2024
Annual Report
GEORGE WESTON LIMITED 2024 ANNUAL REPORT
1
Report to Shareholders
Dear Shareholders,
George Weston Limited has been proudly serving Canadians’
everyday needs for 143 years, and we continue to do so today
as a holding company with two market-leading businesses in
retail and real estate. In 2024, we provided those businesses
with world-class support that created value, not only through
strong financial performance, but also our group’s contributions
towards building prosperity in the communities we serve.
In our retail business at Loblaw, a focus on helping Canadians Live Life Well®
meant delivering value to Canadian consumers during a prolonged cost of living
crisis that was exacerbated by economic uncertainty. This value included opening
or converting more than 60 new Maxi© and No Frills© hard discount stores,
introducing promotions like the Hit of the Month, and our Marvel and Cookware
programs. At Shoppers Drug Mart©, we now operate more than 150 pharmacy care
clinics, including 21 new Shoppers Drug Mart locations opened in 2024, making
essential care even more accessible. And, our customers once again redeemed over
$1 billion in PC Optimum™ points, with offers becoming increasingly personalized
thanks to new digital and data insight capabilities. With a deliberate focus on
lowering its cost to serve, Loblaw delivered its financial plan, while providing even
more value to consumers amidst some of the toughest economic conditions in
recent memory. As a result, the Company was able to invest in growth, reinforcing
the strength of Loblaw’s ability to deliver short, medium, and long-term success.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT
2
In our real estate business, Choice Properties delivered on its long-standing
commitment of both capital preservation and stable and growing cash flows,
while also providing net asset value appreciation and distribution growth
over time. Amid ongoing market and economic volatility, Choice Properties
demonstrated resilience, maintaining 97.6% occupancy and strong Same-Asset
Cash NOI and FFO growth. With a focus on its strategic priorities, Choice Properties
also improved the quality of its portfolio through $426.5 million of transactions,
and made progress in unlocking the value of its development pipeline, delivering
over 1.1 million square feet of new commercial space, as well as 302 purpose-
built rental residential units last year. This all took place while maintaining a
conservative, strong, and flexible balance sheet, underpinned by $13 billion of
unencumbered properties and an Adjusted Debt to EBITDAFV ratio of 7.0x.
With continued conviction in Choice Properties’ high-quality portfolio, it is
well-positioned to generate enduring value through places where people thrive.
As we reflect upon 2024, we are proud of how our operating businesses performed,
and are confident about their long-term prospects. Alongside our 220,000
colleagues and employees who serve our customers and tenants every day,
we continue to work with each business’s management team to look for ways
to capture their full potential. That includes specific inclusion and net zero carbon
goals at George Weston, Loblaw, and Choice Properties where, while others
are choosing to back-away from their commitments, our group has leaned-in.
Looking ahead, we have confidence that we will carry our momentum into 2025 as
we continue to create value and serve Canadians with a sense of purpose every day.
Sincerely,
[signed]
Galen Weston
Chairman & CEO
[signed]
Richard Dufresne
President & CFO
We continue to
create value and
serve Canadians
with a sense of
purpose every day.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT
3
Management’s Discussion
and Analysis
The following Management’s Discussion and Analysis (“MD&A”) for George Weston
Limited (“GWL” or the “Company”) should be read in conjunction with the audited
annual consolidated financial statements and the accompanying notes on pages
85 to 154 of this Annual Report. The Company’s audited annual consolidated financial
statements and the accompanying notes for the year ended December 31, 2024
have been prepared in accordance with International Financial Reporting Standards
as issued by the International Accounting Standards Board (“IFRS Accounting
Standards” or “GAAP”). The audited annual consolidated financial statements include
the accounts of the Company and other entities that the Company controls and are
reported in Canadian dollars, except where otherwise noted.
Under GAAP, certain expenses and income must be recognized that are not necessarily
reflective of the Company’s underlying operating performance. Non-GAAP and other
financial measures exclude the impact of certain items and are used internally when
analyzing consolidated and segment underlying operating performance. These non-
GAAP and other financial measures are also helpful in assessing underlying operating
performance on a consistent basis. See Section 13, “Non-GAAP and Other Financial
Measures”, of this MD&A for more information on the Company’s non-GAAP and other
financial measures.
The Company operates through its two reportable operating segments: Loblaw
Companies Limited (“Loblaw”) and Choice Properties Real Estate Investment Trust
(“Choice Properties”). The effect of consolidation includes eliminations, intersegment
adjustments and other consolidation adjustments. 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.
For further details on the effect of consolidation, refer to Section 13, “Non-GAAP and
Other Financial Measures”, of this MD&A. In this MD&A, unless otherwise indicated,
“Consolidated” refers to the consolidated results of GWL including its subsidiaries.
The information in this MD&A is current to February 25, 2025, unless otherwise noted.
FOOTNOTE LEGEND
1 See Section 13, “Non-GAAP and Other Financial Measures”, of the Company’s 2024 Management’s Discussion and Analysis.
2 To be read in conjunction with “Forward-Looking Statements” beginning on page 83.
3 For financial definitions and ratios refer to Glossary beginning on page 157.
Table of Contents
4 At a Glance
5 Our Business
8 Key Performance Indicators
Operating Segments
12 Loblaw
14 Choice Properties
17 Financial Results
68 Outlook
68 Non-GAAP and Other
Financial Measures
83 Forward-Looking Statements
84 Additional Information
GEORGE WESTON LIMITED 2024 ANNUAL REPORT
4
At a Glance
Key Financial Highlights
As at or for the year ended December 31, 2024
($ millions except where otherwise indicated)
Consolidated
REVENUE
$61,608
+2.5%
vs. 2023
OPERATING INCOME
$4,376
+0.3%
vs. 2023
ADJUSTED EBITDA(1)
$7,401
+6.4%
vs. 2023
ADJUSTED EBITDA MARGIN(1) (%)
12.0%
+40bps
vs. 2023
NET EARNINGS AVAILABLE TO
COMMON SHAREHOLDERS
$1,315
-12.1%
vs. 2023
ADJUSTED NET EARNINGS
AVAILABLE TO COMMON
SHAREHOLDERS(1)
$1,597
+8.9%
vs. 2023
DILUTED NET EARNINGS PER
COMMON SHARE ($)
$9.80
-8.8%
vs. 2023
ADJUSTED DILUTED
NET EARNINGS PER
COMMON SHARE(1) ($)
$11.93
+13.2%
vs. 2023
GWL Corporate
GWL CORPORATE CASH FLOW
FROM OPERATING BUSINESSES(1)
$575
-7.9%
vs. 2023
GWL CORPORATE FREE
CASH FLOW(1)
$1,103
-14.0%
vs. 2023
ANNUALIZED DIVIDENDS
DECLARED PER SHARE ($)
$3.28
+15.0%
vs. 2023
GWL CORPORATE CASH
AND CASH EQUIVALENTS AND
SHORT-TERM INVESTMENTS
$523
-27.3%
vs. 2023
1 Refer to Section 13, “Non-GAAP and Other Financial Measures”, of the Company’s 2024 Management’s Discussion & Analysis.
52.6%
61.7%
GEORGE WESTON LIMITED 2024 ANNUAL REPORT
5
Our Business
Our history as a family business
In 1882, a young Toronto bread salesman and former baker’s apprentice named George
Weston went into business for himself when he bought a bread route from his employer.
By the turn of the century, Weston’s Bread was known throughout the city and George
Weston had become Canada’s biggest baker.
In 1924, George’s eldest son, Garfield Weston, followed in his father’s footsteps and
became president of George Weston Limited. In spite of war and the depression, Garfield
transformed his father’s Toronto bakery into a commercial food empire with holdings on
several continents.
In 1953, George Weston Limited expanded its grocery business, acquiring majority control
of Loblaws Inc. In 1956, Loblaw Companies Limited was incorporated, and over the next
two decades, Loblaw continued to expand its operations throughout Canada and the
United States.
In the early 1970s, a third generation took charge as W. Galen Weston successfully
consolidated the large conglomerate, reinventing Loblaw in the process and transforming
it into Canada’s largest grocery chain and GWL’s largest asset.
In 2006, Galen G. Weston assumed responsibility for Loblaw and guided Loblaw through
a period of transformation and growth in response to a rapidly changing business
environment, including the creation and initial public offering of Choice Properties
Real Estate Investment Trust in 2013 and the acquisition of Shoppers Drug Mart shortly
thereafter. In 2017, Galen G. Weston was appointed CEO of George Weston Limited.
In 2018, as part of GWL’s transformation initiative and long-term commitment to create
shareholder value, the Company completed a reorganization where Loblaw spun out its
majority interest in Choice Properties to GWL. GWL’s acquisition of a majority ownership
of Choice Properties was a critical milestone in the recent history of the Company. With
the addition of Choice Properties to the portfolio, the Company became more balanced,
with three strong and well-positioned businesses in retail, real estate and consumer goods.
In 2021, George Weston Limited made the decision to sell its Weston Foods bakery
business. The business had been the foundation for the Weston Group in Canada since
its establishment in 1882. The sale of the business was completed at the end of 2021,
positioning the Company to focus on its market-leading retail and real estate businesses.
For more than a century and a quarter, thousands of employees of George Weston
Limited and its subsidiaries have built an enterprise that has persevered and prospered
through good times and bad to become one of Canada’s most successful companies.
What we do
George Weston Limited is a Canadian public company, founded in 1882 and listed on
the Toronto Stock Exchange (TSX:WN) since January 1928. The Company owns two
businesses in retail and real estate.
Loblaw
Loblaw (TSX: L) is Canada’s food and
pharmacy leader and the nation’s
largest retailer. Loblaw provides
Canadians with grocery, pharmacy
and healthcare services, health and
beauty products, apparel, general
merchandise and financial services, t
hrough its grocery banners, S
hoppers Drug Mart, Joe Fresh a
nd President’s Choice Bank.
Choice Properties
Choice Properties REIT (TSX: CHP.UN)
is a leading Real Estate Investment
Trust that creates enduring value
through places where people thrive,
from its ownership, operation,
and development of high-quality
commercial and residential properties.
Choice Properties’ portfolio is
comprised of necessity-based grocery
anchored retail properties, well-
located high-quality industrial sites,
and mixed-use and residential assets,
concentrated in attractive markets
across Canada.
Our Business
GEORGE WESTON LIMITED 2024 ANNUAL REPORT
6
Our Operating and Value Creation Strategy
George Weston Limited’s mission is to build
generational value with actively managed
market-leading businesses in retail and
real estate through expertise in strategy,
mergers and acquisitions, capital allocation
and talent development.
Over the years, the Company has successfully executed strategic transactions and has
tightly managed its leverage and capital structure.
The Company is a leader in each of its operating segments, retail and real estate, with
market-leading brands in retail and coveted locations in real estate.
The Company is committed to supporting its portfolio of companies, providing expertise
and decision support. This includes support in areas such as strategy, talent development,
capital allocation and mergers and acquisitions.
The Company brings a unique perspective to the operating business level, having a
viewpoint that spans across the retail and real estate categories, enabling the identification
of opportunities and the sharing of best practices.
By accumulating capital from its existing businesses and prudently leveraging its debt
capacity, the Company supports investments in strategic transactions that create value at
its portfolio of companies. The Company also considers strategic initiatives where it can
leverage its existing capabilities and expertise to create long-term value for shareholders.
The Company has a track record of providing stability and maintaining a long-term outlook.
The Company seeks to deploy its capital optimally, including returning capital to shareholders
and re-investing capital in its portfolio of companies, where it can further enhance
earnings capability.
Our Business
RETAIL
REAL
ESTATE
ACTIVELY MANAGED
PORTFOLIO
BUILD GENERATIONAL
VALUE
GEORGE WESTON LIMITED 2024 ANNUAL REPORT
7
Our Operating and Value Creation Strategy
Built on what we have in common
Together, these four concepts unite our operating companies
and are core to our identity:
CORE VALUES
Our actions are shaped by a set of CORE Values,
which express a shared commitment to Care,
Ownership, Respect and Excellence across the
group of companies.
ETHICS & COMPLIANCE
Throughout our interactions, our decisions are
grounded in a strong sense of Ethics & Compliance.
BLUE CULTURE
Represents how our values come to life every
day in our interactions with our businesses,
each other and our customers.
SOCIAL RESPONSIBILITY
As a generational investor, long-term social,
demographic and environmental trends
matter and underpin the importance we place
on Social Responsibility.
Impacting
Through active management and by leveraging our culture
and values we seek to positively impact:
SHAREHOLDERS
We create value for our shareholders by enhancing
the value of our market-leading businesses,
supporting operational excellence, investing in
strategic transactions and by distributions in
the form of dividends.
COLLEAGUES
Our talent is central to achieving our long-term
goals. Our focus on attracting and developing
exceptional leaders is a strategic imperative
and we are proud to offer challenging and
rewarding careers.
COMMUNITIES
Consistent with our heritage and values, we are
focused on improving the quality of life in the
communities where we live and work.
0
10,000
20,000
30,000
40,000
50,000
60,000
$70,000
Q4
2023
Q4
2024
2023
2024
0
1,000
2,000
3,000
4,000
$5,000
Q4
2023
Q4
2024
2023
2024
0
2,000
4,000
6,000
$8,000
Q4
2023
Q4
2024
2023
2024
0
500
1,000
1,500
$2,000
Q4
2023
Q4
2024
2023
2024
GEORGE WESTON LIMITED 2024 ANNUAL REPORT
8
Key Performance Indicators
As at and for the unaudited quarters and audited years ended December 31
($ millions except where otherwise indicated)
REVENUE
2024
61,608
+2.5%
2023
60,124
Q4 2024
15,097
+2.7%
Q4 2023
14,700
Performance in 2024
Revenue growth of $1,484
million driven by Loblaw
and Choice Properties.
OPERATING INCOME
2024
4,376
+0.3%
2023
4,363
Q4 2024
992
-7.8%
Q4 2023
1,076
Performance in 2024
Operating income increased by
$13 million. The increase was
attributable to an improvement
in the underlying operating
performance of Loblaw and
Choice Properties, and the
favourable year-over-year impact
of GWL Corporate, partially
offset by the unfavourable
year-over-year net impact of
adjusting items.
ADJUSTED EBITDA(1)
2024
7,401
+6.4%
2023
6,953
Q4 2024
1,814
+7.1%
Q4 2023
1,694
Performance in 2024
Adjusted EBITDA(1) increased
by $448 million primarily
driven by an improvement
in the underlying operating
performance of Loblaw and
Choice Properties, and the
favourable year-over-year
impact of GWL Corporate.
ADJUSTED EBITDA
MARGIN (1) (%)
12.0%
2024
+40bps
vs. 2023
12.0%
Q4 2024
+50bps
vs. Q4 2023
ADJUSTED NET EARNINGS
AVAILABLE TO COMMON
SHAREHOLDERS(1)
2024
1,597
+8.9%
2023
1,467
Q4 2024
415
+21.3%
Q4 2023
342
Performance in 2024
Adjusted net earnings
available to common
shareholders(1) increased
by $130 million due to an
increase in the contribution
from the publicly traded
operating companies(i),
and the favourable year-
over-year impact of
GWL Corporate.
ADJUSTED DILUTED NET
EARNINGS PER COMMON
SHARE(1) ($)
$11.93
2024
+13.2%
vs. 2023
$3.15
Q4 2024
+25.5%
vs. Q4 2023
Key Performance Indicators
0
500
1,000
1,500
$2,000
Q4
2023
Q4
2024
2023
2024
0
200
400
600
$800
Q4
2023
Q4
2024
2023
2024
0
300
600
900
1,200
$1,500
Q4
2023
Q4
2024
2023
2024
GEORGE WESTON LIMITED 2024 ANNUAL REPORT
9
CONTRIBUTION TO ADJUSTED
NET EARNINGS(1) FROM THE
PUBLICLY TRADED OPERATING
COMPANIES(i)
2024
1,727
+7.0%
2023
1,614
Q4 2024
440
+16.4%
Q4 2023
378
Performance in 2024
Contribution to adjusted
net earnings available to
common shareholders of the
Company(1) from the publicly
traded operating companies(i)
increased by $113 million
driven by an improvement
in the underlying operating
performance of Loblaw and
Choice Properties.
GWL CORPORATE CASH
FLOW FROM OPERATING
BUSINESSES(1)
2024
575
-7.9%
2023
624
Q4 2024
85
-45.9%
Q4 2023
157
Performance in 2024
GWL Corporate cash flow from
operating businesses (1) were
lower in 2024 primarily due to
the timing of the dividends
received from Loblaw.
GWL CORPORATE FREE
CASH FLOW(1)
2024
1,103
-14.0%
2023
1,283
Q4 2024
258
-37.5%
Q4 2023
413
Performance in 2024
GWL Corporate free cash
flow(1) decreased primarily
due to lower proceeds from
GWL’s participation in Loblaw’s
Normal Course Issuer Bid
(“NCIB”), lower GWL Corporate
cash flow from operating
businesses (1) and higher
income taxes paid.
See page 11 of this MD&A for
a calculation of this metric.
GWL CORPORATE CASH AND
CASH EQUIVALENTS AND
SHORT-TERM INVESTMENTS
$523
2024
-27.3%
vs. 2023
$719
2023
Performance in 2024
The decrease in GWL Corporate
cash and cash equivalents
and short-term investments
since 2023 year end was
primarily due to GWL share
repurchases, dividends paid
to shareholders and income
taxes paid, partially offset by
proceeds received from GWL’s
participation in Loblaw’s NCIB
and higher issuance of long-
term debt net of repayments
in the current year.
1 Refer to Section 13, “Non-GAAP and Other Financial Measures”, of the Company’s 2024 Management’s Discussion and Analysis.
(i) Publicly traded operating companies is the combined results from Loblaw and Choice Properties after the effect of consolidation.
Key Performance Indicators
PC Financial
Loblaw Retail
Lease Liabilities
4.1
7.4
0.5
5.4
6.0
4.0
7.4
0.5
5.0
5.4
$22.3
$23.4
2024
2023
GEORGE WESTON LIMITED 2024 ANNUAL REPORT
10
Total Debt
The Company manages its debt on a segmented basis to ensure that each of its businesses is employing leverage that is
appropriate. The following chart presents total consolidated debt by reportable operating segment after effect of consolidation
as at December 31, 2024 and 2023. There is no recourse to the Company for debt incurred by its operating segments.
The consolidated debt for the group as at December 31, 2024 was $23.4 billion. Indebtedness of Loblaw and Choice Properties
is fully serviced by their respective operating cash flows. Indebtedness of GWL Corporate is comprised of $500 million of
senior unsecured debentures.
TOTAL DEBT
As at December 31
($ billions)
Key Performance Indicators
0
100
200
300
400
$500
2023
2024
0
0.50
1.00
1.50
2.00
2.50
$3.50
3.00
+6.8%
CAGR
2016
2017
2018
2019
2020
2021
2022
2023
2024
2015
GEORGE WESTON LIMITED 2024 ANNUAL REPORT
11
GWL Corporate Free Cash Flow(1)
GWL Corporate free cash flow(1) is generated from the dividends received from Loblaw, distributions received from Choice
Properties, and proceeds from participation in Loblaw’s NCIB, less corporate expenses, interest and income taxes paid.
Quarters ended
Years ended
For the quarters and years ended December 31
($ millions)
2024
2023
2024
2023
Dividends from Loblaw(i)
—
73
237
290
Distributions from Choice Properties
85
84
338
334
GWL Corporate cash flow from operating businesses(1)
85
157
575
624
Proceeds from participation in Loblaw’s NCIB
184
238
746
847
GWL Corporate, financing, and other costs(ii)
(7)
27
(76)
(77)
Income taxes paid
(4)
(9)
(142)
(111)
GWL Corporate free cash flow(1)
258
413
1,103
1,283
(i) GWL Corporate recognized $82 million of dividends from Loblaw in the first quarter of 2025.
(ii) GWL Corporate, financing, and other costs includes all other company level activities that are not allocated to the reportable operating segments such
as net interest expense, corporate activities, administrative costs and changes in non-cash working capital. Also included are preferred share dividends.
Dividends
For the years ended December 31
($ millions except where otherwise indicated)
DIVIDENDS PAID
2024
399
+4.7%
2023
381
Performance in 2024
GWL Corporate dividends
paid were higher due to an
increase in the dividend per
common share of 15.0% in
the second quarter of 2024.
DIVIDENDS PER COMMON SHARE ($)
10 Year Summary
GWL declared an annualized dividend of $3.28 per common share in 2024. The
Company’s objective is to increase the dividend per common share over time
while retaining appropriate free cash flow to finance future growth. Since 2015,
the dividend per common share has increased at a 6.8% Compound Average
Growth Rate (“CAGR”).
1 Refer to Section 13, “Non-GAAP and Other Financial Measures”, of the Company’s 2024 Management’s Discussion and Analysis.
0
10,000
20,000
30,000
40,000
50,000
60,000
$70,000
Q4
2023
Q4
2024
2023
2024
0
500
1,000
1,500
2,000
2,500
3,000
3,500
$4,000
Q4
2023
Q4
2024
2023
2024
GEORGE WESTON LIMITED 2024 ANNUAL REPORT
12
Loblaw
Loblaw (TSX: L) provides Canadians with grocery,
pharmacy, health care services and other health
and beauty products, apparel, general merchandise
and financial services.
Strategy
Loblaw is driven by its purpose to help Canadians Live Life Well
®
which guides its strategic framework. This framework centres
around Loblaw’s three strategic pillars of Delivering Retail
Excellence, Driving Growth, and Investing for the Future, while
embedding Environmental, Social, and Governance (“ESG”)
initiatives in everything it does. Underpinning these strategic
pillars is a sharp focus on leveraging data driven insights
and process efficiency excellence to deliver strong financial
performance. The framework is supported by colleagues
with a shared set of CORE values and culture principles that
encourages colleagues to be authentic, build trust and
make connections.
Loblaw strives to be the “best in food, health and beauty” and
with its focus on retail excellence, it is constantly improving its
retail operations to differentiate its customer offerings, to lower
cost to serve and to deliver scale through its national logistics
infrastructure. Building for the future, its purpose guides its
investments in strategic growth initiatives to further differentiate
its portfolio of assets, generate competitive advantages in
products, services and price, improve its operational efficiencies,
and create new areas of growth to service the changing needs
of Canadians and to personalize their experiences.
Loblaw’s purpose-led approach to addressing ESG issues
ensures that ESG considerations are central to decisions made
across Loblaw. By integrating consideration of environmental
and social risks and good governance practices in its day-to-day
business activities, implementing robust compliance and ethics
programs and supporting its colleagues and the communities
in which it operates, Loblaw aims to be a leading contributor
to Canadian society both today and for generations to come.
Key highlights for the year
Loblaw continued to deliver strong and consistent financial
and operating results across its various businesses in 2024.
Loblaw’s ability to deliver everyday value, quality, service and
convenience to Canadians was reflected in strong sales growth
across its retail business. Loblaw’s portfolio of best in class assets
was well positioned to meet customers’ everyday needs across
food, health and wellness. Loblaw’s relentless focus on retail
excellence leveraged these assets to deliver strong sales growth,
gross margin improvements, and leverage its operating costs.
Key performance indicators
As at or for the unaudited quarters and audited years ended December 31
($ millions except where otherwise indicated)
REVENUE
2024
61,014
+2.5%
2023
59,529
Q4 2024
14,948
+2.9%
Q4 2023
14,531
Performance in 2024
Revenue increased by $1,485
million driven by an increase
in retail sales and in financial-
services revenue. The increase
in retail sales was primarily
due to positive same-store
sales growth.
OPERATING INCOME
2024
3,894
+5.4%
2023
3,696
Q4 2024
850
-9.7%
Q4 2023
941
Performance in 2024
Operating income increased
by $198 million compared
to 2023. The increase was
driven by an improvement
in the underlying operating
performance of retail and
financial services, partially
offset by the unfavourable
year-over-year net impact
of adjusting items.
Loblaw Offerings
DIVISIONS:
Super Market
Hard Discount
Shoppers Drug Mart®
PC Financial®
Joe Fresh®
TOP BRANDS:
President’s Choice®
no name®
Farmer’s Market™
T&T®
Life Brand™
PC Optimum™
Loblaw
0
2,000
4,000
6,000
$8,000
Q4
2023
Q4
2024
2023
2024
0
500
1,000
1,500
$2,000
Q4
2023
Q4
2024
2023
2024
0
1.0
2.0
3.0
4.0%
Q4
2023
Q4
2024
2023
2024
0
2.0
4.0
6.0%
Q4
2023
Q4
2024
2023
2024
GEORGE WESTON LIMITED 2024 ANNUAL REPORT
13
ADJUSTED EBITDA(1)
2024
7,016
+5.7%
2023
6,639
Q4 2024
1,696
+4.0%
Q4 2023
1,631
Performance in 2024
Adjusted EBITDA(1) increased by
$377 million compared to 2023,
due to an increase in retail and
financial services.
Adjusted EBITDA margin(1)
increased due to an increase
in retail adjusted gross profit
percentage (1) driven by
improvements in shrink, partially
offset by an increase in selling,
general and administrative
expenses (“SG&A”) as a percentage
of sales due to the year-over-
year impact of labour costs
and certain real estate activities.
ADJUSTED EBITDA MARGIN (1) (%)
11.5%
2024
+30bps
vs. 2023
11.3%
Q4 2024
+10bps
vs. Q4 2023
FREE CASH FLOW (1)(i)
2024
1,671
-1.7%
2023
1,700
Q4 2024
610
+64.4%
Q4 2023
371
Performance in 2024
Free cash flow
(1)(i) decreased
primarily due to higher income
taxes paid, an unfavourable
change in other non-cash items
and higher capital investments,
partially offset by higher cash
earnings, the year-over-year
change in provisions and credit
card receivables increasing
year-over-year at a rate lower
than prior year.
CAPITAL EXPENDITURES
2.2 billion
2024
+4.3%
vs. 2023
FOOD RETAIL SAME-STORE
SALES GROWTH (i) (%)
2024
1.5%
-240bps
2023
3.9%
Q4 2024
2.5%
+50bps
Q4 2023
2.0%
Performance in 2024
Food retail same-store sales
growth(i) was 1.5%. Consumer
Price Index (“CPI”) was 2.2%
(2023 – 7.8%) which was in
line with Loblaw’s internal
foodinflation,andfoodretail
trafficincreasedandbasket
size decreased.
DRUG RETAIL SAME-STORE
SALES GROWTH (i) (%)
2024
2.4%
-300bps
2023
5.4%
Q4 2024
1.3%
-330bps
Q4 2023
4.6%
Performance in 2024
Drug retail same-store sales
growth was 2.4%. Pharmacy and
healthcare services same-store
sales growth benefited from an
increase in specialty and chronic
prescription volumes. Front
store same-store sales declined,
primarily driven by lower sales of
food and household items and
the decision to exit certain low
margin electronics categories,
partially offset by the continued
strength in beauty products.
RETAIL DEBT TO RETAIL
ADJUSTED EBITDA(1)(i)
2.4x
2024
+0.1x
vs. 2023
1 Refer to Section 13, “Non-GAAP and Other Financial Measures”, of the Company’s 2024 Management’s
Discussion and Analysis.
(i) For more information on these measures, see the 2024 Annual Report filed by Loblaw, which is available
on www.sedarplus.ca or at www.loblaw.ca.
0
300
600
900
1,200
$1,500
Q4
2023
Q4
2024
2023
2024
-600
-400
-200
0
200
400
600
$800
Q4
2023
Q4
2024
2023
2024
GEORGE WESTON LIMITED 2024 ANNUAL REPORT
14
Choice Properties
Choice Properties REIT (TSX: CHP.UN) is a leading
Real Estate Investment Trust that creates enduring
value through places where people thrive, from
its ownership, operation and development of high-
quality commercial and residential properties.
Strategy
Choice Properties’ financial goals are centered on capital
preservation, generating stable and growing cash flows, and
delivering appreciation in net asset value and distributions
over time, supported by its proven strategy and unmatched
foundation. Choice Properties continues to focus on maintaining
its market-leading portfolio, sustaining operational excellence,
and delivering its development pipeline.
Key highlights for the year
Choice Properties achieved another year of strong operational
and financial results, delivering on its strategic framework
while further strengthening its foundation. Despite ongoing
market volatility, its market leading portfolio continued to
demonstrate its resilience. Occupancy remained high, and
Choice Properties achieved strong leasing spreads and
Same-Asset, Cash NOI growth. Each of its three asset classes
retail, industrial, and mixed-use & residential, offers distinct
opportunities to create value and deliver reliable and
consistent cash flows. Choice Properties made significant
strides in deepening its ESG commitments across all aspects
of its business, including the introduction of a Social Impact
Framework to promote local economic development and
social cohesion, leveraging its assets and partnerships to
make a meaningful impact at the neighborhood level.
Top Retail tenants
1. Loblaw
2. Canadian Tire
3. TJX Companies
4. Dollarama
5. Goodlife
6. Liquor Control Board
of Ontario (LCBO)
7. Sobeys
8. Walmart
9. TD Canada Trust
10. Staples
Top Industrial tenants
1. Loblaw
2. Amazon
3. Canada Cartage
4. Wonderbrands
5. Pet Valu
6. NFI IPD
7. Uline Canada Corporation
8. Alberta Gaming,
Liquor and Cannabis
9. Kimberly-Clark
10. Canadian Tire
Key performance indicators
As at or for the unaudited quarters and audited years ended December 31
($ millions except where otherwise indicated)
REVENUE
2024
1,369
+2.5%
2023
1,335
Q4 2024
344
-3.1%
Q4 2023
355
Performance in 2024
Revenue increased by
$34 million due to an increase
in rental revenue, partially offset
by lower revenue from the sale
of residential inventory. The
increase in rental revenue was
driven by higher rental rates
in the retail and industrial
portfolios, higher recoveries,
and acquisitions, net of
dispositions, and completed
developments, partially offset by
lower lease surrender revenue.
OCCUPANCY RATE
97.6%
2024
-40bps
vs. 2023
NET INCOME (LOSS)
2024
785
-1.5%
2023
797
Q4 2024
792
+278.0%
Q4 2023
(445)
Performance in 2024
Net income decreased by
$12 million due to the
unfavourable change in
the fair value adjustments
of its Class B LP units
(“Exchangeable Units”), as a
result of the change in Choice
Properties’ Trust Unit price
and the unfavourable change
of the fair value of investment
properties, partially offset by
an increase in rental revenue,
the favourable impact of
the reversal of a transaction
related provision that was
determined to be no longer
required, and the favourable
change in the adjustment to
fair value on investment in
real estate securities as a result
of the change in the unit price
of Allied Properties Real Estate
Investment Trust (“Allied”).
Choice Properties
0
100
200
300
400
500
600
700
$800
Q4
2023
Q4
2024
2023
2024
0
100
200
300
400
500
600
$700
Q4
2023
Q4
2024
2023
2024
0
200
400
600
800
$1,000
Q4
2023
Q4
2024
2023
2024
0
20
40
60
80
100%
2023
2024
GEORGE WESTON LIMITED 2024 ANNUAL REPORT
15
FUNDS FROM
OPERATIONS (1)
2024
747
+2.9%
2023
726
Q4 2024
188
+1.6%
Q4 2023
185
Performance in 2024
FFO(1) increased by $21 million
primarily due to an increase in
rental income, partially offset
by higher interest expense net
of higher interest income, lower
investment income as a result
of the special distribution from
Allied in the prior year, higher
general and administrative
expenses, lower lease surrender
revenue and lower income from
the sale of residential inventory.
ADJUSTED FUNDS
FROM OPERATIONS (i)
2024
625
+4.5%
2023
598
Q4 2024
109
-14.2%
Q4 2023
127
Performance in 2024
AFFO(i) increased by
$27 million primarily due
to an increase in FFO(i).
SAME-ASSET NOI,
CASH BASIS (i)
2024
958
+3.1%
2023
929
Q4 2024
243
+3.0%
Q4 2023
236
Performance in 2024
Same-Asset NOI, cash basis(i)
increased compared to 2023
primarily due to increased
revenue from higher rental
rates on renewals, new leasing,
contractual rent steps and
higher recoveries mainly in the
industrial and retail portfolios,
as well as the reversal of a
provision in the industrial
portfolio following the
resolution of a tenant dispute.
ADJUSTED DEBT
TO EBITDAFV(i)
7.0x
2024
-0.2x
vs. 2023
ADJUSTED DEBT TO
TOTAL ASSETS(i)
2024
40.0%
-40bps
2023
40.4%
Performance in 2024
Adjusted debt to total assets(i)
decreased primarily due to
a higher total asset balance,
partially offset by a marginal
increase in the overall level
of debt.
DEBT SERVICE
COVERAGE (i)
3.0x
2024
0.0x
vs. 2023
1 Refer to Section 13, “Non-GAAP and Other Financial Measures”, of the Company’s 2024 Management’s Discussion and Analysis.
(i) For more information on these measures, see the 2024 Annual Report filed by Choice Properties, which is available on www.sedarplus.ca or at www.choicereit.ca.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT
16
Financial Highlights(3)
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 17
As at or for the years ended December 31
($ millions except where otherwise indicated)
2024
2023
% Change
CONSOLIDATED OPERATING RESULTS
Revenue
$
61,608
$
60,124
2.5%
Operating income
4,376
4,363
0.3%
Adjusted EBITDA(i)
7,401
6,953
6.4%
Depreciation and amortization
2,611
2,532
3.1%
Net interest expense and other financing charges
972
889
9.3%
Adjusted net interest expense and other financing charges(i)
1,146
1,120
2.3%
Income taxes
908
849
6.9%
Adjusted income taxes(i)
1,137
1,019
11.6%
Net earnings
2,496
2,625
(4.9)%
Net earnings attributable to shareholders of the Company(ii)
1,359
1,540
(11.8)%
Net earnings available to common shareholders of the Company
1,315
1,496
(12.1)%
Adjusted net earnings available to common shareholders of the Company(i)
1,597
1,467
8.9%
Contribution to adjusted net earnings available to common shareholders(i) from
the publicly traded operating companies(iii)
1,727
1,614
7.0%
GWL CORPORATE
Cash flow from operating businesses(i)
$
575
$
624
(7.9)%
Free cash flow(i)
$
1,103
$
1,283
(14.0)%
CONSOLIDATED FINANCIAL POSITION AND CASH FLOWS
Cash and cash equivalents, short-term investments and security deposits
$
2,734
$
2,961
(7.7)%
Cash flows from operating activities
6,065
5,851
3.7%
Capital investments(iv)
2,395
2,379
0.7%
Free cash flow(i)
1,811
1,706
6.2%
Total debt including lease liabilities
23,365
22,268
4.9%
Total equity attributable to shareholders of the Company
6,242
6,675
(6.5)%
Total equity
13,137
13,463
(2.4)%
CONSOLIDATED PER COMMON SHARE
Diluted net earnings per common share ($)
$
9.80
$
10.75
(8.8)%
Adjusted diluted net earnings per common share(i) ($)
$
11.93
$
10.54
13.2%
CONSOLIDATED FINANCIAL MEASURES AND RATIOS
Adjusted EBITDA margin(i) (%)
12.0%
11.6%
Adjusted return on average equity attributable to common shareholders of
the Company(i) (%)
28.3%
24.7%
Adjusted return on capital(i) (%)
14.5%
14.0%
REPORTABLE OPERATING SEGMENTS
Loblaw
Revenue
$
61,014
$
59,529
2.5%
Operating income
3,894
3,696
5.4%
Adjusted EBITDA(i)
7,016
6,639
5.7%
Adjusted EBITDA margin(i) (%)
11.5%
11.2%
Depreciation and amortization
2,966
2,906
2.1%
Choice Properties
Revenue
$
1,369
$
1,335
2.5%
Net income
785
797
(1.5)%
Funds from operations(i)
747
726
2.9%
(i)
See Section 13, “Non-GAAP and Other Financial Measures”, of the Company’s 2024 Management’s Discussion and Analysis.
(ii)
Includes net earnings available to common shareholders of the Company from operations and preferred dividends.
(iii)
Publicly traded operating companies is the combined results from Loblaw and Choice Properties after the effect of consolidation.
(iv)
Capital investments are the sum of fixed asset and investment properties purchases and intangible asset additions as presented in the Company’s consolidated statements of cash flows,
and prepayments transferred to fixed assets in the current year. Loblaw capital investments for the year ended 2023 included $37 million of prepayments transferred to fixed assets.
Management’s Discussion and Analysis
18 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
1
Overall Financial Performance
19
1.1
Consolidated Results of Operations
19
1.2
Consolidated Other Business Matters
24
1.3
Selected Annual Information
25
2
Results of Reportable Operating Segments
28
2.1
Loblaw Operating Results
28
2.2
Choice Properties Operating Results
30
3
Liquidity and Capital Resources
31
3.1
Cash Flows
31
3.2
Liquidity
33
3.3
Components of Total Debt
34
3.4
Financial Condition
37
3.5
Credit Ratings
37
3.6
Share Capital
38
3.7
Off-Balance Sheet Arrangements
41
3.8
Contractual Obligations
41
4
Quarterly Results of Operations
42
4.1
Quarterly Financial Information
42
4.2
Fourth Quarter Results
43
5
Fourth Quarter Results of Reportable Operating Segments
50
5.1
Loblaw Fourth Quarter Operating Results
50
5.2
Choice Properties Fourth Quarter Operating Results
51
6
Disclosure Controls and Procedures
52
7
Internal Control Over Financial Reporting
52
8
Enterprise Risks and Risk Management
53
8.1
Operating Risks and Risk Management
54
8.2
Financial Risks and Risk Management
63
9
Related Party Transactions
65
10
Critical Accounting Estimates and Judgments
65
11
IFRS Accounting Standards and Amendments
67
12
Outlook
68
13
Non-GAAP and Other Financial Measures
68
13.1
Non-GAAP and Other Financial Measures - Selected Comparative Reconciliation
79
14
Forward-Looking Statements
83
15
Additional Information
84
1
Overall Financial Performance
1.1
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.
($ millions except where otherwise indicated)
For the years ended as indicated
2024
2023
$ Change
% Change
Revenue
$
61,608
$
60,124
$
1,484
2.5%
Operating income
$
4,376
$
4,363
$
13
0.3%
Adjusted EBITDA(1)
$
7,401
$
6,953
$
448
6.4%
Adjusted EBITDA margin(1)
12.0%
11.6%
Depreciation and amortization
$
2,611
$
2,532
$
79
3.1%
Net interest expense and other financing charges
$
972
$
889
$
83
9.3%
Adjusted net interest expense and other financing charges(1)
$
1,146
$
1,120
$
26
2.3%
Income taxes
$
908
$
849
$
59
6.9%
Adjusted income taxes(1)
$
1,137
$
1,019
$
118
11.6%
Effective tax rate
26.7%
24.4%
Adjusted effective tax rate(1)
27.4%
26.8%
Net earnings attributable to shareholders of the Company
$
1,359
$
1,540
$
(181)
(11.8) %
Loblaw(i)
$
1,138
$
1,102
$
36
3.3%
Choice Properties
785
797
(12)
(1.5) %
Effect of consolidation
(283)
(248)
(35)
(14.1) %
Publicly traded operating companies
$
1,640
$
1,651
$
(11)
(0.7) %
GWL Corporate
(325)
(155)
(170)
(109.7) %
Net earnings available to common shareholders
of the Company
$
1,315
$
1,496
$
(181)
(12.1) %
Diluted net earnings per common share ($)
$
9.80
$
10.75
$
(0.95)
(8.8) %
Loblaw(i)
$
1,392
$
1,309
$
83
6.3%
Choice Properties
426
409
17
4.2%
Effect of consolidation(1)
(91)
(104)
13
12.5%
Publicly traded operating companies
$
1,727
$
1,614
$
113
7.0%
GWL Corporate
(130)
(147)
17
11.6%
Adjusted net earnings available to common shareholders
of the Company(1)
$
1,597
$
1,467
$
130
8.9%
Adjusted diluted net earnings per common share(1) ($)
$
11.93
$
10.54
$
1.39
13.2%
(i)
Contribution from Loblaw, net of non-controlling interests.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 19
Management’s Discussion and Analysis
20 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
NET EARNINGS AVAILABLE TO COMMON SHAREHOLDERS OF THE COMPANY
Net earnings available to common shareholders of the Company in 2024 were $1,315 million ($9.80 per common share), a decrease
of $181 million ($0.95 per common share) compared to $1,496 million ($10.75 per common share) in 2023. The decrease was due to
the unfavourable year-over-year net impact of adjusting items totaling $311 million ($2.34 per common share) described below,
partially offset by an improvement of $130 million ($1.39 per common share) in the consolidated underlying operating performance
of the Company.
The unfavourable year-over-year net impact of adjusting items totaling $311 million ($2.34 per common share) was primarily due to:
•
the unfavourable impact of charges related to the settlement of class action lawsuits of $253 million ($1.90 per common share).
Refer to Section 1.2, “Consolidated Other Business Matters”, of this MD&A for further information;
•
the unfavourable year-over-year impact of the fair value adjustment on investment properties of $69 million ($0.50 per
common share) driven by Choice Properties, net of the effect of consolidation;
•
the unfavourable year-over-year impact of the fair value adjustment of the Trust Unit liability of $67 million ($0.44 per common
share);
•
the unfavourable impact of the charge related to the PC OptimumTM loyalty program at Loblaw of $49 million ($0.37 per
common share). Refer to Section 2.1, “Loblaw Operating Results”, of this MD&A for further information; and
•
the unfavourable impact of the fair value write-down related to the sale of Wellwise by ShoppersTM (“Wellwise”) at Loblaw of $15
million ($0.11 per common share). Refer to Section 2.1, “Loblaw Operating Results”, of this MD&A for further information;
partially offset by,
•
the favourable year-over-year impact of the (recoveries) charge related to President’s Choice Bank (“PC Bank”) commodity tax
matters at Loblaw of $75 million ($0.56 per common share). Refer to Section 2.1, “Loblaw Operating Results”, of this MD&A for
further information;
•
the favourable impact of the reversal of a transaction related provision of $39 million ($0.29 per common share) that was
determined to be no longer required at Choice Properties; and
•
the favourable 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 $26 million ($0.17 per common share) as a result of the change in
Allied’s unit price.
Adjusted net earnings available to common shareholders of the Company(1) in 2024 were $1,597 million, an increase of $130 million,
or 8.9%, compared to 2023. The increase was due to the favourable year-over-year impact of $113 million from the contribution of the
publicly traded operating companies and the favourable year-over-year impact of $17 million at GWL Corporate primarily driven by
the favourable year-over-year impact of the fair value adjustment on other investments.
Adjusted diluted net earnings per common share(1) were $11.93 in 2024, an increase of $1.39 per common share, or 13.2%, compared
to 2023. The increase was due to the favourable performance in adjusted net earnings available to common shareholders(1) and the
favourable impact of shares purchased for cancellation over the last 12 months ($0.44 per common share) pursuant to the
Company’s Normal Course Issuer Bid (“NCIB”) program.
REVENUE
($ millions except where otherwise indicated)
For the years ended as indicated
2024
2023
$ Change
% Change
Loblaw
$
61,014
$
59,529
$
1,485
2.5%
Choice Properties
1,369
1,335
34
2.5%
Effect of consolidation(1)
(775)
(740)
(35)
(4.7)%
Publicly traded operating companies
$
61,608
$
60,124
$
1,484
2.5%
GWL Corporate
—
—
Consolidated
$
61,608
$
60,124
$
1,484
2.5%
The Company’s 2024 consolidated revenue was $61,608 million, an increase of $1,484 million, or 2.5%, compared to 2023. The
Company’s consolidated revenue was impacted by each of the Company’s reportable operating segments as follows:
•
Positively by 2.5% due to revenue growth of 2.5% at Loblaw, primarily driven by an increase in retail sales of $1,441 million, or
2.5%, and an increase in financial services revenue of $46 million, or 3.0%. The increase in retail sales was due to positive same-
store sales growth.
•
Positively by 0.1% due to revenue growth of 2.5% at Choice Properties. The increase of $34 million was driven by an increase in
rental revenue of $49 million, partially offset by lower revenue from the sale of residential inventory of $15 million. The increase
in rental revenue was primarily driven by higher rental rates.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 21
OPERATING INCOME
($ millions except where otherwise indicated)
For the years ended as indicated
2024
2023
$ Change
% Change
Loblaw
$
3,894
$
3,696
$
198
5.4%
Choice Properties
1,080
1,001
79
7.9%
Effect of consolidation(1)
(320)
(284)
(36)
(12.7)%
Publicly traded operating companies
$
4,654
$
4,413
$
241
5.5%
GWL Corporate
(278)
(50)
(228)
(456.0)%
Consolidated
$
4,376
$
4,363
$
13
0.3%
The Company’s 2024 operating income was $4,376 million compared to $4,363 million in 2023, an increase of $13 million, or 0.3%.
The increase was attributable to an improvement in the underlying operating performance of the Company of $369 million driven
by Loblaw and Choice Properties, and the favourable year-over-year impact of GWL Corporate, partially offset by the unfavourable
year-over-year net impact of adjusting items totaling $356 million described below.
The unfavourable year-over-year net impact of adjusting items totaling $356 million was primarily driven by:
•
the unfavourable impact of charges related to the settlement of class action lawsuits of $420 million;
•
the unfavourable impact of the charge related to the PC Optimum loyalty program at Loblaw of $129 million;
•
the unfavourable year-over-year impact of the fair value adjustment on investment properties of $40 million 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 at Loblaw of $23 million;
partially offset by,
•
the favourable year-over-year impact of the (recoveries) charge related to PC Bank commodity tax matters at Loblaw of
$179 million;
•
the favourable impact of the reversal of a transaction related provision of $39 million that was determined to be no longer
required at Choice Properties; and
•
the favourable year-over-year impact of the fair value adjustment on Choice Properties’ investment in real estate securities of
Allied of $28 million.
ADJUSTED EBITDA(1)
($ millions except where otherwise indicated)
For the years ended as indicated
2024
2023
$ Change
% Change
Loblaw
$
7,016
$
6,639
$
377
5.7%
Choice Properties
965
940
25
2.7%
Effect of consolidation(1)
(561)
(579)
18
3.1%
Publicly traded operating companies
$
7,420
$
7,000
$
420
6.0%
GWL Corporate
(19)
(47)
28
59.6%
Consolidated
$
7,401
$
6,953
$
448
6.4%
The Company’s 2024 adjusted EBITDA(1) was $7,401 million compared to $6,953 million in 2023, an increase of $448 million, or 6.4%.
The increase was impacted by each of the Company’s segments as follows:
•
positively by 5.4% due to growth of 5.7% at Loblaw, driven by an increase in retail and in financial services. The increase in
Loblaw retail adjusted EBITDA(1) was driven by an increase in retail gross profit, partially offset by an increase in retail selling,
general and administrative expenses (“SG&A”);
•
positively by 0.4% due to an increase of 2.7% at Choice Properties, primarily driven by the increase in rental revenue, partially
offset by higher general and administrative expenses and the unfavourable year-over-year impact of certain non-recurring
items; and
•
positively by 0.4% due to an increase of 59.6% at GWL Corporate, primarily due to the favourable year-over-year impact of the
fair value adjustment on other investments.
Management’s Discussion and Analysis
22 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
DEPRECIATION AND AMORTIZATION
($ millions except where otherwise indicated)
For the years ended as indicated
2024
2023
$ Change
% Change
Loblaw
$
2,966
$
2,906
$
60
2.1%
Choice Properties
4
3
1
33.3%
Effect of consolidation
(362)
(380)
18
4.7%
Publicly traded operating companies
$
2,608
$
2,529
$
79
3.1%
GWL Corporate
3
3
—
—%
Consolidated
$
2,611
$
2,532
$
79
3.1%
Depreciation and amortization in 2024 was $2,611 million, an increase of $79 million compared to 2023. Depreciation and
amortization in 2024 included $499 million (2023 – $499 million) of amortization of intangible assets related to the acquisitions
of Shoppers Drug Mart Corporation (“Shoppers Drug Mart”) and Lifemark Health Group (“Lifemark”), recorded by Loblaw. Excluding
these amounts, depreciation and amortization increased by $79 million due to:
•
higher depreciation and amortization at Loblaw primarily driven by an increase in information technology (“IT”) assets and
leased assets, and an increase in depreciation of fixed assets related to conversions of retail locations, partially offset by the
impact of prior year accelerated depreciation due to the reassessment of the estimated useful life of certain IT assets at Loblaw
and prior year accelerated depreciation as a result of network optimization; and
•
the unfavourable year-over-year impact of the effect of consolidation, primarily due to the prior year elimination of Loblaw’s
accelerated depreciation on certain IT assets, as these assets were classified as fixed assets on consolidation and continued to
be depreciated by the Company.
NET INTEREST EXPENSE AND OTHER FINANCING CHARGES
($ millions except where otherwise indicated)
For the years ended as indicated
2024
2023
$ Change
% Change
Net interest expense and other financing charges
$
972
$
889
$
83
9.3%
Add impact of the following:
Fair value adjustment of the Trust Unit liability
164
231
(67)
(29.0) %
Recovery related to PC Bank commodity tax matter
10
—
10
100.0%
Adjusted net interest expense and other financing charges(1)
$
1,146
$
1,120
$
26
2.3%
Net interest expense and other financing charges in 2024 were $972 million, an increase of $83 million compared to 2023. The
increase was due to the unfavourable year-over-year net impact of adjusting items totaling $57 million, itemized in the table above,
and an increase in adjusted net interest expense and other financing charges(1) of $26 million. Included in the adjusting items was
the unfavourable year-over-year impact of the fair value adjustment of the Trust Unit liability of $67 million as a result of the
decrease in Choice Properties’ unit price during 2024.
Adjusted net interest expense and other financing charges(1) in 2024 increased by $26 million, primarily driven by:
•
an increase in interest expense on long-term debt at Loblaw and Choice Properties;
•
an increase in interest expense from lease liabilities at Loblaw, net of the effect of consolidation; and
•
lower interest income on cash and cash equivalents and certain short-term investments at GWL Corporate and Loblaw;
partially offset by,
•
the capitalization of interest expense related to Loblaw’s automated distribution facility;
•
lower interest expense from post-employment and other long-term employee benefits; and
•
an increase in interest income at Choice Properties.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 23
INCOME TAXES
($ millions except where otherwise indicated)
For the years ended as indicated
2024
2023
$ Change
% Change
Income taxes
$
908
$
849
$
59
6.9%
Add (deduct) impact of the following:
Tax impact of items excluded from adjusted earnings
before taxes(i)
235
178
57
32.0%
Outside basis difference in certain Loblaw shares
(6)
(8)
2
25.0%
Adjusted income taxes(1)
$
1,137
$
1,019
$
118
11.6%
Effective tax rate applicable to earnings before taxes
26.7%
24.4%
Adjusted effective tax rate applicable to adjusted earnings
before taxes(1)
27.4%
26.8%
(i)
See the adjusted EBITDA table and the adjusted net interest expense and other financing charges table included in Section 13, “Non-GAAP and
Other Financial Measures”, of this MD&A for a complete list of items excluded from adjusted earnings before taxes.
The effective tax rate in 2024 was 26.7%, compared to 24.4% in 2023. The increase was primarily attributable to the year-over-year
impact of the non-taxable fair value adjustment of the Trust Unit liability, adjustments to certain tax provisions during 2023, and the
impact of other non-deductible items.
The adjusted effective tax rate(1) in 2024 was 27.4%, compared to 26.8% in 2023. The increase was primarily attributable to
adjustments to certain tax provisions during 2023 and the impact of other non-deductible items.
Management’s Discussion and Analysis
24 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
1.2
Consolidated Other Business Matters
GWL CORPORATE FINANCING ACTIVITIES The Company completed the following financing activities during the periods indicated
below. The cash impacts of these activities are set out below:
($ millions)
Quarters Ended
Years Ended
Dec. 31, 2024
Dec. 31, 2023
Dec. 31, 2024
Dec. 31, 2023
NCIB – purchased and cancelled(i)
$
(211)
$
(165)
$
(990)
$
(1,001)
Participation in Loblaw’s NCIB(ii)
184
238
746
847
Debenture repaid - 4.12%, due June 17, 2024
—
—
(200)
—
Debenture issued - 4.19%, due September 5, 2029
—
—
250
—
Net cash flow (used in) from above activities
$
(27)
$
73
$
(194)
$
(154)
(i)
In the fourth quarter of 2024, GWL Corporate paid $2 million of cash consideration related to common shares repurchased under the NCIB for
cancellation in the third quarter of 2024.
(ii)
In the fourth quarter of 2024, GWL Corporate received $3 million of cash consideration related to Loblaw shares sold in the third quarter of 2024.
NCIB - Purchased and Cancelled Shares In the fourth quarter and year-to-date 2024, the Company purchased and cancelled
0.9 million common shares (2023 – 1.1 million common shares) for aggregate consideration of $209 million (2023 – $165 million) and
5.0 million common shares (2023 – 6.3 million common shares) for aggregate consideration of $990 million (2023 – $1,001 million),
respectively, under its NCIB. As at December 31, 2024, the Company had 130.0 million 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 this MD&A 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 and year-to-date 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) and 4.6 million common
shares (2023 – 7.1 million common shares) for aggregate consideration of $746 million (2023 – $847 million), respectively.
Debenture Repayment and Issuance On June 17, 2024, the Company paid in full upon maturity, at par, plus accrued and unpaid
interest thereon, the $200 million aggregated principal amount of the 4.12% senior unsecured notes outstanding.
On September 5, 2024, the Company completed an issuance of $250 million aggregate principal amount of senior unsecured notes
bearing interest at 4.19% per annum and with a maturity date of September 5, 2029.
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 involving certain packaged bread
products which occurred between 2001 and 2015. The Settlement Agreement provides for a total settlement of $500 million. The
Company will pay $247 million and Loblaw will pay $253 million (made up of $157 million in cash and credit for $96 million
previously paid to customers by Loblaw under the Loblaw Card Program). The $500 million settlement amount was negotiated with
lawyers representing consumers in a mediation presided over by the Chief Justice of the Ontario Superior Court of Justice. If the
Settlement Agreement is approved by the courts, it will resolve all of the consumers’ claims against the Company and Loblaw
relating to this matter. In the second quarter of 2024, charges of $420 million ($253 million, net of income taxes and non-controlling
interests) were recorded in SG&A, relating to the settlement and related costs.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 25
1.3
Selected Annual Information
The selected information presented below has been derived from and should be read in conjunction with the annual consolidated
financial statements of the Company dated December 31, 2024, 2023 and 2022 included within the 2024 and 2023 Annual Reports.
The analysis of the data contained in the table focuses on the trends and significant events or items affecting the results of
operations and financial condition of the Company over the latest three year period.
Unless otherwise indicated, all financial information represents the Company’s results from continuing operations.
