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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ($ in thousands) Year Ended January 31, 2019 Year Ended January 31, 2018 NET EARNINGS FOR THE YEAR $ 90,632 $69,691 Other comprehensive income/loss), net of tax: Items that may be reclassified to net earnings: Exchange differences on translation of foreign controlled subsidiaries 8,049 (7,934) Items that will not be subsequently reclassified to net earnings: Remeasurements of defined benefit plans (Note 12) 4,952 1,175 Remeasurements of defined benefit plan of equity investee (24) (173) Total other comprehensive income/(loss), net of tax 12,977 (6.932) COMPREHENSIVE INCOME FOR THE YEAR $103,609 $62.759 OTHER COMPREHENSIVE INCOME/(LOSS) ATTRIBUTABLE TO The North West Company Inc. $ 12,142 $(6,932) Non-controlling interests 835 TOTAL OTHER COMPREHENSIVE INCOME/(LOSS) $ 12,977 $(6.932) COMPREHENSIVE INCOME ATTRIBUTABLE TO The North West Company Inc. $ 98,890 $60,222 Non-controlling interests 4,719 2.537 TOTAL COMPREHENSIVE INCOME $103,609 $62.759 See accompanying notes to consolidated financial statements. THE NORTH WEST COMPANY INC. John D. King, CPA, CA, CMA EXECUTIVE VICE-PRESIDENT & CHIEF FINANCIAL OFFICER THE NORTH WEST COMPANY INC. April 10, 2019 Independent Auditor's Report To the Shareholders of The North West Company Inc. Our opinion In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of The North West Company Inc. and its subsidiaries. (topether, the Company) as at January 31, 2019 and 2018, and its financial performance and its cash flow for the years then ended in accordance with International Financial Reporting Standards (IFRS) What we have audited The Company's consolidated financial statements comprises . the consolidated balance sheets as at January 31, 2019 and 2018 the consolidated statements of earnings for the years then ended: the consolidated statements of comprehensive Income for the years then ended; the consolidated statements of changes in shareholders' equity for the years then ended; the consolidated statements of cash flows for the years then ended, and the notes to the consolidated financial statements, which loodude a summary of significant accounting policies, Basis for opinion We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's responsibilities for the We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion Independence We are independent of the Company in accordance with the ethical requlrements that are relevant to our audit of the consolidated financial statements in Canada. We have fulfilled our other ethical responsibilities in accordance with these requirements. CONSOLIDATED STATEMENTS OF EARNINGS ($ in thousands, except per share amounts) Year Ended January 31, 2019 Year Ended January 31, 201861) SALES $ 2,013,486 $ 1,985,122 Cost of sales (1,372,943) (1.360,381) Gross profit 640,543 624.741 Selling, operating and administrative expenses (Notes 16, 17) (510,635) (510,770) Earnings from operations 129,908 113.971 Interest expense (Note 18) (13,965) (10.1452 Earnings before income taxes 115.943 103.826 Income taxes (Note 9) (25.311) (34,135) NET EARNINGS FOR THE YEAR $ 90,632 $ 69,691 NET EARNINGS ATTRIBUTABLE TO The North West Company Inc. $ 86,748 $ 67,154 Non-controlling interests 3,884 2,537 TOTAL NET EARNINGS $ 90,632 $ 69,091 NET EARNINGS PER SHARE (Note 20) Basie $ 1.78 $ 1.38 Diluted $ 1.36 WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING (000's) Basic 48,697 48,680 Diluted 49,144 49.275 (1) Certain prior period figures have been reclassified as described in Note 3. See accompanying notes to consolidated financial statements. $1.77 Sacrore Capital 4,000 Authorized - The Company has an unlimited number of Common Voting Shares and Variable Voting Shares Shares Consideration Balance at January 31, 2018 48,690,212 $199,619 Issued under option plans (Note 13) 60,717 1,062 Balance at January 31, 2019 48.750,929 8173,681 Balance at January 31, 2017 48.542.514 $168,283 Issued for acquisition of RTW (Note 24) 133-944 Issued under option plans (Note 13) 13.754 336 Balance at January 31, 2018 48,690,212 $172,619 Subsidiaries and Joint Ventures The Company's principal operating subsidiaries are set out below: Proportion of voting rights held by: Activity Country of Organization Company Subsidiary NWC GP Inc. General Partner Canada 100% North West Company Holdings Inc. Holding Company Canada 100% The North West Company LLP Retailing Canada 100% (less one unit) NWC (U.S.) Holdings Inc. Holding Company United States 100% The North West Company (International) Inc. Retailing United States 100% The North West Finance Company Cooperatie U.A. Finance Company Netherlands 90% 1% Roadtown Wholesale Trading Lid. Retailing British Virgin Islands 77% North Star Air Lid. Airline Canada 100% The investment in joint venture comprises a 50% interest in a Canadian Arctic shipping company. Transport Nanak ine. At January 31, 2019, the Company's share of the pet CONSOLIDATED BALANCE SHEETS ($ in thousands) January 31, 2019 January 31, 2018 CURRENT ASSETS Cash $ 38,448 $ 25,160 Accounts receivable (Note 5) 90,323 80,765 Inventories (Note 6) 236,317 222,072 Prepaid expenses 11,741 7,006 376,829 335,003 NON-CURRENT ASSETS Property and equipment (Note 7) 514,946 469,993 Goodwill (Note 8) 45,203 41,231 Intangible assets (Note 8) 39,199 37,628 Deferred tax assets (Note 9) 32,909 34,450 Other assets (Note 10) 13,835 12,643 646,092 595,945 TOTAL ASSETS $1,022,921 $930,948 CURRENT LIABILITIES Accounts payable and accrued liabilities $ 175,726 $170,166 Current portion of long-term debt (Note 11) 900 Income tax payable (Note 9) 255 1,046 176,881 171,212 NON-CURRENT LIABILITIES Long-term debt (Note 11) 365,857 313,549 Defined benefit plan obligation (Note 12) 28,969 34,095 Deferred tax liabilities (Note 9) 9,007 6,468 Other long-term liabilities 21,103 23,468 424,936 377.580 TOTAL LIABILITIES 601,817 548,792 Management is responsible for the other information. The other information comprises the Management's Discussion and Analysis, which we obtained prior to the date of this auditor's report and the Information, other than the consolidated financial statements and our auditor's report thereon, Included in the annual report, which is expected to be made available to us after that date Our opinion on the consolidated financial statements does not cover the other information and we do not and will not express an opinion or any form of assurance conclusion thereon. In connection with our audit of the consolidated financial statements, our responsability is to read the other information Identified above and, in doing so consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. 11, based on the work we have performed on the other information that we obtained prior to the date of this auditor's report, we conclude that there is a material misstatement of this other information we are required to report that fact. We have nothing to report in this regard. When we read the information, other than the consolidated financial statements and our auditor's report thereon, included in the annual report. if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance. Responsibilities of management and those charged with governance for the consolidated financial statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistie alternative but to do so. Those charged with governance are responsible for overseeing the Company's financial reporting process. Auditor's responsibilities for the audit of the consolidated financial statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fred or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economie decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional missions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management . Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to ments or conditions that may east significant doubt on the Company's ability to continue as a pint concern. If we conclude that a material uncertainty exists, we are required to draw attention in our Auditor's report to the related disclosures in the consolidated financial statements or, if such dieses are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to ease to continue as a going concern. Hvalaste the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation Appendix A Specimen Financial Statements The North West Company Inc. In this appendix and the next, we illustrate current financial reporting with two different sets of corporate financial statements that are prepared in accordance with International Financial Reporting Standards The financial statement package for North West Includes the consolidated statement of financial position (which North West calls balance sheet), statement of income (which North West calls statement of earnings), statement of comprehensive income statement of changes in equity (which North West calls statement of changes in shareholders' equity), and statement of cash flows. The financial statements are preceded by two reports management's responsibility for the financial statements and the auditor's report on these statements. Only selected