153
Non-current assets			757	816
Current liabilities(2)			107	105
Non-current liabilities(3)			155	148
(1)	Includes cash and cash equivalents of $50 mil ion (2019: $20 mil ion).
(2)	Includes trade, other payables and provisions of $103 mil ion (2019: $98 mil ion).
(3)	Includes trade, other payables and provisions of $5 mil ion (2019:$5 mil ion).
Ruby
For the years ended December 31($ mil ions)
	2020	2019
Earnings and Comprehensive IncomeRevenue
			432	453
Expenses			(29)	(19)
Depreciation and amortization			(143)	(142)
Impairment			(2,953)	—
Finance costs and other(1)			(130)	(117)
Earnings (loss)			(2,823)	175
Earnings attributable to Pembina			122	120
(1)	Includes interest expense of $104 mil ion (2019: $90 mil ion).
As at December 31($ mil ions)
	2020	2019
Statements of Financial PositionCurrent assets(1)
			50	93
Non-current assets			688	3,705
Current liabilities(2)			77	177
Non-current liabilities(3)			928	1,003
(1)	Includes cash and cash equivalents of $6 mil ion (2019: $38 mil ion).
(2)	Includes trade, other payables and provisions of $2 mil ion (2019: $3 mil ion).
(3)	Includes trade, other payables and provisions of $278 mil ion (2019: $223 mil ion).
			Pembina Pipeline Corporation 2020 Annual Report 103

Veresen Midstream
For the years ended December 31($ mil ions)
	2020	2019
Earnings and Comprehensive IncomeRevenue
			561	615
Expenses			(177)	(213)
Depreciation and amortization			(173)	(165)
Finance costs and other(1)			(84)	(111)
Earnings			127	126
Earnings attributable to Pembina			50	49
(1)	Includes interest expense of $80 mil ion (2019: $109 mil ion).
As at December 31($ mil ions)
	2020	2019
Statements of Financial PositionCurrent assets(1)
			167	166
Non-current assets			4,658	4,501
Current liabilities(2)			109	106
Non-current liabilities(3)			2,681	2,593
(1)	Includes cash and cash equivalents of nil (2019: $3 mil ion).
(2)	Includes trade, other payables and provisions of $80 mil ion (2019: $106 mil ion).
(3)	Includes trade, other payables and provisions of $46 mil ion (2019: $43 mil ion).
CKPC
For the years ended December 31($ mil ions)
	2020	2019
Earnings (Loss) and Comprehensive Income (Loss)Expenses
			(4)	(4)
Impairment			(589)	—
Finance costs(1)			(33)	4
Earnings (loss)			(626)	—
Earnings (loss) attributable to Pembina			(314)	(1)
(1)	Includes interest income of $1 mil ion (2019: $1 mil ion).
As at December 31($ mil ions)
	2020	2019
Statements of Financial PositionCurrent assets(1)
			83	246
Non-current assets			—	283
Current liabilities(2)			99	188
Non-current liabilities(3)			11	12
(1)	Includes cash and cash equivalents of $75 mil ion (2019: $118 mil ion).
(2)	Includes trade, other payables and provisions of $99 mil ion (2019: $76 mil ion).
(3)	Includes trade, other payables and provisions of $11 mil ion (2019: nil).
104 Pembina Pipeline Corporation 2020 Annual Report

Other
For the years ended December 31($ mil ions)
	2020	2019
Earnings and Comprehensive IncomeRevenue
			51	52
Expenses			(16)	(16)
Depreciation and amortization			(16)	(16)
Finance costs and other(1)			(5)	(4)
Earnings			14	16
Earnings attributable to Pembina			5	3
(1)	Includes interest expense of $2 mil ion (2019: $3 mil ion).
As at December 31($ mil ions)
	2020	2019
Statements of Financial PositionCurrent assets(1)
			6	8
Non-current assets			117	131
Current liabilities(2)			25	28
Non-current liabilities(3)			64	84
(1)	Includes cash and cash equivalents of $1 mil ion (2019: $1 mil ion).
(2)	Includes trade, other payables and provisions of $3 mil ion (2019: $4 mil ion).
(3)	Includes trade, other payables and provisions of $1 mil ion (2019: $1 mil ion).
			Pembina Pipeline Corporation 2020 Annual Report 105

13. IMPAIRMENTS
The fol owing table summarizes impairments recognized for the year ended December 31, 2020:
	Property, Plant &	Equity Accounted		Total Impairment
($ mil ions)	Equipment (Note 10)	Investees (Note 12)	Other		Expense
Jordan Cove						344	—	5	349
Investment in Ruby						—	1,257	139	1,396
Investment in CKPC						—	323	(2)	321
Other						13	11	—	24
Total impairments						357	1,591	142	2,090
Recognized through impairment in share of profit from equity accounted investees					314
Recognized as impairment expense					1,776
Total					2,090
Jordan Cove In December 2020, as a result of increased regulatory and political uncertainty, Pembina recognized an impairment on the assets associated with Jordan Cove. The impairment charge of $349 mil ion ($258 mil ion net of tax) includes al previously capitalized amounts related to Jordan Cove, except for land with a recoverable carrying amount of $21 mil ion which approximates its fair value (Level 3).
Ruby
In December 2020, Pembina recognized an impairment for the ful amount of its convertible, cumulative preferred interest in Ruby ($1.3 bil ion) and its associated related party advance ($139 mil ion). The total impairment charge of $1.4 bil ion ($1.0 bil ion net of tax) was the result of an assessment triggered by upcoming contract expirations in mid-2021 with existing tariff rates wel in excess of prevailing interruptible tariff rates, along with declining Rockies basin fundamentals and reduced future volumes resulting from the uncertainty with Jordan Cove. The recoverable amount of Ruby was determined using a value in use approach by discounting expected cash flows resulting from Pembina's convertible, cumulative preferred share interest. Key assumptions that influenced the calculation of the recoverable amount include no future volumes associated with Jordan Cove, incremental future contracted volumes and tol s. Pembina applied a discount rate of 8 percent (2019: 8 percent) in calculating the recoverable amount, which was determined using comparable preferred share yields adjusted for the specific risk profile of the investment.
CKPC
On December 14, 2020, Pembina announced that it, along with its joint venture partner in CKPC, would be indefinitely suspending execution of the integrated PDH/PP Facility project. The suspension is the result of the significant risks arising from the ongoing COVID-19 pandemic, most notably with respect to costs under the lump sum contract for construction of the PDH plant, which remains under a force majeure condition. As a result of the suspension, Pembina recognized an impairment for the ful amount of its investment in CKPC, resulting in a total impairment charge of $323 mil ion ($252 mil ion net of tax) which includes Pembina's share of CKPC's loss resulting from an impairment charge recognized in the joint venture of $314 mil ion plus an incremental impairment of the remaining investment value, based on a fair value less costs of disposal approach which determined the recoverable amount of the investment to be nil (Level 3).
106 Pembina Pipeline Corporation 2020 Annual Report

14. INCOME TAXES
The movements of the components of the deferred tax assets and deferred tax liabilities are as fol ows:
	Balance at			Recognized in
	December 31,		Recognized		Other				Balance at
	2019		in Earnings	Comprehensiv					December
($ mil ions)		(Restated Note 4)	(Loss)	e Income (Loss)		Acquisition	Equity	Other	31, 2020
Deferred income tax assetsDerivative financial instruments
										(13)	21	(4)			—	—	—					4
Employee benefits			9	(2)	4							—	—	—	11
Share-based payments			24								(10)	—			—	—	—					14
Provisions			79	4	—							—	—	—	83
Benefit of loss carryforwards										400	(125)	—			—	—	—					275
Other deductible temporary
differences			52								16	—			—	(2)	—					66
Deferred income tax liabilitiesProperty, plant and equipment
			2,036										55	—			—	—	—	2,091
Intangible assets										263	(3)	—			—	—	—					260
Investments in equity accounted
investees			1,109										(417)	—			—	—	—				692
Taxable limited partnership income
deferral										101	(103)	—			—	—	—					(2)
Other taxable temporary differences										(13)	32	—			—	—	(4)					15
Total net deferred tax liabilities			2,945										(340)	—			—	2	(4)	2,603
									Balance at
	Balance at			Recognized in					December
	December 31,		Recognized		Other				31, 2019
	2018		in Earnings	Comprehensive					(Restated
($ mil ions)		(Restated Note 3)	(Loss)	Income (Loss)		Acquisition	Equity	Other	Note 4)
Deferred income tax assetsDerivative financial instruments
										(18)	5	—			—	—	—					(13)
Employee benefits			9								(1)	1			—	—	—					9
Share-based payments										26	(2)	—			—	—	—					24
Provisions										46	16	—			17	—	—					79
Benefit of loss carryforwards										153	256	—			13	—	(22)					400
Other deductible temporary
differences										67	(40)	—			28	(3)	—					52
Deferred income tax liabilitiesProperty, plant and equipment
			1,587										286	—			163	—			2,036
Intangible assets										118	(14)	—			159	—	—					263
Investments in equity accounted
investees			1,263										(154)	—			—	—	—	1,109
Taxable limited partnership income
deferral										122	(46)	—			25	—	—					101
Other taxable temporary differences			7								(13)	—				—	(7)					(13)
Total net deferred tax liabilities			2,814										(175)	(1)			289	3	15	2,945
					Pembina Pipeline Corporation 2020 Annual Report 107

