Annual Report. 80th. The Saskatoon Co-operative Association Limited

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1 80th Annual Report The Saskatoon Co-operative Association Limited 2015 I N T E G R I T Y D E V E L O P P E O P L E C O M M U N I T Y

2 The Saskatoon Co-operative Association Limited 2014 Annual Report The Saskatoon Co-operative Association Limited 2015 Annual Report Table of Contents President s Report... 1 The Co-operative s Guiding Statements... 3 Management Report... 4 Sustainable Growth, Facilities and Environment Committee Report... 6 Finance and Audit Committee Report... 8 Policy and Governance Committee Report... 9 Member Relations Committee Report Human Resources Management Report Retail Locations Independent Auditors Report Financial Statements Statement on the Co-operative Identity Note Page Saskatoon Co-operative Association s Values... Inside Back Cover

3 President s Report 2016 marks the 80th anniversary of the Saskatoon Co-op. The Co-op continues to its successes just as it has in the past 80 years. The road has had bumps along the way but the Saskatoon Co-op has survived and grown to meet the demands of its members. This past year has recorded another profitable year for Saskatoon Co-op with net savings of $17,468,852 on sales of $415,057,032. Though it is down for previous years this is still a strong result despite the economic headwinds the city is facing. This success comes from the support of the membership and strong management and employee team that drives service to the upmost. The Saskatoon Co-op strives to improve and build facilities that help solidify success in the future. I was very proud to see the opening of the new Food store at Westview. With the grand opening that day, the Saskatoon Co-op in partnership with FCL Community Spaces program contributed $90000 to Caswell Hill Accessible Playground Project. Also announced was the construction of a new food store at Martensville. The year has been busy for your board. The board began the task of strategic planning for the Co-op. This shift brings the clear definition of our vision, mission statement and directives that will guide the board and management team in the future. This planning can provide a defined path for Saskatoon Co-op in the future. These definitions will be continually reviewed to make sure that the needs of the members are met. The Saskatoon Board has been reviewing the democratic process that it operates under. This is a big job and was felt by the board that a third party was needed to review the democratic process. The Saskatoon Co-op has engaged the Co-operative Studies Center at the University of Saskatchewan to conduct a comprehensive review of the democratic structure of Saskatoon Co-op. The study is to be completed in 18 months. Further updates will be provided. As I said, this is the 80th year and the tasks your board have undertaken will ensure the Saskatoon Co-op will be successful in years to come. Grant Whitmore, President of the Board 2015 Annual Report 1

4 Board of Directors Grant Whitmore President & Chair, Board of Directors Chair, Executive Committee Ex-officio, All Board Committees - Term expires 2018 Ron Moffatt Vice-chair, Board of Directors Vice-chair, Executive Committee Member, Policy & Governance Chair Member Relations - Term expires 2016 Norm Bemis Director Treasurer, Executive Committee Chair, Sustainable Growth, Facilities & Environment Vice-Chair, Finance & Audit - Term expires 2017 Mike Puckett Director Secretary, Executive Committee Chair, Finance & Audit Member, Policy & Governance - Term expires 2016 Gord Bedient Director Chair, Policy & Governance Member, Finance & Audit Member, Facilities & Environment - Term expires 2018 Leslie Bernett Director Member, Sustainable Growth, Facilities & Environment Member, Member Relations - Term Expires 2016 Jamie Herle Director Member, Member Relations Member, Policy & Governance - Term expires 2017 Denis Gilbertson Director Vice-Chair, Policy & Governance Member, Sustainable Growth, Facilities & Environment - Term expires 2018 David Thieme Director Vice-Chair, Member Relations Vice-Chair, Sustainable Growth, Facilities & Environment - Term expires The Saskatoon Co-operative Association Limited

