2017 ANNUAL REPORT Our $74M profit before tax in 2017* was driven by our success in e-commerce delivery. Parcels revenue growth of $393M outpaced the $124M decline in Transaction Mail revenue. * Post segment KEY FACTORS

1 PARCELS REVENUE

In 2017, for the first time, we surpassed $2 billion in Parcels revenue. This achievement is rooted in our 2011 decision to focus on becoming Canada’s leader in e-commerce delivery – and in how well % we have executed that strategy. In 2017, 2 3.1 parcels generated 33 per cent of the REVENUE GROWTH Canada Post segment’s revenue.

2 NEIGHBOURHOOD MAILTM

Despite its challenges competing with digital media, our Direct Marketing business generated more than $1.1 billion in 2017. Neighbourhood Mail, which businesses use to reach consumers with offers, grew % during the year. Volumes increased by 6.9 7.5 per cent and revenue by 6.9 per cent, REVENUE GROWTH compared to the previous year.

3 DECLINE OF LETTERMAILTM

Due to digital technology, mail volumes REVENUE DECLINE and revenue decline every year. Volumes of Transaction Mail – letters, bills and $ M statements – fell by 5.5 per cent in 124 2017 and revenue fell by 3.7 per cent. Mail generated 45 per cent of the Canada Post segment’s 2017 revenue. By the numbers

Canada Post Group of Companies

(in millions of dollars) 2017 2016 % Change Operations

Revenue from operations 8,226 7,880 4.8 % Profit from operations 226 149 51.8 % Operating margin (%) 2.7 % 1.9 %

Investing and financing income (expense)1 (27) (35) 23.3 % Profit before tax 199 114 74.9 % Net profit 144 81 77.8 %

Cash provided by operating activities 748 597 25.3 % Cash used in capital expenditures (299) (253) (18.1) %

Financial position

Cash and cash equivalents 1,503 849 77.0 % Total assets 8,481 7,792 8.8 % Loans and borrowings 1,038 1,059 (2.0) % Equity of Canada (386) (331) (16.7) %

Volume

Total volume – Consolidated (in millions) 8,383 8,371 0.5 % Domestic Parcels growth (Canada Post segment) 22.3 % 9.0 % Parcels growth (Canada Post segment) 24.5 % 7.7 % Direct Marketing (Canada Post segment) 4.0 % (5.3) % Domestic Lettermail erosion (Canada Post segment) (5.3) % (7.6) % Transaction Mail erosion (Canada Post segment) (5.5) % (7.8) % Transaction Mail volume decline per address (6.5) % (8.8) %

Canada Post Corporation Registered Pension Plan

Pension assets – Fair market value 25,028 23,150 8.1 % Going-concern surplus (deficit) – To be funded2 2,933 1,788 64.0 % Solvency deficit – To be funded2 (6,417) (6,760) 5.1 % Employer contributions – Current 259 241 7.7 % Employer contributions – Special 34 35 (2.9) %

1. Includes gain on sale of capital assets and assets held for sale. 2. Number for 2017 is an estimate. Actuarial valuations for the Plan will be filed by June 30, 2018. For more details, refer to Section 6.5 of the Management’s Discussion and Analysis on page 57. Highlights Canada Post Group of Companies

Revenue fromfrom Profit (loss)(loss) operations from operationsoperations* (in billions ofof dollars)dollars) (in(in billionsmillions of of dollars) dollars)

8.2 299 8.0 8.0 7.9 7.6 226 169 149

-193 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017

Net profit (loss)*(loss) Labour costs (in millionsbillions of of dollars) dollars) (percentage(percentage ofof revenuerevenue from operations)

198 50.9 48.0 47.9 49.4 49.0 144

99 81

-29

2013 2014 2015 2016 2017 2013 2014 2015 2016 2017

Employee benefitbenefit costs*costs Volume (percentage of revenue from operations) (in(in billionsbillions ofof pieces)pieces)

18.9 18.1 18.0 9.4 17.7 9.1 8.9 15.6 8.4 8.4

2013 2014 2015 2016 2017 2013 2014 2015 2016 2017

References in the Annual Report to Canada Post and the Canada Post segment do not include subsidiaries. The Canada Post Group of Companies and the Group of Companies include the Canada Post segment and its subsidiaries, which are Purolator Holdings Ltd., SCI Group Inc. and Innovapost Inc. In the year of Canada 150, we told the country’s story. In this report, we tell ours. President’s message

A common thread weaves through our 255-year history, which began with regular weekly delivery in 1763. That thread is why the post office was one of the first federal departments created in 1867. It was there in 1884, when Timothy Eaton launched his mail-order catalogue. In the 20th century, it endured as mail volumes grew year after year.

This theme – serving the Evolution has brought great As my own service changing needs of results. Since we began our Canadians – remains the e-commerce journey in 2011, at Canada Post foundation of Canada Post. Canada Post has emerged as draws to a close, The postal system has endured Canada’s No. 1 parcel delivery through centuries of change company with annual I want to thank by evolving and transforming revenue almost doubling to each and every to serve Canadians. In recent more than $2 billion. We years, we have responded once have emerged as one of the employee for again to those changing needs most respected brands in the their hard work, as Canadians look to us to country, as recognized by deliver more of their shopping Cohn & Wolfe’s first-ever list dedication and and less of their mail. of Canada’s most authentic enormous pride.

