A Great Strategic Fit August 28, 2007. Conference Call Participants Edward Kennedy President & CEO...

A Great Strategic Fit

August 28, 2007

Conference Call Participants

Edward Kennedy

President & CEO

The North West Company

Jeffrey Meder

President & CEO

Cost-U-Less

Léo Charrière

Executive Vice-President & CFO

The North West Company

Martin Moore

Vice-President & CFO

Cost-U-Less

Caution Concerning Forward Looking Statements

This report may contain forward-looking statements about the North West Company Fund, including its business operations, strategy and expected financial performance and condition. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, or include words such as “expects”, “anticipates”, “plans”, “believes”, “estimates”, “intends”, “targets”, “projects”, “forecasts” or negative versions thereof and other similar expressions, or future or conditional future financial performance (including revenues, earnings or growth rates), ongoing business strategies or prospects, and possible future Fund action, is also a forward-looking statement. Forward-looking statements are based on current expectations and projections about future events and are inherently subject to, among other things, risks, uncertainties and assumptions about the Fund, economic factors and the retail industry generally. They are no guarantees of future performance, and actual events and results could differ materially from those expressed or implied by forward-looking statements made by the Fund due to, but not limited to, important factors such as general economic, political and market factors in North America and internationally, interest and foreign exchange rates, changes in accounting policies and methods used to report financial condition, including uncertainties associated with critical accounting assumptions and estimates, the effect of applying future accounting changes, business competition, technological change, changes in government regulations and legislation, changes in tax laws, unexpected judicial or regulatory proceedings, catastrophic events, the Fund’s ability to complete strategic transactions and integrate acquisitions and the Company’s success in anticipating and managing the foregoing risks. The reader is cautioned that the foregoing list of important factors is not exhaustive. Other risks are outlined in the Risk Management section of the MD&A included in the Fund’s 2006 Management’s Discussion & Analysis and Consolidated Financial Statements report. The reader is also cautioned to consider these and other factors carefully and not place undue reliance on forward-looking statements. Other than as specifically required by applicable law, the Company has no specific intention to update any forward-looking statements whether as a result of new information, future events or otherwise.

Non-GAAP Financial Measures

This report may also contain non-GAAP financial measures. Non-GAAP financial measures are used to provide management and investors with additional measures of performance. However, we caution that non-GAAP financial measures do not have standard meanings prescribed by GAAP and are not directly comparable to similar measures used by other companies. Specific instances of such measures that may be referred to within this document includes “Trading Profit”. We refer you to the appropriate reconciliation in the Management’s Discussion & Analysis of these non-GAAP financial measures to measures prescribed by GAAP.

Documents Incorporated by Reference

Readers of this presentation are directed to the following documents relating to North West Company Fund’s (NWF) results:

• NWF 2006 Summary Annual Report, Annual Information Form and Information Circular issued April 20, 2007

• NWF 2006 Management’s Discussion & Analysis and Consolidated Financial Statements

• NWF Q1 2007 Report to Unitholders issued June 5, 2007

Each of these documents are made available on the Company’s website at www.northwest.ca and also at www.sedar.com.

Cost-U-Less Acquisition Summary

• Convergence of CUL’s strategic review and NWC’s new market development activities

• All cash, US $11.75 per share, US $52.2 million transaction

• 8.0X EBITDA pre-integration, 5.0-5.50X EBITDA post

• In line with precedent transactions

In Line With Sample Precedent Transactions

DATE TARGET BUYER(S) TEV TEV / LTM

REVENUES / EBITDA

03/20/07 Mrs. Green’s Planet Organic 34 0.9X 7.0X

03/01/07 Beverage & More Tower Brook 205 0.6X N/A

04/20/06 Marsh Sun Capital 296 0.2X 8.9X

12/27/05 Goody’s GMM Capital 235 0.2X 9.7X

12/23/05 Party City Berkshire Partners 350 0.7X 12.5X

12/01/05 Foodarama Management 294 0.2X 7.0X

10/04/05 Brookstone OSIM Int’l 391 0.8X 8.3X

01/26/04 Uni-Marts Management 89 0.3X 13.0X

27/08/07 Cost-U-Less North West 60 0.3X 8.0X

Cost-U-Less Acquisition Summary

• Convergence of CUL’s strategic review and NWC’s new market development activities

• All cash, US $11.75 per share, US $52.2 million transaction

• 8.0X EBITDA pre-integration, 5.0-5.50X EBITDA post

• In line with precedent transactions

• Closing by end of November 2007, subject to CUL shareholder, SEC approval

Cost-U-Less Overview

• Founded in 1989 with one store in Maui

• Went public in 1998

• New management team retrenched and refocused in 2000

• Currently 11 warehouse stores with 12th to open in November


$222$219$209

$177$176

$0

$50

$100

$150

$200

$250

2002 2003 2004 2005 2006

SALES ($ in millions)


