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Shaw Announces Third Quarter and Year-To-Date Fiscal 2019 Results

  • Consolidated operating income before restructuring costs and amortization1 improved 3.8% year-over-year, excluding certain one-time adjustments
  • Strong Wireless results with approximately 62,000 total net additions and record low postpaid churn as the Company deploys spectrum and network into new markets
  • Acquired 600 MHz spectrum for a total price of $492 million, or $0.78 per MHz-Pop, including 30 MHz across each of British Columbia, Alberta and Southern Ontario as well as 20 MHz in Eastern Ontario, that will be used to improve existing LTE service and lay the foundation for 5G
  • Completed the sale of 80.6 million Class B non-voting participating shares of Corus Entertainment Inc. for net proceeds of approximately $526 million

CALGARY, Alberta, June 27, 2019 (GLOBE NEWSWIRE) --  Shaw Communications Inc. (“Shaw” or the “Company”) announces consolidated financial and operating results for the quarter ended May 31, 2019, reported in accordance with the newly adopted IFRS 15 accounting standard, Revenue from contracts with customers (IFRS 15).  Consolidated revenue increased by 2.7% to $1.32 billion compared to the third quarter in fiscal 2018 and operating income before restructuring costs and amortization decreased 1.5% year-over-year to $530 million. Excluding adjustments related to a $13 million retroactive roaming benefit in the third quarter of fiscal 2018 and a $15 million payment to address certain intellectual property (IP) licensing matters in the third quarter of fiscal 2019, consolidated operating income before restructuring costs and amortization increased 3.8% to $545 million in the quarter.

“Freedom Mobile maintained its strong momentum in the quarter, growing wireless subscribers and operating margin. We are reaching more Canadians with our affordable data-centric plans, expanded retail and consumer friendly practices, all of which are changing the competitive landscape. The deployment of low band spectrum is significantly enhancing the customer experience and consistently reducing churn. With our successful acquisition of 600 MHz spectrum across our entire wireless operating footprint, we can continue to improve our network experience and provide affordable options for our customers,” said Brad Shaw, Chief Executive Officer.

Wireless results for the third quarter include postpaid net subscriber additions of approximately 61,000, and prepaid net additions of approximately 800. In April, the Company launched new prepaid service plans that are better aligned with current market offers to attract new subscribers and grow this customer segment. Third quarter prepaid subscriber results demonstrate the significant improvement from prepaid losses in both the prior year and prior quarter. The Company continues to focus on improving its customer experience through the deployment of 700 MHz spectrum, resulting in an 18-basis point reduction year-over-year in postpaid customer churn to a record low 1.18%.

Third quarter Wireline performance reflects improved Consumer Internet subscriber growth of approximately 6,600 RGUs, offset by continued Video and Phone RGU losses, resulting in stable year-over-year Consumer revenue. The Business division delivered consistent top-line growth with revenue increasing 6.4% in the quarter as the penetration of the SmartSuite of services continues to grow.

On April 4th, the Company unveiled Shaw BlueCurve, a technology that provides customers greater control over their home Wi-Fi experience through the BlueCurve Home app and Pods. The launch of Shaw BlueCurve technology is aligned with the Company’s strategic initiative regarding a more agile, innovative, and customer-centric approach to modernizing all aspects of its operations, including a more efficient delivery of products and services. Building on the BlueCurve gateway modem, the Company launched IPTV in Calgary in May and will continue to make this service available to additional markets over the coming months.

During the quarter, we entered into a multi-year IP agreement with a large IP licensing company. With this agreement, we will gain broader access to next-generation video IP offerings across all our platforms. In conjunction with this agreement, we paid approximately $15 million to address certain licensing matters. Excluding the $15 million payment, Wireline operating income before restructuring costs and amortization increased 1.0% compared to the third quarter fiscal 2018 results.

“Our Wireline division is delivering solid and consistent financial and subscriber performance in fiscal 2019. We continue to improve Consumer broadband net additions through increased speeds and innovative new products. The launch of Shaw BlueCurve is the latest way in which we are delivering more value to our customers with speed, coverage and control. Our BlueCurve platform is the foundation on which we will continue to introduce more innovations and drive broadband growth,” said Mr. Shaw.

Selected Financial Highlights

Fiscal 2019 and restated fiscal 2018 results are reported in accordance with IFRS 15. Supplementary information is provided in the accompanying Management’s Discussion and Analysis (“MD&A”), under the heading “Accounting Standards,” which discusses our previous revenue recognition policies and the changes on adoption of the new standard.

               
  Three months ended May 31,   Nine months ended May 31,
(millions of Canadian dollars except per share amounts) 2019   2018
(restated)(1)
Change %   2019   2018
(restated)(1)
Change %
Revenue  1,324     1,289    2.7      3,995     3,863    3.4
Operating income before restructuring costs and amortization(2)  530     538    (1.5 )    1,624     1,501    8.2
Operating margin(2) 40.0 % 41.7 % (4.1 )   40.7 % 38.9 % 4.6
Free cash flow(2)  176     167    5.4      500     355    40.8
Net income (loss) from continuing operations  229     (99 ) >100.0    571     (157 ) >100.0
Net loss from discontinued operations, net of tax  –    –    –      –    (6 ) 100.0
Net income (loss)  229     (99 ) >100.0    571     (163 ) >100.0
Basic earnings (loss) per share  0.44     (0.20 )      1.10     (0.34 )  
Diluted earnings (loss) per share  0.44     (0.20 )      1.10     (0.34 )  

(1)          Fiscal 2018 reported figures have been restated applying IFRS 15 and also reflect a change in accounting policy related to the treatment of digital cable terminals (“DCTs”) to record them as property, plant and equipment rather than inventory upon acquisition. See “Accounting Standards” in the accompanying MD&A.
(2)          See definitions and discussion under “Non-IFRS and additional GAAP measures” in the accompanying MD&A.

In the quarter, the Company added approximately 62,000 net Wireless RGUs, consisting of 61,300 postpaid and 800 prepaid additions. The continued increase in the postpaid subscriber base reflects customer demand for the Big Gig data-centric pricing and packaging options. The increase in the prepaid customer base reflects the new plans that were launched in the market in early April.

Wireless service revenue for the three-month period increased by 22% to $178 million over the comparable period in fiscal 2018 due to the growing penetration of Big Gig data plans. Wireless equipment revenue decreased by 9% to $73 million as a higher proportion of customers elected the Bring Your Own Device (“BYOD”) option compared to the prior period. Third quarter ABPU grew approximately 6.2% year-over-year to $42.30 reflecting the increased number of customers that are subscribing to higher service plans and have purchased a device through Freedom Mobile. Wireless ARPU grew 2.2% to $38.36 reflecting the promotions in the market and increase in prepaid customers.

Wireless operating income before restructuring costs and amortization of $55 million improved 3.8% year-over-year. Excluding the $13 million benefit from retroactive roaming rates recognized in the third quarter of fiscal 2018, operating income before restructuring costs and amortization grew 38% due primarily to increased service revenue and improved efficiencies from additional scale.

Wireline RGUs declined by approximately 35,100 in the quarter compared to a loss of approximately 14,400 in the third quarter of fiscal 2018. The current quarter includes growth in Consumer Internet RGUs of approximately 6,600 whereas the mature products within the Consumer division, including Video, Satellite and Phone declined in the aggregate by 42,600 RGUs. The Company remains focused on growing broadband subscribers, primarily through two-year ValuePlans, and on attracting and retaining high quality video subscribers which supports its consumer profitability objectives.

Third quarter Wireline revenue and operating income before restructuring costs and amortization of $1,075 million and $475 million increased by 1.0% and decreased 2.1% year-over-year, respectively. Excluding the $15 million licensing payment, Wireline operating income before restructuring costs and amortization increased 1.0% to approximately $490 million. Consumer revenue remained flat at $925 million compared to the prior year as contributions from rate adjustments and growth in Internet revenue were offset by declines in Video, Satellite and Phone subscribers and revenue. Business revenue increased 6.4% year-over-year to $150 million, reflecting continued demand for the SmartSuite of business products.

Capital expenditures in the third quarter of $280 million compared to $308 million a year ago. Wireline capital spending decreased by approximately $47 million primarily due to lower network investments and success-based customer premise equipment. Wireless spending increased by approximately $19 million year-over-year due to continued deployment of 700 MHz spectrum and expansion of the wireless network into new markets.

Free cash flow for the quarter of $176 million compared to $167 million in the prior year. The increase was largely due to lower capital expenditures and lower cash taxes, offset in part by lower operating income before restructuring costs and amortization and lower dividends received from equity accounted associates.

Net income for the third quarter of fiscal 2019 of $229 million compared to a net loss of $99 million in the third quarter of fiscal 2018. The increase of $328 million was primarily due to a lower loss associated with the investment in Corus, a deferred tax benefit associated with the future reduction in Alberta’s corporate tax rate announced in May 2019, and gains on the dispositions of certain real estate holdings and minor investments in fiscal 2019.

In the third quarter of fiscal 2019, approximately 350 employees exited the Company, bringing the total number of employees who departed under the Voluntary Departure Program (“VDP”) to approximately 2,060 since the program commenced in March 2018. On a year-to-date basis, the Company has achieved operating cost savings of approximately $73 million and capital cost savings of approximately $25 million. See also “Introduction,” “Other Income and Expense Items,” and “Caution Concerning Forward Looking Statements,” in the accompanying MD&A for a discussion of the Total Business Transformation (“TBT”), the VDP and the risks and assumptions associated therewith.

