2019 Annual Report

LOCALLY INVESTED | COMMUNITY MINDED | LIFETIME MEMBERSHIP BENEFITS Our Mission To capture the hearts and minds of our employees, members and communities to grow our co-operative while returning profits to our member-owners. Our Vision To be our members’ preferred brand along life’s journey. Our Values INTEGRITY…be honest and trustworthy in everything we do!

TEAMWORK…we see the value in working together and always striving to do our best.

RESPECT…for our co-workers, members and communities. Contents

PRESIDENT’S MESSAGE 5

CEO’S MESSAGE 6

MINUTES OF THE 8IST ANNUAL GENERAL MEETING 8

BOARD REPORTS 13

Board of Directors Report 14

Audit Committee Report 16

Nominations Committee Report 16

Governance and Compensation Committee Report 17

FINANCIAL STATEMENTS 19

DIVISION REPORTS 39

About Us 40

Food Division 42

Energy Division 44

Human Resources Division 46

SUSTAINABILITY REPORT 49

Community Investment 48

Environmental Sustainability 51

STATEMENT OF CO-OP IDENTITY 52

CODE OF ETHICAL STANDARDS FOR CO-OPERATIVES 53

RED RIVER COOPERATIVE LTD | 2019 ANNUAL REPORT | 3 Sustainability Pillars Red River Co-op isa different kind of business, and we operate our business with five guidingpillars

Co-operative Leadership

Fiscal Responsibility

Environmental Sustainability

Employee Engagement . Community Investment We have been challenged by our members to expand our food President’s offering in and around the city of Winnipeg. Following the addition of three locations at Lorette, Selkirk and Stonewall in Message 2018, this year we have added Gimli as a new location to the Red River Co-op family. We also announced, in conjunction with Federated Co-operative Limited (FCL), the rebuilding of the location in St. Norbert and our intention to build a new grocery store at the Seasons of Tuxedo. At the same time, we finished a major renovation at our Grant Park location that Ward Weisensel reflects the standards we are aiming to achieve in our grocery President of the Board locations. We continue to look for new opportunities to grow our food and energy brand to better serve our members, where a business case can be supported. The role of the Board of Directors is to steward the resources of the organization and report on the state of We continue to invest in our energy business across our our co-operative. This is my third year as President of network. We are in the midst of a multi-year plan to improve the Red River Co-op Board of Directors and I have been our older assets so that they are consistent with the offering honored to work with our current Board to grow our we want to see across the co-operative retailing system. co-operative for the benefit of our many members. I am proud of what we have accomplished during the past Your Board, and indeed the whole organization, takes its 80 years. However, longevity is not an indicator of success responsibility to members very seriously. We work diligently and not something we can take for granted. We must remain to advance our co-operative and its competitive position, relevant, competitive and flexible to meet the changing needs facilitating the sustainable growth of Red River Co-op. of our members.

It is important to tell our story – a story that was started in In order to accomplish this, we are taking a more strategic the city of Winnipeg and surrounding communities more than approach to co-operative governance. This approach is made 80 years ago. Not only do we keep profits local and invest in more important due to the increasing size of our retail and the local economies, we are involved and personally give where we increasing pace of change – requiring our board to look five or live and work. ten years into the future to ensure we are meeting the needs of our members and communities. We are a different kind of business. A business built on the idea of being truly local and a promise to stay that way. A business We have benefited from bringing corporate performance that cares. For people and about people. For communities management into all of our key areas at our co-operative. This and about communities. A business that is centered on the is a process to provide insight into business decisions, alignment customer. Where customers can become members, and of resources and accountability. This model, centrally developed members are owners. A business that shares its profits with by FCL in collaboration with input from retail Co-ops, provides its members. a framework for retail co-operatives to tailor their business planning and position themselves for the future. In today’s economy, competition remains a challenge to our business. We continue to observe competitors who are It is important that we remain focused on our members and interested in entering the market. Technology continues to communities and leverage our co-operative advantage. The change behaviour; therefore, we must think about how our Board works with our Executive Leadership Team, assessing co-operative conducts its business and reaches both its potential challenges and developing the strategic direction to members as well as non-member customers. lead through the ever-changing business landscape.

We have a distinct advantage over our competition as our Members’ support in the past and into the future is a business model balances economic and social interests. cornerstone of our continued success, along with our Investing in our local communities and meeting the needs of alignment in values, vision and purpose. In the years to come, our more than 312,000 members is essential to who we are as we will continue to build on our strengths to advance our a business. vision to “Be our members’ preferred brand along life’s journey.”

RED RIVER COOPERATIVE LTD | 2019 ANNUAL REPORT | 5 CEO's Message

Doug Wiebe Chief Executive Officer

In spite of the more challenging environment, Red River Co-op continued to invest in our processes, our people, our brand presence and our facilities. From a technological stand-point we continued to pursue the launch of our “Click & Collect” program for our food business and we expect to launch our pilot early this year. We also have been working behind the scenes to deliver a carwash mobile app which too will be launched early in 2020. The completion of the online director candidate voting application was completed and utilized for this year’s slate of candidates. We also continue to work with FCL on additional initiatives to enhance the member/customer experience.

