Board of Directors' Annual Report (2018)

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May 10, 2018
Board of Directors' Annual Report (2018)

BOARD OF DIRECTORS 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. Pembina Co-op’s corporate values are:

Integrity, Excellence, Responsibility.

The Board and Management continue to operate under the Retail Corporate Performance Management (CPM) system that has been developed by FCL. Through the CPM process, the Board identifies the long term goals of Pembina Co-op. Management develops the strategies to achieve the goals and these strategies are incorporated into the Co-op’s annual business plan. The budget is developed in accordance with the business plan and forms the basis to measure the performance of Pembina Co-op’s management and employees. Rather than just 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 successful year in 2017. Sales increased by $6.61 million to $133.63 million. Pembina Co-op achieved a local savings of $2.67 million, an increase of $408,000 over last year. The patronage refund from FCL was $4.90 million, which was $531,000 higher than last year. The net savings before income taxes were $7.57 million compared to $6.63 million in 2016. These savings represent a return of 12.9% on member’s equity and reserves.

Member’s equity, reserves and retained savings total $62.16 million. This represents 67.1% of the total assets compared to 75.4% last year. Our equity ratio continues to be influenced by the large volume of members prepaying their spring crop input requirements and taking earlier delivery of seed and fertilizer.

After providing for income tax, your Board has approved a patronage allocation of $4.42 million. The individual member’s allocation will be based on 3.75% of crop input purchases, 3.75% of fertilizer purchases, 1.0% of general merchandise purchases, 1.0% of project purchases, 4.25% on clear petroleum purchases and 5.0% on dyed fuel purchases made during the 2017 fiscal year. Because of losses sustained on our food operations, there was no patronage allocation made on food purchases. 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 $3.99 million. This included $556,000 submitted to Revenue Canada for withholding tax, $1.15 million to members who qualified under the bylaws and a general repayment of $2.29 million.

Assets and Improvements

During 2017, the Co-op spent $5.27 million on new assets and sold $283,000 of older equipment.

The capital projects included the completion of the Souris Building Centre, the Manitou fertilizer shed, the Notre Dame seed treating plant, the lean on the St Leon fertilizer shed and replacement of eight vehicles.

The Board made the difficult decision to close the Manitou Food store in December. The food store began operating at a loss in 2005. Sales remained flat as the population of the community and surrounding area has been slowly declining. Over time, inflation on operating expenses steadily increased the loses to the point where the decision to close the business had to be made. We met with local members to share information on why the decision was made. We appreciate the professionalism displayed by the members during the meeting and throughout the closing process. We also extend our gratitude to Mike, Sherry, Tressa, Rhonda and Aleasha as they continued to provide excellent service to our members through a difficult time. At this time, we are still exploring opportunities for the building.

Pembina Co-op has several projects planned for the coming year. FCL has completed construction of the corporate bulk fuel plant at Swan Lake. We will upgrade the cardlock to access fuel off of the new bulk plant, decommission the existing fuel plant and move the office back to the petroleum site. The Co-op will purchase nine vehicles to replace older trucks and equipment within the fleet in addition to numerous smaller capital projects. Total capital projects are estimated at $1.2 million.

Community Builder

Pembina Co-op continues its support of the many community organizations throughout its trading area. A community support program has been approved by the Board to replace the previous donation policy. The new program will take a more proactive approach to supporting local initiatives rather than focusing on requests for support. The new program will encourage and recognize our employees for their volunteer efforts in our communities. More detailed information on the new program is available on the Pembina Co-op website. Total donations over the past year exceeded $72,000.

Board of Directors

In 2017, our Board held eight regular meetings. The June meeting included a tour of the Co-op’s facilities in Souris, Minto, Glenboro, Cypress River and Baldur. Six board members attended the FCL Fall Conference in Winnipeg. Marc Grenier, Ken Harpelle, Daniel Van De Velde and Ernest Fraser represented Pembina Co-op at the FCL Annual Meeting in Saskatoon. Ken Harpelle continues to represent District 14 on the FCL Resolutions Committee.

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 2017. 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

Daniel Van De Velde

Daryl Devos

Robert Smith