5 The Saskatoon Co-operative Association Limited Guiding Statements Vision To Set the Standard for Excellence in Co-operative Retailing Mission To provide quality retail products and exceptional service to our members and customers, delivered by a knowledgeable, engaged team within a sustainable, co operative model. Aspirational Statements People We maintain a diverse, skilled and engaged workforce, and we are recognized as a desired place to build a career. Market We consistently provide excellent consumer experiences and actively demonstrate our Co-op brand values - Lifetime Membership Benefits, Locally Invested and Community-Minded. Operations We achieve efficiencies in all aspects of our business by utilizing effective processes and technologies, while maintaining an injury-free workplace environment. Financial We achieve financial goals while maintaining controls, managing risk, and pursuing viable opportunities for growth. Sustainability We are recognized as a leading contributor to our community and we practice sustainable environmental stewardship 2015 Annual Report 3

6 Management Report Financials Sales for the year were $415 million which was a 3% decrease from The main reason for the decrease in sales dollars was lower pump prices despite our litres sold increasing from the prior year. Our agro sales were also negatively affected by poor weather and our home centre sales were impacted by a slowing economy. Our gross margin was $75.6 million compared to $71.4 million the previous year. Strong pump margins in the marketplace was the main contributor to this increase. Expenses were $74.9 million which is an increase of 7% over the 2014 total of $69.9 million. Expenses increased mainly due to this being the first full year of operations for the Centre and Warman food stores and the Centre, Westview, Blairmore and Martensville gas bars. Also contributing to the increase was depreciation expense increasing by $1.9 million this year. Despite higher gross margin dollars, the higher operating expenses decreased our savings from operations from $1.5 million last year to $0.7 million this year. The patronage earned on purchases from our wholesaler Federated Co-operatives Limited (FCL) came to an amount of $14.5 million. FCL s earnings were negatively impacted by lower crude oil prices, lower refining margins, foreign exchange losses and increased depreciation which caused its patronage allocation to us to decrease by $2.3 million despite our volume of purchases increasing. We also had proceeds from the Colonsay Co-op dissolution and a Retail Improvement Credit from FCL included in other income this year of $2.3 million. This led to net savings before income taxes and patronage refunds to members of $17.5 million compared to $18.4 million the previous year. Patronage Allocations Patronage will be allocated to members share accounts from the net savings at the following rates, based on each member s purchases: Grant Wicks General Manager, Saskatoon Co-op Co-operative Retailing System Employee for 40 years Brad Weigel Operations Manager, Saskatoon Co-op Co-operative Retailing System Employee for 27 years Harley McClughan Operations Manager, Saskatoon Co-op Co-operative Retailing System Employee for 27 years Mike Isaak Operations Manager, Saskatoon Co-op Co-operative Retailing System Employee for 26 years 4 The Saskatoon Co-operative Association Limited

7 Gas bar fuel, Bulk petroleum 6.2% 6.25% Food 1.0% 1.0% Home centres, Agro hardware 2.0% 2.5% Crop inputs 2.0% 2.5% Prescriptions 1.5% 3.0% Liquor 1.0% nil Twine, Feed, Agro equipment 1.5% 2.0% Gas bar non-fuel 1.0% 1.0% Travel nil 1.0% Oil and lubes 10.0% 10.0% We continue to allocate a significant portion of our net savings to reserves which has led to a very strong balance sheet. This is done to ensure your Co-op has the financial resources to continue to prosper well into the future. Equity and Cash Back Your Board of Directors has approved an amount of $10.1 million to be allocated to members share accounts following the 2015 fiscal year. Requests for repayment of equity and the general cash repayment are expected to result in approximately $6 million being paid out during Facilities and Services The 50,000 square foot food store at Westview opened in May After the parking lot was completed, a grand opening was held in October The construction of the replacement 10 pump, 10 lane gas bar/convenience store in Warman was completed in June We began construction on a new 30,000 square foot food store Martensville in October 2015 with an expected opening in late Renovations and an expansion to the Attridge food store continued, with completion expected in early In closing, I would like to thank the members for their continued and strengthening support. Your management team looks forward to another exciting and prosperous year in Grant Wicks, General Manager 2015 Annual Report 5

