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2024 FOURTH QUARTER HIGHLIGHTS

• Revenue was $15,097 million, an increase of $397 million, or 2.7%.

• Adjusted EBITDA⁽¹⁾ was $1,814 million, an increase of $120 million, or 7.1%.

• Net earnings available to common shareholders of the Company were $664 million ($5.05 per common share), an increase of $702 million ($5.35 per common share). The increase was mainly due to the favourable year-over-year net impact of adjusting items, primarily due to the favourable year-over-year impact of the fair value adjustment of the Trust Unit liability as a result of the decrease of Choice Properties' unit price in the quarter.

• Adjusted net earnings available to common shareholders of the Company⁽¹⁾ were $415 million, an increase of $73 million, or 21.3%.

• Adjusted diluted net earnings per common share⁽¹⁾ were $3.15, an increase of $0.64 per common share, or 25.5%.

• Repurchased for cancellation 0.9 million common shares at a cost of $209 million.

• GWL Corporate free cash flow⁽¹⁾ was $258 million.

2024 ANNUAL HIGHLIGHTS

• Revenue was $61,608 million, an increase of $1,484 million, or 2.5%.

• Adjusted EBITDA⁽¹⁾ was $7,401 million, an increase of $448 million, or 6.4%.

• Net earnings available to common shareholders of the Company were $1,315 million ($9.80 per common share), a decrease of $181 million ($0.95 per common share), or 12.1%.

• Adjusted net earnings available to common shareholders of the Company⁽¹⁾ were $1,597 million, an increase of $130 million, or 8.9%.

• Adjusted diluted net earnings per common share⁽¹⁾ were $11.93, an increase of $1.39 per common share, or 13.2%.

• Repurchased for cancellation 5.0 million common shares at a cost of $990 million.

• GWL Corporate free cash flow⁽¹⁾ was $1,103 million.

CONSOLIDATED RESULTS OF OPERATIONS

The Company operates through its two reportable operating segments: Loblaw and Choice Properties, each of which are publicly traded entities. As such, the Company's financial statements reflect and are impacted by the consolidation of Loblaw and Choice Properties. The consolidation of these entities into the Company's financial statements reflect the impact of eliminations, intersegment adjustments and other consolidation adjustments, which can positively or negatively impact the Company's consolidated results. Additionally, cash and short-term investments and other investments held by the Company, and all other company level activities that are not allocated to the reportable operating segments, such as net interest expense, corporate activities and administrative costs are included in GWL Corporate. To help our investors and stakeholders understand the Company's financial statements and the effect of consolidation, the Company reports its results in a manner that differentiates between the Loblaw segment, the Choice Properties segment, the effect of consolidation of Loblaw and Choice Properties, and lastly, GWL Corporate.

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.

Net earnings available to common shareholders of the Company in the fourth quarter of 2024 were $664 million ($5.05 per common share), compared to net loss available to common shareholders of the Company of $38 million ($0.30 per common share) in the same period of 2023, an increase of $702 million ($5.35 per common share). The increase was due to the favourable year-over-year net impact of adjusting items totaling $629 million ($4.71 per common share) described below, and an improvement of $73 million ($0.64 per common share) in the consolidated underlying operating performance of the Company.

The favourable year-over-year net impact of adjusting items totaling $629 million ($4.71 per common share) was primarily due to:

• the favourable year-over-year impact of the fair value adjustment of the Trust Unit liability of $781 million ($5.87 per common share) as a result of the decrease in Choice Properties' unit price in the quarter;

    partially offset by,

• the unfavourable year-over-year impact of the fair value adjustment on Choice Properties' investment in real estate securities of Allied Properties Real Estate Investment Trust ("Allied") of $58 million ($0.44 per common share) as a result of a decrease in Allied's unit price in the quarter;

• the unfavourable impact of the charge related to the PC Optimum loyalty program at Loblaw of $49 million ($0.37 per common share). See "Loblaw Other Business Matters", section of this News Release for further information;

• the unfavourable year-over-year impact of the fair value adjustment on investment properties of $24 million ($0.18 per common share) driven by Choice Properties, net of the effect of consolidation; and

• the unfavourable impact of the fair value write-down related to the sale of Wellwise by Shoppers^TM ("Wellwise") at Loblaw of $15 million ($0.11 per common share). See "Loblaw Other Business Matters", section of this News Release for further information.

