No Interest Credit Plan

NON-PUBLIC PROPERTY BOARD OF DIRECTORS

Document # 28b/03

CONSEIL D’ADMINISTRATION DES BIENS NON PUBLICS

OUTLINE

o CANEX Credit Plan overviewo Usage statisticso Financial impact on CANEXo Estimated cost to CFCFo Overall financial impacto $$$ Savings for plan users

CREDIT PLAN OVERVIEW

12 months no interest credit or admin fee on purchases made at CANEX up to $5,000.

No limit to number of plans a member can hold. (minimum $199 - maximum $5,000).

24 months plan available - 5% admin fee applicable.

Admin fee fully reimbursed if 24 month plan paid in full within the first 12 months.

IMPACT OF IMPROVEMENTS TO THE PLAN ( 2 YEARS - $5,000)

Nov 00 – Oct 01

Credit sales $8.7M Average AR $4.4M Plans issued 11,079 Active members 5,797

Nov 01 – Oct 02

Credit sales $10.9M Average AR $ 6.0M Plans issued 12,450 Active members 8,865

CREDIT PLAN CUSTOMERS

Mostly young couples or single military personnel who live on Bases/Wings.

Many customers with little or no credit history. First time buyers of furniture, large appliances

or electronics. Monthly payments made via CF or NPF pay

allotments or a bank pre-authorized debit.

CFCF CONTRIBUTION

The Plan is fully financed by CFCF.

On average 8,900 members avail themselves of this benefit every year.

On average, Credit Plan accounts receivable amount to $6M.

SUMMARY OF REVENUE AND EXPENSES FOR CANEX

o Revenue to CANEX from Credit Plan. $486,000o Volume Rebates & Advertising revenue. 158,600

Total revenue $644,600o Bad debts

(4/10 of 1%, Canadian average 2.3%) (43,600)o Royalties paid to Bases/Wings. (163,500)o Net income to CANEX $437,500

ESTIMATED COST TO CFCF

Loss investment revenue

(based on average rate of return of 8%) $480,000 Bank charges for Credit Plan 15,000

Total direct expenses 495,000 Revenue from 5% admin fee (150,000)

Total cost to CFCF $345,000

TOTAL FINANCIAL IMPACT

Additional revenue for CANEX $437,500

Total cost to CFCF (345,000)

Total system impact 92,500

SAVINGS FOR CUSTOMERS

$981,000/year(Based on a 9% interest rate on consumer loans)