npp bods mtg 26 may 2010 radm(ret’d) bryn weadon

NPP BODs Mtg26 May 2010

RAdm(Ret’d) Bryn Weadon

OUTLINEScope of NPP Assets

Principle fund generators:CANEXCFCF

Annual Financial Contributions

Impact for Bases and Wings

Financial Scope of NPPAs of 31 Mar 09, total NPP Net Assets were

almost $850M and Equity was estimated at $519M

Approximately 50% of the Assets and Equity are SISIP

The other 50% is divided as follows:CFCF - $199M Assets/$102M EquityBase/Wing/Unit Funds - $86M/$59MCANEX - $74M/$54MMesses - $24M/$21MCFPAF - $16MDGPFSS - $6M/$4M

FY 2008-09 RevenuesNet Revenues in FY 09 were $294M – divided

as follows:CANEX - $164MBase/Wing/Unit Funds - $61MMesses - $34MSISIP - $33MDGPFSS - $15MCFPAF - $2MCFCF – ($18M)Ships/Reserve Units - $3M estimate

CANEX $154M in Sales$36M in Gross Profit (23.5% of Sales)$10M in Other Revenue (Concession

Agreements)$20M in Wages and Benefits$15M in Other Operating Expenses$11M Net Earnings before Royalties (7% of

Revenues)$5M in Royalties and Contributions

CANEX All trade payables and receivables are passed

to the CFCF at fair value less a fee of 1% for credit losses

CANEX had $18M on deposit with CFCF:$6M non-interest generating$12M receives Prime plus 0.25%

CANEX had borrowed $11M from CFCF at a 4% interest rate

CANEX added $9M of fixed assets in FY 09 $65M Capital Asset Cost/$27M Net Book Value

CFCF Is the financial heart of NPP cash flowsThe $199M of 31 Mar 09 assets were comprised of:

$88M held in Trust$71M of Receivables ($58M assumed from other NPP

Entities)$21M of Loans$18M share of investment portfolio

Contributes $3M a year towards the cost of NPP Operations and pays over $3M to other NPP Entities/Trusts

$900K cost for CFCF management, user fees, and investment expenses

CFCF Trust Assets Almost $88M as of 31 Mar 09:

Base/Wing/Unit Funds and Messes - $52MCANEX - $18MMuseums/Regiments/RMC Club - $11MSISIP/CFPAF - $2.5MNPP Pension - $2MMFF - $2M

CFCF Capital Was $11M 30 years ago – contributing $300K a yearReceived $50M from Base/Unit ClosuresIn addition to $3M in annual grants contributed:

$24M towards Capital Projects (shared with SISIP)$15M in Loan Forgiveness

Pledged $100M Contingent Liability to SISIP for War Insurance

Needs to generate approximately $10M a year from investment portfolio (Interest, Grants, Expenses)

At average return of 4% after inflation need $250M in investment assets

Base/Wing Funds

Messes

Annual Financial Contributions CANEX Royalties - $4.8M

$3.3M to Bases/Wings/Units$1.5M to NATO Airbase from NATEX

SISIP Morale and Welfare Grants - $3M to $4M

CFCF Grants to NPP non-Capital operations - $3M

Impact for Bases/Wings/Units 15% of Revenues come from:

CANEX Royalties - $3.3MSISIP Morale and Welfare Grants - $3MCFCF Interest - $3M

$3.6M in User Fees paid to DGPFSS to support Accounting, IT, HR and Consolidated Insurance Program

What Can You Do? Pick the best CFCF interest option:

Option A – 3% Fixed – 38%Option B – Prime plus 0.25% - 30%Option C – CFCF Investment Return less 0.5% -

32%Enhance CANEX sales and concession revenuePromote use of SISIP for Personal Financial

ServicesBe fiscally prudent when considering capital

projects or special eventsConsider options to make the overall system

more equitable