Adjusted net earnings available to common shareholders of the Company⁽¹⁾ in the fourth quarter of 2024 were $415 million, an increase of $73 million, or 21.3%, compared to the same period in 2023. The increase was driven by the favourable year-over-year impact of $62 million from the contribution of the publicly traded operating companies and the favourable year-over-year impact of $11 million at GWL Corporate primarily due to a fair value gain on other investments recorded in the quarter.

Adjusted diluted net earnings per common share⁽¹⁾ were $3.15 in the fourth quarter of 2024, an increase of $0.64 per common share, or 25.5%, compared to the same period in 2023. The increase was due to the performance in adjusted net earnings available to common shareholders⁽¹⁾ as described above and the favourable impact of shares purchased for cancellation over the last 12 months ($0.09 per common share) pursuant to the Company's Normal Course Issuer Bid ("NCIB") program.

CONSOLIDATED OTHER BUSINESS MATTERS

GWL CORPORATE FINANCING ACTIVITIES  The Company completed the following select GWL Corporate financing activities:

NCIB – Purchased and Cancelled Shares  In the fourth quarter of 2024, the Company purchased and cancelled 0.9 million common shares (2023 – 1.1 million shares) for aggregate consideration of $209 million (2023 – $165 million) under its NCIB. As at December 31, 2024, the Company had 130.0 million common shares issued and outstanding, net of shares held in trusts (December 31, 2023 – 134.4 million common shares).

In the fourth quarter of 2024, 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, "Share Capital", of the MD&A in the Company's 2024 Annual 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 fourth quarter of 2024, Loblaw repurchased 1.0 million common shares (2023 – 2.0 million common shares) from the Company for aggregate consideration of $181 million (2023 – $238 million).

RESULTS BY OPERATING SEGMENT

The following tables provide key performance metrics for the Company by segment.

Effect of consolidation includes the following items:

 

LOBLAW OPERATING RESULTS

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.

Revenue  Loblaw revenue in the fourth quarter of 2024 was $14,948 million, an increase of $417 million, or 2.9%, compared to the same period in 2023, driven by an increase in retail sales, partially offset by a decrease in financial services revenue.

Retail sales in the fourth quarter of 2024 were $14,579 million, an increase of $422 million, or 3.0%, compared to the same period in 2023. The increase was primarily driven by the following factors:

• food retail sales were $10,138 million (2023 – $9,774 million) and food retail same-store sales growth was 2.5% (2023 – 2.0%). Food retail same-store sales growth was approximately 1.5% after excluding the favourable impact of the timing of Thanksgiving;

  • the Consumer Price Index ("CPI") as measured by The Consumer Price Index for Food Purchased from Stores was 2.4% (2023 – 4.9%) which was higher than Loblaw's internal food inflation; and

  • food retail traffic increased and basket size increased.

• drug retail sales were $4,441 million (2023 – $4,383 million) and drug retail same-store sales grew by 1.3% (2023 – 4.6%) for the quarter;

  • pharmacy and healthcare services same-store sales growth was 6.3% (2023 – 8.0%). On a same-store basis, the number of prescriptions dispensed increased by 1.7% (2023 – 3.4%) and the average prescription value increased by 4.0% (2023 – 3.4%);

              partially offset by,

• • front store same-store sales decline of 3.1% (2023 – growth of 1.7%), primarily driven by the decision to exit certain low margin electronics categories, the impact of the closure of postal services during the Canada Post strike, and lower sales of food and household items, partially offset by the continued strength in beauty products.

Financial services revenue in the fourth quarter of 2024 was $476 million, a decrease of $11 million compared to the same period in 2023. The decrease was primarily driven by lower sales attributable to The Mobile Shop.