($ millions except where otherwise indicated)
For the years ended as indicated
2024
2023
2022
Revenue
$
61,608
$
60,124
$
57,048
Operating income
$
4,376
$
4,363
$
4,553
Adjusted EBITDA(1)
$
7,401
$
6,953
$
6,551
Adjusted EBITDA margin(1)
12.0%
11.6%
11.5%
Depreciation and amortization
$
2,611
$
2,532
$
2,407
Net interest expense and other financing charges
$
972
$
889
$
913
Adjusted net interest expense and other financing charges(1)
$
1,146
$
1,120
$
1,022
Income taxes
$
908
$
849
$
831
Adjusted income taxes(1)
$
1,137
$
1,019
$
989
Adjusted effective tax rate(1)
27.4%
26.8%
27.3%
Net earnings from continuing operations(i)
$
2,496
$
2,625
$
2,809
Net earnings attributable to shareholders of the Company
$
1,359
$
1,540
$
1,816
Loblaw(ii)
$
1,138
$
1,102
$
1,007
Choice Properties
785
797
744
Effect of consolidation
(283)
(248)
127
Publicly traded operating companies
$
1,640
$
1,651
$
1,878
GWL Corporate
(325)
(155)
(100)
Net earnings available to common shareholders of the Company from
continuing operations(i)
$
1,315
$
1,496
$
1,778
Net earnings per common share from continuing operations(i) ($) - diluted
$
9.80
$
10.75
$
12.20
Loblaw(ii)
$
1,392
$
1,309
$
1,194
Choice Properties
426
409
384
Effect of consolidation(1)
(91)
(104)
(52)
Publicly traded operating companies
$
1,727
$
1,614
$
1,526
GWL Corporate
(130)
(147)
(94)
Adjusted net earnings available to common shareholders of the Company(1) from
continuing operations(i)
$
1,597
$
1,467
$
1,432
Adjusted diluted net earnings per common share(1) from
continuing operations(i) ($)
$
11.93
$
10.54
$
9.81
Dividends declared per share ($):
Common shares
$
3.173
$
2.799
$
2.580
Preferred shares – Series I
$
1.45
$
1.45
$
1.45
Preferred shares – Series III
$
1.30
$
1.30
$
1.30
Preferred shares – Series IV
$
1.30
$
1.30
$
1.30
Preferred shares – Series V
$
1.1875
$
1.1875
$
1.1875
Total Assets and Long-Term Financial Liabilities
Total assets
$
51,436
$
49,770
$
48,958
Total long-term debt
$
15,384
$
14,996
$
14,784
Financial liabilities(iii)
704
710
668
Lease liabilities
6,022
5,443
5,158
Trust Unit liability
3,715
3,881
4,112
Total long-term financial liabilities(iii)
$
25,825
$
25,030
$
24,722
(i)
In 2021, the Company completed the sale of the Weston Foods bakery business. The Company’s interest in Weston Foods was presented separately as
discontinued operations in the Company’s 2022 results. Details are included in the Company’s 2022 Annual Report available on the Company’s website
(www.weston.ca).
(ii)
Contribution from Loblaw, net of non-controlling interests.
(iii)
Certain comparative figures have been restated.
REVENUE The Company’s reportable operating segments had the following sales trends over the last three years:
•
Loblaw’s retail sales have continued to grow despite the pressure of a highly competitive retail market, impacts of global
economic uncertainties, and regulatory environment over the last three years. In 2022, COVID-19 continued to impact Loblaw’s
retail sales through the first half of the year. Food retail benefited from elevated eat-at-home trends, and drug retail from
strong cosmetics and over-the-counter (“OTC”) product sales, as customers returned to pre-pandemic activities, while
COVID-19 related testing and vaccines continued at elevated levels. Loblaw’s retail sales growth in the second half of 2022
benefited from global inflationary pressures and reflected continued strength in cosmetics and OTC sales in drug retail. In 2023,
amidst global inflationary pressures, consumers increased their focus on value, which benefited Loblaw’s sales due to its
strength in private label products, discount banners, and personalized promotions, including its PC Optimum loyalty program.
In drug retail, strong cosmetics and OTC product sales continued, while pharmacy services demonstrated strong growth,
partially off-setting a decline in COVID-19 related services. In 2024, consumers remained focused on value, which benefited
Loblaw’s sales due to its strength in private label products, hard discount banners, and personalized promotions, including its
PC Optimum loyalty program. In drug retail, strong cosmetics sales continued and OTC sales normalized as the cough and cold
season returned to more normal trends, while pharmacy services demonstrated strong growth.
Loblaw’s financial services revenue has continued to grow. In 2022, Loblaw’s financial services benefited from an increase in
customer spending, and growing credit card receivables driven by growth in the active customer base. In 2023, Loblaw’s
financial services benefited from an increase in customer spending and higher sales attributable to The Mobile Shop™ kiosk.
Further, Loblaw’s financial services continued to benefit from growing credit card receivables driven by growth in the active
customer base and an increase in customer spending. In 2024, Loblaw’s financial services benefited from an increase in
customer spending and higher sales attributable to The Mobile Shop kiosk. Further, Loblaw’s financial services benefited from
the launch of its PC Insiders™ World Elite® Mastercard® and PC Money™ Savings Account.
•
Choice Properties revenue saw a decline in 2022 due to foregone revenue following the disposition of six office assets (the
“Office Asset Sale”) to Allied in the second quarter of 2022. The decline was partially offset by an increase in rental revenues
from the retail and industrial portfolios driven by improved occupancy and higher rental rates and increased capital recoveries.
In 2023, Choice Properties revenue increased due to higher rental rates in the retail and industrial portfolios, higher capital and
operating recoveries, acquisitions and completed developments and higher lease surrender revenue, partially offset by
foregone revenue following dispositions completed in 2023 and 2022 including the impact of the Office Asset Sale. The increase
in Choice Properties revenue in 2023 also included revenue from the sale of residential inventory. In 2024, revenue at Choice
Properties increased due to continued higher rental rates primarily in the retail and industrial portfolios, higher recoveries, and
the impact of acquisitions, net of dispositions, and completed developments. The increase was partially offset by lower lease
surrender revenue and lower revenue on the sale of residential inventory.
Management’s Discussion and Analysis
26 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
NET EARNINGS AVAILABLE TO COMMON SHAREHOLDERS OF THE COMPANY FROM CONTINUING OPERATIONS AND DILUTED
NET EARNINGS PER COMMON SHARE FROM CONTINUING OPERATIONS
Net earnings available to common shareholders of the Company from continuing operations and diluted net earnings per common
share from continuing operations for the last three years were impacted by certain adjusting items as described in Section 13, “Non-
GAAP and Other Financial Measures”, of this MD&A and by the underlying operating performance of each of the Company’s
reportable operating segments.
Over the last three years, the Company’s underlying operating performance was impacted by the following:
•
changes in the underlying operating performance of Loblaw due to:
•
changes in underlying operating performance of Loblaw retail due to COVID-19 and global inflationary pressure.
Loblaw’s financial results for 2024 and 2023 had higher revenue and cost of sales when compared to 2022;
•
cost savings, operating efficiencies and investments in and benefits from strategic initiatives; and
•
fluctuations in the performance of Loblaw’s financial services driven by the impact of the increase in customer
spending and growth in active customer base, the year-over-year movements of certain commodity taxes accrued,
the expected credit loss provision, and operating costs.
•
changes in the underlying operating performance of Choice Properties due to:
•
fluctuations in rental income from the favourable impact of contributions from acquisition and development transfers,
the year-over-year improvement in rental income from the retail and industrial portfolios driven by an increase in
rental rates, higher recoveries, lease surrender revenue, and the unfavourable impact of dispositions;
•
in 2022 and 2023, the underlying operating performance was impacted by the Office Asset Sale which resulted in the
unfavourable impact of foregone rental income, partially offset by the favourable impact from distribution income
from Choice Properties’ investment in real estate securities of Allied;
•
in 2023 and 2024, the underlying operating performance included income from the sale of residential inventory; and
•
fluctuations in general and administrative expenses.
•
the year-over-year impact of changes in the effect of consolidation. Refer to Section 13, “Non-GAAP and Other Financial
Measures”, of this MD&A for a breakdown of effect of consolidation.
•
the year-over-year impact of changes in GWL Corporate due to:
•
fluctuations in the fair value adjustment on other investments; and
•
higher income tax expense as a result of GWL’s participation in Loblaw’s NCIB.
•
diluted net earnings per common share included the favourable impact of shares purchased for cancellation.
TOTAL ASSETS AND LONG-TERM FINANCIAL LIABILITIES
In 2024, total assets of $51,436 million increased by 3.3% compared to 2023. The increase was primarily driven by an increase in fixed
assets, right-of-use assets, inventories, short-term investments and investment properties. This was partially offset by a decrease in
intangible assets, and cash and cash equivalents held at GWL Corporate. Total long-term financial liabilities of $25,825 million
increased by 3.2% compared to 2023 primarily driven by an increase in lease liabilities and higher net issuance of long-term debt at
Loblaw and GWL Corporate. The increase in long-term financial liabilities was partially offset by a decline in the Trust Unit liability
due to a decrease in the unit price.
In 2023, total assets of $49,770 million increased by 1.7% compared to 2022. The increase was primarily driven by an increase in fixed
assets, investments properties, right-of-use assets, credit card receivables and cash and cash equivalents. This was partially offset by
a decrease in intangible assets and equity accounted joint ventures. Total long-term financial liabilities of $25,030 million increased
by 1.2% compared to 2022 driven by an increase in lease liabilities and long-term debt due to an increase in guaranteed investment
certificates (“GICs”) at Loblaw and the issuances of senior unsecured debentures at Choice Properties. The increase in long-term
financial liabilities was partially offset by a decline in the Trust Unit liability due to a decrease in the unit price.
The Trust Unit liability is recognized at fair value on the consolidated balance sheets and fluctuates due to issuances and changes in
the fair value of Choice Properties’ Trust Units. As at December 31, 2024, 277,262,557 Units were held by Unitholders other than the
Company (2023 – 277,198,557; 2022 – 277,109,734). The Company held an approximate 61.7% (2023 – 61.7%; 2022 – 61.7%) effective
ownership interest in Choice Properties.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 27
2.
Results of Reportable Operating Segments
The following discussion provides details of the 2024 results of operations of each of the Company’s reportable operating segments.
2.1
Loblaw Operating Results
($ millions except where otherwise indicated) For the years ended as indicated
2024
2023
$ Change
% Change
Revenue
$
61,014
$
59,529
$
1,485
2.5%
Operating income
$
3,894
$
3,696
$
198
5.4%
Adjusted EBITDA(1)
$
7,016
$
6,639
$
377
5.7%
Adjusted EBITDA margin(1)
11.5%
11.2%
Depreciation and amortization
$
2,966
$
2,906
$
60
2.1%
REVENUE Loblaw revenue in 2024 was $61,014 million, an increase of $1,485 million, or 2.5%, compared to 2023, driven by an
increase in retail sales and in financial services revenue.
Retail sales were $59,786 million, an increase of $1,441 million, or 2.5%, compared to 2023. The increase was primarily driven by the
following factors:
•
food retail sales were $42,166 million (2023 – $41,188 million) and food retail same-store sales growth was 1.5% (2023 – 3.9%);
•
the Consumer Price Index (“CPI”) as measured by The Consumer Price Index for Food Purchased from Stores was 2.2%
(2023 – 7.8%), which was in line with Loblaw’s internal food inflation; and
•
food retail traffic increased and basket size decreased.
•
drug retail sales were $17,620 million (2023 – $17,157 million) and drug retail same-store sales growth was 2.4% (2023 – 5.4%);
•
pharmacy and healthcare services same-store sales growth was 6.3% (2023 – 6.8%). Pharmacy and healthcare services
same-store sales growth benefited from an increase in specialty and chronic prescription volumes. The number of
prescriptions dispensed increased by 2.5% (2023 – 0.6%). On a same-store basis, the number of prescriptions dispensed
increased by 2.5% (2023 – 0.9%) and the average prescription value increased by 2.9% (2023 – 4.8%);
partially offset by,
•
front store same-store sales decline of 1.3% (2023 – growth of 4.2%). The decline in front store same-store sales was
primarily driven by lower sales of food and household items and the decision to exit certain low margin electronics
categories, partially offset by the continued strength in beauty products.
In 2024, 52 food and drug stores were opened, and 15 food and drug stores were closed, and net retail square footage increased by
0.8 million to 72.0 million square feet.
Financial services revenue was $1,586 million, an increase of $46 million, or 3.0%, compared to the same period in 2023, primarily
driven by higher interest income from the growth of credit card receivables, higher interchange and credit card fee income and
higher sales attributable to The Mobile Shop.
OPERATING INCOME Loblaw operating income in 2024 was $3,894 million, an increase of $198 million, or 5.4%, compared to 2023.
The increase was driven by an improvement in underlying operating performance of $317 million, partially offset by an unfavourable
year-over-year net impact of adjusting items totaling $119 million, as described below:
•
the improvement in underlying operating performance of $317 million was primarily due to:
•
an improvement in the underlying operating performance of retail due to an increase in retail gross profit, partially
offset by an increase in retail SG&A and depreciation and amortization; and
•
an improvement in the underlying operating performance in financial services.
•
the unfavourable year-over-year net impact of adjusting items totaling $119 million was primarily due to:
•
the unfavourable impact of charges related to the settlement of class action lawsuits of $164 million;
•
the unfavourable impact of the charge related to the PC Optimum loyalty program of $129 million. Refer to “Loblaw
Other Business Matters” below for more details;
•
the unfavourable impact of the fair value write-down related to the sale of Wellwise of $23 million. Refer to “Loblaw
Other Business Matters” below for more details; and
•
the unfavourable year-over-year impact of the gains on sale of non-operating properties of $9 million;
partially offset by,
•
the favourable year-over-year impact of the (recoveries) charge related to PC Bank commodity tax matters of
$179 million;
•
the favourable year-over-year impact of the fair value adjustment on fuel and foreign currency contracts of
$21 million; and
•
the favourable year-over-year impact of the fair value adjustment on non-operating properties of $6 million.
Management’s Discussion and Analysis
28 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
ADJUSTED EBITDA(1) Loblaw adjusted EBITDA(1) in 2024 was $7,016 million, an increase of $377 million, or 5.7%, compared to 2023.
The increase was driven by an increase in retail of $301 million, and an increase in financial services of $76 million.
Retail adjusted EBITDA(1) increased by $301 million compared to 2023, driven by an increase in retail gross profit of $638 million,
partially offset by an increase in retail SG&A of $337 million.
•
Retail gross profit percentage of 31.3% increased by 30 basis points compared to 2023, primarily driven by improvements in
shrink.
•
Retail SG&A as a percentage of sales was 20.2%, an increase of 10 basis points compared to 2023, primarily driven by the year-
over-year impact of labour costs and certain real estate activities.
Financial services adjusted EBITDA(1) increased by $76 million compared to 2023, primarily driven by higher revenue as described
above, the year-over-year favourable impact of the expected credit loss provision from the prior year increase of $50 million versus
current year increase of $7 million, and lower customer acquisition expenses and operating costs, including the ongoing benefits
associated with the renewal of a long-term agreement with Mastercard International Incorporated (“Mastercard”), partially offset by
higher contractual charge-offs due to the current macro-economic environment.
DEPRECIATION AND AMORTIZATION Loblaw depreciation and amortization in 2024 was $2,966 million, an increase of $60 million
compared to 2023. The increase in depreciation and amortization was primarily driven by an increase in IT assets and 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 due to the reassessment of the estimated useful life of certain IT assets and prior year accelerated
depreciation as a result of network optimization. Depreciation and amortization in 2024 included $499 million (2023 – $499 million)
of amortization of intangible assets related to the acquisitions of Shoppers Drug Mart and Lifemark.
CONSOLIDATION OF FRANCHISES Loblaw has more than 500 franchise food retail stores in its network. Non-controlling interests
at Loblaw represents the share of earnings that relates to Loblaw’s food retail franchisees and is impacted by the timing of when
profit sharing with franchisees is agreed and finalized under the terms of the agreements. Loblaw’s net earnings attributable to
non-controlling interests were $104 million in 2024. When compared to 2023, this represented an increase of $17 million or 19.5%.
The increase in non-controlling interests at Loblaw was primarily driven by an increase in franchisee earnings after profit sharing.
LOBLAW OTHER BUSINESS MATTERS
PC Bank Commodity Tax Matters In 2022, the Tax Court of Canada (“Tax Court”) released a decision relating to 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 addition, $10 million was recorded related to interest income on cash tax refunds.
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.
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 $23 million in SG&A. The
transaction is expected to close in the first quarter of 2025.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 29
2.2
Choice Properties Operating Results
($ millions except where otherwise indicated) For the years ended as indicated
2024
2023
$ Change
% Change
Revenue
$
1,369
$
1,335
$
34
2.5%
Net interest expense and other financing charges
$
296
$
204
$
92
45.1%
Net income
$
785
$
797
$
(12)
(1.5) %
Funds from Operations(1)
$
747
$
726
$
21
2.9%
REVENUE Choice Properties revenue in 2024 was $1,369 million, an increase of $34 million, or 2.5%, compared to 2023 and included
revenue from the sale of residential inventory of $11 million (2023 – $26 million) and revenue of $783 million (2023 – $748 million)
generated from tenants within Loblaw.
Excluding the impact of the sale of residential inventory, revenue was $1,358 million in 2024, compared to $1,309 million in the same
period in 2023, an increase of $49 million, or 3.7%, primarily driven by:
•
higher rental rates, primarily in the retail and industrial portfolios;
•
higher recoveries; and
•
acquisitions, net of dispositions, and completed developments;
partially offset by,
•
lower lease surrender revenue.
NET INTEREST EXPENSE AND OTHER FINANCING CHARGES Choice Properties net interest expense and other financing charges
in 2024 were $296 million, compared to $204 million in 2023. The increase of $92 million was primarily driven by:
•
the unfavourable year-over-year impact of the fair value adjustment on the Class B LP units (“Exchangeable Units”) of
$83 million as a result of the change in Choice Properties’ unit price in the year; and
•
higher interest expense due to new debt issuances over the past twelve months bearing interest at higher rates than maturing
debt;
partially offset by,
•
higher interest income earned on excess cash.
NET INCOME Choice Properties recorded net income of $785 million in 2024, compared to $797 million in 2023. The decrease of
$12 million was primarily driven by:
•
higher net interest expense and other financing charges as described above; and
•
the unfavourable year-over-year change of the fair value adjustment of investment properties, including those held within
equity accounted joint ventures, of $12 million;
partially offset by,
•
an increase in revenue as described above;
•
the favourable impact of the reversal of a transaction related provision of $39 million that was determined to be no longer
required; and
•
the favourable year-over-year change of the fair value adjustment on investment in real estate securities of $28 million as a
result of a decrease in Allied’s unit price.
FUNDS FROM OPERATIONS(1) Funds from Operations(1) in 2024 were $747 million, an increase of $21 million, compared to 2023. The
increase was primarily due to an increase in rental income, partially offset by higher interest expense net of higher interest income,
lower investment income as a result of Allied’s special distribution in the prior year, higher general and administrative expenses,
lower lease surrender revenue and lower income from the sale of residential inventory.
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 $0.77 per unit. The increase will
be effective for Choice Properties’ Unitholders of record on March 31, 2025.
Management’s Discussion and Analysis
30 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
3.
Liquidity and Capital Resources
3.1
Cash Flows
($ millions)
For the years ended as indicated
2024
2023
$ Change
Cash and cash equivalents, beginning of year
$
2,451
$
2,313
$
138
Cash flows from (used in):
Operating activities
$
6,065
$
5,851
$
214
Investing activities
(2,300)
(1,666)
(634)
Financing activities
(4,180)
(4,049)
(131)
Effect of foreign currency exchange rate changes on
cash and cash equivalents
12
2
10
(Decrease) increase in cash and cash equivalents
$
(403)
$
138
$
(541)
Cash and cash equivalents, end of year
$
2,048
$
2,451
$
(403)
CASH FLOWS FROM OPERATING ACTIVITIES Cash flows from operating activities were $6,065 million in 2024, an increase of
$214 million compared to 2023. The increase in cash flows from operating activities was primarily driven by a year-over-year change
in provisions and non-cash working capital, credit card receivables increasing year-over-year at a rate lower than prior year and
higher cash earnings, partially offset by higher income taxes paid in the current year and an unfavourable year-over-year change in
other non-cash items.
CASH FLOWS USED IN INVESTING ACTIVITIES Cash flows used in investing activities were $2,300 million in 2024, an increase of
$634 million compared to 2023. The increase in cash flows used in investing activities was primarily driven by higher repayments of
mortgages, loans and notes receivable in the prior year, higher purchases of short-term investments, an increase in capital
investments and a decrease in proceeds from disposal of assets.
The following table summarizes the Company’s capital investments by each of its reportable operating segments:
($ millions)
For the years ended as indicated
2024
2023
Loblaw
$
2,200
$
2,109
Choice Properties
354
459
Effect of consolidation
(160)
(191)
Publicly traded operating companies
$
2,394
$
2,377
GWL Corporate
1
2
Total capital investments(i)
$
2,395
$
2,379
(i)
Capital investments are the sum of fixed asset and investment properties purchases and intangible asset additions as presented in the
Company’s consolidated statements of cash flows, and prepayments transferred to fixed assets in the current year. Loblaw capital investments for
the year ended 2023 included $37 million of prepayments transferred to fixed assets.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 31
CASH FLOWS USED IN FINANCING ACTIVITIES Cash flows used in financing activities were $4,180 million in 2024, an increase of
$131 million compared to 2023. The increase in cash flows used in financing activities was primarily driven by higher repayment of
short-term debt in the current year versus higher issuance in the prior year, higher proceeds from financial liabilities in the prior
year and higher lease payments, partially offset by an increase in demand deposits from customers and higher issuance of long-
term debt net of repayments.
The Company’s significant long-term debt transactions are set out in Section 3.3, “Components of Total Debt”.
FREE CASH FLOW(1)
($ millions)
For the years ended as indicated
2024
2023
$ Change
Cash flows from operating activities
$
6,065
$
5,851
$
214
Less: Capital investments(i)
2,395
2,379
16
Interest paid
960
918
42
Lease payments, net
899
848
51
Free cash flow(1)
$
1,811
$
1,706
$
105
(i)
Capital investments are the sum of fixed asset and investment properties purchases and intangible asset additions as presented in the
Company’s consolidated statements of cash flows, and prepayments transferred to fixed assets in the current year. Loblaw capital investments for
the year ended 2023 included $37 million of prepayments transferred to fixed assets.
Free cash flow(1) in 2024 was $1,811 million, an increase of $105 million compared to 2023. The increase in free cash flow(1) was
primarily driven by a year-over-year change in provisions and non-cash working capital, credit card receivables increasing year-over-
year at a rate lower than prior year and higher cash earnings, partially offset by higher income taxes paid in the current year, an
unfavourable year-over-year change in other non-cash items and higher lease payments.
Management’s Discussion and Analysis
32 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
3.2
Liquidity
The Company (excluding Loblaw and Choice Properties) expects that cash and cash equivalents, short-term investments, future
operating cash flows and the amounts available to be drawn against its committed credit facility will enable it to finance its capital
investment program and fund its ongoing business requirements, including working capital, pension plan funding requirements
and financial obligations, over the next 12 months. The Company (excluding Loblaw and Choice Properties) does not foresee any
impediments in obtaining financing to satisfy its long-term obligations.
Loblaw expects that cash and cash equivalents, short-term investments, future operating cash flows and the amounts available to
be drawn against committed credit facilities will enable it to finance its capital investment program and fund its ongoing business
requirements over the next 12 months, including working capital, pension plan funding requirements and financial obligations.
PC Bank expects to obtain long-term financing for its credit card portfolio through the issuance of Eagle Credit Card Trust (“Eagle”)
notes and GICs.
Choice Properties expects to fund its ongoing operations and finance future growth primarily through the use of: existing cash,
cash flows from operations, short-term financing through the committed credit facility, the issuance of unsecured debentures and
equity (including Exchangeable Units) (subject to market conditions), and secured mortgages. Given reasonable access to capital
markets, Choice Properties does not foresee any impediments in obtaining financing to satisfy its short-term and long-term
financial obligations, including its capital investment commitments.
For details on the Company’s cash flows, see Section 3.1 “Cash Flows”, of this MD&A.
TOTAL DEBT The following table presents total debt:
As at
Dec. 31, 2024
Dec. 31, 2023
($ millions)
Loblaw
Choice
Properties
Effect of
consolidation
GWL
Corporate
Total
Loblaw
Choice
Properties
Effect of
consolidation
GWL
Corporate
Total
Bank indebtedness
$
— $
— $
— $
— $
—
$
13 $
— $
— $
— $
13
Demand deposits from
customers
353
—
—
—
353
166
—
—
—
166
Short-term debt
800
—
—
—
800
850
—
—
—
850
Long-term debt due within
one year
631
682
—
—
1,313
1,191
964
—
200
2,355
Long-term debt
7,570
6,003
—
498
14,071
6,661
5,731
—
249
12,641
Certain other liabilities(i)
294
—
512
—
806
280
—
520
—
800
Total debt excluding lease
liabilities
$ 9,648 $ 6,685 $
512 $
498 $ 17,343
$
9,161 $ 6,695 $
520 $
449 $ 16,825
Lease liabilities due within
one year
$ 1,648 $
— $
(603) $
— $ 1,045
$ 1,455 $
— $
(575) $
— $
880
Lease liabilities
$ 8,535 $
1 $ (3,561) $
2 $ 4,977
$ 8,003 $
1 $ (3,444) $
3 $ 4,563
Total debt including total
lease liabilities
$ 19,831 $ 6,686 $ (3,652) $
500 $ 23,365
$ 18,619 $ 6,696 $ (3,499) $
452 $ 22,268
(i)
As at December 31, 2024, certain other liabilities include financial liabilities of $704 million related to the sale and leaseback of retail and
industrial properties (December 31, 2023 – $710 million) (see note 23, “Other Liabilities” of the Company’s consolidated financial statements).
Management targets credit metrics consistent with those of an investment grade profile. GWL Corporate holds cash and cash
equivalents and short-term investments, and as a result monitors its leverage on a net debt basis. GWL Corporate has total debt
including lease liabilities of $500 million (December 31, 2023 – $452 million) and cash and cash equivalents and short-term
investments of $523 million (December 31, 2023 – $719 million), resulting in a net cash position of $23 million (December 31, 2023 –
net cash of $267 million).
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 33
Loblaw’s management is focused on managing its capital structure on a segmented basis to ensure that each of its operating
segments is employing a capital structure that is appropriate for the industry in which it operates.
•
Loblaw targets maintaining retail segment credit metrics consistent with those of investment grade retailers. Loblaw monitors
the retail segment’s debt to retail adjusted EBITDA(1) ratio as a measure of the leverage being employed. Loblaw retail segment
debt to adjusted EBITDA(1) ratio increased compared to 2023, primarily driven by an increase in retail debt partially offset by an
improvement in adjusted EBITDA(1).
•
PC Bank’s capital management objectives are to maintain a consistently strong capital position while considering the
economic risks generated by its credit card receivables portfolio and to meet all regulatory requirements as defined by the
Office of the Superintendent of Financial Institutions (“OSFI”).
Choice Properties targets maintaining credit metrics consistent with those of investment grade Real Estate Investment
Trusts (“REIT”). Choice Properties monitors metrics relevant to the REIT industry including targeting an appropriate debt to total
assets ratio.
COVENANTS AND REGULATORY REQUIREMENTS The Company, Loblaw and Choice Properties are required to comply with
certain financial covenants for various debt instruments. As at year end 2024 and throughout the year, the Company, Loblaw and
Choice Properties were in compliance with their respective covenants.
As at year end 2024 and throughout the year, PC Bank and Choice Properties met all applicable regulatory requirements.
3.3
Components of Total Debt
DEBENTURES The following table summarizes the debentures issued in the years ended as indicated:
2024
2023
($ millions)
Interest Rate
Maturity Date
Principal Amount
Principal Amount
George Weston senior unsecured notes
4.19%
September 5, 2029
$
250
$
—
Loblaw
– Senior unsecured notes(i)
3.56%
December 12, 2029
400
$
—
– Senior unsecured notes
5.12%
March 4, 2054
400
—
Choice Properties senior unsecured debentures
– Series U
5.03%
February 28, 2031
500
—
– Series S
5.40%
March 1, 2033
—
550
– Series T
5.70%
February 28, 2034
—
350
Total debentures issued
$
1,550
$
900
(i)
Loblaw used the net proceeds of this issuance to redeem all issued and outstanding Second Preferred Shares, Series B on January 8, 2025.
On January 16, 2025, Choice Properties completed the issuance, on a private placement basis, of $300 million aggregated principal
amount of Series V senior unsecured debentures bearing interest at a rate of 4.29% per annum and maturing on January 16, 2030.
Management’s Discussion and Analysis
34 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
The following table summarizes the debentures repaid in the years ended as indicated:
2024
2023
($ millions)
Interest Rate
Maturity Date
Principal Amount
Principal Amount
George Weston senior unsecured notes
4.12%
June 17, 2024
$
200
$
—
Loblaw senior unsecured notes
3.92%
June 10, 2024
400
—
Choice Properties senior unsecured debentures
– Series K
3.56%
September 9, 2024
550
—
– Series D
4.29%
February 8, 2024
200
—
– Series G
3.20%
March 7, 2023
—
250
– Series B
4.90%
July 5, 2023
—
200
– Series D-C
3.30%
January 18, 2023
—
125
Total debentures repaid
$
1,350
$
575
On January 10, 2025, Choice Properties paid in full upon maturity, at par, plus accrued and unpaid interest thereon, the $350 million
aggregated principal amount of the 3.55% Series J senior unsecured debentures outstanding.
COMMITTED CREDIT FACILITIES The components of the committed lines of credit available as at year end 2024 and 2023 were as
follows:
As at
Dec. 31, 2024
Dec. 31, 2023
($ millions)
Maturity
Date
Available
Credit
Drawn
Available
Credit
Drawn
George Weston
December 14, 2026
$
350
$
—
$
350
$
—
Loblaw
July 15, 2027
1,500
—
1,500
—
Choice Properties
June 13, 2029
1,500
—
1,500
—
Total committed credit facilities
$
3,350
$
—
$
3,350
$
—
These facilities contain certain financial covenants.
George Weston GWL has a $350 million revolving committed credit facility, provided by a syndicate of lenders, with a maturity
date of December 14, 2026. As at December 31, 2024, no amounts (December 31, 2023 – nil) were drawn under this facility.
Loblaw Loblaw has a $1.5 billion committed credit facility, provided by a syndicate of lenders, with a maturity date of July 15, 2027.
As at December 31, 2024, no amounts (December 31, 2023 – nil) were drawn under this facility.
Choice Properties Choice Properties has a $1.5 billion senior unsecured committed revolving credit facility, provided by a syndicate
of lenders. During 2024, Choice Properties extended the maturity date for the credit facility from September 1, 2028 to June 13, 2029.
As at December 31, 2024, no amounts (December 31, 2023 – nil) were drawn under the facility.
INDEPENDENT SECURITIZATION TRUSTS Loblaw, through PC Bank, participates in various securitization programs that provide a
source of funds for the operation of its credit card business. PC Bank maintains and monitors a co-ownership interest in credit card
receivables with independent securitization trusts, including Eagle and Other Independent Securitization Trusts, in accordance with
its financing requirements.
The following table summarizes the amounts securitized to independent securitization trusts:
As at
($ millions)
Dec. 31, 2024
Dec. 31, 2023
Securitized to independent securitization trusts:
Securitized to Eagle Credit Card Trust
$
1,450
$
1,350
Securitized to Other Independent Securitization Trusts
800
850
Total securitized to independent securitization trusts
$
2,250
$
2,200
Under its securitization programs, PC Bank is required to maintain, at all times, a credit card receivable pool balance equal to a
minimum of 107% of the outstanding securitized liability. PC Bank was in compliance with this requirement as at year end 2024 and
throughout the year.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 35
During 2024, Eagle issued $350 million (2023 – $250 million) of senior and subordinated term notes with a maturity date of
June 17, 2029 (2023 – June 17, 2028). These notes have a weighted average interest rate of 5.03% (2023 – 5.25%). In connection with
this issuance, $150 million (2023 – $125 million) of bond forward agreements were settled, resulting in a realized fair value gain of
$2 million (2023 – gain of $4 million) before income taxes. The gain on the bond forwards will be reclassified to net earnings over the
life of the Eagle notes. This settlement resulted in a net effective interest rate of 4.91% (2023 – 4.95%) on the Eagle notes issued
(see note 30 of the Company’s consolidated financial statements).
Senior and subordinated term notes of $250 million (2023 – $250 million) at a weighted average interest rate of 2.28% (2023 – 3.10%),
previously issued by Eagle, matured and were repaid on July 17, 2024 (2023 – July 17, 2023).
INDEPENDENT FUNDING TRUSTS As at year end 2024, the independent funding trusts had drawn $590 million (2023 –
$558 million) from the revolving committed credit facility that is the source of funding to the independent funding trusts. Loblaw
provides credit enhancement in the form of a standby letter of credit for the benefit of the independent funding trusts. As at year
end 2024, Loblaw has agreed to provide a credit enhancement of $64 million (2023 – $64 million) for the benefit of the independent
funding trusts representing not less than 10% (2023 – not less than 10%) of the principal amount of loans outstanding.
Loblaw has a $700 million revolving committed credit facility that is the source of funding to the independent funding trusts that
has a maturity date of May 29, 2027.
GUARANTEED INVESTMENT CERTIFICATES The following table summarizes PC Bank’s GICs activity, before commissions, for the
years ended as indicated:
($ millions)
2024
2023
Balance, beginning of year
$
1,654
$
1,567
GICs issued
375
583
GICs matured
(552)
(496)
Balance, end of year
$
1,477
$
1,654
As at year end 2024, $331 million in GICs were recorded as long-term debt due within one year (2023 – $541 million).
GWL CORPORATE DEBT The following table summarizes the debt in GWL Corporate:
As at
($ millions)
Maturity Date
Dec. 31, 2024
Dec. 31, 2023
Debentures
2029 - 2033
$
500
$
450
George Weston credit facility
2026
—
—
Transaction costs and other
n/a
(2)
(1)
GWL Corporate debt
$
498
$
449
ASSOCIATE GUARANTEES Loblaw has arranged for its pharmacist owners of corporations licensed to operate retail drug stores at
specific locations using Loblaw’s trademarks (“Associates”) to obtain financing to facilitate their inventory purchases and fund their
working capital requirements by providing guarantees to various Canadian chartered banks that support Associate loans. As at year
end 2024, Loblaw’s maximum obligation in respect of such guarantees was $580 million (2023 – $580 million) with an aggregate
amount of $476 million (2023 – $476 million) in available lines of credit allocated to the Associates by the various banks. As at year
end 2024, Associates had drawn a nominal amount (2023 – $13 million) against these available lines of credit. Any amounts drawn by
the Associates are included in bank indebtedness on the Company’s consolidated balance sheets. As recourse, in the event that any
payments are made under the guarantees, Loblaw holds a first-ranking security interest on all assets of Associates, subject to
certain prior-ranking statutory claims.
Management’s Discussion and Analysis
36 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
3.4
Financial Condition
As at
Dec. 31, 2024
Dec. 31, 2023
Adjusted return on average equity attributable to common shareholders of the Company(1)
28.3%
24.7%
Adjusted return on capital(1)
14.5%
14.0%
The adjusted return on average equity attributable to common shareholders of the Company(1) increased as at year end 2024
compared to 2023, primarily due to an improvement in the Company’s consolidated underlying performance and a decrease in
average equity attributable to common shareholders of the Company(1).
The adjusted return on capital(1) increased as at year end 2024 compared to 2023, primarily due to an improvement in the
Company’s consolidated underlying performance, partially offset by an increase in average capital(1).
3.5
Credit Ratings
During 2024, Morningstar DBRS (“DBRS”) confirmed the following ratings and trends, and S&P Global Ratings (“S&P”) confirmed the
following ratings and outlooks.
The following table sets out the current credit ratings of GWL:
DBRS
S&P
Credit Ratings (Canadian Standards)
Credit Rating
Trend
Credit Rating
Outlook
Issuer rating
BBB
Stable
BBB+
Stable
Medium term notes
BBB
Stable
BBB
n/a
Preferred shares
Pfd-3
Stable
P-2 (low)
n/a
The following table sets out the current credit ratings of Loblaw:
DBRS
S&P
Credit Ratings (Canadian Standards)
Credit Rating
Trend
Credit Rating
Outlook
Issuer rating
BBB (high)
Stable
BBB+
Stable
Medium term notes
BBB (high)
Stable
BBB+
n/a
Second Preferred shares, Series B
Pfd-3 (high)
Stable
P-2 (low)
n/a
The following table sets out the current credit ratings of Choice Properties:
DBRS
S&P
Credit Ratings (Canadian Standards)
Credit Rating
Trend
Credit Rating
Outlook
Issuer rating
BBB (high)
Stable
BBB+
Stable
Senior unsecured debentures
BBB (high)
Stable
BBB+
n/a
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 37
3.6
Share Capital
OUTSTANDING SHARE CAPITAL AND CAPITAL SECURITIES GWL’s outstanding share capital is comprised of common shares and
preferred shares. The following table details the authorized and outstanding common shares and preferred shares as at December
31, 2024:
(number of common shares)
Authorized
Outstanding
Common shares
Unlimited
130,044,778
Preferred shares – Series I
10,000,000
9,400,000
– Series II
10,600,000
—
– Series III
10,000,000
8,000,000
– Series IV
8,000,000
8,000,000
– Series V
8,000,000
8,000,000
COMMON SHARE CAPITAL Common shares issued are fully paid and have no par value. The following table summarizes the
activity in the Company’s common shares issued and outstanding for the years ended December 31, 2024 and December 31, 2023:
2024
2023
($ millions except where otherwise indicated)
Number of
Common Shares
Common
Shar
e Capital
Number of
Common Shares
Common
Share Capital
Issued and outstanding, beginning of year
134,546,581
$
2,511
140,737,942
$
2,619
Issued for settlement of stock options
473,046
53
67,619
8
Purchased and cancelled(i)
(4,974,849)
(86)
(6,258,980)
(116)
Issued and outstanding, end of year
130,044,778
$
2,478
134,546,581
$
2,511
Shares held in trusts, beginning of year
(123,895)
$
(3)
(160,465)
$
(3)
Purchased for future settlement of RSUs and PSUs
(46,000)
(1)
(44,000)
(1)
Released for settlement of RSUs and PSUs
83,268
2
80,570
1
Shares held in trusts, end of year
(86,627)
$
(2)
(123,895)
$
(3)
Issued and outstanding, net of shares held in trusts,
end of year
129,958,151
$
2,476
134,422,686
$
2,508
Weighted average outstanding, net of shares held in trusts
132,162,869
137,527,536
(i)
Number of common shares repurchased and cancelled as at December 31, 2024 does not include shares that may be repurchased subsequent to
year end under the ASPP as described below.
PREFERRED SHARE CAPITAL GWL may, at its option, redeem for cash, in whole or in part, the preferred shares Series I, Series III,
Series IV and Series V outstanding on or after the redemption dates specified by the terms of each series of preferred shares. GWL
may, at any time after issuance, give the holders of these preferred shares the right, at the option of the holders, to convert their
preferred shares into preferred shares of a further series designated by GWL on a share-for-share basis on a date specified by GWL.
Management’s Discussion and Analysis
38 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
DIVIDENDS The declaration and payment of dividends on the Company’s common shares and the amount thereof are at the
discretion of the Company’s Board of Directors (“Board”) which takes into account the Company’s financial results, capital
requirements, available cash flow, future prospects of the Company’s business and other factors considered relevant from time to
time. Over time, it is the Company’s intention to increase the amount of the dividend while retaining appropriate free cash flow to
finance future growth. In the second quarter of 2024 and in the second quarter of 2023, the Board raised the quarterly common
share dividend by $0.107 to $0.820 and by $0.053 to $0.713 per share, respectively. The Board declared dividends for the years ended
as follows:
($)
2024
2023
Dividends declared per share(i):
Common share
$
3.173
$
2.799
Preferred share:
Series I
$
1.45
$
1.45
Series III
$
1.30
$
1.30
Series IV
$
1.30
$
1.30
Series V
$
1.1875
$
1.1875
(i)
Dividends declared in the fourth quarter of 2024 on common shares and Preferred Shares, Series III, Series IV and Series V were payable on
January 1, 2025. Dividends declared in the fourth quarter of 2024 on Preferred Shares, Series I were payable on December 15, 2024.
The following table summarizes the Company’s quarterly dividends declared subsequent to year end 2024:
($)
Dividends declared per share(i)
– Common share
$
0.820
– Preferred share:
Series I
$
0.3625
Series III
$
0.3250
Series IV
$
0.3250
Series V
$
0.296875
(i)
Dividends declared in the first quarter of 2025 on common shares and Preferred Shares, Series III, Series IV and Series V are payable on April
1, 2025. Dividends declared in the first quarter of 2025 on Preferred Shares, Series I are payable on March 15, 2025.
At the time such dividends are declared, GWL identifies on its website (www.weston.ca) the designation of eligible and ineligible
dividends in accordance with the administrative position of the CRA.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 39
NORMAL COURSE ISSUER BID PROGRAM The following table summarizes the Company’s activity under its NCIB for the years
ended as follows:
($ millions except where otherwise indicated)
2024
2023
Purchased for future settlement of RSUs and PSUs (number of shares)
46,000
44,000
Purchased for current settlement of DSUs (number of shares)
1,721
7,521
Purchased and cancelled (number of shares)
4,974,849
6,258,980
Cash consideration paid
Purchased and held in trusts
$
(10)
$
(7)
Purchased and settled
—
(1)
Purchased and cancelled
(990)
(1,001)
Premium charged to retained earnings
Purchased and held in trusts
$
9
$
6
Purchased and settled
—
(2)
Purchased and cancelled(i)
876
874
Reduction in share capital(ii)
$
86
$
116
(i)
Includes $82 million (2023 – $124 million) related to the ASPP, as described below.
(ii)
Includes $8 million (2023 – $16 million) related to the ASPP, as described below.
In 2024, GWL renewed its NCIB to purchase on the Toronto Stock Exchange (“TSX”) or through alternative trading systems up to
6,646,057 of its common shares, representing approximately 5% of issued and outstanding common shares.
Consistent with the exemption originally granted by the TSX in 2023, Wittington Investments, Limited (“Wittington”), the
Company’s controlling shareholder, is permitted to participate in the NCIB in a fixed proportion equal to 50% of Wittington’s pro
rata share of the issued and outstanding common shares of the Company. Purchases of common shares from Wittington will be
made during the TSX’s Special Trading Session pursuant to an automatic disposition plan agreement among the Company’s broker,
the Company and Wittington. The maximum number of common shares that may be purchased pursuant to the NCIB will be
reduced by the number of common shares purchased from Wittington.
In 2024, 4,974,849 common shares (2023 – 6,258,980 common shares) were purchased under the NCIB for cancellation for
aggregate consideration of $990 million (2023 – $1,001 million), including 1,447,904 common shares (2023 – 698,746 common
shares) purchased from Wittington for aggregate consideration of $288 million (2023 – $107 million).
From time to time, the Company participates in an ASPP with a broker in order to facilitate the purchase 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. As at December 31, 2024, an obligation to repurchase shares of $90
million was recognized under the ASPP in trade payables and other liabilities in the Company’s consolidated financial statements.
As of December 31, 2024, 2,812,214 common shares were purchased under the Company’s current NCIB.
Management’s Discussion and Analysis
40 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
3.7
Off-Balance Sheet Arrangements
The following is a summary of the Company’s off-balance sheet arrangements. Certain significant arrangements have also been
discussed in Section 3.3, “Components of Total Debt”.
LETTERS OF CREDIT Standby and documentary letters of credit are used in connection with certain obligations mainly related to
real estate transactions, benefit programs, purchase orders and other performance guarantees, surety bond, securitization of
PC Bank’s credit card receivables, letters of credit and third-party financing made available to Loblaw’s franchisees. As at year end
2024, the aggregate gross potential liability related to the Company’s letters of credit was approximately $587 million (2023 –
$557 million).
GUARANTEES In addition to the letters of credit mentioned above, the Company has entered into various guarantee arrangements
including obligations to indemnify third parties in connection with leases and other transactions in the normal course of the
Company’s business. Additionally, Loblaw has provided a guarantee on behalf of PC Bank to Mastercard for accepting PC Bank as a
card member and licensee of Mastercard. As at year end 2024, the guarantee on behalf of PC Bank to Mastercard was $190 million
USD (2023 – $190 million USD).
LEASE OBLIGATIONS In connection with historical dispositions of certain of its assets, Loblaw has assigned leases to third parties.
Loblaw remains contingently liable for these lease obligations in the event any of the assignees are in default of their lease
obligations. Loblaw has guaranteed lease obligations of a third party distributor in the amount of $2 million (2023 – $3 million).
CASH COLLATERALIZATION As at year end 2024, Loblaw had agreements to cash collateralize certain of its uncommitted credit
facilities up to an amount of $94 million (2023 – $93 million), of which a nominal amount (2023 – nominal) was deposited with major
financial institutions and classified as security deposits on the consolidated balance sheets.
3.8
Contractual Obligations
The following table summarizes certain of the Company’s significant contractual obligations and other obligations as at year
end 2024:
SUMMARY OF CONTRACTUAL OBLIGATIONS
Payments due by year
($ millions)
2025
2026
2027
2028
2029
Thereafter
Total
Total debt (including interest
payments)(i)
$
2,839 $
1,700 $
2,443 $
2,538 $
2,689 $
9,915 $
22,124
Trade payables and other liabilities
7,894
—
—
—
—
—
7,894
Foreign exchange forward contracts
310
—
—
—
—
—
310
Financial liabilities(ii)
66
60
59
52
56
218
511
Lease obligations
1,031
878
768
613
547
2,404
6,241
Associate interest
255
—
—
—
—
—
255
Contracts for purchases of real
property and capital investment
projects(iii)
200
51
157
40
7
—
455
Purchase obligations(iv)
706
647
78
45
—
—
1,476
Total contractual obligations
$
13,301 $
3,336 $
3,505 $
3,288 $
3,299 $
12,537 $
39,266
(i)
Includes short-term debt, bank indebtedness, demand deposits and Loblaw’s certain other liabilities. Total debt also includes fixed interest
payments on long-term debt which are based on the maturing face values and annual interest for each instrument, including GICs, long term
independent securitization trusts and an independent funding trust, as well as annual payment obligations for consolidated structured entities
and mortgages. Variable interest payments are based on the forward rates as at year end 2024.
(ii)
Represents the contractual payments that Loblaw is committed to related to properties disposed of to third parties.
(iii)
Includes agreements for the purchase of equipment, real property and capital commitments for construction, expansion and renovation of
buildings. These agreements may contain conditions that may or may not be satisfied. If the conditions are not satisfied, it is possible the
Company will no longer have the obligation to proceed with the underlying transactions.
(iv)
Includes contractual obligations of a material amount to purchase goods or services where the contract prescribes fixed or minimum volumes to
be purchased or payments to be made within a fixed period of time for a set or variable price. These are only estimates of anticipated financial
commitments under these arrangements and the amount of actual payments will vary. The purchase obligations do not include purchase orders
issued or agreements made in the ordinary course of business which are solely for goods that are meant for resale, nor do they include any
contracts which may be terminated on relatively short notice or with relatively insignificant cost or liability to the Company.
As at year end 2024, the Company had additional long-term liabilities which included post-employment and other long-term
employee benefit plan liabilities, deferred vendor allowances, deferred income tax liabilities, Trust Unit liability and provisions,
including insurance liabilities. These long-term liabilities have not been included in the table above as the timing and amount of
future payments are uncertain.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 41
4.
Quarterly Results of Operations
4.1
Quarterly Financial Information
The Company’s year end is December 31. Activities are reported on a fiscal year ending on the Saturday closest to December 31. As a
result, the Company’s fiscal year is usually 52 weeks in duration but includes a 53rd week every five to six years. Each of the years
ended December 31, 2024 and December 31, 2023 contained 52 weeks. The 52-week reporting cycle is divided into four quarters of
12 weeks each except for the third quarter, which is 16 weeks in duration. When a fiscal year contains 53 weeks, the fourth quarter is
13 weeks in duration. The next 53-week year will occur in fiscal year 2025.
The following is a summary of selected consolidated financial information derived from the Company’s interim period condensed
consolidated financial statements for each of the eight most recently completed quarters.
2024
2023
($ millions except where otherwise indicated)
First
Quarter (12 weeks)
Second
Quarter (12 weeks)
Third
Quarter (16 weeks)
Fourth
Quarter (12 weeks)
Total
(52 weeks)
First
Quarter (12 weeks)
Second
Quarter (12 weeks)
Third
Quarter (16 weeks)
Fourth
Quarter (12 weeks)
Total
(52 weeks)
Revenue
$ 13,735 $ 14,091 $ 18,685 $ 15,097 $ 61,608
$
13,133 $ 13,884 $ 18,407 $ 14,700 $
60,124
Operating income
$
971 $
795 $
1,618 $
992 $
4,376
$
957 $
1,099 $
1,231 $
1,076 $
4,363
Adjusted EBITDA(1)
$
1,623 $
1,806 $
2,158 $
1,814 $
7,401
$
1,507 $
1,733 $
2,019 $
1,694 $
6,953
Depreciation and amortization
$
613 $
598 $
787 $
613 $
2,611
$
582 $
585 $
763 $
602 $
2,532
Net earnings
$
492 $
667 $
440 $
897 $
2,496
$
652 $
782 $
944 $
247 $
2,625
Net earnings (loss) attributable to
shareholders of the Company
$
246 $
410 $
29 $
674 $
1,359
$
436 $
508 $
624 $
(28) $
1,540
Loblaw(i)
$
243 $
241 $
409 $
245 $
1,138
$
221 $
267 $
329 $
285 $
1,102
Choice Properties
142
514
(663)
792
785
271
536
435
(445)
797
Effect of consolidation
(64)
(154)
291
(356)
(283)
3
(252)
(141)
142
(248)
Publicly traded operating companies
$
321 $
601 $
37 $
681 $
1,640
$
495 $
551 $
623 $
(18) $
1,651
GWL Corporate
(85)
(201)
(22)
(17)
(325)
(69)
(53)
(13)
(20)
(155)
Net earnings (loss) available to common
shareholders of the Company
$
236 $
400 $
15 $
664 $
1,315
$
426 $
498 $
610 $
(38) $
1,496
Net earnings (loss) per common share ($)
- basic
$
1.76 $
3.01 $
0.11 $
5.10 $
9.95
$
3.04 $
3.59 $
4.46 $
(0.28) $
10.88
Net earnings (loss) per common share ($)
- diluted
$
1.73 $
2.97 $
0.08 $
5.05 $
9.80
$
3.01 $
3.55 $
4.41 $
(0.30) $
10.75
Adjusted diluted net earnings per common
share(1) ($)
$
2.30 $
2.93 $
3.57 $
3.15 $
11.93
$
1.99 $
2.68 $
3.36 $
2.51 $
10.54
(i)
Contribution from Loblaw, net of non-controlling interests.
REVENUE Over the last eight quarters, consolidated revenue was impacted by each of the Company’s reportable operating
segments as follows:
•
Loblaw revenue was impacted by various factors including the following:
•
seasonality, which was greatest in the fourth quarter and least in the first quarter;
•
the timing of holidays;
•
macro-economic conditions impacting food and drug retail prices; and
•
changes in net retail square footage. Over the past eight quarters, net retail square footage has increased by 0.8
million square feet to 72.0 million square feet.
•
Choice Properties revenue was impacted by the following:
•
increased capital and operating recoveries;
•
higher rental rates in the retail and industrial portfolio;
•
contribution from acquisitions, net of dispositions, and development transfers;
•
lease surrender revenue; and
•
the sale of residential inventory.
Management’s Discussion and Analysis
42 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
NET EARNINGS (LOSS) AVAILABLE TO COMMON SHAREHOLDERS OF THE COMPANY AND DILUTED NET EARNINGS (LOSS) PER
COMMON SHARE Net earnings (loss) available to common shareholders of the Company and diluted net earnings (loss) per
common share for the last eight quarters were impacted by the underlying operating performance of each of the Company’s
reportable operating segments and certain adjusting items as described in Section 13.1, “Non-GAAP and Other Financial Measures -
Selected Comparative Reconciliation”, of this MD&A.
The Company’s underlying operating performance for the last eight quarters included the following:
•
change in Loblaw’s underlying operating performance was driven by:
•
seasonality, which was greatest in the fourth quarter and least in the first quarter;
•
the timing of holidays; and
•
cost savings, operating efficiencies and benefits from strategic initiatives.
•
change in Choice Properties’ underlying operating performance was driven by:
•
changes in revenue as described above;
•
the impact of acquisitions and dispositions of investment properties and development transfers; and
•
changes in general and administrative expenses.
•
the year-over-year impact of changes in the effect of consolidation. Refer to Section 13, “Non-GAAP and Other Financial
Measures”, of this MD&A for a breakdown of effect of consolidation.
•
the year-over-year impact of changes in GWL Corporate due to:
•
fluctuations in the fair value adjustment on other investments.
•
diluted net earnings (loss) per common share included the favourable impact of shares purchased for cancellation.
4.2
Fourth Quarter Results
Loblaw maintained its focus on retail excellence and produced another quarter of strong operational and financial results.
Customers continued to seek a combination of quality, value, service, and convenience, and recognized the strength of Loblaw’s
offer across its store network. Growing customer engagement of personalized PC Optimum loyalty offers, combined with impactful
in-store promotions and more everyday value drove higher traffic and strong market share gains in food retail. In drug retail,
pharmacy and healthcare services continued to perform well. Front store sales reflected growth across the beauty categories, led by
prestige. As expected, this was offset by the impact from the exit from the sale of certain items in the electronics category. Over the
2024 fiscal year, Loblaw invested in its network, opening 52 new drug and food retail stores, and 78 new pharmacy care clinics. In
2025, Loblaw plans to further invest in its network by opening approximately 80 new food and drug stores, and 100 new clinics.
Loblaw also marked a major milestone, with the opening of its first T&T® Supermarket in the United States in the fourth quarter of
2024. Loblaw’s strategy, unique assets, and dedicated colleagues position it well to continue to serve the diverse needs of Canadians
today and in the future.
Choice Properties achieved another quarter and year of strong operational and financial results, delivering on its financial outlook
and strategic priorities. In 2024, Choice Properties further improved the quality of its portfolio by completing $427 million of real
estate transactions and by delivering over $299 million of development projects, adding 1.1 million square feet of new commercial
retail and industrial space and a new purpose-built residential rental building to its portfolio. Choice Properties’ performance
continues to be supported by the strength of its necessity-based portfolio and the stability and flexibility provided by its industry-
leading balance sheet. Choice Properties continues to be well-positioned to deliver stable and growing cash flows and announced
its third consecutive annual distribution increase for unitholders.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 43
The Company’s results reflect the year-over-year impact of the fair value adjustment of the Trust Unit liability.
Quarters Ended
($ millions except where otherwise indicated)
Dec. 31, 2024
Dec. 31, 2023
$ Change
% Change
Revenue
$
15,097
$
14,700
$
397
2.7%
Operating income
$
992
$
1,076
$
(84)
(7.8) %
Adjusted EBITDA(1)
$
1,814
$
1,694
$
120
7.1%
Adjusted EBITDA margin(1)
12.0%
11.5%
Depreciation and amortization
$
613
$
602
$
11
1.8%
Net interest (income) expense and other
financing charges
$
(115)
$
660
$
(775)
(117.4) %
Adjusted net interest expense and other
financing charges(1)
$
284
$
278
$
6
2.2%
Income taxes
$
210
$
169
$
41
24.3%
Adjusted income taxes(1)
$
285
$
260
$
25
9.6%
Effective tax rate
19.0%
40.6%
Adjusted effective tax rate(1)
27.6%
28.0%
Net earnings (loss) attributable to shareholders
of the Company
$
674
$
(28)
$
702
2,507.1%
Loblaw(i)
$
245
$
285
$
(40)
(14.0) %
Choice Properties
792
(445)
1,237
278.0%
Effect of consolidation
(356)
142
(498)
(350.7) %
Publicly traded operating companies
$
681
$
(18)
$
699
3,883.3%
GWL Corporate
(17)
(20)
3
15.0%
Net earnings (loss) available to common shareholders
of the Company
$
664
$
(38)
$
702
1,847.4%
Diluted net earnings (loss) per common share ($)
$
5.05
$
(0.30)
$
5.35
1,783.3%
Loblaw(i)
$
353
$
332
$
21
6.3%
Choice Properties
110
103
7
6.8%
Effect of consolidation(1)
(23)
(57)
34
59.6%
Publicly traded operating companies
$
440
$
378
$
62
16.4%
GWL Corporate
(25)
(36)
11
30.6%
Adjusted net earnings available to common shareholders
of the Company(1)
$
415
$
342
$
73
21.3%
Adjusted diluted net earnings per common share(1) ($)
$
3.15
$
2.51
$
0.64
25.5%
Dividends declared per share ($):
Common shares
$
0.820
$
0.713
Preferred shares – Series I
$
0.3625
$
0.3625
Preferred shares – Series III
$
0.3250
$
0.3250
Preferred shares – Series IV
$
0.3250
$
0.3250
Preferred shares – Series V
$
0.296875
$
0.296875
(i)
Contribution from Loblaw, net of non-controlling interests.
