ANNUAL INFORMATION FORM (for the year ended December 29, 2018) February 21, 2019 LOBLAW COMPANIES LIMITED ANNUAL INFORMATION FORM (for the year ended December 29, 2018) TABLE OF CONTENTS DATE OF INFORMATION 4 FORWARD-LOOKING STATEMENTS 4 CORPORATE STRUCTURE 5 Incorporation 5 Intercorporate Relationships 5 DESCRIPTION OF THE BUSINESS 5 Overview 5 Retail Segment 5 Geographic and Banner Summary 6 Control Brand Products 7 Loyalty Program 8 Supply Chain 8 Retail Competitive Environment 8 Seasonality 8 Financial Services Segment 9 Financial Services Competitive Environment 9 Lending 9 Labour and Employment Matters 9 Intellectual Property 9 Corporate Social Responsibility and Environmental Policies 9 GENERAL DEVELOPMENT OF THE BUSINESS – THREE YEAR HISTORY 11 Retail Segment 11 Information Technology Systems Implementation 11 Strengthened Customer Proposition 12 Gas Bar Network 13 Acquisition of QHR Corporation 13 Financial Services Segment 13 President’s Choice Financial MasterCard 13 Mobile Phone Services 13 PC Insiders 13 Choice Properties 14 RISKS 14 Enterprise Risks and Risk Management 14 Operating Risks and Risk Management 15 Financial Risks and Risk Management 21 CAPITAL STRUCTURE AND MARKET FOR SECURITIES 22 Share Capital 22 Share Trading Price and Volume 23 ______________________________________________________________________________________________________________ Loblaw Companies Limited 2 Annual Information Form (for the year ended December 29, 2018) Debt Securities 24 Credit Facilities 24 Credit Ratings 25 DIVIDENDS 27 DIRECTORS AND OFFICERS 28 Directors 28 Officers 29 LEGAL PROCEEDINGS 29 REGULATORY ACTIONS 31 MATERIAL CONTRACTS 31 Services Agreement 31 INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS 31 TRANSFER AGENTS AND REGISTRARS 31 EXPERTS 31 AUDIT COMMITTEE INFORMATION 32 EXTERNAL AUDIT FEES 32 ADDITIONAL INFORMATION 33 ______________________________________________________________________________________________________________ Loblaw Companies Limited 3 Annual Information Form (for the year ended December 29, 2018) DATE OF INFORMATION All information in this Annual Information Form (“AIF”) is current as of December 29, 2018, unless otherwise stated. FORWARD-LOOKING STATEMENTS This AIF for Loblaw Companies Limited and its subsidiaries (collectively, the “Company” or “Loblaw”) contains forward-looking statements about the Company’s objectives, plans, goals, aspirations, strategies, financial condition, results of operations, cash flows, performance, prospects, opportunities and legal and regulatory matters. Specific forward-looking statements in this AIF include, but are not limited to, statements with respect to the Company’s anticipated future results, events and plans, strategic initiatives and restructuring, regulatory changes including further healthcare reform, future liquidity, planned capital investments, and the status and impact of information technology (“IT”) systems implementation. Forward-looking statements are typically identified by words such as “expect”, “anticipate”, “believe”, “foresee”, “could”, “estimate”, “goal”, “intend”, “plan”, “seek”, “strive”, “will”, “may” and “should” and similar expressions, as they relate to the Company and its management. Forward-looking statements reflect the Company’s estimates, beliefs and assumptions, which are based on management’s perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances. The Company’s expectation of operating and financial performance in 2019 is based on certain assumptions, including assumptions about healthcare reform impacts, anticipated cost savings and operating efficiencies and anticipated benefits from strategic initiatives. The Company’s estimates, beliefs and assumptions are inherently subject to significant business, economic, competitive and other uncertainties and contingencies regarding future events and, as such, are subject to change. The Company can give no assurance that such estimates, beliefs and assumptions will prove to be correct. Numerous risks and uncertainties could cause the Company’s actual results to differ materially from those expressed, implied or projected in the forward-looking statements, including those described in the Risks section of this AIF. Such risks and uncertainties include: • changes to the regulation of generic prescription drug prices, the reduction of reimbursements under public drug benefit plans and the elimination or reduction of professional allowances paid by drug manufacturers; • the inability of the Company’s IT infrastructure to support the requirements of the Company’s business, or the occurrence of any internal or external security breaches, denial of service attacks, viruses, worms