Enhanced Investments - Financial Portal

Published: 2023-05-04

Consolidated financial statements
Consolidated income statements
For the period ended March 31
(in millions of Canadian dollars, except share amounts) (unaudited)note	2023	2022
Operating revenues		3	6,054	5,850
Operating costs		3, 5	(3,516)	(3,266)
Severance, acquisition and other costs		6	(49)	(13)
Depreciation			(918)	(891)
Amortization			(283)	(260)
Finance costs
Interest expense			(344)	(260)
Net return on post-employment benefit plans		12	27	18
Impairment of assets		7	(34)	(2)
Other income		8	121	93
Income taxes			(270)	(335)
Net earnings			788	934
Net earnings attributable to:
Common shareholders			725	877
Preferred shareholders			46	34
Non-controlling interest			17	23
Net earnings			788	934
Net earnings per common share – basic and diluted		9	0.79	0.96
Weighted average number of common shares outstanding – basic (millions)			912.1	910.1
	Consolidated financial statements


BCE InC. 2023 FIrst QuartEr sharEholdEr rEport	38

	Consolidated statements of comprehensive income
	For the period ended March 31
	(in millions of Canadian dollars) (unaudited)	2023	2022
	Net earnings		788	934
	Other comprehensive (loss) income, net of taxes
	Items that will be subsequently reclassified to net earnings
					Net change in value of derivatives designated as cash flow hedges, net of income taxes of ($21) million and
					58	148
	Items that will not be reclassified to net earnings
					Actuarial (losses) gains on post-employment benefit plans, net of income taxes of $47 million and ($235) million
					for the three months ended March 31, 2023 and 2022, respectively (1)	(127)	644
					Net change in value of publicly-traded and privately-held investments, net of income taxes of ($3) million and
					17	1
					Net change in value of derivatives designated as cash flow hedges, net of income taxes of ($2) million and
					6	(8)
	Other comprehensive (loss) income		(46)	785
	Total comprehensive income		742	1,719
	Total comprehensive income attributable to:
	Common shareholders		679	1,662
	Preferred shareholders		46	34
	Non-controlling interest		17	23
	Total comprehensive income		742	1,719
	(1) The discount rate used to value our post-employment benefit obligations at March 31, 2023 was 5.0% compared to 5.3% at December 31, 2022. The discount rate used to value our post-employment
	benefit obligations at March 31, 2022 was 4.3% compared to 3.2% at December 31, 2021.
Consolidated financial statements


39

Consolidated statements of financial position
(in millions of Canadian dollars) (unaudited)note	March 31, 2023	december 31, 2022
ASSETSCurrent assets
Cash					651	99
Cash equivalents					90	50
Trade and other receivables			3,828			4,138
Inventory					673	656
Contract assets					419	436
Contract costs					538	540
Prepaid expenses					378	244
Other current assets					330	324
Assets held for sale		10			260	–
Total current assets			7,167			6,487
Non-current assets
Contract assets					260	288
Contract costs					633	603
Property, plant and equipment			29,233			29,256
Intangible assets			16,338			16,183
Deferred tax assets					102	84
Investments in associates and joint ventures					664	608
Post-employment benefit assets		12	3,407			3,559
Other non-current assets			1,341			1,355
Goodwill			10,830			10,906
Total non-current assets			62,808			62,842
Total assets			69,975			69,329
LIABILITIESCurrent liabilities
Trade payables and other liabilities			4,080			5,221
Contract liabilities					851	857
Interest payable					208	281
Dividends payable					900	867
Current tax liabilities					164	106
Debt due within one year		11	6,347			4,137
Liabilities held for sale		10			109	–
Total current liabilities			12,659			11,469
Non-current liabilities
Contract liabilities					244	228
Long-term debt		11	27,456			27,783
Deferred tax liabilities			4,969			4,953
Post-employment benefit obligations		12	1,348			1,311
Other non-current liabilities			1,032			1,070
Total non-current liabilities			35,049			35,345
Total liabilities			47,708			46,814
Commitments		16
EQUITYEquity attributable to BCE shareholders
	Consolidated financial statements
Preferred shares		14	3,827			3,870