8 Sustainable Growth, Facilities and Environment Committee Report The purpose of the committee is to work with Management in identifying new markets and business opportunities; and assessing the property needs of the Co-operative. It is also responsible for reviewing the environmental practices of the Co-operative and ensuring that policies and procedures are in place. The committee provides recommendations to the Board in both of these critical areas. Board members participate in an annual Strategic Planning meeting which assists in identifying opportunities for Saskatoon Co-op. Norm Bemis, Chair Projects that were completed since the last AGM: A new larger C-Store/Gas Bar in Warman on Centennial Blvd. to replace the former C-Store/Gas Bar on Central Street A state-of-the-art 50,000 sq ft Food Store at Westview to replace the 1960s era shopping centre A complete renovation of the Attridge Food Store which included several new offerings 6 The Saskatoon Co-operative Association Limited

9 Ongoing projects: A 30,000 sq ft Food Store in Martensville A new store in Colonsay offering Food, Hardware, Liquor, Pump Fuel and Agro Services along with a Cardlock. A complete interior renovation and modernization of The Centre Food Store The redevelopment of former lease space to accommodate expanded Co-op services at the Stonebridge Administration Building 2015 Annual Report 7

10 Finance and Audit Committee Report The committee advises the Board on financial administration matters and recommends policies to the Board with respect to the financial affairs of the Saskatoon Co-operative. It advises the Board on issues pertaining to the external auditors, management, the internal audit department, the Board and our membership. The committee also evaluates and reviews the distribution, and makes recommendations. Mike Puckett, Chair With the Saskatoon Co-operatives continued growth, the committee has placed significant emphasis on assessment of the Co-op s long-range financial projections and fixed asset plan. These long-range plans ensure our decisions make good financial sense and that we continue to manage the growth in a responsible manner so that we don t place our Co-op and member s equity in jeopardy. The Committee members are independent and all have, as a minimum, a basic understanding of financial statements and general financial knowledge. Committee and Board members continue to advance their education and are encouraged to participate in courses to improve their skills and knowledge of the financial aspects of the Co-operative system. 8 The Saskatoon Co-operative Association Limited

11 Policy and Governance Committee Report The purpose of the committee is to assist the board in the implementation of the Co-op s mission and objectives through developing and maintaining effective board governance strategies and policies. Gord Bedient, Chair The committee has been busy this year focused on the area of democratic reform. The task has been to seek out options for the board and membership on subjects from director nominations to types of voting procedures. The committee has investigated different systems used by other retails and what works and does not work and can be applied to Saskatoon Co-op. Important too is to determine what can be done under the present legislation governing Co-operatives in Saskatchewan. With this initial work the committee plans to meet with the Co-operative Studies Centre at the U of S to determine an action plan for Saskatoon Co-op. Any options will be brought back to the membership for final approval Annual Report 9

12 Member Relations Committee Report The purpose of the committee is to assist the Board in its role of maintaining and improving the viability of the Co-operative through programs aimed at increasing the interest, understanding and commitment of members, recruitment of new members and developing a positive feeling towards the co-operative in the community. Ron Moffatt, Chair Celebrating our 80th year of being a member-owned business in Saskatoon! supporting your community and what is new in the commodities we offer. Our membership has grown from 78,200 to over 102,000 over the past 5 years. It is very common to approve over 400 new members each month and while they are from all ages, most are in the 26 to 35 year old age ranges. Some of our very first member numbers have been retired but many others have been passed down in families over the years. In fact we still have a couple dozen 2 digit Co-op members patronizing our locations! Over the years we have talked a lot about member engagement, how to reach our membership and communicate with them. By taking the time to buy a membership and choosing to walk through our doors, in spite of all the competition, our membership has engaged with us. Our membership growth and increased sales reflect that we do have an engaged membership, purely by their decision to shop with us. For those interested in seeing more, join us on Facebook at facebook.com/yxeco-op, on and subscribe to yxeco-op YouTube channel to stay up to date with what is happening at your Co-op. We will share with you how we are We supported many non-profit groups over the past year, helping them reach their goals. Our total donations of $150,000 included: United Way Canadian Red Cross CHEP Good Food Inc. Secret Santa Restorative Action Plan Telemiracle 39 Easter Seals Juvenile Diabetes Research Foundation Crime Stoppers Saskatoon Crisis Nursery Saskatchewan Co-operative Youth Camp Music programs; festivals; local schools; University groups; sport teams and many other groups. Donations were in kind, cash or the gift card fundraising program (giving over $60,000 in gift card discounts in 2015). Also, the Food Bank & Learning Centre ($214,600) and the Friendship Inn ($84,000) are strong community partners that we work with on an ongoing basis, allowing you as members to contribute to the 10 The Saskatoon Co-operative Association Limited