Reconciliation of Effective Tax Rate
For the years ended December 31	2019
($ mil ions, except as noted)		2020	(Restated Note 3)
Earnings (loss) before income tax				(416)	1,542
Canadian statutory tax rate (percent)		24.6	26.7
Income tax at statutory rate				(102)	412
Tax rate changes and foreign rate differential				(5)	(349)
Changes in estimate and other				(5)	(35)
Permanent items				12	7
Income tax (recovery) expense				(100)	35
In 2019, the enactment of Alberta Bil 3 reduced corporate income tax rate from 12 percent to 8 percent over a four-year period which resulted in a deferred tax recovery of $305 mil ion. In the fourth quarter of 2020, the Alberta government enacted Bil 35 that accelerated the Alberta corporate income tax rate from 10 percent to 8 percent effective July 1, 2020.
Income Tax Expense
For the years ended December 31	2019
($ mil ions)		2020	(Restated Note 3)
Current tax expense				240	210
Deferred tax expenseOrigination and reversal of temporary differences
				(485)	392
Tax rate changes on deferred tax balances				32	(345)
Decrease (increase) in tax loss carry forward				113	(222)
Total deferred tax (recovery)				(340)	(175)
Total income tax (recovery) expense				(100)	35
Deferred Tax Items Recovered Directly in Equity
For the years ended December 31 ($ mil ions)
		2020	2019
Share issue costs				(2)	(3)
Other comprehensive income (loss):Change in fair value of net investment hedges (Note 26)
				(4)	—
Remeasurements of defined benefit liability (Note 24)				4	1
Deferred tax items recovered directly in equity				(2)	(2)
Pembina has temporary differences associated with its investments in subsidiaries. At December 31, 2020, Pembina has not recorded a deferred tax asset or liability for these temporary differences (2019: nil) as Pembina controls the timing of the reversal and it is not probable that the temporary differences wil reverse in the foreseeable future.
At December 31, 2020, Pembina had U.S. $758 mil ion (2019: U.S. $1.1 bil ion) of U.S. tax losses that do not expire and $43 mil ion (2019: $67 mil ion) of Canadian tax losses that wil expire after 2037. Pembina has determined that it is probable that future taxable profits wil be sufficient to utilize these losses.
108 Pembina Pipeline Corporation 2020 Annual Report

15. TRADE PAYABLES AND OTHER
As at December 31	2019
($ mil ions)		2020	(Restated Note 4)
Trade payables				434	717
Other payables & accrued liabilities				346	288
Total trade payables and other				780	1,005
16. LEASES
Lessee Leases
Pembina enters into arrangements to secure access to assets necessary for operating the business. Leased (right-of-use) assets include terminals, rail, buildings, land and other assets. Total cash outflows related to leases were $131 mil ion for the year ended December 31, 2020 (2019: $83 mil ion).
Right-of-Use Assets
($ mil ions)				Terminals	Rail		Buildings Land & Other	Total
Balance at January 1, 2019 (Restated Note 4)						—	221	127	79	427
Additions (Restated Note 3)						—	54	1	19	74
Acquisition (Note 7)						225	—	7	24	256
Amortization						—	(37)	(17)	(12)	(66)
Balance at December 31, 2019 (Restated Note 4)						225	238	118	110	691
Additions						—	24	22	—	46
Amortization						(12)	(41)	(19)	(14)	(86)
Balance at December 31, 2020						213	221	121	96	651
Lessor Leases
Pembina has entered into contracts for the use of its assets that have resulted in lease treatment for accounting purposes. Assets under operating leases include pipelines, terminals and storage tanks and caverns. See Note 10 for carrying value of property, plant and equipment under operating leases. Assets under finance leases include office sub-leases and terminal assets.
Maturity of Lease Receivables
As at December 31				2020	2019 (Restated Note 4)
($ mil ions)							Operating Leases	Finance Leases	Operating Leases	Finance Leases
Less than one year								146	23	168	23
One to two years								142	23	150	24
Two to three years								139	22	145	23
Three to four years								121	22	139	22
Four to five years								109	22	124	22
More than five years								874	224	983	246
Total undiscounted lease receipts								1,531	336	1,709	360
Unearned finance income on lease receipts							(199)		(215)
Discounted unguaranteed residual value							8		7
Finance lease receivable							145		152
Less current portion(1)							(7)		(7)
Total non-current							138		145
(1)	Included in trade receivables and other on the Consolidated Statement of Financial Position.
						Pembina Pipeline Corporation 2020 Annual Report 109

17. LOANS AND BORROWINGS
This note provides information about the contractual terms of Pembina's interest-bearing loans and borrowings, which are measured at amortized cost.
Carrying Value, Terms and Conditions, and Debt Maturity Schedule
							Carrying Value
	Authorized at	Nominal	Year of
($ mil ions)	December 31, 2020	Interest Rate	Maturity	December 31, 2020	December 31, 2019
Senior unsecured credit facilities(1)(3)(4)						4,138	1.61(2)	Various(1)	1,530	2,097
Senior unsecured notes series A						—	5.57	2020	—	74
Senior unsecured notes series C						—	5.58	2020	—	199
Senior unsecured medium-term notes series 1						250	4.89	2021	250	250
Senior unsecured medium-term notes series 2						450	3.77	2022	449	449
Senior unsecured medium-term notes series 3						450	4.75	2043	447	446
Senior unsecured medium-term notes series 4						600	4.81	2044	597	596
Senior unsecured medium-term notes series 5						450	3.54	2025	449	449
Senior unsecured medium-term notes series 6						500	4.24	2027	498	498
Senior unsecured medium-term notes series 7						600	3.71	2026	603	498
Senior unsecured medium-term notes series 8						650	2.99	2024	647	646
Senior unsecured medium-term notes series 9						550	4.74	2047	542	542
Senior unsecured medium-term notes series 10						650	4.02	2028	661	398
Senior unsecured medium-term notes series 11						800	4.75	2048	842	298
Senior unsecured medium-term notes series 12						650	3.62	2029	654	398
Senior unsecured medium-term notes series 13						700	4.54	2049	713	714
Senior unsecured medium-term notes series 14						600	2.56	2023	599	598
Senior unsecured medium-term notes series 15						600	3.31	2030	597	597
Senior unsecured medium-term notes series 16						400	4.67	2050	397	—
Senior unsecured medium-term notes series 3A						50	5.05	2022	51	52
Senior unsecured medium-term notes series 5A						350	3.43	2021	350	353
Total interest bearing liabilities							10,876	10,152
Less current portion							(600)	(74)
Total non-current							10,276	10,078
(1)	Pembina's unsecured credit facilities include a $2.5 bil ion revolving facility that matures in May 2024, a $500 mil ion non-revolving term loan that matures in August 2022, a
$800 mil ion revolving facility that matures in April 2022, a U.S. $250 mil ion non-revolving term loan that matures in May 2025 and a $20 mil ion operating facility that
matures in May 2021, which is typical y renewed on an annual basis.
(2)	The nominal interest rate is the weighted average of al drawn credit facilities based on Pembina's credit rating at December 31, 2020. Borrowings under the credit facilities
bear interest at prime, Bankers' Acceptance, or LIBOR rates, plus applicable margins.
(3)	Includes U.S. $250 mil ion variable rate debt outstanding at December 31, 2020 (December 31, 2019: U.S. $454 mil ion).
(4)	The U.S. dol ar denominated non-revolving term loan is designated as a hedge of the Company’s net investment in selected foreign operations with a U.S. dol ar functional
currency. Refer to Note 27 for foreign exchange risk management.
On January 10, 2020, Pembina closed an offering of $1.0 bil ion of senior unsecured medium-term notes. The offering was conducted in three tranches, consisting of $250 mil ion issued through a re-opening of Pembina's senior unsecured medium-term notes, series 10, having a fixed coupon of 4.02 percent per annum, payable semi-annual y and maturing on March 27, 2028; $500 mil ion issued through a re-opening of Pembina's senior unsecured medium-term notes, series 11, having a fixed coupon of 4.75 percent per annum, payable semi-annual y and maturing on March 26, 2048; and $250 mil ion issued through a re-opening of Pembina's senior unsecured medium-term notes, series 12, having a fixed coupon of 3.62 percent per annum, payable semi-annual y and maturing on April 3, 2029.
On April 6, 2020, Pembina entered into an unsecured $800 mil ion revolving credit facility with certain existing lenders, which provided additional liquidity and flexibility in Pembina's capital structure in light of current market conditions. The unsecured revolving credit facility matures April 3, 2022. The other terms and conditions of the credit facility, including financial covenants, are substantial y similar to Pembina's unsecured $2.5 bil ion revolving credit facility.
110 Pembina Pipeline Corporation 2020 Annual Report

On May 7, 2020, Pembina entered into an unsecured U.S. $250 mil ion non-revolving term loan with a global bank, which provided additional liquidity and flexibility in Pembina's capital structure in light of current market conditions. The term loan matures May 7, 2025. The other terms and conditions of the credit facility, including financial covenants, are substantial y similar to Pembina's unsecured $2.5 bil ion revolving credit facility.
On May 28, 2020, Pembina closed an offering of $500 mil ion of senior unsecured medium-term notes. The offering was conducted in two tranches, consisting of the issuance of $400 mil ion in senior unsecured medium-term notes, series 16, having a fixed coupon of 4.76 percent per annum, payable semi-annual y, and maturing on May 28, 2050 and $100 mil ion issued through a re-opening of Pembina's senior unsecured medium-term notes, series 7, having a fixed coupon of 3.71 percent per annum, payable semi-annual y and maturing on August 11, 2026.
On July 10, 2020, Pembina's $200 mil ion senior unsecured notes, series C, were ful y repaid through an early redemption, of which notice was provided to holders on June 5, 2020. The senior unsecured notes, series C, were original y set to mature in September 2021.
Subsequent to year-end, on January 25, 2021, Pembina closed an offering of $600 mil ion of fixed-to-fixed rate subordinated notes, series 1 (the "Subordinated Notes, Series 1"). The Subordinated Notes, Series 1 have a fixed coupon of 4.80 percent per annum, payable semi-annual y, and mature on January 25, 2081.
Subsequent to year-end, on March 25, 2021, Pembina cancel ed its $800 mil ion revolving credit facility. No balance was outstanding on the cancel ation date.
Subsequent to year-end, on April 30, 2021, Pembina extended the maturity dates of its revolving and operating credit facilities to June 2026 and May 2022, respectively.
For more information about Pembina's exposure to interest rate, foreign currency and liquidity risk, see Note 27 Financial Instruments.
18. DECOMMISSIONING PROVISION
The decommissioning provision reflects the discounted cash flows expected to be incurred to decommission Pembina's pipeline systems, gas processing and fractionation plants, storage and terminal ing hubs, including estimated environmental reclamation and remediation costs. Changes in the measurement of the decommissioning provision are added to, or deducted from, the cost of the related property, plant and equipment or right of use asset. When a re-measurement of the decommissioning provision relates to a retired asset, the amount is recorded in earnings (loss).
The undiscounted cash flows at the time of decommissioning are calculated using an estimated timing of economic outflows ranging from one to 83 years, with the majority estimated at 50 years. The estimated economic lives of the underlying assets form the basis for determining the timing of economic outflows. Pembina applied credit-adjusted risk-free rates of 3.3 percent to 4.7 percent (2019: 3.3 percent to 4.7 percent) and an inflation rate of 1.8 percent (2019: 1.8 percent).
		2019
($ mil ions)	2020		(Restated Note 4)
Balance at January 1(2)				340	162
Unwinding of discount rate				15	9
Change in rates				—	90
Acquisition (Note 7)				—	74
Additions				11	8
Change in cost estimates and other				(16)	(3)
Total				350	340
Less current portion(1)				(2)	(3)
Balance at December 31				348	337
(1)	Included in trade payables and other on the Consolidated Statement of Financial Position.
(2)	January 1, 2019 opening balance includes $4 mil ion relating to the current portion of the liability previously classified as trade payables and other.
				Pembina Pipeline Corporation 2020 Annual Report 111