Common shares			20,851			20,840
Contributed surplus			1,179			1,172
Accumulated other comprehensive income (loss)				3		(55)
Deficit			(3,926)			(3,649)
Total equity attributable to BCE shareholders			21,934			22,178
Non-controlling interest		10			333	337
Total equity			22,267			22,515
Total liabilities and equity			69,975			69,329
BCE InC. 2023 FIrst QuartEr sharEholdEr rEport	40

	Consolidated statements of changes in equity
		Attributable to BCE shareholders
						Accumulated
						other	Non-
	For the period ended March 31, 2023			Preferred	Common	Contributed		comprehensive			controlling
	(in millions of Canadian dollars) (unaudited)		shares	shares	surplus		income (loss)	Deficit	Total	interest	Total equity
	Balance at December 31, 2022			3,870	20,840	1,172							(55)	(3,649)	22,178	337	22,515
	Net earnings			–	–		–					–	771	771	17	788
	Other comprehensive income (loss)			–	–		–					81	(127)	(46)	–	(46)
	Total comprehensive income			–	–		–					81	644	725	17	742
	Common shares issued under employee stock
	option plan			–	11		(1)					–	–	10	–	10
	Other share-based compensation			–	–		(4)					–	(9)	(13)	–	(13)
	Repurchase of preferred shares		14	(43)	–		12					–	–	(31)	–	(31)
	Dividends declared on BCE common and
	preferred shares			–	–		–					–	(929)	(929)	–	(929)
	Dividends declared by subsidiaries to
	non-controlling interest			–	–		–					–	–	–	(21)	(21)
	Settlement of cash flow hedges transferred
	to the cost basis of hedged items			–	–						(6)	–	(6)	–			(6)
	Other			–	–						(17)	17	–	–			–
	Balance at March 31, 2023			3,827	20,851	1,179							3	(3,926)	21,934	333	22,267
		attributable to BCE shareholders
						accumulated
						other	non-
	For the period ended March 31, 2022			preferred	Common	Contributed		comprehensive			controlling
	(in millions of Canadian dollars) (unaudited)		shares	shares	surplus		income	deficit	total	interest	total equity
	Balance at December 31, 2021			4,003	20,662	1,157		213	(3,400)	22,635	306	22,941
	Net earnings			–	–		–					–	911	911	23	934
	Other comprehensive income			–	–		–	142	643	785	–	785
	Total comprehensive income			–	–		–	142	1,554	1,696	23	1,719
	Common shares issued under employee stock
	option plan			–	168		(6)					–	–	162	–	162
	Other share-based compensation			–	–									(17)	–	(21)	(38)	–	(38)
	Repurchase of preferred shares		14	(118)	–		3					–	–	(115)	–	(115)
	Dividends declared on BCE common and
	preferred shares			–	–		–					–	(873)	(873)	–	(873)
	Dividends declared by subsidiaries to
	non-controlling interest			–	–		–					–	–	–	(11)	(11)
	Balance at March 31, 2022			3,885	20,830	1,137		355	(2,740)	23,467	318	23,785
Consolidated financial statements


41

Consolidated statements of cash flows
For the period ended March 31
(in millions of Canadian dollars) (unaudited)note	2023	2022
Cash flows from operating activitiesNet earnings
			788	934
Adjustments to reconcile net earnings to cash flows from operating activities Severance, acquisition and other costs		6	49	13
Depreciation and amortization			1,201	1,151
Post-employment benefit plans cost		12	31	51
Net interest expense			330	258
Impairment of assets			34	2
Gains on investments		8	–	(37)
Income taxes			270	335
Contributions to post-employment benefit plans			(15)	(79)
Payments under other post-employment benefit plans			(15)	(15)
Severance and other costs paid			(25)	(28)
Interest paid			(439)	(373)
Income taxes paid (net of refunds)			(164)	(116)
Acquisition and other costs paid			–	(3)
Change in contract assets			45	32
Change in wireless device financing plan receivables			41	59
Net change in operating assets and liabilities			(884)	(468)
Cash flows from operating activities			1,247	1,716
Cash flows used in investing activities
Capital expenditures			(1,086)	(959)
Business acquisitions		4	(25)	(139)
Business dispositions		8	–	52
Other investing activities			20	(10)
Cash flows used in investing activities			(1,091)	(1,056)
Cash flows from (used in) financing activities (Decrease) increase in notes payable			(83)	469
Increase in securitized receivables			500	–
Issue of long-term debt		11	1,504	945
Repayment of long-term debt			(299)	(1,258)
Repurchase of a financial liability		13	(149)	–
Issue of common shares			10	161
Purchase of shares for settlement of share-based payments			(93)	(106)
Repurchase of preferred shares		14	(31)	(115)
Cash dividends paid on common shares			(839)	(795)
Cash dividends paid on preferred shares			(55)	(33)
Cash dividends paid by subsidiaries to non-controlling interest			(21)	(11)
Other financing activities			(8)	(28)
Cash flows from (used in) financing activities			436	(771)
Net increase (decrease) in cash			552	(111)
Cash at beginning of period			99	289
Cash at end of period			651	178
Net increase in cash equivalents			40	–
Cash equivalents at beginning of period			50	–
	Consolidated financial statements
Cash equivalents at end of period			90	–


