TORONTO, Aug. 1, 2023
/CNW/ - George Weston Limited (TSX: WN) ("GWL" or the "Company")
today announced its consolidated unaudited results for the 12 weeks
ended June 17,
2023(2).
GWL's 2023 Second Quarter Report has been filed on SEDAR
and is available at sedar.com and in the Investor Centre section of
the Company's website at weston.ca.
"GWL's positive results this quarter reflect the continued
strength and stability of our operating businesses," said
Galen G. Weston, Chairman and Chief
Executive Officer of George Weston Limited. "With Choice Properties
delivering on its financial plan and development initiatives and
Loblaw providing Canadians with the care, selection, and value they
need today, our group is well positioned for continued
success."
Loblaw Companies Limited ("Loblaw") delivered another quarter of
strong operational and financial results as it continued to execute
on retail excellence. The quarter was characterized by increased
sales, a focus on value, and lower gross margins. Loblaw's net
earnings were up 31.3%, unusually elevated by lapping a prior year
charge at President's Choice Bank ("PC Bank"), while adjusted net
earnings were up 10.6%. Loblaw's ability to deliver everyday value
and savings to Canadians was reflected in strong sales growth
across its food and drug businesses. Food retail sales growth was
led by a continued consumer shift to discount stores, as customers
continued to find value in Loblaw's private label brands and
personalized PC Optimum™ offers. Drug front-store and pharmacy
sales remained strong, led by continued strength in beauty
products. Retail gross margin declined slightly in both food and
drug as Loblaw faced double digit supplier cost increases that were
not fully passed on to consumers, and higher shrink. Higher sales
and cost control initiatives drove adjusted net earnings growth in
the quarter.
Choice Properties Real Estate Investment Trust ("Choice
Properties") delivered strong second quarter results, which reflect
the continued demand for its necessity-based retail centres and
well-located industrial assets. Choice Properties continues to make
progress on its development initiatives and is on track to complete
approximately 1.6 million square feet of industrial space and two
residential projects this year. Choice Properties is also advancing
Choice Caledon Business Park, its largest industrial development
site located in the GTA, where site work has started and the first
lease was executed, both important steps towards delivering
high-quality industrial space to its portfolio.
The Company also announced today that the Toronto Stock Exchange
("TSX") has accepted an amendment to the Company's Normal Course
Issuer Bid ("NCIB") to allow Wittington Investments, Limited
("Wittington"), the Company's controlling shareholder, to
participate in the NCIB in a fixed proportion of 50% of
Wittington's pro rata share of the issued and outstanding common
shares of the Company. For additional details, refer to the
"Consolidated Other Business Matters" section of this News
Release.
2023 SECOND QUARTER HIGHLIGHTS
- Net earnings available to common shareholders of the Company
from continuing operations were $498
million, a decrease of $142
million, or 22.2%. Diluted net earnings per common share
from continuing operations were $3.55, a decrease of $0.81 per common share, or 18.6%. The decrease
was due to the unfavourable year-over-year net impact of adjusting
items, primarily driven by the unfavourable year-over-year impact
of the fair value adjustment of the Trust Unit liability.
- Adjusted net earnings available to common shareholders of the
Company(1) from continuing operations were $377 million, an increase of $49 million, or 14.9%.
- Adjusted diluted net earnings per common share(1)
from continuing operations were $2.68, an increase of $0.45 per common share, or 20.2%.
- Repurchased for cancellation 1.5 million common shares at a
cost of $241 million.
- GWL Corporate(3) free cash flow(1) from
continuing operations was $365
million.
CONSOLIDATED RESULTS OF OPERATIONS
The Company's results reflect the year-over-year impact of the
fair value adjustment of the Trust Unit liability as a result of
the significant changes in Choice Properties' unit price, recorded
in net interest expense and other financing charges. The Company's
results are impacted by market price fluctuations of Choice
Properties' Trust Units on the basis that the Trust Units held by
unitholders, other than the Company, are redeemable for cash at the
option of the holder and are presented as a liability on the
Company's consolidated balance sheet. The Company's financial
results are positively impacted when the Trust Unit price declines
and negatively impacted when the Trust Unit price increases.
Unless otherwise indicated, all financial information represents
the Company's results from continuing operations.
($ millions except
where otherwise indicated)
For the periods ended
as indicated
|
12 Weeks
Ended
|
|
|
|
|
Jun. 17,
2023
|
|
Jun. 18,
2022
|
|
$ Change
|
|
% Change
|
|
Revenue
|
|
$
|
13,884
|
|
$ 12,979
|
$
905
|
|
7.0 %
|
|
Operating
income
|
|
$
|
1,099
|
|
$
649
|
$
450
|
|
69.3 %
|
|
Adjusted
EBITDA(1)
|
|
$
|
1,733
|
|
$
1,588
|
$
145
|
|
9.1 %
|
|
Adjusted EBITDA
margin(1)
|
|
|
12.5 %
|
|
|
12.2 %
|
|
|
|
|
|
Net earnings
attributable to shareholders of the
Company from continuing operations
|
|
$
|
508
|
|
$
650
|
$
(142)
|
|
(21.8) %
|
|
Net earnings
available to common shareholders
of the Company
|
|
$
|
498
|
|
$
634
|
$
(136)
|
|
(21.5) %
|
|
Continuing
operations
|
|
$
|
498
|
|
$
640
|
$
(142)
|
|
(22.2) %
|
|
Discontinued
operations(i)
|
|
$
|
—
|
|
$
(6)
|
$
6
|
|
100.0 %
|
|
Adjusted net earnings
available to common shareholders
of the Company(1) from continuing
operations
|
|
$
|
377
|
|
$
328
|
$
49
|
|
14.9 %
|
|
Diluted net earnings
per common share ($)
|
|
$
|
3.55
|
|
$
4.32
|
$ (0.77)
|
|
(17.8) %
|
|
Continuing
operations
|
|
$
|
3.55
|
|
$
4.36
|
$ (0.81)
|
|
(18.6) %
|
|
Discontinued
operations(i)
|
|
$
|
—
|
|
$
(0.04)
|
$
0.04
|
|
100.0 %
|
|
Adjusted diluted net
earnings per common share(1) from
continuing operations ($)
|
|
$
|
2.68
|
|
$
2.23
|
$ 0.45
|
|
20.2 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
In 2021, the Company
completed the sale of the Weston Foods bakery business. The
Company's interest in Weston Foods is presented separately as
discontinued operations in the Company's results. Details are
included in the Company's 2022 Annual Report. The Company's 2022
Annual Report is available at www.sedar.com.
|
In the second quarter of 2023, the Company recorded net earnings
available to common shareholders of the Company from continuing
operations of $498 million ($3.55 per common share), a decrease of
$142 million ($0.81 per common
share) compared to the same period in 2022. The decrease was due to
the unfavourable year-over-year net impact of adjusting items
totaling $191 million ($1.26 per
common share), partially offset by an improvement of
$49 million ($0.45 per common
share) in the consolidated underlying operating performance of the
Company described below.