19. SHARE CAPITAL
Pembina is authorized to issue an unlimited number of common shares, without par value, 254,850,850 Class A preferred shares, issuable in series and an unlimited number of Class B preferred shares. The holders of the common shares are entitled to receive notice of, attend and vote at any meeting of the shareholders of Pembina, receive dividends declared and share in the remaining property of Pembina upon distribution of the assets of Pembina among its shareholders for the purpose of winding-up its affairs.
Common Share Capital
	Number of
	Common Shares	Common
($ mil ions, except as noted)	(mil ions)	Share Capital
Balance at December 31, 2018				508	13,662
Issued on Acquisition, net of issue costs (Note 7)				36	1,710
Share-based payment transactions				4	167
Balance at December 31, 2019				548	15,539
Share-based payment transactions				2	105
Balance at December 31, 2020				550	15,644
Preferred Share Capital
			Number of Preferred
	Shares	Preferred
($ mil ions, except as noted)	(mil ions)	Share Capital
Balance at December 31, 2018				100	2,423
Class A, Series 23 Preferred shares issued on Acquisition, net of issue costs (Note 7)				12	293
Class A, Series 25 Preferred shares issued on Acquisition, net of issue costs (Note 7)				10	243
Part VI.1 tax				—	(3)
Balance at December 31, 2019				122	2,956
Part VI.1 tax				—	(10)
Balance at December 31, 2020				122	2,946
On March 1, 2019, none of the six mil ion Cumulative Redeemable Rate Reset Class A Preferred Series 3 shares outstanding were converted into Cumulative Redeemable Floating Rate Class A Preferred Series 4 shares.
On March 31, 2019, none of the six mil ion Cumulative Redeemable Rate Reset Class A Preferred Series 17 shares outstanding were converted into Cumulative Redeemable Floating Rate Class A Preferred Series 18 shares.
On June 3, 2019, none of the 10 mil ion Cumulative Redeemable Rate Reset Class A Preferred Series 5 shares outstanding were converted into Cumulative Redeemable Floating Rate Class A Preferred Series 6 shares.
On December 2, 2019, none of the 10 mil ion Cumulative Redeemable Rate Reset Class A Preferred Series 7 shares outstanding were converted into Cumulative Redeemable Floating Rate Class A Preferred Series 8 shares.
On December 16, 2019, in connection with the Kinder Acquisition, the outstanding preferred shares of Kinder Morgan Canada were exchanged for Series 23 and 25 Class A preferred shares with similar terms and conditions as the shares previously issued by Kinder Morgan Canada. Dividends on the Series 23 and 25 Class A preferred shares wil continue to be paid on the 15th of February, May, August and November in each year, if, as and when declared by the Board of Directors.
On June 15, 2020, none of the eight mil ion Cumulative Redeemable Rate Reset Class A Preferred Series 19 shares outstanding were converted into Cumulative Redeemable Floating Rate Class A Preferred Series 20 shares.
On November 16, 2020, none of the nine mil ion Cumulative Redeemable Rate Reset Class A Preferred Series 9 shares outstanding were converted into Cumulative Redeemable Floating Rate Class A Preferred Series 10 shares.
112 Pembina Pipeline Corporation 2020 Annual Report

Subsequent to year end, on January 25, 2021 in conjunction with the offering of the Series 1 Subordinated Notes, Pembina issued 600,000 Series 2021-A Class A Preferred Shares, to Computershare Trust Company of Canada, to be held in trust as treasury shares to satisfy Pembina's obligations under the indenture governing the Series 1 Subordinated Notes.
Subsequent to year end, on March 1, 2021, Pembina redeemed al of the 6.8 mil ion issued and outstanding Cumulative Redeemable Minimum Rate Reset Class A Preferred Shares, Series 11 for a redemption price equal to $25.00 per Series 11 Class A Preferred Share.
Subsequent to year end, on June 1, 2021, Pembina redeemed al of the 10 mil ion issued and outstanding Cumulative Redeemable Minimum Rate Reset Class A Preferred Shares, Series 13 for a redemption price equal to $25.00 per Series 13 Class A Preferred Share.
Dividends
The fol owing dividends were declared by Pembina:
For the years ended December 31($ mil ions)
	2020	2019
Common shares
$2.52 per common share (2019: $2.36)	1,385	1,213
Preferred shares
$1.23 per Series 1 preferred share (2019: $1.23)	12	12
$1.12 per Series 3 preferred share (2019: $1.13)	7	7
$1.14 per Series 5 preferred share (2019: $1.19)	11	12
$1.10 per Series 7 preferred share (2019: $1.12)	11	11
$1.18 per Series 9 preferred share (2019: $1.19)	11	11
$1.44 per Series 11 preferred share (2019: $1.44)	10	10
$1.44 per Series 13 preferred share (2019: $1.44)	14	14
$1.12 per Series 15 preferred share (2019: $1.12)			9	9
$1.21 per Series 17 preferred share (2019: $1.22)			7	7
$1.21 per Series 19 preferred share (2019: $1.25)			10	10
$1.23 per Series 21 preferred share (2019: $1.23)			20	20
$1.31 per Series 23 preferred share (2019: $0.16)			16	2
$1.30 per Series 25 preferred share (2019: $0.16)			13	1
	151	126
			Pembina Pipeline Corporation 2020 Annual Report 113

On January 6, 2021, Pembina announced that its Board of Directors had declared a dividend of $0.21 per common share in the total amount of $115 mil ion, payable on February 12, 2021 to shareholders of record on January 25, 2021.
On February 3, 2021, Pembina announced that its Board of Directors had declared a dividend of $0.21 per common share in the total amount of $115 mil ion, payable on March 15, 2021 to shareholders of record on February 25, 2021.
Pembina's Board of Directors also declared quarterly dividends for Pembina's preferred shares on January 6, 2021 as outlined in the fol owing table:
				Dividend Amount
Series	Record Date	Payable Date	Per Share Amount		($ mil ions)
Series 1	February 1, 2021	March 1, 2021				$0.306625	3
Series 3	February 1, 2021	March 1, 2021				$0.279875	2
Series 5	February 1, 2021	March 1, 2021				$0.285813	3
Series 7	February 1, 2021	March 1, 2021				$0.273750	3
Series 9	February 1, 2021	March 1, 2021				$0.296875	3
Series 11	February 1, 2021	March 1, 2021				$0.359375	2
Series 13	February 1, 2021	March 1, 2021				$0.359375	4
Series 15	March 15, 2021	March 31, 2021				$0.279000	2
Series 17	March 15, 2021	March 31, 2021				$0.301313	2
Series 19	March 15, 2021	March 31, 2021				$0.292750	2
Series 21	February 1, 2021	March 1, 2021				$0.306250	5
Series 23	February 1, 2021	February 16, 2021				$0.328125	4
Series 25	February 1, 2021	February 16, 2021				$0.325000	3
									38
20. REVENUE
Revenue has been disaggregated into categories to reflect how the nature, timing and uncertainty of revenue and cash flows are affected by economic factors.
a. Revenue Disaggregation
		2020						2019
		Marketing		Marketing
For the years ended December 31
		& New		& New
	Pipelines								Facilities	Ventures				Total Pipelines	Facilities	Ventures			Total	($ mil ions)Take-or-pay(1)
											1,664	740						—	2,404	1,200					625	—	1,825
Fee-for-service(1)											295	117						—	412			387		117	—			504
Product sales(2)(3)											—	—	2,956				2,956	—		5	3,946	3,951
Revenue from contracts with customers											1,959	857	2,956				5,772	1,587					747	3,946	6,280
Operational finance lease income											15	—						—	15			—		—	—			—
Fixed operating lease income											131	35						—	166			63		29	—			92
Total external revenue											2,105	892	2,956				5,953	1,650					776	3,946	6,372
(1)	Revenue recognized over time.
(2)	Revenue recognized at a point in time.
(3)	2020 period and comparative 2019 period have been restated. See Note 3 to the Consolidated Financial Statements.
114 Pembina Pipeline Corporation 2020 Annual Report