BCE InC. 2023 FIrst QuartEr sharEholdEr rEport	42

	Notes to consolidated financial statements
	These consolidated interim financial statements (financial statements) should be read in conjunction with BCE’s 2022 annual consolidated financial
	statements, approved by BCE’s board of directors on March 2, 2023.
	These notes are unaudited.
	We, us, our, BCE and the company mean, as the context may require, either BCE Inc. or, collectively, BCE Inc., Bell Canada, their subsidiaries, joint
	arrangements and associates.
		Corporate information
	notE 1
	BCE is incorporated and domiciled in Canada. BCE’s head office is located at 1, Carrefour Alexander-Graham-Bell, Verdun, Québec, Canada. BCE is a communications company providing wireless, wireline, Internet and television (TV) services to residential, business and wholesale customers in Canada. Our Bell Media segment provides conventional TV, specialty TV, pay TV, streaming services, digital media services, radio broadcasting services and out-of-home (OOH) advertising services to customers in Canada.
		Basis of presentation and significant accounting policies
	notE 2
	These financial statements were prepared in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting
	Standards Board (IASB), under International Accounting Standard (IAS) 34 – Interim Financial Reporting and were approved by BCE’s board of directors
	on May 3, 2023. These financial statements were prepared using the same basis of presentation, accounting policies and methods of computation as outlined in Note 2, Significant accounting policies in our consolidated financial statements for the year ended December 31, 2022, except as noted below.
	These financial statements do not include all of the notes required in annual financial statements.
	All amounts are in millions of Canadian dollars, except where noted.
	Future changes to accounting standards
	The following amendments to standards issued by the IASB have not yet been adopted by BCE.
	standard		description	Impact	Effective date
	Disclosure of Accounting Policies –		These amendments require that entities disclose material	We are currently assessing the impact of these amendments on the disclosure of our accounting policies.	Effective for annual reporting periods beginning on or after
	Amendments to IAS 1 – Presentation		accounting policies, as defined, instead of significant accounting policies.
	of Financial Statements				January 1, 2023 and any
					changes will be reflected in our financial statements for the year ended December 31, 2023.
Notes to consolidated financial statements