- The unfavourable year-over-year net impact of adjusting items
totaling $191 million ($1.26 per common share) was primarily due
to:
-
- the unfavourable year-over-year impact of the fair value
adjustment of the Trust Unit liability of $374 million ($2.49
per common share) as a result of the decrease in Choice Properties'
unit price; and
- the unfavourable year-over-year impact of the prior year income
tax recovery related to the remeasurement of deferred tax balances
for the Choice Properties' disposition of six office assets (the
"Office Asset Sale") to Allied Properties Real Estate Investment
Trust ("Allied") in the second quarter of 2022 of $46 million ($0.31
per common share);
partially offset by,
-
-
- the favourable year-over-year impact of the fair value
adjustment on Choice Properties' investment in Allied of
$118 million ($0.79 per common share) as a result of the
decrease in Allied's Class B Unit price; and
- the favourable year-over-year impact of the fair value
adjustment on investment properties of $102
million ($0.70 per common
share) driven by Choice Properties, net of consolidation
adjustments in Other and Intersegment.
- The improvement in the Company's consolidated underlying
operating performance of $49 million
($0.45 per common share) was
primarily due to:
-
- the favourable underlying operating performance of Loblaw;
- the favourable underlying operating performance of Choice
Properties; and
- a decrease in the adjusted effective tax rate(1)
primarily attributable to a decrease in current tax expense related
to the Company's participation in Loblaw's NCIB program
and the non-taxable portion of the gain from real estate
dispositions;
partially offset by,
-
-
- an increase in adjusted net interest expense and other
financing charges(1).
- Diluted net earnings per common share from continuing
operations also included the favourable impact of shares purchased
for cancellation over the last 12 months ($0.12 per common share) pursuant to the Company's
NCIB.
Adjusted net earnings available to common shareholders of the
Company(1) from continuing operations were
$377 million, an increase of $49 million, or 14.9%,
compared to the same period in 2022 due to the improvement in the
Company's consolidated underlying operating performance described
above.
Adjusted diluted net earnings per common share(1)
from continuing operations in the second quarter of 2023 were
$2.68, an increase of $0.45 per common share, or 20.2%, compared to the
same period in 2022. The increase was due to the favourable
performance in adjusted net earnings available to common
shareholders(1) from continuing operations and the
favourable impact of share repurchases.
CONSOLIDATED OTHER BUSINESS MATTERS
The Company completed the following GWL Corporate(3)
financing activities:
NCIB – Purchased and Cancelled Shares In the
second quarter of 2023, the Company purchased and cancelled
1.5 million shares under its NCIB (2022 – 1.8 million
shares) at a cost of $241 million
(2022 – $285 million). As at June 17,
2023, the Company had 137.9 million shares issued and
outstanding, net of shares held in trusts (June 18, 2022 – 144.7 million shares).
In the second quarter of 2023, the Company entered into an
automatic share purchase plan ("ASPP") with a broker in order to
facilitate the repurchase of the Company's common shares under its
NCIB. During the effective period of the ASPP, the Company's broker
may purchase common shares at times when the Company would not be
active in the market.
Refer to Section 3.6, "Dividends and Share Repurchases" of the
Management's Discussion and Analysis ("MD&A") in the Company's
2023 Second Quarter Report for more information.
Participation in Loblaw's NCIB The Company
participates in Loblaw's NCIB in order to maintain its
proportionate percentage ownership interest. In the second quarter
of 2023, the Company received proceeds of $250 million (2022 –
$309 million) from the sale of Loblaw common shares.
Amendment to the Company's NCIB The
amendment to the Company's NCIB will permit Wittington to
participate in the Company's share buyback program in a fixed
proportion of 50% of its pro rata share of the issued and
outstanding common shares (the "Fixed Proportion"). Wittington
holds approximately 57% of the Company's issued and outstanding
common shares as at July 21,
2023.
Participating in the Company's share buyback program on this
basis means that Wittington's percentage ownership of the Company
will continue to grow. Wittington believes that the Company and its
operating businesses will remain superior investments over the long
term. Wittington will also be able to expand its diversification,
sustainable investing and support for philanthropy.
The Company's NCIB provides that the Company may, during the
12-month period from May 25, 2023
(the "Effective Date") to May 24,
2024, purchase up to 6,954,013 common shares, representing
approximately 5% of the issued and outstanding common shares as at
the Effective Date, by way of the NCIB on the TSX or through
alternative trading systems or by such other means as may be
permitted by the TSX or under applicable law. Based on the average
daily trading volume of 151,757 during the six months preceding the
Effective Date, daily purchases pursuant to the NCIB are limited to
37,939 common Shares, other than block purchase exceptions. As at
July 21, 2023, an aggregate of
1,382,828 common shares have been purchased by the Company pursuant
to its NCIB.
The Company will be permitted to purchase its common shares from
Wittington in the Fixed Proportion commencing on August 9, 2023, in accordance with an exemption
granted by the TSX pursuant to its rules, regulations and
policies in connection with the NCIB. The maximum number of common
shares that may be purchased pursuant to the NCIB will be reduced
by the number of common shares purchased by the Company from
Wittington. Assuming the Company purchases the maximum number of
common shares every day under the NCIB and that there are no other
transactions affecting the number of common shares, a maximum of
1,605,373 common shares may be repurchased from Wittington pursuant
to the NCIB and its interest in the Company would grow to 58.2% at
the conclusion of the NCIB.
By way of an example of daily trading, if Wittington's pro rata
share of the common shares is 57% (its current interest) and the
Company purchases 19,400 common shares from the public shareholders
pursuant to its NCIB on a given day, it will purchase 7,741 common
shares from Wittington that day (reflecting 50% of
Wittington's pro rata share of the common shares purchased by the
Company pursuant to the NCIB on that day), resulting in a total of
27,141 common shares purchased by the Company pursuant to
the NCIB that day.
Purchases from Wittington will be made during the TSX's Special
Trading Session pursuant to an automatic disposition plan agreement
("ADP Agreement") between the Company's broker, the Company and
Wittington. Purchases from Wittington will be made on trading days,
as required by the ADP Agreement, that the Company makes a purchase
from other shareholders. In the event that Wittington does not sell
common shares on any trading day as required by the terms of the
ADP Agreement (other than as a result of a market disruption
event), the TSX exemption will cease to apply and the Company will
not be permitted to make any further purchases from Wittington
under the terms of the NCIB.