Management’s Discussion and Analysis
44 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
NET EARNINGS (LOSS) AVAILABLE TO COMMON SHAREHOLDERS OF THE COMPANY
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 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);
•
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 at Loblaw of $15 million ($0.11 per common
share).
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
($0.09 per common share) pursuant to the Company’s NCIB program.
REVENUE
Quarters Ended
($ millions except where otherwise indicated)
Dec. 31, 2024
Dec. 31, 2023
$ Change
% Change
Loblaw
$
14,948
$
14,531
$
417
2.9%
Choice Properties
344
355
(11)
(3.1) %
Effect of consolidation(1)
(195)
(186)
(9)
(4.8) %
Publicly traded operating companies
$
15,097
$
14,700
$
397
2.7%
GWL Corporate
—
—
Consolidated
$
15,097
$
14,700
$
397
2.7%
Revenue in the fourth quarter of 2024 was $15,097 million, an increase of $397 million, or 2.7%, compared to the same period in 2023.
The increase in revenue was impacted by each of the Company’s reportable operating segments as follows:
•
Positively by 2.8% due to revenue growth of 2.9% at Loblaw, primarily driven by an increase in retail sales of $422 million, or 3.0%,
partially offset by a decline in financial services revenue of $11 million. The increase in retail sales was due to positive same-store
sales growth.
•
Negatively by 0.1% due to revenue decline of 3.1% at Choice Properties. The decrease of $11 million included revenue from the
sale of residential inventory in the fourth quarter of 2023 of $26 million. Excluding the impact of the sale of residential inventory,
revenue increased by $15 million, or 4.6%, driven by higher rental rates, higher recoveries, the impact of acquisitions, net of
dispositions, and completed developments and higher lease surrender revenue.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 45
OPERATING INCOME
Quarters Ended
($ millions except where otherwise indicated)
Dec. 31, 2024
Dec. 31, 2023
$ Change
% Change
Loblaw
$
850
$
941
$
(91)
(9.7) %
Choice Properties
224
191
33
17.3%
Effect of consolidation(1)
(83)
(45)
(38)
(84.4) %
Publicly traded operating companies
$
991
$
1,087
$
(96)
(8.8) %
GWL Corporate
1
(11)
12
109.1%
Consolidated
$
992
$
1,076
$
(84)
(7.8) %
Operating income in the fourth quarter of 2024 was $992 million compared to $1,076 million in the same period in 2023, a decrease
of $84 million, or 7.8%. The decrease was mainly attributable to the unfavourable year-over-year net impact of adjusting items
totaling $193 million, described below, partially offset by an improvement in underlying operating performance of $109 million
driven by Loblaw and Choice Properties, and the favourable year-over-year impact of GWL Corporate.
The unfavourable year-over-year net impact of adjusting items totaling $193 million was primarily due to:
•
the unfavourable impact of the charge related to the PC Optimum loyalty program at Loblaw of $129 million;
•
the unfavourable year-over-year impact of the fair value adjustment on Choice Properties’ investment in real estate securities
of Allied of $63 million; and
•
the unfavourable impact of the fair value write-down related to the sale of Wellwise at Loblaw of $23 million;
partially offset by,
•
the favourable year-over-year impact of the fair value adjustment of derivatives at Loblaw of $14 million.
ADJUSTED EBITDA(1)
Quarters Ended
($ millions except where otherwise indicated)
Dec. 31, 2024
Dec. 31, 2023
$ Change
% Change
Loblaw
$
1,696
$
1,631
$
65
4.0%
Choice Properties
247
238
9
3.8%
Effect of consolidation(1)
(130)
(164)
34
20.7%
Publicly traded operating companies
$
1,813
$
1,705
$
108
6.3%
GWL Corporate
1
(11)
12
109.1%
Consolidated
$
1,814
$
1,694
$
120
7.1%
Adjusted EBITDA(1) in the fourth quarter of 2024 was $1,814 million compared to $1,694 million in the same period in 2023, an
increase of $120 million, or 7.1%. The increase was impacted by each of the Company’s segments as follows:
•
positively by 3.8% due to an increase of 4.0% at Loblaw, driven by an increase in retail and an increase in financial services. The
increase in Loblaw retail adjusted EBITDA(1) was driven by an increase in retail gross profit, partially offset by an increase in retail
SG&A;
•
positively by 0.5% due to an increase of 3.8% at Choice Properties, primarily driven an increase in rental income, lower general
and administrative expense due to lower salaries, benefits and employee costs and higher lease surrender revenue. The
increase was partially offset by lower distribution income from the investment in real estate securities of Allied and lower
income from the sale of residential inventory; and
•
positively by 0.7% due to an increase of 109.1% at GWL Corporate, primarily due to the favourable year-over-year impact of the
fair value adjustment on other investments.
Management’s Discussion and Analysis
46 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
DEPRECIATION AND AMORTIZATION
Quarters Ended
($ millions except where otherwise indicated)
Dec. 31, 2024
Dec. 31, 2023
$ Change
% Change
Loblaw
$
694
$
680
$
14
2.1%
Choice Properties
1
—
1
100.0%
Effect of consolidation
(82)
(78)
(4)
(5.1)%
Publicly traded operating companies
$
613
$
602
$
11
1.8%
GWL Corporate
—
—
—
—%
Consolidated
$
613
$
602
$
11
1.8%
Depreciation and amortization in the fourth quarter of 2024 was $613 million, an increase of $11 million compared to the same
period in 2023. Depreciation and amortization in the fourth quarter included $115 million (2023 – $115 million) of amortization of
intangible assets related to the acquisitions of Shoppers Drug Mart and Lifemark, recorded by Loblaw. Excluding these amounts,
depreciation and amortization increased by $11 million primarily due to an increase at Loblaw driven by an increase in leased assets,
net of the effect of consolidation, and an increase in depreciation of fixed assets related to conversions of retail locations, partially
offset by the impact of prior year accelerated depreciation as a result of network optimization.
NET INTEREST EXPENSE AND OTHER FINANCING CHARGES
Quarters Ended
($ millions except where otherwise indicated)
Dec. 31, 2024
Dec. 31, 2023
$ Change
% Change
Net interest (income) expense and other financing charges
$
(115)
$
660
$
(775)
(117.4) %
Add (deduct) impact of the following:
Fair value adjustment of the Trust Unit liability
399
(382)
781
204.5%
Adjusted net interest expense and other financing charges(1)
$
284
$
278
$
6
2.2%
Net interest income and other financing charges in the fourth quarter of 2024 were $115 million, compared to net interest expense
and other financing charges of $660 million in 2023, a decrease of $775 million. The decrease was primarily due to the favourable
year-over-year impact of the fair value adjustment of the Trust Unit liability of $781 million, as a result of the decrease in Choice
Properties’ unit price during the fourth quarter of 2024.
In the fourth quarter of 2024, adjusted net interest expense and other financing charges(1) increased by $6 million, primarily driven
by:
•
an increase in interest expense from lease liabilities at Loblaw, net of the effect of consolidation; and
•
lower interest income on cash and cash equivalents and certain short-term investments at GWL Corporate and Loblaw;
partially offset by,
•
the capitalization of interest expense related to Loblaw’s automated distribution facility.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 47
INCOME TAXES
Quarters Ended
($ millions except where otherwise indicated)
Dec. 31, 2024
Dec. 31, 2023
$ Change
% Change
Income taxes
$
210
$
169
$
41
24.3%
Add impact of the following:
Tax impact of items excluded from adjusted earnings
before taxes(i)
67
75
(8)
(10.7)%
Outside basis difference in certain Loblaw shares
8
16
(8)
(50.0)%
Adjusted income taxes(1)
$
285
$
260
$
25
9.6%
Effective tax rate applicable to earnings before taxes
19.0%
40.6%
Adjusted effective tax rate applicable to adjusted earnings
before taxes(1)
27.6%
28.0%
(i)
See the adjusted EBITDA table and the adjusted net interest expense and other financing charges table included in Section 13, “Non-GAAP and
Other Financial Measures”, of this MD&A for a complete list of items excluded from adjusted earnings before taxes.
The effective tax rate in the fourth quarter of 2024 was 19.0%, compared to 40.6% in the same period in 2023. The decrease was
primarily attributable to the year-over-year impact of the non-taxable fair value adjustment of the Trust Unit liability, partially offset
by the impact of other non-deductible items.
The adjusted effective tax rate(1) for the fourth quarter of 2024 was 27.6%, compared to 28.0% in the same period in 2023. The
decrease was primarily attributable to the impact of other non-deductible items.
CASH FLOWS
Quarters Ended
($ millions)
Dec. 31, 2024
Dec. 31, 2023
$ Change
Cash and cash equivalents, beginning of period
$
1,628
$
1,767
$
(139)
Cash flow from (used in):
Operating activities
$
1,689
$
1,513
$
176
Investing activities
(849)
(140)
(709)
Financing activities
(428)
(692)
264
Effect of foreign currency exchange rate changes on
cash and cash equivalents
8
3
5
Increase in cash and cash equivalents
$
420
$
684
$
(264)
Cash and cash equivalents, end of period
$
2,048
$
2,451
$
(403)
CASH FLOWS FROM OPERATING ACTIVITIES Cash flows from operating activities were $1,689 million in the fourth quarter of 2024,
an increase of $176 million compared to the fourth quarter of 2023. The increase in cash flows from operating activities was primarily
due to a favourable year-over-year change in non-cash working capital, partially offset by credit card receivables increasing year-
over-year at a rate higher than prior year, higher income taxes paid and lower cash earnings.
Management’s Discussion and Analysis
48 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
CASH FLOWS USED IN INVESTING ACTIVITIES Cash flows used in investing activities were $849 million in the fourth quarter of
2024, an increase of $709 million compared to the fourth quarter of 2023. The increase in cash flows used in investing activities was
primarily due to higher purchases of short-term investments, higher repayments of mortgages, loans and notes receivable in the
prior year and a decrease in proceeds from disposal of assets.
The following table summarizes the Company’s capital investments by each of its reportable operating segments for the quarters
ended as indicated:
Quarters Ended
($ millions)
Dec. 31, 2024
Dec. 31, 2023
Loblaw
$
628
$
676
Choice Properties
103
165
Effect of consolidation
(16)
(95)
Publicly traded operating companies
$
715
$
746
GWL Corporate
1
1
Capital investments(i)
$
716
$
747
(i)
Capital investments are the sum of fixed asset and investment properties purchases and intangible asset additions as presented in the
Company’s consolidated statements of cash flows, and prepayments transferred to fixed assets in the current period. Loblaw capital investments
in the fourth quarter of 2023 included $37 million of prepayments transferred to fixed assets.
CASH FLOWS USED IN FINANCING ACTIVITIES Cash flows used in financing activities were $428 million in the fourth quarter of
2024, a decrease of $264 million compared to the fourth quarter of 2023. The decrease in cash flows used in financing activities was
primarily driven by higher issuances of long-term debt net of repayments in the current year, an increase in demand deposits from
customers and the timing of the Loblaw dividend payment in the fourth quarter of 2024, partially offset by a decrease in bank
indebtedness.
FREE CASH FLOW(1)
Quarters Ended
($ millions)
Dec. 31, 2024
Dec. 31, 2023
$ Change
Cash flows from operating activities
$
1,689
$
1,513
$
176
Less:
Capital investments(i)
716
747
(31)
Interest paid
210
212
(2)
Lease payments, net
152
157
(5)
Free cash flow(1)
$
611
$
397
$
214
(i)
Capital investments are the sum of fixed asset and investment properties purchases and intangible asset additions as presented in the
Company’s consolidated statements of cash flows, and prepayments transferred to fixed assets in the current period. Loblaw capital
investments in the fourth quarter of 2023 included $37 million of prepayments transferred to fixed assets.
Free cash flow(1) in the fourth quarter of 2024 was $611 million, an increase of $214 million compared to the fourth quarter of 2023.
The increase in free cash flow(1) was primarily driven by a favourable year-over-year change in non-cash working capital, partially
offset by credit card receivables increasing year-over-year at a rate higher than prior year, higher income taxes paid and lower
cash earnings.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 49
5.
Fourth Quarter Results of Reportable Operating Segments
The following discussion provides details of the 2024 fourth quarter results of operations of each of the Company’s reportable
operating segments.
5.1
Loblaw Fourth Quarter Operating Results
Quarters Ended
($ millions except where otherwise indicated)
Dec. 31, 2024
Dec. 31, 2023
$ Change
% Change
Revenue
$
14,948
$
14,531
$
417
2.9%
Operating income
$
850
$
941
$
(91)
(9.7)%
Adjusted EBITDA(1)
$
1,696
$
1,631
$
65
4.0%
Adjusted EBITDA margin(1)
11.3%
11.2%
Depreciation and amortization
$
694
$
680
$
14
2.1%
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 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%). Pharmacy and healthcare services
same-store sales growth benefited from an increase in specialty prescription volumes. The number of prescriptions
dispensed increased by 1.7% (2023 – 3.5%). 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%). The decline in front store same-store sales was
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.
In the last 12 months, 52 food and drug stores were opened, and 15 food and drug stores were closed, resulting in a net increase in
retail square footage of 0.8 million square feet, or 1.1% at 72.0 million square feet.
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 was driven by an unfavourable year-over-year change in adjusting items
totaling $142 million, partially offset by an improvement in underlying operating performance of $51 million, as described below:
•
the unfavourable change in adjusting items totaling $142 million was primarily due to:
•
the unfavourable impact of the charge related to the PC Optimum loyalty program of $129 million;
•
the unfavourable impact of the fair value write-down related to the sale of Wellwise of $23 million; and
•
the unfavourable year-over-year impact of the prior year recovery related to a President’s Choice Bank (“PC Bank”)
commodity tax matter of $13 million;
partially offset by,
•
the favourable year-over-year impact of prior year fair value adjustments on fuel and foreign currency contracts of
$14 million;
•
the favourable year-over-year impact of change in fair value adjustments on non-operating properties of $6 million;
and
•
the favourable impact of a gain on sale of non-operating properties of $3 million.
•
the improvement in underlying operating performance of $51 million was primarily due to:
•
an increase in retail gross profit, partially offset by an increase in retail SG&A and depreciation and amortization; and
•
an improvement in the underlying operating performance in the financial services.
Management’s Discussion and Analysis
50 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
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 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 from the prior year increase of $25 million versus current year
release of $11 million, 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 and Lifemark of $115 million (2023 – $115 million).
CONSOLIDATION OF FRANCHISES Loblaw’s net losses attributable to non-controlling interests were $1 million in the fourth
quarter of 2024, compared to net earnings attributable to non-controlling interests of $16 million in the same period of 2023. This
represented a decrease of $17 million, or 106.3%, primarily driven by a decrease in franchisee earnings after profit sharing.
LOBLAW OTHER BUSINESS MATTERS
For details see Section 2.1, “Loblaw Operating Results”, of this MD&A.
5.2
Choice Properties Fourth Quarter Operating Results
Quarters Ended
($ millions except where otherwise indicated)
Dec. 31, 2024
Dec. 31, 2023
$ Change
% Change
Revenue
$
344
$
355
$
(11)
(3.1) %
Net interest (income) expense and other financing charges
$
(567)
$
636
$
(1,203)
(189.2) %
Net income (loss)
$
792
$
(445)
$
1,237
278.0%
Funds from Operations(1)
$
188
$
185
$
3
1.6%
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.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 51
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 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
For details see Section 2.2, “Choice Properties Operating Results”, of this MD&A.
6.
Disclosure Controls and Procedures
Management is responsible for establishing and maintaining a system of disclosure controls and procedures to provide reasonable
assurance that all material information relating to the Company and its subsidiaries is gathered and reported to senior
management on a timely basis so that appropriate decisions can be made regarding public disclosure.
As required by National Instrument 52-109, Certification of Disclosure in Issuers’ Annual and Interim Filings (“NI 52-109”) the
Chairman & Chief Executive Officer (“CEO”) and the President & Chief Financial Officer (“CFO”) have caused the effectiveness of the
disclosure controls and procedures to be evaluated. Based on that evaluation, management, under the supervision of the Chairman
& CEO and the President & CFO, have concluded that the design and operation of the system of disclosure controls and procedures
were effective as at December 31, 2024.
7.
Internal Control Over Financial Reporting
Management is also responsible for establishing and maintaining adequate internal controls over financial reporting to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for
external purposes in accordance with IFRS Accounting Standards.
As required by NI 52-109, the Chairman & CEO and the President & CFO have caused the effectiveness of the internal controls over
financial reporting to be evaluated using the framework established in ‘Internal Control - Integrated Framework (COSO
Framework)’ published by The Committee of Sponsoring Organizations of the Treadway Commission (COSO), 2013. Based on that
evaluation, management, under the supervision of the Chairman & CEO and the President & CFO, have concluded that the design
and operation of the Company’s internal controls over financial reporting were effective as at December 31, 2024.
In designing such controls, it should be recognized that due to inherent limitations, any control, no matter how well designed and
operated, can provide only reasonable assurance of achieving the desired control objectives and may not prevent or detect
misstatements. Projections of any evaluations of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Additionally, management is required to use judgment in evaluating controls and procedures.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING There were no changes in the Company’s internal controls over
financial reporting in 2024 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over
financial reporting.
Management’s Discussion and Analysis
52 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
8.
Enterprise Risks and Risk Management
The Company is committed to maintaining a framework that ensures risk management is an integral part of its activities. The
Company’s Enterprise Risk Management (“ERM”) program assists all areas of the business in managing risks within appropriate
levels of tolerance by bringing a systematic approach and methodology for evaluating, measuring and monitoring key risks. The
results of the ERM program and other business planning processes are used to identify emerging risks to the Company, prioritize
risk mitigation activities and develop a risk-based internal audit plan.
Risks are not eliminated through the ERM program, but rather, are identified and managed in line with the Company’s Risk
Appetite Statement and within approved risk tolerances. The Risk Appetite Statement articulates key aspects of the Company’s
businesses, values, and brands and provides directional guidance on risk taking.
(i)
Risks are assessed and evaluated based on the Company’s vulnerability to the risk and the potential impact that the underlying risks would
have on the Company’s ability to execute on its strategies and achieve its objectives.
(ii)
Any of the key risks have the potential to negatively affect the Company and its financial performance. The Company has risk management
strategies in place for key risks. However, there can be no assurance that the risks will be mitigated or will not materialize or that events or
circumstances will not occur that could adversely affect the reputation, operations or financial condition or performance of the Company.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 53
8.1
Operating Risks and Risk Management
OPERATING RISKS The following discussion of risks identifies significant factors that could have a material adverse effect on the
Company’s business, operations, financial condition or future financial performance.
The following risks are a subset of the key risks identified through the ERM program. They should be read in conjunction with the
full set of risks inherent in the Company’s business, as included in the Company’s Annual Information Form (“AIF”) for the year
ended December 31, 2024, which is hereby incorporated by reference:
Economic Conditions
Colleague Attraction, Development and Succession Planning
Cybersecurity, Privacy and Data Breaches
Asset Management
IT Systems Implementations and Data Management
Competitive Environment and Strategy
Inventory Management and Shrink
Food, Drug, Product and Services Safety
Healthcare Reform
Labour Relations
Distribution and Supply Chain
Environmental and Social
Associate-owned Drug Store Network and Relationships with Associates
Business Continuity
Property Development and Construction
Legal Proceedings
Property Valuation
Change Management, Process and Efficiency
Capitalization Rate Risk
Franchisee Relationships
Electronic Commerce and Disruptive Technologies
Service Providers
Regulatory Compliance
Execution of Strategic Initiatives
ECONOMIC CONDITIONS The Company’s revenue, profitability, brand and reputation may be impacted by general economic
conditions. These economic conditions include inflation, impact of tariffs, price increases from suppliers, levels of employment, costs
of borrowing, household debt, political uncertainty and government regulation, the impact of natural disasters, war or acts of
terrorism, pandemics, changes in interest rates, tax rates, or exchange rates, and access to consumer credit. A number of these
conditions could negatively impact consumer spending. As a result, these economic conditions may adversely impact demand for
the Company’s products and services which could adversely affect the Company’s operations, financial performance, brand or
reputation.
CYBERSECURITY, PRIVACY AND DATA BREACHES The Company depends on the uninterrupted operation of its IT systems,
networks and services including internal and public internet sites, data hosting and processing facilities, and cloud-based services
and hardware, such as point-of-sale processing at stores, to operate its business.
In the ordinary course of business, the Company collects, processes, transmits and retains confidential, sensitive and personal
information (“Confidential Information”), including payment card industry data and personal health and financial information
regarding the Company and its employees, franchisees, Associates, vendors, customers, patients, credit card and PC Money
Account holders and loyalty program members. Some of this Confidential Information is held and managed by third party service
providers. As with other large companies, the Company is regularly subject to cyberattacks and such attempts are occurring more
frequently, are constantly evolving in nature and are becoming more sophisticated.
The Company has implemented security measures, including employee training, monitoring and testing, maintenance of
protective systems and contingency plans, to protect and to prevent unauthorized access of Confidential Information and to reduce
the likelihood of disruptions to its IT systems. The Company continues to make strategic investments in this area in order to
mitigate cyber threats. The Company also has security processes, protocols and standards that are applicable to its third party
service providers.
Despite these measures, all of the Company’s information systems, including its back-up systems and any third party service
provider systems that it employs, are vulnerable to damage, interruption, disability or failures due to a variety of reasons, including
physical theft, electronic theft, fire, power loss, computer and telecommunication failures or other catastrophic events, as well as
from internal and external security breaches, denial of service attacks, viruses, worms and other known or unknown disruptive
events.
The Company or its third party service providers may be unable to anticipate, timely identify or appropriately respond to one or
more of the rapidly evolving and increasingly sophisticated means by which computer hackers, cyber terrorists and others may
attempt to breach the Company’s security measures or its third party service providers’ information systems.
As cyber threats evolve and become more difficult to detect and successfully defend against, one or more cyber threats might
defeat the Company’s security measures or those of its third party service providers. Moreover, employee error or malfeasance,
faulty password management or other irregularities may result in a breach of the Company’s or its third party service providers’
security measures, which could result in a breach of employee, franchisee, Associate, customer, patient, credit card or PC Money
Account holder or loyalty program member privacy or Confidential Information.
Management’s Discussion and Analysis
54 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
If the Company does not allocate and effectively manage the resources necessary to build and sustain reliable IT infrastructure, fails
to timely identify or appropriately respond to cybersecurity incidents, or the Company’s or its third party service providers’
information systems are damaged, destroyed, shut down, interrupted or cease to function properly, the Company’s business could
be disrupted and the Company could, among other things, be subject to: transaction errors; processing inefficiencies; the loss of or
failure to attract new customers; the loss of revenue; the loss or unauthorized access to Confidential Information or other assets; the
loss of or damage to intellectual property or trade secrets; damage to its reputation; litigation; regulatory enforcement actions;
violation of privacy, security or other laws and regulations; and remediation costs. Any such occurrences could adversely affect the
reputation, operations or financial performance of the Company.
IT SYSTEMS IMPLEMENTATIONS AND DATA MANAGEMENT The operations of the Company are reliant on the continuous and
uninterrupted operations of critical technology systems, including the increasing use of automation technology. Any technology
failure/outage pertaining to the availability, capacity or sustainability of the Company’s IT systems may result in disruptions
impacting the Company’s customers or financial performance, or may negatively impact the Company’s reputation. The Company
continues to make investments in new IT systems to improve the operating effectiveness of the organization. Failure to successfully
migrate from legacy systems to new IT systems or a significant disruption in the Company’s current IT systems during the
implementation of new systems could result in a lack of accurate data to effectively manage day-to-day operations of the business
or achieve its operational objectives, causing significant disruptions to the business and potential financial losses.
Failure to successfully adopt or implement appropriate processes to support the new IT systems, or failure to effectively leverage or
convert data from one system to another, may preclude the Company from optimizing its overall performance and could result in
inefficiencies and duplication in processes, which in turn could adversely affect the reputation, operations or financial performance
of the Company. Failure to realize the anticipated strategic benefits including revenue growth, anticipated cost savings or
operating efficiencies associated with new IT systems could adversely affect the reputation, operations or financial performance of
the Company.
The Company also depends on relevant and reliable information to operate its business. As the volume of data being generated and
reported continues to increase across the Company, data accuracy, quality and governance are required for effective decision
making. Failure by the Company to leverage data, including customer data, in a timely manner may adversely affect the Company’s
ability to execute its strategy and therefore its financial performance. Moreover, lack of sensitive data classification, protection and
use case approval may result in operational or reputational risk.
INVENTORY MANAGEMENT AND SHRINK Loblaw is subject to risks associated with managing its inventory and controlling shrink.
Failure to successfully manage such risks could result in shortages of inventory, excess or obsolete inventory which cannot be sold
profitably or increases in levels of inventory shrink. Any of these outcomes could adversely affect the financial performance of the
Company. Although Loblaw has implemented new IT systems, which are intended to provide increased visibility to integrated
inventory and sales information at store level, Loblaw’s failure to effectively implement such new IT systems and applicable
processes may increase the risks associated with managing inventory, including the risk that inaccurate inventory could result in
inaccurate financial statements.
Loblaw’s retail segment is also examining its fundamental processes related to article lifecycle management, with the goal of
making existing processes more efficient. This will impact existing workflow and system processes across procurement, supply
chain and merchandising. Such simplification and efficiency processes are critical to Loblaw’s ability to implement longer term
system solutions and achieve efficiencies across its retail divisions. Any failure to effectively deliver this enterprise core solution
could negatively impact Loblaw’s operations or financial performance.
HEALTHCARE REFORM Loblaw is reliant on prescription drug sales for a significant portion of its sales and profits. Prescription
drugs and their sales are subject to numerous federal, provincial, territorial and local laws and regulations. Changes to these laws
and regulations, including the potential implementation of a national pharmacare system, changes in the models used to fund
prescription drugs such as the introduction of a pharmacare system, or non-compliance with these laws and regulations, could
adversely affect the reputation, operations or financial performance of the Company.
Federal and provincial laws and regulations that establish public drug plans typically regulate prescription drug coverage, patient
eligibility, pharmacy reimbursement, drug product eligibility and drug pricing. With respect to pharmacy reimbursement, such
laws and regulations typically regulate the allowable drug cost of a prescription drug product, the permitted mark-up on a
prescription drug product and the professional or dispensing fees that may be charged on prescription drug sales to patients
eligible under the public drug plan. With respect to drug product eligibility, such laws and regulations typically regulate the
requirements for listing the manufacturer’s products as a benefit or partial benefit under the applicable governmental drug plan,
drug pricing and, in the case of generic prescription drug products, the requirements for designating the product as
interchangeable with a branded prescription drug product. In addition, other federal, provincial, territorial and local laws and
regulations govern the approval, packaging, labeling, sale, marketing, advertising, handling, storage, distribution, dispensing and
disposal of prescription drugs.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 55
Sales of prescription drugs, pharmacy reimbursement and drug prices may be affected by changes to the healthcare industry,
including legislative or other changes that impact patient eligibility, drug product eligibility, the allowable cost of a prescription
drug product, the mark-up permitted on a prescription drug product, the amount of professional or dispensing fees paid by payers
or the provision or receipt of manufacturer allowances by pharmacies and pharmacy suppliers.
The majority of prescription drug sales are reimbursed or paid by three types of payers: (i) government or public, (ii) private insurers
or employers, and (iii) out-of-pocket by the patient. These payers have pursued and continue to pursue measures to manage the
costs of their drug plans. Canada and each of the provinces has implemented legislative and/or other measures directed towards
managing pharmacy service costs and controlling increasing drug costs incurred by public drug plans and private payers, which
impact pharmacy reimbursement levels and the availability of manufacturer allowances. Legislative measures to control drug costs
include lowering of generic drug pricing. Additionally, the pan-Canadian Pharmaceutical Alliance continues its work regarding cost
reduction initiatives for pharmaceutical products and services.
Legislation in certain provincial jurisdictions establishes listing requirements that ensure that the selling price for a prescription
drug product will not be higher than any selling price established by the manufacturer for the same prescription drug product
under other provincial drug insurance programs. In some provinces, elements of the laws and regulations that impact pharmacy
reimbursement and manufacturer allowances for sales to the public drug plans are extended by legislation to sales to private
payers. Also, private payers (such as corporate employers and their insurers) are looking or may look to benefit from any measures
implemented by government payers to reduce prescription drug costs for public plans by attempting to extend these measures to
prescription drug plans they own or manage. Accordingly, changes to pharmacy reimbursement and manufacturer allowances for
a public drug plan could also impact pharmacy reimbursement and manufacturer allowances for private payers. In addition, private
payers could reduce pharmacy reimbursement for prescription drugs provided to their members or could elect to reimburse
members only for products included on closed formularies or available from preferred providers.
Changes impacting pharmacy reimbursement programs and prescription drug pricing, legislative or otherwise, are expected to
continue to put downward pressure on the value of prescription drug sales. These changes may have a material adverse effect on
Loblaw’s business, sales and profitability. In addition, Loblaw could incur significant costs in the course of complying with any
changes in the regulatory regime affecting prescription drugs and pharmacy services. Non-compliance with any such existing or
proposed laws or regulations, particularly those that provide for the licensing and conduct of wholesalers, the licensing and conduct
of pharmacists, the regulation and ownership of pharmacies, the advertising of pharmacies and prescription services, the provision
of information concerning prescription drug products, the pricing of prescription drugs, privacy and confidentiality and interactions
with provincial drug and eHealth systems, could result in audits, civil or regulatory proceedings, fines, penalties, injunctions, recalls
or seizures, any of which could adversely affect the reputation, operations or financial performance of the Company.
DISTRIBUTION AND SUPPLY CHAIN Loblaw’s ability to satisfy its customers’ demands and achieve its cost objectives depends on
its ability to maintain key logistic and transport arrangements. Loblaw’s distribution and supply chain could be negatively affected
by unforeseen disruptions due to fire, severe weather conditions, natural disasters or other catastrophic events, public health
events, labour disagreements, disruptions to critical technology systems, including automation, or other transportation problems.
The loss of or disruption to these types of arrangements could interrupt product supply, which in turn could adversely affect the
assortment and product availability at the store and digital retail level. If not effectively managed or remedied, these events could
negatively impact customer experience and Loblaw’s ability to attract and retain customers, and could adversely affect the
Company’s operations or financial performance.
ASSOCIATE-OWNED DRUG STORE NETWORK AND RELATIONSHIPS WITH ASSOCIATES The success of Loblaw and the
reputation of its brands are closely tied to the performance of the Shoppers Drug Mart Associate-owned drug stores. Accordingly,
Loblaw relies on Associates to successfully operate, manage and execute retail programs and strategies at their respective drug
store locations. Associates are independent business operators that have entered into agreements with Loblaw to own and operate
retail stores in accordance with prescribed procedures and standards. The success of the operations and financial performance of
their respective drug stores may be beyond Loblaw’s control. In addition, Associates are subject to franchise legislation. Disruptions
to Loblaw’s relationships with Shoppers Drug Mart Associate-owned drug stores or changes in legislation could negatively affect
revenue from Associates, which in turn could adversely affect the reputation, operations or financial performance of the Company.
PROPERTY DEVELOPMENT AND CONSTRUCTION Choice Properties engages in development, redevelopment and major
renovation activities with respect to certain properties. It is subject to certain risks, including: (a) the availability and pricing of
financing on satisfactory terms or availability at all; (b) the availability and timely receipt of zoning, occupancy, land use and other
regulatory and governmental approvals; (c) changes in zoning and land use laws; (d) the ability to achieve an acceptable level of
occupancy upon completion; (e) the potential that Choice Properties may fail to recover expenses already incurred if it abandons
redevelopment opportunities after commencing to explore them; (f) the potential that Choice Properties may expend funds on and
devote management time to projects which are not completed; (g) construction or redevelopment costs of a project, including
rising construction costs and development charges and shortages of experienced labour in certain construction related trades, may
exceed original estimates, possibly making the project less profitable than originally estimated, or unprofitable; (h) the time
required to complete the construction or redevelopment of a project or to lease-up the completed project may be greater than
originally anticipated, thereby adversely affecting Choice Properties’ cash flows and liquidity; (i) the cost and timely completion of
construction (including risks beyond Choice Properties’ control, such as weather, labour conditions or material shortages);
Management’s Discussion and Analysis
56 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
(j) contractor and subcontractor disputes, strikes, labour disputes or supply disruptions; (k) occupancy rates and rents of a
completed project may not be sufficient to make the project profitable; and (l) Choice Properties’ ability to dispose of properties
redeveloped with the intent to sell could be impacted by the ability of prospective buyers to obtain financing given the current
state of the credit markets.
The above risks could result in substantial unanticipated delays or expenses and, under certain circumstances, could prevent the
initiation of development activities or the completion of development activities once undertaken. In addition, development projects
entail risks that investments may not perform in accordance with expectations and can carry an increased risk of litigation (and its
accompanying risks) with contractors, subcontractors, suppliers, partners and others. Any failure by Choice Properties to develop
quality assets and effectively manage all development, redevelopment and major renovation initiatives may negatively impact the
reputation and financial performance of the Company.
PROPERTY VALUATION Choice Properties conducts a valuation assessment of its properties on a quarterly basis. As property
values fluctuate over time in response to market factors, or as underlying assumptions and inputs to the valuation model change,
the fair value of Choice Properties’ portfolio could change materially. Choice Properties is responsible for the reasonableness of the
assumptions and for the accuracy of the inputs into the property valuation model. Errors in the inputs to the valuation model or
inappropriate assumptions may result in an inaccurate valuation of the properties. In addition to a market activity report that is
tailored to Choice Properties’ portfolio, management uses the market information obtained in external appraisals, across multiple
firms, commissioned during the reporting period to assess whether changes to market-related assumptions are required for the
balance of the portfolio. Choice Properties is responsible for monitoring the value of its portfolio going forward and evaluating the
impact of any changes in property value over time. Any changes in the value of the properties may impact Unitholder value.
A publicly traded real estate investment trust will not necessarily trade at values determined solely by reference to the underlying
value of its real estate assets. Accordingly, the Units may trade at a premium or a discount to values implied by the above-
mentioned valuations.
CAPITALIZATION RATE RISK The property valuation process is dependent on several inputs, including the current market
capitalization rate. Risks associated with Choice Properties’ property valuation model include fluctuations in the current market
capitalization rate which can significantly impact the value of Choice Properties’ overall real estate portfolio. In addition, Choice
Properties is subject to certain financial and non-financial covenants in Choice Properties’ existing financial instruments that
include maintaining certain leverage ratios. Changes in the market capitalization rate could impact Choice Properties’ property
valuation which in turn could impact financial covenants.
ELECTRONIC COMMERCE AND DISRUPTIVE TECHNOLOGIES Loblaw’s e-commerce strategy is a growing business initiative.
Customers expect innovative concepts and a positive customer experience, including a user-friendly website, customer offerings
that are integrated with Loblaw’s loyalty program, reliable data, safe and reliable processing of payments and a well-executed
merchandise pick up or delivery process. If systems are damaged or cease to function properly, capital investment may be required.
Loblaw is also vulnerable to various additional uncertainties associated with e-commerce including website downtime and other
technical failures, changes in applicable federal and provincial regulations, security breaches, and consumer privacy concerns. If
these technology-based systems and related processes do not function effectively, or if Loblaw is unable to identify and adapt to
technological efficiencies, such as artificial/cognitive intelligence or automation in a timely manner, Loblaw’s ability to grow its e-
commerce business could be adversely affected. Loblaw has increased its investment in improving the digital customer experience,
but there can be no assurances that Loblaw will be able to recover the costs incurred to date.
A large portion of Choice Properties’ existing real estate portfolio is comprised of necessity-based retail tenants. Shifting consumer
preferences toward e-commerce may result in a decrease in the demand for physical space by retail tenants. The failure of Choice
Properties to adapt to changes in the retail landscape, including finding new tenants to replace any lost income stream from
existing tenants that reduce the amount of physical space they rent from Choice Properties, could adversely affect Choice
Properties’ operations or financial performance.
REGULATORY COMPLIANCE The Company is subject to a wide variety of laws, regulations and orders across all countries in which
it does business, including those laws involving product liability, labour and employment, anti-trust and competition, pharmacy,
food safety, intellectual property, privacy, environmental and other matters.
The Company is subject to taxation by various taxation authorities in Canada and a number of foreign jurisdictions. Changes to any
of the laws, rules, regulations or policies applicable to the Company’s business, including tax laws, minimum wage laws, and laws
affecting the production, processing, preparation, distribution, packaging and labelling of food, pharmaceuticals and general
merchandise products, could adversely affect the operations, financial condition or performance of the Company.
Failure by the Company to comply with applicable laws, regulations and orders could subject the Company to civil or regulatory
actions, investigations or proceedings, including fines, assessments, injunctions, recalls or seizures, which in turn could adversely
affect the reputation, operations or financial condition or performance of the Company. In the course of complying with changes to
laws, the Company could incur significant costs. Changing laws or interpretations of such laws or enhanced enforcement of existing
laws could restrict the Company’s operations or profitability and thereby threaten the Company’s competitive position and ability to
efficiently conduct business.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 57
The Company is subject to tax audits from various tax authorities on an ongoing basis. As a result, from time to time, tax authorities
may disagree with the positions and conclusions taken by the Company in its tax filings or legislation could be amended or
interpretations of current legislation could change, any of which events could lead to reassessments.
Loblaw is subject to capital requirements from OSFI, the primary regulator of PC Bank. PC Bank’s capital management objectives
are to maintain a consistently strong capital position while considering the economic risks generated by its credit card receivables
portfolio and to meet all regulatory capital requirements as defined by OSFI. PC Bank uses Basel III as its regulatory capital
management framework which includes a target common equity Tier 1 capital ratio of 7.0%, a Tier 1 capital ratio of 8.5% and a total
capital ratio of 10.5%. In addition to the regulatory capital ratios requirement, PC Bank is subject to the Basel III Leverage ratio and
OSFI’s Guideline on Liquidity Adequacy Requirements (“LARs”). The LARs guideline establishes standards based on the Basel III
framework. PC Bank would be assessed fines and other penalties for non-compliance with these and other regulations. In addition,
failure by PC Bank to comply, understand, acknowledge and effectively respond to applicable regulations could result in regulatory
intervention and reputational damage.
Choice Properties is currently classified as a “unit trust” and a “mutual fund trust” under the Income Tax Act (Canada). It also
qualifies for the Real Estate Investment Trust Exception under the Income Tax Act (Canada) and as such is not subject to specified
investment flow-through rules. There can be no assurance that the Canadian federal income tax laws will not be changed in a
manner which adversely affects Choice Properties. If Choice Properties ceases to qualify for these and other classifications and
exceptions, the taxation of Choice Properties and Unitholders, including the Company, could be materially adversely different in
certain respects, which could in turn materially adversely affect the trading price of the Trust Units.
COLLEAGUE ATTRACTION, DEVELOPMENT AND SUCCESSION PLANNING The Company’s operations and continued growth are
dependent on its ability to hire, retain and develop colleagues, including leaders. Any failure to effectively attract and retain
colleagues and leaders, including those with scarce and/or specialized skills, and to establish adequate leadership succession
planning, could result in a lack of requisite knowledge, skill and experience. This could erode the Company’s competitive position or
result in increased costs due to the competition for, or high turn-over of, colleagues. Any of the foregoing could negatively affect the
Company’s ability to operate its business, which in turn could adversely affect the Company’s reputation, operations or financial
performance.
ASSET MANAGEMENT Certain significant expenditures, including property taxes, maintenance costs, debt service payments,
insurance costs and related charges, must be made throughout the period of ownership of real property, regardless of whether the
property is producing sufficient income to pay such expenses. In order to retain desirable rentable space, increase tenant demand
and to generate adequate revenue over the long-term, Choice Properties must maintain or, in some cases, improve each property’s
condition to meet market demand. Property management services, including lease management and facility repairs and
maintenance must be executed in a timely and cost-effective manner. Maintaining a rental property in accordance with market
standards can entail significant costs, which Choice Properties may not be able to recover from its tenants. All the Loblaw leases
contain exclusions on certain operating costs and/or property tax recoveries. In addition, property tax reassessments based on
updated appraised values may occur, which Choice Properties may not be able to recover from its tenants. As a result, Choice
Properties may bear the economic cost of such operating costs and/or property taxes which may adversely impact the financial
condition and results of operations and decrease the amount of cash available for distribution to Unitholders. Numerous factors,
including the age of the relevant building, the materials used at the time of construction or currently unknown building code
violations could result in substantial unbudgeted costs for refurbishment or modernization. In addition, the timing and amount of
capital expenditures may indirectly affect the amount of cash available for distribution to Unitholders. Distributions may be
reduced, or even eliminated, at times when Choice Properties deems it necessary to make significant capital or other expenditures.
If the actual costs of maintaining or upgrading a property exceed Choice Properties’ estimates, or if hidden defects are discovered
during maintenance or upgrading which are not covered by insurance or contractual warranties, additional and unexpected costs
may be incurred. If similar properties located in the vicinity of one of the properties in Choice Properties’ portfolio are substantially
refurbished and the property is not similarly refurbished, the net operating income derived from, and the value of, such property
could be reduced. Any failure by Choice Properties to undertake appropriate maintenance and refurbishment work in response to
the factors described above could adversely affect the rental income that is earned from such properties. Any such event could
have a material adverse effect on Choice Properties’ business, cash flows, financial condition or results of operations and its ability to
make distributions to Unitholders.
In addition, a failure by Choice Properties to allocate operational capital adequately could negatively impact occupancy levels,
attraction of high-quality tenants and lease renewals, which could have a material adverse effect on Choice Properties’ operations
and financial performance.
Management’s Discussion and Analysis
58 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
COMPETITIVE ENVIRONMENT AND STRATEGY The Company operates in highly competitive industries.
Loblaw competes against a wide variety of retailers including supermarket and retail drug store operators, as well as mass
merchandisers, warehouse clubs, online retailers, mail order prescription drug distributors, limited assortment stores, discount
stores, convenience stores and specialty stores. Many of these competitors offer a selection of food, drug and general merchandise,
while others remain focused on supermarket-type merchandise. In addition, Loblaw is subject to competitive pressures from new
entrants into the marketplace and from the expansion or renovation of existing competitors, particularly those expanding into the
grocery and retail drug markets and those offering e-commerce retail platforms. Loblaw’s loyalty program is a valuable offering to
customers and provides a key differentiating marketing tool for the business. The marketing, promotional and other business
activities related to Loblaw’s loyalty program must be well managed and coordinated to preserve positive customer perception.
Loblaw has made significant investments in support of its strategic growth areas of Everyday Digital Retail, Payments and Rewards
and Connected Healthcare, which are all subject to competitive pressures. Failure to achieve these or other strategic priorities could
adversely affect the Company’s financial position and its competitiveness.
Loblaw’s inability to effectively predict market activity, leverage customer preferences and spending patterns and respond in a
timely manner to trends, or compete effectively with its current or future competitors could result in, among other things, reduced
market share and reduced profitability. If Loblaw is ineffective in responding to consumer trends or in executing its strategic plans,
its financial performance could be adversely affected. Loblaw’s failure to effectively respond to customer trends may adversely
impact Loblaw’s relationship with its customers. Loblaw closely monitors market developments and market share trends.
Choice Properties competes with other investors, developers, managers and owners of properties in seeking tenants and for the
purchase and development of desirable real estate properties. Competitors may have newer or better located properties, greater
financial or other resources, or greater operating flexibility than Choice Properties. An increase in the availability of funds for
investment or an increase in interest in real estate property investments may increase the competition for real estate property
investments, thereby increasing purchase prices and reducing the yield on the investment. Increased competition to lease
properties could adversely impact Choice Properties’ ability to find suitable tenants at the appropriate rent and may negatively
impact the financial performance of Choice Properties.
Failure by Loblaw or Choice Properties to sustain their competitive position could adversely affect the Company’s financial
performance.
FOOD, DRUG, PRODUCT AND SERVICES SAFETY Loblaw’s products may expose it to risks associated with product safety and
defects and product handling in relation to the manufacturing, design, packaging and labeling, storage, distribution, and display of
products. Loblaw cannot be certain that active management of these risks, including maintaining strict and rigorous controls and
processes in its manufacturing facilities and distribution systems, will eliminate all the risks related to food and product safety.
Loblaw could be adversely affected in the event of a significant outbreak of food-borne illness or food safety issues, including food
tampering or contamination. In addition, failure to trace or locate any contaminated or defective products could affect Loblaw’s
ability to be effective in a recall situation. Loblaw is also subject to risk associated with the distribution of drug products, errors
related to medication dispensing or compounding, injections, patient services or consultation. The occurrence of such events or
incidents, as well as any failure to maintain the cleanliness and health standards at Loblaw’s store level, could result in harm to
customers and negative publicity, could adversely affect the Company’s brands, reputation, operations or financial performance
and could lead to unforeseen liabilities from legal claims or otherwise.
LABOUR RELATIONS Loblaw’s workforce is comprised of both unionized and non-unionized colleagues. With respect to those
colleagues that are covered by collective agreements, there can be no assurance as to the outcome of any labour negotiations or
the timing of their completion. Renegotiating collective agreements or the failure to successfully renegotiate collective agreements
and changes to business operations could result in strikes, work stoppages or business interruptions, and if any of these events
were to occur, they could adversely affect the reputation, operations and financial performance of Loblaw and the financial
performance of the Company. If non-unionized colleagues become unionized, the terms of the resulting collective agreements
would have implications for the affected operations, such as higher labour costs.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 59
ENVIRONMENTAL AND SOCIAL The Company and its operating segments are committed to creating positive environmental and
social change by focusing on issues that matter most to the Company’s customers, employees, communities and other
stakeholders, with a particular focus on combatting climate change and advancing social equity. Any failure or perceived failure to
advance the environmental or social priorities of the Company or its stakeholders may negatively affect the Company’s reputation,
operations or financial performance.
Environmental
The Company and its operating segments face environmental risks that could, directly or indirectly, negatively impact the
Company’s reputation, operations or performance over the short or long-term.
In particular, the Company and its operating segments are confronted with issues relating to climate change. The Company has the
opportunity to make a significant positive impact on the environment. To address this opportunity, the Company and its operating
segments are focused on several strategic initiatives, including reducing emissions, food and plastic waste. Federal and provincial
governments are also striving to combat climate change, including through the consideration and/or implementation of carbon
reduction targets and financial mechanisms to reduce carbon emissions, such as carbon taxes, carbon pricing and caps and trade.
In addition to its own initiatives, the Company and its operating segments may be required to make operational changes and/or
incur significant financial costs to comply with the various governmental reforms, which may differ across jurisdictions. Additionally,
certain global climate change patterns (e.g. rising sea levels, changing rainfall) may impact sourcing of food and food ingredients.
Any failure to meet its strategic objectives, adhere to climate change reforms or to adapt to the impacts of climate change, such as
failure to reduce emissions, eliminate food and plastic waste or mitigate sourcing and supply chain disruptions, could result in fines
or could adversely affect the Company’s reputation, operations or financial performance.
The Company and its operating segments maintain a portfolio of real estate and other facilities and are subject to environmental
risks associated with the contamination of such properties and facilities, whether by previous owners or occupants, neighbouring
properties or by the Company itself. In particular, Loblaw has a number of underground fuel storage tanks, the majority of which are
used for its supply chain transport fleets. Contamination resulting from leaks from these tanks is possible. Additional environmental
issues relating to matters or sites may require the Company to incur significant additional costs. Loblaw also operates refrigeration
equipment in its stores and distribution centres to preserve perishable products as they pass through the supply chain and
ultimately to consumers. These systems contain refrigerant gases which could be released if equipment fails or leaks. A release of
these gases could have adverse effects on the environment. Failure to properly manage any of these environmental risks could
adversely affect the reputation, operations or financial performance of the Company.
Loblaw is subject to legislation that imposes liabilities on retailers, brand owners and importers for costs associated with recycling
and disposal of consumer goods packaging and printed materials distributed to consumers. There is a risk that the Company will be
subject to increased costs associated with these laws. In addition, the Company could be subject to increased or unexpected costs
associated with environmental incidents and the related remediation activities, including litigation and regulatory related costs, all
of which could adversely affect the reputation or financial performance of the Company.
Social
The Company and its operating segments face risks associated with social issues and have established certain priorities in response,
including achieving adequate representation of traditionally under-represented groups in management positions and the
colleague population as a whole, building a culture of inclusion and investing in communities, particularly by supporting women’s
and children’s health. In the event that the Company is not perceived to have robust diversity and inclusion programs, its ability to
attract, develop and retain colleagues could be compromised. The Company recognizes its responsibility to respect and protect the
human rights of all people who support and intersect with the business, and is committed to not tolerating abuse, discrimination or
harassment in any form. Ineffective action or inaction in response to social matters, including a failure or perceived failure to
adequately address its priorities, could adversely affect the Company’s reputation or financial performance.
BUSINESS CONTINUITY The Company’s ability to continue critical operations and processes could be negatively impacted by
adverse events resulting from various incidents, including severe weather, work stoppages, prolonged IT systems failure, terrorist
activity, power failures, border closures or a pandemic or other national or international catastrophe. The Company has business
continuity plans in place to manage any such events. Despite this, ineffective contingency planning, business interruptions, crises or
potential disasters could adversely affect the reputation, operations or financial performance of the Company.
Management’s Discussion and Analysis
60 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
LEGAL PROCEEDINGS In the ordinary course of business, the Company is involved in and potentially subject to legal proceedings.
The proceedings may involve suppliers, customers, patients, Associates, franchisees, regulators, tax authorities or other persons. The
potential outcome of legal proceedings and claims is uncertain.
Shoppers Drug Mart was previously served with an Amended Statement of Claim in a class action proceeding that has been filed
in the Ontario Superior Court of Justice (“Superior Court”) by licensed Associates, claiming various declarations and damages
resulting from Shoppers Drug Mart’s alleged breaches of the Associate Agreement. The class action comprises all of Shoppers Drug
Mart’s current and former licensed Associates residing in Canada, other than in Québec, who were parties to Shoppers Drug Mart’s
2002 and 2010 forms of the Associate Agreement. On July 9, 2013, the Superior Court certified as a class proceeding portions of the
action. A summary judgment trial of the matter was held in December 2022 and on February 17, 2023, the Superior Court released
its decision in relation to those summary judgment motions (the “Decision”). The Superior Court dismissed the plaintiffs’ claims on
the majority of the issues including a request for damages at this stage of proceedings. The Superior Court also held that Shoppers
Drug Mart breached the 2002 form of Associate Agreement when it did not remit certain amounts that it received from generic
drug manufacturers to Associates. On March 20, 2023, the plaintiffs filed a Notice of Appeal and on April 4, 2023, Loblaw filed a
Notice of Cross-Appeal. A hearing for the appeals was held on February 14, 2024 and on February 15, 2024. On August 29, 2024, the
Court of Appeal dismissed both the appeal and cross appeal, with the exception that the plaintiff’s appeal was allowed to correct
the amount Shoppers Drug Mart received in professional allowances during the class period. Accordingly, Loblaw has not recorded
any amounts related to the potential liability associated with this lawsuit. Loblaw does not believe that the ultimate resolution of
this matter will have a material adverse impact on its financial condition or prospects.
In 2017, the Company and Loblaw announced actions taken to address their role in an industry-wide price-fixing arrangement
involving certain packaged bread products. The arrangement involved the coordination of retail and wholesale prices of certain
packaged bread products over a period extending from late 2001 to March 2015. Under the arrangement, the participants regularly
increased prices on a coordinated basis. Class action lawsuits were commenced against the Company and Loblaw as well as a
number of other major grocery retailers and another bread wholesaler. 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 with the
lawyers representing consumers to settle those class action lawsuits for $500 million. The Company and Loblaw will each pay for a
portion of the settlement, with the Company paying $247 million and Loblaw paying $253 million. Loblaw will receive credit for the
$96 million it previously paid to customers in the form of Loblaw cards, resulting in it being required to pay $157 million in cash
towards the settlement. The Settlement Agreement is subject to the approval of the courts. In December 2019, a proposed class
action on behalf of independent distributors was commenced against the Company (the “ID Class Action”). It is too early to predict
the outcome of the ID Class Action but the Company does not believe that the ultimate resolution of such legal proceeding will
have a material adverse impact on its financial condition or prospects. As a result of admission of participation in the arrangement
and cooperation in the Competition Bureau’s investigation, the Company and Loblaw will not face criminal charges or penalties. In
response to such class action lawsuits, certain major grocery retailers have crossclaimed against the Company and Loblaw, and the
Company and Loblaw believe such crossclaims are without merit.
In August 2018, the Province of British Columbia filed a class action against numerous opioid manufacturers and distributors,
including Loblaw and its subsidiaries, Shoppers Drug Mart Inc. and Sanis Health Inc. The claim contains allegations of breach of the
Competition Act, fraudulent misrepresentation and deceit and negligence, and seeks unquantified damages for the expenses
incurred by the federal government, provinces, and territories of Canada in paying for opioid prescriptions and other healthcare
costs related to opioid addiction and abuse in Canada. During the second quarter of 2021, the claim against Loblaw Companies
Limited was discontinued. In May 2019, two further opioid-related class actions were commenced in each of Ontario and Quebec
against a large group of defendants, including Sanis Health Inc. In February 2022, the plaintiff and Sanis Health Inc. agreed to settle
the Quebec action for a nominal amount, with no admission of liability and for the express purpose of avoiding the delays,
disruption, and expenses associated with the litigation. The settlement has been approved by the court and is now final. On
December 12, 2024, the Ontario action was dismissed against Sanis Health Inc., with costs. In December 2019, a further opioid-
related class action was commenced in British Columbia against a large group of defendants, including Sanis Health Inc., Shoppers
Drug Mart Inc. and Loblaw. The allegations in the civil British Columbia class action are similar to the allegations against
manufacturer defendants in the Province of British Columbia class action, except that the December 2019 claim seeks recovery of
damages on behalf of opioid users directly. In April 2021, Loblaw, Shoppers Drug Mart Inc. and Sanis Health Inc. were served with
another opioid-related class action that was started in Alberta against multiple defendants. The claim seeks damages on behalf of
municipalities and local governments in relation to public safety, social service, and criminal justice costs allegedly incurred due to
the opioid crisis. In September 2021, Loblaw, Shoppers Drug Mart Inc. and Sanis Health Inc. were served with a class action started in
Saskatchewan by Peter Ballantyne Cree Nation and Lac La Ronge Indian Band on behalf of all Indigenous, Metis, First Nation and
Inuit communities and governments in Canada to recover costs they have incurred as a result of the opioid crisis, including
healthcare costs, policing costs and societal costs. In October 2024, the claim was discontinued against Shoppers Drug Mart Inc. In
January 2024, Shoppers Drug Mart Inc. was served with a second class action in Saskatchewan started by Lac La Ronge Indian
Band. The case is brought on behalf of Band members and is claiming damages relating to abatement costs, the diversion of
financial and other resources, the reduction in the value of the reserve lands and interests, and lost tax revenues. Shoppers Drug
Mart Inc. is being sued as a representative of an international defendant subclass of opioid “dealers” and Sanis Health Inc. is a
proposed supplier class member. Loblaw believes these proceedings are without merit and is vigorously defending them. Loblaw
does not currently have any significant accruals or provisions for these matters recorded in the consolidated financial statements.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 61
In 2022, the Tax Court released a decision relating to 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 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 addition, $10 million was recorded related to interest income on cash
tax refunds. Certain taxation years subsequent to the periods covered by the FCA decision remain under review by the tax
authorities.