43

		Segmented information
notE 3
In 2022, we began modifying our internal and external reporting processes to align with organizational changes that were made to reflect an increasing strategic focus on multiproduct sales, the continually increasing technological convergence of our wireless and wireline telecommunications infrastructure and operations driven by the deployment of our Fifth Generation (5G) and fibre networks, and our digital transformation. These factors have made it increasingly difficult to distinguish between our wireless and wireline operations and resulted in changes in Q1 2023 to the financial information that is regularly provided to our chief operating decision maker to measure performance and allocate resources.
Effective with our Q1 2023 results, our previous Bell Wireless and Bell Wireline operating segments were combined to form a single reporting segment called Bell Communication and Technology Services (Bell CTS). Bell Media remains a distinct reportable segment and is unaffected. Our results are therefore reported in two segments: Bell CTS and Bell Media. As a result of our reporting changes, prior periods have been restated for comparative purposes.
Our Bell CTS segment provides a wide range of communication products and services to consumers, businesses and government customers across Canada. Wireless products and services include mobile data and voice plans and devices and are available nationally. Wireline products and services comprise data (including Internet access, IPTV, cloud-based services and business solutions), voice, and other communication services and products, which are available to our residential, small and medium-sized business and large enterprise customers primarily in Ontario, Québec, the Atlantic provinces and Manitoba, while satellite TV service and connectivity to business customers are available nationally across Canada. In addition, this segment includes our wholesale business, which buys and sells local telephone, long distance, data and other services from or to resellers and other carriers, as well as the results of operations of our national consumer electronics retailer, The Source (Bell) Electronics Inc. (The Source).
Our Bell Media segment provides conventional TV, specialty TV, pay TV, streaming services, digital media services, radio broadcasting services and OOH and advanced advertising services to customers nationally across Canada.
Our segments reflect how we manage our business and how we classify our operations for planning and measuring performance. The following tables present financial information by segment for the three month periods ended March 31, 2023 and 2022.
				Bell	Bell	Intersegment
For the three month period ended March 31, 2023			note	CTS	Media	eliminations	BCE
Operating revenues
External service revenues				4,528	694			–	5,222
Inter-segment service revenues				7	86			(93)	–
Operating service revenues				4,535	780			(93)	5,222
External/Operating product revenues				832	–			–	832
Total external revenues				5,360	694			–	6,054
Total inter-segment revenues				7	86			(93)	–
Total operating revenues				5,367	780			(93)	6,054
Operating costs			5	(2,961)	(648)			93	(3,516)
Adjusted EBITDA (1)				2,406	132			–	2,538
Severance, acquisition and other costs			6				(49)
Depreciation and amortization							(1,201)
Finance costs
Interest expense							(344)
Net return on post-employment benefit plans			12				27
Impairment of assets							(34)
Other income			8				121
Income taxes							(270)
Net earnings							788
(1) The chief operating decision maker uses primarily one measure of profit to make decisions and assess performance, being operating revenues less operating costs.
	Notes to consolidated financial statements


BCE InC. 2023 FIrst QuartEr sharEholdEr rEport	44

			Bell	Bell	Intersegment
	For the three month period ended March 31, 2022	Cts	Media	eliminations	BCE
	Operating revenues
	External service revenues		4,436			–	5,177
	Inter-segment service revenues		7			(91)	–
	Operating service revenues		4,443			(91)	5,177
	External/Operating product revenues		673			–	673
	Total external revenues		5,109			–	5,850
	Total inter-segment revenues		7			(91)	–
	Total operating revenues		5,116			(91)	5,850
	Operating costs	5	(2,740)			91	(3,266)
	Adjusted EBITDA (1)		2,376			–	2,584
	Severance, acquisition and other costs				(13)
	Depreciation and amortization					(1,151)
	Finance costs
	Interest expense					(260)
	Net return on post-employment benefit plans				18
	Impairment of assets					(2)
	Other income				93
	Income taxes					(335)
	Net earnings					934
	(1) The chief operating decision maker uses primarily one measure of profit to make decisions and assess performance, being operating revenues less operating costs.
	Revenues by services and products
	For the period ended March 31				2023	2022
	Services (1)
	Wireless				1,723	1,635
	Wireline data				2,001	1,953
	Wireline voice				726	771
	Media				694	741
	Other wireline services						78	77
	Total services				5,222	5,177
	Products (2)
	Wireless				626	563
	Wireline				206	110
	Total products				832	673
	Total operating revenues				6,054	5,850
	(1) Our service revenues are generally recognized over time.(2) Our product revenues are generally recognized at a point in time.
								Business acquisition
	notE 4
	Acquisition of FX InnovationOn May 3, 2023, Bell entered into an agreement to acquire FX Innovation, a Montréal-based provider of cloud-focused managed and professional services and workflow automation solutions for business clients, for cash consideration of $160 million and approximately $7 million of estimated
	additional cash consideration contingent on the achievement of certain performance objectives. The transaction is expected to close in late Q2 2023 or early Q3 2023, subject to closing conditions, including regulatory approvals. The acquisition of FX Innovation aims to position Bell as a tech services leader for our enterprise customers.
Notes to consolidated financial statements

	Acquisition of EBOX and other related companies

	In February 2022, Bell acquired EBOX and other related companies, which provide Internet, telephone and TV services to consumers and businesses in Québec and parts of Ontario, for cash consideration of $153 million ($139 million net of cash acquired). The acquisition of EBOX and other related companies is expected to accelerate growth in Bell’s residential and small business customers. The results of the acquired companies are included in our Bell CTS segment.
45