REPORTABLE OPERATING SEGMENTS
The Company operates through its two reportable operating
segments: Loblaw and Choice Properties. Other and Intersegment
includes eliminations, intersegment adjustments related to the
consolidation and cash and short-term investments held by the
Company. All other company level activities that are not allocated
to the reportable operating segments, such as interest expense,
corporate activities and administrative costs are included in Other
and Intersegment.
Loblaw has two reportable operating segments, retail and
financial services. Loblaw's retail segment consists primarily of
food retail and drug retail. Loblaw provides Canadians with
grocery, pharmacy and healthcare services, health and beauty
products, apparel, general merchandise and financial services.
Choice Properties owns, manages and develops a high-quality
portfolio of commercial and residential properties across
Canada.
Excerpt of Segment Information
The accounting policies of the reportable operating segments are
the same as those described in the Company's 2022 audited annual
consolidated financial statements. The Company measures each
reportable operating segment's performance based on adjusted
EBITDA(1). No reportable operating segment is reliant on
any single external customer.
|
|
12 Weeks
Ended
|
|
|
|
Jun. 17,
2023
|
|
|
Jun. 18,
2022
|
|
($ millions)
|
|
Loblaw
|
Choice
Properties
|
Other
and
Inter-
segment
|
Total
Segment
Measure
|
Elim-
inations
|
Total
|
|
|
Loblaw
|
Choice
Properties
|
Other and
Inter-
segment
|
Total
Segment
Measure
|
Elim-
inations
|
Total
|
|
Revenue
|
|
$
13,738
|
$
330
|
$
4
|
$
14,072
|
$
(188)
|
$
13,884
|
|
|
$ 12,847
|
$
313
|
$
4
|
$ 13,164
|
$ (185)
|
$
12,979
|
|
Operating income
(loss)
|
|
$
925
|
$
290
|
$
(116)
|
$
1,099
|
$
—
|
$
1,099
|
|
|
$
740
|
$
(451)
|
$
360
|
$
649
|
$
—
|
$
649
|
|
Net interest
expense
(income) and
other financing
charges
|
|
193
|
(246)
|
126
|
73
|
—
|
73
|
|
|
152
|
(439)
|
(51)
|
(338)
|
—
|
(338)
|
|
Earnings (loss)
before
income taxes
from continuing
operations
|
|
$
732
|
$
536
|
$
(242)
|
$
1,026
|
$
—
|
$
1,026
|
|
|
$
588
|
$
(12)
|
$
411
|
$
987
|
$
—
|
$
987
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
|
$
925
|
$
290
|
$
(116)
|
$
1,099
|
$
—
|
$
1,099
|
|
|
$
740
|
$
(451)
|
$
360
|
$
649
|
$
—
|
$
649
|
|
Depreciation and
amortization
|
|
671
|
1
|
(87)
|
585
|
|
|
|
|
633
|
1
|
(82)
|
552
|
|
|
|
Adjusting
items(i)
|
|
42
|
(53)
|
60
|
49
|
|
|
|
|
124
|
676
|
(413)
|
387
|
|
|
|
Adjusted
EBITDA(i)
|
|
$
1,638
|
$
238
|
$
(143)
|
$
1,733
|
|
|
|
|
$
1,497
|
$
226
|
$
(135)
|
$
1,588
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i) Certain items
are excluded from operating income to derive adjusted
EBITDA(1).
|
Other and Intersegment includes the following items:
|
|
12 Weeks
Ended
|
|
|
|
Jun. 17,
2023
|
|
|
Jun. 18,
2022
|
|
($ millions)
|
|
Revenue
|
Operating
Income
|
Net
Interest
Expense
and Other
Financing
Charges
|
|
|
Revenue
|
Operating
Income
|
Net Interest
Expense
and Other
Financing
Charges
|
|
Internal lease
arrangements
|
|
$
—
|
$
(36)
|
$
(25)
|
|
|
$
—
|
$
(35)
|
$
(23)
|
|
Recognition of
depreciation on Choice Properties'
investment properties classified as fixed assets
by
the Company and measured at cost
|
|
—
|
(7)
|
—
|
|
|
—
|
(12)
|
—
|
|
Fair value adjustment
on investment properties
|
|
—
|
(63)
|
2
|
|
|
—
|
415
|
(5)
|
|
Fair value adjustment
on Choice Properties'
Exchangeable Units
|
|
—
|
—
|
376
|
|
|
—
|
—
|
570
|
|
Fair value adjustment
on Trust Unit liability
|
|
—
|
—
|
(202)
|
|
|
—
|
—
|
(576)
|
|
Unit distributions on
Exchangeable Units paid by
Choice Properties to GWL
|
|
—
|
—
|
(74)
|
|
|
—
|
—
|
(73)
|
|
Unit distributions on
Trust Units paid by Choice
Properties, excluding amounts paid to GWL
|
|
—
|
—
|
51
|
|
|
—
|
—
|
52
|
|
Other
|
|
4
|
(10)
|
(2)
|
|
|
4
|
(8)
|
4
|
|
Total
|
|
$
4
|
$ (116)
|
$
126
|
|
|
$
4
|
$
360
|
$
(51)
|
|
Elimination of
intercompany rental revenue
|
|
(188)
|
—
|
—
|
|
|
(185)
|
—
|
—
|
|
Total including
Eliminations
|
|
$
(184)
|
$ (116)
|
$
126
|
|
|
$
(181)
|
$
360
|
$
(51)
|
|
|
|
|
|
|
|
|
|
|
|
|
Loblaw Operating Results
($ millions except
where otherwise indicated)
For the periods ended
as indicated
|
|
12 Weeks
Ended
|
|
|
|
|
|
Jun. 17,
2023
|
|
Jun. 18,
2022
|
|
$ Change
|
|
% Change
|
|
Revenue
|
|
$ 13,738
|
|
|
$ 12,847
|
|
$
891
|
|
6.9 %
|
|
Operating
income
|
|
$
925
|
|
|
$
740
|
|
$
185
|
|
25.0 %
|
|
Adjusted
EBITDA(1)
|
|
$
1,638
|
|
|
$
1,497
|
|
$
141
|
|
9.4 %
|
|
Adjusted EBITDA
margin(1)
|
|
11.9 %
|
|
|
|
11.7 %
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
$
671
|
|
|
$
633
|
|
$
38
|
|
6.0 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue Loblaw revenue in the second quarter of 2023 was
$13,738 million, an increase of
$891 million, or 6.9%, compared to the same period in
2022, driven by an increase in retail sales and in financial
services revenue.