Dotes to the financial statements related to the topics included in this textbook have been included in this appendix. The complete set of financial statements and annual report for North West can be found on sedar.com in the Issuer Profiles/Companies/Section. In addition, material about working with annual reports, inciding the financial statements, is included on Wiley PLUS. We encourage you to scan North West's financial statements to familiarite yourself with the contents of this appendix. You will also have the opportunity to use these financial statements in conjunction with relevant chapter material in the textbook. As well, these statements can be used to solve the Financial Reporting and Financial Analysis cases in the Expand Your Critical Thinking section of the end of chapter material. As you near the end of your financial accounting course, we challenge you to reread North West's financial statements to see how much greater your understanding of them has become Management's Responsibility for Financial Statements The management of The North West Company Inc. is responsible for the preparation, presentation and integrity of the accompanying consolidated financial statements and all other Information in the annual report. The consolidated financial statements have been prepared by management in accordance with loternational Financial Reporting Standards as issued by the International Accounting Standards Board and include certain amounts that are based on the best estimates and judgment by management In order to meet its responsibility and ensure Integrity of financial Information management has established a core of business ethics, and maintains appropriate Internal controls and accounting systems. An internal audit function is maintained that is designed to provide reasonable assurance that assets are safeguarded, transactions are authorized and recorded and that the financial records are reliable. Ultimate responsibility for financial reporting to shareholders rests with the Board of Directors. The Audit Committee of the Board of Directors, consisting of Independent Directors, meets periodically with management and with the internal and external auditors to review the audit results, internal controls and the selection and consistent application of appropriate accounting policies. Internal and external auditors have unlimited access to the Audit Committee. The Audit Committee meets separately with management and the external auditors to review the financial statements and other contents of the annual report and recommend approval by the Board of Directors. The Audit Committee also recommends the independent auditor for appointment by the shareholders. PricewaterhouseCoopers LLP, an independent firm of auditors appointed by the shareholders, have completed their audit and submitted their report as follows. Falward S. Kennedy PRESIDENT & CEO Non-Controlling Interests $12.205 3,884 835 Total Equity $382.156 90.632 13,000 (21) 103.600 (400) 2.022 (66,283) 4.219 (400) (3.954) CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY ( in thousands) Share Contributed Retained Capital Surplus Earnings AOCIO Total Balance at January 31, 2018 $172.619 $2.570 $181,844 $12.918 $369.951 Net earnings for the year 86.748 86,748 Other compreensive income 4.952 7.214 12,166 Other comprehensive Income/loss) of equity Investee (24) (21) Comprehensive income 01.676 7.214 08.890 Acquisition non-controlling interests Equity settled share-based payments (Note 13) 2.023 2,022 Dividends (Note 19) (62.329) (62,329) Issuance of common shares (Note 15) 1.069 (1.060) 1.062 060 (62.320) (603071) Balance at January 31, 2019 $1773.68 $3.030 8211,191 $20,132 MON 334 Balance January 31, 2017 $168,283 $2,62 $176,003 $20,852 $367.785 Net earnings for the year 67,150 67.154 Other comprehensive income/loss) 1.175 (7.93) (6.759) Other comprehensive income/(loss) of equity investee (173) Comprehensive Income 68,156_(7.9312 00), 222 Acquisition of subuidiary with non-controlling interest (Noto 24) pulty settled share-based payments (Note 13) 259 259 Dividends (Note 19) (69.345 (60.315) Isance of common shares (Note 15) 4.336 (336) 4.000 4336 (7) (6.315) (5805) Balance at January 31, 2018 $172.619 $2.70 $181.841 $12.018 $309.951 (1) Accumulated Other Comprehensive Income See accompanying notes to consolidated financial statements (4-351) $12.50 $- 2.537 (64.661) 421,104 $367785 69,691 (6.750) (1731) 63.759 12.150 2.537 12.150 (2.482) 250 (61.797) 4.000 (48388) $282.156 9,668 $12,205

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