Operational Results by Location

OUTLINE o CFPSA/CANEX Mission Statements o CANEX Overall results – 5 yrs o Canadian Operations o NATEX Operations o Comparison with Canadian Retailers o New Business Opportunities o Ongoing Challenges o Conclusions

CFPSA MISSION STATEMENT “Enhance the quality of life of the military community and contribute to the operational readiness and effectiveness of the Canadian Forces.”

CANEX MISSION STATEMENT “The mission of CANEX is to ensure the availability of competitively priced products and services which satisfy the needs of its customers, while generating revenue for Bases, Wings and Units.”

FINANCIAL HEALTH OF CANEX Compared to other Canadian retailers, CANEX continues to enjoy very good operational results. During the last five years: (CANEX/NATEX) – Sales increased by 19.5%. – Income Before Royalties increased by $100K. – Royalties paid to Bases/Wings and Geilenkirchen went from $3.7M to $4.9M.

FINANCIAL HEALTH OF CANEX cont… CANEX developed ten financial, store operations and HR benchmarks to monitor its performance. Last year CANEX was equal to, or better than, retail industry benchmarks in the following areas: – Payroll in % of sales. – Operating profit margin. – Inventory shortage. – Sales per sq foot. – Employee turnover. – Part-time to Full-time ratio.

FINANCIAL HEALTH OF CANEX cont… CANEX was equal to or below industry benchmarks in the following areas: – Gross profit margin. – Inventory turns. – Transaction per labour hour. – Average $ value per transaction.

5-Years Consolidated Results Sales, IBR and Royalties

CANEX Canada Sales, IBR and Royalties

NATEX/AMSTO Sales, IBR and Royalties

Consolidated CANEX/NATEX Sales, IBR and Royalties

CANEX Canada - Inventory Turns

NATEX - Inventory Turns

5-Years Results by Region

Western Region

Prairie Region

Southern Ontario Region

Northern Ontario Region

Québec Region

Atlantic Region

NEW BUSINESS OPPORTUNITIES o Enhance the CANEX WYN on-line service. o Develop in-store catalogue shopping. o Develop partnerships with local retailers. o Aggressively market the NPP transfer program. o Develop and market our new printing capability to external users.

ONGOING EXTERNAL CHALLENGES o Ever increasing local competition. o Significant increases in operating costs such as service fees, utilities, payroll, etc. o Declining on-site population residing in PMQs/SQs. o Increased operational tempo. o Declining level of foreign military training in Canada. (Suffield and Goose Bay)

CONCLUSIONS In spite of the many challenges it faces daily, CANEX continues to compare very favourably against most well established Canadian retail businesses. CANEX continues to play a significant role in assisting CFPSA with its mandate to enhance the quality of life of the military community. During the last five years alone, CANEX contributed $21.2M to Morale and Welfare activities. The positive financial and service results achieved by CANEX could not have been possible without the dedication, professionalism and hard work of its store and HQ staff.