Retail sales were $13,471 million, an increase of
$848 million, or 6.7%, compared to the same period
in 2022. The increase was primarily driven by the following
factors:
- food retail sales were $9,560
million (2022 – $8,981
million) and food retail same-store sales growth was 6.1%
(2022 – 0.9%);
-
- the Consumer Price Index as measured by The Consumer Price
Index for Food Purchased from Stores was 9.1% (2022 – 9.6%) which
was generally in line with Loblaw's internal food inflation;
and
- food retail traffic increased and basket size decreased.
- drug retail sales were $3,911
million (2022 – $3,642
million) and drug retail same-store sales growth was 5.7%
(2022 – 5.6%);
-
- pharmacy and healthcare services same-store sales growth was
6.3% (2022 – 6.1%). Pharmacy and healthcare services sales include
Lifemark Health Group ("Lifemark") revenue of $112 million (2022 – $49
million). Lifemark was acquired on May 10, 2022. On a same-store basis, the number
of prescriptions dispensed increased by 0.9% (2022 – 2.3%) and the
average prescription value increased by 4.7% (2022 – 3.6%);
and
- front store same-store sales growth was 5.0% (2022 –
5.2%).
Financial services revenue in the second quarter of 2023
increased by $51 million, or 17.2%,
compared to the same period in 2022. The increase was primarily
driven by higher interest income from growth in credit card
receivables, higher interchange income and other credit card
related revenue from an increase in customer spending.
Operating Income Operating income in the second
quarter of 2023 was $925 million, an increase of
$185 million, or 25.0%, compared to the same period in
2022.
Adjusted EBITDA(1) Loblaw adjusted
EBITDA(1) in the second quarter of 2023 was $1,638 million, an increase of $141 million,
or 9.4%, compared to the same period in 2022, driven by an increase
in retail of $142 million, partially offset by a decrease in
financial services of $1 million.
Retail adjusted EBITDA(1) increased by
$142 million compared to the same period in 2022, driven by an
increase in retail gross profit of $230 million, partially
offset by an increase in retail selling, general and administrative
expenses ("SG&A") of $88 million.
- Retail gross profit percentage of 31.1% decreased by 30 basis
points compared to the same period in 2022. Retail margins declined
slightly, primarily driven by higher shrink and higher supplier
costs that were not passed on to consumers.
- Retail SG&A as a percentage of sales was 19.3%, a
favourable decrease of 60 basis points compared to the same period
in 2022. The favourable decrease was primarily due to operating
leverage from higher sales.
Financial services adjusted EBITDA(1) decreased by
$1 million compared to the same
period in 2022, primarily driven by the year-over-year impact of
the expected credit loss provision from the prior year release of
$3 million versus the current year
increase of $8 million and higher
contractual charge-off, operating costs and loyalty program costs
from an increase in consumer spending and the growth in the credit
card portfolio, partially offset by higher revenue as described
above.
Depreciation and Amortization Loblaw depreciation
and amortization in the second quarter of 2023 was
$671 million, an increase of $38 million compared to the
same period in 2022. The increase in depreciation and amortization
was primarily driven by an increase in depreciation of information
technology ("IT") and leased assets, and accelerated depreciation
of $8 million (2022 – nil) as a
result of network optimization. Depreciation and amortization in
the second quarter of 2023 included $116 million (2022 –
$114 million) of amortization of intangible assets related to
the acquisitions of Shoppers Drug Mart Corporation ("Shoppers Drug
Mart") and Lifemark.
Loblaw Other Business Matters
Network Optimization During the second quarter of
2023, Loblaw recorded a charge of $17
million associated with network optimization. Included in
the charge was accelerated depreciation of $8 million as described above.
President's Choice Bank Commodity Tax Matters In
the second quarter of 2023, the Federal government enacted certain
commodity tax legislation that may apply to PC Bank, a subsidiary
of Loblaw, on a retroactive basis. A charge of $37 million, inclusive of interest, has been
recorded for this matter.
In July 2022, the Tax Court of
Canada ("Tax Court") released a
decision relating to PC Bank. Although Loblaw believes in the
merits of its position, Loblaw recorded a charge of $111 million, inclusive of interest, in the
second quarter of 2022. In September 2022, PC Bank filed a
Notice of Appeal with the Federal Court of Appeal. Loblaw believes
that this provision is sufficient to cover its liability, if the
appeal is ultimately unsuccessful.
Choice Properties Operating Results
($ millions except
where otherwise indicated)
For the periods ended
as indicated
|
|
12 Weeks
Ended
|
|
|
|
|
|
|
Jun. 17,
2023
|
|
Jun. 18,
2022
|
|
$ Change
|
|
% Change
|
|
Revenue
|
|
$
330
|
|
|
$
313
|
|
$
17
|
|
5.4 %
|
|
Net interest income and
other financing charges
|
|
$
(246)
|
|
|
$
(439)
|
|
$ 193
|
|
44.0 %
|
|
Net income
(loss)
|
|
$
536
|
|
|
$
(12)
|
|
$ 548
|
|
4,566.7 %
|
|
Funds from
Operations(1)
|
|
$
184
|
|
|
$
175
|
|
$
9
|
|
5.1 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue Choice Properties revenue in the
second quarter of 2023 was $330 million, an increase of
$17 million, or 5.4%, compared to the same period in 2022 and
included $186 million (2022 –
$183 million) generated from tenants within Loblaw retail. The
increase in revenue was primarily driven by:
- higher rental rates primarily in the retail and industrial
portfolios;
- higher capital recoveries;
- the impact of acquisitions and completed developments; and
- higher lease surrender revenue.
Net Interest Income and Other Financing Charges
Choice Properties net interest income and other financing charges
in the second quarter of 2023 were $246
million compared to $439
million in the same period in 2022. The decrease of
$193 million was primarily driven
by:
- the unfavourable year-over-year change of the fair value
adjustment on the Class B LP units ("Exchangeable Units") of
$194 million as a result of the
decrease in the unit price in the quarter; and
- an increase in interest expense on long-term debt due to higher
interest rates and a higher average balance compared to the same
period in 2022;
partially offset by,
- the favourable year-over-year change of the fair value
adjustment on the financial real estate assets.
Net Income (Loss) Choice Properties recorded net
income of $536 million in the second quarter of 2023, compared
to a net loss of $12 million in the same period in 2022. The
increase of $548 million was primarily driven by:
- the favourable year-over-year change in the adjustment to fair
value of investment properties, including those held within equity
accounted joint ventures of $601
million due to the impact of capitalization rate expansion
in the retail portfolio in the prior year;
- the favourable year-over-year change in the adjustment to fair
value of investment in real estate securities of $128 million as a result of the decrease in
Allied's Class B Unit price; and
- an increase in rental revenue as described above;
partially offset by,
- lower net interest income and other financing charges as
described above.