The following table summarizes the fair value of the consideration paid and the fair value assigned to each major class of assets and liabilities.
		Total
Cash consideration		153
Total cost to be allocated		153
Other non-cash working capital		5
Property, plant and equipment		5
Indefinite-life intangible assets (1)		17
Finite-life intangible and other assets (2)		15
Trade payables and other liabilities		(17)
Contract liabilities		(5)
Deferred tax liabilities		(9)
		11
Cash and cash equivalents		14
Fair value of net assets acquired		25
Goodwill (3)		128
(1) Consists of brand and digital assets.(2) Consists mainly of customer relationships.(3) Goodwill arises principally from expected synergies and future growth and is not deductible for tax purposes. Goodwill was allocated to our Bell CTS group of cash-generating units (CGUs).
The transaction did not have a significant impact on our consolidated operating revenues and net earnings for the three months ended March 31, 2022.
			Operating costs
notE 5
For the period ended March 31				note	2023	2022
Labour costs
Wages, salaries and related taxes and benefits					(1,102)	(1,040)
Post-employment benefit plans service cost (net of capitalized amounts)				12	(58)	(69)
Other labour costs (1)					(259)	(237)
Less:
Capitalized labour					303	260
Total labour costs					(1,116)	(1,086)
Cost of revenues (2)					(1,954)	(1,728)
Other operating costs (3)					(446)	(452)
Total operating costs					(3,516)	(3,266)
(1) Other labour costs include contractor and outsourcing costs.(2) Cost of revenues includes costs of wireless devices and other equipment sold, network and content costs, and payments to other carriers.(3) Other operating costs include marketing, advertising and sales commission costs, bad debt expense, taxes other than income taxes, information technology costs, professional service fees and rent.
			Severance, acquisition and other costs
notE 6
For the period ended March 31					2023	2022
Severance					(29)	(18)
Acquisition and other					(20)	5
Total severance, acquisition and other costs					(49)	(13)
Severance costsSeverance costs consist of charges related to involuntary and voluntary employee terminations.
	Notes to consolidated financial statements
Acquisition and other costsAcquisition and other costs consist of transaction costs, such as legal and financial advisory fees, related to completed or potential acquisitions, employee severance costs related to the purchase of a business, the costs to integrate acquired companies into our operations, costs relating to litigation and


regulatory decisions, when they are significant, and other costs.
BCE InC. 2023 FIrst QuartEr sharEholdEr rEport	46

		Impairment of assets
	notE 7
	Impairment charges for the three months ended March 31, 2023 of $34 million relate mainly to right-of-use assets for certain office spaces we ceased using as part of our real estate optimization strategy as a result of our hybrid work policy.
		Other income
	notE 8
	For the period ended March 31		2023	2022
	Net mark-to-market gains on derivatives used to economically hedge equity settled share-based compensation
	plans		18	75
	Gains (losses) on retirements and disposals of property, plant and equipment and intangible assets		47	(6)
	Equity income (losses) from investments in associates and joint ventures
	Operations		18	(9)
	Gains on investments		–	37
	Early debt redemption costs		–	(18)
	Other		38	14
	Total other income		121	93
	Gains on disposals of property, plant and equipment
	In Q1 2023, we sold land for total proceeds of $54 million and recorded a gain of $53 million as part of our real estate optimization strategy.
	Gains on investmentsOn March 1, 2022, we completed the sale of our wholly-owned subsidiary 6362222 Canada Inc. (Createch), a consulting business that specializes in
	the optimization of business processes and implementation of technological solutions, which was included in our Bell CTS segment. We recorded cash proceeds of $53 million and a gain on sale of $36 million (before tax expense of $2 million).
		Earnings per share
	notE 9
	The following table shows the components used in the calculation of basic and diluted net earnings per common share for earnings attributable to
	common shareholders.
	For the period ended March 31		2023	2022
	Net earnings attributable to common shareholders – basic		725	877
	Dividends declared per common share (in dollars)		0.9675	0.92
	Weighted average number of common shares outstanding (in millions)
	Weighted average number of common shares outstanding – basic		912.1	910.1
	Assumed exercise of stock options (1)		0.2	0.7
	Weighted average number of common shares outstanding – diluted (in millions)		912.3	910.8
	(1) The calculation of the assumed exercise of stock options includes the effect of the average unrecognized future compensation cost of dilutive options. It excludes options for which the exercise price
	is higher than the average market value of a BCE common share. The number of excluded options was 3,250,443 for the first quarter of 2023, compared to nil for the first quarter of 2022.
Notes to consolidated financial statements