Canada Post President and CEO Deepak Chopra (right) meets employee Jeff Hall during Canada 150 celebrations.

2 Canada Post Corporation 2017 Annual Report Deepak Chopra and other senior leaders visited employees at the Iqaluit Post Office when he was there to help unveil the Nunavut stamp in May.

brands. Despite LettermailTM volumes dropping by 2 billion pieces since their peak, Canada Post posted a profit for a fourth consecutive year. By transforming itself, Canada Post has enabled Canada’s retailers to reinvent their businesses as they face accelerating disruption to their disrupted in the digital era, remain a vital institution for old brick-and-mortar business marketing mail remains years to come. As my own model. It has opened up a strong contributor to our service at Canada Post draws national and global markets business. We have worked to a close, I want to thank for small Canadian businesses, closely with businesses and each and every employee – enabling micro-multinationals marketers to deliver a timely thousands of whom I that are succeeding on the and compelling offer into met – for their hard work, world stage. It has helped the hands of existing and dedication and enormous improve the standard of living potential customers. Our pride. It was my privilege for rural and northern efforts have paid off as we to serve the people of this communities by affordably see national brands, such as great country with you. delivering goods that were Canadian Tire, embracing otherwise too expensive or the catalogue once again. unavailable locally. Canada Post touches the E-commerce was not alone in lives of every Canadian. driving our profit. While other By providing service that is paper-based industries – focused on the needs of our newspapers, magazines and customers, we have not only Deepak Chopra books – have been severely endured, but are equipped to President and Chief Executive Officer

Canada Post Corporation 2017 Annual Report 3 Highlights of the holiday season

The 2017 holiday season stands out because it was when Canadians and retailers were counting on us most. We met their expectations by delivering a record 62 million parcels between November 5, 2017, and January 14, 2018. We also improved service performance by several measures. 1.83M On December 4, 2017, we achieved an all-time record for parcel deliveries in a single day. Four other days during the season also surpassed our previous record of 1.52M, set in 2016.

MILLION MILLION PARCEL PARCEL 3.6M 67 DAYS 41 DAYS PARCELS DELIVERED ON WEEKENDS IN ALL OF 2017 IN THE HOLIDAY Our employees’ dedication kept SEASON e-commerce orders flowing quickly through our network and We had our first one-million- 40 of these one-million-parcel days to Canadians. In holiday 2016, parcel day during Christmas were consecutive. In holiday 2016, we delivered 2.4M on weekends. 2012. Now they happen we had 26 one-million-parcel days, throughout the year. 20 of which were consecutive.

4 Canada Post Corporation 2017 Annual Report Highlights of 2017 7.5 % Growth in Neighbourhood MailTM volumes in 2017 16.2M While most Canadians live in urban centres ADDRESSES and in the south, we find ways to reach every address, delivering parcels and mail in the SERVED Northwest Territories by helicopter drop, and by floatplane, hovercraft and snowmobile in other remote spots. % + A significant challenge remains: 179 + 192 + 24.5 137 The number of addresses + 182 + GROWTH IN to which we deliver 157 + grows steadily 157 PARCEL VOLUMES + 153 Increase in Most of that was in Domestic each year… + addresses 154 Parcels – a sign of our critical + since 2006: role supporting Canadian 178 + e-commerce. 203 1.9M +

200 (in thousands) 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 -2.6% -2.9%

-6.7%* Total decline -4.9% per address -4.6% since 2006: %* -7.0% 47.7 -5.9% … while the -6.1% number of pieces of (excluding Outbound Letter-post) -6.8%

*Due to a methodology change implemented in 2010, Transaction Mail we deliver volumes for 2009 were restated for comparability. -8.8% Had 2008 volumes been restated, the decline per address to each address decreases sharply. for 2009 would have been 5.1% and the cumulative -6.5% decrease since 2006 would have been 46.8%.

Canada Post Corporation 2017 Annual Report 5 Direct Marketing

Canadians love a bargain, to shop or eat out. They Canadians want and need coupons during the back-to-school like deals and season, for example, and during and after Christmas. In both seasons, they’re stretching their dollars. discounts, and Marketing mail helps by making them aware of sales businesses and discounts and of new stores or eateries in a way know they bring that is tangible and personal. For many small, owner- customers in the operated or family-run businesses, mailing a flyer is not only the best way to reach nearby consumers, it’s also door. That’s why the only advertising they can afford. Larger businesses marketing mail also appreciate the personal touch that marketing mail works for senders brings to their campaigns, and they often combine it with digital advertising. and receivers. Marketing mail is part of the advertising mix in this digital era because it works – for consumers and for businesses.

6 Canada Post Corporation 2017 Annual Report A winning swing with Neighbourhood Mail

Black Friday is the most million flyers to homes lucrative day of the in the rest of the country. year for many retailers. Which would produce With so much riding better results? “Budgets on it, Golf Town Vice- are constrained and every President of Marketing dollar we spend must and E-commerce, Fred drive ROI,” says LeCoq. LeCoq, tested the The answer was clear: company’s shoppers. Same-store sales Golf Town sent more than increased more than 400,000 Neighbourhood 65 per cent in Quebec Mail pieces to residents of versus 20 per cent for Quebec and nearly three the rest of Canada.