b. Contract Liabilities
Significant changes in the contract liabilities balances during the period are as fol ows:
	2020	2019
	Other			Total	Other			Total
For the years ended December 31($ mil ions)
	Contract			Contract	Contract			Contract
			Take-or-Pay	Liabilities		Liabilities	Take-or-Pay	Liabilities			Liabilities
Opening balance						8	223			231		9	159		168
Additions (net in the period)						3	117			120		4	35	39
Acquisition (Note 7)						—			—	—		—	77	77
Revenue recognized from contract liabilities(1)						(8)			(51)	(59)		(5)	(48)	(53)
Closing balance						3	289			292		8	223		231
Less current portion(2)						(3)			(59)	(62)		(8)	(31)	(39)
Ending balance						—	230			230		—	192		192
(1)	Recognition of revenue related to performance obligations satisfied in the current period that were included in the opening balance of contract liabilities.
(2)	As at December 31, 2020, the balance includes $3 mil ion of cash col ected under take-or-pay contracts which wil be recognized within one year as the customer chooses to
ship, process, or otherwise forego the associated service.
Contract liabilities depict Pembina's obligation to perform services in the future for cash and non-cash consideration which has been received from customers. Contract liabilities include up-front payments or non-cash consideration received from customers for future transportation, processing and storage services. Contract liabilities also include consideration received from customers for take-or-pay commitments where the customer has a make-up right to ship or process future volumes under a firm contract. These amounts are non-refundable should the customer not use its make-up rights.
Pembina does not have any contract assets. In al instances where goods or services have been transferred to a customer in advance of the receipt of customer consideration, Pembina's right to consideration is unconditional and has therefore been presented as a receivable.
									Pembina Pipeline Corporation 2020 Annual Report 115

c. Revenue Al ocated to Remaining Performance Obligations
Pembina expects to recognize revenue in future periods that includes current unsatisfied remaining performance obligations totaling $8.5 bil ion (2019: $9.3 bil ion). Over the next five years, this remaining performance obligation wil be recognized annual y ranging from $1.1 bil ion (2019: $1.1 bil ion) declining to $969 mil ion (2019: $983 mil ion). Subsequently, up to 2039 (2019: 2039), Pembina wil recognize from $870 mil ion (2019: $977 mil ion) to $22 mil ion (2019: $13 mil ion) per year.
In preparing the above figures, Pembina has taken the practical expedient to exclude contracts that are being accounted for using the practical expedient to recognize revenue in an amount equal to Pembina's right to invoice, as wel as the practical expedient to exclude contracts that have original expected durations of one year or less.
Variable consideration relating to flow through costs are not included in the amounts presented. These flow through costs do not impact net income or cash flow, and due to the long-term nature of the contracts there is significant uncertainty in estimating these amounts. In addition, Pembina excludes contracted revenue amounts for assets not yet in-service unless both Board of Directors approval and regulatory approval for the asset has been obtained.
21. NET FINANCE COSTS
For the years ended December 31	2019
($ mil ions)		2020	(Restated Note 3)
Interest expense on financial liabilities measured at amortized cost:
Loans and borrowings				362	291
Leases				39	17
Unwinding of discount rate				15	8
Gain in fair value of non-commodity-related derivative financial instruments				(5)	(4)
Foreign exchange losses (gains) and other				9	(23)
Net finance costs				420	289
Net interest paid of $429 mil ion (2019: $311 mil ion) includes interest paid during construction and capitalized of $46 mil ion (2019: $42 mil ion).
116 Pembina Pipeline Corporation 2020 Annual Report

22. OPERATING SEGMENTS
Pembina determines its reportable segments based on the nature of operations and includes three operating segments: Pipelines, Facilities and Marketing & New Ventures.
The Pipelines segment includes conventional, oil sands and transmission pipeline systems, crude oil storage and terminal ing business and related infrastructure serving various markets and basins across North America.
The Facilities segment includes processing and fractionation facilities and related infrastructure that provide Pembina's customers with natural gas and NGL services that are highly integrated with Pembina's other businesses and a bulk marine terminal in the Port of Vancouver, Canada.
The Marketing & New Ventures segment undertakes value-added commodity marketing activities including buying and sel ing products and optimizing storage opportunities, by contracting capacity on Pembina's and various third-party pipelines and utilizing Pembina's rail fleet and rail logistics capabilities. Marketing activities also include identifying commercial opportunities to further develop other Pembina assets. Pembina's Marketing business also includes results from Aux Sable's NGL extraction facility near Chicago, Il inois and other natural gas and NGL processing facilities, logistics and distribution assets in the United States and Canada.
The financial results of the operating segments are included below. Performance is measured based on results from operating activities, net of depreciation and amortization, as included in the internal management reports that are reviewed by Pembina's Chief Executive Officer, Chief Financial Officer and other Senior Vice Presidents. These results are used to measure performance as management believes that such information is the most relevant in evaluating results of certain segments relative to other entities that operate within these industries. Inter-segment transactions are recorded at market value and eliminated under corporate and inter-segment eliminations.
For the year ended December 31, 2020
				Corporate &
(Restated Note 3)
			Marketing &	Inter-segment
	Pipelines(1)	Facilities	New Ventures(2)	Eliminations	Total	($ mil ions)
Revenue from external customers		2,105	892				2,956	—	5,953
Inter-segment revenue								146	339				—	(485)	—
Total revenue(3)		2,251	1,231				2,956	(485)	5,953
Operating expenses(4)								498	392				—	(178)	712
Cost of goods sold, including product purchases								—	11	2,815	(317)	2,509
Depreciation and amortization included in operations								402	199				50	11	662
Cost of sales								900	602				2,865	(484)	3,883
Realized gain on commodity-related derivative
financial instruments								—	—	(54)	—	(54)
Unrealized (gain) loss on commodity-related derivative
financial instruments								—	(4)	88	—	84
Share of profit from equity accounted investees -
operations								227	55	—	—	282
Adjusted gross profit		1,578	688				57	(1)	2,322
Impairment in share of profit from equity accounted
investees								—	—	(314)	—	(314)
Gross profit (loss)		1,578	688				(257)	(1)	2,008
Depreciation included in general and administrative								—	—	—	38	38
Other general and administrative(4)								24	10	28	146	208
Other (income) expense								(1)	2	4	(23)	(18)
Impairment expense		1,396								10	370	—	1,776
Reportable segment results from operating activities								159	666				(659)	(162)	4
Net finance costs (income)								31	24	(13)	378	420
Reportable segment earnings (loss) before tax								128	642				(646)	(540)	(416)
Capital expenditures								587	370				38	34	1,029
Contributions to equity accounted investees								—	69	155	—	224
		Pembina Pipeline Corporation 2020 Annual Report 117

For the year ended December 31, 2019
				Corporate &
(Restated Note 3)
			Marketing &	Inter-segment
	Pipelines(1)	Facilities	New Ventures(2)	Eliminations	Total	($ mil ions)
Revenue from external customers		1,650	776				3,946	—	6,372
Inter-segment revenue								137	345				—	(482)	—
Total revenue(3)		1,787	1,121				3,946	(482)	6,372
Operating expenses(4)								436	344				—	(178)	602
Cost of goods sold, including product purchases								—	4	3,559	(311)	3,252
Depreciation and amortization included in operations								243	166				51	11	471
Cost of sales								679	514				3,610	(478)	4,325
Realized gain on commodity-related derivative
financial instruments								—	—	(33)	—	(33)
Share of profit from equity accounted investees								274	51	50	—	375
Unrealized loss on commodity-related derivative
financial instruments								—	—	13	—	13
Gross profit (loss)		1,382	658				406	(4)	2,442
Depreciation included in general and administrative								—	—	—	36	36
Other general and administrative(4)								30	14	35	181	260
Other expense								3	—	3	9	15
Impairment expense								300	—	—	—	300
Reportable segment results from operating activities		1,049	644				368	(230)	1,831
Net finance costs (income)								6	21	(8)	270	289
Reportable segment earnings (loss) before tax		1,043	623				376	(500)	1,542
Capital expenditures								892	569				157	27	1,645
Contributions to equity accounted investees								13	73	177	—	263
(1)	Pipelines transportation revenue includes $228 mil ion (2019: $33 mil ion) associated with U.S. pipeline revenue.
(2)	Marketing & New Ventures includes revenue of $143 mil ion (2019: $182 mil ion) associated with U.S. midstream sales.
(3)	During 2020, no one customer accounted for 10 percent or more of total revenues reported throughout al segments. During 2019, one customer accounted for 10 percent or
more of total revenues with $718 mil ion reported throughout al segments.
(4)	Pembina incurred $370 mil ion (2019: $339 mil ion) of employee costs, of which $244 mil ion (2019: $182 mil ion) was recorded in operating expenses and $126 mil ion (2019:
$157 mil ion) in general and administrative expenses. Employee costs include salaries, benefits and share-based compensation.
Geographical Information
Non-Current Assets
For the years ended December 31					2019
($ mil ions)				2020			(Restated Note 4)
Canada				26,504	26,222
United States				3,601	5,543
Total non-current assets(1)				30,105	31,765
(1)	Excludes deferred income tax assets.
118 Pembina Pipeline Corporation 2020 Annual Report

23. EARNINGS (LOSS) PER COMMON SHARE
Basic Earnings (Loss) Per Common Share
The calculation of basic loss per common share at December 31, 2020 was based on the loss attributable to common shareholders of $476 mil ion (2019: $1.4 bil ion(1) earnings) and a weighted average number of common shares outstanding of 550 mil ion (2019: 512 mil ion).
Diluted Earnings (Loss) Per common Share
The calculation of diluted loss per common share at December 31, 2020 was based on loss attributable to common shareholders of $476 mil ion (2019: $1.4 bil ion(1) earnings), and weighted average number of common shares outstanding after adjustment for the effects of al dilutive potential common shares of 550 mil ion (2019: 514 mil ion).
Earnings (Loss) Attributable to Common Shareholders
For the years ended December 31	2019
($ mil ions)		2020	(Restated Note 3)
Earnings (loss)				(316)	1,507
Dividends on preferred shares				(148)	(123)
Cumulative dividends on preferred shares, not yet declared				(12)	(8)
Basic and diluted earnings (loss) attributable to common shareholders				(476)	1,376
Weighted Average Number of Common Shares
	2019
(In mil ions of shares, except as noted)		2020	(Restated Note 3)
Issued common shares at January 1				548	508
Effect of shares issued on Acquisition				—	1
Effect of shares issued on exercise of options				2	3
Basic weighted average number of common shares at December 31				550	512
Dilutive effect of share options on issue(1)				—	2
Diluted weighted average number of common shares at December 31				550	514
Basic earnings (loss) per common share (dol ars)				(0.86)	2.69
Diluted earnings (loss) per common share (dol ars)				(0.86)	2.68
(1)	The average market value of Pembina's shares for purposes of calculating the dilutive effect of share options for the year ended December 31, 2019 was based on quoted
market prices for the period during which the options were outstanding.
For the year ended December 31, 2020, 277 thousand (2019: nil) stock options were excluded from the calculation of diluted earnings (loss) per common share as the impact of these options are anti-dilutive.
				Pembina Pipeline Corporation 2020 Annual Report 119