Funds from Operations(1) Funds from
operations(1) in the second quarter of 2023 were
$184 million, an increase of
$9 million compared to the same
period in 2022. The increase was primarily due to the increase in
revenue and an increase in interest income, which was partially
offset by increases in interest expense and general and
administrative expenses.
Choice Properties Other Business Matters
Subsequent Events On July 5,
2023, Choice Properties paid in full upon maturity, at par,
plus accrued and unpaid interest thereon, the $200 million aggregate principal amount of the
4.90% Series B senior unsecured debentures outstanding. The
repayment of the Series B senior unsecured debentures was funded by
an advance on Choice Properties' credit facility.
On July 24, 2023, Choice
Properties announced that it has agreed to issue, on a private
placement basis, $350 million
aggregate principal amount of Series T senior unsecured
debentures that will bear interest at a rate of 5.699% per annum
and will mature on February 28, 2034.
Subject to customary closing conditions, the offering is expected
to close on August 1, 2023.
OUTLOOK(2)
The Company's 2023 outlook remains unchanged and it continues to
expect adjusted net earnings(1) from continuing
operations to increase due to the results from its operating
segments, and to use excess cash to repurchase shares.
Loblaw Loblaw will continue to execute on
retail excellence while advancing its growth initiatives in 2023.
Loblaw's businesses remain well placed to service the everyday
needs of Canadians. However, Loblaw cannot predict the precise
impacts of global economic uncertainties, including the
inflationary environment, on its 2023 financial results.
For the full year 2023, Loblaw continues to expect:
- its retail business to grow earnings faster than sales;
- adjusted net earnings per common share(1) growth in
the low double digits;
- to increase investments in its store network and distribution
centres by investing a net amount of $1.6
billion in capital expenditures, which reflects gross
capital investments of approximately $2.1
billion offset by approximately $500
million of proceeds from real estate dispositions; and
- to return capital to shareholders by allocating a significant
portion of free cash flow to share repurchases.
Choice Properties Choice Properties is focused on
capital preservation, delivering stable and growing cash flows and
net asset value appreciation, all with a long-term focus. Choice
Properties' high-quality portfolio is primarily leased to
necessity-based tenants and logistics providers, who are less
sensitive to economic volatility and therefore provide stability to
its overall portfolio. Choice Properties continues to experience
positive leasing momentum across its portfolio and is well
positioned to handle its 2023 lease renewal exposure. Choice
Properties also continues to advance its development program, with
a focus on industrial opportunities, which provides it with the
best opportunity to add high-quality real estate to its portfolio
at a reasonable cost and drive net asset value appreciation over
time.
Choice Properties is confident that its business model, stable
tenant base, strong balance sheet and disciplined approach to
financial management will continue to position it well for future
success. However, Choice Properties cannot predict the precise
impacts of the broader economic environment on its 2023 financial
results. In 2023, Choice Properties will continue to focus on its
core business of essential retail and industrial, its growing
residential platform and its robust development pipeline, and is
targeting:
- stable occupancy across the portfolio, resulting in 2-3%
year-over-year growth in Same-Asset NOI, Cash
Basis(4);
- annual FFO(1) per Unit Diluted(4) in a
range of $0.98 to $0.99, reflecting 2-3% year-over-year growth;
and
- stable leverage metrics, targeting Adjusted Debt to
EBITDAFV(4) of approximately 7.5x.
FORWARD-LOOKING STATEMENTS
This News Release contains forward-looking statements about the
Company's objectives, plans, goals, aspirations, strategies,
financial condition, results of operations, cash flows,
performance, prospects, opportunities and legal and regulatory
matters. Specific forward-looking statements in this News Release
include, but are not limited to, statements with respect to the
Company's anticipated future results, events and plans, strategic
initiatives and restructuring, regulatory changes including further
healthcare reform, future liquidity, planned capital investments,
and the status and impact of IT systems implementations. These
specific forward-looking statements are contained throughout this
News Release including, without limitation, in the "Outlook"
section of this News Release. Forward-looking statements are
typically identified by words such as "expect", "anticipate",
"believe", "foresee", "could", "estimate", "goal", "intend",
"plan", "seek", "strive", "will", "may", "should" and similar
expressions, as they relate to the Company and its management.
Forward-looking statements reflect the Company's estimates,
beliefs and assumptions, which are based on management's perception
of historical trends, current conditions and expected future
developments, as well as other factors it believes are appropriate
in the circumstances. The Company's estimates, beliefs and
assumptions are inherently subject to significant business,
economic, competitive and other uncertainties and contingencies
regarding future events, and as such, are subject to change. The
Company can give no assurance that such estimates, beliefs and
assumptions will prove to be correct.
Numerous risks and uncertainties could cause the Company's
actual results to differ materially from those expressed, implied
or projected in the forward-looking statements,
including those described in the "Enterprise Risks and Risk
Management" sections of the MD&A in the Company's 2022
Annual Report and the Company's Annual Information Form for the
year ended December 31, 2022.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which reflect the Company's
expectations only as of the date of this News Release. Except
as required by law, the Company does not undertake to update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
DECLARATION OF QUARTERLY DIVIDENDS
Subsequent to the end of the second quarter of 2023, the
Company's Board of Directors declared a quarterly dividend on GWL
Common Shares, Preferred Shares, Series I, Preferred Shares, Series
III, Preferred Shares, Series IV and Preferred Shares,
Series V payable as follows:
Common
Shares
|
$0.713
per share payable October 1, 2023, to
shareholders of record September 15, 2023;
|
|
|
Preferred Shares,
Series I
|
$0.3625 per share
payable September 15, 2023, to shareholders of record August 31,
2023;
|
|
|
Preferred Shares,
Series III
|
$0.3250 per share
payable October 1, 2023, to shareholders of record September 15,
2023;
|
|
|
Preferred Shares,
Series IV
|
$0.3250 per share
payable October 1, 2023, to shareholders of record September 15,
2023;
|
|
|
Preferred Shares,
Series V
|
$0.296875 per share
payable October 1, 2023, to shareholders of record September 15,
2023.
|
2023 SECOND QUARTER REPORT
The Company's 2022 Annual Report and 2023 Second Quarter Report
are available in the Investor Centre section of the Company's
website at www.weston.ca and have been filed on SEDAR and are
available at www.sedar.com.
INVESTOR RELATIONS
Shareholders, security analysts and investment professionals
should direct their requests to Roy
MacDonald, Group Vice-President, Investor Relations, at the
Company's Executive Office or by e-mail at investor@weston.ca.