Young entrepreneurs rely on marketing mail

Tony Sanderson, then 21, and Chris Louis, 20, were both working at pizzerias in Victoria, B.C., when Villages Pizza came up for sale. “I called Chris and said ‘hey, wanna buy “Our new franchisee a pizza shop?’” That was called recently because 2011. Today they own he was getting all kinds seven pizza shops. of sales and inquiries,” In 2017, they delivered he says. Five thousand 28,000 menus. “Putting menus had been sent advertising in people’s out the previous week. hands just works,” “DM definitely creates says Sanderson. a buzz.”

Canada Post Corporation 2017 Annual Report 7 Parcels

Serving Canadians means anticipating their evolving needs – then adapting to meet them. Canada Post did. After studying global e-commerce trends, we realized that Canadians would need us to deliver hundreds of millions of online orders in this decade alone. So we pivoted our business. Now we deliver more parcels to Canadians than anyone. With mail-order We meet their needs for reliable, prompt and secure catalogues, parcels service. We offer consumers the convenient delivery, were our past. pickup and returns options they prefer. Start-ups, With Canada’s small- and mid-sized entrepreneurs and established national brands all rely on us to enable their success – online shoppers, in retail’s crucial holiday season and all year. we’ve made them With mail-order catalogues, parcels were part of our our future. past. With Canada’s consumers and retailers, we’ve made them our future.

8 Canada Post Corporation 2017 Annual Report Sport Chek and Atmosphere expand their omni-channel presence

Canada’s largest shipping and increased sporting goods retailer, the online SKU count FGL Sports has leading three-fold. Year-over-year brands Sport Chek and online order volumes shot Atmosphere under up roughly 300 per cent. its banner. “Not only can our Always looking to better customers find more serve customers, Sport online,” says Mike Chek and Atmosphere Moussa, Associate Vice- worked with Canada Post President of E-commerce last spring to roll out our for FGL Sports, “but store Ship From Store service associates using tablets to nearly 170 stores. can ensure no store visit That enabled speedier is wasted.”

A niche product and superb operations spell growth for Tom&Sawyer

Blazing an entirely excellence, including new market segment, strategic scheduling of Tom&Sawyer offers on-demand pickups, fresh, healthy pet meals helps them reduce for dogs and cats – and shipping times, a fresh- pet parents can’t get food essential. enough. The start-up has “We’ve really appreciated experienced over 600 our partnership with per cent sales growth Canada Post,” says since launching in 2015, co-founder Kristin fuelled largely by word Matthews. “They know of mouth. the demand for fresh-food But it’s not just their high- delivery is growing – it’s quality products that are become a real priority for Co-founders Kristin Matthews and Peter Zakarow at the Tom&Sawyer winning fans. Operational their team.” café and kitchen in Toronto.

Canada Post Corporation 2017 Annual Report 9 Our employees Proud to serve their fellow Canadians

Employees across the country, including this group at the Léo Blanchette mail processing plant in Montréal, celebrated Canada 150 together – and some even sang O Canada.

Canada Post’s greatest In our biggest test, In our biggest test, strength is its employees, the holiday season, the holiday season, as the 2017 Christmas we were at our best. season shows. Record Our dedicated we were at our best. parcel volumes asked employees rose to all a lot of employees in these challenges – and our processing plants, customers noticed. delivery depots and Consumers tweeted transportation teams, their thanks and among others. Day after commercial customers day, our facilities, vehicles expressed gratitude for and post offices were our employees’ hard packed with parcels. work on their behalf. Winter came early, Best Buy Canada, for bringing storms out East example, wrote about Delivery agent Lorraine Miner was and in British Columbia, our “outstanding” one of thousands of Canada Post and a deep freeze that service and said it employees across the country who delivered the holidays with a smile. descended on Ontario “once again delighted” and the Prairies. Millions their customers. Our of Canadian families employees’ pride in their were counting on us work was met with well- to get their gifts to deserved appreciation. them in time.

10 Canada Post Corporation 2017 Annual Report Service performance by the numbers

Despite significant parcel Parcels on-time delivery performance exceeded volume growth, service the target for 2017, a year in which parcel performance exceeded volumes increased by 24.5 per cent. targets for this line of 90.2 per cent of those who replied to our Retail business, as it did in Customer Receipt Survey in 2017 were satisfied TM Smartmail Marketing with our retail service, a rating that exceeds the products and Lettermail. retail industry standard by about 10 per cent. It was a remarkable We exceeded our combined target for on-time achievement, made delivery performance of Personalized Mail™ possible by the incredible and Neighbourhood Mail™ services. efforts of employees throughout our network. Lettermail on-time delivery performance was excellent. At 95.4 per cent, it was above target.

Safety first

Canada Post continues to place a high priority on health and safety. In 2017, we launched a rigorous driver safety program, a skills evaluation process for operators of motorized material handling equipment and updated our policies around electrical safety, hot work, safety eyewear and working at heights. Almost half of the injuries in 2017 were from slips, trips and falls, and more than a third involved manual material handling. For the year, total injury frequency (all injuries that require professional medical treatment) improved by 2 per cent over 2016. We will increase our focus on safety in 2018 through awareness, coaching and training, as well as policy and

Slips, trips and falls remain the biggest program improvements. risk of injury for delivery agents like Marlon Hinds, shown walking a route in Ottawa, Ontario, in early March.

