Meeting challenges, making changes

2010 Annual Report

MAKING

CHANGE

NECESSARY

A zero-emission electric vehicle,part o our modern delivery eetNewdeliverymodelSaer, moreefcientequipment

Canada Post Annual Report 2010

For the purposes o this report, “Canada Post” or “the Canada Post segment” reers to Canada Post’s core services (TransactionMail, Direct Marketing and Parcels lines o business) and excludes its subsidiaries Purolator Inc. (ormerly known as PurolatorCourier Ltd.) and SCI Group and joint venture Innovapost. “The Canada Post Group” reers to the company’s core services andincludes its subsidiaries and joint venture.

Contents

Financial and Operating Highlights1

President’s Message 2About Us 4Key Peromance Indicators 5Financial Review 6Operations 8Lines o Business and Subsidiaries 10Our Customers 12New Products and Services 13Our People, Our Communities 14Chairman’s Message 17Corporate Governance 18Board o Directors 20Ocers o the Corporation 21Ombudsman’s Message 22Reporting on the

Service Charter

and 23Other Public-Policy ProgramsFinancial Perormance 29

2010 Canada Post Annual Report

Financial and Operating Highlights –The Canada Post Group

Financial and Operating Highlights – The Canada Post Group

The

Canada Post Group processed 10.6 billion

pieces during the 12-month period. Consolidated revenue rom operations reached $7.5 billion and consolidated net incometotalled $439 million.

Revenue FromOperations

Billions o dollars

Volume

Billions o pieces

Reported Net Income

Millions o dollars

12714813935754119281907.57.37.3

20082007200620102009

7.711.811.610.811.8

Annual Report

(in millions o dollars) 2010 2009 % Change

20082007200620102009 2008200720062010200920082007200620102009

Income FromOperations

Millions o dollars

7.510.6315439

Operations

Revenue rom operations As reported $7,453 $7,312 1.9%Income rom operations Revenue rom operations – cost o operations 315 357 (11.7)%Operating prot margin (%) Income rom operations ÷ revenue rom operations 4.2% 4.9% –Income beore income taxes As reported 307 379 (19.0)%Net income As reported 439 281 56.3%Return on equity (%) Net income ÷ average equity 21.8% 17.0% –Cash rom (used in) operations As reported (41) 134 (130.6)%Capital expenditures As reported 411 412 (0.1)%

Financial Position

Cash 379 473 (19.7)%Total assets 7,600 6,029 26.0%Equity o Canada 2,236 1,787 25.1%