24. PENSION PLAN
As at December 31 ($ mil ions)
	2020	2019
Registered defined benefit net obligation			26	19
Supplemental defined benefit net obligation			18	16
Net employee benefit obligations			44	35
Pembina maintains defined contribution plans and non-contributory defined benefit pension plans covering its employees. Pembina contributes five to 10 percent of an employee's earnings to the defined contribution plan until the employee's age plus years of service equals 50, at which time they become eligible for the defined benefit plans. Pembina recognized $12 mil ion in expense for the defined contribution plan during the year (2019: $11 mil ion). The defined benefit plans include a funded registered plan for al eligible employees and an unfunded supplemental retirement plan for those employees affected by the Canada Revenue Agency maximum pension limits. The defined benefit plans are administered by separate pension funds that are legal y separated from Pembina. Benefits under the plans are based on the length of service and the annual average best three years of earnings during the last 10 years of service of the employee. Benefits paid out of the plans are not indexed. Pembina measures its accrued benefit obligations and the fair value of plan assets for accounting purposes as at December 31 of each year. The most recent actuarial funding valuation was at December 31, 2019. The defined benefit plans expose Pembina to actuarial risks such as longevity risk, interest rate risk, and market (investment) risk.
Effective January 1, 2021, Pembina revised the eligibility requirements for the defined benefit plan. Employees with an age plus years of service of 40 at January 1, 2021 wil remain eligible for the defined benefit plan, when their age plus years of service reaches 50. Al other employees wil remain in the defined contribution plan.
Defined Benefit Obligations
			2020	2019
As at December 31				Registered	Supplemental	Registered					Supplemental
($ mil ions)			Plans	Plan	Plan	Plan
Present value of unfunded obligations							—	18	—	16
Present value of funded obligations							278	—	250	—
Total present value of obligations							278	18	250	16
Fair value of plan assets							252	—	231	—
Recognized liability for defined benefit obligations							(26)	(18)	(19)	(16)
Pembina funds the defined benefit obligation plans in accordance with government regulations by contributing to trust funds administered by an independent trustee. The funds are invested primarily in equities and bonds. Defined benefit plan contributions totaled $23 mil ion for the year ended December 31, 2020 (2019: $20 mil ion).
Pembina has determined that, in accordance with the terms and conditions of the defined benefit plans, and in accordance with statutory requirements of the plans, the present value of refunds or reductions in future contributions is not lower than the balance of the total fair value of the plan assets less the total present value of obligations. As such, no decrease in the defined benefit asset is necessary at December 31, 2020 (December 31, 2019: nil).
Registered Defined Benefit Pension Plan Assets Comprise
As at December 31(Percent)
	2020	2019
Equity securities	63	62
Debt	37	38
	100	100
120 Pembina Pipeline Corporation Annual Report 2020

Movement in the Present Value of the Defined Benefit Pension Obligation
	2020	2019
			Registered	Supplemental		Registered	Supplemental
($ mil ions)	Plans				Plan	Plan					Plan
Defined benefits obligations at January 1										250			16	212						12
Benefits paid by the plan										(28)			(2)	(12)						—
Current service costs										18			1	15						1
Interest expense										8			1	8						—
Actuarial losses in other comprehensive income										30			2	27						3
Defined benefit obligations at December 31										278			18	250						16
Movement in the Present Value of Registered Defined Benefit Pension Plan Assets
($ mil ions)		2020						2019
Fair value of plan assets at January 1						231					193
Contributions paid into the plan						23					20
Benefits paid by the plan						(28)					(12)
Return on plan assets						18					22
Interest income						8					8
Fair value of registered plan assets at December 31						252					231
Expense Recognition in Earnings (Loss)
For the years ended December 31 ($ mil ions)
		2020						2019
Registered PlanCurrent service costs
						19					15
Interest on obligation						9					8
Interest on plan assets						(8)					(8)
						20					15
The expense is recognized in the fol owing line items in the consolidated statement of comprehensive income:
For the years ended December 31 ($ mil ions)
		2020						2019
Registered PlanOperating expenses
						10					7
General and administrative expense						10					8
						20					15
Expense recognized for the Supplemental Plan was less than $2 mil ion for each of the years ended December 31, 2020 and 2019.
Actuarial Gains and Losses Recognized in Other Comprehensive Income (Loss)
			2020	2019
									Registered	Supplemental						Registered	Supplemental
($ mil ions)									Plans	Plan			Total	Plan	Plan						Total
Balance at January 1											(33)	(2)				(35)	(28)	(1)	(29)
Remeasurements:
Financial assumptions											(13)	(1)				(14)	(21)	(1)	(22)
Experience adjustments											(10)	(1)				(11)	—	—	—
Return on plan assets excluding interest income											15	—				15	16	—	16
Recognized loss during the period after tax											(8)	(2)				(10)	(5)	(1)	(6)
Balance at December 31											(41)	(4)				(45)	(33)	(2)	(35)
	Pembina Pipeline Corporation Annual Report 2020 121

Principal actuarial assumptions used:
As at December 31(weighted average percent)
	2020	2019
Discount rate	2.6	3.1
Future pension earning increases	4.0	4.0
Assumptions regarding future mortality are based on published statistics and mortality tables. The current longevities underlying the values of the liabilities in the defined plans are as fol ows:
As at December 31 (years)
	2020	2019
Longevity at age 65 for current pensionersMales
	21.9	21.8
Females	24.3	24.2
Longevity at age 65 for current member aged 45Males
	22.9	22.8
Females	25.2	25.1
The calculation of the defined benefit obligation is sensitive to the discount rate, compensation increases, retirements and termination rates as set out above. A change in the estimated discount rate of 2.6 percent by 100 basis points at December 31, 2020 is considered reasonably possible in the next financial year. An increase by 100 basis points would result in a $40 mil ion addition to the obligation whereas, a decrease would lead to a $51 mil ion reduction to the obligation.
Pembina expects to contribute $23 mil ion to the defined benefit plans in 2021.
25. SHARE-BASED PAYMENTS
At December 31, 2020, Pembina has the fol owing share-based payment arrangements:
Share Option Plan (Equity-Settled)
Pembina has a share option plan under which employees are eligible to receive options to purchase shares in Pembina.
Long-Term Share Unit Award Incentive Plan (Cash-Settled)
Pembina has a long-term share unit award incentive plan. Under the share-based compensation plan, awards of restricted ("RSU") and performance ("PSU") share units are made to officers and non-officers. The plan results in participants receiving cash compensation based on the value of the underlying notional shares granted under the plan. Payments are based on a trading value of Pembina's common shares plus notional dividends and performance of Pembina.
Pembina also has a deferred share unit ("DSU") plan. Under the DSU plan, directors are required to take at least 50 percent of total director compensation as DSUs, until such time that they have met certain share ownership guidelines. A DSU is a notional share that has the same value as one Pembina common share. Its value changes with Pembina's share price. DSUs do not have voting rights but they accrue dividends as additional DSU units, at the same rate as dividends paid on Pembina's common shares. DSUs are paid out when a director retires from the board and are redeemed for cash using the weighted average of trading price of common shares on the Toronto Stock Exchange ("TSX") for the last five trading days before the redemption date, multiplied by the number of DSUs the director holds.
Terms and Conditions of Share Option Plan and Share Unit Award Incentive Plan
Share Option Plan
Share options vest one-third on the first anniversary of the grant date, one-third on the second anniversary of the grant date and one-third on the third anniversary of the grant date and have a contractual life of seven years.
122 Pembina Pipeline Corporation Annual Report 2020

Long-Term Share Unit Award Incentive Plan(1)
Grant date RSUs, PSUs and DSUs to Officers, Non-Officers(2) and Directors
(thousands of units, except as noted)	PSUs (3)	RSUs (3)	DSUs	Total
January 1, 2019					475	460	36	971
January 1, 2020					469	487	31	987
(1)	Distribution Units are granted in addition to RSU and PSU grants based on notional accrued dividends from RSU and PSU granted but not paid.
(2)	Non-Officers defined as senior selected positions within Pembina.
(3)	Contractual life of 3 years.
PSUs vest on the third anniversary of the grant date. RSUs vest one-third on the first anniversary of the grant date, one-third on the second anniversary of the grant date and one-third on the third anniversary of the grant date. Actual units awarded are based on the trading value of the shares and performance of Pembina.
Disclosure of Share Option Plan
The number and weighted average exercise prices of share options as fol ows:
			Weighted Average
					Exercise Price
(thousands of options, except as noted)		Number of Options		(dol ars)
Outstanding at December 31, 2018						17,928	$42.12
Granted			5,470	$48.27
Exercised						(3,979)	$37.95
Forfeited			(655)	$45.29
Expired			(180)	$48.98
Outstanding at December 31, 2019						18,584	$44.65
Granted			7,316	$37.55
Exercised						(2,188)	$40.17
Forfeited						(1,103)	$44.86
Expired			(833)	$45.24
Outstanding at December 31, 2020						21,776	$42.68
As of December 31, 2020, the fol owing options are outstanding:
(thousands of options, except as noted)							Number Outstanding	Weighted Average
Exercise Price (dol ars)							at December 31, 2020	Options Exercisable	Remaining Life
$26.83 – $36.32										4,451		681	6.0
$36.33 – $43.06										4,349				3,813	3.3
$43.07 – $45.29										4,362				1,138	5.0
$45.30 – $48.08										3,402				2,039	4.9
$48.09 – $52.01										5,212				2,800	3.9
Total										21,776	10,471		4.6
Options are exercised regularly throughout the year. Therefore, the weighted average share price during the year of $49.79 (2019: $48.87) is representative of the weighted average share price at the date of exercise.
	Pembina Pipeline Corporation Annual Report 2020 123