Canada Post Corporation 2017 Annual Report 11 Canada 150 was a celebration of the stories that unite our country, define us as Canadians and make us proud.

Canada welcomed the world In Montréal, world-renowned Canadian architect Moshe Safdie unveiled the Expo 67 stamp at Habitat 67, the revolutionary housing complex he designed for Expo. Its image graces the stamp. More than 50 million people from around the world attended Expo 67.

Canadian architect Moshe Safdie at the Expo 67 stamp unveiling.

Dean Brody performs at the outdoor unveiling of the Trans-Canada Highway stamp. Open road, endless possibilities Country music star Dean Brody was in Regina, beside the iconic Trans-Canada Highway, to reveal a stamp celebrating the 8,000-kilometre ribbon of adventures, dreams and commerce. Construction on the Trans-Canada Highway was completed in 1971.

12 Canada Post Corporation 2017 Annual Report Our iconic stamp program Canada’s centennial Prominent Canadians makes us Canada’s in 1967. helped to tell the storyteller – so we stories and to unveil the embraced Canada 150 Our Canada 150 stamps 10 stamps in suitably wholeheartedly. We showcased stories of memorable settings. It all celebrated 10 incredible courage and compassion, made for an extraordinary moments and innovation and dedication, celebration worthy of our achievements since diversity and unity. country’s sesquicentennial.

Series of the century Hockey legends who helped Team Canada defeat the mighty Soviets in the 1972 Summit Series unveiled a stamp at CFB Winnipeg, honouring that clash of titans. The epic eight- game series, which included Game 3 in Winnipeg, galvanized Canada and forever changed hockey.

Phil Esposito, member of Team Canada 1972.

Terry Fox receives the Order of Canada, September 1980. A hero’s legacy Terry Fox’s incredible Marathon of Hope in 1980 captivated a nation and still inspires us today. Judith Fox, Terry’s sister, unveiled a stamp in St. John’s, N.L. – where the Marathon of Hope began – honouring his run more than halfway across Canada.

Canada Post Corporation 2017 Annual Report 13 Canadian Space Agency astronaut Jeremy Hansen at Glen Ames Senior Public School in Toronto.

A nation’s innovation Canadian Space Agency astronaut Jeremy Hansen visited a Toronto school to unveil a stamp saluting Canada’s achievements in space, science, technology and innovation. The stamp features Canada’s most famous robotics accomplishment – the Canadarm – which made its space debut in 1981.

Canada Post President and CEO Deepak Chopra and the Rt. Hon. Beverley McLachlin, then Chief Justice of Canada, unveiling the Constitution stamp on Parliament Hill.

The Constitution comes home The Right Honourable Beverley McLachlin, then Chief Justice of Canada, unveiled a stamp on Parliament Hill commemorating the Proclamation of the Constitution Act, 1982, which patriated the Constitution and introduced the Canadian Charter of Rights and Freedoms.

Rosie Katsak and her daughter are two of the 1,600 residents of Mittimatalik (Pond Inlet), an Inuit community on northern Baffin Island.

A new territory In Iqaluit, Nunavut Premier Peter Taptuna, Commissioner of Nunavut Nellie Kusugak, and George Qulaut, Speaker of the Legislative Assembly, unveiled a stamp commemorating Nunavut becoming a territory in 1999. The stamp also celebrates Nunavut’s people and heritage.

14 Canada Post Corporation 2017 Annual Report Jill Andrew (left) and Aisha Fairclough, co-founders of Body Confidence Canada.

Marriage equality for all The 519 in Toronto hosted an emotional stamp unveiling honouring the struggle of same-sex couples to have the legal right to marry. The stamp and its rainbow symbol commemorate the 2005 passage of the Civil Marriage Act, which made marriage equality the law in Canada.

Para alpine skier Lauren Woolstencroft, the first Canadian Paralympian to win five gold medals in a single Winter Games, , 2010.

Redefining ability and possibility Canadian Paralympic legends Lauren Woolstencroft and Arnold Boldt revealed a stamp in Vancouver celebrating Canada’s achievements in the Paralympic movement and our country’s role in hosting two Paralympic Games – Toronto in 1976 and Vancouver in 2010.

Canadian Olympic medallists Joannie Rochette and Greg Joy unveiled the stamp in Vancouver.

Glory of the Games In Vancouver, Olympic medallists Greg Joy (high jump) and Joannie Rochette (figure skating) unveiled a stamp marking Canada’s success at hosting the Olympic Games: the in Montréal, 1988 Winter Olympics in Calgary and 2010 Winter Olympics in Vancouver.

Canada Post Corporation 2017 Annual Report 15 Oh Canada Sharing Canada’s stories

In 2017, our iconic stamp program enjoyed a number of historic firsts: We issued our first joint stamp with India Post and we adhered a miniature fabric crest to a stamp to mark 100 years of the Toronto Maple Leafs®. History and multiculturalism also figured prominently: Canada Post President and We marked 100 years since the Halifax Explosion and CEO Deepak Chopra and Walter Gretzky unveil the Canadian Hockey the Battle of Vimy Ridge. Canadian Hockey Legends – the Legends stamp of Walter’s son final instalment of our five-year NHL® collection – marked Wayne, The Great One, at the the League’s 100th anniversary and 125 years of the Hockey Hall of Fame in September. Stanley Cup®. And separate Diwali, Eid, Hanukkah and Christmas issues captured Canada’s religious diversity.