CHANGE MANAGEMENT, PROCESS AND EFFICIENCY Many initiatives are underway to reduce the complexity and cost of the
Company’s business operations, ensuring a low cost operating structure that allows for continued investments in the Company’s
strategic growth areas. These efforts include initiatives focused on improving processes and generating efficiencies across the
Company’s administrative, store and distribution network infrastructures. The success of these initiatives is dependent on effective
leadership and realizing intended benefits. Ineffective change management could result in a lack of integrated processes and
procedures, unclear accountabilities and decision-making rights, decreased colleague engagement, ineffective communication
and training or a lack of requisite knowledge. Any of the foregoing could disrupt operations, increase the risk of customer
dissatisfaction, adversely affect the Company’s reputation or financial performance or adversely affect the ability of the Company to
implement and achieve its long-term strategic objectives.
FRANCHISEE RELATIONSHIPS Loblaw has entered into agreements with third party franchisees that permit the franchisees to
own and operate retail stores in accordance with prescribed procedures and standards. A substantial portion of Loblaw’s revenues
and earnings comes from amounts paid by franchisees in connection with their store operations and leased property. Franchisees
are independent operators and their operations may be negatively affected by factors beyond Loblaw’s control. If franchisees do not
operate their stores in accordance with Loblaw’s standards or otherwise in accordance with good business practices, franchisee
fees and rent paid to Loblaw could be negatively affected, which in turn could adversely affect the Company’s reputation,
operations or financial performance. In addition, the Company’s reputation could be harmed if a significant number of franchisees
were to experience operational failures, health and safety exposures or were unable to pay Loblaw for products, fees or rent.
Loblaw’s franchise system is also subject to franchise legislation enacted by a number of provinces. Any new legislation or failure to
comply with existing legislation could adversely affect operations and could add administrative costs and burdens, any of which
could affect Loblaw’s relationship with its franchisees.
Supply chain or system changes by Loblaw could cause or be perceived to cause disruptions to franchised store operations and
could result in negative effects on the financial performance of franchisees. Relationships with franchisees could pose significant
risks if they are disrupted, which could adversely affect the reputation, operations or financial performance of the Company.
SERVICE PROVIDERS The Company has a wide range of key business relationships with third parties including vendors, suppliers,
distributors and contractors. The Company relies on vendors, including offshore vendors in both mature and developing markets, to
provide the Company with goods and services. Offshore sourcing increases certain risks to the Company, including risks associated
with food safety and general merchandise product defects, non-compliance with ethical and safe business practices and
inadequate supply of products. The Company has no direct influence over how vendors are managed. Negative events affecting
vendors or inefficient, ineffective or incomplete vendor management strategies, policies and/or procedures, including those related
to ethical sourcing, could adversely impact the Company’s reputation and impair the Company’s ability to meet customer needs or
control costs and quality, which could adversely affect the reputation, operations or financial performance of the Company.
Loblaw relies on service providers including transport carriers or other delivery service providers, logistic service providers and
operators of warehouses and distribution facilities. Ineffective selection, contractual terms or relationship management could
impact Loblaw’s ability to source products (both national brand and control brand products), to have products available for
customers, to market to customers or to operate efficiently and effectively. Disruption in services from suppliers could interrupt the
delivery of merchandise to stores or customers, which in turn could adversely affect the operations or financial performance of the
Company.
PC Bank uses third party service providers to process credit card transactions, operate call centres and operationalize certain risk
management strategies for the PC® Mastercard® and PC Money Account. A significant disruption in the services provided by third
party service providers could adversely affect the financial performance of PC Bank and the Company.
The Company has outsourced certain administrative functions of its business to service providers including account payments,
payroll services, IT support, investment management and custodial relationships, and benefit plan administration. Any disruption in
the services provided by these suppliers could adversely affect the return on these assets or liquidity of the Company.
Management’s Discussion and Analysis
62 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
EXECUTION OF STRATEGIC INITIATIVES The Company undertakes from time to time acquisitions and dispositions that meet its
strategic objectives. The Company holds cash and short-term investments and is continuing to evaluate strategic opportunities for
the use or deployment of these funds. The use or deployment of the funds and the execution of the Company’s capital plans could
pose a risk if they do not align with the Company’s strategic objectives or if the Company experiences integration difficulties on the
acquisition of any businesses. Execution of the strategic plan requires prudent operational planning, availability and attention of key
personnel, timely implementation and effective change management. In addition, the Company may not be able to realize upon
the synergies, business opportunities and growth prospects expected from any such investment opportunities or from the
execution of the Company’s strategies. Finally, any acquisition or divestiture activities may present unanticipated costs and
managerial and operational risks, including the diversion of management’s time and attention from day-to-day activities. If the
Company’s strategies are not effectively developed and executed, it could negatively affect the reputation, operations or financial
performance of the Company.
8.2
Financial Risks and Risk Management
FINANCIAL RISKS The Company is exposed to a number of financial risks, including those associated with financial instruments,
which have the potential to affect its operating and financial performance. The Company uses OTC derivative instruments to offset
certain of these risks. Policies and guidelines prohibit the use of any derivative instrument for trading or speculative purposes. The
fair value of derivative instruments is subject to changing market conditions which could adversely affect the financial performance
of the Company.
The following is a summary of the Company’s financial risks which are discussed in detail below:
Liquidity
Trust Unit Prices
Commodity Prices
Interest Rates
Currency Exchange Rates
Credit Ratings
Credit
LIQUIDITY Liquidity risk is the risk that the Company is unable to generate or obtain sufficient cash or its equivalents in a cost
effective manner to fund its obligations as they come due. The Company is exposed to liquidity risk through, among other areas,
PC Bank, which requires a reliable source of funding for its credit card business. PC Bank relies on its securitization programs,
demand deposits from customers and the acceptance of GIC deposits to fund the receivables of its credit cards. The Company
would experience liquidity risks if it fails to maintain appropriate levels of cash and short-term investments, is unable to access
sources of funding or fails to appropriately diversify sources of funding. If any of these events were to occur, they could adversely
affect the financial performance of the Company.
Liquidity risk is mitigated by maintaining appropriate levels of cash and cash equivalents and short-term investments, actively
monitoring market conditions, and by diversifying sources of funding, including the Company’s committed credit facilities, and
maintaining a well-diversified maturity profile of debt and capital obligations.
COMMODITY PRICES Loblaw is exposed to increases in the prices of commodities in operating its stores and distribution networks,
as well as to the indirect effect of changing commodity prices on the price of consumer products. Rising commodity prices could
adversely affect the financial performance of Loblaw. To manage a portion of this exposure, Loblaw uses purchase commitments
and derivative instruments in the form of exchange traded futures contracts and forward contracts to minimize cost volatility
related to commodities.
CURRENCY EXCHANGE RATES The Company is exposed to foreign currency exchange rate variability, primarily on its U.S. dollar
denominated purchases in trade payables and other liabilities. A depreciating Canadian dollar relative to the U.S. dollar will have a
negative impact on year-over-year changes in reported operating income and net earnings, while an appreciating Canadian dollar
relative to the U.S. dollar will have the opposite impact. To manage a portion of this exposure, the Company uses derivative
instruments in the form of futures contracts and forward contracts to minimize cost volatility related to foreign exchange.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 63
CREDIT The Company is exposed to credit risk resulting from the possibility that counterparties could default on their financial
obligations to the Company, including derivative instruments, cash and cash equivalents, short-term investments, security deposits,
PC Bank’s credit card receivables, Loblaw’s finance lease receivable, pension assets held in the Company’s defined benefit plans and
Loblaw’s accounts receivable, including amounts due from government and third-party drug plans arising from prescription drug
sales, independent accounts and amounts owed from vendors. Failure to manage credit risk could adversely affect the financial
performance of the Company.
The risk related to derivative instruments, cash and cash equivalents, short-term investments and security deposits is reduced by
policies and guidelines that require that the Company enters into transactions only with counterparties or issuers that have a
minimum long-term “A-” credit rating from a recognized credit rating agency and place minimum and maximum limits for
exposures to specific counterparties and instruments.
Choice Properties mitigates the risk of credit loss relating to rent receivables by evaluating the creditworthiness of new tenants,
obtaining security deposits wherever permitted by legislation, ensuring its tenant mix is diversified and limiting its exposure to any
one tenant, except Loblaw. Choice Properties establishes an allowance for expected credit losses with respect to rent receivables.
The allowance is determined on a tenant-by-tenant basis based on the specific factors related to the tenant.
PC Bank manages its credit card receivable risk by employing stringent credit scoring techniques, actively monitoring the credit
card portfolio and reviewing techniques and technology that can improve the effectiveness of the collection process. In addition,
these receivables are dispersed among a large, diversified group of credit card customers.
Loblaw’s finance lease receivable and Loblaw’s accounts receivable, including amounts due from governments and third-party
drug plans arising from prescription drug sales, independent accounts and amounts owed from vendors and tenants, are actively
monitored on an ongoing basis and settled on a frequent basis in accordance with the terms specified in the applicable
agreements.
Despite the mitigation strategies described above, it is possible that the Company’s financial performance could be negatively
impacted by the failure of a counterparty to fulfill its obligations.
TRUST UNIT PRICES The Company is exposed to market price risk from Choice Properties’ Trust Units that are 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 holders. The liability is recorded at fair value at each reporting period based on the market
price of Trust Units. The change in the fair value of the liability negatively impacts net earnings when the Trust Unit price increases
and positively impacts net earnings when the Trust Unit price declines.
INTEREST RATES The Company is exposed to interest rate risk from fluctuations in interest rates on its floating rate debt and from
the refinancing of existing financial instruments. An increase in interest rates could adversely affect the operations or financial
performance of the Company. The Company manages interest rate risk by monitoring the respective mix of fixed and floating rate
debt and by taking action as necessary to maintain an appropriate balance considering current market conditions, with the
objective of maintaining the majority of its debt at fixed interest rates.
CREDIT RATINGS Credit ratings assigned to the Company and any of its securities may be changed at any time based on the
judgment of the credit rating agencies and may also be impacted by a change in the credit rating of Loblaw, Choice Properties and
their respective affiliates. In addition, the Company, Loblaw, Choice Properties and their respective affiliates may incur additional
indebtedness in the future, which could impact current and future credit ratings. A reduction in credit ratings could materially
adversely affect the market value of the Company’s outstanding securities and the Company’s access to and cost of financing.
Management’s Discussion and Analysis
64 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
9.
Related Party Transactions
Galen G. Weston beneficially owns or controls, directly and indirectly, including through Wittington, a total of 76,697,812 of GWL’s
common shares, representing approximately 59.0% of GWL’s outstanding common shares (2023 – 58.0%).
Transactions between the Company and its consolidated entities have been eliminated on consolidation and are not disclosed
below.
In 2023, inventory purchases from Associated British Foods plc, a related party during 2023 by virtue of a common director of such
entity’s parent company and GWL’s parent company, amounted to $41 million. Associated British Foods plc was not a related party
of the Company during 2024.
VENTURE FUNDS During 2020, GWL, Loblaw and a wholly owned subsidiary of Wittington became limited partners in a limited
partnership formed by Wittington (“Venture Fund I”). A wholly owned subsidiary of Wittington is the general partner of Venture
Fund I, which hired an external fund manager to oversee it. The purpose of Venture Fund I is to pursue venture capital investing in
innovative businesses that are in technology-oriented companies at all stages of the start-up life cycle that operate in commerce,
healthcare, and food sectors and are based in North America. Each of the three limited partners have a 33% interest in Venture
Fund I. The Company has a consolidated capital commitment of $66 million over a 10-year period.
During 2022, Loblaw became a limited partner in another limited partnership formed by Wittington (“Venture Fund II”). A wholly
owned subsidiary of Wittington is also the general partner of Venture Fund II, and the purpose of Venture Fund II is consistent with
Venture Fund I. Loblaw has a 50% interest in Venture Fund II and has a total capital commitment of $60 million over a 10-year
period.
CO-INVESTMENT During 2024, GWL and two Wittington subsidiaries co-invested $14 million ($10 million USD) in a third-party
company, of which the Company contributed $6 million ($4 million USD).
POST-EMPLOYMENT BENEFIT PLANS The Company sponsors a number of post-employment plans, which are related parties.
Contributions made by the Company to these plans are disclosed in the notes to the consolidated financial statements.
INCOME TAX MATTERS From time to time, the Company and Wittington may enter into agreements to make elections that are
permitted or required under applicable income tax legislation with respect to affiliated corporations.
COMPENSATION OF KEY MANAGEMENT PERSONNEL The Company’s key management personnel is comprised of certain
members of the executive teams of GWL, Loblaw and Wittington, as well as members of the Boards of GWL, Loblaw and Wittington
to the extent that they have the authority and responsibility for planning, directing and controlling the day-to-day activities of the
Company.
Annual compensation of key management personnel that is directly attributable to the Company was as follows:
($ millions)
2024
2023(i)
Salaries, director fees and other short-term employee benefits
$
15
$
17
Equity-based compensation
12
13
Total compensation
$
27
$
30
(i)
Certain comparative figures have been restated to conform with current year presentation.
10.
Critical Accounting Estimates and Judgments
The preparation of the consolidated financial statements requires management to make estimates and judgments in applying the
Company’s accounting policies that affect the reported amounts and disclosures made in the consolidated financial statements
and accompanying notes.
Within the context of this MD&A, a judgment is a decision made by management in respect of the application of an accounting
policy, a recognized or unrecognized financial statement amount and/or note disclosure, following an analysis of relevant
information that may include estimates and assumptions. Estimates and assumptions are used mainly in determining the
measurement of balances recognized or disclosed in the consolidated financial statements and are based on a set of underlying
data that may include management’s historical experience, knowledge of current events and conditions and other factors that are
believed to be reasonable under the circumstances. Management continually evaluates the estimates and judgments it uses.
The following are the accounting policies subject to judgments and key estimation uncertainty that the Company believes could
have the most significant impact on the amounts recognized in the consolidated financial statements.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 65
BASIS OF CONSOLIDATION
Judgments Made in Relation to Accounting Policies Applied The Company uses judgment in determining the entities that it
controls and therefore consolidates. The Company controls an entity when the Company has the existing rights that give it the
current ability to direct the activities that significantly affect the entity’s returns. The Company consolidates all of its wholly owned
subsidiaries. Judgment is applied in determining whether the Company controls the entities in which it does not have ownership
rights or does not have full ownership rights. Most often, judgment involves reviewing contractual rights to determine if rights are
participating (giving power over the entity) or protective rights (protecting the Company’s interest without giving it power).
INVENTORIES
Key Estimations Inventories are carried at the lower of cost and net realizable value which requires the Company to utilize
estimates related to fluctuations in shrink, future retail prices, the impact of vendor rebates on cost, seasonality and costs necessary
to sell the inventory.
IMPAIRMENT OF NON-FINANCIAL ASSETS (GOODWILL, INTANGIBLE ASSETS, FIXED ASSETS AND RIGHT-OF-USE ASSETS)
Judgments Made in Relation to Accounting Policies Applied The Company uses judgment in determining cash generating units
(“CGUs”) for the purpose of testing fixed assets, right-of-use assets and intangible assets for impairment. Judgment is also used to
determine the goodwill CGUs for the purpose of testing goodwill for impairment. The Company has determined that each retail
location is a separate CGU. Intangible assets are allocated to the CGUs (or groups of CGUs) to which they relate. Goodwill is allocated
to CGUs (or groups of CGUs) based on the level at which management monitors goodwill, which cannot be higher than an
operating segment. The allocation of goodwill is made to CGUs (or groups of CGUs) that are expected to benefit from the synergies
and future growth of the business combination from which they arose. In addition, judgment is used to determine whether a
triggering event has occurred requiring an impairment test to be completed. In applying this judgment management considers
profitability of the CGU and other qualitative factors.
Key Estimations In determining the recoverable amount of a CGU or a group of CGUs, various estimates are employed. The
Company determines fair value less costs to sell using such estimates as market rental rates for comparable properties, discount
rates and capitalization rates. The Company determines value in use by using estimates including projected future sales and
earnings, and discount rates consistent with external industry information reflecting the risk associated with the specific cash flows.
IMPAIRMENT OF CREDIT CARD RECEIVABLES
Judgments Made in Relation to Accounting Policies Applied and Key Estimations In each stage of the expected credit loss
(“ECL”) model, impairment is determined based on the probability of default, loss given default, and expected exposures at default
on drawn and undrawn exposures on credit card receivables. The application of the ECL model requires management to apply the
following significant judgments, assumptions and estimations:
•
Movement of impairment measurement between the three stages of the ECL model, based on the assessment of the increase
in credit risks on credit card receivables. The assessment of changes in credit risks includes qualitative and quantitative factors
of the accounts, such as historical credit loss experience and external credit scores;
•
Thresholds for significant increase in credit risk based on changes in probability of default over the expected life of the
instrument relative to initial recognition; and
•
Forecasts of future economic conditions, namely the unemployment rate. Management uses an average of unemployment
rate forecasts published by major Canadian Chartered Banks and the Conference Board of Canada to establish the base case
scenario and other representative ranges of possible forecast scenarios.
CUSTOMER LOYALTY AWARDS PROGRAM
Key Estimations The Company defers revenue at the time the award is earned by members based on the relative fair value of the
award. The relative fair value is determined by allocating consideration between the fair value of the loyalty awards earned by
loyalty program members, net of breakage, and the goods and services on which the awards were earned, based on their relative
stand-alone selling price. The estimated fair value per point for the PC Optimum loyalty program is determined based on the
program reward schedule and is $1 for every 1,000 points earned. The breakage rate of the program is an estimate of the amount of
points that will never be redeemed. The rate is reviewed on an ongoing basis and is estimated utilizing historical redemption
activity and anticipated earn and redeem behaviour of members. In 2024, Loblaw recorded a charge of $129 million. This charge
represents the revaluation of the loyalty liability for outstanding points.
FAIR VALUE OF INCOME PRODUCING PROPERTIES
Key Estimations The fair value of income producing properties is dependent on significant assumptions related to discount rates
and terminal capitalization rates, and other assumptions related to the future cash flows over the holding period. The review of
future cash flows involves assumptions relating to market rents, as well as current leasing and/or development activity, renewal
probability, downtime on lease expiry, vacancy allowances, and expected maintenance costs. In addition to reviewing future cash
flows, management assesses changes in the business climate and other factors, which may affect the ultimate value of the
property. These assumptions may not ultimately be achieved.
Management’s Discussion and Analysis
66 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
INCOME AND OTHER TAXES
Judgments Made in Relation to Accounting Policies Applied The calculation of current and deferred income taxes requires
management to make certain judgments including expectations about future operating results, the timing and reversal of
temporary differences, and the interpretation of tax rules in jurisdictions where the Company performs activities. Where the
amount of tax payable or recoverable is uncertain, the Company establishes provisions based on the most likely amount of the
liability or recovery.
PROVISIONS
Judgments Made in Relation to Accounting Policies Applied and Key Estimations The recording of provisions requires
management to make certain judgments regarding whether there is a present legal or constructive obligation as a result of a past
event, it is probable that the Company will be required to settle the obligation and if a reliable estimate of the amount of the
obligation can be made. The Company has recorded provisions primarily in respect of self-insurance and legal claims. The Company
reviews the merits, risks and uncertainties of each provision, based on current information, and the amount expected to be required
to settle the obligation. Provisions are reviewed on an ongoing basis and are adjusted accordingly when new facts and events
become known to the Company.
LEASES
Judgments Made in Relation to Accounting Policies Applied Management exercises judgment in determining the appropriate
lease term on a lease by lease basis. Management considers all facts and circumstances that create an economic incentive to
exercise a renewal option or to not exercise a termination option including investments in major leaseholds, store performances,
past business practice and the length of time remaining before the option is exercisable. The periods covered by renewal options
are only included in the lease term if management is reasonably certain to renew. Management considers reasonably certain to be
a high threshold. Changes in the economic environment or changes in the retail industry may impact management’s assessment
of lease terms, and any changes in management’s estimate of lease terms may have a material impact on the Company’s
consolidated balance sheets and statements of earnings.
Key Estimations In determining the carrying amount of right-of-use assets and lease liabilities, the Company is required to
estimate the incremental borrowing rate specific to each leased asset or portfolio of leased assets if the interest rate implicit in the
lease is not readily determined. Management determines the incremental borrowing rate using a base risk-free interest rate
estimated by reference to the Government of Canada bond yield with an adjustment that reflects the Company’s credit rating, the
security, lease term and value of the underlying leased asset, and the economic environment in which the leased asset operates.
The incremental borrowing rates are subject to change due to changes in the business and macroeconomic environment.
11.
IFRS Accounting Standards and Amendments
Amendments to IFRS 9 and IFRS 7 In May 2024, amendments to IFRS 9, “Financial Instruments” (“IFRS 9”) and IFRS 7, “Financial
Instruments: Disclosures” (“IFRS 7”) were issued. The amendments clarify the timing of recognition and derecognition for a financial
asset or financial liability, including clarifying that a financial liability is derecognized on the settlement date. In addition to these
clarifications, the amendments introduce an accounting policy choice to derecognize financial liabilities settled using an electronic
payment system before the settlement date, if specific conditions are met. Also included in the amendments, are clarifications
regarding the classification of financial assets, including those with features linked to environmental, social and corporate
governance. Under the amendments, additional disclosures are required for financial instruments with contingent features and
investments in equity instruments classified at fair value through other comprehensive income. These amendments are effective
for annual reporting periods beginning on or after January 1, 2026. Early adoption is permitted, with an option to early adopt only
the amendments to the classification of financial assets. The adoption is not expected to have a material impact on the Company’s
consolidated financial statements.
Amendments to IFRS 9 and IFRS 7 In December 2024, amendments to IFRS 9 and IFRS 7 were issued to enhance the
transparency of nature-dependent electricity contracts. The amendments allow a company to apply an own-use exemption to
certain power purchase agreements if certain requirements are met. The amendments require further disclosure where an own-
use exemption is applied regarding the contractual features exposing the company to variability in electricity volume and risk of
oversupply, unrecognized contractual commitments and the effect of the contracts on an entity’s financial performance. The
amendments are effective for annual reporting periods beginning on or after January 1, 2026. The Company is currently assessing
the impact of these amendments.
IFRS 18 In April 2024, IFRS 18, “Presentation and Disclosure in Financial Statements” was issued to achieve comparability of the
financial performance of similar entities. The standard, which replaces IAS 1 “Presentation of Financial Statements”, impacts the
presentation of primary financial statements and notes, including the statement of earnings where companies will be required to
present separate categories of income and expense for operating, investing, and financing activities with prescribed subtotals for
each new category. The standard will also require management-defined performance measures to be explained and included in a
separate note within the consolidated financial statements. The standard is effective for annual reporting periods beginning on or
after January 1, 2027, including interim financial statements, and requires retrospective application. The Company is currently
assessing the impact of the new standard.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 67
12.
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(i);
•
annual FFO(1) per unit diluted(i) 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(i) below 7.5x.
(i)
For more information on these measures see the 2024 Annual Report filed by Choice Properties, which is available on www.sedarplus.ca or at
www.choicereit.ca.
13.
Non-GAAP and Other Financial Measures
The Company uses non-GAAP and other financial measures and ratios in this document, such as: adjusted EBITDA and adjusted
EBITDA margin, adjusted net earnings attributable to shareholders of the Company, adjusted net earnings available to common
shareholders of the Company, adjusted diluted net earnings per common share, effect of consolidation, adjusted return on average
equity attributable to common shareholders of the Company, adjusted return on capital, GWL Corporate free cash flow, free cash
flow and Choice Properties Funds from Operations, among others. In addition to these items, the following measures are used by
management in calculating adjusted diluted net earnings per common share: adjusted operating income, adjusted net interest
expense and other financing charges, adjusted earnings before income taxes, adjusted income taxes and adjusted effective tax
rate. The Company believes these non-GAAP and other financial measures provide useful information to both management and
investors with regard to accurately assessing the Company’s financial performance and financial condition for the reasons outlined
below.
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.
Management’s Discussion and Analysis
68 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
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.
Quarters Ended
Dec. 31, 2024
Dec. 31, 2023
($ millions)
Loblaw
Choice
Properties
Effect of
consol
idation
-
GWL
Corporate
Consolidated
Loblaw
Choice
Properties
Effect of
consol
idation
-
GWL
Corporate
Consolidated
Net earnings (loss) attributable to
shareholders of the Company
$
674
$
(28)
Add (deduct) impact of the following:
Non-controlling interests
223
275
Income taxes
210
169
Net interest (income) expense and other
financing charges
(115)
660
Operating income
$
850 $
224 $
(83) $
1 $
992
$
941
$
191 $
(45) $
(11) $
1,076
Add (deduct) impact of the following:
PC Optimum loyalty program
$
129 $
— $
— $
— $
129
$
— $
— $
— $
— $
—
Amortization of intangible assets acquired
with Shoppers Drug Mart and Lifemark
115
—
—
—
115
115
—
—
—
115
Fair value adjustment of investment in
real estate securities
—
36
—
—
36
—
(27)
—
—
(27)
Fair value write-down related to sale of
Wellwise
23
—
—
—
23
—
—
—
—
—
Fair value adjustment on investment
properties
—
(14)
35
—
21
—
74
(40)
—
34
Fair value adjustment on non-operating
properties
3
—
—
—
3
9
—
—
—
9
Gain on sale of non-operating properties
(3)
—
—
—
(3)
—
—
(1)
—
(1)
Fair value adjustment of derivatives
—
—
—
—
—
14
—
—
—
14
Recovery related to PC Bank commodity
tax matter
—
—
—
—
—
(13)
—
—
—
(13)
Adjusting items
$
267 $
22 $
35 $
— $
324
$
125 $
47 $
(41) $
— $
131
Adjusted operating income
$
1,117 $
246 $
(48) $
1 $
1,316
$ 1,066 $
238 $
(86) $
(11) $
1,207
Depreciation and amortization excluding the
impact of the above adjustment(i)
579
1
(82)
—
498
565
—
(78)
—
487
Adjusted EBITDA
$ 1,696 $
247 $
(130) $
1 $
1,814
$
1,631 $
238 $
(164) $
(11) $
1,694
(i)
Depreciation and amortization for the calculation of adjusted EBITDA excludes amortization of intangible assets acquired with Shoppers Drug
Mart and Lifemark, recorded by Loblaw.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 69
Years Ended
Dec. 31, 2024
Dec. 31, 2023
($ millions)
Loblaw
Choice
Properties
Effect of
consol
idation
-
GWL
Corporate
Consolidated
Loblaw
Choice
Properties
Effect of
consol
idation
-
GWL
Corporate
Consolidated
Net earnings attributable to shareholders
of the Company
$
1,359
$
1,540
Add impact of the following:
Non-controlling interests
1,137
1,085
Income taxes
908
849
Net interest expense and other
financing charges
972
889
Operating income
$ 3,894 $ 1,080 $
(320) $
(278) $
4,376
$ 3,696 $
1,001 $
(284) $
(50) $
4,363
Add (deduct) impact of the following:
PC Optimum loyalty program
$
129 $
— $
— $
— $
129
$
— $
— $
— $
— $
—
Amortization of intangible assets acquired
with Shoppers Drug Mart and Lifemark
499
—
—
—
499
499
—
—
—
499
Fair value adjustment of investment in
real estate securities
—
36
—
—
36
—
64
—
—
64
Fair value write-down related to sale of
Wellwise
23
—
—
—
23
—
—
—
—
—
Fair value adjustment on investment
properties
—
(116)
121
—
5
—
(128)
93
—
(35)
Fair value adjustment on non-operating
properties
3
—
—
—
3
9
—
—
—
9
Gain on sale of non-operating properties
(3)
—
—
—
(3)
(12)
—
(8)
—
(20)
Fair value adjustment of derivatives
(5)
—
—
—
(5)
16
—
—
—
16
(Recoveries) Charge related to PC Bank
commodity tax matters
(155)
—
—
—
(155)
24
—
—
—
24
Charges related to settlement of class
action lawsuits
164
—
—
256
420
—
—
—
—
—
Transaction costs and other related
recoveries
—
(39)
—
—
(39)
—
—
—
—
—
Adjusting items
$
655 $
(119) $
121 $
256 $
913
$
536 $
(64) $
85 $
— $
557
Adjusted operating income
$ 4,549 $
961 $
(199) $
(22) $
5,289
$ 4,232 $
937 $
(199) $
(50) $
4,920
Depreciation and amortization excluding the
impact of the above adjustment(i)
2,467
4
(362)
3
2,112
2,407
3
(380)
3
2,033
Adjusted EBITDA
$ 7,016 $
965 $
(561) $
(19) $
7,401
$ 6,639 $
940 $
(579) $
(47) $
6,953
(i)
Depreciation and amortization for the calculation of adjusted EBITDA excludes amortization of intangible assets acquired with Shoppers Drug
Mart and Lifemark, recorded by Loblaw.
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.
Management’s Discussion and Analysis
70 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
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 released a decision relating to 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 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 $39 million that was determined to be no longer required.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 71
ADJUSTED NET INTEREST EXPENSE AND OTHER FINANCING CHARGES The Company believes adjusted net interest expense and
other financing charges is useful in assessing the ongoing net financing costs of the Company.
The following table reconciles adjusted net interest expense and other financing charges to GAAP net interest expense and other
financing charges reported for the periods ended as indicated.
($ millions)
Quarters Ended
Years Ended
Dec. 31, 2024
Dec. 31, 2023
Dec. 31, 2024
Dec. 31, 2023
Net interest (income) expense and other financing
charges
$
(115)
$
660
$
972
$
889
Add (deduct) impact of the following:
Fair value adjustment of the Trust Unit liability
399
(382)
164
231
Recovery related to PC Bank commodity tax matter
—
—
10
—
Adjusted net interest expense and other financing
charges
$
284
$
278
$
1,146
$
1,120
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, $10 million was recorded related to interest
income on cash tax refunds on the PC Bank commodity tax matter discussed above.
ADJUSTED INCOME TAXES AND ADJUSTED EFFECTIVE TAX RATE The Company believes the adjusted effective tax rate
applicable to adjusted earnings before taxes is useful in assessing the underlying operating performance of its business.
The following table reconciles the effective tax rate applicable to adjusted earnings before taxes to the GAAP effective tax rate
applicable to earnings before taxes as reported for the periods ended as indicated.
($ millions except where otherwise indicated)
Quarters Ended
Years Ended
Dec. 31, 2024
Dec. 31, 2023
Dec. 31, 2024
Dec. 31, 2023
Adjusted operating income(i)
$
1,316
$
1,207
$
5,289
$
4,920
Adjusted net interest expense and other financing
charges(i)
284
278
1,146
1,120
Adjusted earnings before taxes
$
1,032
$
929
$
4,143
$
3,800
Income taxes
$
210
$
169
$
908
$
849
Add (deduct) impact of the following:
Tax impact of items excluded from adjusted
earnings before taxes(ii)
67
75
235
178
Outside basis difference in certain Loblaw shares
8
16
(6)
(8)
Adjusted income taxes
$
285
$
260
$
1,137
$
1,019
Effective tax rate applicable to earnings before taxes
19.0%
40.6%
26.7%
24.4%
Adjusted effective tax rate applicable to adjusted
earnings before taxes
27.6%
28.0%
27.4%
26.8%
(i)
See reconciliations of adjusted operating income and adjusted net interest expense and other financing charges above.
(ii)
See the adjusted EBITDA table and the adjusted net interest expense and other financing charges table above for a complete list of items
excluded from adjusted earnings before taxes.
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 – $8 million) on temporary
differences in respect of GWL’s investment in certain Loblaw shares that are expected to reverse in the foreseeable future as a result
of GWL’s participation in Loblaw’s NCIB.
Management’s Discussion and Analysis
72 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
ADJUSTED NET EARNINGS AVAILABLE TO COMMON SHAREHOLDERS AND ADJUSTED DILUTED NET EARNINGS PER COMMON
SHARE The Company believes that adjusted net earnings available to common shareholders and adjusted diluted net earnings per
common share are useful in assessing the Company’s underlying operating performance and in making decisions regarding the
ongoing operations of its business.
The following table reconciles adjusted net earnings available to common shareholders of the Company and adjusted net earnings
attributable to shareholders of the Company to net earnings attributable to shareholders of the Company and then to net earnings
available to common shareholders of the Company reported for the periods ended as indicated.
($ millions except where otherwise indicated)
Quarters Ended
Years Ended
Dec. 31, 2024
Dec. 31, 2023
Dec. 31, 2024
Dec. 31, 2023
Net earnings (loss) attributable to shareholders of
the Company
$
674
$
(28)
$
1,359
$
1,540
Less: Prescribed dividends on preferred shares in
share capital
(10)
(10)
(44)
(44)
Net earnings (loss) available to common shareholders of
the Company
$
664
$
(38)
$
1,315
$
1,496
Less: Reduction in net earnings due to dilution
at Loblaw
(3)
(3)
(12)
(12)
Net earnings (loss) available to common shareholders
for diluted earnings per share
$
661
$
(41)
$
1,303
$
1,484
Net earnings (loss) attributable to shareholders of
the Company
$
674
$
(28)
$
1,359
$
1,540
Adjusting items (refer to the following table)
(249)
380
282
(29)
Adjusted net earnings attributable to shareholders
of the Company
$
425
$
352
$
1,641
$
1,511
Less: Prescribed dividends on preferred shares in
share capital
(10)
(10)
(44)
(44)
Adjusted net earnings available to common
shareholders of the Company
$
415
$
342
$
1,597
$
1,467
Less: Reduction in net earnings due to dilution
at Loblaw
(3)
(3)
(12)
(12)
Adjusted net earnings available to common
shareholders for diluted earnings per share
$
412
$
339
$
1,585
$
1,455
Diluted weighted average common shares outstanding
(in millions)
131.0
134.8
132.9
138.0
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 73
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.
Quarters Ended
Dec. 31, 2024
Dec. 31, 2023
Net Earnings Available
to Common Shareholders of the Company
Diluted
Ne
t Earnin
gs
Per Co
mmon Share ($)
Net (Loss) Earnings Available
to Common Shareholders of the Company
Diluted
Net Earni
ngs Per
Com
mon Sh
are ($)
($ millions except where otherwise
indicated)
Loblaw(i)
Choice
Properties
Effect of
consol
idation
-
GWL
Corporate
Consol
idated
-
Consol
idated
-
Loblaw(i)
Choice
Properties
Effect of
consol
idation
-
GWL
Corporate
Consol
idated
-
Consol
idated
-
As reported
$
245 $
792 $
(356) $
(17) $
664
$
5.05
$
285 $ (445) $
142 $
(20) $
(38)
$
(0.30)
Add (deduct) impact of the
following(ii):
PC Optimum loyalty program
$
49 $
— $
— $
— $
49
$
0.37
$
— $
— $
— $
— $
—
$
—
Amortization of intangible
assets acquired
with Shoppers Drug Mart
and Lifemark
44
—
—
—
44
0.34
45
—
—
—
45
0.33
Fair value adjustment of
investment in real estate
securities
—
36
(3)
—
33
0.25
—
(27)
2
—
(25)
(0.19)
Fair value write-down related
to sale of Wellwise
15
—
—
—
15
0.11
—
—
—
—
—
—
Fair value adjustment on
investment properties
—
(13)
30
—
17
0.13
—
73
(80)
—
(7)
(0.05)
Fair value adjustment on non-
operating properties
2
—
—
—
2
0.02
3
—
—
—
3
0.02
Gain on sale of non-operating
properties
(2)
—
—
—
(2)
(0.02)
—
—
(1)
—
(1)
(0.01)
Fair value adjustment of
derivatives
—
—
—
—
—
—
5
—
—
—
5
0.04
Recovery related to PC Bank
commodity tax matter
—
—
—
—
—
—
(6)
—
—
—
(6)
(0.04)
Fair value adjustment of the
Trust Unit liability
—
—
(399)
—
(399)
(3.04)
—
—
382
—
382
2.83
Outside basis difference in
certain Loblaw shares
—
—
—
(8)
(8)
(0.06)
—
—
—
(16)
(16)
(0.12)
Fair value adjustment on
Choice Properties’
Exchangeable Units
—
(705)
705
—
—
—
—
502
(502)
—
—
—
Adjusting items
$
108 $
(682) $
333 $
(8) $ (249)
$
(1.90)
$
47 $
548 $
(199) $
(16) $
380
$
2.81
Adjusted
$
353 $
110 $
(23) $
(25) $
415
$
3.15
$
332 $
103 $
(57) $
(36) $
342
$
2.51
(i)
Contribution from Loblaw, net of non-controlling interests.
(ii)
Net of income taxes and non-controlling interests, as applicable.
Management’s Discussion and Analysis
74 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
Years Ended
Dec. 31, 2024
Dec. 31, 2023
Net Earnings Available
to Common Shareholders of the Company
Diluted
Ne
t Earnin
gs
Per Co
mmon Share ($)
Net Earnings Available
to Common Shareholders of the Company
Diluted
Ne
t Earnin
gs
Per Co
mmon Share ($)
($ millions except where otherwise
indicated)
Loblaw(i)
Choice
Properties
Effect of
consol
idation
-
GWL
Corporate
Consol
idated
-
Consol
idated
-
Loblaw(i)
Choice
Properties
Effect of
consol
idation
-
GWL
Corporate
Consol
idated
-
Consol
idated
-
As reported
$
1,138 $
785 $
(283) $
(325) $ 1,315
$
9.80
$
1,102 $
797 $
(248) $
(155) $ 1,496
$
10.75
Add (deduct) impact of the
following(ii):
PC Optimum loyalty program
$
49 $
— $
— $
— $
49
$
0.37
$
— $
— $
— $
— $
—
$
—
Amortization of intangible
assets acquired
with Shoppers Drug Mart
and Lifemark
194
—
—
—
194
1.46
194
—
—
—
194
1.41
Fair value adjustment of
investment in real estate
securities
—
36
(3)
—
33
0.25
—
64
(5)
—
59
0.42
Fair value write-down related
to sale of Wellwise
15
—
—
—
15
0.11
—
—
—
—
—
—
Fair value adjustment on
investment properties
—
(118)
121
—
3
0.02
—
(131)
65
—
(66)
(0.48)
Fair value adjustment on non-
operating properties
2
—
—
—
2
0.02
3
—
—
—
3
0.02
Gain on sale of non-operating
properties
(2)
—
—
—
(2)
(0.02)
(5)
—
(6)
—
(11)
(0.08)
Fair value adjustment of
derivatives
(2)
—
—
—
(2)
(0.02)
6
—
—
—
6
0.04
(Recoveries) Charge related to
PC Bank commodity tax
matters
(66)
—
—
—
(66)
(0.49)
9
—
—
—
9
0.07
Charges related to settlement
of class action lawsuits
64
—
—
189
253
1.90
—
—
—
—
—
—
Transaction costs and other
related recoveries
—
(39)
—
—
(39)
(0.29)
—
—
—
—
—
—
Fair value adjustment of the
Trust Unit liability
—
—
(164)
—
(164)
(1.23)
—
—
(231)
—
231)
(1.67)
Outside basis difference in
certain Loblaw shares
—
—
—
6
6
0.05
—
—
—
8
8
0.06
Fair value adjustment on
Choice Properties’
Exchangeable Units
—
(238)
238
—
—
—
—
(321)
321
—
—
—
Adjusting items
$
254 $
(359) $
192 $
195 $
282
$
2.13
$
207 $
(388) $
144 $
8 $
(29)
$
(0.21)
Adjusted
$
1,392 $
426 $
(91) $
(130) $ 1,597
$
11.93
$
1,309 $
409 $
(104) $
(147) $ 1,467
$
10.54
(
(i)
Contribution from Loblaw, net of non-controlling interests.
(ii)
Net of income taxes and non-controlling interests, as applicable.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 75
EFFECT OF CONSOLIDATION The Company believes that a breakdown of the effect of consolidation is useful in assessing the
Company’s underlying operating performance and in making decisions regarding the ongoing operations of its business.
The following table provides a breakdown of the effect of consolidation for certain key performance metrics.
Quarters Ended
Dec. 31, 2024
Dec. 31, 2023
($ millions)
Revenue
Operating Income
Adjusted
EBITDA(i)
Net Interest
Expens
e and Oth
er Financing Charges
Adjusted Net
Earnings
Available to
Common
Shareholders(i)
Revenue
Operating Income
Adjusted
EBITDA(i)
Net Interest
Expens
e and Oth
er Financing Charges
Adjusted Net
Earnings
Available to
Common
Shareholders(i)
Elimination of intercompany
rental revenue
$ (200) $
(13) $
(13) $
— $
(11)
$
(190) $
(20) $
(20) $
— $
(17)
Elimination of internal lease
arrangements
5
(18)
(114)
(34)
12
4
(9)
(102)
(29)
14
Elimination of intersegment real
estate transactions
—
(13)
(13)
—
(11)
—
(34)
(35)
—
(37)
Asset impairments, net of
recoveries
—
10
10
—
7
—
(7)
(7)
—
(5)
Recognition of depreciation on
Choice Properties’ investment
properties classified as fixed
assets by the Company and
measured at cost
—
(14)
—
—
(14)
—
(15)
—
—
(14)
Fair value adjustment on
investment properties
—
(35)
—
(1)
—
—
40
—
1
—
Unit distributions on
Exchangeable Units paid by
Choice Properties to GWL
—
—
—
(75)
75
—
—
—
(74)
74
Unit distributions on Trust Units
paid by Choice Properties,
excluding amounts paid
to GWL
—
—
—
54
(54)
—
—
—
51
(51)
Fair value adjustment of the Trust
Unit liability
—
—
—
(399)
—
—
—
—
382
—
Fair value adjustment on Choice
Properties’ Exchangeable Units
—
—
—
705
—
—
—
—
(502)
—
Tax expense on Choice Properties
related earnings
—
—
—
—
(27)
—
—
—
—
(21)
Total
$ (195) $
(83) $
(130) $
250 $
(23)
$
(186) $
(45) $
(164) $
(171) $
(57)
(i)
See reconciliation of adjusted EBITDA and adjusted net earnings available to common shareholders of the Company above.
Management’s Discussion and Analysis
76 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
Years Ended
Dec. 31, 2024
Dec. 31, 2023
($ millions)
Revenue
Operating Income
Adjusted
EBITDA(i)
Net Interest
Expens
e and Oth
er Financing Charges
Adjusted Net
Earnings
Available to
Common
Shareholders(i)
Revenue
Operating Income
Adjusted
EBITDA(i)
Net Interest
Expens
e and Oth
er Financing Charges
Adjusted Net
Earnings
Available to
Common
Shareholders(i)
Elimination of intercompany
rental revenue
$ (788) $
16 $
16 $
— $
13
$ (752) $
(19) $
(19) $
— $
(16)
Elimination of internal lease
arrangements
13
(44)
(455)
(136)
68
12
(97)
(506)
(120)
17
Elimination of intersegment real
estate transactions
—
(132)
(132)
—
(116)
—
(39)
(47)
—
(50)
Asset impairments, net of
recoveries
—
10
10
—
7
—
(7)
(7)
—
(5)
Recognition of depreciation on
Choice Properties’ investment
properties classified as fixed
assets by the Company and
measured at cost
—
(49)
—
—
(50)
—
(29)
—
—
(35)
Fair value adjustment on
investment properties
—
(121)
—
2
—
—
(93)
—
3
—
Unit distributions on
Exchangeable Units paid by
Choice Properties to GWL
—
—
—
(300)
300
—
—
—
(296)
296
Unit distributions on Trust Units
paid by Choice Properties,
excluding amounts paid
to GWL
—
—
—
211
(211)
—
—
—
207
(207)
Fair value adjustment of the Trust
Unit liability
—
—
—
(164)
—
—
—
—
(231)
—
Fair value adjustment on Choice
Properties’ Exchangeable Units
—
—
—
238
—
—
—
—
321
—
Tax expense on Choice Properties
related earnings
—
—
—
—
(102)
—
—
—
—
(104)
Total
$ (775) $ (320) $
(561) $
(149) $
(91)
$ (740) $
(284) $ (579) $
(116) $
(104)
(i)
See reconciliation of adjusted EBITDA and adjusted net earnings available to common shareholders of the Company above.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 77
FREE CASH FLOW The Company believes free cash flow is useful in assessing the Company’s cash available for additional financing
and investing activities.
The following table reconciles free cash flow to GAAP measures reported for the periods ended as indicated.
($ millions)
Quarters Ended
Years Ended
Dec. 31, 2024
Dec. 31, 2023
Dec. 31, 2024
Dec. 31, 2023
Cash flows from operating activities
$
1,689
$
1,513
$
6,065
$
5,851
Less: Capital investments(i)
716
747
2,395
2,379
Interest paid
210
212
960
918
Lease payments, net
152
157
899
848
Free cash flow
$
611
$
397
$
1,811
$
1,706
(i)
Capital investments are the sum of fixed asset and investment properties purchases and intangible asset additions as presented in the
Company’s consolidated statements of cash flows, and prepayments transferred to fixed assets in the current year. Loblaw capital investments for
the year ended 2023 included $37 million of prepayments transferred to fixed assets.
ADJUSTED RETURN ON AVERAGE EQUITY ATTRIBUTABLE TO COMMON SHAREHOLDERS OF THE COMPANY AND ADJUSTED
RETURN ON CAPITAL The Company uses the following metrics to measure its leverage and profitability. The definitions of these
ratios are presented below.
Adjusted Return on Average Equity Attributable to Common Shareholders of the Company Adjusted net earnings available to
common shareholders of the Company for the last four quarters divided by average total equity attributable to common
shareholders of the Company. Refer to Section 3.4, “Financial Condition”, of this MD&A.
Adjusted Return on Capital Tax-effected adjusted operating income for the last four quarters divided by average capital where
capital is defined as total debt, plus equity attributable to shareholders of the Company, less cash and cash equivalents, and short-
term investments. Refer to Section 3.4, “Financial Condition”, of this MD&A.
CHOICE PROPERTIES’ FUNDS FROM OPERATIONS Choice Properties considers Funds from Operations to be a useful measure of
operating performance as it adjusts for items included in net income that do not arise from operating activities or do not
necessarily provide an accurate depiction of its performance.
Funds from Operations is calculated in accordance with the Real Property Association of Canada’s Funds from Operations &
Adjusted Funds from Operations for IFRS Accounting Standards issued in January 2022.
The following table reconciles Choice Properties’ Funds from Operations to net income for the periods ended as indicated.
($ millions)
Quarters Ended
Years Ended
Dec. 31, 2024
Dec. 31, 2023
Dec. 31, 2024
Dec. 31, 2023
Net income (loss)
$
792
$
(445)
$
785
$
797
Add (deduct) impact of the following:
Amortization of intangible assets
—
—
1
1
Transaction costs and other related recoveries
—
—
(39)
—
Adjustment to fair value of unit-based compensation
(2)
1
(1)
(1)
Fair value adjustment on Exchangeable Units
(705)
503
(238)
(321)
Fair value adjustment on investment properties
16
74
(93)
(114)
Fair value adjustment on investment properties to
proportionate share
(29)
(1)
(25)
(17)
Fair value adjustment of investment in real estate
securities
36
(27)
36
64
Capitalized interest on equity accounted
joint ventures
3
3
12
12
Unit distributions on Exchangeable Units
75
74
300
296
Internal expenses for leasing
3
3
10
9
Income tax recovery
(1)
—
(1)
—
Funds from Operations
$
188
$
185
$
747
$
726
Management’s Discussion and Analysis
78 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
13.1
Non-GAAP and Other Financial Measures - Selected Comparative Reconciliation
Unless otherwise indicated, all financial information represents the Company’s results from continuing operations.
ADJUSTED EBITDA The following table reconciles adjusted EBITDA to operating income, which is reconciled to GAAP net earnings
(loss) attributable to shareholders of the Company from continuing operations reported for the periods ended as indicated.
($ millions)
2024
2023
2022
First
Quarter (12 weeks)
Second
Quarter (12 weeks)
Third
Quarter (16 weeks)
Fourth
Quarter (12 weeks)
Total
(52 weeks)
First
Quarter (12 weeks)
Second
Quarter (12 weeks)
Third
Quarter (16 weeks)
Fourth
Quarter (12 weeks)
Total
(52 weeks)
Total
(52 weeks)
Net earnings (loss) attributable to
shareholders of the Company
from continuing operations
$
246 $
410 $
29 $
674 $
1,359
$
436 $
508 $
624 $
(28) $
1,540 $
1,822
Add (deduct) impact of the
following:
Non-controlling interests
$
246 $
257 $
411 $
223 $
1,137
$
216 $
274 $
320 $
275 $
1,085 $
987
Income taxes
$
264 $
131 $
303 $
210 $
908
$
234 $
244 $
202 $
169 $
849 $
831
Net interest expense (income)
and other financing charges
$
215 $
(3) $
875 $
(115) $
972
$
71 $
73 $
85 $
660 $
889 $
913
Operating income
$
971 $
795 $
1,618 $
992 $
4,376
$
957 $
1,099 $
1,231 $
1,076 $
4,363 $
4,553
Add (deduct) impact of the
following:
PC Optimum loyalty program
$
— $
— $
— $
129 $
129
$
— $
— $
— $
— $
— $
—
Amortization of intangible assets
acquired with Shoppers Drug
Mart and Lifemark
114
115
155
115
499
114
116
154
115
499
497
Fair value adjustment of
investment in real estate
securities
30
28
(58)
36
36
15
31
45
(27)
64
248
Fair value write-down related to
sale of Wellwise
—
—
—
23
23
—
—
—
—
—
—
Fair value adjustment on
investment properties
16
2
(34)
21
5
(49)
(21)
1
34
(35)
(728)
Fair value adjustment on non-
operating properties
—
—
—
3
3
—
—
—
9
9
(6)
Gain on sale of non-operating
properties
—
—
—
(3)
(3)
(1)
(3)
(15)
(1)
(20)
(57)
Fair value adjustment of
derivatives
(7)
2
—
—
(5)
3
5
(6)
14
16
(5)
(Recoveries) Charges related to
PC Bank commodity tax
matters
—
—
(155)
—
(155)
—
37
—
(13)
24
111
Charges related to settlement of
class action lawsuits
—
420
—
—
420
—
—
—
—
—
—
Transaction costs and other
related expenses
—
(39)
—
—
(39)
—
—
—
—
—
21
Restructuring and other related
costs
—
—
—
—
—
—
—
—
—
—
4
Foreign currency translation and
other company level activities
—
—
—
—
—
—
—
—
—
—
3
Adjusting items
$
153 $
528 $
(92) $
324 $
913
$
82 $
165 $
179 $
131 $
557 $
88
Adjusted operating income
$
1,124 $
1,323 $
1,526 $
1,316 $
5,289
$
1,039 $
1,264 $
1,410 $
1,207 $
4,920 $
4,641
Depreciation and amortization
excluding the impact of the
above adjustment(i)
$
499 $
483 $
632 $
498 $
2,112
$
468 $
469 $
609 $
487 $
2,033 $
1,910
Adjusted EBITDA
$
1,623 $
1,806 $
2,158 $
1,814 $
7,401
$
1,507 $
1,733 $
2,019 $
1,694 $
6,953 $
6,551
(i)
Depreciation and amortization for the calculation of adjusted EBITDA excludes amortization of intangible assets acquired with Shoppers Drug
Mart and Lifemark, recorded by Loblaw.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 79
ADJUSTED NET INTEREST EXPENSE AND OTHER FINANCING CHARGES 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.
($ millions)
Dec. 31, 2024 (52 weeks)
Years Ended
Dec. 31, 202
3 (52 weeks)
Dec. 31, 2022 (52 weeks)
Net interest expense and other financing charges
$
972
$
889
$
913
Add impact of the following:
Fair value adjustment of the Trust Unit liability
164
231
98
Recovery related to PC Bank commodity tax matter
10
—
—
Recovery related to Glenhuron
—
—
11
Adjusted net interest expense and other financing charges
$
1,146
$
1,120
$
1,022
ADJUSTED INCOME TAXES AND ADJUSTED EFFECTIVE TAX RATE 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.
($ millions except where otherwise indicated)
Dec. 31, 2024 (52 weeks)
Years Ended
Dec. 31, 202
3 (52 weeks)
Dec. 31, 2022 (52 weeks)
Adjusted operating income(i)
$
5,289
$
4,920
$
4,641
Adjusted net interest expense and other financing charges(i)
1,146
1,120
1,022
Adjusted earnings before taxes
$
4,143
$
3,800
$
3,619
Income taxes
$
908
$
849
$
831
Add (deduct) impact of the following:
Tax impact of items excluded from adjusted earnings before taxes(ii)
235
178
83
Outside basis difference in certain Loblaw shares
(6)
(8)
(4)
Remeasurement of deferred tax balances
—
—
46
Recovery related to Glenhuron
—
—
33
Adjusted income taxes
$
1,137
$
1,019
$
989
Effective tax rate applicable to earnings before taxes
26.7%
24.4%
22.8%
Adjusted effective tax rate applicable to adjusted earnings before taxes
27.4%
26.8%
27.3%
(i)
See reconciliations of adjusted operating income and adjusted net interest expense and other financing charges above.
(ii)
See the adjusted EBITDA table and the adjusted net interest expense and other financing charges table above for a complete list of items
excluded from adjusted earnings before taxes.
Management’s Discussion and Analysis
80 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
ADJUSTED NET EARNINGS AVAILABLE TO COMMON SHAREHOLDERS FROM CONTINUING OPERATIONS AND ADJUSTED
DILUTED NET EARNINGS PER COMMON SHARE FROM CONTINUING OPERATIONS The following tables reconcile adjusted net
earnings available to common shareholders of the Company from continuing operations and adjusted diluted net earnings from
continuing operations per common share to GAAP net earnings (loss) available to common shareholders of the Company from
continuing operations and diluted net earnings (loss) per common share from continuing operations as reported for the periods
ended as indicated.
