Mr. G.W.J. Pottow reports

THE BECKER MILK COMPANY LIMITED: THREE MONTH FINANCIAL RESULTS AND REGULAR DIVIDEND

The Becker Milk Company Ltd. has released the results for the three months ended July 31, 2018.

Highlights:

• Total revenues for the three months ended July 31, 2018, were $769,250, compared with $894,428 for the same period in 2017.
• Net operating income for the first quarter of fiscal 2019 was $625,269, compared with $764,803 in fiscal 2018.
• Net income for Q1 fiscal 2019 was seven cents per share, compared with 27 cents per share in fiscal 2018.

Financial highlights

Net operating income for the three months ended July 31, 2018, decreased $139,534, compared with the previous year to $625,269, as a result of decreased revenues resulting from the sale of properties.

                                                                  Three months ended            
                                                                             July 31, 
                                                                   2018         2017

Property revenue                                               $750,064     $889,476
Finance income                                                   19,186        4,952
Total revenues                                                 $769,250     $894,428
Property revenue                                               $750,064     $889,476
Property operating expenses                                    (124,795)    (124,673)
Net operating income                                           $625,269     $764,803
Adjusted funds from operations                                 $243,581     $365,356
Net income attributable to common and special shareholders     $133,350     $484,748
Average common and special shares outstanding                 1,808,360    1,808,360
Income per share                                                  $0.07        $0.27

Components of the $351,398 decrease in net income for the three months ended July 31, 2018, compared with the three months ended July 31, 2017, are shown in the attached table.

 
       CHANGES IN NET INCOME -- THREE MONTHS ENDED JULY 31, 2018,                   
               COMPARED WITH THREE MONTHS JULY 31, 2017                                     
                                                                            
Decrease in net operating income                                ($139,534)  
Decrease in fair value adjustment                                (279,976)  
Increase in administrative expenses                               (23,564)   
Decrease in current taxes                                          41,573     
Increase in recovery of deferred taxes on investment properties    26,046     
Increase in finance income                                         14,234     
Decrease in loss on disposal                                        7,470      
Decrease in strategic expenses                                      2,353      
Decrease in net income                                          ($351,398)  

Adjusted funds from operations

For the three months ended July 31, 2018, the company recorded adjusted funds from operations of $243,581 (13 cents per share), compared with $365,356 (20 cents per share) in 2017.

                                          Three months ended 
                                                     July 31,            
                                            2018        2017  

Funds from operations                   $269,675    $369,647
Items not affecting cash                                  
Straight line rent                             -           0     
Expenses related to strategic review      (1,938)      4,291 
Sustaining capital expenditures          (24,156)          0     
Adjusted funds from operations           $243,581   $365,356
Adjusted funds from operations per share    $0.13      $0.20   

Strategic review

Since 2014, the board of directors has been evaluating strategic directions for the company and has engaged in discussions with potential acquirors. None of those discussions are active at this time. During this period, a program of divesting less desirable sites has resulted in the sale of 15 investment properties. The company continues to review its strategic alternatives and will update the market as appropriate, and as required.

Dividend

The directors of the company have declared the regular semi-annual dividend on Class B special and common shares of 40 cents per share. This dividend of 40 cents will be paid to those shareholders of record as of Sept. 21, 2018, and payable on Oct. 1, 2018.

The dividends for Canadian tax purposes will be considered as an eligible dividend.

The company's interim financial statements for the three months ended July 31, 2018, along with the management's discussion and analysis will be filed with SEDAR.