Expected volatility is estimated by considering historic average share price volatility. The weighted average inputs used in the measurement of the fair values at grant date of share options are the fol owing:
Share Options Granted
For the years ended December 31 (dol ars, except as noted)
	2020	2019
Weighted average
Fair value at grant date			3.82	4.12
Expected volatility (percent)	36.61	18.7
Expected option life (years)	3.67	3.67
Expected annual dividends per option			2.52	2.36
Expected forfeitures (percent)	6.9	6.6
Risk-free interest rate (based on government bonds)(percent)	0.5	1.6
Disclosure of Long-Term Share Unit Award Incentive Plan
The long-term share unit award incentive plans were valued using the volume weighted average price for 20 days ending December 31, 2020 of $32.53 (2019: $47.52). Actual payment may differ from amount valued based on market price and company performance.
Employee Expenses
For the years ended December 31($ mil ions)
	2020	2019
Share option plan, equity settled			17	16
Long-term share unit award incentive plan			11	50
Share-based compensation expense			28	66
Total carrying amount of liabilities for cash settled arrangements			60	95
Total intrinsic value of liability for vested benefits			39	57
26. ACCUMULATED OTHER COMPREHENSIVE INCOME
	Pension and
	other Post-
			Currency	Cash Flow	Retirement
			Translation	Hedge	Benefit Plan
($ mil ions)			Reserve	Reserve		Adjustments(2)	Total
Balance at December 31, 2018						347	—	(30)	317
Other comprehensive loss before hedging activities						(213)	—				(6)	(219)
Balance at December 31, 2019						134	—	(36)	98
Other comprehensive loss before hedging activities						(117)	—	(10)	(127)
Other comprehensive gain resulting from hedging activities(1)							32	—				—	32
Tax impact							(1)	—				—	(1)
Balance at December 31, 2020							48	—	(46)	2
(1)	Amounts relate to hedges of the Company's net investment in foreign operations (reported in Currency Translation Reserve) and interest rate derivatives designated as cash
flow hedges (reported in Cash Flow Hedge Reserve)(Note 27).
(2)	Pension and other Post-Retirement Benefit Plan Adjustments wil not be reclassified into earnings.
124 Pembina Pipeline Corporation Annual Report 2020

27. FINANCIAL INSTRUMENTS & RISK MANAGEMENT
Risk Management Overview
Pembina has exposure to counterparty credit risk, liquidity risk and market risk. Pembina recognizes that effective management of these risks is a critical success factor in managing organization and shareholder value.
Risk management strategies, policies and limits ensure risks and exposures are aligned to Pembina's business strategy and risk tolerance. Pembina's Board of Directors is responsible for providing risk management oversight at Pembina and oversees how management monitors compliance with Pembina's risk management policies and procedures and reviews the adequacy of this risk framework in relation to the risks faced by Pembina. Internal audit personnel assist the Board of Directors in its oversight role by monitoring and evaluating the effectiveness of the organization's risk management system.
Counterparty Credit Risk
Counterparty credit risk represents the financial loss Pembina may experience if a counterparty to a financial instrument or commercial agreement failed to meet its contractual obligations to Pembina in accordance with the terms and conditions of the financial instruments or agreements with Pembina. Counterparty credit risk arises primarily from Pembina's cash and cash equivalents, trade and other receivables, advances to related parties and from counterparties to its derivative financial instruments. The carrying amount of Pembina's cash and cash equivalents, trade and other receivables, advances to related parties, derivative financial instruments and certain financial guarantees represents the maximum counterparty credit exposure, without taking into account security held.
Pembina manages counterparty credit risk through established credit management techniques, including conducting comprehensive financial and other assessments for al new counterparties and regular reviews of existing counterparties to establish and monitor a counterparty's creditworthiness, setting exposure limits, monitoring exposures against these limits, entering into master netting arrangements and obtaining financial assurances where warranted. Pembina utilizes various sources of financial, credit and business information in assessing the creditworthiness of a counterparty including external credit ratings, where available, and in other cases, detailed financial statement analysis in order to generate an internal credit rating based on quantitative and qualitative factors. The establishment of counterparty exposure limits is governed by a Board of Directors designated counterparty exposure limit matrix which represents the maximum dol ar amounts of counterparty exposure by debt rating that can be approved for a counterparty. Pembina continues to closely monitor and reassess the creditworthiness of its counterparties, which has resulted in Pembina reducing or mitigating its exposure to certain counterparties where it was deemed warranted and permitted under contractual terms.
Financial assurances from counterparties may include guarantees, letters of credit and cash. At December 31, 2020 letters of credit totaling $130 mil ion (December 31, 2019: $90 mil ion) were held primarily in respect of customer trade receivables.
Pembina typical y has col ected its trade receivables in ful and at December 31, 2020, 94 percent were current (2019: 95 percent). Management defines current as outstanding accounts receivable under 30 days past due. Pembina has a general lien and a continuing and first priority security interest in, and a secured charge on, al of a shipper's petroleum products in its custody.
At December 31, the aging of past due trade and other receivables was as fol ows:
($ mil ions)	2020	2019
31-60 days past due			3	1
Greater than 61 days past due			8	7
			11	8
			Pembina Pipeline Corporation Annual Report 2020 125

Pembina uses a loss al owance matrix to measure lifetime expected credit losses at initial recognition and throughout the life of the receivable. The loss al owance matrix is determined based on Pembina's historical default rates over the expected life of trade receivables, adjusted for forward-looking estimates. Management believes the unimpaired amounts that are past due by greater than 30 days are ful y col ectible based on historical default rates of customers and management's assessment of counterparty credit risk through established credit management techniques as discussed above.
Expected credit losses on lease receivables are determined using a probability-weighted estimate of credit losses, measured as the present value of al expected cash shortfal s, discounted at the interest rates implicit in the leases, using reasonable and supportable information about past events, current conditions and forecasts of future economic conditions. Pembina considers the risk of default relating to lease receivables low based on Pembina's assessment of individual counterparty credit risk through established credit management techniques as discussed above.
Advances to related parties at December 31, 2020 are held at amortized cost and consist of funds advanced by Pembina to a jointly control ed entity. Expected credit losses are measured using a probability-weighted estimate of credit losses, measured as the present value of al expected cash shortfal s, discounted at the effective interest rate of the financial asset, using reasonable and supportable information about past events, current conditions and forecasts of future economic conditions.
As a result of the assessment leading to the impairment of Pembina's preferred interest in Ruby, Pembina further impaired its remaining related party advance of $139 mil ion to Ruby. See Note 13 for additional details.
Pembina monitors and manages its concentration of counterparty credit risk on an ongoing basis. Pembina believes these measures minimize its counterparty credit risk but there is no certainty that they wil protect it against al material losses. As part of its ongoing operations, Pembina must balance its market and counterparty credit risks when making business decisions.
Liquidity Risk
Liquidity risk is the risk Pembina wil not be able to meet its financial obligations as they come due. The fol owing are the contractual maturities of financial liabilities, including estimated interest payments.
	Outstanding Balances Due by Period
December 31, 2020
		Carrying	Expected	Less Than 1		More Than
		Amount	Cash Flows	Year			1 - 3 Years	3 - 5 Years	5 Years	($ mil ions)Trade payables and accrued liabilities
			780	780	780				—	—	—
Loans and borrowings			10,876	16,275	1,058			2,262	2,708	10,247
Dividends payable			115	115	115				—	—	—
Derivative financial liabilities								69	69	69				—	—	—
Lease liabilities			774	1,064	131							217	174	542
Pembina manages its liquidity risk by forecasting cash flows over a 12 month rol ing time period to identify financing requirements. These financing requirements are then addressed through a combination of credit facilities and through access to capital markets, if required.
126 Pembina Pipeline Corporation Annual Report 2020

Market Risk
Pembina's results are subject to movements in commodity prices, foreign exchange and interest rates. A formal Risk Management Program including policies and procedures has been designed to mitigate these risks.
a. Commodity Price Risk
Certain of the transportation contracts or tol ing arrangements with respect to Pembina's pipeline assets do not include take-or-pay commitments from crude oil and gas producers and, as a result, Pembina is exposed to throughput risk with respect to those assets. A decrease in volumes transported can directly and adversely affect Pembina’s revenues and earnings. The demand for, and utilization of, Pembina's pipeline assets may be impacted by factors such as changing market fundamentals, capacity bottlenecks, operational incidents, regulatory restrictions, system maintenance, weather and increased competition. Market fundamentals, such as commodity prices and price differentials, natural gas and gasoline consumption, alternative energy sources and global supply disruptions outside of Pembina's control can impact both the supply of and demand for the commodities transported on Pembina's pipelines.
Pembina's Marketing business includes activities related to product storage, terminal ing, and hub services. These activities expose Pembina to certain risks relating to fluctuations in commodity prices and, as a result, Pembina may experience volatility in revenue and impairments related to the book value of stored product with respect to these activities. Primarily, Pembina enters into contracts to purchase and sel crude oil, condensate, NGL and natural gas at floating market prices; as a result, the prices of products that are marketed by Pembina are subject to volatility as a result of factors such as seasonal demand changes, extreme weather conditions, market inventory levels, general economic conditions, changes in crude oil markets and other factors. Pembina manages its risk exposure by balancing purchases and sales to secure less volatile margins. Notwithstanding Pembina's management of price and quality risk, marketing margins for commodities can vary and have varied significantly from period to period in the past. This variability could have an adverse effect on the results of Pembina's Marketing business and its overal results of operations. To assist in reducing this inherent variability in its Marketing business, Pembina has invested, and wil continue to invest, in assets that have a fee-based revenue component.
Pembina is also exposed to potential price declines and decreasing frac spreads between the time Pembina purchases NGL feedstock and sel s NGL products. Frac spread is the difference between the sale prices of NGL products and the cost of NGL sourced from natural gas and acquired at prices related to natural gas prices. Frac spreads can change significantly from period to period depending on the relationship between NGL and natural gas prices (the "frac spread ratio"), absolute commodity prices and changes in the Canadian to U.S. dol ar exchange rate. In addition to the frac spread ratio changes, there is also a differential between NGL product prices and crude oil prices which can change margins realized for midstream products. The amount of profit or loss made on the extraction portion of the business wil general y increase or decrease with frac spreads. This exposure could result in variability of cash flow generated by the Marketing business, which could affect Pembina and the cash dividends that Pembina is able to distribute.
Pembina utilizes financial derivative instruments as part of its overal risk management strategy to assist in managing the exposure to commodity price, interest rate, cost of power and foreign exchange risk. As an example of commodity price mitigation, Pembina actively fixes a portion of its exposure to fractionation margins through the use of derivative financial instruments. Additional y, Pembina's Marketing business is also exposed to variability in quality, time and location differentials for various products, and financial instruments may be used to offset Pembina's exposures to these differentials. Pembina does not use financial instruments for speculative purposes. Commodity price fluctuations and volatility can also impact producer activity and throughput in Pembina’s infrastructure.
	Pembina Pipeline Corporation Annual Report 2020 127