2024
2023
2022
($ millions)
First
Quarter (12 weeks)
Second
Quarter (12 weeks)
Third
Quarter (16 weeks)
Fourth
Quarter (12 weeks)
Total
(52 weeks)
First
Quarter (12 weeks)
Second
Quarter (12 weeks)
Third
Quarter (16 weeks)
Fourth
Quarter (12 weeks)
Total
(52 weeks)
Total
(52 weeks)
Continuing Operations
$
236 $
400 $
15 $
664 $
1,315
$
426 $
498 $
610 $
(38) $
1,496 $
1,778
Add (deduct) impact of the
following(i):
PC Optimum loyalty program
$
— $
— $
— $
49 $
49
$
— $
— $
— $
— $
— $
—
Amortization of intangible assets
acquired with Shoppers
Drug Mart and Lifemark
45
43
62
44
194
45
44
60
45
194
191
Fair value adjustment of
investment in real estate
securities
28
25
(53)
33
33
14
28
42
(25)
59
228
Fair value write-down related to
sale of Wellwise
—
—
—
15
15
—
—
—
—
—
—
Fair value adjustment on
investment properties
14
4
(32)
17
3
(43)
(17)
1
(7)
(66)
(645)
Fair value adjustment on non-
operating properties
—
—
—
2
2
—
—
—
3
3
(2)
Gain on sale of non-operating
properties
—
—
—
(2)
(2)
(1)
(1)
(8)
(1)
(11)
(22)
Fair value adjustment of
derivatives
(4)
2
—
—
(2)
1
2
(2)
5
6
(2)
(Recoveries) Charges related to
PC Bank commodity tax
matters
—
—
(66)
—
(66)
—
15
—
(6)
9
45
Charges related to settlement of
class action lawsuits
—
253
—
—
253
—
—
—
—
—
—
Transaction costs and other
related expenses
—
(39)
—
—
(39)
—
—
—
—
—
12
Restructuring and other related
costs
—
—
—
—
—
—
—
—
—
—
10
Fair value adjustment of the
Trust Unit liability
(59)
(274)
568
(399)
(164)
(192)
(202)
(219)
382
(231)
(98)
Outside basis difference in
certain Loblaw shares
52
(20)
(18)
(8)
6
32
10
(18)
(16)
8
4
Remeasurement of deferred tax
balances
—
—
—
—
—
—
—
—
—
—
(46)
Recovery related to Glenhuron
—
—
—
—
—
—
—
—
—
—
(23)
Foreign currency translation and
other company level activities
—
—
—
—
—
—
—
—
—
—
2
Adjusting items Continuing
Operations
$
76 $
(6) $
461 $
(249) $
282
$
(144) $
(121) $
(144) $
380 $
(29) $
(346)
Adjusted Continuing Operations
$
312 $
394 $
476 $
415 $
1,597
$
282 $
377 $
466 $
342 $
1,467 $
1,432
(i)
Net of income taxes and non-controlling interests, as applicable.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 81
2024
2023
2022
($ except where otherwise indicated)
First
Quarter
(12 weeks)
Second
Quarter
(12 weeks)
Third
Quarter
(16 weeks)
Fourth
Quarter
(12 weeks)
Total
(52 weeks)
First
Quarter
(12 weeks)
Second
Quarter
(12 weeks)
Third
Quarter
(16 weeks)
Fourth
Quarter
(12 weeks)
Total
(52 weeks)
Total
(52 weeks)
Continuing Operations
$
1.73 $
2.97 $
0.08 $
5.05 $
9.80
$
3.01 $
3.55 $
4.41 $
(0.30) $
10.75 $
12.20
Add (deduct) impact of the
following(i):
PC Optimum loyalty program
$
— $
— $
— $
0.37 $
0.37
$
— $
— $
— $
— $
— $
—
Amortization of intangible assets
acquired with Shoppers
Drug Mart and Lifemark
0.34
0.33
0.47
0.34
1.46
0.32
0.32
0.43
0.33
1.41
1.32
Fair value adjustment of
investment in real estate
securities
0.21
0.19
(0.40)
0.25
0.25
0.10
0.20
0.30
(0.19)
0.42
1.57
Fair value write-down related to
sale of Wellwise
—
—
—
0.11
0.11
—
—
—
—
—
—
Fair value adjustment on
investment properties
0.10
0.03
(0.24)
0.13
0.02
(0.30
(0.12)
0.01
(0.05)
(0.48)
(4.45)
Fair value adjustment on non-
operating properties
—
—
—
0.02
0.02
—
—
—
0.02
0.02
(0.01)
Gain on sale of non-operating
properties
—
—
—
(0.02)
(0.02)
(0.01
(0.01)
(0.05)
(0.01)
(0.08)
(0.15)
Fair value adjustment of
derivatives
(0.03)
0.01
—
—
(0.02)
0.01
0.01
(0.01)
0.04
0.04
(0.01)
(Recoveries) Charges related to
PC Bank commodity tax
matters
—
—
(0.50)
—
(0.49)
—
0.11
—
(0.04)
0.07
0.31
Charges related to settlement of
class action lawsuits
—
1.89
—
—
1.90
—
—
—
—
—
—
Transaction costs and other
related expenses
—
(0.29)
—
—
(0.29)
—
—
—
—
—
0.08
Restructuring and other related
costs
—
—
—
—
—
—
—
—
—
—
0.07
Fair value adjustment of the Trust
Unit liability
(0.44)
(2.05)
4.30
(3.04)
(1.23)
(1.37
(1.45)
(1.60)
2.83
(1.67)
(0.68)
Outside basis difference in certain
Loblaw shares
0.39
(0.15)
(0.14)
(0.06)
0.05
0.23
0.07
(0.13)
(0.12)
0.06
0.03
Remeasurement of deferred tax
balances
—
—
—
—
—
—
—
—
—
—
(0.32)
Recovery related to Glenhuron
—
—
—
—
—
—
—
—
—
—
(0.16)
Foreign currency translation and
other company level activities
—
—
—
—
—
—
—
—
—
—
0.01
Adjusting items Continuing
Operations
$
0.57 $
(0.04) $
3.49 $
(1.90) $
2.13
$
(1.02) $
(0.87) $
(1.05) $
2.81 $
(0.21) $
(2.39)
Adjusted Continuing Operations
$
2.30 $
2.93 $
3.57 $
3.15 $
11.93
$
1.99 $
2.68 $
3.36 $
2.51 $
10.54 $
9.81
Diluted weighted average
common shares outstanding
(in millions)
134.9
133.6
132.1
131.0
132.9
140.7
139.5
137.3
134.8
138.0
144.8
)
)
)
(i)
Net of income taxes and non-controlling interests, as applicable.
Management’s Discussion and Analysis
82 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
14.
Forward-Looking Statements
The Annual Report, including the MD&A, 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 Annual Report 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 Annual Report including, without
limitation, in Section 3, “Liquidity and Capital Resources”, Section 10, “Critical Accounting Estimates and Judgments”, Section 11,
“IFRS Accounting Standards and Amendments”, Section 12, “Outlook”, and Section 13, “Non-GAAP and Other Financial Measures”, of
this MD&A. 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 Section 8, “Enterprise Risks and Risk Management” of the
Company’s 2024 Annual Report and the Company’s AIF for the year ended December 31, 2024. Such risks and uncertainties include:
•
changes in economic conditions, including inflation, impact of tariffs, price increases from suppliers, levels of employment,
costs of borrowing, household debt, political uncertainty and government regulation, the impact of natural disasters, war or
acts of terrorism, pandemics, changes in interest rates, tax rates, or exchange rates, and access to consumer credit;
•
inability of the Company’s IT infrastructure to support the requirements of the Company’s business, or the occurrence of any
internal or external security breaches, denial of service attacks, viruses, worms and other known or unknown cybersecurity or
data breaches;
•
failure to realize benefits from investments in the Company’s new IT systems and related processes, including automation;
•
inability of the Company to manage inventory to minimize the impact of obsolete or excess inventory or control shrink;
•
changes to the regulation of generic prescription drug prices, the reduction of reimbursements under public drug benefit
plans and the elimination or reduction of professional allowances paid by drug manufacturers;
•
failure to maintain an effective supply chain and consequently an appropriate assortment of available product at the store and
digital retail level;
•
failure to realize the anticipated benefits associated with the Company’s strategic priorities and major initiatives, including
revenue growth, anticipated cost savings and operating efficiencies, or organizational changes that may impact the
relationships with franchisees and Associates;
•
failure by Choice Properties to realize the anticipated benefits associated with its strategic priorities and major initiatives,
including failure to develop quality assets and effectively manage development, redevelopment, and renovation initiatives and
the timelines and costs related to such initiatives;
•
failure to execute the Company’s e-commerce initiatives or to adapt its business model to shifts in the retail landscape caused
by digital advances;
•
changes to any of the laws, rules, regulations or policies applicable to the Company’s business;
•
failure to attract and retain colleagues may impact the Company’s ability to effectively operate and achieve financial
performance goals;
•
failure by Choice Properties to effectively and efficiently manage its property and leasing management processes;
•
failure to effectively respond to consumer trends or heightened competition, whether from current competitors or new
entrants to the marketplace;
•
public health events including those related to food and drug safety;
•
errors made through medication dispensing or errors related to patient services or consultation;
•
failure to achieve desired results in labour negotiations, including the terms of future collective bargaining agreements;
•
failure to adapt to environmental and social risks, including failure to execute against the Company’s climate change and social
equity initiatives;
•
adverse outcomes of legal and regulatory proceedings and related matters;
•
reliance on the performance and retention of third party service providers, including those associated with the Company’s
supply chain and apparel business and located in both advanced and developing markets; and
•
the inability of the Company to effectively develop and execute its strategy.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 83
This is not an exhaustive list of the factors that may affect the Company’s forward-looking statements. Other risks and uncertainties
not presently known to the Company or that the Company presently believes are not material could also cause actual results or
events to differ materially from those expressed in its forward-looking statements. Additional risks and uncertainties are discussed
in the Company’s materials filed with the Canadian securities regulatory authorities from time to time, including, without limitation,
the section entitled “Operating and Financial Risks and Risk Management” in the Company’s AIF 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 MD&A. 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.
15.
Additional Information
Additional information about the Company has been filed electronically with various securities regulators in Canada through
SEDAR+ and is available at www.sedarplus.ca.
This Annual Report 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 also 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.
Toronto, Canada
February 25, 2025
Management’s Discussion and Analysis
84 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
Financial Results
Management’s Statement of Responsibility for Financial Reporting 86
Independent Auditor's Report
87
Consolidated Financial Statements
90
Consolidated Statements of Earnings
90
Consolidated Statements of Comprehensive Income
90
Consolidated Balance Sheets
91
Consolidated Statements of Changes in Equity
92
Consolidated Statements of Cash Flows
93
Notes to the Consolidated Financial Statements
94
Note 1.
Nature and Description of the Reporting Entity
94
Note 2.
Material Accounting Policies
94
Note 3.
Critical Accounting Estimates and Judgments
107
Note 4.
IFRS Accounting Standards and Amendments
109
Note 5.
Subsidiaries
109
Note 6.
Net Interest Expense and Other Financing Charges
110
Note 7.
Income Taxes
111
Note 8.
Basic and Diluted Net Earnings per Common Share
112
Note 9.
Cash and Cash Equivalents and Change in Non-Cash Working Capital
113
Note 10.
Accounts Receivable
113
Note 11.
Credit Card Receivables
114
Note 12.
Inventories
116
Note 13.
Assets Held for Sale
116
Note 14.
Fixed Assets
116
Note 15.
Investment Properties
118
Note 16.
Equity Accounted Joint Ventures
119
Note 17.
Intangible Assets
119
Note 18.
Goodwill
121
Note 19.
Other Assets
122
Note 20.
Supplier Financing Arrangements
122
Note 21.
Provisions
123
Note 22.
Long-Term Debt
124
Note 23.
Other Liabilities
127
Note 24.
Share Capital
128
Note 25.
Capital Management
130
Note 26.
Post-Employment Benefits
132
Note 27.
Equity-Based Compensation
137
Note 28.
Employee Costs
142
Note 29. Leases
143
Note 30.
Financial Instruments
145
Note 31.
Financial Risk Management
147
Note 32.
Contingent Liabilities
149
Note 33.
Financial Guarantees
151
Note 34.
Related Party Transactions
152
Note 35.
Segment Information
153
Note 36.
Subsequent Event
154
Three Year Summary
155
Glossary
157
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 85
Management’s Statement of Responsibility for Financial Reporting
Management of George Weston Limited is responsible for the preparation, presentation and integrity of the accompanying
consolidated financial statements, Management’s Discussion and Analysis and all other information in the 2024 Annual Report. This
responsibility includes the selection and consistent application of appropriate accounting principles and methods in addition
to making the judgments and estimates necessary to prepare the consolidated financial statements in accordance with
International Financial Reporting Standards as issued by the International Accounting Standards Board. It also includes ensuring
that the financial information presented elsewhere in the 2024 Annual Report is consistent with that in the consolidated financial
statements.
Management is also responsible for providing reasonable assurance that assets are safeguarded and that relevant and reliable
financial information is produced. Management is required to design a system of internal controls and certify as to the design and
operating effectiveness of internal controls over financial reporting. A dedicated control compliance team reviews and evaluates
internal controls, the results of which are shared with management on a quarterly basis.
PricewaterhouseCoopers LLP, whose report follows, were appointed as independent auditors by a vote of the Company’s
shareholders to audit the consolidated financial statements.
The Board of Directors, acting through an Audit Committee comprised solely of directors who are independent, are responsible
for determining that management fulfills its responsibilities in the preparation of the consolidated financial statements and
the financial control of operations. The Audit Committee recommends the independent auditors for appointment by the
shareholders. The Audit Committee meets regularly with senior and financial management, internal auditors and the independent
auditors to discuss internal controls, auditing activities and financial reporting matters. The independent auditors and internal
auditors have unrestricted access to the Audit Committee. These consolidated financial statements and Management’s Discussion
and Analysis have been approved by the Board of Directors for inclusion in the 2024 Annual Report based on the review and
recommendation of the Audit Committee.
[signed]
Galen G. Weston
Chairman and
Chief Executive Officer
[signed]
Richard Dufresne
President and
Chief Financial Officer
Toronto, Canada
February 25, 2025
86 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
Independent Auditor’s Report
To the Shareholders of George Weston Limited
Our opinion
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of
George Weston Limited and its subsidiaries (together, the Company) as at December 31, 2024 and 2023, and its financial
performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards as issued
by the International Accounting Standards Board (IFRS Accounting Standards).
What we have audited
The Company’s consolidated financial statements comprise:
•
the consolidated statements of earnings for the years ended December 31, 2024 and 2023;
•
the consolidated statements of comprehensive income for the years ended December 31, 2024 and 2023;
•
the consolidated balance sheets as at December 31, 2024 and 2023;
•
the consolidated statements of changes in equity for the years ended December 31, 2024 and 2023;
•
the consolidated statements of cash flows for the years ended December 31, 2024 and 2023; and
•
the notes to the consolidated financial statements, comprising material accounting policy information and other explanatory
information.
Basis for opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those
standards are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of
our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated
financial statements in Canada. We have fulfilled our other ethical responsibilities in accordance with these requirements.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated
financial statements for the year ended December 31, 2024. These matters were addressed in the context of our audit of the
consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.
Assessment of impairment indicators for fixed assets and right-of-use assets for retail locations
Refer to note 2 – Material Accounting Policies, note 3 – Critical Accounting Estimates and Judgments, note 14 – Fixed Assets and
note 29 – Leases to the consolidated financial statements.
As at December 31, 2024, the Company had fixed assets of $12,686 million and right-of-use assets of $4,920 million. At each balance
sheet date, management reviews the carrying amounts of its fixed assets and right-of-use assets at the Cash Generating Unit (CGU)
level to determine whether there is any indication of impairment. Judgment is used to determine whether an indication of
impairment exists; if any such indication exists, the CGU is then tested for impairment. In applying this judgment, management
considers profitability of the CGU and other qualitative factors. Management determined that each retail location is a separate CGU
for purposes of fixed asset and right-of-use asset impairment testing. The fixed assets and right-of-use assets related to the retail
location CGUs represent a significant portion of the Company’s fixed assets and right-of-use assets.
Management identified indications of impairment for certain retail location CGUs and therefore an impairment test was performed
for these CGUs. An impairment loss is recognized for the amount by which the CGU’s carrying value exceeds its recoverable
amount. For the year ended December 31, 2024, the Company recorded $21 million of impairment losses on fixed assets and
$8 million of impairment losses on right-of-use assets in respect of 14 retail location CGUs.
We considered this a key audit matter due to the judgments made by management in assessing the indications of impairment.
This resulted in significant audit effort and subjectivity in performing procedures to assess the indications of impairment.
Our approach to addressing the matter included the following procedures, among others:
•
Evaluated management’s assessment of indications of impairment, which included the following:
•
Assessed the reasonableness of the profitability of the CGUs on a sample basis by considering the actual historical
performance of the CGUs.
•
Assessed other qualitative factors by considering evidence obtained in other areas of the audit.
•
Tested the underlying data used in the indications of impairment assessment on a sample basis by tracing to supporting
documentation and testing the mathematical accuracy.
•
Performed a sensitivity analysis over indications of impairment.
•
Tested the disclosures made in the consolidated financial statements with regards to the impairment assessments of the retail
location CGUs.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 87
Valuation of income producing properties
Refer to note 2 – Material Accounting Policies, note 3 – Critical Accounting Estimates and Judgments and note 15 – Investment
Properties to the consolidated financial statements.
The Company measures its income producing properties at fair value and, as at December 31, 2024, these assets were valued at
$5,348 million. The fair values of these assets are prepared by the Company’s internal valuations team and reviewed by
management. As part of management’s internal valuation program, the Company considers external valuations performed by
independent national real estate valuation firms for a cross section of properties that represent different geographical locations and
asset classes across the Company’s portfolio. Income producing properties are valued primarily using the discounted cash flow
method. The significant assumptions under this method include the discount rates and terminal capitalization rates applicable to
those assets.
We considered this a key audit matter due to (i) significant audit effort required to assess the fair values of income producing
properties; (ii) critical judgments by management when determining the fair values of the income producing properties, including
the development of the significant assumptions; and (iii) a high degree of complexity in assessing audit evidence related to the
significant assumptions developed by management. In addition, the audit effort involved the use of professionals with specialized
skill and knowledge in the field of real estate valuations.
Our approach to addressing the matter included the following procedures, among others:
•
Developed a point estimate of the fair value of each individual income producing property using external market data and
compared each independent point estimate to management’s estimate of each property to evaluate the reasonableness of
management’s estimate.
•
For the individual estimates that fell outside of the expected range established from the point estimate, we tested how
management determined the fair value estimate of the income producing property, which included the following:
•
Evaluated the appropriateness of the valuation methodology used.
•
Evaluated the reasonableness of the discount rates and terminal capitalization rates by comparing to externally available
market data. For certain properties, professionals with specialized skill and knowledge in the field of real estate valuations
assisted in evaluating the reasonableness of the discount rates and terminal capitalization rates.
•
Tested the underlying data used in the discounted cash flow method.
Other information
Management is responsible for the other information. The other information comprises the Management’s Discussion and Analysis
and the information, other than the consolidated financial statements and our auditor’s report thereon, included in the annual
report.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified
above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements
or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of management and those charged with governance for the consolidated financial
statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with
IFRS Accounting Standards, and for such internal control as management determines is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Company’s ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless
management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
Independent Auditor’s Report
88 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally
accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and
maintain professional skepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to
provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
•
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
•
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management.
•
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the
Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the Company to cease to continue as a going concern.
•
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures,
and whether the consolidated financial statements represent the underlying transactions and events in a manner that
achieves fair presentation.
•
Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business units within the Company as a basis for forming an opinion on the consolidated financial statements. We
are responsible for the direction, supervision and review of the audit work performed for purposes of the group audit. We
remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to
bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance
in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely
rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Anita McOuat.
/s/ PricewaterhouseCoopers LLP
Chartered Professional Accountants, Licensed Public Accountants
Toronto, Ontario
February 25, 2025
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 89
Consolidated Statements of Earnings
For the years ended December 31
(millions of Canadian dollars except where otherwise indicated)
2024
2023
Revenue
$
61,608
$
60,124
Operating Expenses
Cost of inventories sold (note 12)
41,297
40,513
Selling, general and administrative expenses
15,935
15,248
57,232
55,761
Operating Income
4,376
4,363
Net Interest Expense and Other Financing Charges (note 6)
972
889
Earnings Before Income Taxes
3,404
3,474
Income Taxes (note 7)
908
849
Net Earnings
2,496
2,625
Attributable to:
Shareholders of the Company (note 8)
1,359
1,540
Non-Controlling Interests
1,137
1,085
Net Earnings
$
2,496
$
2,625
Net Earnings per Common Share ($) (note 8)
Basic
$
9.95
$
10.88
Diluted
$
9.80
$
10.75
See accompanying notes to the consolidated financial statements.
Consolidated Statements of Comprehensive Income
For the years ended December 31
(millions of Canadian dollars)
2024
2023
Net Earnings
$
2,496
$
2,625
Other comprehensive income (loss), net of taxes
Items that are or may be reclassified subsequently to profit or loss:
Foreign currency translation adjustment (note 30)
4
—
Unrealized losses on cash flow hedges (note 30)
(10)
(3)
Gain on long-term securities (note 30)
1
1
Items that will not be reclassified to profit or loss:
Net defined benefit plan actuarial gains (note 26)
78
199
Adjustment to fair value of investment properties
53
11
Other comprehensive income
126
208
Comprehensive Income
2,622
2,833
Total Comprehensive Income
2,622
2,833
Attributable to:
Shareholders of the Company
1,451
1,652
Non-Controlling Interests
1,171
1,181
Total Comprehensive Income
$
2,622
$
2,833
See accompanying notes to the consolidated financial statements.
90 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
Consolidated Balance Sheets
As at December 31
(millions of Canadian dollars)
2024
2023
ASSETS
Current Assets
Cash and cash equivalents (note 9)
$
2,048
$
2,451
Short-term investments
648
472
Accounts receivable (note 10)
1,503
1,377
Credit card receivables (note 11)
4,230
4,132
Inventories (note 12)
6,332
5,829
Prepaid expenses and other assets
737
629
Assets held for sale (note 13)
62
46
Total Current Assets
15,560
14,936
Fixed Assets (note 14)
12,686
11,857
Right-of-Use Assets (note 29)
4,920
4,408
Investment Properties (note 15)
5,506
5,366
Equity Accounted Joint Ventures (note 16)
884
884
Intangible Assets (note 17)
5,460
6,009
Goodwill (note 18)
4,902
4,879
Deferred Income Taxes (note 7)
128
138
Security Deposits
38
38
Other Assets (note 19)
1,352
1,255
Total Assets
$
51,436
$
49,770
LIABILITIES
Current Liabilities
Bank indebtedness (note 33)
$
—
$
13
Trade payables and other liabilities (note 20)
7,894
6,887
Loyalty liability
212
123
Provisions (note 21)
509
121
Income taxes payable
141
307
Demand deposits from customers
353
166
Short-term debt (note 11)
800
850
Long-term debt due within one year (note 22)
1,313
2,355
Lease liabilities due within one year (note 29)
1,045
880
Associate interest
255
370
Total Current Liabilities
12,522
12,072
Provisions (note 21)
105
96
Long-Term Debt (note 22)
14,071
12,641
Lease Liabilities (note 29)
4,977
4,563
Trust Unit Liability
3,715
3,881
Deferred Income Taxes (note 7)
1,675
1,870
Other Liabilities (note 23)
1,234
1,184
Total Liabilities
38,299
36,307
EQUITY
Share Capital (note 24)
3,293
3,325
Retained Earnings
5,490
5,421
Contributed Surplus
(2,787)
(2,275)
Accumulated Other Comprehensive Income
246
204
Total Equity Attributable to Shareholders of the Company
6,242
6,675
Non-Controlling Interests
6,895
6,788
Total Equity
13,137
13,463
Total Liabilities and Equity
$
51,436
$
49,770
Contingent liabilities (note 32). Subsequent event (note 36).
See accompanying notes to the consolidated financial statements.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 91
Consolidated Statements of Changes in Equity
(millions of Canadian dollars except
where otherwise indicated)
Common
Shares
Preferred Shares
Total
Shar
e Capital
Retained
Earnings
Contributed Surplus
Foreign
Currenc
y Translati
on Adjustment
Cash
Flo
w Hedg
es a
nd Other
Adjustment to
Fair Value o
n Transfer
of Investm
ent Properties
Total
Accumulate
d Oth
er Comprehens
ive Income
Non-
Controllin
g Interests
Total
Equity
Balance as at Dec. 31, 2023
$ 2,508 $
817 $
3,325 $
5,421 $
(2,275) $
28 $
1 $
175 $
204 $
6,788 $
13,463
Net earnings
—
—
—
1,359
—
—
—
—
—
1,137
2,496
Other comprehensive income (loss)(i)
—
—
—
42
—
3
(6)
53
50
34
126
Comprehensive income (loss)
$
— $
— $
— $
1,401 $
— $
3 $
(6) $
53 $
50 $
1,171 $
2,622
Transfer of revaluation reserve upon
disposal of investment properties
—
—
—
8
—
—
—
(8)
(8)
—
—
Effect of equity-based compensation
(notes 24 & 27)
53
—
53
(1)
(3)
—
—
—
—
(10)
39
Shares purchased and cancelled
(note 24)
(86)
—
(86)
(876)
—
—
—
—
—
—
(962)
Net effect of shares held in trusts
(notes 24 & 27)
1
—
1
(2)
—
—
—
—
—
—
(1)
Loblaw capital transactions
and dividends
—
—
—
—
(509)
—
—
—
—
(1,054)
(1,563)
Dividends declared
Per common share ($) (note 24)
– $3.173
—
—
—
(418)
—
—
—
—
—
—
(418)
Per preferred share ($) (note 24)
– Series I – $1.45
—
—
—
(13)
—
—
—
—
—
—
(13)
– Series III – $1.30
—
—
—
(10)
—
—
—
—
—
—
(10)
– Series IV – $1.30
—
—
—
(10)
—
—
—
—
—
—
(10)
– Series V – $1.1875
—
—
—
(10)
—
—
—
—
—
—
(10)
$
(32) $
— $
(32) $
(1,332) $
(512) $
— $
— $
(8) $
(8) $
(1,064) $
(2,948)
Balance as at Dec. 31, 2024
$ 2,476 $
817 $
3,293 $
5,490 $
(2,787) $
31 $
(5) $
220 $
246 $
6,895 $
13,137
(millions of Canadian dollars except
where otherwise indicated)
Common
Shares
Preferred Shares
Total
Shar
e Capital
Retained
Earnings
Contributed Surplus
Foreign
Currenc
y Translati
on Adjustment
Cash
Flo
w Hedg
es
and Other
Adjustment to
Fair Value o
n Transfer
of Investm
ent Properties
Total
Accumulate
d Oth
er Comprehens
ive Income
Non-
Controllin
g Interests
Total
Equity
Balance as at Dec. 31, 2022
$
2,616 $
817 $
3,433 $
5,075 $
(1,864) $
28 $
5 $
164 $
197 $
6,339 $
13,180
Net earnings
—
—
—
1,540
—
—
—
—
—
1,085
2,625
Other comprehensive income (loss)(i)
—
—
—
105
—
—
(4)
11
7
96
208
Comprehensive income (loss)
$
— $
— $
— $
1,645 $
— $
— $
(4) $
11 $
7 $
1,181 $
2,833
Effect of equity-based compensation
(notes 24 & 27)
8
—
8
—
8
—
—
—
—
7
23
Shares purchased and cancelled
(note 24)
(116)
—
(116)
(874)
—
—
—
—
—
—
(990)
Net effect of shares held in trusts
(notes 24 & 27)
—
—
—
1
—
—
—
—
—
—
1
Loblaw capital transactions
and dividends
—
—
—
—
(419)
—
—
—
—
(739)
(1,158)
Dividends declared
Per common share ($) (note 24)
– $2.799
—
—
—
(383)
—
—
—
—
—
—
(383)
Per preferred share ($) (note 24)
– Series I – $1.45
—
—
—
(13)
—
—
—
—
—
—
(13)
– Series III – $1.30
—
—
—
(10)
—
—
—
—
—
—
(10)
– Series IV – $1.30
—
—
—
(10)
—
—
—
—
—
—
(10)
– Series V – $1.1875
—
—
—
(10)
—
—
—
—
—
—
(10)
$
(108) $
— $
(108) $
(1,299) $
(411) $
— $
— $
— $
— $
(732) $
(2,550)
Balance as at Dec. 31, 2023
$ 2,508 $
817 $
3,325 $
5,421 $
(2,275) $
28 $
1 $
175 $
204 $
6,788 $
13,463
(i)
Other comprehensive income (loss) includes an actuarial gain of $78 million (2023 – gain of $199 million), of which $42 million (2023 – gain of $105 million) is presented in
retained earnings, and $36 million (2023 – gain of $94 million) in non-controlling interests. Also included in non-controlling interests is a $3 million loss on cash flow
hedges (2023 – gain of $2 million) and a gain of $1 million on foreign currency translation adjustments (2023 – nominal loss).
See accompanying notes to the consolidated financial statements.
92 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
Consolidated Statements of Cash Flows
For the years ended December 31
(millions of Canadian dollars)
2024
2023
Operating Activities
Net earnings
$
2,496
$
2,625
Add (deduct):
Net interest expense and other financing charges (note 6)
972
889
Income taxes (note 7)
908
849
Depreciation and amortization
2,611
2,532
Asset impairments, net of recoveries (notes 14 & 29)
22
24
Adjustment to fair value of investment properties and assets held for sale (notes 13 & 15)
8
(26)
Adjustment to fair value of investment in real estate securities (note 30)
36
64
Change in allowance for credit card receivables (note 11)
7
50
Change in provisions (note 21)
397
17
Change in non-cash working capital (note 9)
35
(75)
Change in gross credit card receivables (note 11)
(105)
(228)
Income taxes paid
(1,285)
(1,028)
Interest received
81
73
Other
(118)
85
Cash Flows from Operating Activities
6,065
5,851
Investing Activities
Fixed asset and investment properties purchases (notes 14 & 15)
(2,018)
(1,935)
Intangible asset additions (note 17)
(377)
(407)
(Purchase) disposal of short-term investments
(176)
31
Proceeds from disposal of assets (notes 14, 15 & 29)
331
409
Lease payments received from finance leases
9
13
(Advances) repayments of mortgages, loans and notes receivable (note 19)
(35)
229
Increase in security deposits
—
(2)
Disposal of long-term securities (note 19)
81
45
Other
(115)
(49)
Cash Flows used in Investing Activities
(2,300)
(1,666)
Financing Activities
(Decrease) increase in bank indebtedness (note 33)
(13)
5
(Decrease) increase in short-term debt (note 11)
(50)
150
Increase in demand deposits from customers
187
41
Long-term debt – Issued (note 22)
2,613
1,939
– Repayments (note 22)
(2,285)
(1,714)
Interest paid
(960)
(918)
Cash rent paid on lease liabilities – Interest (notes 6 & 29)
(236)
(207)
Cash rent paid on lease liabilities – Principal (note 29)
(672)
(654)
Share capital – Issued (notes 24 & 27)
48
7
– Purchased and held in trusts (note 24)
(10)
(7)
– Purchased and cancelled (note 24)
(990)
(1,001)
Loblaw common share capital – Issued (note 27)
147
61
– Purchased and held in trusts
(72)
(72)
– Purchased and cancelled
(1,008)
(882)
Dividends – To common shareholders
(399)
(381)
– To preferred shareholders
(44)
(44)
– To non-controlling interests
(221)
(272)
Proceeds from financial liabilities
—
47
Other
(215)
(147)
Cash Flows used in Financing Activities
(4,180)
(4,049)
Effect of foreign currency exchange rate changes on cash and cash equivalents
12
2
(Decrease) increase in Cash and Cash Equivalents
(403)
138
Cash and Cash Equivalents, Beginning of Year
2,451
2,313
Cash and Cash Equivalents, End of Year
$
2,048
$
2,451
See accompanying notes to the consolidated financial statements.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 93
Notes to the Consolidated Financial Statements
Note 1. Nature and Description of the Reporting Entity
George Weston Limited (“GWL” or the “Company”) is a Canadian public company incorporated in 1928, with its registered office
located at 22 St. Clair Avenue East, Toronto, Canada M4T 2S5. The Company’s parent is Wittington Investments, Limited
(“Wittington”).
The Company operates through its two reportable operating segments: Loblaw Companies Limited (“Loblaw”) and Choice
Properties Real Estate Investment Trust (“Choice Properties”). Effect of consolidation includes eliminations, intersegment
adjustments and other consolidation adjustments. 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.
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.
Note 2. Material Accounting Policies
STATEMENT OF COMPLIANCE The consolidated financial statements have been prepared in accordance with International
Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS Accounting Standards” or “GAAP”)
and using the accounting policies described herein.
These consolidated financial statements were authorized for issuance by the Company’s Board of Directors (“Board”) on
February 25, 2025.
BASIS OF PREPARATION The consolidated financial statements were prepared on a historical cost basis except for the following
items that were measured at fair value:
•
investment properties as described in note 15;
•
defined benefit pension plan assets with the obligations related to these pension plans measured at their discounted present
value as described in note 26;
•
amounts recognized for cash-settled equity-based compensation arrangements as described in note 27; and
•
certain financial instruments as described in note 30.
The accounting policies set out below have been applied consistently in the preparation of the consolidated financial statements
for all years presented.
The consolidated financial statements are presented in Canadian dollars.
FISCAL YEAR The Company’s year end is December 31. Activities are reported on a fiscal year ending on the Saturday closest to
December 31. As a result, the Company’s fiscal year is usually 52 weeks in duration but includes a 53rd week every five to six years.
The years ended December 31, 2024 and December 31, 2023 contained 52 weeks.
BASIS OF CONSOLIDATION The consolidated financial statements include the accounts of GWL and other entities that the
Company controls. Control exists when the Company has the existing rights that give it the current ability to direct the activities
that significantly affect the entities’ returns. The Company assesses control on an ongoing basis. The Company’s interest in the
voting share capital of its subsidiaries is 100%, except for Loblaw and Choice Properties (see note 5).
Structured entities are entities controlled by the Company which were designed so that voting or similar rights are not the
dominant factor in deciding who controls the entity. Structured entities are consolidated if, based on an evaluation of the substance
of its relationship with the Company, the Company concludes that it controls the structured entity. Structured entities controlled by
the Company were established under terms that impose strict limitations on the decision-making powers of the structured entities’
management and that results in the Company receiving the majority of the benefits related to the structured entities’ operations
and net assets, being exposed to the majority of risks incident to the structured entities’ activities, and retaining the majority of the
residual or ownership risks related to the structured entities or their assets.
Transactions and balances between the Company and its consolidated entities have been eliminated on consolidation.
Non-controlling interests are recorded in the consolidated financial statements and represent the non-controlling shareholders’
portion of the net assets and net earnings of Loblaw. Transactions with non-controlling interests are treated as transactions with
equity owners of the Company. Changes in GWL’s ownership interest in its subsidiaries are accounted for as equity transactions.
Choice Properties’ Trust Units held by non-controlling interests are presented as a liability as the Trust Units are redeemable for
cash at the option of the holder, subject to certain restrictions.
94 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
Loblaw consolidates the Associates as well as the franchisees of its food retail stores that are subject to a simplified franchise
agreement implemented in 2015. An “Associate” is a pharmacist-owner of a corporation that is licensed to operate a retail drug
store at a specific location using Loblaw’s trademarks. The consolidation of Associates and franchisees is based on the concept of
control, for accounting purposes, which was determined to exist through the agreements that govern the relationships between
Loblaw and the Associates and franchisees. Loblaw does not have any direct or indirect shareholdings in the corporations that
operate the Associates. Associate interest reflects the investment the Associates have in the net assets of their businesses. Under
the terms of the Associate Agreements, Shoppers Drug Mart Inc. (or an affiliate thereof) agrees to purchase the assets that the
Associates use in store operations, primarily at the carrying value to the Associate, when Associate Agreements are terminated by
either party. The Associates’ corporations and the franchisees remain separate legal entities.
BUSINESS COMBINATIONS Business combinations are accounted for using the acquisition method as of the date when control is
transferred to the Company. The Company measures goodwill as the excess of the sum of the fair value of the consideration
transferred over the net identifiable assets acquired and liabilities assumed, all measured as at the acquisition date. Transaction
costs that the Company incurs in connection with a business combination, other than those associated with the issue of debt or
equity securities, are expensed as incurred.
NET EARNINGS PER COMMON SHARE Basic net earnings per common share (“EPS”) is calculated by dividing the net earnings
available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted
EPS is calculated by adjusting the net earnings available to common shareholders and the weighted average number of common
shares outstanding for the effects of all dilutive instruments.
REVENUE RECOGNITION The Company recognizes revenue when control of the goods or services has been transferred. Revenue is
measured at the amount of consideration to which the Company expects to be entitled to.
Loblaw Retail Revenue includes the sale of goods and services to customers through corporate, franchise-owned retail food and
Associate-owned drug stores, which includes in-store pharmacies, health care services and other health and beauty products,
apparel and other general merchandise. Revenue is measured at the amount of consideration to which the Company expects to be
entitled to, net of estimated returns and sales incentives. The Company recognizes revenue made through corporate, franchise and
Associate stores at the time the point of sale is made or when service is delivered to the customers. The Company recognizes
revenue made through independent wholesale customers at the time of delivery of inventory.
For certain sale of goods in which the Company earns commissions, including but not limited to lottery and third party gift cards,
the Company records net revenue as an agent on the basis that the Company does not control pricing or bear inventory risk.
Loblaw Financial Services Revenue includes interest income on credit card loans, credit card membership fees and service fees,
commissions, and other revenue related to financial services. Interest income is recognized using the effective interest method.
Credit card membership fees and service fees are recognized when services are rendered. Commission revenue is recorded on a net
basis. Other revenue is recognized periodically or according to contractual provisions.
Choice Properties Revenue includes rental revenue on lease components, including the recovery of property taxes and insurance,
earned from tenants under lease agreements. The rental revenue is recognized on a straight-line basis over the terms of the
respective leases. Property operating cost recoveries are recognized in the period that recoverable costs are incurred to the tenants.
Contingent rental income is recognized when it arises.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 95
INCOME TAXES Current and deferred taxes are recognized in the consolidated statements of earnings, except for current and
deferred taxes related to a business combination, or amounts charged directly to equity or other comprehensive income, which are
recognized in the consolidated balance sheets.
Current tax is the expected tax payable or receivable on the taxable income or loss for the period, using tax rates enacted or
substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognized using the asset and liability method of accounting on temporary differences arising between the
financial statement carrying values of existing assets and liabilities and their respective income tax bases. Deferred tax is measured
using enacted or substantively enacted income tax rates expected to apply in the years in which those temporary differences are
expected to be recovered or settled. A deferred tax asset is recognized for temporary differences as well as unused tax losses and
credits to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax
assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit
will be realized.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets and they
relate to income taxes levied by the same taxation authority on the same taxable entity, or on different taxable entities where the
Company intends to settle its current tax assets and liabilities on a net basis.
Deferred tax is recorded on temporary differences arising on investments in subsidiaries, except where the timing of the reversal of
the temporary difference is controlled by the Company and it is probable that the temporary difference will not reverse in the
foreseeable future.
In 2023, the Company adopted the amendments to International Accounting Standard (“IAS”) 12, “Income Taxes”, issued in May
2023, introducing a mandatory temporary exception to the requirements of IAS 12 under which a company does not recognize or
disclose information about deferred tax assets and liabilities related to the proposed Organization for Economic Co-operation and
Development (“OECD”) Pillar Two model rules (“Pillar Two”). The Company applied the temporary exception as of December 31, 2024
as disclosed in note 7.
Choice Properties qualifies as a “mutual fund trust” and a real estate investment trust (“REIT”) under the Income Tax Act (Canada).
Certain legislation relating to the federal income taxation of Specified Investment Flow Through trusts or partnerships (“SIFT”)
provide that certain distributions from a SIFT will not be deductible in computing the SIFT’s taxable income and that the SIFT will
be subject to tax on such distributions at a rate that is substantially equivalent to the general tax rate applicable to Canadian
corporations.
Under the SIFT rules, the taxation regime will not apply to a REIT that meets prescribed conditions relating to the nature of its
assets and revenue (the “REIT Conditions”) and distributions may be deducted against the REIT’s taxable income. Choice Properties
has reviewed the SIFT rules and has assessed its interpretation and application to Choice Properties’ assets and revenue and has
determined that it meets the REIT Conditions. The Trustees intend to distribute annually all taxable income directly earned by
Choice Properties to Unitholders and to deduct such distributions for income tax purposes and, accordingly, no net current income
tax expense or deferred income tax assets or liabilities have been recorded in the consolidated financial statements of Choice
Properties related to its Canadian investment properties.
Choice Properties also consolidates certain taxable entities in Canada for which current and deferred income taxes are recorded.
Current tax is the expected tax payable or receivable on the taxable income or loss for the period, using tax rates enacted or
substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
CASH EQUIVALENTS Cash equivalents consist of highly liquid marketable investments, such as government treasury bills and
bankers’ acceptances with an original maturity date of 90 days or less from the date of acquisition. Credit card and debit card
transactions that typically process in three days or less are also classified as cash equivalents.
SHORT-TERM INVESTMENTS Short-term investments are investments in highly liquid and rated certificates of deposit, commercial
paper or other securities, primarily Canadian and United States government securities and notes of other creditworthy parties, with
an original term to maturity of more than 90 days and remaining term to maturity of less than one year from the date of acquisition.
SECURITY DEPOSITS Security deposits consist of cash and cash equivalents and short-term investments. Security deposits also
include amounts which are required to be placed with counterparties as collateral to enter into and maintain certain outstanding
letters of credit and certain financial derivative contracts.
Notes to the Consolidated Financial Statements
96 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
CREDIT CARD RECEIVABLES Loblaw, through President’s Choice Bank (“PC Bank”), a wholly-owned subsidiary of Loblaw, has
credit card receivables that are stated net of an allowance. Interest income is recorded in revenue and interest expense is recorded
in net interest expense and other financing charges using the effective interest method. The effective interest rate is the rate that
discounts the estimated future cash receipts through the expected life of the credit card receivable (or, where appropriate, a shorter
period) to the carrying amount. When calculating the effective interest rate, Loblaw estimates future cash flows considering all
contractual terms of the financial instrument, but not future credit losses. For credit-impaired credit card receivables, a credit-
adjusted effective interest rate is calculated using estimated future cash flows including expected credit losses.
The Company applies the expected credit loss (“ECL”) model to assess impairment on its credit card receivables at each balance
sheet date. Credit card receivables are assessed collectively for impairment by applying the three-stage approach. Refer to the
Impairment of Financial Assets policy for details of each stage. The application of the ECL model requires PC Bank to apply
significant judgments, assumptions and estimations (see note 3).
Impairment losses and reversals are recorded in selling, general and administrative expenses (“SG&A”) in the consolidated
statements of earnings with the carrying amount of the credit card receivables adjusted through the use of allowance accounts.
Loblaw, through PC Bank, participates in various securitization programs that provide the primary source of funds for the operation
of its credit card business. PC Bank maintains and monitors co-ownership interest in credit card receivables with independent
securitization trusts, in accordance with its financing requirements. PC Bank is required to absorb a portion of the related credit
losses. As a result, Loblaw has not transferred all of the risks and rewards related to these assets and continues to recognize these
assets in credit card receivables. The transferred receivables are accounted for as financing transactions. The associated liabilities
secured by these assets are included in either short-term debt or long-term debt based on their characteristics and are carried at
amortized cost. Loblaw provides a standby letter of credit for the benefit of the independent securitization trusts.
Eagle Credit Card Trust PC Bank participates in a single seller revolving co-ownership securitization program with Eagle Credit
Card Trust (“Eagle”) and continues to service the credit card receivables on behalf of Eagle, but does not receive any fee for its
servicing obligations and has a retained interest in the securitized receivables represented by the right to future cash flows after
obligations to investors have been met. Loblaw consolidates Eagle as a structured entity.
Other Independent Securitization Trusts The Other Independent Securitization Trusts administer multi-seller, multi-asset
securitization programs that acquire assets from various participants, including credit card receivables from PC Bank. These trusts
are managed by major Canadian chartered banks. PC Bank does not control the trusts through voting interests and does not
exercise any control over the trusts’ management, administration or assets. The activities of these trusts are conducted on behalf of
the participants and each trust is a conduit through which funds are raised to purchase assets through the issuance of senior and
subordinated short-term and medium-term asset backed notes. These trusts are unconsolidated structured entities.
INVENTORIES The Company values inventories at the lower of cost and net realizable value. Cost includes the costs of purchases
net of vendor allowances plus other costs, such as transportation, that are directly incurred to bring inventories to their present
location and condition. Inventories are measured at weighted average cost.
Loblaw estimates net realizable value as the amount that inventories are expected to be sold taking into consideration fluctuations
in retail prices due to seasonality less estimated costs necessary to make the sale. Inventories are written down to net realizable
value when the cost of inventories is estimated to be unrecoverable due to obsolescence, damage or declining selling prices. When
circumstances that previously caused inventories to be written down below cost no longer exist or when there is clear evidence of
an increase in selling prices, the amount of the write-down previously recorded is reversed. Storage costs, indirect administrative
overhead and certain selling costs related to inventories are expensed in the period that these costs are incurred.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 97
Notes to the Consolidated Financial Statements
98 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
VENDOR ALLOWANCES Loblaw receives allowances from certain of its vendors whose products it purchases. These allowances are
received for a variety of buying and/or merchandising activities, including vendor programs such as volume purchase allowances,
purchase discounts, listing fees and exclusivity allowances. Allowances received from a vendor are a reduction in the cost of the
vendor’s products and services, and are recognized as a reduction in the cost of sales and the related inventory in the consolidated
statements of earnings and the consolidated balance sheets, respectively, when it is probable that they will be received and the
amount of the allowance can be reliably estimated. Amounts received but not yet earned are presented in other liabilities as
deferred vendor allowances.
Certain exceptions apply if the consideration is a payment for goods or services delivered to the vendor or for direct reimbursement
of selling costs incurred to promote goods. The consideration is then recognized as a reduction of the cost incurred in the
consolidated statements of earnings.
ASSETS HELD FOR SALE Non-current assets or disposal groups are classified as assets held for sale if their carrying amount will be
recovered principally through a sale transaction rather than through continuing use. Assets classified as held for sale are measured
at the lower of the carrying amount or fair value less cost to sell and are not depreciated. The fair value measurement of assets held
for sale is categorized within Level 2 of the fair value hierarchy. Assets that were previously classified as investment properties are
measured using the fair value model consistent with properties classified as investment properties.
FIXED ASSETS Fixed assets are recognized and subsequently measured at cost less accumulated depreciation and any net
accumulated impairment losses.
Borrowing costs directly attributable to the acquisition, construction or production of fixed assets that necessarily take a substantial
period of time to prepare for their intended use and a proportionate share of general borrowings, are capitalized to the cost of those
fixed assets, based on a quarterly weighted average cost of borrowing. All other borrowing costs are expensed as incurred and
recognized in net interest expense and other financing charges.
Gains and losses on disposal of fixed assets are determined by comparing the fair value of proceeds from disposal with the net book
value of the assets and are recognized net in operating income. For transactions in which the sale of a fixed asset satisfies the
requirements of IFRS 15, “Revenue from Contracts with Customers” (“IFRS 15”), and the asset is leased back by the Company, the
Company recognizes, in operating income, only the amount of gains or losses that relate to the rights transferred to the purchaser.
Fixed assets are depreciated on a straight-line basis over their estimated useful lives to their estimated residual value when the
assets are available for use. When significant parts of a fixed asset have different useful lives, they are accounted for as separate
components and depreciated separately. Estimated useful lives are as follows:
Buildings
10 to 40 years
Equipment and fixtures
2 to 20 years
Building improvements
up to 10 years
Leasehold improvements
Lesser of term of the lease and useful life up to 25 years(i)
(i)
If it is reasonably certain that the Company will obtain ownership of the leased asset by the end of the lease term, the associated leasehold
improvements are depreciated over the useful life of the asset on the same basis as owned assets.
Fixed assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. Refer to the
Impairment of Non-Financial Assets policy.
LEASES
As a Lessee At inception of a contract, the Company determines whether a contract is or contains a lease. When a contract
contains both lease and non-lease components, the Company will allocate the consideration in the contract to each of the
components on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-
lease components. Relative stand-alone prices are determined by maximizing the most observable supplier prices for a similar asset
and/or service.
The Company recognizes a right-of-use asset and a lease liability based on the present value of future lease payments when the
leased asset is available for use by the Company. Lease payments for assets that are exempt through the short-term or low-value
exemptions and variable payments not based on an index or rate are recognized in cost of sales and SG&A on the most systematic
basis.
The measurement of lease liabilities includes the fixed and in-substance fixed payments and variable lease payments that
depend on an index or a rate, less any lease incentives receivable. If applicable, lease liabilities will also include a purchase option
exercise price if the Company is reasonably certain to exercise that option, termination penalties if the lease term also reflects the
termination option and amounts expected to be payable under a residual value guarantee. Subsequent to initial measurement,
the Company measures lease liabilities at amortized cost using the effective interest method. Lease liabilities are remeasured
when there is a change in management’s assessment of whether it will exercise a renewal or termination option or a change in
future lease payments due to a change in index or rate. Right-of-use assets are adjusted by the same remeasurement amount.
Right-of-use assets are measured at the initial amount of the lease liabilities plus any initial direct costs, lease payments made at
or before the commencement date net of lease incentives received, and decommissioning costs. Subsequent to initial
measurement, the Company applies the cost model with the exception of the fair value model application to right-of-use assets
that meet the definition of investment properties. Right-of-use assets are measured at cost less accumulated depreciation, net
accumulated impairment losses, and any remeasurements of lease liabilities. The assets are depreciated on a straight-line basis
over the earlier of the assets’ useful lives or the end of the lease terms. Right-of-use assets are reviewed at each balance sheet
date to determine whether there is any indication of impairment. Refer to the Impairment of Non-Financial Assets policy.
Discount rates used in the present value calculation are the interest rates implicit in the leases, or if the rates cannot be readily
determined, the Company's incremental borrowing rates. Lease terms applied are the contractual non-cancellable periods of
the leases plus periods covered by an option to renew the leases if the Company is reasonably certain to exercise that option
and the periods covered by an option to terminate the leases if the Company is reasonably certain not to exercise that option.
For sale and leaseback transactions, the Company applies the requirements of IFRS 15 to determine whether the transfer of the
asset should be accounted for as a sale. If the transfer of the asset is a sale in accordance with IFRS 15, the Company will measure
the right-of-use asset arising from the leaseback at the proportion of the previous carrying amount of the asset that relates to the
right of use retained by the Company. If the transfer of the asset is not a sale in accordance with IFRS 15, the Company will continue
to account for the asset under IAS 16, “Property, Plant and Equipment” and recognize the proceeds received as financial liabilities.
As a Lessor At the date the Company makes the underlying leased asset available for use to the lessee, the Company classifies
each lease as either an operating lease or a finance lease. A lease is a finance lease if it transfers substantially all the risks and
rewards of the underlying asset to the lessee; otherwise, the lease is an operating lease. Rental income from operating leases is
recognized on a straight-line basis over the lease term. Rental income from finance leases is recognized on a systematic basis that
reflects the Company's rate of return on the net investment in the leased asset.
When the Company is an intermediate lessor, it will assess the sublease classification by reference to the right-of-use asset. The
Company considers factors such as whether the sublease term covers a major portion of the head lease term.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 99
INVESTMENT PROPERTIES Investment properties include income producing properties and properties under development that
are owned by the Company and held to either earn rental income, for capital appreciation, or both. The Company’s investment
properties include single tenant properties held to earn rental income and certain multiple tenant properties. Land and buildings
leased to franchisees are not accounted for as investment properties as these properties are related to the Company’s operating
activities.
Income producing properties are measured using the fair value model. 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. Under the discounted cash flow methodology, discount rates are applied to the
future cash flows over the holding period, generally over a minimum term of ten years, including a terminal value of the investment
properties based on a terminal capitalization rate applied to the estimated net operating income in the terminal year. 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.
When a property changes from own use to investment property, the property is remeasured to fair value. Any gain arising from the
remeasurement is recognized in operating income to the extent that it reverses a previous impairment loss on that property, with
any remaining gain recognized in other comprehensive income. Any loss on remeasurement is recognized in operating income. All
subsequent changes in fair value of the property are recognized in operating income. Upon sale of an investment property that was
previously classified as fixed assets, amounts included in the revaluation reserve are transferred to retained earnings.
When an investment property carried at fair value changes to own use, the property is recognized in fixed assets at the fair value at
the date of change in use. The property is subsequently accounted for under the accounting policy for fixed assets.
Properties under development include specifically identifiable costs incurred in the period before construction is complete, and are
transferred to income producing properties at their fair value upon practical completion.
JOINT ARRANGEMENTS The Company, through Choice Properties, owns investments under joint arrangements. Joint
arrangements are arrangements of which two or more parties have joint control. Joint control is the contractual sharing of control
of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing
control. Joint arrangements are classified as either joint operations or joint ventures depending on Choice Properties’ rights and
obligations in the arrangement based on factors such as the structure, legal form and contractual terms of the arrangement.
Joint Ventures A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to
the net assets of the joint arrangement.
The Company’s investment in a joint venture is recorded using the equity method and is initially recognized in the consolidated
balance sheet at cost and adjusted thereafter to recognize Choice Properties’ share of the profit or loss and other comprehensive
income or loss of the joint venture. The Company’s share of the joint venture’s profit or loss is recognized in the Company’s
operating income and other comprehensive income.
A joint venture is considered to be impaired if there is objective evidence of impairment, as a result of one or more events that
occurred after initial recognition of the joint venture, and that event has a negative impact on the future cash flows of the joint
venture that can be reliably estimated.
Joint Operations A joint operation is a joint arrangement whereby the parties that have joint control have rights to the assets and
obligations for the liabilities relating to the arrangement. The financial statements of the joint operations are prepared for the same
reporting period as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the
Company’s. The Company recognizes its proportionate share of assets, liabilities, revenues and expenses of the joint operations.
GOODWILL Goodwill arising in a business combination is recognized as an asset at the date that control is acquired. Goodwill is
subsequently measured at cost less accumulated impairment losses. Goodwill is not amortized but is tested for impairment on an
annual basis or more frequently if there are indicators that goodwill may be impaired as described in the Impairment of Non-
Financial Assets policy.
INTANGIBLE ASSETS Intangible assets with finite lives are measured at cost less accumulated amortization and any accumulated
impairment losses. These intangible assets are amortized on a straight-line basis over their estimated useful lives, ranging from 3 to
30 years, and are tested for impairment as described in the Impairment of Non-Financial Assets policy. Useful lives, residual values
and amortization methods for intangible assets with finite useful lives are reviewed at least annually. Amortization expense for
intangible assets is recognized in SG&A.
Indefinite life intangible assets are measured at cost less any accumulated impairment losses. These intangible assets are tested for
impairment on an annual basis or more frequently if there are indicators that intangible assets may be impaired as described in the
Impairment of Non-Financial Assets policy.
Notes to the Consolidated Financial Statements
100 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
IMPAIRMENT OF NON-FINANCIAL ASSETS At each balance sheet date, the Company reviews the carrying amounts of its non-
financial assets at the cash generating unit (“CGU”) level, other than inventories, deferred tax assets and investment properties, to
determine whether there is any indication of impairment. If any such indication exists, the asset is then tested for impairment by
comparing its recoverable amount to its carrying value. Goodwill and indefinite life intangible assets are tested for impairment at
least annually.
For the purpose of impairment testing, assets, including right-of-use assets, are grouped together into the smallest group of assets
that generate cash inflows from continuing use that are largely independent of cash inflows of other assets or groups of assets. This
grouping is referred to as a CGU. The Company has determined that each retail location is a separate CGU for purposes of
impairment testing.
Goodwill arising from a business combination is tested for impairment at the minimum grouping of CGUs that are expected to
benefit from the synergies of the business combination from which the goodwill arose.
The recoverable amount of a CGU or CGU grouping is the higher of its value in use and its fair value less costs to sell. Value in use is
based on the estimated future cash flows from the CGU or CGU grouping discounted to their present value using a pre-tax discount
rate in a discounted cash flow model that reflects current market assessments of the time value of money and the risks specific to
the CGU or CGU grouping. If the CGU or CGU grouping includes right-of-use assets in its carrying amount, the pre-tax discount rate
reflects the risks associated with the exclusion of lease payments from the estimated future cash flows. The fair value less costs to
sell reflects the amount that could be obtained from the disposal of the CGU or CGU grouping in an arm’s length transaction
between knowledgeable and willing parties, net of estimates of the costs of disposal.