Operating Income  Loblaw operating income in the fourth quarter of 2024 was $850 million, a decrease of $91 million, or 9.7%, compared to the same period in 2023. The decrease included the PC Optimum loyalty program charge of $129 million (see "Loblaw Other Business Matters" below).

Adjusted EBITDA⁽¹⁾  Loblaw adjusted EBITDA⁽¹⁾ in the fourth quarter of 2024 was $1,696 million, an increase of $65 million, or 4.0%, compared to the same period in 2023. The increase was due to an increase in retail of $47 million and an increase in financial services of $18 million.

Retail adjusted EBITDA⁽¹⁾ in the fourth quarter of 2024 increased by $47 million, driven by an increase in retail gross profit of $96 million, partially offset by an increase in retail selling, general and administrative expenses ("SG&A") of $49 million.

• Retail gross profit percentage of 30.9% decreased by 20 basis points compared to the same period in 2023, primarily driven by changes in sales mix, including the impact of the closure of postal services during the Canada Post strike and the Thanksgiving shift, partially offset by improvements in shrink.

• Retail SG&A as a percentage of sales was 20.1%, a favourable decrease of 20 basis points compared to the same period in 2023, primarily due to the year-over-year impact of labour costs including expenses related to the ratification of union labour agreements in the prior year, and operating leverage from higher sales, partially offset by the year-over-year impact of certain real estate activities.

Financial services adjusted EBITDA⁽¹⁾ increased by $18 million compared to the same period in 2023, primarily driven by the year-over-year favourable impact of the expected credit loss provision, partially offset by lapping of prior year benefits associated with the renewal of a long-term agreement with Mastercard.

Depreciation and Amortization  Loblaw depreciation and amortization in the fourth quarter of 2024 was $694 million, an increase of $14 million compared to the same period in 2023, primarily driven by an increase in leased assets and an increase in depreciation of fixed assets related to conversions of retail locations, partially offset by the impact of prior year accelerated depreciation as a result of network optimization. Depreciation and amortization in the fourth quarter of 2024 included the amortization of intangible assets related to the acquisitions of Shoppers Drug Mart Corporation ("Shoppers Drug Mart") and Lifemark Health Group ("Lifemark") of $115 million (2023 – $115 million).

Loblaw Other Business Matters

PC Optimum loyalty program  In the fourth quarter of 2024, Loblaw recorded a charge of $129 million which represents the revaluation of the loyalty liability for outstanding points, reflecting higher PC Optimum member participation and higher redemption rates.

Sale of Wellwise  In the fourth quarter of 2024, Loblaw entered into an agreement with a third party to sell all of the shares of its Wellwise business for cash proceeds. Accordingly, Loblaw recorded a net fair value write-down of $23 million in SG&A. The transaction is expected to close in the first quarter of 2025.

CHOICE PROPERTIES OPERATING RESULTS

Choice Properties owns, manages and develops a high-quality portfolio of commercial and residential properties across Canada.

Revenue  Choice Properties revenue in the fourth quarter of 2024 was $344 million, a decrease of $11 million, or 3.1%, compared to the same period in 2023 and included revenue of $197 million (2023 – $187 million) generated from tenants within Loblaw. In the fourth quarter of 2023, revenue included $26 million from the sale of residential inventory.

Excluding the impact of the sale of residential inventory, revenue in the fourth quarter of 2024 increased by $15 million, or 4.6%, compared to the same period in 2023, primarily driven by:

• higher rental rates primarily in the retail and industrial portfolios;

• higher recoveries;

• acquisitions, net of dispositions, and completed developments; and

• higher lease surrender revenue.

Net Interest (Income) Expense and Other Financing Charges  Choice Properties net interest income and other financing charges in the fourth quarter of 2024 were $567 million, compared to net interest expense and other financing charges of $636 million in the same period in 2023. The change of $1,203 million was primarily driven by:

• the favourable year-over-year change in the fair value adjustment on the Class B LP units ("Exchangeable Units") of $1,207 million, as a result of the decrease in the unit price in the quarter;

    partially offset by,

• an increase in interest expense due to new debt issuances over the past twelve months bearing interest at higher rates than maturing debt.

