Dollarama : Third Quarter Financial Statements

Dollarama Inc.

Condensed Interim Consolidated Financial Statements

For the 13-week and 39-week periods ended October 28, 2018 and October 29, 2017

(Unaudited, expressed in thousands of Canadian dollars, unless otherwise noted)

Interim Consolidated Statement of Financial Position as at (Unaudited, expressed in thousands of Canadian dollars)

October 28,	January 28,
		Note
2018	2018
$	$
Assets
Current assets
Cash	78,843	54,844
Accounts receivable	34,753	15,263
Prepaid expenses	8,110	8,649
Prepaid income taxes	1,661	-
Inventories	570,955	490,927
Derivative financial instruments	7	13,818	286
708,140	569,969
Non-current assets
Property, plant and equipment	6	557,590	490,988
Intangible assets	148,472	145,600
Goodwill	727,782	727,782
Total assets	2,141,984	1,934,339
Liabilities and shareholders' deficit
Current liabilities
Accounts payable and accrued liabilities	213,640	228,362
Dividend payable	12,935	12,180
Derivative financial instruments	7	-	35,720
Income taxes payable	-	39,491
Finance lease obligations	10	512	-
Current portion of long-term debt	8	414,243	405,192
641,330	720,945
Non-current liabilities
Long-term debt	8	1,484,761	1,260,459
Finance lease obligations	10	3,474	-
Deferred rent and lease inducements	97,041	92,633
Deferred income taxes	131,844	112,660
Total liabilities	2,358,450	2,186,697
Commitments	10
Shareholders' deficit
Share capital	9	413,289	415,787
Contributed surplus	9	30,992	27,699
Deficit	(673,003)	(663,421)
Accumulated other comprehensive income (loss)	12,256	(32,423)
Total shareholders' deficit	(216,466)	(252,358)
Total liabilities and shareholders' deficit	2,141,984	1,934,339
1

Interim Consolidated Statement of Changes in Shareholders' Deficit For the 39-week periods ended

(Unaudited, expressed in thousands of Canadian dollars, except share amounts)

NoteNumber of common shares(1)

Share Contributed capital surplus $ $

Deficit $

Accumulated other comprehensive income (loss)

$

Total $

Balance - January 29, 2017

345,154,047

420,266

24,321

(342,957)

(1,346) 100,284

Net earnings

Other comprehensive loss Total comprehensive income

Dividends declared Repurchase and cancellation of common shares Share-based compensation Issuance of common shares Reclassification for the exercise of share options

- - - -- - - -

• - 356,582

- 356,582

-

-(17,863)

• - 356,582

  (17,863)

  (17,863) 338,719

• - (37,340)

  • 9 (11,036,520)

  (13,444)

• - (420,439)

- (37,340) - (433,883)

9 9

- 927,150

-

- 11,906 2,575

5,015 - - 5,015

- (2,575)

- -- 11,906

-

-

Balance - October 29, 2017

335,044,677

421,303

26,761

(444,154)

(19,209) (15,299)

Balance - January 28, 2018

327,977,577

415,787

27,699

(663,421)

(32,423) (252,358)

Net earnings

Other comprehensive income Total comprehensive income

- -

- -

• - 376,894

-

-- 31,211

376,894

31,211

IFRS 9 transition adjustment Transfer of realized cash flow hedge losses to inventory Dividends declared Repurchase and cancellation of common shares Share-based compensation Issuance of common shares Reclassification for the exercise of share options

4

- - - -- - - -

9 9 9

(8,450,957)

(10,722)

- 418,550

Balance - October 28, 2018

- 319,945,170

- 6,797 1,427 413,289

- - - - - 4,720 -

376,894 31,211

408,105

- 8,646

8,646

- 4,822 (39,116)

4,822

- (39,116)

(347,360)

- (358,082)

(1,427) 30,992

- - - (673,003)

- 4,720

- 6,797

- 12,256

- (216,466)

(1) Numbers of common shares as at January 29, 2017, October 29, 2017 and January 28, 2018, including changes in the share capital between these three dates, reflect the retrospective application of the Share Split (defined under Note 9).