An impairment loss is recognized if the carrying amount of a CGU or CGU grouping exceeds its recoverable amount. For asset
impairments other than goodwill, the impairment loss reduces the carrying amounts of the non-financial assets in the CGU on a
pro-rata basis, up to an asset’s individual recoverable amount. Any loss identified from goodwill impairment testing is first applied
to reduce the carrying amount of goodwill allocated to the CGU grouping, and then to reduce the carrying amounts of the other
non-financial assets in the CGU or CGU grouping on a pro-rata basis.
For assets other than goodwill, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed
the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been
recognized. An impairment loss in respect of goodwill is not reversed.
Impairment losses and reversals are recognized in SG&A.
CUSTOMER LOYALTY AWARDS PROGRAM Loblaw defers revenue at the time the award is earned by loyalty program members
based on the relative fair value of the award. The relative fair value is determined by allocating consideration between the fair value
of the loyalty awards earned by loyalty program members, net of breakage, and the goods and services on which the awards were
earned, based on their relative stand-alone selling price. The estimated fair value per point for the PC OptimumTM loyalty program is
determined based on the program reward schedule and is $1 for every 1,000 points earned. The breakage rate of the program is an
estimate of the amount of points that will never be redeemed. The rate is reviewed on an ongoing basis and is estimated
utilizing historical redemption activity and anticipated earn and redeem behaviour of members. The majority of Loblaw’s loyalty
liability, a contract liability, is expected to be redeemed and recognized as revenue within one year of issuance.
FINANCIAL INSTRUMENTS AND DERIVATIVE FINANCIAL INSTRUMENTS Financial assets and liabilities are recognized when the
Company becomes party to the contractual provisions of the financial instrument. Upon initial recognition, financial instruments,
including derivatives and embedded derivatives in certain contracts, are measured at fair value plus or minus transaction costs that
are directly attributable to the acquisition or issue of financial instruments that are not classified as fair value through profit or loss.
Fair values are based on quoted market prices where available from active markets, otherwise fair values are estimated using
valuation methodologies, primarily discounted cash flows taking into account external market inputs where possible. The
amortized cost of a financial asset or liability is the amount at which the financial asset or liability is measured at initial recognition,
minus principal payments, plus or minus the cumulative amortization using the effective interest method of any difference
between the initial amount recognized and the maturity amount, minus any reduction for impairment.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 101
The following table summarizes the classification and measurement of the Company’s financial assets and liabilities:
Asset / Liability
Classification / Measurement
Cash and cash equivalents
Amortized cost
Short-term investments
Amortized cost
Accounts receivable
Amortized cost
Credit card receivables
Amortized cost
Security deposits
Fair value through profit and loss
Certain other assets
Amortized cost / fair value through profit and loss
Long-term securities
Fair value through other comprehensive income
Bank indebtedness
Amortized cost
Trade payables and other liabilities
Amortized cost
Demand deposits from customers
Amortized cost
Short-term debt
Amortized cost
Long-term debt
Amortized cost
Trust Unit liability
Fair value through profit and loss
Associate interest
Amortized cost
Certain other liabilities
Amortized cost
Derivatives
Fair value through profit and loss / fair value through other comprehensive income
Financial derivative instruments in the form of forwards and futures, as well as non-financial derivatives in the form of futures
contracts, options contracts and forward contracts, are recorded at fair value on the consolidated balance sheet. The Company does
not use derivative instruments for speculative purposes. Embedded derivatives are separated from the host contract and
accounted for separately on the consolidated balance sheet at fair value if the host contract is not a financial asset. Derivative
instruments are recorded in current or non-current assets and liabilities based on their remaining terms to maturity. All changes in
fair values of the derivative instruments are recorded in net earnings unless the derivative qualifies and is effective as a hedging
item in a designated hedging relationship.
The Company has cash flow hedges which are used to manage exposure to fluctuations in foreign currency exchange and interest
rates. The effective portion of the change in fair value of the hedging item is recorded in other comprehensive income. If the
change in fair value of the hedging item is not completely offset by the change in fair value of the hedged item, the ineffective
portion of the hedging relationship is recorded in net earnings. Amounts accumulated in other comprehensive income are
reclassified to net earnings when the hedged item is recognized in net earnings. The Company ensures that the hedge accounting
relationships are aligned with the Company’s risk management objectives and strategy and applies a more qualitative and forward-
looking approach to assessing hedge effectiveness. The Company’s risk management strategy and hedging activities are disclosed
in note 30, “Financial Instruments” and note 31, “Financial Risk Management”.
Gains and losses on financial assets and financial liabilities classified as fair value through profit and loss (“FVTPL”) are recognized in
net earnings in the period in which they are incurred. Settlement date accounting is used to account for the purchase and sale of
financial assets. Gains or losses between the trade date and settlement date on FVTPL financial assets are recorded in net earnings.
Notes to the Consolidated Financial Statements
102 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
Valuation Process The determination of the fair value of financial instruments is performed by the Company’s treasury and
financial reporting departments on a quarterly basis. There was no change in the valuation techniques applied to financial
instruments during the current year. The following table describes the valuation techniques used in the determination of the fair
values of financial instruments:
Type
Valuation Approach
Cash and cash equivalents, Short-term investments,
Security deposits, Accounts receivable, Credit card
receivables, Bank indebtedness, Trade payables and
other liabilities, Demand deposits from customers
and Short-term debt
The carrying amount approximates fair value due to the short-term
maturity of these instruments.
Derivatives
Specific valuation techniques used to value derivative financial
instruments include:
. Quoted market prices or dealer quotes for similar instruments; and
. The fair values of other derivative instruments are determined based
on observable market information as well as valuations determined
by external valuators with experience in financial markets.
Long-term debt, Trust Unit liability and Certain other
financial instruments
The fair value is based on the present value of contractual cash flows,
discounted at the Company’s current incremental borrowing rate for
similar types of borrowing arrangements or, where applicable, quoted
market prices.
Impairment of Financial Assets The Company applies a forward-looking ECL model at each balance sheet date to financial assets
measured at amortized cost or those measured at fair value through other comprehensive income, except for investments in equity
instruments.
The ECL model applied to financial assets requires judgment, assumptions and estimations on changes in credit risks, forecasts of
future economic conditions and historical information on the credit quality of the financial asset. Consideration of how changes in
economic factors affect ECLs are determined on a probability-weighted basis.
Impairment losses and reversals are recorded in SG&A with the carrying amount of the financial asset or group of financial assets
adjusted through the use of allowance accounts.
FOREIGN CURRENCY TRANSLATION The functional currency of the Company is the Canadian dollar.
Transactions in foreign currencies are translated into the functional currency at the foreign currency exchange rates that
approximate the rates in effect at the dates when such items are transacted. Monetary assets and liabilities denominated in foreign
currencies are translated into the functional currency at the exchange rate at the balance sheet date. Non-monetary items that are
measured based on historical cost in a foreign currency are translated at the exchange rate at the date of the transaction. Foreign
currency differences are recognized in operating income.
The assets and liabilities of foreign operations that have a functional currency different from that of the Company, including
goodwill and fair value adjustments arising on acquisition, are translated into the functional currency at the foreign currency
exchange rate in effect at the balance sheet date. Revenues and expenses of foreign operations are translated into Canadian dollars
at the foreign currency exchange rates that approximate the rates in effect at the dates when such items are transacted. The
resulting foreign currency exchange gains or losses are recognized in the foreign currency translation adjustment as part of other
comprehensive income. When such foreign operation is disposed of, the related foreign currency translation reserve is recognized
in net earnings as part of the gain or loss on disposal. On the partial disposal of such foreign operation, the relevant proportion is
reclassified to net earnings.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 103
DEFINED BENEFIT POST-EMPLOYMENT PLANS The Company has a number of contributory and non-contributory defined benefit
post-employment plans providing pension and other benefits to eligible employees. The defined benefit pension plans provide a
pension based on length of service and eligible pay. The other defined benefits include health care, life insurance and dental
benefits provided to eligible employees who retire at certain ages having met certain service requirements. The Company’s net
defined benefit plan obligations (assets) for each plan are actuarially calculated by a qualified actuary at the end of each annual
reporting period using the projected unit credit method pro-rated based on service and management’s best estimate of the
discount rate, the rate of compensation increase, retirement rates, termination rates, mortality rates and expected growth rate of
health care costs. The discount rate used to value the defined benefit plan obligation is based on high quality corporate bonds
denominated in the same currency with cash flows that match the terms of the defined benefit plan obligations. Past service costs
(credits) arising from plan amendments are recognized in operating income in the year that they arise. The actuarially determined
net interest costs on the net defined benefit plan obligation are recognized in net interest expense and other financing charges.
The fair values of plan assets are deducted from the defined benefit plan obligations to arrive at the net defined benefit plan
obligations (assets). For plans that result in a net defined benefit asset, the recognized asset is limited to the present value of
economic benefits available in the form of future refunds from the plan or reductions in future contributions to the plan (“asset
ceiling”). If it is anticipated that the Company will not be able to recover the value of the net defined benefit asset, after considering
minimum funding requirements, the net defined benefit asset is reduced to the amount of the asset ceiling. When the payment in
the future of minimum funding requirements related to past service would result in a net defined benefit surplus or an increase in a
surplus, the minimum funding requirements are recognized as a liability to the extent that the surplus would not be fully available
as a refund or a reduction in future contributions.
Remeasurements including actuarial gains and losses, the effect of the asset ceiling (if applicable) and the impact of any minimum
funding requirements are recognized through other comprehensive income and subsequently reclassified from accumulated other
comprehensive income to retained earnings.
OTHER LONG-TERM EMPLOYEE BENEFIT PLANS The Company offers other long-term employee benefits including contributory
long-term disability benefits and non-contributory continuation of health care and dental benefits to employees who are on long-
term disability leave. As the amount of the long-term disability benefit does not depend on length of service, the obligation is
recognized when an event occurs that gives rise to an obligation to make payments. The accounting for other long-term employee
benefit plans is similar to the method used for defined benefit plans except that all actuarial gains and losses are recognized in
operating income.
DEFINED CONTRIBUTION PLANS The Company maintains a number of defined contribution pension plans for employees in which
the Company pays fixed contributions for eligible employees into a registered plan and has no further significant obligation to pay
any further amounts. The costs of benefits for defined contribution plans are expensed as employees have rendered service.
MULTI-EMPLOYER PENSION PLANS The Company participates in multi-employer pension plans (“MEPPs”) which are accounted
for as defined contribution plans. The Company’s responsibility to make contributions to these plans is limited to amounts
established pursuant to its collective agreements. Defined benefit MEPPs are accounted for as defined contribution plans as
adequate information to account for the Company’s participation in the plans is not available due to the size and number of
contributing employers in the plans. The contributions made by the Company to MEPPs are expensed as contributions are due.
Notes to the Consolidated Financial Statements
104 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
EQUITY-SETTLED EQUITY-BASED COMPENSATION PLANS Stock options, Restricted Share Units (“RSUs”), Performance Share
Units (“PSUs”), Director Deferred Share Units (“DSUs”) and Executive Deferred Share Units (“EDSUs”) issued by the Company are
substantially all settled in common shares and are accounted for as equity-settled awards.
The Company and Loblaw’s stock options outstanding have a seven year term to expiry, vest 20% cumulatively on each anniversary
date of the grant and are exercisable at the designated common share price, which is based on the greater of the volume weighted
average trading prices of GWL or Loblaw common shares for either the five trading days prior to the date of grant or the trading day
immediately preceding the grant date. The fair value of each tranche of options granted is measured separately at the grant date
using a Black-Scholes option pricing model, and includes the following assumptions:
•
The expected dividend yield is estimated based on the expected annual dividend prior to the option grant date and the closing
share price as at the option grant date;
•
The expected share price volatility is estimated based on the historical volatility of GWL or Loblaw over a period consistent with
the expected life of the options;
•
The risk-free interest rate is estimated based on the Government of Canada bond yield in effect at the grant date for a term to
maturity equal to the expected life of the options; and
•
The effect of expected exercise of options prior to expiry is incorporated into the weighted average expected life of the options,
which is based on historical experience and general option holder behaviour.
RSUs and PSUs vest after the end of a three year performance period. The number of PSUs that vest is based on the achievement of
specified performance measures. The fair value of each RSU and PSU granted is measured separately at the grant date based on
the market value of a GWL or Loblaw common share. Dividends paid may be reinvested in RSUs and PSUs and are treated as
capital transactions.
GWL and Loblaw established trusts for each of their RSU and PSU plans to facilitate the purchase of shares for future settlement
upon vesting. Each company is the sponsor of their respective trusts and has assigned Computershare Trust Company of Canada as
the trustee. GWL and Loblaw fund the purchase of shares for settlement. The trusts are considered structured entities and are
consolidated in the Company’s financial statements with the cost of the acquired shares recorded at book value as a reduction to
share capital. Any premium on the acquisition of the shares above book value is applied to retained earnings until the shares are
issued to settle RSU and PSU plan obligations.
Members of GWL’s and Loblaw’s Board, who are not management, may elect to receive a portion of their annual retainers and fees
in the form of DSUs. Eligible executives of the Company may elect to defer up to 100% of the Short-Term Incentive Plan earned in
any year into the EDSU plan. Dividends paid earn fractional DSUs and EDSUs, respectively and are treated as capital transactions.
DSUs and EDSUs vest upon grant.
The compensation expense for equity-settled plans is prorated over the vesting or performance period, with a corresponding
increase to contributed surplus. Forfeitures are estimated at the grant date and are revised to reflect changes in expected or actual
forfeitures.
Upon exercise of options, the amount accumulated in contributed surplus for the award plus the cash received upon exercise is
recognized as an increase in share capital. Upon settlement of RSUs and PSUs, the amount accumulated in contributed surplus for
the award is reclassified to share capital, with any premium or discount applied to retained earnings.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 105
CASH-SETTLED EQUITY-BASED COMPENSATION PLANS Unit Options, Restricted Units (“RUs”), Performance Units (“PUs”), Trustee
Deferred Units (“DUs”), and Unit-Settled Restricted Units (“URUs”) issued by Choice Properties are accounted for as cash-settled
awards. The fair value of the amount payable to recipients in respect of these cash settled awards is re-measured at each balance
sheet date, and a compensation expense is recognized in SG&A over the vesting period for each tranche with a corresponding
change in the liability.
Choice Properties’ Unit Options have a five to ten year term, vest 25% cumulatively on each anniversary date of the grant and are
exercisable at the designated Unit price, which is based on the greater of the volume weighted average trading price of a Unit for
the five trading days prior to the date of grant or the trading day immediately preceding the grant date. The fair value of each
tranche is valued separately using a Black-Scholes option pricing model, and includes the following assumptions:
•
The expected distribution yield is estimated based on the expected annual distribution prior to the balance sheet date and the
closing Unit price as at the balance sheet date;
•
The expected Unit price volatility is estimated based on the average volatility of Choice Properties’ Unit price over a period
consistent with the expected life of the options;
•
The risk-free interest rate is estimated based on the Government of Canada bond yield in effect at the balance sheet date for a
term to maturity equal to the expected life of the options; and
•
The effect of expected exercise of options prior to expiry is incorporated into the weighted average expected life of the options,
which is based on expectations of option holder behaviour.
RUs entitle certain employees to receive the value of the RU award in cash or Units at the employee’s discretion at the end of the
applicable vesting period, which is usually three years in length. The RU plan provides for the crediting of additional RUs in respect
of distributions paid on Units for the period when a RU is outstanding. The fair value of each RU granted is measured based on the
market value of a Unit at the balance sheet date.
PUs entitle certain employees to receive the value of the PU award in cash or Units at the end of the applicable performance period,
which is usually three years in length, based on Choice Properties achieving certain performance conditions. The PU plan provides
for the crediting of additional PUs in respect of distributions paid on Units for the period when a PU is outstanding. The fair value of
each PU granted is measured based on the market value of a Unit and an estimate of the performance conditions being met at the
balance sheet date.
Members of the Choice Properties’ Board of Trustees, who are not management of Choice Properties, are required to receive a
portion of their annual retainer in the form of DUs and may also elect to receive up to 100% of their remaining fees in DUs.
Distributions paid earn fractional DUs, which are treated as additional awards. DUs vest upon grant. The fair value of each DU
granted is measured based on the market value of a Unit at the balance sheet date.
URUs are accounted for as cash-settled awards. Typically, full vesting of the URUs would not occur until the employee had remained
with Choice Properties for three years from the grant date. Depending on the nature of the grant, the URUs are subject to a six-year
holding period during which the Units cannot be disposed. The fair value of each URU granted is measured based on the market
value of a Unit at the balance sheet date, less a discount to account for the vesting and holding period restriction placed on the
URUs.
EMPLOYEE SHARE OWNERSHIP PLAN GWL’s and Loblaw’s contributions to the Employee Share Ownership Plan (“ESOP”) are
measured at cost and recorded as compensation expense in operating income when the contribution is made. The ESOPs are
administered through a trust which purchases GWL’s and Loblaw’s common shares on the open market on behalf of its employees.
ADOPTION OF ACCOUNTING AMENDMENTS
Amendments to IAS 7 and IFRS 7 In May 2023, amendments to IAS 7, “Statement of Cash Flows” and IFRS 7, “Financial
Instruments: Disclosures” were issued to enhance the transparency of supplier finance arrangements. The amendments require
further disclosure for supplier finance arrangements regarding the terms and conditions, the range of payment due dates, and how
they affect an entity’s cash flows, liabilities and exposure to liquidity risk. The amendments are effective for annual reporting periods
beginning on or after January 1, 2024. The Company has included the required disclosure in note 20.
Notes to the Consolidated Financial Statements
106 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
Note 3. Critical Accounting Estimates and Judgments
The preparation of the consolidated financial statements requires management to make estimates and judgments in applying the
Company’s accounting policies that affect the reported amounts and disclosures made in the consolidated financial statements
and accompanying notes.
Within the context of these consolidated financial statements, a judgment is a decision made by management in respect of the
application of an accounting policy, a recognized or unrecognized financial statement amount and/or note disclosure, following an
analysis of relevant information that may include estimates and assumptions. Estimates and assumptions are used mainly in
determining the measurement of balances recognized or disclosed in the consolidated financial statements and are based on a set
of underlying data that may include management’s historical experience, knowledge of current events and conditions and other
factors that are believed to be reasonable under the circumstances. Management continually evaluates the estimates and
judgments it uses.
The following are the accounting policies subject to judgments and key estimation uncertainty that the Company believes could
have the most significant impact on the amounts recognized in the consolidated financial statements. The Company’s material
accounting policies are disclosed in note 2.
BASIS OF CONSOLIDATION
Judgments Made in Relation to Accounting Policies Applied The Company uses judgment in determining the entities that it
controls and therefore consolidates. The Company controls an entity when the Company has the existing rights that give it the
current ability to direct the activities that significantly affect the entity’s returns. The Company consolidates all of its wholly owned
subsidiaries. Judgment is applied in determining whether the Company controls the entities in which it does not have ownership
rights or does not have full ownership rights. Most often, judgment involves reviewing contractual rights to determine if rights are
participating (giving power over the entity) or protective rights (protecting the Company’s interest without giving it power).
INVENTORIES
Key Estimations Inventories are carried at the lower of cost and net realizable value which requires the Company to utilize
estimates related to fluctuations in shrink, future retail prices, the impact of vendor rebates on cost, seasonality and costs necessary
to sell the inventory.
IMPAIRMENT OF NON-FINANCIAL ASSETS (GOODWILL, INTANGIBLE ASSETS, FIXED ASSETS AND RIGHT-OF-USE ASSETS)
Judgments Made in Relation to Accounting Policies Applied The Company uses judgment in determining CGUs for the purpose
of testing fixed assets, right-of-use assets and intangible assets for impairment. Judgment is also used to determine the goodwill
CGUs for the purpose of testing goodwill for impairment. The Company has determined that each retail location is a separate CGU.
Intangible assets are allocated to the CGUs (or groups of CGUs) to which they relate. Goodwill is allocated to CGUs (or groups of
CGUs) based on the level at which management monitors goodwill, which cannot be higher than an operating segment. The
allocation of goodwill is made to CGUs (or groups of CGUs) that are expected to benefit from the synergies and future growth of the
business combination from which they arose. In addition, judgment is used to determine whether a triggering event has occurred
requiring an impairment test to be completed. In applying this judgment management considers profitability of the CGU and other
qualitative factors.
Key Estimations In determining the recoverable amount of a CGU or a group of CGUs, various estimates are employed. The
Company determines fair value less costs to sell using such estimates as market rental rates for comparable properties, discount
rates and capitalization rates. The Company determines value in use by using estimates including projected future sales and
earnings, and discount rates consistent with external industry information reflecting the risk associated with the specific cash flows.
IMPAIRMENT OF CREDIT CARD RECEIVABLES
Judgments Made in Relation to Accounting Policies Applied and Key Estimations In each stage of the ECL model, impairment is
determined based on the probability of default, loss given default, and expected exposures at default on drawn and undrawn
exposures on credit card receivables. The application of the ECL model requires management to apply the following significant
judgments, assumptions and estimations:
•
Movement of impairment measurement between the three stages of the ECL model, based on the assessment of the increase
in credit risks on credit card receivables. The assessment of changes in credit risks includes qualitative and quantitative factors
of the accounts, such as historical credit loss experience and external credit scores;
•
Thresholds for significant increase in credit risk based on changes in probability of default over the expected life of the
instrument relative to initial recognition; and
•
Forecasts of future economic conditions, namely the unemployment rate. Management uses an average of unemployment
rate forecasts published by major Canadian Chartered Banks and the Conference Board of Canada to establish the base case
scenario and other representative ranges of possible forecast scenarios.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 107
CUSTOMER LOYALTY AWARDS PROGRAM
Key Estimations The Company defers revenue at the time the award is earned by members based on the relative fair value of the
award. The relative fair value is determined by allocating consideration between the fair value of the loyalty awards earned by
loyalty program members, net of breakage, and the goods and services on which the awards were earned, based on their relative
stand-alone selling price. The estimated fair value per point for the PC Optimum loyalty program is determined based on the
program reward schedule and is $1 for every 1,000 points earned. The breakage rate of the program is an estimate of the amount of
points that will never be redeemed. The rate is reviewed on an ongoing basis and is estimated utilizing historical redemption
activity and anticipated earn and redeem behaviour of members. In 2024, Loblaw recorded a charge of $129 million. This charge
represents the revaluation of the loyalty liability for outstanding points.
FAIR VALUE OF INCOME PRODUCING PROPERTIES
Key Estimations The fair value of income producing properties is dependent on significant assumptions related to discount rates
and terminal capitalization rates, and other assumptions related to the future cash flows over the holding period. The review of
future cash flows involves assumptions relating to market rents, as well as current leasing and/or development activity, renewal
probability, downtime on lease expiry, vacancy allowances, and expected maintenance costs. In addition to reviewing future cash
flows, management assesses changes in the business climate and other factors, which may affect the ultimate value of the
property. These assumptions may not ultimately be achieved.
INCOME AND OTHER TAXES
Judgments Made in Relation to Accounting Policies Applied The calculation of current and deferred income taxes requires
management to make certain judgments including expectations about future operating results, the timing and reversal of
temporary differences, and the interpretation of tax rules in jurisdictions where the Company performs activities. Where the
amount of tax payable or recoverable is uncertain, the Company establishes provisions based on the most likely amount of the
liability or recovery.
PROVISIONS
Judgments Made in Relation to Accounting Policies Applied and Key Estimations The recording of provisions requires
management to make certain judgments regarding whether there is a present legal or constructive obligation as a result of a past
event, it is probable that the Company will be required to settle the obligation and if a reliable estimate of the amount of the
obligation can be made. The Company has recorded provisions primarily in respect of self-insurance and legal claims. The Company
reviews the merits, risks and uncertainties of each provision, based on current information, and the amount expected to be required
to settle the obligation. Provisions are reviewed on an ongoing basis and are adjusted accordingly when new facts and events
become known to the Company.
LEASES
Judgments Made in Relation to Accounting Policies Applied Management exercises judgment in determining the appropriate
lease term on a lease by lease basis. Management considers all facts and circumstances that create an economic incentive to
exercise a renewal option or to not exercise a termination option including investments in major leaseholds, store performances,
past business practice and the length of time remaining before the option is exercisable. The periods covered by renewal options
are only included in the lease term if management is reasonably certain to renew. Management considers reasonably certain to be
a high threshold. Changes in the economic environment or changes in the retail industry may impact management’s assessment
of lease terms, and any changes in management’s estimate of lease terms may have a material impact on the Company’s
consolidated balance sheets and statements of earnings.
Key Estimations In determining the carrying amount of right-of-use assets and lease liabilities, the Company is required to
estimate the incremental borrowing rate specific to each leased asset or portfolio of leased assets if the interest rate implicit in the
lease is not readily determined. Management determines the incremental borrowing rate using a base risk-free interest rate
estimated by reference to the Government of Canada bond yield with an adjustment that reflects the Company’s credit rating, the
security, lease term and value of the underlying leased asset, and the economic environment in which the leased asset operates.
The incremental borrowing rates are subject to change due to changes in the business and macroeconomic environment.
Notes to the Consolidated Financial Statements
108 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
Note 4. IFRS Accounting Standards and Amendments
Amendments to IFRS 9 and IFRS 7 In May 2024, amendments to IFRS 9, “Financial Instruments” (“IFRS 9”) and IFRS 7, “Financial
Instruments: Disclosures” (“IFRS 7”) were issued. The amendments clarify the timing of recognition and derecognition for a financial
asset or financial liability, including clarifying that a financial liability is derecognized on the settlement date. In addition to these
clarifications, the amendments introduce an accounting policy choice to derecognize financial liabilities settled using an electronic
payment system before the settlement date, if specific conditions are met. Also included in the amendments, are clarifications
regarding the classification of financial assets, including those with features linked to environmental, social and corporate
governance. Under the amendments, additional disclosures are required for financial instruments with contingent features and
investments in equity instruments classified at fair value through other comprehensive income. These amendments are effective
for annual reporting periods beginning on or after January 1, 2026. Early adoption is permitted, with an option to early adopt only
the amendments to the classification of financial assets. The adoption is not expected to have a material impact on the Company’s
consolidated financial statements.
Amendments to IFRS 9 and IFRS 7 In December 2024, amendments to IFRS 9 and IFRS 7 were issued to enhance the
transparency of nature-dependent electricity contracts. The amendments allow a company to apply an own-use exemption to
certain power purchase agreements if certain requirements are met. The amendments require further disclosure where an own-
use exemption is applied regarding the contractual features exposing the company to variability in electricity volume and risk of
oversupply, unrecognized contractual commitments and the effect of the contracts on an entity’s financial performance. The
amendments are effective for annual reporting periods beginning on or after January 1, 2026. The Company is currently assessing
the impact of these amendments.
IFRS 18 In April 2024, IFRS 18, “Presentation and Disclosure in Financial Statements” was issued to achieve comparability of the
financial performance of similar entities. The standard, which replaces IAS 1 “Presentation of Financial Statements”, impacts the
presentation of primary financial statements and notes, including the statement of earnings where companies will be required to
present separate categories of income and expense for operating, investing, and financing activities with prescribed subtotals for
each new category. The standard will also require management-defined performance measures to be explained and included in a
separate note within the consolidated financial statements. The standard is effective for annual reporting periods beginning on or
after January 1, 2027, including interim financial statements, and requires retrospective application. The Company is currently
assessing the impact of the new standard.
Note 5. Subsidiaries
The table below summarizes the Company’s principal subsidiaries. The proportion of ownership interests held equals the voting
rights held by the Company. GWL’s ownership in Loblaw and Choice Properties is impacted by changes in Loblaw’s common share
equity and Choice Properties’ Trust Units, respectively.
As at
Dec. 31, 2024
Dec. 31, 2023
Number
of shares
/units held
Ownership
interest
Number
of shares
/ units held
Ownership
interest
Loblaw
Common shares(i)
158,853,468
52.6%
163,473,491
52.6%
Class B LP Units(ii)
395,786,525
n/a
395,786,525
n/a
Trust Units
50,661,415
n/a
50,661,415
n/a
Choice Properties
446,447,940
61.7%
446,447,940
61.7%
(i)
GWL participates in Loblaw’s Normal Course Issuer Bid (“NCIB”) program in order to maintain its proportionate percentage ownership.
(ii)
Class B LP Units (“Exchangeable Units”) are economically equivalent to Trust Units, receive distributions equal to the distributions paid on Trust
Units and are exchangeable, at the holder's option, into Trust Units.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 109
Note 6. Net Interest Expense and Other Financing Charges
($ millions)
2024
2023
Interest expense:
Long-term debt
$
654
$
625
Lease liabilities (note 29)
236
207
Borrowings related to credit card receivables
85
82
Trust Unit distributions
210
207
Independent funding trusts
35
37
Post-employment and other long-term employee benefits (note 26)(i)
7
15
Bank indebtedness
1
1
Financial liabilities (note 23)
44
44
Capitalized interest(ii)
(40)
(7)
$
1,232
$
1,211
Interest income:
Accretion income
$
(2)
$
(3)
Interest income
(84)
(88)
Other interest income (note 32)
(10)
—
$
(96)
$
(91)
Fair value adjustment of the Trust Unit liability (note 30)
$
(164)
$
(231)
Net interest expense and other financing charges
$
972
$
889
(i)
Includes $1 million (2023 – $9 million) net interest expense from post-employment benefits and $6 million (2023 – $6 million) net interest expense
from other long-term employee benefits.
(ii)
Includes borrowing costs of $37 million (2023 – nil) at Loblaw, which were capitalized related to the construction of the automated distribution
facility, and $3 million (2023 – $7 million) of interest at Choice Properties that was capitalized to qualifying development projects.
Notes to the Consolidated Financial Statements
110 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
Note 7. Income Taxes
The components of income taxes recognized in the consolidated statements of earnings were as follows:
($ millions)
2024
2023
Current income taxes
Current period
$
1,144
$
1,137
Adjustments in respect of prior periods
(8)
(41)
Deferred income taxes
Origination and reversal of temporary differences
(221)
(241)
Adjustments in respect of prior periods
(7)
(6)
Income taxes
$
908
$
849
Income tax expense (recovery) recognized in other comprehensive income was as follows:
($ millions)
2024
2023
Net defined benefit plan actuarial gains (note 26)
$
28
$
71
Adjustment to fair value on transfer of investment properties
8
2
Unrealized (losses) gains on cash flow hedges (note 30)
(3)
2
Total income tax expense recognized in other comprehensive income
$
33
$
75
The effective tax rates in the consolidated statements of earnings were reported at rates different than the weighted average basic
Canadian federal and provincial statutory income tax rates for the following reasons:
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 111
2024
2023
Weighted average basic Canadian federal and provincial statutory income tax rate
26.5%
26.5%
Net (decrease) increase resulting from:
Non-deductible and non-taxable items
(0.1) %
(0.9) %
Impact of fair value adjustment of Trust Unit liability
(1.3) %
(1.7) %
Adjustments in respect of prior periods
(0.4) %
(1.3) %
Tax on GWL participation in Loblaw’s NCIB
2.0 %
1.9 %
Other
—
(0.1) %
Effective tax rate applicable to earnings before income taxes
26.7%
24.4%
Deferred income tax assets which were not recognized on the consolidated balance sheets were as follows:
As at
($ millions)
Dec. 31, 2024
Dec. 31, 2023
Deductible temporary differences
$
21
$
14
Income tax losses and credits
396
362
Unrecognized deferred income tax assets
$
417
$
376
Certain non-capital loss carryforwards expire in the years 2026 to 2043. The deductible temporary differences do not expire under
current income tax legislation. Deferred income tax assets were not recognized in respect of these items because it is not probable
that future taxable income will be available to the Company to utilize the benefits.
Deferred income tax assets and liabilities recognized on the consolidated balance sheets were attributable to the following:
As at
($ millions)
Dec. 31, 2024
Dec. 31, 2023
Trade payables and other liabilities
$
177
$
106
Other liabilities
352
331
Lease liabilities
1,582
1,423
Fixed assets
(1,275)
(1,253)
Right-of-use assets
(1,284)
(1,144)
Goodwill and intangible assets
(1,145)
(1,281)
Non-capital loss carryforwards (expiring 2026 to 2043)
47
65
Capital loss carryforwards
10
13
Other
(11)
8
Net deferred income tax liabilities
$
(1,547)
$
(1,732)
Recorded on the consolidated balance sheets as follows:
Deferred income tax assets
$
128
$
138
Deferred income tax liabilities
(1,675)
(1,870)
Net deferred income tax liabilities
$
(1,547)
$
(1,732)
Global Minimum Tax (Pillar Two) In December 2021, the OECD issued model rules for a new global minimum tax framework. Pillar
Two legislation has been enacted or substantively enacted in certain jurisdictions in which the Company operates, and is effective
for the Company’s 2024 fiscal year.
The Company is applying the exception to recognizing and disclosing information about deferred tax asset and liabilities related to
Pillar Two income taxes, as provided in the amendments to IAS 12 issued in May 2023.
Income tax expense recognized in the consolidated statements of earnings in 2024 includes $5 million (2023 – not applicable)
related to Pillar Two income taxes.
Note 8. Basic and Diluted Net Earnings per Common Share
($ millions except where otherwise indicated)
2024
2023
Net earnings attributable to shareholders of the Company
$
1,359
$
1,540
Prescribed dividends on preferred shares in share capital
(44)
(44)
Net earnings available to common shareholders of the Company
$
1,315
$
1,496
Reduction in net earnings due to dilution at Loblaw
(12)
(12)
Net earnings available to common shareholders for diluted earnings per share
$
1,303
$
1,484
Weighted average common shares outstanding (in millions) (note 24)
132.2
137.5
Dilutive effect of equity-based compensation(i) (in millions)
0.7
0.5
Diluted weighted average common shares outstanding (in millions)
132.9
138.0
Basic net earnings per common share ($)
$
9.95
$
10.88
Diluted net earnings per common share ($)
$
9.80
$
10.75
(i)
In 2024, nominal (2023 – nominal) potentially dilutive instruments were excluded from the computation of diluted net earnings per common
share as they were anti-dilutive.
Notes to the Consolidated Financial Statements
112 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
Note 9. Cash and Cash Equivalents and Change in Non-Cash Working Capital
The components of cash and cash equivalents and change in non-cash working capital were as follows:
CASH AND CASH EQUIVALENTS
As at
($ millions)
Dec. 31, 2024
Dec. 31, 2023
Cash
$
1,821
$
1,493
Cash equivalents
227
958
Cash and cash equivalents
$
2,048
$
2,451
CHANGE IN NON-CASH WORKING CAPITAL
Years Ended
($ millions)
Dec. 31, 2024
Dec. 31, 2023
Change in:
Accounts receivable
$
(133)
$
(168)
Prepaid expenses and other assets
(45)
6
Inventories
(503)
45
Trade payables and other liabilities
742
56
Other
(26)
(14)
Change in non-cash working capital
$
35
$
(75)
Note 10. Accounts Receivable
The following are continuities of allowances for uncollectible accounts receivable for the years ended December 31, 2024 and
December 31, 2023:
($ millions)
2024
2023
Allowances, beginning of year
$
(50)
$
(46)
Net write-offs (additions)
2
(4)
Allowances, end of year
$
(48)
$
(50)
Credit risk associated with accounts receivable is discussed in note 31.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 113
Note 11. Credit Card Receivables
The components of credit card receivables were as follows:
As at
($ millions)
Dec. 31, 2024
Dec. 31, 2023
Gross credit card receivables
$
4,493
$
4,388
Allowance for credit card receivables
(263)
(256)
Credit card receivables
$
4,230
$
4,132
Securitized to independent securitization trusts:
Securitized to Eagle Credit Card Trust (note 22)
$
1,450
$
1,350
Securitized to Other Independent Securitization Trusts
800
850
Total securitized to independent securitization trusts
$
2,250
$
2,200
Loblaw, through PC Bank, participates in various securitization programs that provide a source of funds for the operation of its
credit card business. PC Bank maintains and monitors a co-ownership interest in credit card receivables with independent
securitization trusts, including Eagle and Other Independent Securitization Trusts, in accordance with its financing requirements.
The associated liability of Eagle is recorded in long-term debt (see note 22). The associated liabilities of credit card receivables
securitized to the Other Independent Securitization Trusts are recorded in short-term debt.
The securitization agreements between PC Bank and the Other Independent Securitization Trusts are renewed and extended on an
annual basis. The existing agreements were renewed in 2024, with their respective maturity dates extended to 2026 and with all
other terms and conditions remaining substantially the same.
As at year end 2024, PC Bank recorded a $50 million net increase of co-ownership interest in the securitized receivables held with
the Independent Securitization Trusts as a result of growth in the credit card portfolio.
The undrawn commitments on facilities available from the Other Independent Securitization Trusts as at year end 2024 were
$100 million (2023 – $100 million).
Loblaw has arranged letters of credit on behalf of PC Bank for the benefit of the independent securitization trusts (see note 33).
Under its securitization programs, PC Bank is required to maintain, at all times, a credit card receivable pool balance equal to a
minimum of 107% of the outstanding securitized liability. PC Bank was in compliance with this requirement as at year end 2024 and
throughout the year.
The following table provides gross carrying amounts of credit card receivables by internal risk ratings for credit risk management
purposes:
As at Dec. 31, 2024
($ millions)
12-month ECL (Stage 1)
Lifetime ECL-
not credit impaired (Stage 2)
Lifetime ECL-
credit
impaired (Stage 3)
Total
Low risk
$
2,264
$
10
$
—
$
2,274
Moderate risk
1,240
41
—
1,281
High risk
587
298
53
938
Total gross carrying amount
$
4,091
$
349
$
53
$
4,493
ECL allowance
(112)
(108)
(43)
(263)
Net carrying amount
$
3,979
$
241
$
10
$
4,230
Notes to the Consolidated Financial Statements
114 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
As at Dec. 31, 2023
($ millions)
12-month ECL (Stage 1)
Lifetime ECL-n
ot credit
impaired (Stage 2)
Lifetime ECL-c
redit impaired (Stage 3)
Total
Low risk
$
2,194
$
13
$
—
$
2,207
Moderate risk
1,215
38
—
1,253
High risk
461
414
53
928
Total gross carrying amount
$
3,870
$
465
$
53
$
4,388
ECL allowance
(104)
(110)
(42)
(256)
Net carrying amount
$
3,766
$
355
$
11
$
4,132
The following are continuities of Loblaw’s allowance for credit card receivables for the years ended December 31, 2024 and
December 31, 2023:
2024
($ millions)
Stage 1
Stage 2
Stage 3
Total
Balance, beginning of year
$
104
$
110
$
42
$
256
Increase / (decrease) during the year:
Transfers(i)
To Stage 1
41
(41)
—
—
To Stage 2
(7)
9
(2)
—
To Stage 3
(4)
(28)
32
—
New loans originated(ii)
16
9
3
28
Net remeasurements(iii)
(38)
49
155
166
Write-offs
—
—
(218)
(218)
Recoveries
—
—
31
31
Balance, end of year
$
112
$
108
$
43
$
263
(i)
Transfers reflect allowance movements between stages for loans that were recognized as of the beginning of the year.
(ii)
New loans originated reflect the stage of loan, and the related loan balance, as of the end of the year.
(iii)
Net remeasurements includes the impact from changes in loan balances, model enhancements and credit quality during the year.
2023
($ millions)
Stage 1
Stage 2
Stage 3
Total
Balance, beginning of year
$
79
$
92
$
35
$
206
Increase / (decrease) during the year:
Transfers(i)
To Stage 1
27
(27)
—
—
To Stage 2
(7)
9
(2)
—
To Stage 3
(3)
(20)
23
—
New loans originated(ii)
15
8
4
27
Net remeasurements(iii)
(7)
48
140
181
Write-offs
—
—
(183)
(183)
Recoveries
—
—
25
25
Balance, end of year
$
104
$
110
$
42
$
256
(i)
Transfers reflect allowance movements between stages for loans that were recognized as of the beginning of the year.
(ii)
New loans originated reflect the stage of loan, and the related loan balance, as of the end of the year.
(iii) Net remeasurements includes the impact from changes in loan balances, model enhancements and credit quality during the year.
The allowances for credit card receivables recorded in the consolidated balance sheets are maintained at a level which is
considered adequate to endure credit-related losses on credit card receivables.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 115
Note 12. Inventories
For inventories recorded as at year end 2024, Loblaw has an inventory provision of $32 million (2023 – $46 million) for the write-
down of inventories below cost to net realizable value. The write-down was included in cost of inventories sold. There were no
reversals of previously recorded write-downs of inventories during 2024 and 2023.
Note 13. Assets Held for Sale
The components of assets held for sale, net of intercompany transactions, were as follows:
As at
($ millions)
Dec. 31, 2024
Dec. 31, 2023
Loblaw(i)(ii)
$
43
$
46
Choice Properties(iii)
19
—
Assets Held for Sale
$
62
$
46
(i)
In the fourth quarter of 2024, Loblaw entered into an agreement with a third party to sell all of the shares of its Wellwise by ShoppersTM
(“Wellwise”) business for cash proceeds. Accordingly, $43 million of assets and $19 million of liabilities related to the disposal group were classified
as held-for-sale, and 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.
(ii)
In 2024, Loblaw disposed of three properties (2023 – nine) included in assets held for sale for proceeds of $24 million (2023 – $38 million) and
recognized a net gain of $3 million (2023 – net gain of $12 million).
(iii) Subsequent to year end, Choice Properties disposed of the properties classified as Assets Held for Sale.
Note 14. Fixed Assets
The following is a continuity of the cost and accumulated depreciation and impairment losses of fixed assets for the year ended
December 31, 2024:
($ millions)
Land
Buildings
and
building
improvements
Equipment
and
fixtures
Leasehold
improvements
Assets
under
construction
Total
Cost, beginning of year
$
1,992 $
9,417 $
10,774 $
2,799 $
1,065 $ 26,047
Additions
19
13
128
74
1,766
2,000
Disposals
(18)
(123)
(86)
(39)
—
(266)
Net transfer to assets held for sale
(18)
(12)
(12)
(14)
—
(56)
Net transfer to investment properties (note 15)
—
(83)
—
—
—
(83)
Transfer from assets under construction
28
162
956
160
(1,306)
—
Business acquisitions
—
—
—
1
—
1
Cost, end of year
$ 2,003 $
9,374 $
11,760 $
2,981 $
1,525 $ 27,643
Accumulated depreciation and impairment losses,
beginning of year
$
5 $
4,306 $
8,011 $
1,865 $
3 $ 14,190
Depreciation
—
214
616
161
—
991
Impairment losses
—
1
13
10
—
24
Reversal of impairment losses
—
(4)
(5)
(1)
—
(10)
Disposals
—
(57)
(81)
(40)
—
(178)
Transfer to assets held for sale
—
(2)
(8)
(10)
—
(20)
Net transfer to investment properties (note 15)
—
(40)
—
—
—
(40)
Accumulated depreciation and impairment
losses, end of year
$
5 $
4,418 $
8,546 $
1,985 $
3 $ 14,957
Carrying amount as at:
December 31, 2024
$
1,998 $
4,956 $
3,214 $
996 $
1,522 $ 12,686
Notes to the Consolidated Financial Statements
116 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
The following is a continuity of the cost and accumulated depreciation and impairment losses of fixed assets for the year ended
December 31, 2023:
($ millions)
Land
Buildings
and
building
improvements
Equipment an
d fixtures
Leasehold
improvements
Assets
under
construction
Total
Cost, beginning of year
$
1,991 $
9,357 $
9,984 $
2,615 $
531 $ 24,478
Additions(i)
10
18
153
33
1,651
1,865
Disposals
(22)
(148)
(86)
(12)
—
(268)
Transfer from assets held for sale
1
1
—
—
—
2
Net transfer from/(to) investment properties (note 15)
4
(36)
—
—
—
(32)
Transfer from assets under construction
8
225
722
162
(1,117)
—
Business acquisitions
—
—
1
1
—
2
Cost, end of year
$
1,992 $
9,417 $
10,774 $
2,799 $
1,065 $ 26,047
Accumulated depreciation and impairment losses,
beginning of year
$
6 $
4,088 $
7,505 $
1,746 $
3 $ 13,348
Depreciation
—
246
572
130
—
948
Impairment losses
—
10
26
3
—
39
Reversal of impairment losses
(1)
(1)
(6)
(3)
—
(11)
Disposals
—
(29)
(86)
(11)
—
(126)
Net transfer to investment properties (note 15)
—
(8)
—
—
—
(8)
Accumulated depreciation and impairment losses,
end of year
$
5 $
4,306 $
8,011 $
1,865 $
3 $ 14,190
Carrying amount as at:
December 31, 2023
$
1,987 $
5,111 $
2,763 $
934 $
1,062 $
11,857
(i)
Additions to fixed assets include $37 million of prepayments that were transferred from other assets in 2023.
SECURITY AND ASSETS PLEDGED As at year end 2024, the Company had fixed assets with a carrying amount of $379 million (2023
– $267 million) which were encumbered by mortgages of $436 million (2023 – $257 million) (see note 22).
FIXED ASSET COMMITMENTS As at year end 2024, the Company had entered into commitments of $455 million (2023 –
$1,155 million) for the construction, expansion and renovation of buildings and the purchase of real property.
IMPAIRMENT LOSSES AND REVERSALS OF FIXED ASSETS AND RIGHT-OF-USE ASSETS Management identified indications of
impairment for certain retail location CGUs and therefore an impairment test was performed for these CGUs. For the year ended
December 31, 2024, the Company recorded $21 million (2023 – $36 million) of impairment losses on fixed assets and $8 million
(2023 – $7 million) of impairment losses on right-of-use assets (see note 29) in respect of 14 CGUs (2023 – 14 CGUs). Of the total
CGUs, no CGUs (2023 – no CGUs) were impaired on the basis of their carrying values exceeding their fair value less costs to sell.
For the year ended December 31, 2024, the Company recorded $10 million (2023 – $11 million) of impairment reversals on fixed
assets and $1 million (2023 – $11 million) of impairment reversals on right-of-use assets (see note 29) in respect to 6 CGUs (2023 –
9 CGUs). Impairment reversals are recorded where the recoverable amount of the retail location exceeds its carrying values. 4 CGUs
(2023 – No CGUs) with impairment reversals had fair value less costs to sell greater than their carrying values.
When determining the value in use of a retail location, the Company develops a discounted cash flow model for each CGU.
The duration of the cash flow projections for individual CGUs varies based on the remaining useful life of the significant assets
within the CGU. Projected future sales and earnings for cash flows are based on actual operating results, operating budgets, and
long-term growth rates that are consistent with industry averages, all of which are consistent with strategic plans presented to
GWL’s and Loblaw’s Boards. The estimate of the value in use of relevant CGUs was determined using a pre-tax discount rate of 7.8%
to 9.2% at the end of 2024 (2023 – 8.3% to 9.6%).
Additional impairment losses on fixed assets of $3 million (2023 – $3 million) were incurred related to Loblaw’s store closures,
renovations, and conversions of retail locations.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 117
Note 15. Investment Properties
The following are continuities of investment properties for the years ended December 31, 2024 and December 31, 2023:
($ millions)
2024
2023
Balance, beginning of the year
$
5,366
$
5,144
Adjustment to fair value of investment properties
(22)
20
Additions
138
166
Disposals
(47)
(101)
Net transfer from fixed assets(i) (note 14)
93
39
Net transfer from other assets
—
25
Net transfer to assets held for sale
(54)
(124)
Net transfer from equity accounted joint ventures
21
193
Other
11
4
Balance, end of the year(ii)
$
5,506
$
5,366
(i)
Includes the fair value gain of $50 million (2023 – $15 million) recognized in other comprehensive income related to transfer of fixed assets to
investment properties.
(ii)
Includes $5,348 million (2023 – $5,156 million) of income producing properties and $158 million (2023 – $210 million) of properties under
development.
During 2024, the Company recognized in operating income $396 million (2023 – $394 million) of rental revenue and incurred direct
operating costs of $147 million (2023 – $141 million) related to its investment properties, including $2 million (2023 – $1 million) of
direct operating costs related to its investment properties for which no rental revenue was earned.
INTERNAL APPRAISALS
Investment properties are measured at fair value, which was primarily determined by using the discounted cash flow method.
Management reviews the valuation process and results prepared by the internal valuation team at least once per quarter. The
valuations exclude any portfolio premium or value for the management platform and reflect the highest and best use for each of
the Company’s investment properties. As part of management’s internal valuation process, the Company considers external
valuations performed by independent national real estate valuation firms for a cross-section of properties that represent different
geographical locations and asset classes across the Company’s portfolio. On a quarterly basis, the internal valuation team reviews
and updates, as deemed necessary, the valuation models to reflect current market data. Updates may be made to capitalization
rates, discount rates, market rents, as well as current leasing and/or development activity, renewal probability, downtime on lease
expiry, vacancy allowances, and expected maintenance costs.
INDEPENDENT APPRAISALS
Properties are typically independently appraised at the time of acquisition. In addition, the Company has engaged independent
nationally-recognized valuation firms to appraise its investment properties such that the majority of the portfolio will be
independently appraised at least once over a four-year period. When an independent appraisal is obtained, the internal valuation
team assesses all major inputs used by the independent valuators in preparing their reports and holds discussions with them on
the reasonableness of their assumptions. Where warranted, adjustments will be made to the internal valuations to reflect the
assumptions contained in the external valuations. The Company will record the internal value in its consolidated financial
statements.
Notes to the Consolidated Financial Statements
118 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
Note 16. Equity Accounted Joint Ventures
The Company accounts for its investments in joint ventures using the equity method. These investments hold primarily income
producing properties and some development properties. The table below summarizes the Company’s investment, through Choice
Properties, in joint ventures.
As at
Dec. 31, 2024
Dec. 31, 2023
Number of
joint
ventures(i)
Ownership
interest
Number of
joint
ventures
Ownership
interest
Retail
12
50% - 75%
15
25% - 75%
Industrial
1
75%
—
—%
Mixed-Use & Residential
4
50%
3
50%
Land held for development
1
85%
3
50% - 85%
Total equity accounted joint ventures
18
21
Investment in equity accounted joint ventures ($ millions)
$
884
$
884
(i)
During 2024, one joint venture was reclassified to industrial and one to mixed-use & residential from land held for development.
During 2024, the Company’s share of net income and comprehensive income from the joint ventures was $49 million (2023 –
$39 million).
Note 17. Intangible Assets
The following is a continuity of the cost and accumulated amortization and impairment losses of intangible assets for the year
ended December 31, 2024:
($ millions)
Indefinite
life
intangible
assets
Software
Other
definite life
intangible
assets(i)
Total
Cost, beginning of year
$
3,756 $
4,629 $
6,240 $
14,625
Additions
1
372
4
377
Net transfer to assets held for sale
—
3
—
3
Business acquisitions
—
—
15
15
Disposals
—
(1)
(1)
(2)
Cost, end of year
$
3,757 $
5,003 $
6,258 $
15,018
Accumulated amortization and impairment losses, beginning of year
$
— $
3,552 $
5,064 $
8,616
Amortization
—
426
518
944
Disposals
—
(1)
(1)
(2)
Accumulated amortization and impairment losses, end of year
$
— $
3,977 $
5,581 $
9,558
Carrying amount as at:
December 31, 2024
$
3,757 $
1,026 $
677 $
5,460
(i)
Other definite life intangible assets includes prescription files with a net book value of $104 million related to the acquisition of Shoppers Drug
Mart Corporation (“Shoppers Drug Mart”) in 2014 which will be fully amortized by the end of 2025.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 119
The following is a continuity of the cost and accumulated amortization and impairment losses of intangible assets for the year
ended December 31, 2023:
($ millions)
Indefinite
life
intangible
assets
Software
Other
definite li
fe intangible assets
(i)
Total
Cost, beginning of year
$
3,756 $
4,239 $
6,228 $
14,223
Additions
—
402
5
407
Business acquisitions
—
—
12
12
Disposals
—
(12)
(5)
(17)
Cost, end of year
$
3,756 $
4,629 $
6,240 $
14,625
Accumulated amortization and impairment losses, beginning of year
$
— $
3,150 $
4,546 $
7,696
Amortization
—
414
518
932
Disposals
—
(12)
—
(12)
Accumulated amortization and impairment losses, end of year
$
— $
3,552 $
5,064 $
8,616
Carrying amount as at:
December 31, 2023
$
3,756 $
1,077 $
1,176 $
6,009
(i)
Other definite life intangible assets includes prescription files with a net book value of $557 million related to the acquisition of Shoppers Drug
Mart in 2014 which will be fully amortized by the end of 2025.
INDEFINITE LIFE INTANGIBLE ASSETS Indefinite life intangible assets recorded by Loblaw are comprised of brand names,
trademarks, import purchase quotas and certain liquor licenses. The brand names and trademarks are a result of Loblaw’s
acquisition of Shoppers Drug Mart, Lifemark Health Group (“Lifemark”), and T&T Supermarket Inc. Loblaw expects to renew the
registration of the brand names, trademarks, import purchase quotas and liquor licenses at each expiry date indefinitely, and
expects these assets to generate economic benefit in perpetuity. As such, the Company has assigned these intangible assets
indefinite useful lives.
SOFTWARE Software is comprised of software purchases and development costs. There were no capitalized borrowing costs
included in 2024 and 2023.
OTHER DEFINITE LIFE INTANGIBLE ASSETS Other definite life intangible assets recorded by Loblaw primarily consist of
prescription files, the customer loyalty awards program and customer relationships.
Notes to the Consolidated Financial Statements
120 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
Note 18. Goodwill
The following are continuities of the cost and accumulated impairment losses of goodwill for the years ended December 31, 2024
and December 31, 2023:
($ millions)
2024
2023
Cost, beginning of year
$
5,873
$
5,847
Business acquisitions
23
26
Cost, end of year
$
5,896
$
5,873
Accumulated impairment losses
$
994
$
994
Carrying amount, end of year
$
4,902
$
4,879
The carrying amount of goodwill attributed to each CGU was as follows:
As at
($ millions)
Dec. 31, 2024
Dec. 31, 2023
Shoppers Drug Mart
$
3,006
$
2,996
Market(i)
139
238
Discount(i)
703
603
Lifemark
388
376
T&T Supermarket Inc.
129
129
Other
537
537
Carrying amount of goodwill, as at the end of year
$
4,902
$
4,879
(i)
Includes goodwill reallocated from the Market division to the Discount division.
IMPAIRMENT TESTING OF GOODWILL AND INDEFINITE LIFE INTANGIBLES The Company tests goodwill and indefinite life
intangible assets for impairment annually or more frequently if indicators of impairment are identified.
The key assumptions used to calculate the fair value less costs to sell are revenue and gross margin forecasts, growth/attrition rates,
discount rate, and terminal rate. These assumptions are considered to be Level 3 in the fair value hierarchy.
The weighted average cost of capital was determined to be 7.1% to 9.8% (2023 – 7.1% to 10.1%) and is based on a risk-free rate, an
equity risk premium adjusted for betas of comparable publicly traded companies, an unsystematic risk premium, an after-tax cost
of debt based on corporate bond yields and the capital structure of comparable publicly traded companies.
Cash flow projections have been discounted using a rate derived from an after-tax weighted average cost of capital. As at year end
2024, the after-tax discount rate used in the recoverable amount calculations was 7.1% to 9.8% (2023 – 7.1% to 10.1%).
The Company included a minimum of three years of cash flows in its discounted cash flow model. The cash flow forecasts were
extrapolated beyond the forecasting period using an estimated long-term growth rate of 2.0% to 2.5% (2023 – 2.0% to 2.5%). The
budgeted EBITDA growth was based on the Company’s strategic plan approved by the Board.