Deepak Chopra and His Excellency, Vikas Swarup, High Commissioner of Canada Post’s Eid stamp India to Canada, unveil the first joint stamp between Canada Post and recognizes Eid al-Fitr and India Post at Toronto City Hall. The Diwali stamp celebrates the Festival of Eid al-Adha, two of the most Lights, an annual observance for many Hindus, Sikhs, Buddhists and Jains. important festivals celebrated by Muslims.

A joint stamp issue with France’s La Poste featured two stamps honouring the bond that the Battle of Vimy Ridge on French soil forged between our two nations. The Canadian stamp, left, was designed by Susan Scott of Montréal.

16 Canada Post Corporation 2017 Annual Report Helping kids and communities

In 2017, the Canada Post organizations across the awarded more than Community Foundation country. It also raised $1.2 $6 million to more than for Children contributed million for grants in 2018. 550 projects, including about $1.1 million in Over the past five years, crisis lines, anti-bullying grants to 103 community the Foundation has initiatives, and breakfast and literacy programs. Funds are raised through an in-store campaign, sales of fundraising stamps and employee dime-a‑day payroll deductions.

Designed by Andrew Lewis, our 2017 Foundation fundraising stamps feature many smiling cats. $1 from the purchase of every 10-stamp booklet went to the Foundation.

Helping Santa since 1982

Thirty-six years of history. Six million volunteer hours. More than 36 million responses. That’s the legacy of the Canada Post Santa Letter- writing Program, which has created many magical memories for Canadians retirees and other One parent wrote to say: of all ages. volunteers were handling “I hope you know you In 1982, the program’s about one million letters have made many, many inaugural year, we helped a year. In 2017, about children very happy.” Santa answer 22,000 9,000 volunteers helped letters. Within 10 years, Santa with more than volunteer employees, 1.6 million letters.

Canada Post Corporation 2017 Annual Report 17 Chair’s message

The Board of Directors ensures that Canada Post will keep evolving to provide the services that Canadians expect, while remaining financially self-sustaining.

This year also marked the start place a new focus on working of a transition of leadership at collaboratively with employees Canada Post. The announced across the Corporation – to departure of Deepak Chopra, find innovative solutions after seven dedicated years of for the changing work service, sparked the search for environment, and together, a successor. The new CEO build a vision for the future. will be building on strong On behalf of the Board, I 2017 was another year of leadership and vision and will thank Canadians for the trust significant transition for be tasked with continuing the and confidence they place in Canada Post. The continued bold evolution of a vibrant Canada Post. That support decline of Lettermail was institution that every Canadian comes from many places, offset financially by the relies on. With many Board from personal relationships ongoing success of the members’ terms ending, with the local mail carrier, to strategy to focus on Canada’s Canadians from coast to coast the high-quality service they growing e-commerce market. to coast were also offered receive at outlets, and to the the opportunity to apply in The year set several new deep respect they feel for an open process to serve in records, such as the 67 days an institution older than with over a million parcels that role. Canada itself. delivered. Customers once As these transitions are It is a distinct honour and a again made Canada Post finalized in early 2018, great responsibility to serve on the No.1 parcel company in Canada Post will follow new the Board. I do so with pride Canada. These impressive direction from its shareholder, for the past, and optimism results, with continued the Government of Canada. for the future. financial profitability, proved It has instructed Canada Post the success of the strategies to set a new path forward to introduced by the CEO and meet the changing needs of management, which were Canadians, while continuing realized by the thousands of to ensure the access and high dedicated employees who level of service that individuals Jessica L. McDonald serve Canadians every day. and businesses expect. We will Chair of the Board of Directors

18 Canada Post Corporation 2017 Annual Report Officers of Board of Directors the Corporation

Jessica L. McDonald s H l ] Deepak Chopra Deepak Chopra ICD.D Ottawa, Ontario President and Chief Executive Officer Vancouver, British Columbia President and Chair of the Chief Executive Officer Senior vice-presidents Board of Directors Canada Post Corporation Wayne Cheeseman Canada Post Corporation Chief Financial Officer Leonard (Len) Diplock Strategy and Corporate Marketing Michèle Desjardins ✿ ] A. Michel Lavigne w s ICD.D FCPA, FCA Anik Dubreuil Chief Information Technology Officer Montréal, Quebec Laval, Quebec Doug Ettinger Chief Commercial Officer Scott G. McDonald Chief Human Resources Officer Mary Traversy Alain Sans Cartier © H l William H. Sheffield l H Chief Operating Officer L’Ancienne-Lorette, Quebec ICD.D Toronto, Ontario John B. West General Counsel and Corporate Secretary

Vice-presidents Jay Davis Engineering Sharon Sparkes H n Donald Woodley ] l Manon Fortin ICD.D, CPA, CA Mono, Ontario Operations Integration St. John’s, Newfoundland and Labrador Douglas Greaves Pension Fund and Chief Investment Officer Rod Hart Parcels Ann Therese MacEachern Human Resources n Chair of the Audit Committee Barbara MacKenzie © Chair of the Corporate Governance and Nominating Committee Finance and Comptroller ✿ Chair of the Human Resources and Compensation Committee w Chair of the Pension Committee Susan Margles s Member of the Audit Committee Government Relations and Policy ] Member of the Corporate Governance and Nominating Committee l Member of the Human Resources and Compensation Committee Serge Pitre H Member of the Pension Committee Sales Three seats on the Board of Directors are vacant. Jo-Anne Polak As of March 22, 2018 Communications and Public Affairs Brian Wilson Operations