47

		Assets held for sale
notE 10
In December 2022, we entered into an agreement to sell our 63% ownership in certain production studios and production studios which were under construction, which are included in our Bell Media segment.
As at March 31, 2023, construction of the production studios was substantially completed. As a result, we have presented the assets and liabilities of the
production studios as held for sale in our statement of financial position at March 31, 2023.
The results of operations of the assets held for sale did not have a significant impact on our revenue or net earnings for the three months ended
March 31, 2023 and 2022.
On May 3, 2023, we completed the sale of the production studios and received net cash proceeds of $210 million.
The following table summarizes the carrying value of the assets and liabilities that are classified as held for sale at March 31, 2023.
			2023
Prepaid expenses			1
Property, plant and equipment			179
Intangible assets			4
Goodwill			76
Total assets held for sale			260
Trade payables and other liabilities			13
Contract liabilities			1
Debt due within one year			46
Long term debt			46
Deferred tax liabilities			3
Total liabilities held for sale			109
Non-controlling interest			23
Net assets held for sale			128
		Debt
notE 11
On February 9, 2023, Bell Canada issued, under its 1997 trust indenture, 4.55% Series M-58 medium-term note (MTN) debentures, with a principal amount of $1,050 million, which mature on February 9, 2030. Additionally, on the same date, Bell Canada issued, under its 1997 trust indenture, 5.15% Series M-59 MTN Debentures, with a principal amount of $450 million, which mature on February 9, 2053.
The Series M-58 and M-59 MTN debentures are fully and unconditionally guaranteed by BCE.
In Q1 2023, Bell Canada reclassified its 2.70% Series M-44 MTN debentures with a total principal amount of $1 billion and its 0.75% US-3 Notes with a principal amount of $600 million in U.S. dollars ($777 million in Canadian dollars), which mature on February 27, 2024 and March 17, 2024, respectively, from long-term debt to debt due within one year.
		Post-employment benefit plans
notE 12
Post-employment benefit plans costWe provide pension and other benefits for most of our employees. These include defined benefit (DB) pension plans, defined contribution (DC) pension plans and other post-employment benefits (OPEBs).
Components of post-employment benefit plans service cost
For the period ended March 31				2023	2022
DB pension				(32)	(48)
DC pension				(38)	(38)
Less:
Capitalized benefit plans cost				12	17
	Notes to consolidated financial statements
Total post-employment benefit plans service cost				(58)	(69)


BCE InC. 2023 FIrst QuartEr sharEholdEr rEport	48

Components of post-employment benefit plans financing income

For the period ended March 31

2023

2022

DB pension

OPEBs

(10)

(8)

Total net return on post-employment benefit plans

Financial assets and liabilities

notE 13

Fair value

The following table provides the fair value details of financial instruments measured at amortized cost in the consolidated statements of financial position.

March 31, 2023

december 31, 2022

Carrying

Fair

Carrying

Fair

Classification

Fair value methodology

value

Debt securities and other debt

Debt due within one year and long-term debt

Quoted market price of debt

26,547

25,103

25,061

23,026

The following table provides the fair value details of financial instruments measured at fair value in the consolidated statements of financial position.

Fair value

Quoted prices in

active markets for

observable

non-observable

Carrying value of

identical assets

market data

market inputs

Classification

asset (liability)

(level 1)

(level 2)

(level 3)

(1)

(2)

March 31, 2023

Publicly-traded and privately-held investments (3)

Other non-current assets

220

–

211

Derivative financial instruments

Other current assets, trade payables and other liabilities, other non-current assets and liabilities

156

–

156

–

Other

Other non-current assets and liabilities

118

–

194

(76)

December 31, 2022

Publicly-traded and privately-held investments (3)

Other non-current assets

215

–

206

Derivative financial instruments

Other current assets, trade payables and other liabilities, other non-current assets and liabilities

–

Maple Leaf Sports & Entertainment Ltd. (MLSE) financial liability (4)

Trade payables and other liabilities

(149)

–

(149)

Other

Other non-current assets and liabilities

108

–

184

(76)

(1) Observable market data such as equity prices, interest rates, swap rate curves and foreign currency exchange rates. (2) Non-observable market inputs such as discounted cash flows and earnings multiples. A reasonable change in our assumptions would not result in a significant increase (decrease) to our level 3

financial instruments.