The Company completed its annual impairment tests for goodwill and indefinite life intangible assets and concluded there was no
impairment.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 121
Note 19. Other Assets
The components of other assets were as follows:
As at
($ millions)
Dec. 31, 2024
Dec. 31, 2023
Investment in real estate securities (note 30)
$
203
$
238
Sundry investments and other receivables
256
307
Net accrued benefit plan asset (note 26)
370
309
Finance lease receivable
19
35
Mortgages, loans and notes receivable
418
358
Long-term securities
120
201
Long-term receivable(i)
133
—
Other
172
83
Total Other Assets
$
1,691
$
1,531
Current portion of mortgages, loans, notes and finance lease receivable(ii)
(339)
(276)
Other Assets
$
1,352
$
1,255
(i)
Balance includes recovery related to the PC Bank commodity tax matter (see note 32).
(ii)
Current portion of mortgages, loans, notes and finance lease receivable is included in prepaid expenses and other assets in the consolidated
balance sheets.
Note 20. Supplier Financing Arrangements
In 2024, Loblaw started a supplier financing program with a third-party financial institution that provides financing to suppliers. This
arrangement allows these suppliers to elect to be paid by the financial institution at a discount earlier than the maturity date of the
receivable which generally ranges between 30 and 60 days. Participating suppliers can sell one or more of Loblaw’s payment
obligations at their sole discretion, and Loblaw’s rights and obligations to suppliers are not impacted. Loblaw will pay the full
amount owing to the financial institution according to the terms negotiated with the supplier on the maturity dates. The amount
outstanding under this program as at year end 2024 was $52 million and is presented within trade payables and other liabilities. As
at year end 2024, suppliers have received payment of $44 million from the financial institution under the program. The activity
related to this program is classified as an operating activity within the consolidated statements of cash flows.
Notes to the Consolidated Financial Statements
122 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
Note 21. Provisions
The following are continuities of provisions for the years ended December 31, 2024 and December 31, 2023:
($ millions)
2024
2023
Balance, beginning of year
$
217
$
200
Additions (note 32)
482
105
Payments
(82)
(79)
Reversals
(4)
(9)
Impact of foreign currency translation
1
—
Balance, end of year
$
614
$
217
As at
($ millions)
Dec. 31, 2024
Dec. 31, 2023
Recorded on the consolidated balance sheets as follows:
Current provisions
$
509
$
121
Non-current provisions
105
96
Total provisions
$
614
$
217
Provisions consist primarily of amounts recorded in respect of self-insurance and legal claims.
The Company’s accrued insurance liabilities were $109 million (2023 – $100 million), of which $69 million (2023 – $61 million) was
included in non-current provisions and $40 million (2023 – $39 million) in current provisions. Included in total accrued insurance
liabilities were $14 million (2023 – $13 million) of U.S. workers’ compensation liabilities. The related cost and accrued workers’
compensation liabilities are based on actuarial valuations which are dependent on assumptions determined by management. The
discount rate used in determining the 2024 U.S. workers’ compensation cost and liability was 5.0% (2023 – 2.0%). The total workers’
compensation liability is equal to the ultimate actuarial loss estimate less any actual losses paid to date. Any change in the workers’
compensation liability is recognized immediately in operating income.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 123
Note 22. Long-Term Debt
The components of long-term debt were as follows:
As at
($ millions)
Dec. 31, 2024
Dec. 31, 2023
Debentures
George Weston Limited Notes
4.12% due 2024
$
—
$
200
7.10%, due 2032
150
150
6.69%, due 2033
100
100
4.19%, due 2029
250
—
Loblaw Companies Limited Notes
3.92%, due 2024
—
400
6.65%, due 2027
100
100
6.45%, due 2028
200
200
4.49%, due 2028
400
400
6.50%, due 2029
175
175
3.56%, due 2029
400
—
2.28%, due 2030
350
350
11.40%, due 2031
Principal
151
151
Effect of coupon repurchase
25
28
6.85%, due 2032
200
200
5.01%, due 2032
400
400
6.54%, due 2033
200
200
8.75%, due 2033
200
200
6.05%, due 2034
200
200
6.15%, due 2035
200
200
5.90%, due 2036
300
300
6.45%, due 2039
200
200
7.00%, due 2040
150
150
5.86%, due 2043
55
55
5.34%, due 2052
400
400
5.12%, due 2054
400
—
Choice Properties Debentures
Series D 4.29%, due 2024
—
200
Series F 4.06%, due 2025
200
200
Series H 5.27%, due 2046
100
100
Series J 3.55%, due 2025
350
350
Series K 3.56%, due 2024
—
550
Series L 4.18%, due 2028
750
750
Series M 3.53%, due 2029
750
750
Series N 2.98%, due 2030
400
400
Series O 3.83%, due 2050
100
100
Series P 2.85%, due 2027
500
500
Series Q 2.46%, due 2026
350
350
Series R 6.00%, due 2032
500
500
Series S 5.40%, due 2033
550
550
Series T 5.70%, due 2034
350
350
Series U 5.03%, due 2031
500
—
Long-Term Debt Secured by Mortgage
2.04% - 5.65%, due 2025 - 2049 (note 14)
1,300
977
Guaranteed Investment Certificates
0.60% - 5.50%, due 2024 - 2029
1,477
1,654
Independent Securitization Trust (note 11)
2.28%, due 2024
—
250
1.34%, due 2025
300
300
1.61%, due 2026
300
300
4.78%, due 2027
232
232
5.63%, due 2027
9
9
6.83%, due 2027
9
9
5.13%, due 2028
232
232
6.11%, due 2028
9
9
7.36%, due 2028
9
9
4.92%, due 2029
326
—
5.87%, due 2029
12
—
7.12%, due 2029
12
—
Independent Funding Trusts
590
558
Choice Properties Construction Loans
5
90
Transaction costs and other
(44)
(42)
Total long-term debt
$
15,384
$
14,996
Less amount due within one year
1,313
2,355
Long-term debt
$
14,071
$
12,641
Notes to the Consolidated Financial Statements
124 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
Significant long-term debt transactions are described below:
DEBENTURES The following table summarizes the debentures issued in the years ended as indicated:
2024
2023
($ millions)
Interest Rate
Maturity Date
Principal Amount
Principal Amount
George Weston senior unsecured notes
4.19%
September 5, 2029
$
250
$
—
Loblaw
– Senior unsecured notes(i)
3.56%
December 12, 2029
400
—
– Senior unsecured notes
5.12%
March 4, 2054
400
—
Choice Properties senior unsecured debentures
– Series U
5.03%
February 28, 2031
500
—
– Series S
5.40%
March 1, 2033
—
550
– Series T
5.70%
February 28, 2034
—
350
Total debentures issued
$
1,550
$
900
(i)
Loblaw used the net proceeds of this issuance to redeem all issued and outstanding Second Preferred Shares, Series B on January 8, 2025.
On January 16, 2025, Choice Properties completed the issuance, on a private placement basis, of $300 million aggregated principal
amount of Series V senior unsecured debentures bearing interest at a rate of 4.29% per annum and maturing on January 16, 2030.
The following table summarizes the debentures repaid in the years ended as indicated:
2024
2023
($ millions)
Interest Rate
Maturity Date
Principal Amount
Principal Amount
George Weston senior unsecured notes
4.12%
June 17, 2024
$
200
$
—
Loblaw senior unsecured notes
3.92%
June 10, 2024
400
—
Choice Properties senior unsecured debentures
– Series K
3.56%
September 9, 2024
550
—
– Series D
4.29%
February 8, 2024
200
—
– Series G
3.20%
March 7, 2023
—
250
– Series B
4.90%
July 5, 2023
—
200
– Series D-C
3.30%
January 18, 2023
—
125
Total debentures repaid
$
1,350
$
575
On January 10, 2025, Choice Properties paid in full upon maturity, at par, plus accrued and unpaid interest thereon, the $350 million
aggregated principal amount of the 3.55% Series J senior unsecured debentures outstanding.
GUARANTEED INVESTMENT CERTIFICATES The following table summarizes PC Bank’s Guaranteed Investment Certificates (“GICs”)
activity, before commissions, for the years ended as indicated:
($ millions)
2024
2023
Balance, beginning of year
$
1,654
$
1,567
GICs issued
375
583
GICs matured
(552)
(496)
Balance, end of year
$
1,477
$
1,654
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 125
INDEPENDENT SECURITIZATION TRUST The notes issued by Eagle are debentures, which are collateralized by PC Bank’s credit
card receivables (see note 11).
During 2024, Eagle issued $350 million (2023 – $250 million) of senior and subordinated term notes with a maturity date of
June 17, 2029 (2023 – June 17, 2028). These notes have a weighted average interest rate of 5.03% (2023 – 5.25%). In connection with
this issuance, $150 million (2023 – $125 million) of bond forward agreements were settled, resulting in a realized fair value gain of
$2 million (2023 – gain of $4 million) before income taxes. The gain on the bond forwards will be reclassified to net earnings over the
life of the Eagle notes. This settlement resulted in a net effective interest rate of 4.91% (2023 – 4.95%) on the Eagle notes issued
(see note 30).
Senior and subordinated term notes of $250 million (2023 – $250 million) at a weighted average interest rate of 2.28% (2023 – 3.10%),
previously issued by Eagle, matured and were repaid on July 17, 2024 (2023 – July 17, 2023).
INDEPENDENT FUNDING TRUSTS As at year end 2024, the independent funding trusts had drawn $590 million (2023 –
$558 million) from the revolving committed credit facility that is the source of funding to the independent funding trusts.
Loblaw has a $700 million revolving committed credit facility that is the source of funding to the independent funding trusts that
has a maturity date of May 29, 2027.
COMMITTED CREDIT FACILITY The components of the committed lines of credit available as at year end 2024 and 2023 were as
follows:
As at
Dec. 31, 2024
Dec. 31, 2023
($ millions)
Maturity
Date
Available
Credit
Drawn
Available
Credit
Drawn
George Weston
December 14, 2026
$
350
$
—
$
350
$
—
Loblaw
July 15, 2027
1,500
—
1,500
—
Choice Properties
June 13, 2029
1,500
—
1,500
—
Total committed credit facilities
$
3,350
$
—
$
3,350
$
—
These facilities contain certain financial covenants (see note 25).
George Weston GWL has a $350 million revolving committed credit facility, provided by a syndicate of lenders, with a maturity
date of December 14, 2026. As at December 31, 2024, no amounts (December 31, 2023 – nil) were drawn under this facility.
Loblaw Loblaw has a $1.5 billion committed credit facility, provided by a syndicate of lenders, with a maturity date of July 15, 2027.
As at December 31, 2024, no amounts (December 31, 2023 – nil) were drawn under this facility.
Choice Properties Choice Properties has a $1.5 billion senior unsecured committed revolving credit facility, provided by a syndicate
of lenders. During 2024, Choice Properties extended the maturity date for the credit facility from September 1, 2028 to June 13, 2029.
As at December 31, 2024, no amounts (December 31, 2023 – nil) were drawn under the facility.
LONG-TERM DEBT DUE WITHIN ONE YEAR The components of long-term debt due within one year were as follows:
As at
($ millions)
Dec. 31, 2024
Dec. 31, 2023
Debentures
$
547
$
1,347
GICs
331
541
Independent Securitization Trust
300
250
Long-term debt secured by mortgage
130
167
Construction Loans
5
50
Long-term debt due within one year
$
1,313
$
2,355
Notes to the Consolidated Financial Statements
126 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
SCHEDULE OF REPAYMENTS The schedule of repayment of long-term debt, based on maturity, is as follows:
($ millions)
Dec. 31, 2024
2025
$
1,317
2026
1,060
2027
1,827
2028
1,981
2029
2,231
Thereafter
7,012
Total long-term debt (excludes transaction costs)
$
15,428
See note 30 for the fair value of long-term debt.
RECONCILIATION OF LONG-TERM DEBT The following table reconciles the changes in cash flows from financing activities for long-
term debt for the years ended as indicated:
($ millions)
2024
2023
Total long-term debt, beginning of year
$
14,996
$
14,784
Long-term debt issuances(i)
2,613
1,939
Long-term debt repayments
(2,285)
(1,714)
Total cash flow from long-term debt financing activities
328
225
Other non-cash changes
60
(13)
Total long-term debt, end of year
$
15,384
$
14,996
(i)
Includes net movements from the independent funding trust, which are revolving debt instruments.
Note 23. Other Liabilities
The components of other liabilities were as follows:
As at
($ millions)
Dec. 31, 2024
Dec. 31, 2023
Financial liabilities(i)
$
695
$
702
Net defined benefit plan obligation (note 26)
271
282
Other long-term employee benefit obligation
134
129
Equity-based compensation liability (note 27)
6
8
Other
128
63
Other liabilities
$
1,234
$
1,184
(i)
Financial liabilities represent properties disposed of by Choice Properties or Loblaw to third parties. On consolidation, these transactions were not
recognized as a sale of assets as under the terms of the leases, as the Company did not relinquish control of the properties for purposes of IFRS 16
“Leases” and IFRS 15 “Revenue from Contracts with Customers”. As at December 31, 2024, $9 million (December 31, 2023 – $8 million) was recorded
in trade payables and other liabilities and $695 million (December 31, 2023 – $702 million) was recorded in other liabilities for all properties
recognized as financial liabilities.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 127
Note 24. Share Capital
The components of share capital were as follows:
As at
($ millions)
Dec. 31, 2024
Dec. 31, 2023
Common share capital
$
2,476
$
2,508
Preferred shares, Series I
228
228
Preferred shares, Series III
196
196
Preferred shares, Series IV
197
197
Preferred shares, Series V
196
196
Share capital
$
3,293
$
3,325
COMMON SHARE CAPITAL (AUTHORIZED – UNLIMITED) Common shares issued are fully paid and have no par value.
The following table summarizes the activity in the Company’s common shares issued and outstanding for the years ended
December 31, 2024 and December 31, 2023:
2024
2023
($ millions except where otherwise indicated)
Number of
Common
Shares
Common
Share Capital
Number of
Common
Shares
Common
Share Capital
Issued and outstanding, beginning of year
134,546,581
$
2,511
140,737,942
$
2,619
Issued for settlement of stock options (note 27)
473,046
53
67,619
8
Purchased and cancelled(i)
(4,974,849)
(86)
(6,258,980)
(116)
Issued and outstanding, end of year
130,044,778
$
2,478
134,546,581
$
2,511
Shares held in trusts, beginning of year
(123,895) $
(3)
(160,465)
$
(3)
Purchased for future settlement of RSUs and PSUs
(46,000)
(1)
(44,000)
(1)
Released for settlement of RSUs and PSUs (note 27)
83,268
2
80,570
1
Shares held in trusts, end of year
(86,627) $
(2)
(123,895)
$
(3)
Issued and outstanding, net of shares held in trusts,
end of year
129,958,151
$
2,476
134,422,686
$
2,508
Weighted average outstanding, net of shares held
in trusts (note 8)
132,162,869
137,527,536
(i)
Number of common shares repurchased and cancelled as at December 31, 2024, does not include shares that may be repurchased subsequent to
year end under the automatic share purchase plan (“ASPP”), as described below.
Preferred Shares, Series I (authorized – 10.0 million) GWL has 9.4 million 5.80% non-voting Preferred Shares, Series I outstanding,
with a face value of $235 million, which entitle the holders to a fixed cumulative preferred cash dividend of $1.45 per share per
annum which will, if declared, be payable quarterly. GWL may, at its option, redeem for cash, in whole or in part, these outstanding
preferred shares at $25.00 per share, together with all accrued and unpaid dividends to the redemption date.
At any time after issuance, GWL may, at its option, give the holders of these preferred shares the right, at the option of the holders,
to convert their preferred shares into preferred shares of a further series designated by GWL on a share-for-share basis on a date
specified by GWL.
Preferred Shares, Series III (authorized – 10.0 million) GWL has 8.0 million 5.20% non-voting Preferred Shares, Series III
outstanding, with a face value of $200 million, which entitle the holders to a fixed cumulative preferred cash dividend of $1.30 per
share per annum which will, if declared, be payable quarterly. GWL may, at its option, redeem for cash, in whole or in part, these
outstanding preferred shares at $25.00 per share, together with all accrued and unpaid dividends to the redemption date.
At any time after issuance, GWL may, at its option, give the holders of these preferred shares the right, at the option of the holders,
to convert their preferred shares into preferred shares of a further series designated by GWL on a share-for-share basis on a date
specified by GWL.
Notes to the Consolidated Financial Statements
128 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
Preferred Shares, Series IV (authorized – 8.0 million) GWL has 8.0 million 5.20% non-voting Preferred Shares, Series IV outstanding,
with a face value of $200 million, which entitle the holders to a fixed cumulative preferred cash dividend of $1.30 per share per
annum which will, if declared, be payable quarterly. GWL may, at its option, redeem for cash, in whole or in part, these outstanding
preferred shares at $25.00 per share, together with all accrued and unpaid dividends to the redemption date.
At any time after issuance, GWL may, at its option, give the holders of these preferred shares the right, at the option of the holders,
to convert their preferred shares into preferred shares of a further series designated by GWL on a share-for-share basis on a date
specified by GWL.
Preferred Shares, Series V (authorized – 8.0 million) GWL has 8.0 million 4.75% non-voting Preferred Shares, Series V outstanding,
with a face value of $200 million, which entitle the holders to a fixed cumulative preferred cash dividend of $1.1875 per share per
annum which will, if declared, be payable quarterly. GWL may, at its option, redeem for cash, in whole or in part, these outstanding
preferred shares at $25.00 per share, together with all accrued and unpaid dividends to the redemption date.
At any time after issuance, GWL may, at its option, give the holders of these preferred shares the right, at the option of the holders,
to convert their preferred shares into preferred shares of a further series designated by GWL on a share-for-share basis on a date
specified by GWL.
DIVIDENDS The declaration and payment of dividends on the Company’s common shares and the amount thereof are at the
discretion of the Company’s Board which takes into account the Company’s financial results, capital requirements, available cash
flow, future prospects of the Company’s business and other factors considered relevant from time to time. Over time, it is the
Company’s intention to increase the amount of the dividend while retaining appropriate free cash flow to finance future growth. In
the second quarter of 2024 and in the second quarter of 2023, the Board raised the quarterly common share dividend by $0.107 to
$0.820 and by $0.053 to $0.713 per share, respectively. The Board declared dividends for the years ended as follows:
($)
2024
2023
Dividends declared per share(i):
Common share
$
3.173
$
2.799
Preferred share:
Series I
$
1.45
$
1.45
Series III
$
1.30
$
1.30
Series IV
$
1.30
$
1.30
Series V
$
1.1875
$
1.1875
(i)
Dividends declared in the fourth quarter of 2024 on common shares and Preferred Shares, Series III, Series IV and Series V were payable on
January 1, 2025. Dividends declared in the fourth quarter of 2024 on Preferred Shares, Series I were payable on December 15, 2024.
The following table summarizes the Company’s quarterly dividends declared subsequent to year end 2024:
($)
Dividends declared per share(i)
– Common share
$
0.820
– Preferred share:
Series I
$
0.3625
Series III
$
0.3250
Series IV
$
0.3250
Series V
$
0.296875
(i)
Dividends declared in the first quarter of 2025 on common shares and Preferred Shares, Series III, Series IV and Series V are payable on April
1, 2025. Dividends declared in the first quarter of 2025 on Preferred Shares, Series I are payable on March 15, 2025.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 129
Notes to the Consolidated Financial Statements
130 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
NORMAL COURSE ISSUER BID PROGRAM The following table summarizes the Company’s activity under its NCIB for the years
ended as follows:
($ millions except where otherwise indicated)
2024
2023
Purchased for future settlement of RSUs and PSUs (number of shares)
46,000
44,000
Purchased for current settlement of DSUs (number of shares)
1,721
7,521
Purchased and cancelled (number of shares)
4,974,849
6,258,980
Cash consideration paid
Purchased and held in trusts
$
(10)
$
(7)
Purchased and settled
—
(1)
Purchased and cancelled
(990)
(1,001)
Premium charged to retained earnings
Purchased and held in trusts
$
9
$
6
Purchased and settled
—
(2)
Purchased and cancelled(i)
876
874
Reduction in share capital(ii)
$
86
$
116
(i)
Includes $82 million (2023 – $124 million) related to the ASPP, as described below.
(ii)
Includes $8 million (2023 – $16 million) related to the ASPP, as described below.
In 2024, GWL renewed its NCIB to purchase on the Toronto Stock Exchange (“TSX”) or through alternative trading systems up to
6,646,057 of its common shares, representing approximately 5% of issued and outstanding common shares.
Consistent with the exemption originally granted by the TSX in 2023, Wittington, the Company’s controlling shareholder, is
permitted to participate in the NCIB in a fixed proportion equal to 50% of Wittington’s pro rata share of the issued and outstanding
common shares of the Company. Purchases of common shares from Wittington will be made during the TSX’s Special Trading
Session pursuant to an automatic disposition plan agreement among the Company’s broker, the Company and Wittington. The
maximum number of common shares that may be purchased pursuant to the NCIB will be reduced by the number of common
shares purchased from Wittington.
In 2024, 4,974,849 common shares (2023 – 6,258,980 common shares) were purchased under the NCIB for cancellation for
aggregate consideration of $990 million (2023 – $1,001 million), including 1,447,904 common shares (2023 – 698,746 common
shares) purchased from Wittington for aggregate consideration of $288 million (2023 – $107 million).
From time to time, the Company participates in an ASPP with a broker in order to facilitate the purchase 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. As at December 31, 2024, an obligation to repurchase shares of $90
million was recognized under the ASPP in trade payables and other liabilities in the Company’s consolidated financial statements.
As of December 31, 2024, 2,812,214 common shares were purchased under the Company’s current NCIB.
Note 25. Capital Management
In order to manage its capital structure, the Company may, among other activities, adjust the amount of dividends paid to
shareholders, purchase shares for cancellation pursuant to its NCIB, issue new shares or issue or repay long-term debt with the
objective of:
•
ensuring sufficient liquidity is available to support its financial obligations and to execute its operating and strategic plans;
•
maintaining financial capacity and flexibility through access to capital to support future development of the business;
•
minimizing the after-tax cost of its capital while taking into consideration current and future industry, market and economic
risks and conditions;
•
utilizing short-term funding sources to manage its working capital requirements and long-term funding sources to manage
the long-term capital investments of the business;
•
returning an appropriate amount of capital to shareholders; and
•
targeting an appropriate leverage and capital structure for the Company and each of its reportable operating segments.
The Company has policies in place which govern debt financing plans and risk management strategies for liquidity, interest rates
and foreign exchange. These policies outline measures and targets for managing capital, including a range for leverage consistent
with the desired credit rating. Management and the Audit Committee regularly review the Company’s compliance with, and
performance against, these policies. In addition, management regularly reviews these policies to ensure they remain consistent
with the risk tolerance acceptable to the Company.
The following table summarizes the Company’s total capital under management:
As at
($ millions)
Dec. 31, 2024
Dec. 31, 2023
Bank indebtedness
$
—
$
13
Demand deposits from customer
353
166
Short-term debt
800
850
Long-term debt due within one year
1,313
2,355
Long-term debt
14,071
12,641
Certain other liabilities(i)
806
800
Total debt excluding lease liabilities
$
17,343
$
16,825
Lease liabilities due within one year
1,045
880
Lease liabilities
4,977
4,563
Total debt including lease liabilities
$
23,365
$
22,268
Equity attributable to shareholders of the Company
6,242
6,675
Total capital under management
$
29,607
$
28,943
(i)
As at December 31, 2024, certain other liabilities include financial liabilities of $704 million related to the sale and leaseback of retail and
industrial properties (December 31, 2023 - $710 million) (see note 23).
COVENANTS AND REGULATORY REQUIREMENTS The Company and Loblaw are subject to certain key financial and non-
financial covenants under their existing credit facilities, certain debentures and letters of credit. These covenants, which include
interest coverage and leverage ratios, as defined in the respective agreements, are measured by the Company and Loblaw on a
quarterly basis to ensure compliance with these agreements. As at year end 2024 and throughout the year, the Company and
Loblaw were in compliance with each of their covenants under their agreements.
Loblaw is subject to externally imposed capital requirements from the Office of the Superintendent of Financial Institutions
(“OSFI”), the primary regulator of PC Bank. PC Bank’s capital management objectives are to maintain a consistently strong capital
position while considering the economic risks generated by its credit card receivables portfolio and to meet all regulatory capital
requirements as defined by OSFI. PC Bank uses Basel III as its regulatory capital management framework, which includes a
target common equity Tier 1 capital ratio of 7.0%, a Tier 1 capital ratio of 8.5% and a total capital ratio of 10.5%. In addition to the
regulatory capital ratios requirement, PC Bank is subject to the Basel III Leverage ratio. PC Bank is also subject to OSFI’s Guideline
on Liquidity Adequacy Requirements (“LARs”). The LARs guideline establishes standards based on the Basel III framework,
including a Liquidity Coverage Ratio standard. As at year end 2024 and throughout the year, PC Bank has met all applicable
regulatory requirements.
Choice Properties has certain key financial covenants in its debentures and committed credit facility. The key financial covenants
include debt service ratios and leverage ratios, as defined in the respective agreements. These ratios are measured by Choice
Properties on an on-going basis to ensure compliance with the agreements. As at year end 2024 and throughout the year, Choice
Properties was in compliance with each of the key financial covenants under these agreements.
In addition, the Company has wholly-owned subsidiaries that engage in insurance related activities. These subsidiaries each
exceeded their minimum regulatory capital and surplus requirements as at year end 2024.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 131
Note 26. Post-Employment Benefits
POST-EMPLOYMENT BENEFITS The Company sponsors a number of pension plans, including registered defined benefit pension
plans, registered defined contribution pension plans and supplemental unfunded arrangements providing pension benefits in
excess of statutory limits. Certain obligations of the Company under these supplemental pension arrangements are secured by a
standby letter of credit issued by a major Canadian chartered bank.
The Loblaw Governance, Talent and Compensation Committee, which assumed responsibilities from the former Loblaw Pension
Committee in January 2025, and the GWL Governance, Human Resource, Nominating and Compensation Committee (collectively,
the “Committees”) oversee the Company’s and the Loblaw’s pension plans. The Committees are responsible for assisting the
Company’s and Loblaw’s Boards in fulfilling their general oversight responsibilities for the plans.
The Company’s defined benefit pension plans are primarily funded by the Company, predominantly non-contributory and the
benefits are, in general, based on career average earnings subject to limits. The funding is based on regulatory going concern and
solvency valuations for which the assumptions may differ from the assumptions used for accounting purposes as detailed in this
note.
The Company also offers certain other defined benefit plans other than pension plans. These other defined benefit plans are
generally not funded, are mainly non-contributory and include health care, life insurance and dental benefits. Employees eligible for
these other defined benefit plans are those who retire at certain ages having met certain service requirements. The majority of
other defined benefit plans for current and future retirees include a limit on the total benefits payable by the Company.
The Company’s defined benefit pension plans and other defined benefit plans expose it to a number of actuarial risks, such as
longevity risk, interest rate risk and market risk.
In Canada, the Company also has a national defined contribution plan for salaried employees. All newly hired salaried employees
are only eligible to participate in this defined contribution plan. The Company also contributes to various MEPPs, which are
administered by independent boards of trustees generally consisting of an equal number of union and employer representatives.
The Company, together with its franchises, is the largest participating employer in the Canadian Commercial Workers Industry
Pension Plan (“CCWIPP”), with approximately 53,000 (2023 – 53,000) employees as members. The Company’s responsibility to make
contributions to these plans is limited by amounts established pursuant to its collective agreements (see note 28).
The Company expects to make contributions in 2025 to its defined benefit and defined contribution plans and the MEPPs in which
it participates as well as make benefit payments to the beneficiaries of the supplemental unfunded defined benefit pension plans,
other defined benefit plans and other long-term employee benefit plans.
DEFINED BENEFIT PENSION PLANS AND OTHER DEFINED BENEFIT PLANS Information on the Company’s defined benefit
pension plans and other defined benefit plans, in aggregate, is summarized as follows:
As at
Dec. 31, 2024
Dec. 31, 2023
($ millions)
Defined
Benefit Pension Plans
Other
Defined
Benefit
Plans
Defined
Benefit
Pension
Plans
Other
Defined
Benefit
Plans
Present value of funded obligations
$
(1,514) $
—
$
(1,480) $
—
Present value of unfunded obligations
(154)
(108)
(157)
(116)
Total present value of defined benefit obligations
$ (1,668) $
(108)
$
(1,637) $
(116)
Fair value of plan assets
1,889
—
1,793
—
Total funded status of surpluses (obligations)
$
221 $
(108)
$
156 $
(116)
Assets not recognized due to asset ceiling
(14)
—
(13)
—
Total net defined benefit plan surpluses (obligations)
$
207 $
(108)
$
143 $
(116)
Recorded on the consolidated balance sheets as follows:
Other assets (note 19)
$
370 $
—
$
309 $
—
Other liabilities (note 23)
$
(163) $
(108)
$
(166) $
(116)
Notes to the Consolidated Financial Statements
132 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
The following are the continuities of the fair value of plan assets and the present value of the defined benefit plan obligations:
2024
2023
($ millions)
Defined
Benefit
Pension
Plans
Other
Defined
Benefit Plans
Total
Defined
Benefit
Pension
Plans
Other
Defined
Benefit
Plans
Total
Changes in the fair value of plan assets
Fair value, beginning of year
$
1,793 $
— $
1,793
$
1,616 $
— $
1,616
Employer contributions
—
—
—
21
—
21
Employee contributions
2
—
2
2
—
2
Benefits paid
(52)
—
(52)
(50)
—
(50)
Interest income
81
—
81
86
—
86
Actuarial gains in other comprehensive income
69
—
69
121
—
121
Other
(4)
—
(4)
(3)
—
(3)
Fair value, end of year
$
1,889 $
— $
1,889
$
1,793 $
— $
1,793
Changes in the present value of the defined benefit
plan obligations
Balance, beginning of year
$
1,637 $
116 $
1,753
$
1,446 $
119 $
1,565
Current service cost
43
2
45
44
4
48
Interest cost
76
5
81
74
6
80
Benefits paid
(63)
(5)
(68)
(57)
(3)
(60)
Employee contributions
2
—
2
2
—
2
Actuarial (gains) losses in other comprehensive
income
(27)
(10)
(37)
128
(10)
118
Balance, end of year
$
1,668 $
108 $
1,776
$
1,637 $
116 $
1,753
Total funded status of surpluses (obligations)
$
221 $
(108) $
113
$
156 $
(116) $
40
Changes in the assets not recognized due to asset
ceiling
Balance, beginning of year
$
13 $
— $
13
$
265 $
— $
265
Change in liability arising from change in asset ceiling
—
—
—
(267)
—
(267)
Interest expense on assets not recognized due to
asset ceiling
1
—
1
15
—
15
Balance, end of year
$
14 $
— $
14
$
13 $
— $
13
Total net defined benefit plan surpluses (obligations)
$
207 $
(108) $
99
$
143 $
(116) $
27
For the year ended 2024, the actual gain on plan assets was $150 million (2023 – gain of $207 million).
The net defined benefit obligation can be allocated to the plans’ participants as follows:
•
Active plan participants – 49% (2023 – 51%)
•
Deferred plan participants – 12% (2023 – 12%)
•
Retirees – 39% (2023 – 37%)
During 2025, the Company expects to contribute nominal amounts (2024 – contributed nominal amounts) to its registered defined
benefit pension plans due to the surplus position of the total funded status of the pension plans. The actual amount of
contributions may vary from the estimate depending on the funded positions of the plans, filing of any actuarial valuations, any new
regulatory requirements, or other factors related to its registered defined benefit pension plans.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 133
The net cost recognized in net earnings before income taxes for the Company’s defined benefit pension plans and other defined
benefit plans was as follows:
2024
2023
($ millions)
Defined
Benefit
Pension
Plans
Other
Defined
Benefit Plans
Total
Defined
Benefit
Pension
Plans
Other
Defined
Benefit
Plans
Total
Current service cost
$
43 $
2 $
45
$
44 $
4 $
48
Net interest (income) cost on net defined benefit plan
asset (obligations)
(4)
5
1
3
6
9
Other
4
—
4
3
—
3
Net post-employment defined benefit cost
$
43 $
7 $
50
$
50 $
10 $
60
The actuarial gains recognized in other comprehensive income for defined benefit plans were as follows:
2024
2023
($ millions)
Defined
Benefit
Pension
Plans
Other
Defined
Benefit
Plans
Total
Defined
Benefit
Pension
Plans
Other
Defined
Benefit
Plans
Total
Return on plan assets excluding amounts included in net
interest expense and other financing charges
$
69 $
— $
69
$
121 $
— $
121
Experience adjustments
5
2
7
(20)
12
(8)
Actuarial gains from change in demographic
assumptions
—
7
7
35
8
43
Actuarial gains (losses) from change in financial
assumptions(i)
22
1
23
(143)
(10)
(153)
Change in liability arising from change in asset ceiling(i)
—
—
—
267
—
267
Total net actuarial gains recognized in other
comprehensive income before income taxes
$
96 $
10 $
106
$
260 $
10 $
270
Income tax expenses on actuarial gains (note 7)
(25)
(3)
(28)
(69)
(2)
(71)
Actuarial gains net of income tax expenses
$
71 $
7 $
78
$
191 $
8 $
199
(i)
The actuarial gains and the change in liability arising from change in asset ceiling were primarily driven by an increase in discount rates.
Notes to the Consolidated Financial Statements
134 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
The cumulative actuarial gains before income taxes recognized in equity for the Company’s defined benefit plans were as follows:
2024
2023
($ millions)
Defined
Benefit
Pension
Plans
Other
Defined
Benefit
Plans
Total
Defined
Benefit
Pension
Plans
Other
Defined
Benefit
Plans
Total
Cumulative amount, beginning of year
$
289 $
137 $
426
$
29 $
127 $
156
Net actuarial gains recognized in the year before income
taxes
96
10
106
260
10
270
Cumulative amount, end of year
$
385 $
147 $
532
$
289 $
137 $
426
COMPOSITION OF PLAN ASSETS The defined benefit pension plan assets are held in trust and consist of the following asset
categories:
As at
($ millions except where otherwise indicated)
Dec. 31, 2024
Dec. 31, 2023
Equity securities
Canadian
– pooled funds
$
25
1%
$
23
1%
Foreign
– pooled funds
853
45%
794
45%
Total equity securities
$
878
46%
$
817
46%
Debt securities
Fixed income securities:
– government
$
600
32%
$
562
31%
– corporate
171
9%
152
9%
Total debt securities
$
771
41%
$
714
40%
Other investments
$
235
12%
$
221
12%
Cash and cash equivalents
$
5
1%
$
41
2%
Total
$
1,889
100%
$
1,793
100%
As at year end 2024 and 2023, the defined benefit pension plans did not directly include any GWL, Loblaw or Choice Properties
securities.
All equity and debt securities and other investments are valued based on quoted prices (unadjusted) in active markets for identical
assets or liabilities or based on inputs other than quoted prices in active markets that are observable for the asset or liability, either
directly as prices or indirectly, either derived from prices or as per agreements for contractual returns.
The Company’s asset allocation reflects a balance of interest rate sensitive investments, such as fixed income investments, and
equities, which are expected to provide higher returns over the long-term. The Company’s targeted asset allocations are actively
monitored and adjusted on a plan by plan basis to align the asset mix with the liability profiles of the plans.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 135
PRINCIPAL ACTUARIAL ASSUMPTIONS The principal actuarial assumptions used in calculating the Company’s defined benefit
plan obligations and net defined benefit plan cost for the year were as follows (expressed as weighted averages):
2024
2023
Defined
Benefit
Pension
Plans
Other
Defined
Benefit
Plans
Defined
Benefit
Pension
Plans
Other
Defined
Benefit
Plans
Defined Benefit Plan Obligations
Discount rate
4.70%
4.70%
4.60%
4.60%
Rate of compensation increase
3.00 %
n/a
4% for 2023 and 3%
thereafter
n/a
Mortality table(i)
CPM-RPP2014Pub/Priv Generational
CPM-RPP2014Pub/Priv Generational
CPM-RPP2014Pub/Priv Generational
CPM-RPP2014Pub/Priv Generational
Net Defined Benefit Plan Cost
Discount rate
4.60%
4.60%
5.30%
5.30%
Rate of compensation increase
3.00%
n/a
4.00%
n/a
Mortality table(i)
CPM-RPP2014Pub/Priv Generational
CPM-RPP2014Pub/Priv Generational
CPM-RPP2014Pub/Priv Generational
CPM-RPP2014Pub/Priv Generational
n/a – not applicable
(i)
An adjusted public or private sector mortality table is used depending on the prominent demographics and actual experience for each plan.
The weighted average duration of the defined benefit obligations as at year end 2024 is 13.7 years (2023 – 14.0 years).
The growth rate of health care costs, primarily drug and other medical costs, for the other defined benefit plan obligations as at year
end 2024 was estimated at 5.10% and is expected to increase to 5.30% as at year end 2025.
SENSITIVITY OF KEY ACTUARIAL ASSUMPTIONS The following table outlines the key assumptions for 2024 (expressed as
weighted averages) and the sensitivity of these assumptions on the defined benefit plan obligations.
The sensitivity analysis provided in the table is hypothetical and should be used with caution. The sensitivities of each key
assumption have been calculated independently of any changes in other key assumptions. Actual experience may result in
changes in a number of key assumptions simultaneously. Changes in one factor may result in changes in another, which could
amplify or reduce the impact of such assumptions.
Notes to the Consolidated Financial Statements
136 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
Defined Benefit Pension Plans
Other Defined Benefit Plans
Increase (Decrease)
($ millions)
Defined B
enefit Pl
an O
bligations
Defined B
enefit Pla
n Ob
ligations
Discount rate
4.70%
4.70%
Impact of:
1% increase
$
(197)
$
(12)
1% decrease
$
243
$
15
Expected growth rate of health care costs
5.10%
Impact of:
1% increase
n/a
$
9
1% decrease
n/a
$
(8)
Mortality rates
Impact of:
One year increase in life expectancy
$
31
$
1
One year decrease in life expectancy
$
(29)
$
(1)
n/a – not applicable
Note 27. Equity-Based Compensation
The Company’s equity-based compensation arrangements include stock option plans, RSU plans, PSU plans, DSU plans,
EDSU plans and Choice Properties’ unit-based compensation plans. The Company’s costs recognized in SG&A related to its equity-
based compensation arrangements in 2024 were $82 million (2023 – $87 million).
The following table presents the carrying amount of the Company’s equity-based compensation arrangements:
As at
($ millions)
Dec. 31, 2024
Dec. 31, 2023
Trade payables and other liabilities
$
13
$
11
Other liabilities (note 23)
$
6
$
8
Contributed surplus
$
140
$
143
Details related to the equity-based compensation plans of GWL and Loblaw are as follows:
STOCK OPTION PLANS GWL maintains a stock option plan for certain employees. Under this plan, GWL may grant options for up
to 6,453,726 of its common shares.
Loblaw maintains a stock option plan for certain employees. Under this plan, Loblaw may grant options for up to 28,137,162 of its
common shares.
The following table is a summary of GWL’s stock option plan activity:
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 137
2024
2023
Options
(number
of shares)
Weighted
Average
Exercise
Price/Share
Options
(number
of shares)
Weighted
Average
Exercise
Price/Share
Outstanding options, beginning of year
1,695,657
$
110.68
1,648,766
$
106.38
Granted
112,657
$
178.19
114,510
$
169.85
Exercised (note 24)
(473,046)
$
100.98
(67,619)
$
105.97
Expired
(14,476)
$
112.52
—
$
—
Outstanding options, end of year
1,320,792
$
119.90
1,695,657
$
110.68
Options exercisable, end of year
749,404
$
106.73
911,368
$
102.56
The following table summarizes information about GWL’s outstanding stock options as at December 31, 2024:
2024
Outstanding Options
Exercisable Options
Range of Exercise Prices ($)
Number of
Options
Outstanding
Weighted
Average
Remaining
Contractual
Life (years)
Weighted
Average
Exercise
Price/Share
Number of
Exercisable
Options
Weighted
Average
Exercise
Price/Share
$93.17 - $102.51
490,272
3
$
98.49
331,405
$
97.35
$102.52 - $104.48
387,194
2
$
104.15
282,131
$
104.15
$104.49 - $190.66
443,326
4
$
157.32
135,868
$
134.93
1,320,792
$
119.90
749,404
$
106.73
During 2024, GWL issued common shares on the exercise of stock options with a weighted average market share price of $195.09
(2023 – $164.39) per common share and received cash consideration of $48 million (2023 – $7 million).
The fair value of stock options granted by GWL during 2024 was $4 million (2023 – $4 million). The assumptions used to measure
the grant date fair value of the GWL options granted during the years ended under the Black-Scholes stock option valuation model
were as follows:
2024
2023
Expected dividend yield
1.6%
1.6%
Expected share price volatility
20.1% - 21.8%
19.3% - 21.2%
Risk-free interest rate
3.3% - 3.7%
3.4% - 3.6%
Expected life of options
5.0 - 6.6 years
5.0 - 6.6 years
Estimated forfeiture rates are incorporated into the measurement of stock option plan expense. The forfeiture rate applied as at
year end 2024 was 1.1% (2023 – 1.3%).
The following table is a summary of Loblaw’s stock option plan activity:
2024
2023
Options
(number
of shares)
Weighted
Average
Exercise
Price/Share
Options
(number
of shares)
Weighted
Average
Exercise
Price/Share
Outstanding options, beginning of year
5,496,224
$
79.89
5,782,615
$
71.07
Granted
505,535
$
147.68
857,666
$
118.94
Exercised
(2,178,132)
$
67.69
(984,923)
$
61.48
Forfeited/cancelled
(217,306)
$
97.56
(159,134)
$
83.80
Expired
(14,133)
$
59.00
—
$
—
Outstanding options, end of year
3,592,188
$
95.85
5,496,224
$
79.89
Options exercisable, end of year
1,204,271
$
78.58
2,321,812
$
67.05
The following table summarizes information about Loblaw’s outstanding stock options as at December 31, 2024:
2024
Outstanding Options
Exercisable Options
Range of Exercise Prices ($)
Number of
Options
Outstanding
Weighted
Average
Remaining
Contractual
Life (years)
Weighted
Average
Exercise
Price/Share
Number of
Exercisable
Options
Weighted
Average
Exercise
Price/Share
$55.18 - $70.13
1,431,486
2
$
64.96
789,872
$
64.59
$70.14 - $117.72
953,973
4
$
98.25
293,674
$
99.42
$117.73 - $179.77
1,206,729
6
$
130.58
120,725
$
119.43
3,592,188
$
95.85
1,204,271
$
78.58
During 2024, Loblaw issued common shares on the exercise of stock options with a weighted average market share price of $153.42
(2023 – $120.31) per common share and received cash consideration of $147 million (2023 – $61 million).
The fair value of stock options granted by Loblaw during 2024 was $15 million (2023 – $21 million). The assumptions used to
measure the grant date fair value of the Loblaw options granted during the years ended as indicated under the Black-Scholes stock
option valuation model were as follows:
2024
2023
Expected dividend yield
1.2%
1.5%
Expected share price volatility
17.6% - 22.0%
19.4% – 22.5%
Risk-free interest rate
3.1% - 3.8%
3.0% – 4.2%
Expected life of options
3.8 - 6.2 years
3.8 – 6.2 years
Estimated forfeiture rates are incorporated into the measurement of stock option plan expense. The forfeiture rate applied as at
year end 2024 was 10.0% (2023 – 11.0%).
Notes to the Consolidated Financial Statements
138 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
RESTRICTED SHARE UNIT PLANS The following table is a summary of GWL’s and Loblaw’s RSU plan activity:
GWL
Loblaw
(Number of awards)
2024
2023
2024
2023
Outstanding RSUs, beginning of year
22,400
25,499
752,848
716,827
Granted
4,768
8,127
159,940
252,588
Reinvested
323
384
5,678
10,481
Settled
(7,726)
(10,655)
(291,741)
(204,779)
Forfeited
(1,061)
(955)
(39,328)
(22,269)
Outstanding RSUs, end of year
18,704
22,400
587,397
752,848
The fair value of GWL’s and Loblaw’s RSUs granted during 2024 was $1 million (2023 – $1 million) and $25 million (2023 – $30 million),
respectively.
PERFORMANCE SHARE UNIT PLANS The following table is a summary of GWL’s and Loblaw’s PSU plan activity:
GWL
Loblaw
(Number of awards)
2024
2023
2024
2023
Outstanding PSUs, beginning of year
110,100
144,083
576,075
648,199
Granted
37,071
33,951
304,972
319,671
Reinvested
1,331
1,988
4,345
8,707
Settled
(75,542)
(69,915)
(415,374)
(376,108)
Forfeited
(6)
(7)
(30,849)
(24,394)
Outstanding PSUs, end of year
72,954
110,100
439,169
576,075
The fair value of GWL’s and Loblaw’s PSUs granted during 2024 was $4 million (2023 – $4 million) and $18 million (2023 –
$20 million), respectively.
SETTLEMENT OF AWARDS FROM SHARES HELD IN TRUSTS The following table summarizes GWL’s settlement of RSUs and PSUs
from shares held in trusts for the years ended as indicated:
(Number of awards)
2024
2023
Settled
83,268
80,570
Released from trusts (note 24)
83,268
80,570
During 2024, the settlement of awards from shares held in trusts resulted in a $7 million increase (2023 – $7 million) in retained
earnings and a $2 million increase (2023 – $1 million) in share capital.
DIRECTOR DEFERRED SHARE UNIT PLANS The following table is a summary of GWL’s and Loblaw’s DSU plan activity:
GWL
Loblaw
(Number of awards)
2024
2023
2024
2023
Outstanding DSUs, beginning of year
164,480
161,207
351,636
325,231
Granted
7,847
10,107
18,173
21,458
Reinvested
2,592
2,736
3,149
4,947
Settled
—
(9,570)
(47,289)
—
Outstanding DSUs, end of year
174,919
164,480
325,669
351,636
The fair value of GWL’s and Loblaw’s DSUs granted during 2024 was $2 million (2023 – $2 million) and $3 million (2023 – $3 million),
respectively.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 139
EXECUTIVE DEFERRED SHARE UNIT PLANS The following table is a summary of GWL’s and Loblaw’s EDSU plan activity:
GWL
Loblaw
(Number of awards)
2024
2023
2024
2023
Outstanding EDSUs, beginning of year
46,066
45,273
38,340
65,498
Granted
—
—
2,671
3,303
Reinvested
697
793
357
888
Settled
(1,721)
—
(1,677)
(31,339)
Forfeited
—
—
—
(10)
Outstanding EDSUs, end of year
45,042
46,066
39,691
38,340
There were no GWL EDSUs granted in 2024 and 2023. The fair value of Loblaw’s EDSUs granted during 2024 was nominal (2023 –
nominal).
CHOICE PROPERTIES The following are details related to the unit-based compensation plans of Choice Properties:
UNIT OPTION PLAN Choice Properties maintains a Unit Option plan for certain employees. Under this plan, Choice Properties may
grant Unit Options totaling up to 19,744,697 Units, as approved at the annual and special meeting of Unitholders on April 29, 2015.
The Unit Options vest in tranches over a period of four years.
The following table is a summary of Choice Properties’ Unit Option plan activity:
2024
2023
Number of
awards
Weighted
average
exercise
price/unit
Number of
awards
Weighted
average
exercise
price/unit
Outstanding Unit Options, beginning of year
164,300
$
11.92
253,154
$
12.01
Exercised
(64,000)
$
11.92
(88,823)
$
12.17
Expired
—
$
—
(31)
$
13.93
Outstanding Unit Options, end of year
100,300
$
11.92
164,300
$
11.92
Unit Options exercisable, end of year
100,300
$
11.92
164,300
$
11.92
The assumptions used to measure the fair value of the Unit Options under the Black-Scholes model were as follows:
Notes to the Consolidated Financial Statements
140 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
2024
2023
Expected distribution yield
5.7%
5.4%
Expected Unit price volatility
14.5%
11.3%
Risk-free interest rate
0.03%
0.06%
Expected life of options
0.1 years
0.1 years
RESTRICTED UNIT PLAN RUs entitle certain employees to receive the value of the RU award in cash or Units at the end of the
applicable vesting period, which is usually three years in length. The RU plan provides for the crediting of additional RUs in respect
of distributions paid on Units for the period when a RU is outstanding. The fair value of each RU granted is measured based on the
market value of a Trust Unit at the balance sheet date. There were no RUs vested as at year end 2024 and 2023.
The following table is a summary of Choice Properties’ RU plan activity:
(Number of awards)
2024
2023
Outstanding RUs, beginning of year
265,338
271,147
Granted
119,867
128,795
Reinvested
15,544
16,361
Exercised
(96,610)
(96,308)
Forfeited
(28,638)
(54,657)
Outstanding RUs, end of year
275,501
265,338
UNIT-SETTLED RESTRICTED UNIT PLAN Under the terms of the URU plan, certain employees are granted URUs, which are subject
to vesting conditions and disposition restrictions. Typically, full vesting of the URUs occurs three years after the date of grant.
Depending on the nature of the grant, the URUs are subject to a six-year holding period during which the Units cannot be disposed.
There were 1,573,240 URUs vested, but still subject to disposition restrictions as at year end 2024 (2023 – 1,503,185).
The following table is a summary of Choice Properties’ URU plan activity for units not yet vested:
(Number of awards)
2024
2023
Outstanding URUs, beginning of year
705,401
666,719
Granted
304,610
240,893
Forfeited
(10,486)
(4,942)
Vested
(228,444)
(197,269)
Outstanding URUs, end of year
771,081
705,401
PERFORMANCE UNIT PLAN PUs entitle certain employees to receive the value of the PU award in cash or Units at the end of the
applicable performance period, which is usually three years in length, based on Choice Properties achieving certain performance
conditions. The PU plan provides for the crediting of additional PUs in respect of distributions paid on Units for the period when a
PU is outstanding. The fair value of each PU granted is measured based on the market value of a Trust Unit at the balance sheet
date. There were no PUs vested as at year end 2024 and 2023.
The following table is a summary of Choice Properties’ PU plan activity:
(Number of awards)
2024
2023
Outstanding PUs, beginning of year
256,674
238,418
Granted
94,335
97,056
Reinvested
14,000
14,148
Exercised
(116,832)
(107,057)
Forfeited
(14,562)
(19,737)
Added by performance factor
19,918
33,846
Outstanding PUs, end of year
253,533
256,674
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 141
TRUSTEE DEFERRED UNIT PLAN Non-management members of the Choice Properties’ Board of Trustees are required to receive a
portion of their annual retainer in the form of DUs and may also elect to receive up to 100% of their remaining fees in DUs.
Distributions paid earn fractional DUs, which are treated as additional awards. The fair value of each DU granted is measured based
on the market value of a Unit at the balance sheet date. All DUs vest when granted, however, they cannot be exercised while
Trustees are members of the Board.
The following table is a summary of Choice Properties’ DU plan activity:
(Number of awards)
2024
2023
Outstanding Trustee DUs, beginning of year
559,380
506,556
Granted
110,696
111,047
Reinvested
33,565
30,029
Exercised
—
(88,252)
Outstanding Trustee DUs, end of year
703,641
559,380
Note 28. Employee Costs
Included in operating income were the following employee costs:
($ millions)
2024
2023
Wages, salaries and other short-term employee benefits
$
7,985
$
7,693
Post-employment benefits (note 26)(i)(ii)
157
155
Other long-term employee benefits (note 26)
31
52
Equity-based compensation
76
82
Capitalized to fixed assets and intangible assets
(128)
(133)
Employee costs
$
8,121
$
7,849
(i)
Includes $39 million (2023 - $35 million) of the Company’s contributions made in connection with defined contribution pension plans.
(ii)
Includes $69 million (2023 - $69 million) of the Company’s contributions made in connection with the MEPPs, of which $68 million (2023 - $69
million) relates to CCWIPP.
Notes to the Consolidated Financial Statements
142 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
Note 29. Leases
The Company leases certain of Loblaw’s retail stores and distribution centres, corporate offices, passenger vehicles, trailers and IT
equipment. Leases of Loblaw’s retail stores are a substantial portion of the Company’s lease portfolio. Loblaw retail store leases
typically have an initial contractual period of 10 to 15 years with additional renewal options available thereafter.
The Company has owned and leased properties that are leased and subleased to third parties, respectively. Owned properties are
held to either earn rental income, for capital appreciation, or both. Subleases are primarily related to non-consolidated franchise
stores, medical centres and ancillary tenants within Loblaw stores.
AS A LESSEE
Right-of-Use Assets The following are continuities of the cost and accumulated depreciation of right-of-use assets for the years
ended December 31, 2024 and December 31, 2023:
2024
2023
($ millions)
Property
Other
Total
Property
Other
Total
Cost
Balance, beginning of year
$
7,176 $
185 $
7,361
$
6,456 $
131 $
6,587
Lease additions, net of lease terminations
468
17
485
215
29
244
Lease extensions and other items
724
(3)
721
577
25
602
Retired leases
(49)
—
(49)
(72)
—
(72)
Reclassification to asset held for sale (note 13)
(12)
—
(12)
—
—
—
Balance, end of year
$
8,307 $
199 $
8,506
$
7,176 $
185 $
7,361
Accumulated depreciation
Balance, beginning of year
$
2,849 $
104 $
2,953
$
2,297 $
82 $
2,379
Depreciation
652
23
675
628
22
650
Net impairment losses (reversals) (note 14)
7
—
7
(4)
—
(4)
Retired leases
(49)
—
(49)
(72)
—
(72)
Balance, end of year
$
3,459 $
127 $
3,586
$
2,849 $
104 $
2,953
Carrying amount, end of year
$
4,848 $
72 $
4,920
$
4,327 $
81 $
4,408
Lease Liabilities The following are continuities of lease liabilities for the years ended December 31, 2024 and December 31, 2023:
($ millions)
2024
2023
Balance, beginning of year
$
5,443
$
5,158
Lease additions, net of lease terminations
641
371
Lease extensions and other items
624
568
Lease payments
(908)
(861)
Interest expense on lease liabilities (note 6)
236
207
Reclassification to assets held for sale (note 13)
(14)
—
Balance, end of year
$
6,022
$
5,443
Lease liabilities due within one year
$
1,045
$
880
Lease liabilities
4,977
4,563
Total lease liabilities
$
6,022
$
5,443
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 143
Liquidity The future undiscounted contractual lease obligations are as follows:
Due by year
As at
Dec. 31, 2024
Dec. 31, 2023
($ millions)
2025
2026
2027
2028
2029
Thereafter
Total
Total
Lease obligations
$ 1,031
$
878
$
768
$
613
$
547
$
2,404
$
6,241
$
5,590
As at December 31, 2024, the Company also had commitments of $552 million (December 31, 2023 – $717 million) related to leases
not yet commenced.
Short-Term Leases The Company has short-term leases that are primarily related to trailer rentals and certain properties. During
2024, $44 million (2023 – $45 million) was recognized in cost of inventories sold and SG&A.
Variable Lease Payments The Company makes variable lease payments for property tax and insurance charges on leased
properties. The Company also has certain retail store leases where portions of the lease payments are contingent on a percentage
of retail sales. During 2024, $255 million (2023 – $237 million) of variable lease payments were recognized in SG&A.
Extension Options Substantially all of Loblaw’s retail store leases have extension options for additional lease terms. As at December
31, 2024, approximately 20% (December 31, 2023 – 16%) of the lease liabilities are related to extension options that were deemed
reasonably certain to be exercised.
As at December 31, 2024, approximately $7 billion (December 31, 2023 – $7 billion) of discounted future lease payments are related
to extension options that were not deemed to be reasonably certain to be exercised and were not included in lease liabilities. These
future lease payments are discounted at the incremental borrowing rates associated with the current lease liability profile.
Sale and Leaseback Transactions During 2024, the Company disposed of and leased back three retail properties and two
distribution centres (2023 – eighteen retail properties and two distribution centres) for proceeds of $180 million (2023 – $184 million),
and recognized a gain of $25 million (2023 – gain of $27 million) in SG&A.