Net Income (Loss)  Choice Properties net income in the fourth quarter of 2024 was $792 million, compared to a net loss of $445 million in the same period in 2023. The change of $1,237 million was primarily driven by:

• the change in net interest (income) expense and other financing charges as described above; and

• the favourable year-over-year change in the adjustment to fair value of investment properties, including those held within equity accounted joint ventures, of $88 million;

    partially offset by,

• the unfavourable year-over-year change in the adjustment to fair value of investment in real estate securities of $63 million as a result of the decrease in Allied's unit price in the quarter.

Funds from Operations⁽¹⁾  Funds from Operations⁽¹⁾ in the fourth quarter of 2024 increased by $3 million to $188 million compared to the same period in 2023. The increase was primarily due to an increase in rental income, lower general and administrative expenses due to lower salaries, benefits and employee costs, and higher lease surrender revenue. The increase was partially offset by lower investment income as a result of Allied's special distribution in the prior year, income from the sale of residential inventory in the prior year, higher interest expense, and lower interest income.

Choice Properties Other Business Matters

Subsequent Events  On January 10, 2025, Choice Properties paid in full upon maturity, at par, plus accrued and unpaid interest thereon, the $350 million aggregated principal amount of the 3.55% Series J senior unsecured debentures outstanding.

On January 16, 2025, Choice Properties completed the issuance, on a private placement basis, of $300 million aggregated principal amount of Series V senior unsecured debentures bearing interest at a rate of 4.29% per annum and maturing on January 16, 2030.

Subsequent to year end, Choice Properties disposed of two retail properties for an aggregate net proceeds of $36 million.

On February 12, 2025, Choice Properties announced an increase in the annual distribution by 1.3% to $0.77 per unit. The increase will be effective for Choice Properties' Unitholders of record on March 31, 2025.

OUTLOOK⁽²⁾

For 2025, the Company expects adjusted net earnings⁽¹⁾ to increase due to the results from its operating segments, and to use excess cash to repurchase shares.

Loblaw  Loblaw will remain focused on retail excellence while advancing its growth initiatives with the goal of delivering consistent operational and financial results in 2025. Loblaw's businesses remain well positioned to meet the everyday needs of Canadians.

In 2025, Loblaw's results will include the impact of a 53rd week, which is expected to benefit adjusted net earnings per common share⁽¹⁾ growth by approximately 2%. On a full-year comparative basis, excluding the impact of the 53rd week, Loblaw expects:

• its retail business to grow earnings faster than sales;

• adjusted net earnings per common share⁽¹⁾ growth in the high single-digits;

• to continue investing in its store network and distribution centres by investing a net amount of $1.9 billion in capital expenditures, which reflects gross capital investments of approximately $2.2 billion, net of approximately $300 million of proceeds from property disposals; 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. Its 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 will continue to advance its development program, with a focus on commercial developments, which provides 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 benefit its operations. In 2025, Choice Properties is targeting:

• stable occupancy across the portfolio, resulting in approximately 2% - 3% year-over-year growth in Same-Asset NOI, cash basis⁽³⁾;

• annual FFO⁽¹⁾ per unit diluted⁽³⁾ in a range of $1.05 to $1.06, reflecting approximately 2% - 3% year-over-year growth; and

• strong leverage metrics, targeting Adjusted Debt to EBITDAFV⁽³⁾ below 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 information technology 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" section of the MD&A in the Company's 2024 Annual Report and the Company's Annual Information Form for the year ended December 31, 2024.

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 fourth quarter of 2024, 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:

SELECTED FINANCIAL INFORMATION

The following includes selected quarterly financial information which is prepared by management in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS Accounting Standards" or "GAAP") and is based on the Company's audited annual consolidated financial statements for the year ended December 31, 2024. This financial information does not contain all disclosures required by IFRS Accounting Standards, and accordingly, this financial information should be read in conjunction with the Company's 2024 Annual Report available in the Investor Centre section of the Company's website at www.weston.ca.