The Company is refining its fiscal 2019 guidance which excludes the $15 million payment to address certain IP licensing matters. It expects consolidated operating income before restructuring costs and amortization growth of approximately 6% over fiscal 2018; capital investments of approximately $1.2 billion; and free cash flow of approximately $550 million. The Company’s guidance includes assumptions related to cost savings that will be achieved through the TBT initiative (specifically the VDP savings) that have also been refined and are expected to amount to a combined $135 million in fiscal 2019 which is materially in line with the $140 million original estimate. The savings during the fiscal year are now expected to be approximately $95 million attributed to operating expenses and approximately $40 million attributed to capital expenditures, which represents a minor shift from original guidance. See also “Caution Concerning Forward Looking Statements” in the accompanying MD&A.

Mr. Shaw concluded, “We continue to deliver results that are consistent with our overall plan for fiscal 2019. Through our unwavering focus on execution, we are growing our wireless and broadband customers, managing through the VDP exits and making the appropriate investments to capitalize on future growth. During the quarter, we also completed two significant transactions that are aligned with our strategic focus, including the purchase of 600 MHz spectrum and the sale of our Corus investment. Considering both of the transactions, our balance sheet continues to be strong with leverage at the low end of our target range.”

Shaw Communications Inc. is a leading Canadian connectivity company. The Wireline division consists of Consumer and Business services. Consumer serves residential customers with broadband Internet, Shaw Go WiFi, video and digital phone. Business provides business customers with Internet, data, WiFi, digital phone and video services. The Wireless division provides wireless voice and LTE data services through an expanding and improving mobile wireless network infrastructure.  

Shaw is traded on the Toronto and New York stock exchanges and is included in the S&P/TSX 60 Index (Symbol: TSX - SJR.B, SJR.PR.A, SJR.PR.B, NYSE – SJR, and TSXV – SJR.A). For more information, please visit www.shaw.ca

The accompanying MD&A forms part of this news release and the “Caution concerning forward-looking statements” applies to all the forward-looking statements made in this news release. 

For more information, please contact:
Shaw Investor Relations
Investor.relations@sjrb.ca

  1. See definitions and discussion under “Non-IFRS and additional GAAP measures” in the accompanying MD&A.
  2. See definitions and discussion of ABPU, ARPU, RGUs and Wireless Postpaid Churn under “Key Performance Drivers” in the accompanying MD&A.

MANAGEMENT’S DISCUSSION AND ANALYSIS
For the three and nine months ended May 31, 2019

June 27, 2019

 Contents

Introduction 8
Selected financial and operational highlights 11
Overview 14
Outlook 16
Non-IFRS and additional GAAP measures 16
Discussion of operations 20
Supplementary quarterly financial information 23
Other income and expense items 24
Financial position 26
Liquidity and capital resources 27
Accounting standards 30
Related party transactions 39
Financial instruments 39
Internal controls and procedures 39
Risks and uncertainties 40
Government Regulations and Regulatory 40

 Advisories

The following Management’s Discussion and Analysis (“MD&A”) of Shaw Communications Inc. is dated June 27, 2019 and should be read in conjunction with the unaudited interim Consolidated Financial Statements and Notes thereto for the quarter ended May 31, 2019 and the 2018 Annual Consolidated Financial Statements, the Notes thereto and related MD&A included in the Company’s 2018 Annual Report. The financial information presented herein has been prepared on the basis of International Financial Reporting Standards (“IFRS”) for interim financial statements and is expressed in Canadian dollars unless otherwise indicated. References to “Shaw,” the “Company,” “we,” “us,” or “our” mean Shaw Communications Inc. and its subsidiaries and consolidated entities, unless the context otherwise requires.

Caution concerning forward-looking statements

Statements included in this MD&A that are not historic constitute “forward-looking information” within the meaning of applicable securities laws. Such statements can generally be identified by words such as “anticipate,” “believe,” “expect,” “plan,” “intend,” “target,” “goal” and similar expressions (although not all forward-looking statements contain such words). Forward looking statements in this MD&A include, but are not limited to statements related to:

  • future capital expenditures;
  • proposed asset acquisitions and dispositions;
  • expected cost efficiencies;
  • financial guidance and expectations for future performance;
  • business and technology strategies and measures to implement strategies;
  • competitive strengths;
  • expected project schedules, regulatory timelines, completion/in-service dates for the Company’s capital and other projects;
  • the expected number of retail outlets;
  • the expected impact of new accounting standards, recently adopted or expected to be adopted in the future;
  • the expected impact of government regulations or regulatory developments on the Company’s business, operations, and/or financial performance;
  • timing of new product and service launches;
  • the deployment of: (i) network infrastructure to improve capacity and coverage and (ii) new technologies, including but not limited to next generation wireless and wireline technologies such as 5G and IPTV, respectively;
  • the expected growth in the Company’s market share;
  • the expected growth in subscribers and the products/services to which they subscribe;
  • the cost of acquiring and retaining subscribers and deployment of new services;
  • the total restructuring charges (related primarily to severance and employee related costs as well as additional costs directly associated with the Company’s Total Business Transformation (“TBT”) initiative);
  • the anticipated annual cost reductions related to the Voluntary Departure Program (“VDP”) (including reductions in operating and capital expenditures) and the timing of realization thereof;
  • the impact that employee exits will have on Shaw’s business operations;
  • the outcome of the TBT initiative, including the timing thereof and the total savings at completion; and
  • the expansion and growth of the Company’s business and operations and other goals and plans. 

All of the forward-looking statements made in this report are qualified by these cautionary statements.

Forward-looking statements are based on assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments as well as other factors it believes are appropriate in the circumstances as of the current date. The Company’s management believes that its assumptions and analysis in this MD&A are reasonable and that the expectations reflected in the forward-looking statements contained herein are also reasonable based on the information available on the date such statements are made and the process used to prepare the information. These assumptions, many of which are confidential, include but are not limited to management expectations with respect to:

  • general economic, market and business conditions;
  • future interest rates;
  • previous performance being indicative of future performance;
  • future income tax and exchange rates;
  • technology deployment;
  • future expectations and demands of our customers;
  • subscriber growth;
  • the Company being able to successfully deploy: (i) network infrastructure required to improve capacity and coverage and (ii) new technologies, including but not limited to next generation wireless and wireline technologies such as 5G and IPTV, respectively;
  • short-term incremental costs associated with growth in Wireless handset sales;
  • pricing, usage and churn rates;
  • availability of devices;
  • content and equipment costs;
  • industry structure, conditions and stability;
  • government regulation and legislation;
  • the completion of proposed transactions;
  • the TBT initiative being completed in a timely and cost-effective manner and yielding the expected results and benefits, including: (i) resulting in a leaner, more integrated and agile company with improved efficiencies and execution to better meet Shaw’s consumers’ needs and expectations (including the products and services offered to its customers) and (ii) realizing the expected cost reductions;
  • the Company being able to complete the employee exits pursuant to the VDP with minimal impact on business operations within the anticipated timeframes and for the budgeted amount;
  • the cost estimates for any outsourcing requirements and new roles in connection with the VDP;
  • the Company being able to gain access to sufficient retail distribution channels;
  • the Company being able to access the spectrum resources required to execute on its current and long term strategic initiatives; and
  • the integration of recent acquisitions.

You should not place undue reliance on any forward-looking statements. Many risk factors, including those not within the Company's control, may cause the Company's actual results to be materially different from the views expressed or implied by such forward-looking statements, including but not limited to:

  • changes in general economic, market and business conditions;
  • changing interest rates, income taxes and exchange rates;
  • changes in the competitive environment in the markets in which the Company operates and from the development of new markets for emerging technologies;
  • changing industry trends, technological developments, and other changing conditions in the entertainment, information and communications industries;
  • the Company’s failure to execute its strategic plans and complete capital and other projects by the completion date;
  • the Company’s failure to grow subscribers;
  • the Company’s failure to grow market share;
  • the Company’s failure to close any transactions;
  • the Company’s failure to have the spectrum resources required to execute on its current and long term strategic initiatives;
  • the Company’s failure to gain sufficient access to retail distribution channels;
  • the Company failure to complete the deployment of: (i) network infrastructure required to improve capacity and coverage and (ii) new technologies, including but not limited to next generation wireless and wireline technologies such as 5G and IPTV, respectively;
  • the Company’s failure to achieve cost efficiencies;
  • the Company’s failure to implement the TBT initiative as planned and realize the anticipated benefits therefrom, including: (i) the failure of the TBT to result in a leaner, more integrated and agile company with improved efficiencies and execution to better meet Shaw’s consumers’ needs and expectations (including the products and services offered to its customers) and (ii) the failure to realize the expected cost reductions;
  • the Company’s failure to complete employee exits pursuant to the VDP with minimal impact on operations;
  • disruptions to service, including due to network failure or disputes with key suppliers;
  • technology, privacy, cyber security and reputational risks;
  • opportunities that may be presented to and pursued by the Company;
  • changes in laws, regulations and decisions by regulators that affect the Company or the markets in which it operates;
  • the Company’s status as a holding company with separate operating subsidiaries; and
  • other factors described in this MD&A under the heading “Risks and Uncertainties” and in the MD&A for the year ended August 31, 2018 under the heading “Known events, Trends, Risks, and Uncertainties.” 

The foregoing is not an exhaustive list of all possible risk factors.

Should one or more of these risks materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary materially from those described herein.