TRADING PROFIT ($ in millions)

2.7

4.6

6.8 7.0 7.1

$0

$2

$4

$6

$8

2002 2003 2004 2005 2006


NET EARNINGS ($ in millions)

0.3

1.4

2.73.0

2.7

$0

$1

$2

$3

2002 2003 2004 2005 2006


• Average store size is 32,000 square feet

• Dominant warehouse store format in 9 of 11 markets

• Expertise in logistics, buying and local market knowledge

• Stores are in good physical condition

• Recently upgraded store information systems


• “Your” -- The right mix for each market to become their store

• “Best Value” -- EDLP-driven, fair price for all items offered

• “Warehouse Store” -- Defines core merchandise mix (with no club fees)

“YOUR BEST VALUE WAREHOUSE STORE”


• 3,000 SKUs of branded and local product

• Non-perishable food: 40% of sales

Dry groceries, soda, beer, wine, candy, snacks

• Fresh food: 27% of sales

Frozen, cooler, dairy, meat, produce

• Non-food: 33% of sales

Sundries, health and beauty, electronics, furniture and housewares


• Two store market: Dededo open 15 years, Tamuning 11 years

• Economic outlook positive with military build-up

• Customer loyalty program a key strategy

GUAM


AMERICAN SAMOA

• Open 12 years

• Tuna industry drives economy

• U.S. Congress recently extended key tax breaks for two years


HILO

• Open 14.5 years

• Strong economy:

Significant population & housing growth

• Evaluating relocation opportunities


ST. CROIX

• In market for 12.5 years, relocated May 2005

• Stable economy based on oil refinery industry

• Improving performance of relocated store

• New prototypical layout


ST. MAARTEN

• In market for almost 7 years

• Tourism-based economy improving:

Airport expansion, new Marriott Hotel project

• Growing business segment:

Off-island, mega yachts

• French business increasing

• Occupy strong market position


• Maintaining EDLP leadership

• Low costs as an integral part of CUL culture

• Managing risk (weather, political, economic, competitive)

• Shifting to a growth focus

CURRENT KEYS TO SUCCESS

Cost-U-Less’ Strategic Fit with North West

• Compatible size and company values

• Shared focus on remote, “second world” markets

• Brings dedicated resources to support activities, i.e. store development, human resources

• Brings financial strength and flexibility to grow

• Offers opportunity for CUL merchandising people to apply skills to NWC’s Alaska and Canadian markets

THE CUL PERSPECTIVE:

• Similar demographic and psychographic customer profiles

• Similar high entry barriers (regulation, supply chain, climate, size)

• Shared focus on food and everyday needs

• Shared focus on localized approach to product mix and empowered local management

THE NWC PERSPECTIVE:


• Intrapreneurial culture

• Leading market position

• Post turnaround with stable cash flow, low maintenance capex

• Need for operational and public company scale = opportunity to leverage NWC capability

• Opportunity for growth and further performance enhancement

THE NWC PERSPECTIVE:


Projected Cost Synergies

• Consolidation of executive positions

• Consolidation of admin and support

• Combining of U.S. merchandising groups

• Consolidation of warehouse and office space between Anchorage and Seattle

• Elimination of CUL public company expenses

• Current cost synergy target is $3 million annualized, beginning in 2008

Attractive Opportunities for Growth

• New store openings in Cayman Islands (Q4/07) and Aruba (2008)

• Multi-format growth strategy in South Pacific beginning in 2008

• New warehouse and complementary format stores in Caribbean beginning in 2009-2010

• Assess CUL capabilities to bring small-format warehouse stores to rural centres in Alaska and Western Canada

South Pacific Market

Carribbean Market

Same Store Enhancement Opportunities

• Shift to NWC-style pay for performance

• Enhance store merchandise selection and ordering capability

• Leverage Supervalu, NWC Canada and Giant Tiger procurement strengths

• Test / Introduce more opening price points, smaller sizes, trend, financial services and big ticket products

• Bring CUL warehouse product expertise to existing Canadian and Alaskan store formats

Risk Assessment

• New store performance

• Large-box competitive entry

• Achieving cost synergies

• Complexity of AC / CUL / NWC integration

• Shortfalls to growth analysis and assumptions

• Higher maintenance capex

Summary

• An attractive medium- to long-term growth driver

• Accretion to NWC earnings beginning in 2008

• Similar strategy and competitive strengths

• Similar high entry barriers, remoteness and challenging physical environment

• Favourable demographics or economic trends

• Stable earnings reflects compatible business risk

• We’ve done this before (AC acquisition and Giant Tiger roll-out)

Questions?

A Great Strategic Fit August 28, 2007. Conference Call Participants Edward Kennedy President & CEO...

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