2016 AGM: Board of Director's Report

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May 12, 2016
2016 AGM: Board of Director's Report

Your Board of Directors is pleased to report on the operations for Pembina Co-op.

The Vision and Mission of Our Co-op

Pembina Co-op’s vision is a future-orientated statement set by the Board of Directors that is designed to guide the organization for the next ten years. Our vision statement for Pembina Co-op is:

“To be a Leader through Innovation and Superior Customer Service”

The mission statement is a succinct description of the fundamental purpose of an organization, describing why it exists and what it does to achieve its vision. Our mission statement is:

“To Benefit Members by Progressively Growing Business and Community through Co-operative Principles.”

The Co-op will continually work towards achieving its vision and mission through its corporate values. FCL has identified the corporate values for the Co-operative Federation as:

Integrity, Excellence, Responsibility.

We also strongly believe that these represent the core values for Pembina Co-op. Everything the Co-op does to fulfil its vision and mission will be conducted with these values in mind.

The Board and Management have initiated the Retail Corporate Performance Management (CPM) system that is being developed by FCL as the process we will follow to create the business plan for Pembina Co-op. CPM will identify the long term goals of Pembina Co-op that Management will pursue as it works towards fulfilling the Vision and Mission of Pembina Co-op. Management will develop the strategies to achieve the long-term goals and these strategies will be incorporated into the Co-op’s annual business plan. The budget will be developed in accordance with the business plan and will form the basis to measure the performance of Pembina Co-op’s management and employees. Rather than being an annual plan, CPM focuses on longer term thinking and planning that will set the Co-op’s path for the next decade.

Financial Results

Pembina Co-op achieved another very successful year in 2015. Sales increased by $1.9 million to $129.2 million, a new record for our Co-op. The Co-op achieved a local savings of $3.24 million, an increase of $664,000 compared to last year. The patronage refund from FCL was $4.67 million, which was $627,000 lower than last year. The net savings before income taxes were $7.91 million compared to $7.87 million in 2014. These savings represent a return of 14.5% on member’s equity and reserves.

Member’s equity, reserves and retained savings total $57.2 million. This represents 73.4% of the total assets compared to 74.1% last year. Our equity ratio continues to be influenced by the large volume of members prepaying their spring crop input requirements.

Member accounts were $3.19 million, a decrease of $280,000 from last year. Management was able to reduce the allowance set up for doubtful accounts by $79,000 to $432,000. The total figure includes all accounts that are greater than six months past due and any account that management determines may be uncollectable.

After providing for income tax, your Board has approved a patronage allocation of $5.02 million. The individual member’s allocation will be based on 4.5% of crop input purchases, 4.0% of fertilizer purchases, 0.5% of food purchases, 2.5% of general merchandise purchases, 2.5% of project purchases, 4.75% on clear petroleum purchases and 5.25% on dyed fuel purchases made during the 2015 fiscal year. The remainder of the savings will be allocated to the Co-op’s reserves and to pay income taxes.

During the past year, the Board approved cash repayments totalling $4.64 million. This included $716,000 submitted to Revenue Canada for withholding tax, $1.08 million to members who qualified under the bylaws and a general repayment of $2.84 million.

Assets and Improvements

During 2015, the Co-op spent $5.07 million on new assets and sold $221,000 of older equipment.

The Co-op started construction on two fertilizer warehouses at Swan Lake and Baldur with both sites being operational for the current spring season. A seed treating facility was completed at St. Leon Agro to enable the co-op to expand its soybean seed offering. Repairs were completed on the Minto Agro seed facility due to extensive damage caused by a windstorm. The Co-op replaced numerous vehicles as we continue to update our older trucks and equipment to maintain our service levels to our members.

Pembina Co-op closed the keylock facility in Altamont and the hardware store in Mariapolis during the past year. The Mariapolis store has been renovated into office space for the co-op’s agro division.

Pembina Co-op has numerous projects planned for the coming year. Construction has started on a new building centre at Souris with plans to open late in 2016. FCL will begin construction of a corporate bulk fuel plant at Swan Lake in June with completion expected for next spring. The project will include upgrading the cardlock, decommissioning the existing fuel plant and moving the office to where the existing plant is located. One of the fuel trucks was replaced in February as the Co-op prepares to accommodate bottom loading of the trucks. This increases pumping capacity and improves driver safety compared to the loading arms that are currently being used. Three of the trucks are equipped for bottom loading and the decision will be made on the best way to proceed with the fourth unit prior to construction being completed next spring. The Co-op will purchase eight more vehicles to replace older trucks and equipment within the fleet. This includes a Terragator at Swan Lake Agro to replace a rented unit and a new fuel delivery unit. Total capital projects are estimated at $3.6 million.

Community Builder

Pembina Co-op continues its support of the many community organizations throughout its trading area. A donation policy has been approved by the Board to support capital projects initiated by the local residents of each community to promote the services offered in their area. The program maintains fair and consistent support throughout the Co-op’s trading area. Each year, the Co-op will sponsor students to attend the Co-op Leadership Camp held at Riding Mountain. The board offers a $1,000 scholarship to a student planning to enter a trades program for construction. The local Co-op outlets will work with community groups to assist in promoting local events such as bonspiels, tournaments, fairs and community celebrations. Total donations over the past year exceeded $72,000.

Board of Directors

In 2015, our Board held eleven regular meetings. The June meeting included a tour of the Co-op’s facilities in Swan Lake, Mariapolis, Crystal City, Pilot Mound and Manitou. The Board completed the second phase of the Corporate Performance Management system whereby the co-op’s strengths, weaknesses, opportunities and threats were identified. The next phase will be setting the long-term goals for Pembina Co-op as we work towards fulfilling the vision and mission of our Co-op. Eight board members attended the FCL Fall Conference in Winnipeg. Marc Grenier, Daryl Devos and Kevin Cutting represented Pembina Co-op at the FCL Annual Meeting in Saskatoon. Ken Harpelle continues to represent District 14 on the FCL Resolutions Committee.

Acknowledgements

The Board would like to recognize the directors who have attained service milestones during the past year. Ken Harpelle has completed 18 years and Marc Grenier has completed 21 years as a director of our Co-op. Marc has served as President and Ken as Vice President since 2007.

We would like to express our gratitude to the management and staff for their efforts during the past year. Your extra effort resulted in another strong year. We appreciate your dedication in running our business. We would also like to thank the members for their continued support in 2015. By supporting a business you own, you benefit by sharing in the profits of the company, and your community benefits by maintaining a valuable service.

Your Board of Directors

Marc Grenier (President)

Kevin Cutting

Ken Harpelle (Vice President)

Bertrand De Rocquigny

Barry Gosnell (Secretary)

Ernest Fraser

Carla Pouteau

Daryl Devos

Robert Smith