Metro Vancouver Properties Corp. announces the results for the three months ended November 30, 2023

VANCOUVER, British Columbia, Jan. 12, 2024 (GLOBE NEWSWIRE) -- Metro Vancouver Properties Corp., a Vancouver-based real estate company announces the results of operations for the three months ended November 30, 2023.

The results reported are pursuant to International Financial Reporting Standards (IFRS) for public companies.

For the three months ended November 30, 2023, the Company is reporting net loss of $38.6 million (2022: $0.3 million); cash flows generated from operating activities before changes in non-cash operating balances of $3.2 million (2022: $3.8 million); and loss per share of $0.03 (2022: $0.00). Included in net loss is a provision for losses totalling approximately $32.9 million (2022: $nil) recognizing a tax liability for unpaid taxes and estimated interest and a provision recorded against the carrying value of the Company’s cash tax deposits. Also included in net loss is a net loss on the fair value adjustment on investment properties of approximately $8.7 million (2022: $4.5 million).

As previously reported in the Company’s Consolidated Financial Statements, the Company had received from the Canada Revenue Agency (“CRA”) and Alberta Tax and Revenue Administration (“ATRA”) tax notices of reassessment for various taxation years. The reassessments deny the application and usage of certain non-capital losses, deductions and investment tax credits arising from prior years. The Company had filed notices of objection and notices of appeal to the reassessments with the CRA and ATRA.

The Company’s parent company, Madison Pacific Properties Inc. (“Madison”) had also received from the CRA tax notices of reassessment for various taxation years denying the application and usage of certain carryforward losses. The Company’s and Madison’s reassessments were issued on similar grounds. Madison had also appealed these reassessments (the “Madison Appeal”). The Madison Appeal was heard by the Tax Court of Canada (the “TCC”) in 2020, 2022 and 2023. The TCC released its judgement on the Madison Appeal on December 27, 2023 in favour of the CRA’s position, confirming the CRA’s, and by implications ATRA’s, reassessments. The decision denied Madison’s ability to use certain carryforward losses for certain taxation years within 2009 to 2017.

Based on the decision of the TCC in the Madison Appeal and other related factors, including the accounting criteria under IFRS regarding tax contingencies, the Company has recorded a full provision of $13.6 million against the carrying value of the cash tax deposits and a liability for uncertain tax positions of approximately $19.3 million for unpaid taxes and estimated interest for the Company’s reassessments. The total of these amounts, $32.9 million, was recognized to income tax expense of $25.5 million and interest expense on uncertain tax position of $7.4 million in the Interim Consolidated Statement of (Loss) Income and Comprehensive (Loss) Income for the three months ended November 30, 2023.

The Company and its counsel are evaluating its defense position in respect of the Company’s appeal.

For a review of the risks and uncertainties to which the Company is subject, see its most recently filed annual and interim MD&A.

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