Consolidated Statements of Earnings

Consolidated Balance Sheets

Consolidated Statements of Cash Flows

Basic and Diluted Net Earnings per Common Share

2024 ANNUAL REPORT

The Company's 2024 Annual Report is 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.sedarplus.ca.

MODERN SLAVERY ACT REPORT

In compliance with the Fighting Against Forced Labour and Child Labour in Supply Chains Act (referred to as Canada's "Modern Slavery Act"), the Company and certain of its subsidiaries, including Loblaw, have publicly filed their joint Modern Slavery Act Report for the 2024 fiscal year. The Modern Slavery Act Report can be viewed online on the Company's website at www.weston.ca, or under the Company's SEDAR+ profile at www.sedarplus.ca. All shareholders may request that paper copies of the Modern Slavery Act Report be mailed to them at no cost by submitting an email request to investor@weston.ca.

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 Toronto Stock Exchange ("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 websites at www.loblaw.ca and www.choicereit.ca.

Ce rapport est disponible en français.

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 measures 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 www.sedarplus.ca or at www.loblaw.ca or www.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.

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 reported for the periods ended as indicated.

 

The following items impacted adjusted EBITDA in 2024 and 2023:

PC Optimum loyalty program  In the fourth quarter of 2024, Loblaw recorded a charge of $129 million which represents the revaluation of the loyalty liability for outstanding points, reflecting higher PC Optimum member participation and higher redemption rates.

Amortization of intangible assets acquired with Shoppers Drug Mart and Lifemark  The acquisition of Shoppers Drug Mart in 2014 included approximately $6,050 million of definite life intangible assets, which are being amortized over their estimated useful lives. In 2024, the annual amortization associated with the acquired intangibles was $479 million. The annual amortization will decrease to approximately $130 million in 2025, including $110 million in the first quarter of 2025, and approximately $30 million thereafter.

The acquisition of Lifemark in 2022 included approximately $299 million of definite life intangible assets, which are being amortized over their estimated useful lives.

Fair value adjustment of investment in real estate securities  Choice Properties received Allied Class B Units as part of the consideration for the Choice Properties disposition of six office assets to Allied in 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 write-down related to sale of Wellwise  In the fourth quarter of 2024, Loblaw entered into an agreement with a third party to sell all of the shares of its Wellwise business for cash proceeds. Accordingly, Loblaw recorded a net fair value write-down of $23 million in SG&A. The transaction is expected to close in the first quarter of 2025.

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.

Fair value adjustment on non-operating properties  The Company measures non-operating properties, which are investment properties and assets held for sale that were transferred from investment properties, at fair value. Under the fair value model, non-operating properties are initially measured at cost and subsequently measured at fair value. Fair value using the income approach include assumptions as to market rental rates for properties of similar size and condition located within the same geographical areas, recoverable operating costs for leases with tenants, non-recoverable operating costs, vacancy periods, tenant inducements and terminal capitalization rates. Gains and losses arising from changes in the fair value are recognized in operating income in the period in which they arise.

Gain on sale of non-operating properties  In the fourth quarter of 2024 and year-to-date, Loblaw recorded a gain related to the sale of non-operating properties of $3 million (fourth quarter of 2023 and year-to-date – nil and gain of $12 million, respectively).

In the fourth quarter of 2023 and year-to-date, Choice Properties disposed of properties and incurred a loss which was recognized in fair value adjustment on investment properties. On consolidation, the Company recorded these properties as fixed assets, which was recognized at cost less accumulated depreciation. As a result, in the fourth quarter of 2023 and year-to-date, on consolidation, an incremental gain of $1 million and $8 million, respectively, was recognized in 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.

(Recoveries) Charge related to PC Bank commodity tax matters  In 2022, the Tax Court of Canada ("Tax Court") released a decision relating to President's Choice Bank ("PC Bank"), a subsidiary of Loblaw. The Tax Court 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. PC Bank subsequently filed a Notice of Appeal with the Federal Court of Appeal ("FCA") and in March 2024, the matter was heard by the FCA. In the third quarter of 2024, the FCA released its decision and reversed the decision of the Tax Court. As a result, PC Bank reversed charges of $155 million, including $111 million initially recorded in 2022.