This MD&A provides certain future-oriented financial information or financial outlook (as such terms are defined in applicable securities laws), including the financial guidance and assumptions disclosed under “Outlook,” the expected annualized savings to be realized from the VDP and the total anticipated TBT restructuring costs for fiscal 2019. Shaw discloses this information because it believes that certain investors, analysts and others utilize this and other forward-looking information to assess Shaw's expected operational and financial performance, and as an indicator of its ability to service debt and pay dividends to shareholders. The Company cautions that such financial information may not be appropriate for this or other purposes.

Any forward-looking statement speaks only as of the date on which it was originally made and, except as required by law, the Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement to reflect any change in related assumptions, events, conditions or circumstances. All forward looking statements contained in this MD&A are expressly qualified by this statement.

Additional Information

Additional information concerning the Company, including the Company’s Annual Information Form is available through the Internet on SEDAR which may be accessed at www.sedar.com. Copies of such information may also be obtained on the Company’s website at www.shaw.ca, or on request and without charge from the Corporate Secretary of the Company, Suite 900, 630 – 3rd Avenue S.W., Calgary, Alberta, Canada T2P 4L4, telephone (403) 750-4500.

Non-IFRS and additional GAAP measures

Certain measures in this MD&A do not have standard meanings prescribed by IFRS and are therefore considered non-IFRS measures. These measures are provided to enhance the reader’s overall understanding of our financial performance or current financial condition.  They are included to provide investors and management with an alternative method for assessing our operating results in a manner that is focused on the performance of our ongoing operations and to provide a more consistent basis for comparison between periods. These measures are not in accordance with, or an alternative to, IFRS and do not have standardized meanings. Therefore, they are unlikely to be comparable to similar measures presented by other entities. 

Please refer to “Non-IFRS and additional GAAP measures” in this MD&A for a discussion and reconciliation of non-IFRS measures, including operating income before restructuring costs and amortization, free cash flow, and the net debt leverage ratio.

Introduction

In fiscal 2019, we continue to deliver results that are consistent with our overall plan by executing on our operating priorities. Through our unwavering focus on execution, we are growing our wireless and broadband customers, identifying sustainable cost savings in our core Wireline business, and making the appropriate investments to capitalize on future growth. The disposal of our equity investment in Corus Entertainment Inc. (“Corus”) in the quarter, further solidifies our balance sheet and allows us to continue our transformation into an agile, lean and digital-first organization that is focused on providing a seamless connectivity experience that meets the needs of its customers now and into the future.

Wireless

Our Wireless operations have enabled a strategic and transformative shift that supports our long-term, sustainable growth ambitions. Our footprint now covers approximately 17 million people in some of Canada’s largest urban centres, or almost half of the Canadian population. In the first three quarters of fiscal 2019, we launched in a number of new markets including Victoria, British Columbia and Red Deer, Alberta in February, and six additional communities in Eastern Ontario in March.

Freedom Mobile maintained its strong momentum in the quarter, growing wireless subscribers and operating margin.  The growth and retention of our subscriber base and improving financial performance reflect the appeal of our differentiated value proposition. Our affordable and innovative Big Gig data plans, combined with the latest devices available in the market, continue to attract high lifetime value customers to Freedom Mobile. In April, the Company launched new prepaid service plans that are better aligned with current market offers in order to attract new subscribers and grow this customer segment. Early results indicate that the new plans are having an impact on subscriber results. In addition, our Wireless service is accessible to more Canadians through the addition of approximately 240 locations in 2018, with national retail partners including Loblaws’ “The Mobile Shop” and Walmart. When combined with our existing corporate and dealer store network, Freedom Mobile expects to have over 650 retail locations operational at the end of 2019. As we continue to reach more Canadians with our affordable data-centric plans, expanded retail presence and consumer friendly practices, we are changing the competitive landscape.

Supporting our Wireless revenue growth and improved Wireless postpaid churn results are the significant investments in our network and customer service capabilities. We are executing a step-by-step operating plan to improve our network and deploy spectrum in the most efficient way. We continue to deploy our Extended Range LTE in Calgary, Edmonton, Vancouver and Southwestern Ontario, which leverages our 700 MHz spectrum to provide customers with improved in-building service as well as extending service at the edge of the current coverage area. The deployment of the 700 MHz spectrum is expected to continue throughout fiscal 2019 and 2020. With our successful acquisition of 600 MHz spectrum across our entire wireless operating footprint, we can continue to improve our network experience and provide affordable options for our customers.

The Company also continues to deploy small cell technology (low-powered wireless transmitters and receivers with a range of 100 meters to 200 meters), designed to provide network coverage to smaller areas. As tall high-power macro towers keep the network signal strong across large distances, small cells suit more densely developed areas like city centres and popular venues by providing LTE/VoLTE quality, speed, capacity and coverage improvements in these high traffic areas. These network investments support continued growth in our Wireless business by significantly enhancing the customer experience while consistently reducing churn and are the building blocks for emerging technologies, such as 5G.

Wireline

We continue to focus on the execution and delivery of stable and profitable Wireline results. This includes growing broadband subscribers, primarily through two-year ValuePlans, and attracting and retaining high lifetime value video subscribers which support our consumer profitability objectives.

Our team is modernizing several aspects of our operations as we work to better meet the needs of today’s customer. We are leveraging insights from data to help us better understand customer preferences and provide them with the services they want, including the recently introduced Shaw BlueCurve Home app and Pods. We are shifting customer interactions to digital platforms and driving more self-help, self-install and self-service.

We are starting to see the results of these efforts as our teams begin to think and work differently to deliver a modern connectivity experience anchored in broadband. We have deployed DOCSIS 3.1 over our extensive wireline network to give us the ability to deliver gigabit speeds across virtually all of our cable footprint. As the key product in the customer’s home, our broadband service has a significant and cost-effective competitive advantage.

We remain focused on growing our Wireline broadband customer base and improving execution. In the third quarter, we added approximately 6,600 Consumer Internet subscribers and significantly improved Wireline profitability through disciplined cost control, including the execution of the VDP. While we are only part of the way through our journey towards a modern Shaw, we are encouraged by the progress we have made as we improve upon the fundamentals of our Wireline business, further supporting the delivery of our broadband strategy through fiscal 2019.

The Company has announced several significant Wireline enhancements related to its broadband service for its customers. In late November, Shaw doubled Internet speeds of its top residential tiers and, in April, the Company unveiled Shaw BlueCurve, a technology that provides customers greater control over their home Wi-Fi experience through the BlueCurve Home app and Pods.

Shaw BlueCurve is a simple and powerful new technology that gives customers more coverage and greater control over their home Wi-Fi experience while at the same time helping redefine their relationship with in-home connected devices. The BlueCurve Home app is the latest innovative product that Shaw has introduced to market through its partnership with Comcast, and it is available with Shaw’s BlueCurve Gateway modem – the hub of our customers’ in-home content and connectivity experience. Shaw BlueCurve Pods expand in-home coverage by creating a mesh Wi-Fi network which blankets your home with wireless coverage and reduces the challenges of Wi-Fi dead spots.

The launch of Shaw BlueCurve technology is aligned with the Company’s strategic initiative regarding a more agile, innovative, and customer-centric approach to modernizing all aspects of its operations, including a more efficient delivery of products and services. Building on the BlueCurve gateway modem, the Company launched IPTV in Calgary in May and will continue to make this service available to additional markets over the coming months.

We are capitalizing on the network investments that we have made, and continue to make, in pursuit of providing customers with an enhanced connectivity experience. The launch of Shaw BlueCurve is the latest way in which we are delivering more value to our customers with speed, coverage and control. Our BlueCurve platform is the foundation on which we will continue to introduce more innovations and, through this enhanced customer experience, we can more effectively differentiate ourselves from the competition and drive broadband growth, while building upon our journey to a modern Shaw.

Our Wireline Business division contributed solid results again this quarter, leveraging our SmartSuite products that deliver enterprise-grade services to small and medium size businesses. SmartSuite products are the foundation for growth in Shaw Business and we expect to continue increasing market share, revenue and profitability, as we focus on delivering our services in targeted strategic verticals. Our SmartSuite products can scale to larger businesses as well, giving us opportunities to deliver services across Canada. Shaw Business customers will also benefit from speed increases that are now eligible on Business Internet and SmartWiFi 150 and 300 plans moving to 300Mbps and 600Mbps, respectively. Shaw Business also announced the launch of gigabit download speeds, which will help customers keep up with the demands of their growing businesses.

Selected financial and operational highlights

Fiscal 2019 and restated fiscal 2018 results are reported in accordance with the newly adopted IFRS 15, Revenue from contracts with customers (“IFRS 15”). Supplementary information is provided in "Accounting Standards", reflecting the previous revenue recognition policies and the changes from the adoption of the new standard.

Basis of presentation

On May 31, 2017, the Company entered into an agreement to sell a group of assets comprising the operations of Shaw Tracking, a fleet tracking operation reported within the Company’s Wireline segment, to an external party. The transaction closed on September 15, 2017.

Accordingly, the operating results and operating cash flows for the Shaw Tracking business (an operating segment within the Wireline division) are presented as discontinued operations separate from the Company’s continuing operations. This MD&A reflects the results of continuing operations, unless otherwise noted.