AS A LESSOR
Operating Leases During 2024, the Company recognized operating lease income of $398 million (2023 – $378 million), of which
$19 million (2023 – $20 million) is related to subleases of right-of-use assets.
The future undiscounted operating lease payments to be received by the Company are as follows:
Notes to the Consolidated Financial Statements
144 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
Payments to be received by year
As at
Dec. 31, 2024
Dec. 31, 2023
($ millions)
2025
2026
2027
2028
2029
Thereafter
Total
Total
Operating lease income
$
398
$
359
$
309
$
261
$
200
$
848
$
2,375
$
2,052
The Company has certain owned land and buildings that it leases to third parties, which as at December 31, 2024 had a net carrying
amount of $781 million (2023 – $849 million).
Note 30. Financial Instruments
The following table presents the fair value and fair value hierarchy of the Company’s financial instruments and excludes financial
instruments measured at amortized cost that are short-term in nature, and certain other assets for which the carrying value
approximates fair value. The carrying values of the Company’s financial instruments approximate their fair values except for long-
term debt.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 145
As at
Dec. 31, 2024
Dec. 31, 2023
($ millions)
Level 1 Level 2 Level 3
Total
Level 1
Level 2
Level 3
Total
Financial assets
Amortized cost:
Mortgages, loans and notes receivable(i)
$
— $
— $ 260 $ 260
$
— $
— $
205 $
205
Fair value through other comprehensive income:
Long-term securities(i)
120
—
—
120
201
—
—
201
Derivatives included in prepaid expenses and other assets
—
1
—
1
—
8
—
8
Fair value through profit and loss:
Security deposits
38
—
—
38
38
—
—
38
Mortgages, loans and notes receivable(i)
—
—
163
163
—
—
161
161
Investment in real estate securities(i)
—
203
—
203
—
238
—
238
Certain other assets(i)
—
15
134
149
—
17
95
112
Derivatives included in prepaid expenses and other assets
—
11
—
11
—
8
2
10
Financial liabilities
Amortized cost:
Long-term debt
—
9,216
6,811
16,027
—
8,627
6,599
15,226
Associate interest
—
—
255
255
—
—
370
370
Certain other liabilities(i)(ii)
—
—
813
813
—
—
807
807
Fair value through other comprehensive income:
Derivatives included in trade payables and other liabilities
—
—
16
16
—
—
4
4
Fair value through profit and loss:
Trust Unit liability
3,715
—
—
3,715
3,881
—
—
3,881
Derivatives included in trade payables and other liabilities
—
2
6
8
4
4
—
8
(i)
Included in the consolidated balance sheets in Other Assets or Other Liabilities.
(ii)
Certain other liabilities relate primarily to financial liabilities associated with properties that did not meet the criteria for sale.
There were no transfers between the levels of the fair value hierarchy during the periods presented.
During 2024, a gain of $10 million (2023 – loss of $3 million) was recognized in operating income on financial instruments
designated as amortized cost. In addition, a net gain of $186 million (2023 – $139 million) was recognized in earnings before income
taxes on financial instruments required to be classified as fair value through profit or loss.
Investments in Real Estate Securities On March 31, 2022, Choice Properties disposed of its interests in a portfolio of six office assets
to Allied Properties Real Estate Investment Trust (“Allied”). The consideration received consisted of 11,809,145 exchangeable Class B
limited partnership units of Allied Properties Exchangeable Limited Partnership (“Allied Class B Units”), an affiliated entity of Allied,
with a fair value of $551 million on the transaction date. Also included as consideration was a promissory note with a fair value of
$193 million (face value of $200 million), which was repaid by Allied on December 29, 2023. The Allied Class B Units are
exchangeable into, and are economically equivalent to, the publicly traded trust units of Allied (“Allied Units”), and were
accompanied by a corresponding number of special voting units of Allied. There are no restrictions on the exchange of Allied Class
B Units into Allied Units, but the Allied Units (if exchanged) are subject to a lock-up from the closing of the transaction, such that
25% of the Allied Class B Units or Allied Units, as applicable, will be released from lock-up every three months following the first
anniversary of closing of the transaction. As at year end 2024, none of the Class B Units were subject to lock-up (December 31, 2023 -
2,952,286). As a holder of the Allied Class B Units, Choice Properties is entitled to distributions paid by Allied.
The Allied Class B Units are recorded at their fair value based on market trading prices of Allied’s publicly traded units, and included
in investment in real estate securities in the table above. As at year end 2024, Choice Properties, held 11,809,145 Allied Class B Units
with a value of $203 million (December 31, 2023 – $238 million). In 2024, a fair value loss of $36 million (2023 – $64 million) was
recorded in SG&A.
Other Derivatives The Company uses bond forwards, interest rate swaps and foreign exchange forwards to mitigate the impact of
increases in interest rates and manage its anticipated exposure to exchange rates on its underlying operations and anticipated
fixed asset purchases. The Company also uses swaps, futures, options and forward contracts to manage its anticipated exposure to
fluctuations in commodity prices and exchange rates in its underlying operations. The following is a summary of the fair values
recognized in the consolidated balance sheets and the net realized and unrealized gains (losses) before income taxes related to the
Company’s other derivatives:
2024
($ millions)
Net asset
(liability
) fair value
Gain/(loss)
recorded in OCI
Gain/(loss)
recorded i
n operating income
Derivatives designated as cash flow hedges
Foreign Exchange Forwards(i)
$
1
$
(1)
$
1
Bond Forwards(ii)
—
4
(3)
Interest Rate Swaps(iii)
4
(4)
1
Energy Hedge(iv)
(15)
(12)
—
Total derivatives designated as cash flow hedges
$
(10)
$
(13)
$
(1)
Derivatives not designated in a formal hedging relationship
Foreign Exchange and Other Forwards
$
5
$
—
$
26
Other Non-Financial Derivatives
—
—
2
Total derivatives not designated in a formal hedging relationship
$
5
$
—
$
28
Total derivatives
$
(5)
$
(13)
$
27
(i)
PC Bank uses foreign exchange forwards, with a notional value of $11 million USD, to manage its foreign exchange risk related to certain U.S.
payables. The fair value of the derivatives is included in prepaid expenses and other assets.
(ii)
The Company uses bond forwards to manage its interest risk related to future debt issuances. During 2024, PC Bank settled all of its outstanding
bond forwards.
(iii)
PC Bank uses interest rate swaps, with a notional value of $180 million, to mitigate the impact of increases in interest rates. The fair value of the
derivatives is included in prepaid expenses and other assets. Choice Properties uses interest rate swaps, with a notional value of $76 million as
derivative assets and a notional value of $75 million as derivative liabilities, to manage its interest risk related to variable rate mortgages. The fair
values of the derivatives held by Choice Properties are included in other assets and other liabilities.
(iv)
In 2023, Loblaw entered into a 20-year arrangement to hedge energy pricing on its purchases in Alberta beginning on January 1, 2025. The hedge
has a notional value of $223 million. The fair value of the derivative is included in other liabilities.
Notes to the Consolidated Financial Statements
146 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
2023
($ millions)
Net asset
(liability
) fair value
Gain/
(loss)
recorded in OCI
Gain/(loss)
recorded i
n operating income
Derivatives designated as cash flow hedges
Foreign Exchange Forwards(i)
$
7
$
(2)
$
2
Bond Forwards(ii)
—
11
(4)
Interest Rate Swaps(iii)
8
(6)
2
Energy Hedge(iv)
(4)
(4)
—
Total derivatives designated as cash flow hedges
$
11
$
(1)
$
—
Derivatives not designated in a formal hedging relationship
Foreign Exchange and Other Forwards
$
(3)
$
—
$
(4)
Other Non-Financial Derivatives
(4)
—
(7)
Total derivatives not designated in a formal hedging relationship
$
(7)
$
—
$
(11)
Total derivatives
$
4
$
(1)
$
(11)
(i)
PC Bank uses foreign exchange forwards, with a notional value of $9
million USD, to manage its foreign exchange risk related to certain U.S.
payables. The fair value of the derivatives is included in prepaid expenses and other assets.
(ii)
The Company uses bond forwards, to manage its interest risk related to future debt issuances. During 2023, PC Bank settled all of its outstanding
bond forwards.
(iii)
PC Bank uses interest rate swaps, with a notional value of $180 million, to mitigate the impact of increases in interest rates. The fair value of the
derivatives is included in prepaid expenses and other assets. Choice Properties uses interest rate swaps, with a notional value of $79 million as
derivative assets and a notional value of $109 million as derivative liabilities, to manage its interest risk related to variable rate mortgages. The fair
values of the derivatives held by Choice Properties are included in other assets and other liabilities. Also during 2023, Choice Properties entered
into cross currency swaps to hedge foreign exchange associated with the equivalent amount borrowed in U.S. dollar on its credit facility. The
cross currency swaps matured in 2023 as the U.S dollar borrowings were
repaid.
(iv)
In 2023, Loblaw entered into a 20-year arrangement to hedge energy pricing on its purchases in Alberta beginning on January 1, 2025. The hedge
has a notional value of $223
million. The fair value of the derivative is included in trade payables and other liabilities.
Note 31. Financial Risk Management
As a result of holding and issuing financial instruments, the Company is exposed to certain risks. The following is a description of
those risks and how the exposures are managed:
LIQUIDITY RISK Liquidity risk is the risk that the Company is unable to generate or obtain sufficient cash or its equivalents in a cost
effective manner to fund its obligations as they come due. The Company is exposed to liquidity risk through, among other areas,
PC Bank, which requires a reliable source of funding for its credit card business. PC Bank relies on its securitization programs,
demand deposits from customers and the acceptance of GIC deposits to fund the receivables of its credit cards. The Company
would experience liquidity risks if it fails to maintain appropriate levels of cash and short-term investments, is unable to access
sources of funding or fails to appropriately diversify sources of funding. If any of these events were to occur, they could adversely
affect the financial performance of the Company.
Liquidity risk is mitigated by maintaining appropriate levels of cash and cash equivalents and short-term investments, actively
monitoring market conditions, and by diversifying sources of funding, including the Company’s committed credit facilities, and
maintaining a well-diversified maturity profile of debt and capital obligations.
Maturity Analysis The following are the undiscounted contractual maturities of significant financial liabilities (excluding lease
liabilities - see note 29) as at December 31, 2024:
($ millions)
2025
2026
2027
2028
2029
Thereafter
Total(i)
Long-term debt including
interest payments(ii)
$
1,683 $
1,700 $
2,443 $
2,538 $
2,689 $
9,915 $
20,968
Trade payables and other liabilities
7,894
—
—
—
—
—
7,894
Foreign exchange forward contracts
310
—
—
—
—
—
310
Short-term debt (note 11)
800
—
—
—
—
—
800
Financial liabilities (note 23)
66
60
59
52
56
218
511
Demand deposits from customers
353
—
—
—
—
—
353
Associate interest
255
—
—
—
—
—
255
Certain other liabilities
3
—
—
—
—
—
3
Total
$
11,364 $
1,760 $
2,502 $
2,590 $
2,745 $
10,133 $
31,094
(i)
The Trust Unit liability has been excluded as this liability does not have a contractual maturity date.
(ii)
Fixed interest payments are based on the maturing face values and annual interest for each instrument, including GICs, long-term independent
securitization trusts and an independent funding trust, as well as annual payment obligations for structured entities and mortgages. Variable
interest payments are based on the forward rates as at year end 2024.
CREDIT RISK The Company is exposed to credit risk resulting from the possibility that counterparties could default on their
financial obligations to the Company, including derivative instruments, cash and cash equivalents, short-term investments, security
deposits, PC Bank’s credit card receivables, Loblaw’s finance lease receivable, pension assets held in the Company’s defined benefit
plans and Loblaw’s accounts receivable, including amounts due from government and third-party drug plans arising from
prescription drug sales, independent accounts and amounts owed from vendors. Failure to manage credit risk could adversely
affect the financial performance of the Company.
The risk related to derivative instruments, cash and cash equivalents, short-term investments and security deposits is reduced by
policies and guidelines that require that the Company enters into transactions only with counterparties or issuers that have a
minimum long-term “A-” credit rating from a recognized credit rating agency and place minimum and maximum limits for
exposures to specific counterparties and instruments.
Choice Properties mitigates the risk of credit loss relating to rent receivables by evaluating the creditworthiness of new tenants,
obtaining security deposits wherever permitted by legislation, ensuring its tenant mix is diversified and limiting its exposure to any
one tenant, except Loblaw. Choice Properties establishes an allowance for expected credit losses with respect to rent receivables.
The allowance is determined on a tenant-by-tenant basis based on the specific factors related to the tenant.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 147
PC Bank manages its credit card receivable risk by employing stringent credit scoring techniques, actively monitoring the credit
card portfolio and reviewing techniques and technology that can improve the effectiveness of the collection process. In addition,
these receivables are dispersed among a large, diversified group of credit card customers.
Loblaw’s finance lease receivable and Loblaw’s accounts receivable, including amounts due from governments and third-party
drug plans arising from prescription drug sales, independent accounts and amounts owed from vendors and tenants, are actively
monitored on an ongoing basis and settled on a frequent basis in accordance with the terms specified in the applicable
agreements.
The Company’s maximum exposure to credit risk as it relates to derivative instruments is approximated by the positive fair market
value of the derivatives on the consolidated balance sheets (see note 30).
Refer to notes 10 and 11 for additional information on the credit quality performance of the Company’s other receivables and
Loblaw’s credit card receivables, respectively, mentioned above.
TRUST UNIT PRICE RISK The Company is exposed to market price risk from Choice Properties’ Trust Units that are 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 holders. The liability is recorded at fair value at each reporting period based on
the market price of Trust Units. The change in the fair value of the liability negatively impacts net earnings when the Trust Unit price
increases and positively impacts net earnings when the Trust Unit price declines. A one dollar increase in the market value of Trust
Units, with all other variables held constant, would result in an increase of $277 million in net interest expense and other financing
charges.
INTEREST RATE RISK The Company is exposed to interest rate risk from fluctuations in interest rates on its floating rate debt and
from the refinancing of existing financial instruments. An increase in interest rates could adversely affect the operations or financial
performance of the Company. The Company manages interest rate risk by monitoring the respective mix of fixed and floating rate
debt and by taking action as necessary to maintain an appropriate balance considering current market conditions, with the
objective of maintaining the majority of its debt at fixed interest rates. The Company estimates that a 1% increase (decrease) in
short-term interest rates, with all other variables held constant, would result in an increase (decrease) of $6 million in net interest
expense and other financing charges.
CURRENCY EXCHANGE RATE RISK The Company is exposed to foreign currency exchange rate variability, primarily on its U.S.
dollar denominated purchases in trade payables and other liabilities. A depreciating Canadian dollar relative to the U.S. dollar will
have a negative impact on year-over-year changes in reported operating income and net earnings, while an appreciating Canadian
dollar relative to the U.S. dollar will have the opposite impact. To manage a portion of this exposure, the Company uses derivative
instruments in the form of futures contracts and forward contracts to minimize cost volatility related to foreign exchange.
COMMODITY PRICE RISK Loblaw is exposed to increases in the prices of commodities in operating its stores and distribution
networks, as well as to the indirect effect of changing commodity prices on the price of consumer products. Rising commodity
prices could adversely affect the financial performance of Loblaw. To manage a portion of this exposure, Loblaw uses purchase
commitments and derivative instruments in the form of exchange traded futures contracts and forward contracts to minimize cost
volatility related to commodities. Loblaw estimates that based on the outstanding derivative contracts held as at year end 2024, a
10% decrease in relevant commodity prices, with all other variables held constant, would result in a loss of $5 million in earnings
before income taxes.
Notes to the Consolidated Financial Statements
148 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
Note 32. Contingent Liabilities
In the ordinary course of business, the Company is involved in and potentially subject to, legal actions and proceedings. In addition,
the Company is subject to tax audits from various tax authorities on an ongoing basis. As a result, from time to time, tax authorities
may disagree with the positions and conclusions taken by the Company in its tax filings or legislation could be amended or
interpretations of current legislation could change, any of which events could lead to reassessments.
There are a number of uncertainties involved in such matters, individually or in aggregate, and as such, there is a possibility that the
ultimate resolution of these matters may result in a material adverse effect on the Company’s reputation, operations, financial
condition or performance in future periods. It is not currently possible to predict the outcome of the Company’s legal actions and
proceedings with certainty. Management regularly assesses its position on the adequacy of accruals or provisions related to such
matters and will make any necessary adjustments.
The following is a description of the Company’s significant legal proceedings:
Shoppers Drug Mart was previously served with an Amended Statement of Claim in a class action proceeding that has been filed
in the Ontario Superior Court of Justice (“Superior Court”) by licensed Associates (“Associates”), claiming various declarations and
damages resulting from Shoppers Drug Mart’s alleged breaches of the Associate Agreement. The class action comprises all of
Shoppers Drug Mart’s current and former licensed Associates residing in Canada, other than in Québec, who were parties to
Shoppers Drug Mart’s 2002 and 2010 forms of the Associate Agreement. On July 9, 2013, the Superior Court certified as a class
proceeding portions of the action. A summary judgment trial of the matter was held in December 2022 and on February 17, 2023,
the Superior Court released its decision in relation to those summary judgment motions (the “Decision”). The Superior Court
dismissed the plaintiffs’ claims on the majority of the issues including a request for damages at this stage of proceedings. The
Superior Court also held that Shoppers Drug Mart breached the 2002 form of Associate Agreement when it did not remit certain
amounts that it received from generic drug manufacturers to Associates. On March 20, 2023, the plaintiffs filed a Notice of Appeal
and on April 4, 2023, Loblaw filed a Notice of Cross-Appeal. A hearing for the appeals was held on February 14, 2024 and on February
15, 2024. On August 29, 2024, the Court of Appeal dismissed both the appeal and cross appeal, with the exception that the plaintiff’s
appeal was allowed to correct the amount Shoppers Drug Mart received in professional allowances during the class period.
Accordingly, Loblaw has not recorded any amounts related to the potential liability associated with this lawsuit. Loblaw does not
believe that the ultimate resolution of this matter will have a material adverse impact on its financial condition or prospects.
In 2017, the Company and Loblaw announced actions taken to address their role in an industry-wide price-fixing arrangement
involving certain packaged bread products. The arrangement involved the coordination of retail and wholesale prices of certain
packaged bread products over a period extending from late 2001 to March 2015. Under the arrangement, the participants regularly
increased prices on a coordinated basis. Class action lawsuits were commenced against the Company and Loblaw as well as a
number of other major grocery retailers and another bread wholesaler. 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 with the
lawyers representing consumers to settle those class action lawsuits for $500 million. The Company and Loblaw will each pay for a
portion of the settlement, with the Company paying $247 million and Loblaw paying $253 million. Loblaw will receive credit for the
$96 million it previously paid to customers in the form of Loblaw cards, resulting in it being required to pay $157 million in cash
towards the settlement. The Settlement Agreement is subject to the approval of the courts. In December 2019, a proposed class
action on behalf of independent distributors was commenced against the Company (the “ID Class Action”). It is too early to predict
the outcome of the ID Class Action but the Company does not believe that the ultimate resolution of such legal proceeding will
have a material adverse impact on its financial condition or prospects. As a result of admission of participation in the arrangement
and cooperation in the Competition Bureau’s investigation, the Company and Loblaw will not face criminal charges or penalties. In
response to such class action lawsuits, certain major grocery retailers have crossclaimed against the Company and Loblaw, and the
Company and Loblaw believe such crossclaims are without merit.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 149
In August 2018, the Province of British Columbia filed a class action against numerous opioid manufacturers and distributors,
including Loblaw and its subsidiaries, Shoppers Drug Mart Inc. and Sanis Health Inc. The claim contains allegations of breach of the
Competition Act, fraudulent misrepresentation and deceit and negligence, and seeks unquantified damages for the expenses
incurred by the federal government, provinces, and territories of Canada in paying for opioid prescriptions and other healthcare
costs related to opioid addiction and abuse in Canada. During the second quarter of 2021, the claim against Loblaw Companies
Limited was discontinued. In May 2019, two further opioid-related class actions were commenced in each of Ontario and Quebec
against a large group of defendants, including Sanis Health Inc. In February 2022, the plaintiff and Sanis Health Inc. agreed to settle
the Quebec action for a nominal amount, with no admission of liability and for the express purpose of avoiding the delays,
disruption, and expenses associated with the litigation. The settlement has been approved by the court and is now final. On
December 12, 2024, the Ontario action was dismissed against Sanis Health Inc., with costs. In December 2019, a further opioid-
related class action was commenced in British Columbia against a large group of defendants, including Sanis Health Inc., Shoppers
Drug Mart Inc. and Loblaw. The allegations in the civil British Columbia class action are similar to the allegations against
manufacturer defendants in the Province of British Columbia class action, except that the December 2019 claim seeks recovery of
damages on behalf of opioid users directly. In April 2021, Loblaw, Shoppers Drug Mart Inc. and Sanis Health Inc. were served with
another opioid-related class action that was started in Alberta against multiple defendants. The claim seeks damages on behalf of
municipalities and local governments in relation to public safety, social service, and criminal justice costs allegedly incurred due to
the opioid crisis. In September 2021, Loblaw, Shoppers Drug Mart Inc. and Sanis Health Inc. were served with a class action started in
Saskatchewan by Peter Ballantyne Cree Nation and Lac La Ronge Indian Band on behalf of all Indigenous, Metis, First Nation and
Inuit communities and governments in Canada to recover costs they have incurred as a result of the opioid crisis, including
healthcare costs, policing costs and societal costs. In October 2024, the claim was discontinued against Shoppers Drug Mart Inc. In
January 2024, Shoppers Drug Mart Inc. was served with a second class action in Saskatchewan started by Lac La Ronge Indian
Band. The case is brought on behalf of Band members and is claiming damages relating to abatement costs, the diversion of
financial and other resources, the reduction in the value of the reserve lands and interests, and lost tax revenues. Shoppers Drug
Mart Inc. is being sued as a representative of an international defendant subclass of opioid “dealers” and Sanis Health Inc. is a
proposed supplier class member. Loblaw believes these proceedings are without merit and is vigorously defending them. Loblaw
does not currently have any significant accruals or provisions for these matters recorded in the consolidated financial statements.
In 2022, the Tax Court of Canada (“Tax Court”) released a decision relating to 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 (see note 19). In
addition, $10 million was recorded related to interest income on cash tax refunds. Certain taxation years subsequent to the periods
covered by the FCA decision remain under review by the tax authorities.
INDEMNIFICATION PROVISIONS The Company from time to time enters into agreements in the normal course of its business,
such as service and outsourcing arrangements, lease agreements in connection with business or asset acquisitions or dispositions,
and other types of commercial agreements. These agreements by their nature may provide for indemnification of counterparties.
These indemnification provisions may be in connection with breaches of representations and warranties or in respect of future
claims for certain liabilities, including liabilities related to tax and environmental matters. The terms of these indemnification
provisions vary in duration and may extend for an unlimited period of time. In addition, the terms of these indemnification
provisions vary in amount and certain indemnification provisions do not provide for a maximum potential indemnification amount.
Indemnity amounts are dependent on the outcome of future contingent events, the nature and likelihood of which cannot be
determined at this time. As a result, the Company is unable to reasonably estimate its total maximum potential liability in respect of
indemnification provisions. Historically, the Company has not made any significant payments in connection with these
indemnification provisions.
Notes to the Consolidated Financial Statements
150 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
Note 33. Financial Guarantees
The Company established letters of credit used in connection with certain obligations mainly related to real estate transactions,
benefit programs, purchase orders and guarantees with a gross potential liability of approximately $416 million as at year end 2024
(2023 – $379 million). In addition, Loblaw and Choice Properties have provided to third parties the following significant guarantees:
ASSOCIATE GUARANTEES Loblaw has arranged for its Associates to obtain financing to facilitate their inventory purchases and
fund their working capital requirements by providing guarantees to various Canadian chartered banks that support Associate loans.
As at year end 2024, Loblaw’s maximum obligation in respect of such guarantees was $580 million (2023 – $580 million) with an
aggregate amount of $476 million (2023 – $476 million) in available lines of credit allocated to the Associates by the various banks.
As at year end 2024, Associates had drawn a nominal amount (2023 – $13 million) against these available lines of credit. Any
amounts drawn by the Associates are included in bank indebtedness on the Company’s consolidated balance sheets. As recourse,
in the event that any payments are made under the guarantees, Loblaw holds a first-ranking security interest on all assets of
Associates, subject to certain prior-ranking statutory claims.
INDEPENDENT FUNDING TRUSTS The full balance relating to the debt of the independent funding trusts has been consolidated
on the balance sheets of the Company (see note 22). As at year end 2024, Loblaw has agreed to provide a credit enhancement of
$64 million (2023 – $64 million) in the form of a standby letter of credit for the benefit of the independent funding trusts
representing not less than 10% (2023 – not less than 10%) of the principal amount of loans outstanding. This credit enhancement
allows the independent funding trusts to provide financing to Loblaw’s franchisees. As well, each franchisee provides security to the
independent funding trusts for its obligations by way of a general security agreement. In the event that a franchisee defaults on its
loan and Loblaw has not, within a specified time period, assumed the loan, or the default is not otherwise remedied, the
independent funding trusts would assign the loan to Loblaw and draw upon this standby letter of credit. This standby letter of
credit has never been drawn upon. Loblaw has agreed to reimburse the issuing bank for any amount drawn on the standby letter of
credit.
LEASE OBLIGATIONS In connection with historical dispositions of certain of its assets, Loblaw has assigned leases to third parties.
Loblaw remains contingently liable for these lease obligations in the event any of the assignees are in default of their lease
obligations. Loblaw has guaranteed lease obligations of a third party distributor in the amount of $2 million (2023 – $3 million).
CASH COLLATERALIZATION As at year end 2024, Loblaw had agreements to cash collateralize certain of its uncommitted credit
facilities up to an amount of $94 million (2023 – $93 million), of which a nominal amount (2023 – nominal) was deposited with major
financial institutions and classified as security deposits on the consolidated balance sheets.
FINANCIAL SERVICES Loblaw has provided a guarantee on behalf of PC Bank to Mastercard International Incorporated
(“Mastercard”) for accepting PC Bank as a card member and licensee of Mastercard. As at year end 2024, the guarantee on behalf of
PC Bank to Mastercard was $190 million USD (2023 – $190 million USD).
Letters of credit for the benefit of independent securitization trusts with respect to the securitization programs of PC Bank have
been issued by major financial institutions. These standby letters of credit can be drawn upon in the event of a major decline in the
income flow from or in the value of the securitized credit card receivables. Loblaw has agreed to reimburse the issuing banks for
any amount drawn on the standby letters of credit. The aggregate gross potential liability under these arrangements for the Other
Independent Securitization Trusts was $72 million (2023 – $77 million), which represented approximately 9% (2023 – 9%) of the
securitized credit card receivables amount (see note 11).
CHOICE PROPERTIES Letters of credit to support guarantees related to its investment properties including maintenance and
development obligations to municipal authorities are issued by Choice Properties. As at year end 2024, the aggregate gross
potential liability related to these letters of credit totalled $37 million (2023 – $38 million). Choice Properties’ credit facility and
debentures are guaranteed by each of the General Partner, the Partnership and any other person that becomes a subsidiary of
Choice Properties (with certain exceptions). In the case of default by Choice Properties, the indenture trustee will be entitled to seek
redress from the guarantors for the guaranteed obligations in the same manner and upon the same terms that it may seek to
enforce the obligations of Choice Properties. These guarantees are intended to eliminate structural subordination, which would
otherwise arise as a consequence of Choice Properties’ assets being primarily held in its various subsidiaries.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 151
Note 34. Related Party Transactions
Galen G. Weston beneficially owns or controls, directly and indirectly, including through Wittington, a total of 76,697,812 of GWL’s
common shares, representing approximately 59.0% of GWL’s outstanding common shares (2023 – 58.0%).
Transactions between the Company and its consolidated entities have been eliminated on consolidation and are not disclosed in
this note.
In 2023, inventory purchases from Associated British Foods plc, a related party during 2023 by virtue of a common director of such
entity’s parent company and GWL’s parent company, amounted to $41 million. Associated British Foods plc was not a related party
of the Company during 2024.
VENTURE FUNDS During 2020, GWL, Loblaw and a wholly owned subsidiary of Wittington became limited partners in a limited
partnership formed by Wittington (“Venture Fund I”). A wholly owned subsidiary of Wittington is the general partner of Venture
Fund I, which hired an external fund manager to oversee it. The purpose of Venture Fund I is to pursue venture capital investing in
innovative businesses that are in technology-oriented companies at all stages of the start-up life cycle that operate in commerce,
healthcare, and food sectors and are based in North America. Each of the three limited partners have a 33% interest in Venture
Fund I. The Company has a consolidated capital commitment of $66 million over a 10-year period.
During 2022, Loblaw became a limited partner in another limited partnership formed by Wittington (“Venture Fund II”). A wholly
owned subsidiary of Wittington is also the general partner of Venture Fund II, and the purpose of Venture Fund II is consistent with
Venture Fund I. Loblaw has a 50% interest in Venture Fund II and has a total capital commitment of $60 million over a 10-year
period.
CO-INVESTMENT During 2024, GWL and two Wittington subsidiaries co-invested $14 million ($10 million USD) in a third-party
company, of which the Company contributed $6 million ($4 million USD).
POST-EMPLOYMENT BENEFIT PLANS The Company sponsors a number of post-employment plans, which are related parties.
Contributions made by the Company to these plans are disclosed in note 26.
INCOME TAX MATTERS From time to time, the Company and Wittington may enter into agreements to make elections that are
permitted or required under applicable income tax legislation with respect to affiliated corporations.
COMPENSATION OF KEY MANAGEMENT PERSONNEL The Company’s key management personnel is comprised of certain
members of the executive teams of GWL, Loblaw and Wittington, as well as members of the Boards of GWL, Loblaw and Wittington
to the extent that they have the authority and responsibility for planning, directing and controlling the day-to-day activities of the
Company.
Annual compensation of key management personnel that is directly attributable to the Company was as follows:
($ millions)
2024
2023(i)
Salaries, director fees and other short-term employee benefits
$
15
$
17
Equity-based compensation
12
13
Total compensation
$
27
$
30
(i)
Certain comparative figures have been restated to conform with current year presentation.
Notes to the Consolidated Financial Statements
152 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
Note 35. Segment Information
The Company has two reportable operating segments: Loblaw and Choice Properties. Effect of consolidation includes eliminations,
intersegment adjustments and other consolidation adjustments. 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.
The accounting policies of the reportable operating segments are the same as those described in the Company’s summary of
material accounting policies (see note 2). The Company measures each reportable operating segment’s performance based on
operating income less adjusting items and before depreciation and amortization (“Adjusted EBITDA”). No reportable operating
segment is reliant on any single external customer.
-
1
-
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 153
2024
2023
($ millions)
Loblaw
Choice
Properties
Total
Segment
Measure
Effect of
consol
idation
GWL
Corporate
Total
Loblaw
Choice
Properties
Total
Segment
Measure
Effect of
consol
idation
GWL
Corporate
Total
Revenue
$ 61,014 $ 1,369 $ 62,383 $ (775) $
— $ 61,608
$ 59,529 $ 1,335 $ 60,864 $ (740) $
— $ 60,124
Cost of inventories sold
41,288
9
41,297
—
—
41,297
40,492
21
40,513
—
—
40,513
Selling, general and
administrative
expenses
15,832
280
16,112
(455)
278
15,935
15,341
313
15,654
(456)
50
15,248
Operating income
$ 3,894 $ 1,080 $ 4,974 $ (320) $ (278) $ 4,376
$ 3,696 $ 1,001 $ 4,697 $ (284) $
(50) $ 4,363
Net interest expense
(income) and other
financing charges
821
296
1,117
(149)
4
972
803
204
1,007
(116)
(2)
889
Earnings before
income taxes
$ 3,073 $ 784 $ 3,857 $ (171) $ (282) $ 3,404
$ 2,893 $
797 $ 3,690 $ (168) $
(48) $ 3,474
Operating income
$ 3,894 $ 1,080 $ 4,974 $ (320) $ (278) $ 4,376
$ 3,696 $ 1,001 $ 4,697 $ (284) $
(50) $ 4,363
Depreciation and
amortization
2,966
4
2,970
2,906
3
2,909
Adjusting items(i)
156
(119)
37
37
(64)
(27)
Adjusted EBITDA(i)
$ 7,016 $
965 $ 7,981
$ 6,639 $
940 $ 7,579
-
-
(i)
Certain items are excluded from operating income to derive adjusted EBITDA:
2024
2023
($ millions)
Loblaw
Choice
Properties
Total
Segment
Measure
Loblaw
Choice
Properties
Total
Segment
Measure
PC Optimum loyalty program
$
129 $
— $
129
$
— $
— $
—
Fair value adjustment of investment in real estate securities
—
36
36
—
64
64
Fair value write-down related to sale of Wellwise
23
—
23
—
—
—
Fair value adjustment on investment properties
—
(116)
(116)
—
(128)
(128)
Fair value adjustment on non-operating properties
3
—
3
9
—
9
Gain on sale of non-operating properties
(3)
—
(3)
(12)
—
(12)
Fair value adjustment of derivatives
(5)
—
(5)
16
—
16
(Recoveries) Charge related to PC Bank commodity tax
matters
(155)
—
(155)
24
—
24
Charges related to settlement of class action lawsuits
164
—
164
—
—
—
Transaction costs and other related recoveries
—
(39)
(39)
—
—
—
Adjusting Items
$
156 $
(119) $
37
$
37 $
(64) $
(27)
Effect of consolidation includes the following items:
2024
2023
($ millions)
Revenue
Operating Income
Net Interest
Expens
e and Oth
er Financing Charges
Revenue
Operating Income
Net Interest
Expens
e and Oth
er Financing Charges
Elimination of intercompany rental revenue
$
(788) $
16 $
—
$
(752) $
(19) $
—
Elimination of internal lease arrangements
13
(44)
(136)
12
(97)
(120)
Elimination of intersegment real estate transactions
—
(132)
—
—
(39)
—
Asset impairments, net of recoveries
—
10
—
—
(7)
—
Recognition of depreciation on Choice Properties’ investment
properties classified as fixed assets by the Company and
measured at cost
—
(49)
—
—
(29)
—
Fair value adjustment on investment properties
—
(121)
2
—
(93)
3
Unit distributions on Exchangeable Units paid by Choice
Properties to GWL
—
—
(300)
—
—
(296)
Unit distributions on Trust Units paid by Choice Properties,
excluding amounts paid to GWL
—
—
211
—
—
207
Fair value adjustment on Choice Properties’
Exchangeable Units
—
—
238
—
—
321
Fair value adjustment on Trust Unit liability
—
—
(164)
—
—
(231)
Total
$
(775) $
(320) $
(149)
$
(740) $
(284) $
(116)
As at
($ millions)
Dec. 31, 2024
Dec. 31, 2023
Total Assets
Loblaw
$
40,880
$
38,979
Choice Properties
17,558
17,309
Total Segment Measure
58,438
56,288
GWL Corporate
12,376
12,507
Effect of consolidation
(19,378)
(19,025)
Consolidated
$
51,436
$
49,770
($ millions)
2024
2023
Capital Investments
Loblaw
$
2,200
$
2,109
Choice Properties
354
459
Total Segment Measure
2,554
2,568
GWL Corporate
1
2
Effect of consolidation
(160)
(191)
Consolidated(i)
$
2,395
$
2,379
(i)
Capital investments are the sum of fixed asset and investment properties purchases and intangible asset additions as presented in the Company’s
consolidated statements of cash flows, and prepayments transferred to fixed assets in the current year. Loblaw capital investments for the year ended 2023
included $37 million of prepayments transferred to fixed assets.
Note 36. Subsequent Event
CHOICE PROPERTIES On February 12, 2025, Choice Properties announced an increase in the annual distribution by 1.3% to $0.77
per unit. The increase will be effective for Choice Properties’ Unitholders of record on March 31, 2025.
Notes to the Consolidated Financial Statements
154 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
Three Year Summary
Unless otherwise indicated, all financial information represents the Company’s results from continuing operations.
CONSOLIDATED INFORMATION(i)
As at or for the years ended December 31
($ millions except where otherwise indicated)
2024
(52 weeks)
2023
(52 weeks)
2022
(52 weeks)
Operating Results
Revenue
61,608
60,124
57,048
Operating income
4,376
4,363
4,553
Adjusted EBITDA(ii)
7,401
6,953
6,551
Depreciation and amortization
2,611
2,532
2,407
Net interest expense and other financing charges
972
889
913
Adjusted net interest expense and other financing charges(ii)
1,146
1,120
1,022
Income taxes
908
849
831
Adjusted income taxes(ii)
1,137
1,019
989
Net earnings (loss)
2,496
2,625
2,803
Continuing operations
2,496
2,625
2,809
Discontinued operations(iii)
—
—
(6)
Net earnings attributable to shareholders of the Company from continuing
operations
1,359
1,540
1,822
Net earnings (loss) available to common shareholders of the Company
1,315
1,496
1,772
Continuing operations
1,315
1,496
1,778
Discontinued operations(iii)
—
—
(6)
Adjusted net earnings available to common shareholders of
the Company(ii) from continuing operations
1,597
1,467
1,432
Financial Position(iv)
Fixed assets
12,686
11,857
11,130
Goodwill and intangible assets
10,362
10,888
11,380
Total assets
51,436
49,770
48,958
Cash and cash equivalents, short-term investments and security deposits
2,734
2,961
2,852
Total debt including lease liabilities
23,365
22,268
21,523
Total equity attributable to shareholders of the Company
6,242
6,675
6,841
Total equity
13,137
13,463
13,180
Cash Flows
Cash flows from operating activities
6,065
5,851
4,912
Capital investments
2,395
2,379
1,865
Per Common Share ($)
Diluted net earnings (loss) per common share
9.80
10.75
12.16
Continuing operations
9.80
10.75
12.20
Discontinued operations(iii)
—
—
(0.04)
Adjusted diluted net earnings per common share(ii) from continuing
operations
11.93
10.54
9.81
Financial Measures and Ratios
Adjusted EBITDA margin(ii) (%)
12.0
11.6
11.5
Adjusted return on average equity attributable to common shareholders
of the Company(ii) (%)
28.3
24.7
23.5
Adjusted return on capital(ii) (%)
14.5
14.0
13.8
(i)
For financial definitions and ratios refer to the Glossary beginning on page 157.
(ii)
See Section 13, “Non-GAAP and Other Financial Measures”, of the Company’s 2024 Management’s Discussion and Analysis.
(iii)
In 2021, the Company completed the sale of the Weston Foods bakery business. The Company’s interest in Weston Foods was presented
separately as discontinued operations in the Company’s 2022 results. Details are included in the Company’s 2022 Annual Report available on the
Company’s website (
www.weston.ca).
(iv)
Inclusive of Discontinued Operations.
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 155
SEGMENT INFORMATION(i)
As at or for the years ended December 31
($ millions except where otherwise indicated)
2024
(52 weeks)
2023
(52 weeks)
2022
(52 weeks)
OPERATING RESULTS
Revenue
Loblaw
61,014
59,529
56,504
Choice Properties
1,369
1,335
1,265
Effect of consolidation
(775)
(740)
(721)
GWL Corporate
—
—
—
Consolidated
61,608
60,124
57,048
Operating Income
Loblaw
3,894
3,696
3,334
Choice Properties
1,080
1,001
1,083
Effect of consolidation
(320)
(284)
159
GWL Corporate
(278)
(50)
(23)
Consolidated
4,376
4,363
4,553
Adjusted EBITDA(ii)
Loblaw
7,016
6,639
6,173
Choice Properties
965
940
897
Effect of consolidation
(561)
(579)
(503)
GWL Corporate
(19)
(47)
(16)
Consolidated
7,401
6,953
6,551
Adjusted EBITDA Margin (%)(ii)
Loblaw
11.5
11.2
10.9
Depreciation and Amortization
Loblaw
2,966
2,906
2,795
Choice Properties
4
3
3
Effect of consolidation
(362)
(380)
(395)
GWL Corporate
3
3
4
Consolidated
2,611
2,532
2,407
FINANCIAL POSITION
Total Assets
Loblaw
40,880
38,979
38,147
Choice Properties
17,558
17,309
16,820
Effect of consolidation
(19,378)
(19,025)
(18,683)
GWL Corporate
12,376
12,507
12,674
Consolidated
51,436
49,770
48,958
CASH FLOWS
Capital Investments
Loblaw
2,200
2,109
1,571
Choice Properties
354
459
335
Effect of consolidation
(160)
(191)
(42)
GWL Corporate
1
2
1
Consolidated(iii)
2,395
2,379
1,865
(i)
For financial definitions and ratios refer to the Glossary beginning on page 157.
(ii)
See Section 13, “Non-GAAP and Other Financial Measures”, of the Company’s 2024 Management’s Discussion and Analysis.
(iii)
Capital investments are the sum of fixed asset and investment properties purchases and intangible asset additions as presented in the
Company’s consolidated statements of cash flows, and prepayments transferred to fixed assets in the current year. Loblaw capital investments for
the year ended 2023 included $37 million of prepayments transferred to fixed assets.
Three Year Summary
156
GEORGE WESTON LIMITED 2024 ANNUAL REPORT
Glossary
Term
Definition
Adjusted diluted net earnings per common share
Adjusted net earnings available to common shareholders of the Company including
the effect of all dilutive instruments divided by the weighted average number of
common shares outstanding during the period adjusted for the impact of dilutive
items (see Section 13, “Non-GAAP and Other Financial Measures”, of the Company’s
Management’s Discussion and Analysis).
Adjusted EBITDA
Adjusted operating income before depreciation and amortization (see Section 13,
“Non-GAAP and Other Financial Measures”, of the Company’s Management’s
Discussion and Analysis).
Adjusted EBITDA margin
Adjusted EBITDA divided by revenue (see Section 13, “Non-GAAP and Other Financial
Measures”, of the Company’s Management’s Discussion and Analysis).
Adjusted earnings before income taxes
Adjusted operating income less adjusted net interest expense and other financing
charges (see Section 13, “Non-GAAP and Other Financial Measures”, of the Company’s
Management’s Discussion and Analysis).
Adjusted effective tax rate
Adjusted income taxes divided by adjusted operating income less adjusted net
interest expense and other financing charges (see Section 13, “Non-GAAP and Other
Financial Measures”, of the Company’s Management’s Discussion and Analysis).
Adjusted income taxes
Income taxes adjusted for the tax impact of items included in adjusted operating
income less adjusted net interest expense and other financing charges (see Section
13, “Non-GAAP and Other Financial Measures”, of the Company’s Management’s
Discussion and Analysis).
Adjusted net earnings attributable to shareholders
of the Company
Net earnings attributable to shareholders of the Company adjusted for items that are
not necessarily reflective of the Company’s underlying operating performance (see
Section 13, “Non-GAAP and Other Financial Measures”, of the Company’s
Management’s Discussion and Analysis).
Adjusted net earnings available to common shareholders
of the Company
Adjusted net earnings attributable to shareholders of the Company less preferred
dividends (see Section 13, “Non-GAAP and Other Financial Measures”, of the
Company’s Management’s Discussion and Analysis).
Adjusted net interest expense and other
financing charges
Net interest expense and other financing charges adjusted for items that are not
necessarily reflective of the Company’s ongoing net financing costs (see Section 13,
“Non-GAAP and Other Financial Measures”, of the Company’s Management’s
Discussion and Analysis).
Adjusted operating income
Operating income adjusted for items that are not necessarily reflective of the
Company’s underlying operating performance (see Section 13, “Non-GAAP and Other
Financial Measures”, of the Company’s Management’s Discussion and Analysis).
Adjusted return on average equity attributable
to common shareholders of the Company
Adjusted net earnings available to common shareholders of the Company for the last
four quarters divided by average total equity attributable to common shareholders of
the Company (see Section 3.4, “Financial Condition” and Section 13, “Non-GAAP and
Other Financial Measures”, of the Company’s Management’s Discussion and Analysis).
Adjusted return on capital
Tax-effected adjusted operating income for the last four quarters divided by average
capital where capital is defined as total debt, plus equity attributable to shareholders
of the Company, less cash and cash equivalents, and short-term investments (see
Section 3.4, “Financial Condition” and Section 13, “Non-GAAP and Other Financial
Measures”, of the Company’s Management’s Discussion and Analysis).
Basic net earnings per common share
Net earnings available to common shareholders of the Company divided by the
weighted average number of common shares outstanding during the period.
Capital under management
Total debt plus total equity attributable to shareholders of the Company.
Capital investments
Sum of fixed asset and investment properties purchases, intangible asset additions,
and prepayments transferred to fixed assets in the current year, as applicable (see
notes 14, 15 and 17 of the Company’s consolidated financial statements).
Choice Properties’ Funds from Operations
Choice Properties’ net income (loss) adjusted for items that are not necessarily
reflective of Choice Properties’ underlying operating performance (see Section 13,
“Non-GAAP and Other Financial Measures”, of the Company’s Management’s
Discussion and Analysis).
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 157
Term
Definition
Compound Average Growth Rate
Measure of annualized growth over a period longer than one year. It is the mean
annual growth rate over a two year period, 2022 to 2024.
Control brand
A brand and associated trademark that is owned by Loblaw for use in connection
with its own products and services.
Conversion
A store that changes from one Loblaw banner to another Loblaw banner.
Diluted net earnings per common share
Net earnings available to common shareholders of the Company adjusted for the
impact of dilutive items divided by the weighted average number of common shares
outstanding during the period adjusted for the impact of dilutive items.
Diluted weighted average common shares outstanding
Weighted average number of common shares outstanding including the effects of all
dilutive instruments.
Food retail basket size
The dollar value of products sold in a single Loblaw retail transaction.
Food retail traffic
The number of customers entering stores across all Loblaw banners.
Free cash flow
Cash flows from operating activities less capital investments, interest paid and net
lease payments (see Section 13, “Non-GAAP and Other Financial Measures”, of the
Company’s Management’s Discussion and Analysis).
Net earnings attributable to shareholders of the Company
Net earnings less non-controlling interests.
Net earnings available to common shareholders of the
Company
Net earnings attributable to shareholders of the Company less preferred
dividends.
Operating income
Net earnings before net interest expense and other financing charges and
income taxes.
Publicly traded operating companies
The contribution to the Company’s financial performance from its controlling interest
in Loblaw and Choice Properties after the effect of consolidation, each of which are
publicly traded entities (see notes 2 and 5 of the Company’s consolidated financial
statements).
Retail debt to retail adjusted EBITDA
Loblaw retail total debt divided by Loblaw retail adjusted EBITDA.
Retail gross profit percentage
Loblaw retail gross profit divided by Loblaw retail revenue.
Retail gross profit
Loblaw retail revenue less cost of inventories sold.
Retail square footage
Retail square footage includes Loblaw’s corporate stores, franchised stores and
associate-owned drug stores.
Same-store sales
Loblaw retail sales for stores in operation in both comparable periods, including
relocated, converted, expanded, contracted or renovated stores.
Total equity attributable to common shareholders
of the Company
Total equity less preferred shares outstanding and non-controlling
interests.
Total equity attributable to shareholders of the Company
Total equity less non-controlling interests.
Weighted average common shares outstanding
The number of common shares outstanding determined by relating the portion of
time within the period the common shares were outstanding to the total time in that
period.
Year
The Company’s year end is December 31. Activities are reported on a fiscal year
ending on the Saturday closest to December 31, usually 52 weeks in duration
but includes a 53rd week every five to six years. Each of the years ended December 31,
2024 and December 31, 2023 contained 52 weeks.
Glossary
158 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
Corporate Directory
Board of Directors
Galen G. Weston, B.A., M.B.A.
Chairman and Chief Executive Officer of the
Corporation; Chairman, Loblaw Companies
Limited; Chairman, Wittington Investments,
Limited; Chairman, President’s Choice Bank;
President, Weston Family Foundation; former
Chair and Trustee of Choice Properties Real
Estate Investment Trust.
M. Marianne Harris, B.Sc., J.D., M.B.A. (1, 2)
Corporate Director; Former Managing Director
and President, Corporate and Investment
Banking, Merrill Lynch Canada Inc., Former
Head of Financial Institutions Group Americas,
Merrill Lynch Pierce Fenner & Smith; Director,
Loblaw Companies Limited; Director, Sun Life
Financial Inc.; Director, Public Sector Pension
Investment Board; Former Director, Hydro One
Inc./ Hydro One Limited; Former Chair,
Investment Industry Regulatory Organization
of Canada (IIROC); Member of Dean’s Advisory
Council, Schulich School of Business; Former
member of Advisory Council, Hennick Centre
for Business and Law.
Nancy H.O. Lockhart, O. Ont. (1, 2)
Corporate Director; Trustee, Choice Properties
Real Estate Investment Trust; Director, Atrium
Mortgage Investment Corporation, and Chair
Emeritus, Crow’s Theatre Company; former
Chief Administrative Officer, Frum
Development Group, former Vice President,
Shoppers Drug Mart Corporation; former Chair,
Ontario Science Centre, Canadian Film Centre
and Alignvest Student Housing; former
Director, The Royal Conservatory of Music;
former President, Canadian Club of Toronto;
former Director, Loblaw Companies Limited,
Gluskin Sheff & Associates Inc., Barrick Gold
Corporation, Canada Deposit Insurance
Corporation, Centre for Addiction and Mental
Health Foundation, and the Loran Scholars
Foundation.
Sarabjit (Sabi) S. Marwah (1, 2)
Corporate Director; former member to the
Senate of Canada; former Vice-Chairman and
Chief Operating Officer of The Bank of Nova
Scotia; Director, Cineplex Inc.; Director, ONEX
Ltd.; member of Waugh Family Foundation;
former Director, TELUS Corporation; former
Trustee and Chair, Hospital for Sick Children;
former Chair, Humber River Regional Hospital;
former member of the Board of Directors,
C.D.Howe Institute, Toronto International Film
Festival and Torstar Corporation.
Gordon M. Nixon, C.M., O. Ont. (1, 2*)
Corporate Director; Chair, BCE Inc. and
Director, BlackRock, Inc.; former President and
Chief Executive Officer, Royal Bank of Canada;
Advisory Board, KingSett Canadian Real Estate
Income Fund L.P.; Trustee, Art Gallery of
Ontario.
Barbara G. Stymiest, C.M., F.C.P.A. (1*,2)
Corporate Director; Vice-Chair, Age-Well NCE
Inc.; Director, President’s Choice Bank; Board
member of Resolution Re Ltd; former Member,
Group Executive, Royal Bank of Canada; former
Chief Executive Officer, TMX Group Inc., former
Executive Vice-President and Chief Financial
Officer, BMO Capital Markets; former Partner,
Ernst & Young LLP; former Director, Blackberry
Limited and Sun Life Financial Inc..
Cornell Wright, J.D., M.B.A.
President and Director of Wittington
Investments, Limited; Trustee, Choice
Properties Real Estate Investment Trust;
Director, Loblaw Companies Limited; Director,
BCE Inc., Trustee, University Health Network;
Executive in Residence, Member of Dean’s
Advisory Board, University of Toronto’s Rotman
School of Management; former Chair, National
Ballet of Canada.
(1) Audit Committee
(2) Governance, Human Resource,
Nominating and Compensation
Committee
* Chair of the Committee
Corporate Officers
Galen G. Weston
Chairman and Chief Executive Officer
Andrew Bunston
Chief Legal Officer and Secretary
Lina Taglieri
Senior Vice President and Group Head,
Controller
Richard Dufresne
President
and Chief Financial
Officer
Katie McCullam
Chief Strategy Officer
Jeff Gobeil
Senior Vice President and Group Head, Tax
Rashid Wasti
Executive Vice President
and Chief Talent Officer
John Williams
Senior Vice President and Group Treasurer
Anemona Turcu
Senior Vice President and Group Chief Risk
Officer
GEORGE WESTON LIMITED 2024 ANNUAL REPORT 159
Shareholder and Corporate Information
Executive Office
George Weston Limited
22 St. Clair Avenue East
Toronto, Canada M4T 2S5
Tel: 416.922.2500
www.weston.ca
Stock Exchange Listing and Symbols
The Company’s common and preferred shares are listed on the
Toronto Stock Exchange and trade under the symbols: “WN”,
“WN.PR.A”, “WN.PR.C”, “WN.PR.D” and “WN.PR.E”.
Common Shares
At year end 2024, there were 130,044,778 common shares issued and
outstanding.
The average 2024 daily trading volume of the Company’s common
shares was 128,299.
Preferred Shares
As at year end 2024, there were 9,400,000 preferred shares Series I,
8,000,000 preferred shares Series III, 8,000,000 preferred shares
Series IV and 8,000,000 preferred shares Series V issued and
outstanding.
The average 2024 daily trading volume of the Company’s preferred
shares was:
Series I:
4,463
Series III:
4,680
Series IV:
5,364
Series V:
3,437
Preferred Dividend Dates
The declaration and payment of quarterly preferred dividends are
made subject to approval by the Board of Directors. The record and
payment dates for 2025 are:
Series I
Record Date
Payment Date
Feb. 28
March 15
May 31
June 15
Aug. 31
Sept. 15
Nov. 30
Dec. 15
Series III, Series IV and Series V
Record Date
Payment Date
March 15
April 1
June 15
July 1
Sept. 15
Oct. 1
Dec. 15
Jan. 1
Common Dividend Policy
The declaration and payment of dividends on the Company’s
common shares and the amount thereof are at the discretion of the
Board of Directors which takes into account the Company’s financial
results, capital requirements, available cash flow, future prospects of
the Company’s business and other factors considered relevant from
time to time. Over time, it is the Company’s intention to increase the
amount of the dividend while retaining appropriate free cash flow to
finance future growth.
Common Dividend Dates
The declaration and payment of quarterly common dividends are
made subject to approval by the Board of Directors. The anticipated
record and payment dates for 2025 are:
Record Date
Payment Date
March 15
April 1
June 15
July 1
Sept. 15
Oct. 1
Dec. 15
Jan. 1
Design: Q30 Design Inc. Printing: TC Transcontinental
Normal Course Issuer Bid
The Company has a Normal Course Issuer Bid on the Toronto Stock
Exchange.
Value of Common Shares
For capital gains purposes, the valuation day (December 22, 1971) cost
base for the Company, adjusted for the 4 for 1 stock split (effective
May 27, 1986) and the 3 for 1 stock split (effective May 8, 1998), is $1.50
per share. The value on February 22, 1994 was $13.17 per share.
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Annual Meeting
The 2025 Annual Meeting of Shareholders of George Weston Limited
will be held on Tuesday, May 6, 2025 at 11:00 a.m. (EDT) at The Royal
Conservatory, TELUS Centre for Performance and Learning, Koerner
Hall, 273 Bloor Street West, Toronto, Ontario, Canada and virtually via
a live webcast.
Trademarks
George Weston Limited, Loblaw Companies Limited, Choice
Properties Real Estate Investment Trust and their respective
subsidiaries own a number of trademarks. These trademarks are the
exclusive property of George Weston Limited, Loblaw Companies
Limited, Choice Properties Real Estate Investment Trust and their
respective subsidiary companies. Trademarks where used in this
report are marked with TM or ® symbols, or written in italics.
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 the
Canadian securities regulatory authorities in Canada through
SEDAR+.
This Annual Report includes selected information on Loblaw
Companies Limited, a public company with shares, and Choice
Properties Real Estate Investment Trust, a public entity with units,
both of which are traded on the Toronto Stock Exchange.
Ce rapport est disponible en français.
160 GEORGE WESTON LIMITED 2024 ANNUAL REPORT
GEORGE WESTON LIMITED
22 St. Clair Avenue East
Toronto, ON M4T 2S5
Tel: (416) 922-2500
www.weston.ca