In 2023, the Federal government enacted certain commodity tax legislation that applied to PC Bank on a retroactive basis. A charge of $37 million, inclusive of interest, was recorded for this matter. In the fourth quarter of 2023, Loblaw reversed $13 million of previously recorded charges. The reversal was a result of new guidance issued by the Canada Revenue Agency.

Charges related to settlement of class action lawsuits  On July 24, 2024, the Company and Loblaw entered into binding Minutes of Settlement and on January 31, 2025, the Company and Loblaw entered into a Settlement Agreement to resolve nationwide class action lawsuits against them relating to their role in an industry-wide price-fixing arrangement. In the second quarter of 2024, the Company and Loblaw recorded charges of $256 million and $164 million, respectively, in SG&A, relating to the settlement and related costs.

Transaction costs and other related recoveries  In the second quarter of 2024, Choice Properties recorded a reversal of a transaction related provision for $39 million that was determined to be no longer required.

ADJUSTED NET INTEREST EXPENSE AND OTHER FINANCING CHARGES  The Company believes adjusted net interest expense and other financing charges is useful in assessing the ongoing net financing costs of the Company.

The following table reconciles adjusted net interest expense and other financing charges to GAAP net interest expense and other financing charges reported for the periods ended as indicated.

The following items impacted adjusted net interest expense and other financing charges in 2024 and 2023:

Fair value adjustment of the Trust Unit liability  The Company is exposed to market price fluctuations as a result of the Choice Properties Trust Units held by Unitholders other than the Company. These Trust Units 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. An increase (decrease) in the market price of Trust Units results in a charge (income) to net interest expense and other financing charges.

Recovery related to PC Bank commodity tax matter  In the third quarter of 2024, $10 million was recorded related to interest income on cash tax refunds on the PC Bank commodity tax matter discussed above.

ADJUSTED INCOME TAXES AND ADJUSTED EFFECTIVE TAX RATE  The Company believes the adjusted effective tax rate applicable to adjusted earnings before taxes is useful in assessing the underlying operating performance of its business.

The following table reconciles the effective tax rate applicable to adjusted earnings before taxes to the GAAP effective tax rate applicable to earnings before taxes as reported for the periods ended as indicated.

In addition to certain items described in the "Adjusted EBITDA" and "Adjusted Net Interest Expense and Other Financing Charges" sections above, the following item impacted adjusted income taxes and the adjusted effective tax rate in 2024 and 2023:

Outside basis difference in certain Loblaw shares  The Company recorded a deferred tax recovery of $8 million in the fourth quarter of 2024 (2023 – $16 million) and a deferred tax expense of $6 million year-to-date (2023 – $8 million) 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.

ADJUSTED NET EARNINGS AVAILABLE TO COMMON SHAREHOLDERS AND ADJUSTED DILUTED NET EARNINGS PER COMMON SHARE  The Company believes that adjusted net earnings available to common shareholders and adjusted diluted net earnings per common share 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 and adjusted net earnings attributable to shareholders of the Company to net earnings attributable to shareholders of the Company and then to net earnings available to common shareholders of the Company reported for the periods ended as indicated.

The following table reconciles adjusted net earnings available to common shareholders of the Company and adjusted diluted net earnings per common share to GAAP net earnings available to common shareholders of the Company and diluted net earnings per common share as reported for the periods ended as indicated.

 

GWL CORPORATE FREE CASH FLOW  GWL Corporate free cash flow is generated from dividends received from Loblaw, distributions received from Choice Properties, and proceeds from participation in Loblaw's NCIB, less corporate expenses, interest and income taxes paid.

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 IFRS Accounting Standards issued in January 2022.

The following table reconciles Choice Properties' Funds from Operations to net income for the periods ended as indicated.

SOURCE George Weston Limited

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