Financial Highlights

               
               
  Three months ended May 31,   Nine months ended May 31,
(millions of Canadian dollars except per share amounts) 2019   2018
(restated)(1)
Change %   2019   2018
(restated)(1)
Change %
Operations:              
Revenue  1,324     1,289    2.7      3,995     3,863    3.4
Operating income before restructuring costs and amortization(2)  530     538    (1.5 )    1,624     1,501    8.2
Operating margin(2) 40.0 % 41.7 % (4.1 )   40.7 % 38.9 % 4.6
Net income (loss) from continuing operations  229     (99 ) >100.0    571     (157 ) >100.0
Loss from discontinued operations, net of tax  –    –    –      –    (6 ) 100.0
Net income (loss)  229     (99 ) >100.0    571     (163 ) >100.0
Per share data:              
Basic earnings (loss) per share              
Continuing operations  0.44     (0.20 )      1.10     (0.33 )  
Discontinued operations  –    –        –    (0.01 )  
   0.44     (0.20 )      1.10     (0.34 )  
Diluted earnings (loss) per share              
Continuing operations  0.44     (0.20 )      1.10     (0.33 )  
Discontinued operations  –    –        –    (0.01 )  
   0.44     (0.20 )      1.10     (0.34 )  
Weighted average participating shares for basic earnings per share outstanding during period (millions)  512     503         510     500     
Funds flow from continuing operations(3)  471     437    7.8      1,354     755    79.3
Free cash flow(2)  176     167     5.4       500     355     40.8 

(1)          Fiscal 2018 reported figures have been restated applying IFRS 15 and also reflect a change in accounting policy related to the treatment of digital cable terminals (“DCTs”) to record them as property, plant and equipment rather than as inventory upon acquisition. See “Accounting Standards.”
(2)          See definitions and discussion under “Non-IFRS and additional GAAP measures.”
(3)          Funds flow from operations is before changes in non-cash balances related to operations as presented in the unaudited interim Consolidated Statements of Cash Flows. 

Key Performance Drivers

Shaw measures the success of its strategies using a number of key performance drivers which are defined and described under “Key Performance Drivers - Statistical Measures” in the 2018 Annual MD&A and in this MD&A below, which includes a discussion as to their relevance, definitions, calculation methods and underlying assumptions.  The following key performance indicators are not measurements in accordance with IFRS, should not be considered alternatives to revenue, net income or any other measure of performance under IFRS and may not be comparable to similar measures presented by other issuers.

Commencing this fiscal year, we are disclosing Wireless average billing per subscriber unit (“ABPU”) and Wireless postpaid churn (as defined below) as key performance indicators. 

Subscriber (or revenue generating unit (“RGU”)) highlights

               
               
      Change   Change
      Three months ended   Nine months ended
  May 31,
2019
August 31,
2018
May 31,
2019
May 31,
2018
  May 31,
2019
May 31,
2018
Wireline – Consumer              
Video – Cable  1,508,208   1,585,232   (24,303 )  (16,332 )    (77,024 )  (52,055 )
Video – Satellite  715,017   750,403   3,134     9,066       (35,386 )  (15,740 )
Internet  1,900,302   1,876,944   6,647     (3,754 )    23,358     19,416   
Phone  795,457   853,847   (21,517 )  (13,264 )    (58,390 )  (45,524 )
Total Consumer  4,918,984   5,066,426   (36,039 )  (24,284 )    (147,442 )  (93,903 )
Wireline – Business              
Video – Cable  43,586   49,606   (4,301 )  (251 )    (6,020 )  (1,356 )
Video – Satellite  35,593   34,831   (626 )  531       762     1,349   
Internet  173,094   172,859   427     813       235     481   
Phone  374,765   354,912   5,368     8,766       19,853     19,518   
Total Business  627,038   612,208   868     9,859       14,830     19,992   
Total Wireline  5,546,022   5,678,634   (35,171 )  (14,425 )    (132,612 )  (73,911 )
Wireless              
Postpaid  1,241,736   1,029,720   61,279     54,189       212,016     180,747   
Prepaid  336,619   373,138   820     (7,530 )    (36,519 )  (10,076 )
Total Wireless  1,578,355   1,402,858   62,099     46,659       175,497     170,671   
Total Subscribers  7,124,377   7,081,492   26,928     32,234       42,885     96,760   

In Wireless, the Company continued to add subscribers, gaining a net combined 62,099 postpaid and prepaid subscribers in the quarter. The continued increase in the postpaid subscriber base reflects our expanding and improving network and customer demand for the Big Gig data-centric pricing and packaging options. The increase in the prepaid customer base reflects the new plans that were launched in the market in early April.

Wireline RGUs declined by 35,171 in the quarter compared to a loss of 14,425 RGUs in the third quarter of 2018. The current quarter includes growth in Consumer Internet RGUs of approximately 6,600 whereas the mature products within the Consumer division, including Video, Satellite and Phone declined in aggregate by 42,600 RGUs. The Company remains focused on growing broadband subscribers, primarily through two-year ValuePlans, and on attracting and retaining high lifetime value video subscribers which support its consumer profitability objectives.

Wireless Postpaid Churn

To assist in understanding the performance of our Wireless business, this fiscal year we commenced disclosing Wireless postpaid subscriber or RGU churn (“postpaid churn”).  Subscriber churn measures success in retaining subscribers. Wireless postpaid churn is a measure of the number of postpaid subscribers that deactivated during a period as a percentage of the average postpaid subscriber base during a period, calculated on a monthly basis. It is calculated by dividing the number of Wireless postpaid subscribers that deactivated (in a month) by the average number of postpaid subscribers during the month. When used or reported for a period greater than one month, postpaid churn represents the sum of the number of subscribers deactivating for each period incurred divided by the sum of the average number of postpaid subscribers of each period incurred.

Postpaid churn of 1.18% in the third quarter of fiscal 2019 compares to 1.36% in the third quarter of fiscal 2018 reflecting the significant and ongoing enhancements to the wireless customer experience including our expanding and improving network and the Big Gig data-centric pricing and packaging options. 

Wireless average billing per subscriber unit (“ABPU”)

To assist in understanding the underlying economics of our Wireless business, this fiscal year we commenced disclosing Wireless average billing per subscriber per month (“ABPU”). This measure is an industry metric that is useful in assessing the operating performance of a wireless entity. We use ABPU as a measure that approximates the average amount the Company invoices an individual subscriber unit on a monthly basis. ABPU helps us to identify trends and measures the Company’s success in attracting and retaining higher lifetime value subscribers. Wireless ABPU is calculated as service revenue (excluding the allocation of the device subsidy attributable to service revenue under IFRS 15) plus the monthly re-payments of the outstanding device balance owing from customers on contract, divided by the average number of subscribers on the network during the period and is expressed as a rate per month.

ABPU of $42.30 in the third quarter of fiscal 2019 compares to $39.84 in the third quarter of fiscal 2018, reflecting the increased number of customers that are subscribing to higher value service plans and purchasing a device through Freedom Mobile.

Wireless average revenue per subscriber unit (“ARPU”)

Wireless ARPU is calculated as service revenue divided by the average number of subscribers on the network during the period and is expressed as a rate per month. This measure is an industry metric that is useful in assessing the operating performance of a wireless entity. ARPU also helps to identify trends and measure the Company’s success in attracting and retaining higher-value subscribers.

ARPU of $38.36 in the third quarter of fiscal 2019 compares to $37.54 in the third quarter of fiscal 2018 and reflects the impact of changes in accounting policies upon the adoption of IFRS 15, whereby a portion of the device subsidy, previously fully allocated as a reduction to equipment revenue, is now partially allocated as a reduction to service revenue.

Overview

For detailed discussion of divisional performance see “Discussion of operations”. Highlights of the consolidated first quarter financial results are as follows:  

Revenue

Revenue for the third quarter of fiscal 2019 of $1.32 billion increased $35 million or 2.7% from $1.29 billion for the third quarter of fiscal 2018, highlighted by the following:

  • The year-over-year increase in revenue was primarily due to a $25 million or 11.1% increase in the Wireless division driven by higher service revenues which contributed an incremental $32 million or 21.9% to consolidated revenue primarily due to higher postpaid RGUs (approximately 297,000 since May 31, 2018) and a 6.2% and 2.2% year-over-year increase in ABPU to $42.30 and  ARPU to $38.36, respectively. This was partially offset by a $7 million or 8.8% decrease in equipment revenue compared to the third quarter of fiscal 2018.
  • The Business division contributed $9 million or 6.4% growth over the third quarter of fiscal 2018 to consolidated revenue reflecting continued demand for the SmartSuite of business products.
  • Consumer division revenue for the quarter increased $2 million or 0.2% compared to the third quarter of fiscal 2018 as contributions from rate adjustments and growth in Internet revenue were offset by declines in Video, Satellite and Phone subscribers and revenue.   

Compared to the second quarter of fiscal 2019, consolidated revenue for the quarter increased 0.6% or $8 million. The increase in revenue over the prior quarter relates primarily to an increase of $9 million in service revenue in the Wireless division, higher ABPU (up from $41.34 in the second quarter of fiscal 2019 to $42.30 in the current quarter) and higher ARPU (up from $37.58 in the second quarter of fiscal 2019 to $38.36 in the current quarter) and a $4 million increase in Wireline revenues partially offset by a $5 million decrease in Wireless equipment revenue.

Revenue for the nine-month period ended May 31, 2019 of $3.99 billion increased $132 million or 3.4% from $3.86 billion for the comparable period in fiscal 2018.

  • The year-over-year improvement in revenue was primarily due to the Wireless division contributing revenues of $771 million, an increase of $110 million or 16.6% compared to the comparable nine-month period of fiscal 2018.
  • The Business division contributed $24 million or 5.7% to the consolidated revenue improvements for the nine-month period driven primarily by customer growth. 
  • Consumer division revenues were consistent with the comparable nine-month period of fiscal 2018.