(3) Unrealized gains and losses are recorded in Other comprehensive (loss) income in the statements of comprehensive income and are reclassified from Accumulated other comprehensive income

(loss) to Deficit in the statements of financial position when realized.

(4) Represented BCE’s obligation to repurchase the BCE Master Trust Fund’s (Master Trust Fund) 9% interest in MLSE at a price not less than an agreed minimum price. In January 2023, BCE repurchased

the interest held by the Master Trust Fund, a trust fund that holds pension fund investments serving the pension obligations of the BCE group pension plan participants, in MLSE for a cash consideration

of $149 million.

Market risk

Currency exposuresWe use forward contracts, options and cross currency interest rate swaps to manage foreign currency risk related to anticipated purchases and certain foreign currency debt.

A 10% depreciation (appreciation) in the value of the Canadian dollar relative to the U.S. dollar would result in a loss of $7 million (loss of $36 million)

recognized in net earnings at March 31, 2023 and a gain of $128 mil ion (loss of $116 mil ion) recognized in Other comprehensive (loss) income at March 31, 2023, with all other variables held constant.

Notes to consolidated financial statements

A 10% depreciation (appreciation) in the value of the Canadian dollar relative to the Philippine peso would result in a gain (loss) of $3 million recognized

in Other comprehensive (loss) income at March 31, 2023, with all other variables held constant.

The following table provides further details on our outstanding foreign currency forward contracts and options as at March 31, 2023.
		Buy	amount	sell	amount
type of hedgecurrencyto receivecurrencyto payMaturityhedged item
Cash flow (1)		USD	1,543	CAD	2,110	2023	Loans
Cash flowUSD	564	CAD	768	2023		Commercial paper
Cash flowUSD	610	CAD	758	2023		Anticipated purchases
Cash flowPHP	1,829	CAD	42	2023		Anticipated purchases
Cash flowUSD	824	CAD	1,046	2024		Anticipated purchases
EconomicUSD	117	CAD	147	2023		Anticipated purchases
Economic – call options		CAD	168	USD	117	2023		Anticipated purchases
Economic – put options		USD	117	CAD	147	2023		Anticipated purchases
Economic – call options		CAD	225	USD	156	2024		Anticipated purchases
Economic – put options		USD	336	CAD	432	2024		Anticipated purchases
Economic – options (2)		USD	120	CAD	153	2024		Anticipated purchases
Economic – call options		USD	540	CAD	694	2025		Anticipated purchases
Economic – put options		USD	360	CAD	461	2025		Anticipated purchases
(1) Forward contracts to hedge loans secured by receivables under our securitization program. (2) Foreign currency options with a leverage provision and a profit cap limitation
Interest rate exposuresIn Q1 2023, we sold interest rate swaptions with a notional amount of $250 million maturing in Q2 2023, for $2 million, to hedge economically the fair value of our Series M-53 MTN debentures. In Q1 2023, we also sold interest rate swaptions with a notional amount of $425 million maturing in Q2 2023,
for $2 million, to hedge economically the floating interest rate exposure relating to our Series M-53 MTN debentures. The fair value of these interest rate
swaptions at March 31, 2023 is a liability of $1 million recognized in Trade payables and other liabilities in the statements of financial position. A gain of $3 million for the three months ended March 31, 2023, relating to these interest rate swaptions is recognized in Other income in the income statements.
In 2022, we entered into interest rate swaps with a notional amount of $500 million maturing in 2027 to hedge the fair value of our Series M-53 MTN debentures. The fair value of these interest rate swaps at March 31, 2023 is a liability of $6 million recognized in Trade payables and other liabilities and Other non-current liabilities in the statements of financial position.
In 2022, we entered into cross currency basis rate swaps maturing in 2023 with a notional amount of $638 million to hedge economically the basis rate exposure on future debt issuances. The fair value of these cross currency basis rate swaps at March 31, 2023 and December 31, 2022 was a liability of
$20 million and $33 million, respectively, recognized in Trade payables and other liabilities in the statements of financial position. A gain of $13 million
for the three months ended March 31, 2023 relating to these basis rate swaps is recognized in Other income in the income statements.
We use leveraged interest rate options to hedge economically the dividend rate resets on $582 million of our preferred shares which had varying reset dates in 2021 for the periods ending in 2026. The fair value of these leveraged interest rate options at March 31, 2023 and December 31, 2022 was a liability of $1 million recognized in Trade payables and other liabilities and Other non-current liabilities in the statements of financial position.
A 1% increase (decrease) in interest rates would result in a loss of $34 million (gain of $19 million) recognized in net earnings at March 31, 2023, with all
other variables held constant.
A 0.1% increase (decrease) in cross currency basis swap rates would result in a gain of $9 million (loss of $10 million) recognized in net earnings at
March 31, 2023, with all other variables held constant.
Equity price exposuresWe use equity forward contracts on BCE’s common shares to hedge economically the cash flow exposure related to the settlement of equity settled share-based compensation plans. The fair value of our equity forward contracts at March 31, 2023 and December 31, 2022 was a net liability of $32 million and a net liability of $48 million, respectively, recognized in Other current assets, Trade payables and other liabilities, Other non-current assets and Other non-current liabilities in the statements of financial position. A gain of $18 million for the three months ended March 31, 2023 relating to these equity forward contracts is recognized in Other income in the income statements.
A 5% increase (decrease) in the market price of BCE’s common shares would result in a gain (loss) of $33 mil ion recognized in net earnings at March 31, 2023, with all other variables held constant.
	Notes to consolidated financial statements