Kaval Pannu Corporate Auditor

As of March 22, 2018

Canada Post Corporation 2017 Annual Report 19 Corporate governance

The Board’s role is supported by Canada Post’s statutory framework, bylaws and Board Charter. The Board provides oversight and guidance on behalf of Canada Post’s shareholder, the Government of Canada, on the strategies, business plans and related affairs of Canada Post.

In carrying out its oversight strong business judgment and Employee diversity is a business role, the Board of Directors expertise to the stewardship imperative in today’s world. holds management of Canada Post. The Board has established an accountable for its business To provide oversight for Equality in Employment policy performance and strategic such a large and complex for the Corporation and objectives. To fulfill these organization, directors regularly reviews its responsibilities the Board normally devote 25 to performance in this area. exercises due diligence over 30 days a year to Board work. Independence of the Board • strategic initiatives and In 2017, the Board met The positions of the Chair and corporate plans 10 times and its committees of the President and Chief • service and operational met a total of 18 times. Executive Officer are separate. performance The Board holds its regular • internal control and Gender diversity on meetings with the President financial reporting the Board and Chief Executive Officer as • major contracts and Canada Post recognizes the a member and with the Chief investments relationship between gender Financial Officer as an invitee. • recruitment of diversity and corporate Otherwise, the Board meets senior officers performance. Working with the without the presence of • health and safety, labour shareholder, the Board ensures management, unless required and compensation that highly qualified female for presentations or reports. management candidates are identified for The Board holds in camera • effective reporting any vacant positions. It works sessions with outside directors to the shareholder. closely with the office of the Minister of Public Services and only. The Audit Committee The Board of Directors is Procurement to recommend meets in camera with external composed of 11 members, potential candidates who will and internal auditors. The including the President and provide the skills needed by the Board engages independent Chief Executive Officer, all Board and also address its counsel and advisers as it of whom are Governor-in- commitment to diversity. The deems necessary. Council appointees. As of Board currently has a female Committees of the Board March 22, 2018, three seats membership of over 30 per are temporarily vacant. As Additional oversight is cent, including the Chair. It is accomplished under the overseer of an approximately focused on growing this $8.2 billion commercial auspices of the Audit number as it identifies new Committee, the Corporate enterprise, the Board brings candidates in 2018. Governance and Nominating

20 Canada Post Corporation 2017 Annual Report Ombudsman’s report

Committee, the Human Reporting to the Chair of the Board of Directors, the Office of Resources and Compensation the Ombudsman is independent of Canada Post staff and Committee, and the management. It gives Canadians another avenue if they feel Pension Committee. Canada Post did not live up to its service commitments. It investigates customer complaints and recommends fair Board effectiveness and equitable solutions. By identifying trends, focusing on The Board regularly assesses prevention and recommending changes as needed, it also its effectiveness through a offers Canada Post another perspective to improve service. self-assessment survey. It has set criteria for desired skills In 2017, the overall number of appeals filed to our Office fell and attributes used to identify 8 per cent, despite the significant increase in parcel volumes. potential gaps in succession. Compared to 2016, we saw a decrease in the 10 most Board remuneration complies common kinds of appeal. with guidelines issued by the In 2017, we received 5,449 appeals, compared to 5,943 Privy Council Office. in 2016. Of the 2,497 cases we investigated, 46 per cent Subsidiaries resulted in corrective action. In the rest, our investigation Alignment and oversight of supported Canada Post’s actions. In comparison, corrective Canada Post’s subsidiaries action was needed in 52 per cent of the 2,617 cases we ensure consistent governance investigated in 2016 (including resubmissions). practices in companies in More than half the appeals did not result in an investigation which Canada Post holds a because customers reached out to us before giving majority interest. Canada Post time to address the issue, or withdrew their Governance in principle submission before the investigation concluded. Canada Post holds the view The number of appeals related to the Canadian Postal that effective organizations Service Charter decreased by 229, or by 10 per cent. The require governance practices decline reflects improvements in access to the customer that are comprehensive but service department. dynamic. Good governance is The Office of the Ombudsman’s Annual Report will be available at an essential component in canadapost.ca/ombudsman. ensuring that the Corporation continues to serve Canadians in an effective and sustainable manner. More information can be found under Corporate Governance at canadapost.ca.

Canada Post Corporation 2017 Annual Report 21 Canadian Postal Service Charter

The Canadian Postal Service Charter ensures that postal services remain universal, affordable, reliable, convenient, secure and responsive to Canada Post’s customers. Our compliance to the Charter for 2017 is presented in blue italics after each clause.