Operating income before restructuring costs and amortization

Operating income before restructuring costs and amortization for the third quarter of fiscal 2019 of $530 million decreased by $8 million or 1.5% from $538 million for the third quarter of fiscal 2018, highlighted by the following: 

  • The year-over-year improvement in the Wireless division of $2 million was mainly due to postpaid RGU growth and the 6.2% increase in ABPU partially offset by the impact of the $13 million credit for a retroactive domestic roaming rate adjustment received in the prior year. Excluding the impact of this credit in 2018, Wireless operating income before restructuring costs and amortization increased 38%.
  • The year-over-year decrease in the Wireline division of $10 million was driven primarily by a $15 million payment to address certain intellectual property (“IP”) licensing matters in the quarter partially offset by higher revenues. Excluding the impact of the $15 million licensing payment, Wireline operating income before restructuring costs and amortization increased 1.0% year-over-year.

Operating margin for the third quarter of 40.0% decreased 170 basis points compared to 41.7% in the third quarter of fiscal 2018 due primarily to a 140 basis points decrease in the Wireline operating margin driven primarily by the impact of the $15 million payment to address certain IP licensing matters, as well as a 160 basis points decrease in the Wireless operating margin as a result of the impact of the $13 million credit for a retroactive domestic roaming rate adjustment in the prior year quarter.

Compared to the second quarter of fiscal 2019, operating income before restructuring costs and amortization for the current quarter decreased $19 million primarily due to a $22 million decrease in the Wireline division mainly as a result of the $15 million payment to address certain IP licensing matters partially offset higher Wireless revenues attributed to net RGU gains.

For the nine-month period ended May 31, 2019, operating income before restructuring costs and amortization of $1.62 billion increased $123 million or 8.2% from $1.50 billion for the comparable prior year period.

  • Wireless operating income before restructuring costs and amortization for the nine-month period increased $48 million or 46.2% over the comparable period driven primarily by subscriber and ABPU growth, partially offset by the impact of the $13 million credit for a retroactive domestic roaming rate adjustment received in the prior year.
  • Wireline operating income before restructuring costs and amortization for the nine-month period increased $75 million or 5.4% over the comparable period primarily as a result of lower operating costs mainly related to VDP and a $24 million increase in revenues partially offset by the impact of the $15 million payment to address certain IP licensing matters.

Free cash flow

Free cash flow for the third quarter of fiscal 2019 of $176 million increased $9 million from $167 million in the third quarter of fiscal 2018, mainly due to a $28 million decrease in capital expenditures and lower cash taxes partially offset by an $8 million decrease in operating income before restructuring costs and amortization and lower dividends received from equity-accounted associates.

Net income (loss)

Net income of $229 million and $571 million for the three and nine months ended May 31, 2019, compared to a net loss of $99 million and $163 million for the same period in fiscal 2018. The changes in net income are outlined in the following table.

         
         
  May 31, 2019 net income compared to:  
  Three months ended   Nine months ended
(millions of Canadian dollars) February 28, 2019 May 31, 2018
(restated)(1)
  May 31, 2018
(restated)(1)
Increased (decreased) operating income before restructuring costs and amortization(2)  (19 )  (8 )    123  
Decreased (increased) restructuring costs  -    13      429  
Increased amortization  -    (12 )    (22 )
Change in net other costs and revenue(3)  (29 )  220      184  
Decreased (increased) income taxes  122    115      14  
Increased income from discontinued operations, net of tax  -    -      6   
   74    328      734  

(1)          Fiscal 2018 reported figures have been restated applying IFRS 15 and also reflect a change in accounting policy. See “Accounting Standards”
(2)          See definitions and discussion under “Non-IFRS and additional GAAP measures”
(3)          Net other costs and revenue include equity income (loss) of an associate or joint venture, business acquisition costs, accretion of long-term liabilities and provisions, debt retirement costs, realized and unrealized foreign exchange differences and other losses as detailed in the unaudited Consolidated Statements of Income

Net other costs and revenue in the third quarter of fiscal 2018 included a $284 million impairment from the Company’s equity investment in Corus Entertainment Inc. Restructuring costs in the third quarter of fiscal 2018 of approximately $13 million related to further organizational restructuring under the TBT initiative and VDP program offered in the second quarter of fiscal 2018. The costs primarily relate to severance and other employee costs as well as other costs directly associated with the TBT initiative.

Outlook

The Company is refining its fiscal 2019 guidance which excludes the $15 million payment to address certain IP licensing matters. It expects consolidated operating income before restructuring costs and amortization growth of approximately 6% over fiscal 2018; capital investments of approximately $1.2 billion; and free cash flow of approximately $550 million. The Company’s guidance includes assumptions related to cost savings that will be achieved through the TBT initiative (specifically the VDP savings) that have also been refined and are expected to amount to a combined $135 million in fiscal 2019 which is materially in line with the $140 million original estimate. The savings during the fiscal year are now expected to be approximately $95 million attributed to operating expenses and approximately $40 million attributed to capital expenditures, which represents a minor shift from original guidance.  

See “Caution concerning forward-looking statements.”

Non-IFRS and additional GAAP measures

The Company’s continuous disclosure documents may provide discussion and analysis of non-IFRS financial measures. These financial measures do not have standard definitions prescribed by IFRS and therefore may not be comparable to similar measures disclosed by other companies. The Company’s continuous disclosure documents may also provide discussion and analysis of additional GAAP measures. Additional GAAP measures include line items, headings, and sub-totals included in the financial statements.

The Company utilizes these measures in making operating decisions and assessing its performance.  Certain investors, analysts and others utilize these measures in assessing the Company’s operational and financial performance and as an indicator of its ability to service debt and return cash to shareholders. The non-IFRS financial measures and additional GAAP measures have not been presented as an alternative to revenue, net income or any other measure of performance required by IFRS.

Below is a discussion of the non-IFRS financial measures and additional GAAP measures used by the Company and provides a reconciliation to the nearest IFRS measure or provides a reference to such reconciliation.

Operating income before restructuring costs and amortization

Operating income before restructuring costs and amortization is calculated as revenue less operating, general and administrative expenses. It is intended to indicate the Company’s ongoing ability to service and/or incur debt and is therefore calculated before items such as restructuring costs, equity income/loss of an associate or joint venture, amortization (a non-cash expense) and interest. Operating income before restructuring costs and amortization is one measure used by the investing community to value the business.

           
           
  Three months ended May 31,   Nine months ended May 31,
(millions of Canadian dollars) 2019   2018
(restated)(1)
  2019   2018
(restated)(1)
Operating income from continuing operations  267     273       835     305   
Add back (deduct):          
Restructuring costs  –    13       1     430   
Amortization:          
Deferred equipment revenue  (5 )  (7 )    (16 )  (24 )
Deferred equipment costs  21     27       66     85   
Property, plant and equipment, intangibles and other  247     232       738     705   
Operating income before restructuring costs and
 amortization
 530     538       1,624     1,501   

(1)       Fiscal 2018 reported figures have been restated applying IFRS 15 and also reflect a change in accounting policy. See “Accounting Standards”

Operating margin

Operating margin is calculated by dividing operating income before restructuring costs and amortization by revenue. Operating margin is also one of the measures used by the investing community to value the business.

               
               
  Three months ended May 31,   Nine months ended May 31,
  2019   2018
(restated)(1)
Change %   2019   2018
(restated)(1)
Change %
Wireline 44.2 % 45.6 %  (3.1 )   45.6 % 43.6 % 4.6
Wireless 21.9 % 23.5 %  (6.8 )   19.7 % 15.7 % 25.5
Combined Wireline and Wireless 40.0 % 41.7 % (4.1 )   40.7 % 38.9 % 4.6

(1)       Fiscal 2018 reported figures have been restated applying IFRS 15. See “Accounting Standards”

Income from discontinued operations before restructuring costs, amortization, taxes and other non-operating items

Income from discontinued operations before restructuring costs, amortization, taxes and other non-operating items is calculated as revenue less operating, general and administrative expenses from discontinued operations.  This measure is used in the determination of free cash flow.

           
           
  Three months ended May 31,   Nine months ended May 31,
(millions of Canadian dollars) 2019 2018   2019 2018  
Loss from discontinued operations, net of tax  –  –    –  –  
Add back (deduct):          
Loss on divestiture, net of tax  –  –    –  (6 )
Loss from discontinued operations before restructuring costs, amortization, taxes and other non-operating items  –  –    –  (6 )

Net debt leverage ratio

The Company uses this ratio to determine its optimal leverage ratio. Refer to “Liquidity and capital resources” for further detail.

Free cash flow

The Company utilizes this measure to assess the Company’s ability to repay debt and pay dividends to shareholders.

Free cash flow is comprised of operating income before restructuring costs and amortization, adding dividends from equity accounted associates, changes in receivable related balances with respect to customer equipment financing transactions as a cash item and deducting capital expenditures (on an accrual basis and net of proceeds on capital dispositions) and equipment costs (net), interest, cash taxes paid or payable, dividends paid on the preferred shares, recurring cash funding of pension amounts net of pension expense and adjusted to exclude share-based compensation expense. 

Free cash flow has not been reported on a segmented basis. Certain components of free cash flow from continuing operations, including operating income before restructuring costs and amortization continue to be reported on a segmented basis. Capital expenditures and equipment costs (net) are also reported on a segmented basis. Other items, including interest and cash taxes, are not generally directly attributable to a segment, and are reported on a consolidated basis.