BCE InC. 2023 FIrst QuartEr sharEholdEr rEport	50

		Share capital
	notE 14
	Conversion and dividend rate reset of BCE First Preferred Shares On March 1, 2023, 3,635,351 of BCE’s fixed rate Cumulative Redeemable First Preferred Shares, Series AC (Series AC Preferred Shares) were converted,
	on a one-for-one basis, into floating-rate Cumulative Redeemable First Preferred Shares, Series AD (Series AD Preferred Shares). In addition, on March 1, 2023, 351,634 of BCE’s Series AD Preferred Shares were converted, on a one-for-one basis, into Series AC Preferred Shares.
	The annual fixed dividend rate on BCE’s Series AC Preferred Shares was reset for the next five years, effective March 1, 2023, at 5.08%. The Series AD
	Preferred Shares will continue to pay a monthly cash dividend.
	Normal course issuers bid for BCE First Preferred Shares
	In Q1 2023, BCE repurchased and canceled 1,712,000 First Preferred Shares with a stated capital of $43 million for a total cost of $31 million. The remaining
	$12 million was recorded to contributed surplus.
	Redemption of BCE’s Series AO First Preferred Shares
	In Q1 2022, BCE redeemed its 4,600,000 issued and outstanding Cumulative Redeemable First Preferred Shares, Series AO (Series AO First Preferred
	Shares) with a stated capital of $118 million for a total cost of $115 million. The remaining $3 million was recorded to contributed surplus.
		Share-based payments
	notE 15
	The following share-based payment amounts are included in the income statements as operating costs.
	For the period ended March 31		2023	2022
	Employee savings plan		(8)	(8)
	Restricted share units (RSUs) and performance share units (PSUs)		(34)	(25)
	Other (1)		(1)	(1)
	Total share-based payments		(43)	(34)
	(1) Includes deferred share units and stock options.
	The following tables summarize the change in outstanding RSUs/PSUs and stock options for the period ended March 31, 2023.
	RSUs/PSUs
				number of
				rsus/psus
	Outstanding, January 1, 2023			3,124,187
	Granted			1,054,153
	Dividends credited			46,003
	Settled			(904,862)
	Forfeited			(7,534)
	Outstanding, March 31, 2023			3,311,947
	Stock options
						Weighted average
					number of options	exercise price ($)
	Outstanding, January 1, 2023		7,802,108	61
	Exercised (1)		(176,243)	58
	Forfeited or expired		(11,408)	63
	Outstanding and exercisable, March 31, 2023		7,614,457	61
	(1) The weighted average market share price for options exercised during the three months ended March 31, 2023 was $61.
Notes to consolidated financial statements
		Commitments
	notE 16
	Subsequent to quarter end, our commitments for property, plant and equipment and intangible assets increased by $806 million, which are payable $13 million in 2023, $54 million in 2024, $84 million in 2025, $87 million in 2026, $67 million in 2027 and $501 million thereafter.
51