Preamble Universal service Affordable rates The Canada Post Corporation 1. Canada Post will maintain 3. Canada Post will charge was created to provide a a postal system that allows uniform postage rates for standard of service that meets individuals and businesses in letters of similar size and the needs of the people of Canada to send and receive weight, so that letters to Canada. The Government mail within Canada and Canadian addresses will of Canada is committed to between Canada and require the same postage, ensuring transparency in elsewhere. Canada Post will regardless of the distance how Canada Post provides provide a service for the to reach the recipient. quality postal services to all collection, transmission and The postage rates charged Canadians, rural and urban, delivery of letters, parcels for letters of similar size and individuals and businesses, and publications. weight to Canadian addresses in a secure and financially All 16.2 million Canadian were uniform, regardless self-sustaining manner. residential and business of distance. The Government has therefore addresses were served, and established the Canadian international inbound and 4. As required by the Postal Service Charter to outbound services were Canada Post Corporation Act, describe its expectations provided to 192 countries. Canada Post will charge regarding Canada Post’s service postage rates that are fair and standards and related activities 2. The provision of postal reasonable and, together with in providing postal services that services to rural regions of the other revenues, are sufficient meet the needs of consumers country is an integral part of to cover the costs incurred in of postal services in Canada. Canada Post’s universal service. its operations. These expectations are not More than 7,500 rural Canada Post’s basic letter rate intended to modify or and suburban delivery of $0.85 provides excellent derogate from Canada Post’s routes served approximately value for a reasonable price to obligations as set out in the 4.8 million addresses. Of consumers and small business. Canada Post Corporation Act the approximately 6,200 or any other legislation. postal outlets located across 5. Canada Post will provide Canada, more than half are advance notice of and publicly in rural areas. advertise proposed pricing changes for regulated letter mail products and consult with consumers during the rate-setting process.

22 Canada Post Corporation 2017 Annual Report In light of the government 8. Canada Post will deliver 10. Canada Post will provide review of Canada Post, there letter mail: retail postal outlets, including were no proposed changes –– Within a community within both corporate post offices to regulated postage rates two business days; and private dealer operated in 2017. outlets which are conveniently –– Within a province within located and operated, so that: three business days; and Frequent and –– 98 per cent of consumers reliable delivery –– Between provinces within will have a postal outlet 6. Canada Post will deliver four business days. within 15 km; letters, parcels and publications In 2017, the on-time service –– 88 per cent of consumers five days a week (except for performance for Domestic will have a postal outlet statutory holidays) to every Lettermail delivery was within 5 km; and Canadian address, except in 95.4 per cent. remote areas where less –– 78 per cent of consumers frequent service may be Convenient access will have a postal outlet necessary due to limited to postal services within 2.5 km. access to the community. 9. Canada Post will provide In 2017, 98.8 per cent of Letter carriers and rural and an extensive network for Canadians lived within 15 km suburban mail carriers accessing postal services that of a postal outlet, 90.8 per provided scheduled five-day-a- includes retail postal outlets, cent within 5 km, and 79 per week delivery to 99.9% of stamp shops and street cent within 2.5 km. the addresses they serve. letterboxes, as well as access to information and customer 11. The moratorium on the 7. Canada Post will deliver to service through Canada Post’s closure of rural post offices every address in Canada. This website and call centres. is maintained. Situations may be delivery to the door, affecting Canada Post In addition to approximately personnel (e.g., retirement, a community mailbox, group 6,200 full service postal outlets mailbox, a rural mailbox, a illness, death, etc.) or and thousands of places to buy Canada Post infrastructure postal box, general delivery at stamps, Canada Post offered the post office or delivery to (e.g., fire or termination of 24/7 access to canadapost.ca lease, etc.) may, nevertheless, a central point in apartment/ for online services, such as office buildings. affect the ongoing operation tracking a package, registering of a post office. Canada Post delivered to a change of address and every address in Canada. purchasing postage. In 2017, personnel or A breakdown of delivery infrastructure issues affected Canada Post also provided 129 post offices covered by methods is in the chart approximately 231,000 on page 25. the moratorium. In 76 cases, collection points where postal retail services to the items could be deposited (and community were maintained approximately 707,000 rural through staffing of vacancies mailboxes, which are also and in 24 cases retail services collection points). Continued on page 24

Canada Post Corporation 2017 Annual Report 23 Canadian Postal Service Charter

were provided in a affected households before In 2017, Customer Service neighbouring community. implementing any changes. received 3.9 million customer Remaining cases are calls and more than 808,000 undergoing staffing actions 14. At least one month before electronic customer inquiries or being reviewed through deciding to permanently close, through email, fax and further community move or amalgamate online service tickets. consultation. In all cases, corporate post offices, These interactions related delivery services for the Canada Post will meet with to questions, requests, community were maintained affected customers and problems and complaints. without disruption. communities to jointly explore options and find practical 17. The Canada Post Secure delivery solutions that address Ombudsman will investigate 12. Canada Post will take into customer concerns. complaints about compliance consideration the security and In 2017, seven urban with the Canadian Postal privacy of the mail in every corporate post offices came Service Charter in situations aspect of mail collection, under review. Affected where customers remain transmission and delivery. customers and communities unsatisfied after they have exhausted Canada Post’s The Security and Investigation were notified and consulted at least one month in advance complaint resolution Services group conducts its processes. operations in accordance with of any proposed change. the Canada Post Corporation The Ombudsman is the Act and other regulatory and 15. Each year, Canada Post final appeal authority in legislative authorities. will hold an Annual Public complaints resolution at Canada Post Corporation is Meeting open to the public Canada Post. More subject to the Privacy Act. to provide an opportunity for information can be found the public to express views, on the Office of the Community outreach and ask questions and provide Ombudsman’s website at consultation feedback to Canada Post. canadapost.ca/ombudsman. Canada Post held its Annual 13. Where Canada Post Reporting on performance plans to change delivery Public Meeting on September methods, Canada Post will 14, 2017, in Yellowknife. 18. Each year in its Annual communicate, either in person Report, Canada Post will or in writing, with affected Responding to complaints report on its performance customers and communities 16. Canada Post will establish against each of the at least one month in advance and promulgate complaint expectations in this Canadian to explain decisions and resolution processes that are Postal Service Charter. explore options that address easily accessible to customers customer concerns. and will address complaints In all instances, Canada Post in a fair, respectful and provided advance notice and timely manner. extensive consultation with