Free cash flow is calculated as follows:

               
               
  Three months ended May 31,   Nine months ended May 31,
(millions of Canadian dollars) 2019   2018
(restated)(1)
Change %   2019   2018
(restated)(1)
Change %
Revenue              
Consumer  925     923     0.2       2,784     2,784     –  
Business  150     141     6.4       445     421     5.7   
Wireline  1,075     1,064     1.0       3,229     3,205     0.7   
Service  178     146     21.9       513     407     26.0   
Equipment  73     80     (8.8 )    258     254     1.6   
Wireless  251     226     11.1       771     661     16.6   
   1,326     1,290     2.8       4,000     3,866     3.5   
Intersegment eliminations  (2 )  (1 )  100.0       (5 )  (3 )  66.7   
   1,324     1,289     2.7       3,995     3,863     3.4   
Operating income before restructuring costs and amortization(2)              
Wireline  475     485     (2.1 )    1,472     1,397     5.4   
Wireless  55     53    3.8      152     104     46.2   
   530     538     (1.5 )    1,624     1,501     8.2   
Capital expenditures and equipment costs (net):(3)              
Wireline  193     240     (19.6 )    593     687     (13.7 )
Wireless  87     68     27.9       237     241     (1.7 )
   280     308     (9.1 )    830     928     (10.6 )
Free cash flow before the following  250     230     8.7       794     573     38.6   
Less:              
Interest  (60 )  (60 )  –      (190 )  (183 )  3.8   
Cash taxes  (19 )  (29 )  (34.5 )    (119 )  (116 )  2.6   
Other adjustments:              
Dividends from equity accounted associates   5     23     (78.3 )    10     69     (85.5 )
Non-cash share-based compensation  –    –    –      2     2     –  
Pension adjustment  3     4    (25.0 )    9     12     (25.0 )
Customer equipment financing  –    1     (100.0 )    1     4     (75.0 )
Preferred share dividends  (3 )  (2 )  50.0       (7 )  (6 )  16.7   
Free cash flow  176     167     5.4       500     355     40.8   

(1)          Fiscal 2018 reported figures have been restated applying IFRS 15 and also reflect a change in accounting policy. See “Accounting Standards”
(2)          See definitions and discussion under “Non-IFRS and additional GAAP measures”
(3)          Per Note 3 to the unaudited interim Consolidated Financial Statements

Discussion of operations

Wireline

               
               
  Three months ended May 31,   Nine months ended May 31,
(millions of Canadian dollars) 2019   2018
(restated)(1)
Change %   2019   2018
(restated)(1)
Change %
Consumer  925     923     0.2       2,784     2,784     –
Business  150     141     6.4       445     421     5.7 
Wireline revenue  1,075     1,064     1.0       3,229     3,205     0.7 
Operating income before restructuring costs and amortization(2)  475     485     (2.1 )    1,472     1,397     5.4 
Operating margin(2) 44.2 % 45.6 %  (3.1 )   45.6 % 43.6 %  4.6 

(1)          Fiscal 2018 reported figures have been restated applying IFRS 15. See “Accounting Standards”
(2)          See definitions and discussion under “Non-IFRS and additional GAAP measures”

In the third quarter of fiscal 2019, Wireline RGUs decreased by 35,171 compared to a 14,425 RGU loss in the third quarter of fiscal 2018. The current quarter includes growth in Consumer Internet RGUs of approximately 6,600 whereas the mature products within the Consumer division, including Video, Satellite and Phone declined in aggregate by 42,600 RGUs. The Company remains focused on growing broadband subscribers, primarily through two-year ValuePlans, and on attracting and retaining high lifetime value video subscribers which support its consumer profitability objectives.

Revenue highlights include:

  • Consumer revenue for the third quarter of fiscal 2019 increased by $2 million or 0.2%, compared to the third quarter of fiscal 2018 as contributions from rate adjustments and growth in Internet revenue were offset by declines in Video, Satellite and Phone subscribers and revenue.   
    • As compared to the second quarter of fiscal 2019, the current quarter revenue increased by $2 million or 0.2%.
  • Business revenue of $150 million for the third quarter of fiscal 2019 was up $9 million or 6.4% over the third quarter of fiscal 2018, reflecting continued demand for the SmartSuite of business products.
    • As compared to the second quarter of fiscal 2019, the current quarter revenue increased $2 million or 1.4%. 

Operating income before restructuring costs and amortization highlights include:

  • Operating income before restructuring costs and amortization for the third quarter of fiscal 2019 of $475 million was down 2.1% or $10 million from $485 million in the third quarter of fiscal 2018.  The decrease relates primarily to a $15 million payment to address certain IP licensing matters in the third quarter of fiscal 2019 partially offset by higher revenues. Excluding the impact of the licensing payment, Wireline operating income before restructuring costs and amortization increased 1.0% year-over-year.
    • As compared to the second quarter of fiscal 2019, Wireline operating income before restructuring costs and amortization for the current quarter decreased by $22 million driven primarily by the $15 million payment to address certain IP licensing matters.    

Wireless

               
               
  Three months ended May 31,   Nine months ended May 31,
(millions of Canadian dollars) 2019   2018
(restated)(1)
Change %   2019   2018
(restated)(1)
Change %
Service  178     146     21.9       513     407     26.0 
Equipment and other  73     80     (8.8 )    258     254     1.6 
Wireless revenue  251     226     11.1       771     661     16.6 
Operating income before restructuring costs and amortization(2)  55     53     3.8       152     104     46.2 
Operating margin(2) 21.9 % 23.5 %  (6.8 )   19.7 % 15.7 %  25.5 

(1)          Fiscal 2018 reported figures have been restated applying IFRS 15. See “Accounting Standards”
(2)          See definitions and discussion under “Non-IFRS and additional GAAP measures”

The Wireless division added 62,099 RGUs in the third quarter of fiscal 2019 as compared to 46,659 RGUs gained in the third quarter of fiscal 2018. The continued increase in the postpaid subscriber base reflects our expanding and improving network and customer demand for the Big Gig data-centric pricing and packaging options. The increase in the prepaid customer base reflects the new plans that were launched in the market in early April. 

Revenue highlights include:

  • Revenue of $251 million for the third quarter of fiscal 2019 increased $25 million or 11.1% over the third quarter of fiscal 2018. The increase in revenue was driven primarily by a year-over-year increase in service revenue which grew by $32 million or 21.9% as a result of increased postpaid RGUs and improved ABPU of $42.30 and ARPU of $38.36 as compared to $39.84 and $37.54, respectively, in the third quarter of fiscal 2018. This increase was partially offset by a decrease in equipment revenue of $7 million or 8.8%.
    • As compared to the second quarter of fiscal 2019, the current quarter revenue increased $4 million or 1.6%, while ABPU increased by $0.96 or 2.3% (ABPU of $41.34 in the second quarter of fiscal 2019), and ARPU increased by $0.78 or 2.1% (ARPU of $37.58 in the second quarter of fiscal 2019).  The quarter-over-quarter increase in both ABPU and ARPU was driven primarily by our expanding and improving network and customer demand for the Big Gig data-centric pricing and packaging options.

Operating income before restructuring costs and amortization highlights include:

  • Operating income before restructuring costs and amortization of $55 million for the third quarter of fiscal 2019 improved by $2 million over the third quarter of fiscal 2018. The improvements were driven primarily by increased subscribers at higher ABPU/ARPU partially offset by the impact of the $13 million credit for a retroactive domestic roaming rate adjustment received in the prior year. Excluding the impact of this credit in 2018, Wireless operating income before restructuring costs and amortization increased 38%.   
    • As compared to the second quarter of fiscal 2019, operating income before restructuring costs and amortization for the current quarter increased $3 million or 5.8%.  

Capital expenditures and equipment costs

               
  Three months ended May 31,   Nine months ended May 31,
(millions of Canadian dollars) 2019   2018
(restated)(1)
Change %   2019 2018
(restated)(1)
Change %
Wireline              
New housing development  36     31   16.1       99   88   12.5   
Success-based  64     72   (11.1 )    190   215   (11.6 )
Upgrades and enhancements  98     112   (12.5 )    256   309   (17.2 )
Replacement  7     10   (30.0 )    19   23   (17.4 )
Building and other  (12 )  15   (180.0 )    29   52   (44.2 )
Total as per Note 3 to the unaudited interim
 consolidated financial statements
 193     240   (19.6 )    593   687   (13.7 )
Wireless              
Total as per Note 3 to the unaudited interim
 consolidated financial statements
 87     68   27.9       237   241   (1.7 )
Consolidated total as per Note 3 to the unaudited interim
 consolidated financial statements
 280     308   (9.1 )    830   928   (10.6 )

(1)       Fiscal 2018 reported figures have been restated as a result of a change in accounting policy. See “Accounting Standards”

In the third quarter of fiscal 2019, capital investment of $280 million decreased $28 million compared to the prior year period. Wireline capital spending decreased by approximately $47 million primarily due to lower network investments and success-based customer premise equipment. Wireless spending increased by approximately $19 million year-over-year due to the continued deployment of 700 MHz spectrum and the expansion of the wireless network into new markets. 

Wireline highlights include:

  • Success-based capital for the quarter of $64 million was $8 million lower than in the third quarter of fiscal 2018. The decrease was driven primarily by lower Video equipment purchases in the current quarter.
  • For the quarter, investment in combined upgrades, enhancements and replacement categories was $105 million, a $17 million or 13.9% decrease over the prior year driven by lower planned
    Wireline spend on system network infrastructure.
  • Investments in new housing development was $36 million, a $5 million increase over the comparable period, driven by residential and commercial customer network growth and acquisition.