13 strengthening of local families in need. The total in kind donations to these non-profits over the past year equaled $298,600. A $90,000 boost from Co-op Community Spaces will help the Caswell Community Association break ground on a safe, engaging and accessible new playground in Saskatoon. The Caswell Community Association is one of 16 community groups in Western Canada that received a combined $1 million in funding from Co-op Community Spaces this year. Launched by the Co-operative Retailing System (CRS), which is comprised of Federated Co-operatives Limited (FCL) and more than 200 independent retail co-operatives, Co-op Community Spaces provides support to recreation, environmental conservation and urban agriculture projects. products, excellent customer service and being a strong supporter of our community. With continuing expansion into growing neighborhoods, we are able to offer existing and new services to more customers and thereby grow our membership. Additionally, we offer a survey to our new members. In the last quarter of 2015, when asked What is the first word that comes to mind when you think of Saskatoon Co-op?, the answers were gas, local, friendly, and convenient. Visit our website : saskatoonco-op.ca under What s New on the home page for communications about Co-op in your community. This year, a market research survey was conducted on the Food and C-Store/Gas Bar Divisions. Results reflected that we are well known for; quality 2015 Annual Report 11

14 Human Resources Management Report General Staff Meeting Saskatoon Co-op held its sixth Annual General Staff Meeting on Sunday October 4, 2015 at Prairieland Park. The theme of the event was Occupational Health & Safety. Employees were treated to a hilarious performance from stand-up comedian Kelly Taylor. A presentation was given by safety speaker Kevin Burns, who was able to entertain our audience and also give an important message about the significance of workplace safety. Kelly s message was very valuable as he really keyed in on the idea that safety is a team game and that every employee can be a safety leader. Employees were also entertained by Saskatoon Co-op managers participating in a Co-op themed game of Jeopardy. Planning for the 2016 Staff Meeting has already begun. Employee Relations Saskatoon Co-op continued to grow in The opening of the new Westview Food Store provided current and potential employees with new opportunities. Employment opportunities will continue to be created throughout Saskatoon and area in the future, including the new Martensville Food Store. The Eco Pass Program continued in 2015, ensuring affordable bus passes are available and easy to access for all employees. The Employee Newsletter has continued to be an effective communication tool for employees by sharing accomplishments, personal and organizational news, and upcoming events and important dates. Employee Service Milestones were celebrated during the May and November coffee parties, where employees were given gifts to honour their years of dedication and service. Training Training opportunities continued to be offered to employees through courses and online training modules in Online training received a facelift in December as all E-learning moved to a brand new website, complete with updated training modules and an improved, easy to use interface. WHMIS training has been updated to include the new Globally Harmonized System of Classification and Labelling of Chemicals, which is now required in Canada. Training modules such as Co-op Branding continue to be mandatory for all staff, ensuring that staff are aware of and represent the core values of Co-op. Training is still an essential requirement for new and existing employees and this area will continue to grow as new courses and E-learning modules become available. United Way Giving Back to the Community The Saskatoon Co-op United Way Campaign for 2015 raised $29, in total donations, a record high in our history of the campaign. Saskatoon Co-op matched donations by 100%, demonstrating continued support for the United Way organization. Employees made donations to vote for which Managers they wanted to participate in a Co-op themed game of Jeopardy at the General Staff Meeting. Employees also contributed through a Change Drive, where they donated spare change to Change Meters that were located at each site. The goal of the 2016 United Way Campaign is to produce even more successful results. 12 The Saskatoon Co-operative Association Limited