Interim Consolidated Statement of Net Earnings and Comprehensive Income (Loss) For the 13-week and 39-week periods ended

(Unaudited, expressed in thousands of Canadian dollars, except share and per share amounts)

13-week periods ended October 28,October 29,39-week periods ended October 28,October 29,

Note	2018	2017
$	$	$	$
Sales	864,267	810,583	2,488,789	2,328,015
Cost of sales	14	528,411	485,703	1,523,869	1,415,816
Gross profit	335,856	324,880	964,920	912,199
General, administrative and store operating expenses	121,227	117,630	354,282	339,887
Depreciation and amortization	14	19,629	17,999	57,495	51,845
Operating income	195,000	189,251	553,143	520,467
Net financing costs	14	11,443	10,154	34,178	29,621
Earnings before income taxes	183,557	179,097	518,965	490,846
Income taxes	11	50,010	49,005	142,071	134,264
Net earnings	133,547	130,092	376,894	356,582
Other comprehensive income
Items to be reclassified subsequently to net earnings
Unrealized gain (loss) on derivative financial instruments,
net of reclassification adjustment	-	22,214	-	(24,522)
Unrealized gain on derivative financial instruments not subject
to basis adjustments	1,087	-	2,022	-
Items that will not be reclassified subsequently to net earnings
Unrealized gain on derivative financial instruments subject to
basis adjustments	4	4,167	-	40,625	-
Income taxes recovery (expenses) relating to components of
other comprehensive income	(1,591)	(5,915)	(11,436)	6,659
Total other comprehensive income (loss),
net of income taxes	3,663	16,299	31,211	(17,863)
Total comprehensive income	137,210	146,391	408,105	338,719
Earnings per common share
Basic net earnings per common share (restated) (1)	12	$0.41	$0.39	$1.15	$1.05
Diluted net earnings per common share (restated) (1)	12	$0.41	$0.38	$1.14	$1.04
Weighted average number of common shares
outstanding (thousands) (restated) (1)	12	325,032	336,573	326,752	339,909
Weighted average number of diluted common shares
outstanding (thousands) (restated) (1)	12	328,905	340,803	330,992	344,001

(1) Numbers of common shares and amounts per common share as at October 29, 2017 reflect the retrospective application of the Share Split

(see Note 9).

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

2018

2017

Dollarama Inc.

Interim Consolidated Statement of Cash Flows For the 13-week and 39-week periods ended (Unaudited, expressed in thousands of Canadian dollars)

13-week periods ended

39-week periods ended

Note
$	$	$	$
Operating activities
Net earnings	133,547	130,092	376,894	356,582
Adjustments to reconcile net earnings to net cash generated
from operating activities:
Depreciation of property, plant and equipment and
amortization of intangible assets	14	19,629	17,999	57,495	51,845
Amortization of deferred tenant allowances	(1,488)	(1,294)	(4,236)	(3,789)
Amortization of deferred leasing costs	117	120	355	363
Amortization of debt issue costs	567	492	1,699	1,533
Amortization of bond lock loss	23	-	68	-
Transfer of realized cash flow hedge losses to inventory	4	-	-	8,646	-
Recognition of realized losses on foreign exchange
contracts	7	-	(1,445)	-	(3,496)
Cash settlement of gains on foreign exchange contracts	-	(11,373)	-	(1,267)
Deferred lease inducements	1,328	1,240	3,537	3,721
Deferred tenant allowances	2,961	2,694	5,107	6,884
Share-based compensation	9	1,512	1,676	4,720	5,015
Interest payment on finance lease	27	-	88	-
Financing costs on long-term debt	7,626	7,675	9,051	9,132
Deferred income taxes	3,687	8,141	5,896	6,383
Loss (gain) on disposal of assets	(153)	126	(30)	181
169,383	156,143	469,290	433,087
Changes in non-cash working capital components	7,15	(76,023)	(35,490)	(164,656)	(48,059)
Net cash generated from operating activities	93,360	120,653	304,634	385,028
Investing activities
Additions to property, plant and equipment	(29,686)	(24,620)	(110,868)	(66,920)
Additions to intangible assets	(3,284)	(6,800)	(13,210)	(13,577)
Proceeds from disposal of property, plant and equipment	922	184	1,164	544
Net cash used in investing activities	(32,048)	(31,236)	(122,914)	(79,953)
Financing activities
Proceeds from long-term debt issued (the Floating Rate
Notes and the 2.203% Fixed Rate Notes)	8	-	-	300,000	550,000
Proceeds (repayments) of Credit Facility	8	115,000	35,000	(76,000)	(95,000)
Repayment of Series 1 Floating Rate Notes	-	-	-	(275,000)
Payment of debt issue costs	-	-	(1,397)	(2,438)
Repayment of finance lease	(149)	-	(481)	-
Issuance of common shares	3,215	1,477	6,797	11,906
Dividends paid	(13,073)	(12,461)	(38,362)	(36,599)
Repurchase and cancellation of common shares	9	(269,165)	(115,403)	(348,278)	(442,703)
Net cash used in financing activities	(164,172)	(91,387)	(157,721)	(289,834)
Increase (decrease) in cash	(102,860)	(1,970)	23,999	15,241
Cash - beginning of period	181,703	79,226	54,844	62,015
Cash - end of period	78,843	77,256	78,843	77,256
4

October 28,	October 29,	October 28,	October 29,
2018	2017	2018	2017