The fol owing table shows the impact on earnings(1) if the underlying commodity price risk of the derivative financial instruments (increased) or decreased by 15 percent, with other variables held constant.
As at December 31, 2020	15 Percent	15 Percent
($ mil ions)	Price Increase	Price Decrease
Crude oil			(30)	28
Natural gas			9	(9)
NGL(2)			(32)	32
(1)	Based on average market prices.
(2)	Includes propane, butane and condensate.
b. Foreign Exchange Risk
Certain of Pembina's cash flows, namely a portion of its commodity-related cash flows, certain cash flows from U.S.-based infrastructure assets and distributions from U.S.-based investments in equity accounted investees, are subject to currency risk, arising from the denomination of specific cash flows in U.S. dol ars. Additional y, a portion of Pembina's capital expenditures and contributions or loans to Pembina's U.S.-based investments in equity accounted investees, may be denominated in U.S. dol ars. Furthermore, the value of the investment in U.S. dol ar denominated subsidiaries wil fluctuate with changes in exchange rates when translated into Pembina's functional currency.
Pembina monitors, assesses and responds to these foreign currency risks using an active risk management program, which may include the issuance of U.S. dol ar debt, and exchange of foreign currency for domestic currency at a fixed rate.
The fol owing table shows the impact on earnings(1) if the underlying foreign exchange risk rate of the derivative financial instruments (increased) or decreased by $0.10, with other variables held constant.
As at December 31, 2020	$0.10	$0.10
($ mil ions)	Rate Increase	Rate Decrease
U.S. to Canadian dol ars			(26)	26
(1)	Based on the U.S. to Canadian dol ar exchange rate.
c. Interest Rate Risk
Interest bearing financial liabilities include Pembina's debt and lease liabilities. Pembina has a floating interest rate debt in the form of its credit facilities and certain long-term debt, which subjects Pembina to interest rate risk. Pembina monitors and assesses variable interest rate risk and responds to this risk by issuing long-term debt with fixed interest rates or by entering into interest rate swaps.
Pembina's U.S. drawings on its credit facilities, certain U.S. debt, and Pembina's interest rate swaps have variable rate components that reference the London Interbank Offered Rate ("LIBOR"). This rate is expected to be phased out fol owing 2021 and wil likely be replaced by a secured overnight financing rate. LIBOR wil cease to be published at the end of 2023. Pembina wil continue to monitor developments and the potential impact on the business.
At the reporting date, the interest rate profile of Pembina's interest-bearing financial instruments was:
As at December 31($ mil ions)
			2020	2019
Carrying amounts of financial liabilityFixed rate instruments(1)
			10,120	8,874
Variable rate instruments(2)			1,530	2,097
			11,650	10,971
(1)	Includes lease liabilities.
(2)	At December 31, 2020, Pembina held positions in financial derivative contracts designated as cash flow hedging instruments, fixing the interest rates on U.S. $250 mil ion of
variable rate debt (December 31, 2019: nil).
128 Pembina Pipeline Corporation Annual Report 2020

Cash Flow Sensitivity Analysis for Variable Rate Instruments
The fol owing table shows the impact on earnings if interest rates at the reporting date would have (increased) decreased earnings by 100 basis points, with other variables held constant.
As at December 31, 2020	100 Basis Point	100 Basis Point
($ mil ions)			Increase	Decrease
Variable rate instruments			(13)		13
Fair Values
The fair values of financial assets and liabilities, together with the carrying amounts shown in the consolidated statements of financial position, are shown in the table below. Certain non-derivative financial instruments measured at amortized cost including cash and cash equivalents, trade receivables and other, finance lease receivables, advances to related parties and trade payables and other have been excluded because they have carrying amounts that approximate their fair value due to the nature of the item or the short time to maturity. These instruments would be classified in Level 2 of the fair value hierarchy.
						2020	2019
As at December 31						Fair Value(1)	Fair Value(1)
								Carrying	Carrying
								Value	Value	($ mil ions)				Level 1	Level 2	Level 3	Level 1	Level 2	Level 3
Financial assets carried at fair valueDerivative financial instruments(3)
									53	—	53	—	48				—	48		—
Financial liabilities carried at fair valueDerivative financial instruments(3)
									69	—	69	—	9				—	9		—
Financial liabilities carried at amortized costLoans and borrowings(2)
								10,876	— 11,902		— 10,152	— 10,729	—
(1)	The basis for determining fair value is disclosed in Note 6.
(2)	Carrying value of current and non-current balances.
(3)	At December 31, 2020 al derivative financial instruments are carried at fair value through earnings.
Pembina's financial instruments carried at fair value are valued using Level 2 inputs that include quoted forward prices for commodities, time value and volatility factors, which can be substantial y observed or corroborated in the marketplace. Instruments in this category include non-exchange traded derivatives such as over-the-counter physical forwards and options, including those that have prices similar to quoted market prices. Pembina obtains quoted market prices for its inputs from information sources including banks, Bloomberg Terminals and Natural Gas Exchange.
Interest Rates Used for Determining Fair Value
The interest rates used to discount estimated cash flows, when applicable, are based on the government yield curve at the reporting date plus an adequate credit spread, and were as fol ows:
As at December 31 (percent)
			2020	2019
Derivatives			0.5 - 0.7	2.0 - 2.5
Loans and borrowings			0.5 - 3.9	2.3 - 4.0
Fair value of power derivatives are based on market rates reflecting forward curves.
						Pembina Pipeline Corporation Annual Report 2020 129

Non-Derivative Instruments Designated as Net Investment Hedges
Pembina has designated certain U.S. dol ar denominated debt as a hedge of the Company's net investment in U.S. dol ar denominated subsidiaries and investments in equity accounted investees. The designated debt has been assessed as having no ineffectiveness as the U.S. dol ar debt has an equal and opposite exposure to U.S. dol ar fluctuations. As a result, al foreign exchange gains or losses on the debt are reported directly in other comprehensive (loss) income.
The fol owing balances of U.S. dol ar debt had been designated as hedges:
For the Years ended December 31($ mil ions)
	2020	2019
Notional amount of U.S. debt designated (in U.S. dol ars)			250	—
Carrying value of U.S. debt designated			317	—
Maturity date	2025	NA
Derivative instruments
Pembina enters into derivative instruments to hedge future cash flows associated with interest rate, commodity, and foreign exchange exposures. Derivatives are considered effective hedges to the extent that they offset the changes value of the hedged item or transaction resulting from a specified risk factor. In some cases, even though the derivatives are considered to be effective economic hedges, they do not meet the specific criteria for hedge accounting treatment and are classified as held at fair value through profit or loss ("FVTPL").
The fol owing table is a summary of the net derivative financial instruments, which is consistent with the gross balances:
			2020	2019
			Non-	Non-						Non-
As at December 31 ($ mil ions)				Current	Current	Current				Current	Current	Current						Current
				Asset	Asset	Liability			Total	Asset	Asset	Liability						Liability	Total
Commodity, power, storage and rail
financial instruments					11	27						(68)	(30)	34						5	(6)	(3)	30
Interest rate					—	1						(1)	—	—						—	—	—	—
Foreign exchange					14	—						—	14	6						3	—	—	9
Net derivative financial instruments					25	28						(69)	(16)	40						8	(6)	(3)	39
Notional and Maturity Summary
The maturity and notional amount or quantity outstanding related Pembina's derivative instruments is as fol ows:
						Liquids	Natural Gas			Power	Foreign	Interest
($ mil ions)						(bpd)	(GJ/d)								(MWh)	Exchange	Rate
As at December 31, 2020Purchases(1)
										1,756	73,557	6						—	—
Sales(1)										25,284	—	—						—	—
Mil ions of U.S. dol ars										—	—	—						260	250
Maturity dates						2021	2021	2021								2021	2025
As at December 31, 2019Purchases(1)
										409	94,727	—						—	—
Sales(1)										24,839	—	—						—	—
Mil ions of U.S. dol ars										—	—	—						470	—
Maturity dates						2020-2021	2020-2021	NA	2020-2021	NA
(1)	Barrels per day ("bpd"), gigajoules per day ("GJ/d") and megawatt hours ("MWh").
130 Pembina Pipeline Corporation Annual Report 2020