Additional financial information has been filed electronically
with various securities regulators in Canada through SEDAR. This News Release
includes selected information on Loblaw, a public company with
shares trading on the TSX, and selected information on Choice
Properties, a public real estate investment trust with units
trading on the TSX. For information regarding Loblaw or Choice
Properties, readers should refer to the respective materials filed
on SEDAR from time to time. These filings are also maintained on
the respective companies' corporate website: www.loblaw.ca and
www.choicereit.ca.
Ce rapport est disponible en français.
|
|
Endnotes
|
|
|
(1)
|
See the "Non-GAAP and
Other Financial Measures" section in Appendix 1 of this News
Release, which includes the reconciliation of such non-GAAP and
other financial measures to the most directly comparable GAAP
measures.
|
|
|
(2)
|
This News Release
contains forward-looking information. See "Forward-Looking
Statements" section of this News Release and the Company's 2022
Annual Report for a discussion of material factors that could cause
actual results to differ materially from the forecasts and
projections herein and of the material factors and assumptions that
were used when making these statements. This News Release should be
read in conjunction with GWL's filings with securities regulators
made from time to time, all of which can be found at www.weston.ca
and www.sedar.com.
|
|
|
(3)
|
GWL Corporate refers to
the non-consolidated financial results and metrics of GWL. GWL
Corporate is a subset of Other and Intersegment.
|
|
|
(4)
|
For more information on
Choice Properties measures see the 2022 Annual Report filed by
Choice Properties, which is available on sedar.com or at
choicereit.ca.
|
|
|
APPENDIX 1: NON-GAAP AND OTHER FINANCIAL MEASURES
The Company uses non-GAAP and other financial measures and
ratios as it believes these measures and ratios provide useful
information to both management and investors with regard to
accurately assessing the Company's financial performance and
financial condition.
Further, certain non-GAAP and other financial measures of Loblaw
and Choice Properties are included in this document. For more
information on these measures, refer to the materials filed by
Loblaw and Choice Properties, which are available on sedar.com or
at loblaw.ca or choicereit.ca, respectively.
Management uses these and other non-GAAP and other financial
measures to exclude the impact of certain expenses and income that
must be recognized under GAAP when analyzing underlying
consolidated and segment operating performance, as the excluded
items are not necessarily reflective of the Company's underlying
operating performance and make comparisons of underlying financial
performance between periods difficult. The Company adjusts for
these items if it believes doing so would result in a more
effective analysis of underlying operating performance. The
exclusion of certain items does not imply that they are
non-recurring.
These measures do not have a standardized meaning prescribed by
GAAP and therefore they may not be comparable to similarly titled
measures presented by other publicly traded companies, and should
not be construed as an alternative to other financial measures
determined in accordance with GAAP. Unless otherwise indicated, all
financial information represents the Company's results from
continuing operations.
ADJUSTED EBITDA The Company believes adjusted
EBITDA is useful in assessing and making decisions regarding the
underlying operating performance of the Company's ongoing
operations and in assessing the Company's ability to generate cash
flows to fund its cash requirements, including its capital
investment program.
The following table reconciles adjusted EBITDA to operating
income, which is reconciled to GAAP net earnings attributable to
shareholders of the Company from continuing operations reported for
the periods ended as indicated.
|
|
12 Weeks
Ended
|
|
|
|
Jun. 17,
2023
|
|
|
Jun. 18,
2022
|
|
($ millions)
|
|
Loblaw
|
Choice
Properties
|
Other &
Intersegment
|
Consolidated
|
|
|
Loblaw
|
Choice
Properties
|
Other &
Intersegment
|
Consolidated
|
|
Net earnings
attributable to shareholders of the
Company from continuing operations
|
|
|
|
|
|
|
$
508
|
|
|
|
|
|
$
650
|
|
Add (deduct) impact of
the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling
interests
|
|
|
|
|
|
|
274
|
|
|
|
|
|
224
|
|
Income
taxes
|
|
|
|
|
|
|
244
|
|
|
|
|
|
113
|
|
Net interest expense
(income) and other
financing charges
|
|
|
|
|
|
|
73
|
|
|
|
|
|
(338)
|
|
Operating income
(loss)
|
|
$
925
|
$
|
290
|
$
|
(116)
|
$
1,099
|
|
|
$
740
|
$
(451)
|
$
360
|
$
649
|
|
Add (deduct) impact of
the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangible assets acquired
with Shoppers Drug Mart and Lifemark
|
|
$
116
|
$
|
—
|
$
|
—
|
$
116
|
|
|
$
114
|
$
—
|
$
—
|
$
114
|
|
Charges related to PC
Bank commodity tax matters
|
|
37
|
|
—
|
|
—
|
37
|
|
|
111
|
—
|
—
|
111
|
|
Fair value adjustment
of investment in real estate
securities
|
|
—
|
|
31
|
|
—
|
31
|
|
|
—
|
159
|
—
|
159
|
|
Fair value adjustment
of derivatives
|
|
5
|
|
—
|
|
—
|
5
|
|
|
4
|
—
|
—
|
4
|
|
Fair value adjustment
on investment properties
|
|
—
|
|
(84)
|
|
63
|
(21)
|
|
|
—
|
517
|
(415)
|
102
|
|
Gain on sale of
non-operating properties
|
|
—
|
|
—
|
|
(3)
|
(3)
|
|
|
(4)
|
—
|
—
|
(4)
|
|
Transaction costs and
other related expenses
|
|
—
|
|
—
|
|
—
|
—
|
|
|
13
|
—
|
—
|
13
|
|
Foreign currency
translation and other company
level activities
|
|
—
|
|
—
|
|
—
|
—
|
|
|
—
|
—
|
2
|
2
|
|
Adjusting
items
|
|
$
158
|
$
|
(53)
|
$
|
60
|
$
165
|
|
|
$
238
|
$
676
|
$
(413)
|
$
501
|
|
Adjusted operating
income
|
|
$
1,083
|
$
|
237
|
$
|
(56)
|
$
1,264
|
|
|
$
978
|
$
225
|
$
(53)
|
$
1,150
|
|
Depreciation and
amortization excluding the impact
of the above adjustment(i)
|
|
555
|
|
1
|
|
(87)
|
469
|
|
|
519
|
1
|
(82)
|
438
|
|
Adjusted
EBITDA
|
|
$
1,638
|
$
|
238
|
$
|
(143)
|
$
1,733
|
|
|
$ 1,497
|
$
226
|
$
(135)
|
$
1,588
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i) Depreciation
and amortization for the calculation of adjusted EBITDA excludes
the amortization of intangible assets, acquired with Shoppers Drug
Mart and Lifemark, recorded by Loblaw.
|
The following items impacted adjusted EBITDA in the second quarter
of 2023 and 2022:
Amortization of intangible assets acquired with Shoppers
Drug Mart and Lifemark The acquisition of Shoppers Drug
Mart in 2014 included approximately $6 billion of
definite life intangible assets, which are being amortized
over their estimated useful lives. Annual amortization associated
with the acquired intangible assets will be approximately
$500 million until 2024 and will decrease thereafter.