24 Canada Post Corporation 2017 Annual Report Number of % of total Average annual Delivery method addresses* addresses cost per address

Door to door 4,204,007 26.0% $291 Centralized point (e.g. apt. lobby lockbox) 4,276,195 26.4% $120 Group mailbox, community mailbox, kiosk 5,278,814 32.6% $130 Delivery facility (postal box, general delivery) 1,719,091 10.6% $75 Rural mailbox 706,958 4.4% $217 All methods 16,185,065 100.0% $167

* As at December 31, 2017

19. In addition, Canada Post See the table above. need to adapt the Charter to will present in its Annual changing requirements. Report an overview of the Reviewing the Charter The government review delivery methods it uses, 20. The Government will concluded that Canada Post is indicating the number of review the Canadian Postal expected to continue to meet addresses served with each Service Charter every five years the expectations laid out in delivery method and the after its adoption to assess the the Charter. financial costs associated with each method of delivery.

Other public policy programs

Government mail and Institute for the Blind, send reduced postage rates for materials for the blind talking books and other eligible library materials The Canada Post Corporation materials free of charge across circulated between a library Act allows for mailing of letters Canada and around the world. and its patrons. Canada Post free of charge between citizens Canada Post received a receives no appropriation or and the Governor General, government appropriation of compensation of any kind from members of Parliament (MPs), $22 million in 2017 to help the government to offset the the speakers of the Senate and offset the financial impact reduced postage rate. the House of Commons, and of these programs on the Environment policy other designated officials of Corporation. Canada Post is committed to Parliament. MPs can also send environmental protection in its up to four flyer mailings a Library materials operations. Canada Post has year free of charge to their The Library Materials service is determined in accordance with constituents. available to recognized public sections 66 and 67 of the The Act also provides for free libraries, university libraries Canadian Environmental mailing of materials for the or other libraries that are Assessment Act, 2012, that, to blind. Visually impaired maintained by non-profit the best of its knowledge, during Canadians and many libraries organizations or associations 2017 its projects were not likely across the country, including and are for public use in to cause significant adverse that of the Canadian National Canada. The service provides environmental effects.

Canada Post Corporation 2017 Annual Report 25 Our size and scope

PIECES DELIVERED FLEET ITEM TRACKING

Almost More than 8.4 billion More than 708 pieces of mail, parcels and messages 13,000 million Group of Companies Canada Post vehicles online tracking events (72 per cent on the mobile app) VOLUME PER DAY EMPLOYEES More than PLANTS AND Close to DEPOTS 64,000 1M Canada Post Group of Companies, full-time Canadians have and part-time paid employees, excluding a parcel locker 21 484 temporary, casual and term employees in their building processing letter carrier (approximate figure) plants depots

CANADAPOST.CA 3M RETAIL POST OFFICES mobile app downloads 243 million since launch visits to canadapost.ca in 2017 in 2010 (includes visits to epost.ca)

Nearly ADDRESSES SERVED 6,200 90.8% Residential Businesses retail post offices of Canadians live across Canada within 5 km of a post office

Almost More than AROUND THE WORLD 15.2 1 Service to million million 192 countries CANADA POST 2701 RIVERSIDE DR SUITE N1200 OTTAWA ON K1A 0B1

General inquiries: 1-866-607-6301 For more detailed information, visit our website at canadapost.ca.

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Image credits COVER – Canadarm: NASA/Canadian Space Agency | Alexandre Bilodeau: Mark Blinch/Reuters | Michelle Stilwell: Suzanne Plunkett/Reuters | Trans-Canada Highway landscape: Barrett & MacKay Photography | Trans-Canada Highway sign: David Pearson/Alamy/All Canada Photos | Signing of Canadian Constitution: Ron Poling/The Canadian Press | Inuit couple: Jerry Kobalenko/All Canada Photos | Same-sex marriage: Courtesy of Jill Andrew | Habitat ’67: M & N/Alamy/All Canada Photos | Summit Series: Graphic Artists/Hockey Hall of Fame/000029702 | Terry Fox: Gail Harvey

INSIDE – 12 Both: Pinpoint National Photography 13 Top: Canada Post | Terry Fox: Darryl Dyck/The Canadian Press 14 Top: Pinpoint National Photography | Middle: Denis Drever Photography | Bottom: Inuit woman and child: Lee Narraway 15 Top: Courtesy of Jill Andrew | Middle: Jonathan Hayward/The Canadian Press | Bottom: Pinpoint National Photography

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