and other known or unknown cybersecurity or data breaches; • failure to realize benefits from investments in the Company’s new IT systems; • failure to realize the anticipated benefits associated with the Company’s strategic priorities and major initiatives, including revenue growth, anticipated cost savings and operating efficiencies, or organizational changes that may impact the relationships with franchisees and associates; • failure to effectively respond to consumer trends or heightened competition, whether from current competitors or new entrants to the marketplace; • failure to maintain an effective supply chain and consequently an appropriate assortment of available product at store level; • failure to execute the Company’s e-commerce initiatives or to adapt its business model to the shifts in the retail landscape caused by digital advances; • public health events including those related to food and drug safety; • errors made through medication dispensing or errors related to patient services or consultation; • adverse outcomes of legal and regulatory proceedings and related matters; • changes to any of the laws, rules, regulations or policies applicable to the Company’s business; • failure to achieve desired results in labour negotiations, including the terms of future collective bargaining agreements; and • changes in economic conditions, including economic recession or changes in the rate of inflation or deflation, employment rates and household debt, political uncertainty, interest rates, currency exchange rates or derivative and commodity prices. This is not an exhaustive list of the factors that may affect the Company’s forward-looking statements. Other risks and uncertainties not presently known to the Company or that the Company presently believes are not material could also cause actual results or events to differ materially from those expressed in its forward-looking statements. Additional risks and uncertainties are discussed in the Company’s materials filed with the Canadian securities regulatory authorities from time to time. Readers are cautioned not to place undue reliance on these forward- looking statements, which reflect the Company’s expectations only as of the date of this AIF. Except as required by law, the Company does not undertake to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. ______________________________________________________________________________________________________________ Loblaw Companies Limited 4 Annual Information Form (for the year ended December 29, 2018) 1. CORPORATE STRUCTURE 1.1 Incorporation Loblaw Companies Limited was incorporated on January 18, 1956, although portions of its business originated before 1900. It was continued under the Canada Business Corporations Act by a certificate of continuance dated May 7, 1980. The registered office of the Company is located at 22 St. Clair Avenue East, Toronto, Ontario, Canada, M4T 2S5. The National Head Office and store support centre of the Company is located at 1 President’s Choice Circle, Brampton, Ontario, Canada, L6Y 5S5. 1.2 Intercorporate Relationships Loblaw Companies Limited is a holding company, which carries on its business through its subsidiaries. A list of the subsidiaries of the Company that carry on its principal businesses is set out below. The Company owns, either directly or indirectly, 100% of the voting and non-voting securities of these subsidiaries. Subsidiary Jurisdiction of Incorporation/Formation Loblaws Inc. Ontario Shoppers Drug Mart Inc. Canada President’s Choice Bank Canada Loblaw, George Weston Limited (“Weston”) and Choice Properties Real Estate Investment Trust (“Choice Properties”) are part of a common control group (the “Weston Group”). Although the entities making up the Weston Group each have their own strategies and, for the most part, focus on different businesses, the entities acknowledge that from time to time new corporate opportunities will arise that potentially could be of interest to more than one entity of the Weston Group. Accordingly, the entities making up the Weston Group have adopted a framework that facilitates the decision making process to allocate opportunities to the entity best suited to pursue the opportunity based on its existing businesses and other considerations. 2. DESCRIPTION OF THE BUSINESS 2.1 Overview The Company has two reportable operating segments: Retail and Financial Services. The Retail segment consists primarily of corporate and franchise-owned retail food and Associate-owned drug stores, and includes in-store pharmacies and other health and beauty products, apparel and other general merchandise. The Company’s Financial Services segment provides