Wireless highlights include:

  • Capital investment of $87 million in the third quarter increased relative to the third quarter of fiscal 2018 by $19 million, primarily due to the timing of expenditures. In fiscal 2019, the Company plans to continue to focus on investment in the Wireless network and infrastructure, specifically the deployment of 700 MHz spectrum, LTE and small cells as well as retail expansion in new and existing markets and enhancements to the back-office systems. Network expansion related investment and the deployment of our 700 MHz spectrum is also expected to increase throughout fiscal 2019.

 Supplementary quarterly financial information

               
               
Quarter Revenue Operating
income before
restructuring
costs and
 amortization (3)
Net income (loss)
from continuing
operations
attributable to
equity shareholders
Net income
(loss)
attributable
to equity
shareholders
Net income
(loss)(4)
Basic and
Diluted earnings
(loss) per share
from continuing
operations
Basic and
Diluted
earnings
(loss) per
share
(millions of Canadian dollars except per share amounts)        
2019              
Third  1,324   530   227     227     229     0.44     0.44   
Second  1,316   549   155     155     155     0.30     0.30   
First  1,355   545   187     187     187     0.36     0.36   
2018              
Fourth(1)  1,326   555   194     194     194     0.38     0.38   
Third(1)  1,289   538   (99 )  (99 )  (99 )  (0.20 )  (0.20 )
Second(1)  1,329   483   (175 )  (175 )  (175 )  (0.35 )  (0.35 )
First(1)  1,245   480   117     111     111     0.23     0.22   
2017              
Fourth(2)  1,244   479   149     481     481     0.30     0.97   

(1)       Fiscal 2018 reported figures have been restated applying IFRS 15 and also reflect a change in accounting policy. See “Accounting Standards”.
(2)       Amounts calculated on a basis consistent with the Company’s previous accounting policies prior to adopting IFRS 15 and a change in accounting policy.
(3)       See definition and discussion under “Non-IFRS and additional GAAP measures.”
(4)       Net income attributable to both equity shareholders and non-controlling interests

   
F19 Q3 vs
F19 Q2
In the third quarter of fiscal 2019, net income increased $74 million compared to the second quarter of fiscal 2019 mainly due to a $41 million gain on the disposal of property, plant and equipment to a related party, a $15 million gain on the sale of a portfolio investment and the $102 million impact of a tax rate change on deferred taxes partially offset by a $109 million loss on the disposal of the Company’s investment in Corus in the quarter.
F19 Q2 vs
F19 Q1
In the second quarter of fiscal 2019, net income decreased $32 million compared to the first quarter of fiscal 2019 mainly due to a $20 million decrease in equity income related to the Company’s investment in Corus in the quarter and higher income taxes.
F19 Q1
vs
F18 Q4
In the first quarter of fiscal 2019, net income decreased $7 million compared to the fourth quarter of fiscal 2018 mainly due to a $10 million decrease in operating income before restructuring costs and amortization and a decrease in other gains mainly related to a $16 million gain on the sale of certain wireless spectrum licenses in the fourth quarter of fiscal 2018. These decreases were partially offset by a $10 million increase in equity income related to the Company’s investment in Corus in the quarter.
F18 Q4
vs
F18 Q3
In the fourth quarter of fiscal 2018, net income improved by $293 million compared to the third quarter of fiscal 2018 primarily due to an impairment charge of $284 million related to the Company’s investment in Corus recorded in the prior quarter.
F18 Q3
vs
F18 Q2
In the third quarter of fiscal 2018, the net loss decreased $76 million compared to the second quarter of fiscal 2018 mainly due to a decrease in third quarter restructuring costs of $404 million and an increase in operating income before restructuring costs and amortization. The increase was partially offset by an impairment charge of $284 million related to the Company’s investment in Corus and higher income taxes.
F18 Q2
vs
F18 Q1
In the second quarter of fiscal 2018, net income decreased $286 million compared to the first quarter of fiscal 2018 mainly due to $417 million of restructuring costs recorded during the quarter related to the Company’s TBT initiative and composed primarily of the costs associated with the VDP, including severance and other employee related costs. The decrease was partially offset by increased wireless revenues of $93 million.
F18 Q1
vs
F17 Q4
In the first quarter of fiscal 2018, net income decreased $370 million compared to the fourth quarter of fiscal 2017 mainly due to the $330 million gain on divestiture, net of tax, of ViaWest, as well as an $11 million non-operating provision recovery in the prior quarter.

Other income and expense items

Restructuring costs

Restructuring costs generally include severance, employee related costs and other costs directly associated with a restructuring program. For the three and nine months ended May 31, 2019, the category included $nil and $1 million respectively in restructuring charges related to the Company’s TBT initiative for a total of $447 million since the beginning of the program in March 2018, of which $272 million has been paid up to and including May 31, 2019. 

As a first step in the TBT, the VDP was offered to eligible employees in the second quarter of fiscal 2018. The outcome of the program had approximately 3,300 Shaw employees accepting the VDP package, representing approximately 25% of all employees. The costs related to this program make up the majority of the restructuring costs recorded in the prior year; however, in the first quarter of fiscal 2019, further organizational changes in the execution of TBT resulted in additional restructuring costs of $1 million.

In the third quarter of fiscal 2019, approximately 350 employees exited the Company, bringing the total number of employees who have departed under the VDP to approximately 2,060 employees. 

Amortization

               
               
  Three months ended May 31,   Nine months ended May 31,
(millions of Canadian dollars) 2019   2018
(restated)(1)
Change %   2019   2018
(restated)(1)
Change %
Amortization revenue (expense)              
Deferred equipment revenue  5     7     (28.6 )    16     24     (33.3 )
Deferred equipment costs  (21 )  (27 )  (22.2 )    (66 )  (85 )  (22.4 )
Property, plant and equipment, intangibles and other  (247 )  (232 )  6.5       (738 )  (705 )  4.7   

(1)       Fiscal 2018 reported figures have been restated as a result of a change in accounting policy. See “Accounting Standards”

Amortization of property, plant and equipment, intangibles and other increased 6.5% and 4.7% for the three and nine months ended May 31, 2019, over the comparable period due to amortization of new expenditures exceeding the amortization of assets that became fully amortized during the period.

Amortization of financing costs and interest expense

               
               
  Three months ended May 31,   Nine months ended May 31,
(millions of Canadian dollars) 2019 2018 Change %   2019 2018 Change %
Amortization of financing costs – long-term debt  1   –  –    2   2   –
Interest expense  62   60   3.3     192   184   4.3 

Interest expense for the three and nine months ended May 31, 2019, was higher than the comparable periods primarily due to higher average outstanding debt balances in the current year. See note 11 of the unaudited interim consolidated financial statements for further detail.

Equity income (loss) of an associate

For the three and nine months ended May 31, 2019, the Company recorded equity income of $20 million and $46 million, respectively, related to its interest in Corus, compared to equity losses of $259 million and $213 million for the comparable period. The increase substantially reflects a $284 million impairment from the Company’s investment in Corus recorded in the third quarter of fiscal 2018.

On May 31, 2019, the Company sold all of its 80,630,383 Class B non-voting participating shares of Corus at a price of $6.80 per share. Proceeds, net of transaction costs, were $526 million, which resulted in a loss of $109 million for the three and nine months ended May 31, 2019.

Other gains/losses

This category generally includes realized and unrealized foreign exchange gains and losses on U.S. dollar denominated current assets and liabilities, gains and losses on disposal of property, plant and equipment and minor investments, and the Company’s share of the operations of Burrard Landing Lot 2 Holdings Partnership.

During the three-month period ended May 31, 2019, the Company recorded a net $41 million gain on the disposal of property, plant and equipment as well as a $15 million gain on the disposal of a minor portfolio investment.

Income taxes

Income taxes are lower in the quarter compared to the third quarter of fiscal 2018 mainly due to the decrease in applicable tax rates (Alberta statutory tax rate decrease).

 Financial position

Total assets were $15.5 billion at May 31, 2019, compared to $14.4 billion at August 31, 2018. The following is a discussion of significant changes in the consolidated statement of financial position since August 31, 2018. 

Current assets increased $1,062 million primarily due to increases in cash of $1,043 million, other current assets of $33 million, and current portion of contract assets of $2 million partially offset by a decrease in accounts receivable of $19 million. Cash increased primarily due to the issuance of $1 billion of senior notes, netting proceeds of $993 million, proceeds of $551 million collected from the sale of Corus and other portfolio investments, proceeds of $46 million on the disposal of property, plant and equipment as well as funds provided by continuing operations. This was partially offset by cash outlays for the spectrum acquisition of $492 million and other capital additions.

Other current assets increased over the period mainly due to an increase in Wireless subscribers participating in the Company’s MyTab Boost, a plan that allows customers to pay less for their handset upfront if they pay a predetermined incremental amount on a monthly basis. This increase continues to be driven by growth in handset sales.

The current portion of contract assets increased over the period mainly due to an increase in Wireless subscribers participating in the Company’s discretionary wireless handset discount program, MyTab. Under IFRS 15, the portion of this discount relating to the handset is applied against equipment revenue at the point in time that the handset is transferred to the customer while the portion relating to service revenue is recorded as a contract asset and amortized over the life of the contract against future service revenues.