The acquisition of Lifemark in the second quarter of 2022
included approximately $299 million
of definite life intangible assets, which are being amortized over
their estimated useful lives.
Charges related to PC Bank commodity tax matters In
the second quarter of 2023, the Federal government enacted certain
commodity tax legislation that may apply to PC Bank, a subsidiary
of Loblaw, on a retroactive basis. A charge of $37 million, inclusive of interest, has been
recorded for this matter.
In the second quarter of 2022, Loblaw recorded a charge of
$111 million, inclusive of interest.
On July 19, 2022, the Tax Court
released its decision and ruled that PC Bank is not entitled
to claim notional input tax credits for certain payments it made to
Loblaws Inc. in respect of redemptions of loyalty points. On
September 29, 2022, PC Bank filed a
Notice of Appeal with the Federal Court of Appeal.
Fair value adjustment of investment in real estate
securities Choice Properties received Allied Class B
Units as part of the consideration for the Office Asset Sale on
March 31, 2022. Choice Properties
recognized these units as investments in real estate securities.
The investment in real estate securities is exposed to market price
fluctuations of Allied trust units. An increase (decrease) in the
market price of Allied trust units results in income (a charge) to
operating income.
Fair value adjustment of derivatives Loblaw is
exposed to commodity price and U.S. dollar exchange
rate fluctuations. In accordance with Loblaw's commodity risk
management policy, Loblaw enters into exchange traded futures
contracts and forward contracts to minimize cost volatility
relating to fuel prices and the U.S. dollar exchange rate. These
derivatives are not acquired for trading or speculative purposes.
Pursuant to Loblaw's derivative instruments accounting policy,
changes in the fair value of these instruments, which include
realized and unrealized gains and losses, are recorded in
operating income. Despite the impact of accounting for these
commodity and foreign currency derivatives on Loblaw's reported
results, the derivatives have the economic impact of largely
mitigating the associated risks arising from price and exchange
rate fluctuations in the underlying commodities and U.S. dollar
commitments.
Fair value adjustment on investment properties The
Company measures investment properties at fair value. Under the
fair value model, investment properties are initially measured at
cost and subsequently measured at fair value. Fair value is
determined based on available market evidence. If market evidence
is not readily available in less active markets, the Company uses
alternative valuation methods such as discounted cash flow
projections or recent transaction prices. Gains and losses on fair
value are recognized in operating income in the period in which
they are incurred. Gains and losses from disposal of investment
properties are determined by comparing the fair value of disposal
proceeds and the carrying amount and are recognized in operating
income.
Gain on sale of non-operating properties In the
second quarter of 2022, Loblaw recorded a gain related to the sale
of non-operating properties of $4
million.
In the second quarter of 2023, Choice Properties disposed of a
property and incurred a loss which was recognized in fair value
adjustment of investment properties. On consolidation, the Company
recorded the property in fixed assets, which was recognized at cost
less accumulated depreciation. As a result, in the second quarter
of 2023, on consolidation, an incremental $3 million gain was
recognized in operating income.
Transaction costs and other related expenses In
connection with the acquisition of Lifemark, Loblaw recorded
acquisition costs of $13 million in
operating income during the second quarter of 2022.
ADJUSTED NET EARNINGS AVAILABLE TO COMMON SHAREHOLDERS FROM
CONTINUING OPERATIONS AND ADJUSTED DILUTED NET EARNINGS PER COMMON
SHARE FROM CONTINUING OPERATIONS The Company
believes that adjusted net earnings available to common
shareholders from continuing operations and adjusted diluted net
earnings per common share from continuing operations are useful in
assessing the Company's underlying operating performance and in
making decisions regarding the ongoing operations of its
business.
The following table reconciles adjusted net earnings available
to common shareholders of the Company from continuing operations
and adjusted net earnings attributable to shareholders of the
Company from continuing operations to net earnings attributable to
shareholders of the Company and then to net earnings available to
common shareholders of the Company from continuing operations
reported for the periods ended as indicated.
($ millions except
where otherwise indicated)
|
12 Weeks
Ended
|
|
Jun. 17,
2023
|
|
Jun. 18,
2022
|
|
Net earnings
attributable to shareholders of the Company
|
|
$
508
|
|
|
$ 644
|
|
Less: Net loss
from discontinued operations
|
|
—
|
|
|
(6)
|
|
Net earnings
attributable to shareholders of the Company from
continuing operations
|
|
$
508
|
|
|
$ 650
|
|
Less: Prescribed
dividends on preferred shares in share capital
|
|
(10)
|
|
|
(10)
|
|
Net earnings available
to common shareholders of the Company from continuing
operations
|
|
$
498
|
|
|
$ 640
|
|
Less: Reduction
in net earnings due to dilution at Loblaw
|
|
(3)
|
|
|
(2)
|
|
Net earnings available
to common shareholders from continuing operations for diluted
earnings per share
|
|
$
495
|
|
|
$ 638
|
|
Net earnings
attributable to shareholders of the Company from continuing
operations
|
|
$
508
|
|
|
$ 650
|
|
Adjusting items (refer
to the following table)
|
|
(121)
|
|
|
(312)
|
|
Adjusted net earnings
attributable to shareholders of the Company from
continuing
operations
|
|
$
387
|
|
|
$ 338
|
|
Less: Prescribed
dividends on preferred shares in share capital
|
|
(10)
|
|
|
(10)
|
|
Adjusted net earnings
available to common shareholders of the Company from
continuing operations
|
|
$
377
|
|
|
$ 328
|
|
Less: Reduction
in net earnings due to dilution at Loblaw
|
|
(3)
|
|
|
(2)
|
|
Adjusted net earnings
available to common shareholders for diluted earnings per share
from continuing operations
|
|
$
374
|
|
|
$ 326
|
|
|
|
|
|
|
|
|
Diluted weighted
average common shares outstanding (in millions)
|
|
139.5
|
|
|
146.3
|
|
|
|
|
|
|
|
|
The following table reconciles adjusted net earnings available to
common shareholders of the Company from continuing operations and
adjusted diluted net earnings per common share from continuing
operations to GAAP net earnings available to common shareholders of
the Company from continuing operations and diluted net earnings per
common share from continuing operations as reported for the periods
ended as indicated.