Gains and Losses on Derivative Instruments
Realized and unrealized gains (losses) on derivative instruments are as fol ows:
For the years ended December 31($ mil ions)
	2020	2019
Derivative instruments held at FVTPL(1)Realized (gain) loss
Commodity-related			(54)	(33)
Foreign exchange			2	3
Unrealized loss (gain)
Commodity-related			84	13
Foreign exchange			5	4
(1)	Realized and unrealized (gains) losses on commodity derivative instruments held at FVTPL are included in (gain) loss on commodity-related derivative financial instruments in
the consolidated statements of (loss) earnings and comprehensive (loss) income. Realized and unrealized (gains) losses on foreign exchange derivative instruments held at
FVTPL are included in net finance costs in the consolidated statements of (loss) earnings and comprehensive (loss) income.
28. CAPITAL MANAGEMENT
Pembina's objective when managing capital is to ensure a stable stream of dividends to shareholders that is sustainable over the long-term. Pembina manages its capital structure based on requirements arising from significant capital development activities, the risk characteristics of its underlying asset base and changes in economic conditions. Pembina manages its capital structure and short-term financing requirements using non-GAAP measures, including the ratios of debt to adjusted EBITDA, debt to total enterprise value, adjusted cash flow to debt and debt to equity. The metrics are used to measure Pembina's financial leverage and measure the strength of Pembina's balance sheet. Pembina remains satisfied that the leverage currently employed in its capital structure is sufficient and appropriate given the characteristics and operations of the underlying asset base. Pembina, upon approval from its Board of Directors, wil balance its overal capital structure through new equity or debt issuances, as required.
Pembina maintains a conservative capital structure that al ows it to finance its day-to-day cash requirements through its operations, without requiring external sources of capital. Pembina funds its operating commitments, short-term capital spending as wel as its dividends to shareholders through this cash flow, while new borrowing and equity issuances are primarily reserved for the support of specific significant development activities. The capital structure of Pembina consists of shareholder's equity, comprised of common and preferred equity, plus long-term debt. Long-term debt is comprised of bank credit facilities and unsecured notes.
Pembina is subject to certain financial covenants under its note indentures and credit agreements and is in compliance with al financial covenants as of December 31, 2020.
Note 19 of these financial statements shows the change in share capital for the year ended December 31, 2020.
			Pembina Pipeline Corporation Annual Report 2020 131

29. GROUP ENTITIES
Significant Subsidiaries
As at December 31 (percentages)
	Jurisdiction	Ownership Interest
Pembina Cochin LLC	Delaware U.S.		100
Pembina Empress NGL Partnership	Alberta		100
Pembina Gas Services Limited Partnership	Alberta		100
Pembina Holding Canada L.P.	Alberta		100
Pembina Infrastructure and Logistics L.P.	Alberta		100
Pembina Midstream Limited Partnership	Alberta		100
Pembina Oil Sands Pipeline L.P.	Alberta		100
Pembina Pipeline	Alberta		100
PKM Canada North 40 Limited Partnership	Manitoba		100
30. RELATED PARTIES
Pembina enters into transactions with related parties in the normal course of business and on terms equivalent to those that prevail in arm's length transactions, unless otherwise noted. Pembina contracts capacity from its equity accounted investee Al iance, advances funds to support operations and provides services, on a cost recovery basis, to investments in equity accounted investees. A summary of the significant related party transactions are as fol ows:
Equity Accounted Investees
($ mil ions)				2020	2019
For the years ended December 31:
Services provided						136	82
Services received						14	2
Interest income						14	10
As at December 31:
Advances to related parties(1)						13	131
Trade receivables and other						19	17
Trade payables and accrued liabilities						2	—
(1)	During the year ended December 31, 2020, Pembina advanced U.S. $24 mil ion (2019: U.S. $31 mil ion) to Ruby and $5 mil ion (2019: $17 mil ion), net of repayments, to Fort
Corp. In December 31, 2020, Pembina recognized an impairment of U.S. $110 mil ion on its advances to Ruby (Note 13). During the year ended December 31, 2019, Pembina
converted $57 mil ion in advances to CKPC into equity contributions.
Key Management Personnel and Director Compensation
Key management consists of Pembina's directors and certain key officers.
Compensation
In addition to short-term employee benefits, including salaries, director fees and short-term incentives, Pembina also provides key management personnel with share-based compensation, contributes to post employment pension plans and provides car al owances, parking and business club memberships.
Key management personnel compensation comprised:
For the years ended December 31 ($ mil ions)
				2020	2019
Short-term employee benefits						10	10
Share-based compensation and other						10	13
Total compensation of key management						20	23
132 Pembina Pipeline Corporation Annual Report 2020

Transactions
Key management personnel and directors of Pembina control less than one percent of the voting common shares of Pembina (consistent with the prior year). Certain directors and key management personnel also hold Pembina preferred shares. Dividend payments received for the common and preferred shares held are commensurate with other non-related holders of those instruments.
Certain officers are subject to employment agreements in the event of termination without just cause or change of control.
Post-Employment Benefit Plans
Pembina has significant influence over the pension plans for the benefit of their respective employees. No balance payable is outstanding at December 31, 2020 (December 31, 2019: nil).
	Transaction Value
($ mil ions)	Years Ended December 31
Post-employment benefit plan		Transaction	2020	2019
Defined benefit plan		Funding		23		20
31. COMMITMENTS AND CONTINGENCIES
Commitments
Pembina had the fol owing contractual obligations outstanding at December 31, 2020:
Contractual Obligations(1)				Payments Due by Period
($ mil ions)					Total	Less than 1 Year	1 – 3 Years	3 – 5 Years			After 5 Years
Leases(2)					1,064	131	217		174	542
Loans and borrowings(3)					16,275	1,058	2,262		2,708	10,247
Construction commitments(4)					1,208	523	149		43	493
Other					569	112	145		75	237
Total contractual obligations					19,116	1,824	2,773		3,000	11,519
(1)	Pembina enters into product purchase agreements and power purchase agreements to secure supply for future operations. Purchase prices of both NGL and power are
dependent on current market prices. Volumes and prices for NGL and power contracts cannot be reasonably determined, and therefore, an amount has not been included in
the contractual obligations schedule. Product purchase agreements range from one to 9 years and involve the purchase of NGL products from producers. Assuming product is
available, Pembina has secured between 35 and 175 mbpd of NGL each year up to and including 2029. Power purchase agreements range from one to 24 years and involve
the purchase of power from electrical service providers. Pembina has secured up to 80 megawatts per day each year up to and including 2044.
(2)	Includes terminals, rail, office space, land and vehicle leases.
(3)	Excluding deferred financing costs. Including interest payments on Pembina's senior unsecured notes.
(4)	Excluding significant projects that are awaiting regulatory approval, projects which Pembina is not committed to construct, and projects that are executed by equity
accounted investees.
Commitments to Equity Accounted Investees
Pembina has commitments to provide contributions to certain equity accounted investees based on annual budgets approved by the joint venture partners.
Contingencies
Pembina, including its subsidiaries and its investments in equity accounted investees, are subject to various legal and regulatory and tax proceedings, actions and audits arising in the normal course of business. We represent our interests vigorously in al proceedings in which we are involved. Legal and administrative proceedings involving possible losses are inherently complex, and we apply significant judgment in estimating probable outcomes. Of most significance is a claim filed against Aux Sable by a counterparty to an NGL supply agreement. Aux Sable has filed Statements of Defense responding to the claim. While the final outcome of such actions and proceedings cannot be predicted with certainty, at this time management believes that the resolutions of such actions and proceedings wil not have a material impact on Pembina's financial position or results of operations.
				Pembina Pipeline Corporation Annual Report 2020 133

Letters of Credit

Pembina has provided letters of credit to various third parties in the normal course of conducting business. The letters of credit include financial guarantees to counterparties for product purchases and sales, transportation services, utilities, engineering and construction services. The letters of credit have not had and are not expected to have a material impact on Pembina's financial position, earnings, liquidity or capital resources.

At December 31, 2020, Pembina had $91 mil ion (December 31, 2019: $103 mil ion) in letters of credit issued to facilitate commercial transactions with third parties and to support regulatory requirements.

32. SUBSEQUENT EVENTS

On June 1, 2021, Pembina announced that it had entered into an arrangement agreement with Inter Pipeline Ltd. ("Inter Pipeline"), pursuant to which Pembina proposed to acquire al of the issued and outstanding common shares of Inter Pipeline by way of a plan of arrangement under the Business Corporations Act (Alberta) (the "Inter Pipeline Arrangement"). Pursuant to the Inter Pipeline Arrangement, holders of Inter Pipeline common shares (other than dissenting holders of Inter Pipeline common shares) would have received 0.5 of a common share of Pembina for each common share of Inter Pipeline that they owned. On July 25, 2021, the arrangement agreement was terminated and Pembina received the termination fee of $350 mil ion.

On June 4, 2021, Pembina acquired a 49.9 percent interest in a joint venture with the Haisla Nation to develop the Cedar LNG Project, a LNG facility located on the coast of British Columbia within the Douglas Channel on Haisla-owned land. Pembina's initial investment of $129 mil ion included $76 mil ion of accrued contingent consideration payable on achievement of certain conditions. Under the terms of the agreement, Pembina has commitments to make additional payments on a positive final investment decision as wel as contributions to fund development costs and annual operating budgets.

134 Pembina Pipeline Corporation Annual Report 2020

HEAD OFFICEPembina Pipeline CorporationSuite 4000, 585 - 8th Avenue SWCalgary, Alberta T2P 1G1
AUDITORSKPMG LLPChartered Professional AccountantsCalgary, Alberta
TRUSTEE, REGISTRAR & TRANSFER AGENTComputershare Trust Company of CanadaSuite 600, 530 - 8th Avenue SWCalgary, Alberta T2P 3S81.800.564.6253
STOCK EXCHANGEPembina Pipeline CorporationToronto Stock Exchange listing symbols for:COMMON SHARES
	PPL
PREFERRED SHARES	PPL.PR.A, PPL.PR.C, PPL.PR.E, PPL.PR.G, PPL.PR.I, PPL.PR.K,
PPL.PR.M, PPL.PR.O, PPL.PR.Q, PPL.PR.S, PPL.PF.A, PPL.PF.C and PPL.PF.ENew York Stock Exchange listing symbol for:COMMON SHARES
	PBA
INVESTOR INQUIRIESPHONE
		403.231.3156
FAX	403.237.0254
TOLL FREE		1.855.880.7404
EMAIL		investor-relations@pembina.com
WEBSITE		www.pembina.com