Investments and other assets decreased by $623 million due to the disposal of the Company’s investment in Corus and another minor portfolio investment. Property, plant and equipment increased $115 million due to capital investments in excess of amortization.  Intangible assets increased $470 million primarily due to the acquisition of spectrum for $492 million, partially offset by amortization of existing intangible assets.

Current liabilities increased $1.1 billion during the period primarily due to an increase in the current portion of long-term debt of $1.25 billion due to the reclassification of a $1.25 billion senior note coming due in October 2019, partially offset by decreases in accounts payable and accrued liabilities of $61 million, provisions of $6 million, income taxes payable of $40 million and current portion of contract liabilities of $7 million.

Accounts payable and accruals decreased due to the timing of payment and fluctuations in various payables including capital expenditures, interest and programming costs. The decrease in current provisions was mainly due to the payment of restructuring costs related to the TBT. In connection with the VDP, the Company recorded a total of $447 million in restructuring charges in fiscal 2018 and 2019 primarily related to severance and other related costs, of which $272 million has been paid, $174 million is included in current provisions and $1 million is included in long-term provisions. Income taxes payable decreased due to normal course tax installment payments, partially offset by the current period provision.

Long-term debt decreased $254 million primarily due to the change in classification of the $1.25 billion senior note to current liabilities, partially offset by the issuance of $1 billion in senior notes, with $500 million due in 2023 and $500 million due in 2028. 

Shareholders’ equity increased $265 million mainly due to an increase in share capital of $198 million and retained earnings of $107 million partially offset by an increase in accumulated other comprehensive loss of $40 million. Share capital increased due to the issuance of 7,871,860 Class B non-voting participating shares (“Class B Non-Voting Shares”) under the Company’s stock option plan and Dividend Reinvestment Plan (“DRIP”). Retained earnings increased due to current year income of $569 million partially offset by dividends of $301 million.

As at June 15, 2019, there were 492,145,608 Class B Non-Voting Shares, 10,012,393 Series A Shares, 1,987,607 Series B Shares and 22,372,064 Class A Shares issued and outstanding. As at June 15, 2019, 8,518,001 Class B Non-Voting Shares were issuable on exercise of outstanding options. Shaw is traded on the Toronto and New York stock exchanges and is included in the S&P/TSX 60 Index (Trading Symbols: TSX – SJR.B, SJR.PR.A, SJR.PR.B, NYSE – SJR, and TSXV – SJR.A). For more information, please visit www.shaw.ca.

Liquidity and capital resources

In the nine-month period ended May 31, 2019, the Company generated $500 million of free cash flow. Shaw used its free cash flow along with $551 million net proceeds from the sale of its investment in Corus Class B shares and another minor portfolio investment, $993 million net proceeds from a senior note issuance, and proceeds on issuance of Class B Non-Voting Shares of $33 million to fund the net working capital change of $169 million, pay common share dividends of $292 million, purchase $492 million in spectrum licenses, and pay $102 million in restructuring costs. 

Debt structure and financial policy

On November 2, 2018, the Company solidified its balance sheet through the issuance of $1 billion in senior notes, comprised of $500 million at a rate of 3.80% due November 2, 2023 and $500 million at a rate of 4.40% due November 2, 2028. The funds will be used for general corporate purposes which may include the repayment of indebtedness. On November 21, 2018, the Company amended the terms of its $1.5 billion bank credit facility to extend the maturity date to December 2023. The facility can be used for working capital and general corporate purposes, including to issue letters of credit.

The Company issued Class B Non-Voting Shares from treasury under its DRIP which resulted in cash savings and incremental Class B Non-Voting Shares of $161 million during the nine-month period ending May 31, 2019. 

Effective May 29, 2019, the Company amended the terms of its accounts receivable securitization program to extend the term of the program to May 29, 2022 and increase the sales committed up to a maximum of $200 million. As at May 31, 2019, $40 million was drawn under the program.  The Company continues to service and retain substantially all of the risks and rewards relating to the trade receivables sold, and therefore, the trade receivables remain recognized on the Company’s Consolidated Statement of Financial Position and the funding received is recorded as a current liability (revolving floating rate loans) secured by the trade receivables. The buyer’s interest in the accounts receivable ranks ahead of the Company’s interest and the program restricts it from using the trade receivables as collateral for any other purpose. The buyer of the trade receivable has no claim on any other assets of the Company.

As at May 31, 2019, the net debt leverage ratio for the Company was 1.8x. Considering the prevailing competitive, operational and capital market conditions, the Board of Directors has determined that having this ratio in the range of 2.0 to 2.5x would be optimal leverage for the Company in the current environment. Should the ratio fall below this, other than on a temporary basis, the Board may choose to recapitalize back into this optimal range. The Board may also determine to increase the Company’s debt above these levels to finance specific strategic opportunities such as a significant acquisition or repurchase of Class B Non-Voting Shares in the event that pricing levels were to drop precipitously.

The Company calculates net debt leverage ratio as follows(1):

       
       
(millions of Canadian dollars) May 31, 2019   August 31, 2018
restated(3)
Short-term borrowings  40       40   
Current portion of long-term debt  1,251       1   
Long-term debt  4,056       4,310   
50% of outstanding preferred shares  147       147   
Cash  (1,427 )    (384 )
(A) Net debt(2)  4,067       4,114   
Operating income before restructuring costs and amortization  2,179       2,056   
Corus dividends  33       92   
(B) Adjusted operating income before restructuring costs  and amortization(2)  2,212       2,148   
(A/B) Net debt leverage ratio 1.8x     1.9x  

(1)          The following contains a description of the Company’s use of non-IFRS financial measures, provides a reconciliation to the nearest IFRS measure or provides a reference to such reconciliation.
(2)         These financial measures do not have standard definitions prescribed by IFRS and therefore may not be comparable to similar measures disclosed by other companies and have not been presented as an alternative to liquidity prescribed by IFRS.
(3)       Fiscal 2018 reported figures have been restated applying IFRS 15 and also reflect a change in accounting policy. See “Accounting Standards”

Shaw’s credit facilities are subject to customary covenants which include maintaining minimum or maximum financial ratios.

     
     
    Covenant Limit
Shaw Credit Facilities    
Total Debt to Operating Cash Flow(1) Ratio   < 5.00:1
Operating Cash Flow(1) to Fixed Charges(2) Ratio   > 2.00:1

(1)          Operating Cash Flow, for the purposes of the covenants, is calculated as net earnings before interest expense, depreciation, amortization, restructuring, and current and deferred income taxes, excluding profit or loss from investments accounted for on an equity basis, for the most recently completed fiscal quarter multiplied by four, plus cash dividends and other cash distributions received in the most recently completed four fiscal quarters from investments accounted for on an equity basis.
(2)          Fixed Charges are defined as the aggregate interest expense for the most recently completed fiscal quarter multiplied by four.

As at May 31, 2019, Shaw is in compliance with these covenants and based on current business plans, the Company is not aware of any condition or event that would give rise to non-compliance with the covenants over the life of the borrowings which currently mature in December of 2023.

Based on the aforementioned financing activities, available credit facilities and forecasted free cash flow, the Company expects to have sufficient liquidity to fund operations, obligations, working capital requirements, including maturing debt, during the upcoming fiscal year. On a longer-term basis, Shaw expects to generate free cash flow and have borrowing capacity sufficient to finance foreseeable future business plans and refinance maturing debt.

On December 4, 2018, the Company entered into new unsecured letter of credit facilities, under which letters of credit were issued in favour of and filed with Innovation, Science and Economic Development Canada (“ISED”) to fulfill the pre-auction financial deposit requirement with respect to its application to participate in the 600 MHz spectrum auction which occurred during the period from March 14, 2019 to April 10, 2019.  The Company’s wireless subsidiary, Freedom Mobile Inc., successfully acquired 11 paired blocks of 20-year 600 MHz spectrum, across its wireless operating footprint, for a total price of $492 million.  In accordance with 600 MHz auction terms, 20% ($98 million) was paid to ISED on April 26, 2019 and the remaining 80% balance ($394 million) was paid on May 24, 2019.  As of May 31, 2019, all of the letters of credit were cancelled and the unsecured letter of credit facilities were all terminated.

As at May 31, 2019, the Company had $1.4 billion of cash on hand, its $1.5 billion bank credit facility was fully undrawn and there was an additional $160 million available to draw under its accounts receivable securitization program.

Cash Flow from Operations

Operating Activities

               
               
  Three months ended May 31,   Nine months ended May 31,
(millions of Canadian dollars) 2019   2018
(restated)(1)
Change %   2019   2018
(restated)(1)
Change %
Funds flow from continuing operations  471     437    7.8    1,354     755     79.3 
Net change in non-cash balances related to operations  (39 )  (64 ) 39.1    (221 )  143    >(100.0)
Operating activities of discontinued operations  –    –    –    –    (2 ) 100.0
   432     373     15.8     1,133     896     26.5 

(1)       Fiscal 2018 reported figures have been restated applying IFRS 15 and also reflect a change in accounting policy. See “Accounting Standards”

For the three months ended May 31, 2019, funds flow from operating activities increased over the comparable period in fiscal 2018 primarily due to an increase in net income from continuing operations and an increase in the net change in non-cash balances related to operations. The net change in non-cash balances related to operations fluctuated over the comparative period due to changes in accounts receivable and other current asset balances, and the timing of payment of current income taxes payable and accounts payable and accrued liabilities.

Investing Activities

...
               
               
  Three months ended May 31,   Nine months ended May 31,
(millions of Canadian dollars) 2019