15 Diversity In 2015, much work was done towards the goal of building and maintaining beneficial relationships with the members of our community. Saskatoon Co-op continued its partnerships with organizations such as Partners in Employment, YWCA, Open Door Society, Conseil De La Co-operation De La Saskatchewan, Individual Development Account Program, International Women of Saskatoon and others. Saskatoon Co-op supports these organizations by attending job fairs, providing work placement opportunities and hiring casual and permanent candidates. Saskatoon Co-op continued its strong relationships with local high schools, both in and around Saskatoon, to support the younger workforce. Work education placements were taken whenever possible. These partnerships have allowed Saskatoon Co-op to support community groups and better represent the community through a more diverse workforce. Health & Safety Saskatoon Co-op completed the first year of the new Health & Safety program within the organization. Being able to track incidents and learn from them has been beneficial in addressing where Saskatoon Co-op needs to go in We will continue to develop policies that ensure our employees are working safely and going home injury free. We are looking at managing our return to work program and to help them recover and return to safe environments. Monthly observation tours are taking place at all locations, giving us new objectives and directives for Annual Report 13

16 Locations Saskatoon Co-op Head Office Administration Member Relations Department Human Resources Department Credit Department Board of Directors Wellman Crescent Saskatoon, SK Wine, Spirits, Beer Store Blairmore Convenience Stores / Gas Bars Fairhaven Greystone Attridge Westview The Centre Stonebridge 22nd Street 51st Street Avenue C Preston Crossing Blairmore Colonsay Martensville Warman Car Washes Greystone Attridge Stonebridge Preston Crossing 51st Street Avenue C Blairmore Cardlocks 51st Street Tamke Road Martensville Food Stores Attridge Stonebridge The Centre Westview Warman Colonsay Pharmacies (located in Food Stores) Attridge Stonebridge The Centre Westview Home Centres Avenue C 8th Street Agro Centre Agro Centre - Highway The Saskatoon Co-operative Association Limited

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33 Statement on the Co-operative Identity International Co-operative Alliance Definition A co-operative is an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise. Principles The co-operative principles are guidelines by which co-operatives put their values into practice. 1. Voluntary and Open Membership Co-operatives are voluntary organizations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination. 2. Democratic Member Control Co-operatives are democratic organizations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership. In primary co-operatives members have equal voting rights (one member, one vote) and co-operatives at other levels are also organized in a democratic manner. 3. Member Economic Participation Members contribute equitably to, and democratically control, the capital of their co-operative. At least part of that capital is usually the common property of the co-operative. Members usually receive limited compensation, if any, on capital subscribed as a condition of membership. Members allocate surpluses for any or all of the following purposes: developing their co-operative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their Values Co-operatives are based on the values of self-help, self-responsibility, democracy, equality, equity and solidarity. In the tradition of their founders, cooperative members believe in the ethical values of honesty, openness, social responsibility and caring for others. transactions with the co-operative; and supporting other activities approved by the membership. 4. Autonomy and Independence Co-operatives are autonomous, self-help organizations controlled by their members. If they enter into agreements with other organizations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their co-operative autonomy. 5. Education, Training and Information Co-operatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their co-operatives. They inform the general public particularly young people and opinion leaders about the nature and benefits of co-operation. 6. Co-operation Among Co-operatives Co-operatives serve their members most effectively and strengthen the co-operative movement by working together through local, national, regional and international structures. 7. Concern for Community Co-operatives work for the sustainable development of their communities through policies approved by their members. Manchester, United Kingdom, September 23, Annual Report 31

34 Notes 32 The Saskatoon Co-operative Association Limited

35 Integrity Present an open and ethical company Bring a reliable and honest approach to business Treat people with respect Be accountable for all decisions Deliver sustainable returns and growth Develop People Dedication to healthy work environments Provide valuable employment Work co-operatively as a team Sustain high morale Facilitate employee achievement and development Community Strengthen our community Care for our environment Support our neighbourhoods Contribute positively to our local economy

36 The Saskatoon Co-operative Association Limited Wellman Crescent Saskatoon, SK Canada S7T 0J1 Phone (306) Fax (306)