|
12 Weeks
Ended
|
|
|
Jun. 17,
2023
|
|
Jun. 18,
2022
|
|
($ except where
otherwise indicated)
|
Net
Earnings
Available to
Common
Shareholders of
the Company
($
millions)
|
|
Diluted
Net
Earnings
Per Common
Share
|
|
Net
Earnings
Available to
Common
Shareholders of
the Company
($ millions)
|
|
Diluted
Net
Earnings
Per Common
Share
|
|
Continuing
Operations
|
|
$
|
498
|
|
$
|
3.55
|
|
|
$
|
640
|
|
$
|
4.36
|
|
Add (deduct) impact of
the following(i):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangible assets acquired with Shoppers
Drug Mart and Lifemark
|
|
$
|
44
|
|
$
|
0.32
|
|
|
$
|
44
|
|
$
|
0.31
|
|
Charges related to PC
Bank commodity tax matters
|
|
|
15
|
|
|
0.11
|
|
|
|
45
|
|
|
0.31
|
|
Fair value adjustment
of investment in real estate securities
|
|
|
28
|
|
|
0.20
|
|
|
|
146
|
|
|
0.99
|
|
Fair value adjustment
of derivatives
|
|
|
2
|
|
|
0.01
|
|
|
|
2
|
|
|
0.01
|
|
Fair value adjustment
on investment properties
|
|
|
(17)
|
|
|
(0.12)
|
|
|
|
85
|
|
|
0.58
|
|
Gain on sale of
non-operating properties
|
|
|
(1)
|
|
|
(0.01)
|
|
|
|
(2)
|
|
|
(0.02)
|
|
Transaction costs and
other related expenses
|
|
|
—
|
|
|
—
|
|
|
|
7
|
|
|
0.05
|
|
Fair value adjustment
of the Trust Unit liability(ii)
|
|
|
(202)
|
|
|
(1.45)
|
|
|
|
(576)
|
|
|
(3.94)
|
|
Outside basis
difference in certain Loblaw shares(iii)
|
|
|
10
|
|
|
0.07
|
|
|
|
(18)
|
|
|
(0.12)
|
|
Remeasurement of
deferred tax balances(iv)
|
|
|
—
|
|
|
—
|
|
|
|
(46)
|
|
|
(0.31)
|
|
Foreign currency
translation and other company level activities
|
|
|
—
|
|
|
—
|
|
|
|
1
|
|
|
0.01
|
|
Adjusting items
Continuing Operations
|
|
$
|
(121)
|
|
$
|
(0.87)
|
|
|
$
|
(312)
|
|
$
|
(2.13)
|
|
Adjusted Continuing
Operations
|
|
$
|
377
|
|
$
|
2.68
|
|
|
$
|
328
|
|
$
|
2.23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Net of income taxes and
non-controlling interests, as applicable.
|
(ii)
|
Trust Units held by
unitholders other than the Company are presented as a liability on
the Company's consolidated balance sheets as they are redeemable
for cash at the option of the holder, subject to certain
restrictions. This liability is recorded at fair value at each
reporting date based on the market price of Trust Units at the end
of each period through net interest expense and other financing
charges.
|
(iii)
|
The Company recorded
deferred tax expense on temporary differences in respect of GWL's
investment in certain Loblaw shares that are expected to reverse in
the foreseeable future as a result of GWL's participation in
Loblaw's NCIB.
|
(iv)
|
In the second quarter
of 2022, the Company revalued certain deferred tax balances as a
result of the Office Asset Sale.
|
GWL CORPORATE(3) FREE CASH FLOW FROM CONTINUING
OPERATIONS GWL Corporate(3) free cash
flow from continuing operations is generated from the dividends
received from Loblaw, distributions received from Choice
Properties, and proceeds from participation in Loblaw's Normal
Course Issuer Bid, less corporate expenses, interest and income
taxes paid.
|
|
12 Weeks
Ended
|
($ millions)
|
|
Jun. 17,
2023
|
|
|
Jun. 18,
2022
|
|
Dividends from
Loblaw
|
|
$
69
|
|
|
$
64
|
|
Distributions from
Choice Properties
|
|
83
|
|
|
82
|
|
GWL
Corporate(3) cash flow from operating businesses from
Continuing Operations
|
|
$
152
|
|
|
$ 146
|
|
Proceeds from
participation in Loblaw's Normal Course Issuer Bid
|
|
250
|
|
|
309
|
|
GWL Corporate,
financing, and other costs(i)
|
|
(16)
|
|
|
(44)
|
|
Income taxes
paid
|
|
(21)
|
|
|
(34)
|
|
GWL
Corporate(3) free cash flow from Continuing
Operations
|
|
$
365
|
|
|
$ 377
|
|
|
|
|
|
|
|
|
(i) Included in
Other and Intersegment. GWL Corporate includes all other company
level activities that are not allocated to the reportable operating
segments, such as net interest expense, corporate activities and
administrative costs. Also included are preferred share
dividends.
|
CHOICE PROPERTIES' FUNDS FROM OPERATIONS Choice
Properties considers funds from operations to be a useful measure
of operating performance as it adjusts for items included in net
income that do not arise from operating activities or do not
necessarily provide an accurate depiction of its performance.
Funds from operations is calculated in accordance with the Real
Property Association of Canada's
Funds from Operations & Adjusted Funds from Operations for
International Financial Reporting Standards issued in
January 2022.
The following table reconciles Choice Properties' funds from
operations to net income for the periods ended as indicated.
($ millions)
|
12 Weeks
Ended
|
|
Jun. 17,
2023
|
|
|
Jun. 18,
2022
|
Net income
(loss)
|
|
$
536
|
|
|
$ (12)
|
Add (deduct) impact of
the following:
|
|
|
|
|
|
Amortization of
intangible assets
|
|
1
|
|
|
—
|
Adjustment to fair
value of unit-based compensation
|
|
(1)
|
|
|
(2)
|
Fair value adjustment
on Exchangeable Units
|
|
(376)
|
|
|
(570)
|
Fair value adjustment
on investment properties
|
|
(86)
|
|
|
524
|
Fair value adjustment
on investment property held in equity accounted
joint ventures
|
|
—
|
|
|
(1)
|
Fair value adjustment
of investment in real estate securities
|
|
31
|
|
|
159
|
Capitalized interest
on equity accounted joint ventures
|
|
3
|
|
|
2
|
Unit distributions on
Exchangeable Units
|
|
74
|
|
|
73
|
Internal expenses for
leasing
|
|
2
|
|
|
2
|
Funds from
Operations
|
|
$
184
|
|
|
$ 175
|
|
|
|
|
|
|
SOURCE George Weston Limited