We continue to invest in our employees, and in 2019 we delivered our very first Brand Day bringing together as many of our employees Red River Co-op continues to grow, expand and evolve itself as possible to discuss the performance of our Co-op and the future to meet the ever-changing needs of its members and adapt to direction of our retail. Our food division team was recognized as the competitive forces within the market. This past year was a Manitoba’s Favourite Local Retailer again in 2019, marking the third challenging economic environment in Western Canada and your time in the past four years that they earned this recognition. In 2019 Co-op was not immune. Despite these challenging conditions, Red our support of local producers, growers and manufacturers grew to River Co-op held its own in terms of market share and was solid in more than $10 million in sales. terms of overall impact and performance. Red River Co-op enhanced its presence in the communities we Although your Co-op’s sales were flat with 2018, our profitability serve through our support of local charities and non-profits was down in 2019 following the record earnings of 2018. Local totalling more than $180,369 this past year. We also combined earnings were impacted as a result of a conscious decision to ensure our efforts with those of FCL’s through the support of Co-op our price at the pumps were competitive with all fuel retailers, Community Spaces Program and the Red Cross Give Card including discounters such as COSTCO. As a result, the available promotion, both raising funds for very worthy causes in Western margin in the Winnipeg pump gas market was challenged at the Canadian communities, including here in Winnipeg. Red River local level. We also saw continued pressure on food margins as all Co-op is proud of the work we continue to do in the community food competitors fight for market share in a very static market. thanks to the support of members, the most recent example Finally, as shared in the past, a large portion of our earnings are being a $70,798 donation to the Children’s Hospital Foundation derived from Federated Co-operatives Limited (FCL) and the 2019 of Manitoba through proceeds from the 2019 Fuel Good Day and allocation was down $14.3 million from their record results in 2018. sales from our Grey Cup Champion Blue Bombers Collector cups.

Working together, we will make a difference in members’ lives by sustaining our operations and doing our part to improve the communities we serve.

6 | RED RIVER COOPERATIVE LTD | 2019 ANNUAL REPORT During 2019 we completed extensive upgrading at both our member-owned and not by an individual shareholder(s), food and energy division sites. This work is necessary to ensure as a member you have a say in how this business is run we have facilities which are modern and relevant to the needs through the democratic process. We invest in communities, of our member-owners. Two major investments that took place through the construction of new, or the upgrading of this past year were the complete rebuild of the fuelling station existing facilities. We employ local people, fuelling local in Niverville and the modernization of the Grant Park food store. economies through salaries, wages, the taxes paid and the We also expanded our food presence in our trading area with revenue these individuals spend sustaining themselves the acquisition of the Super A Foods store in Gimli. We hope to in their communities. At Red River Co-op we are very complete the upgrading of all our energy assets by the end of proud of our support of local producers, growers and fiscal 2021. In terms of food store expansion, we will open our manufacturers to aid in the development of a vibrant and eighth location in St. Norbert late in 2020 and will commence sustainable community. We also give to many charitable construction of our ninth food store in the fast-growing organizations who make our community a better place Seasons of Tuxedo area this summer. We continue to look for for us all. The ultimate difference: we share our profits opportunities to grow both our food and energy presence in with our members – no other business does this! and around the city of Winnipeg. In 2020 we opened our first electric vehicle charging station at our Dryden gas bar through As we look forward to 2020, we do so with optimism, a partnership with Tesla. We are currently working with the thanks to our extremely talented team members, a Co-operative Retailing System to develop an electric charging visionary Board of Directors who are the keepers of corridor across Western Canada and are currently planning for Co-op principles and philosophy, and our member-owners the installation of four charging stations in the city of Winnipeg. who care about their Co-op and their communities.

The ongoing evolution of the energy sector and the regulations We will continue to evolve and build our Co-op business, governing it will provide challenges for the sustainability and we will continue to enhance our relationships of FCL refining operations in Regina. These impacts to the with each other, our suppliers and our communities. refinery complex have a direct impact on Red River Co-op and Working together, we will make a difference in its members because they contribute to our ongoing success members’ lives by sustaining our operations and doing through the patronage dividends we receive from our wholesale. our part to improve the communities we serve.

As a co-operative, we are a different kind of business. Red On behalf of our management team I express my River Co-op has a role to play within the community and we gratitude to our members. It is our pleasure to serve operate very differently than our competitors. Because we are you, and thank you for supporting Red River Co-op. Minutes of the 81st Annual Meeting APRIL 11, 2019

1. REGISTRATION 8. ADOPTION OF MINUTES OF THE 80th ANNUAL MEETING All members in attendance registered in advance of the Annual Meeting. Director Marlene Boersch referred the members to the 80th Annual General Meeting draft minutes included in the 2018 Annual Report 2. CALL TO ORDER booklet provided to members at registration. The 81st Annual Meeting of Red River Cooperative Ltd. was held on April 11th, 2019 at the Canad Inns Polo Park, in Winnipeg, Manitoba. President Motion that the minutes of the 80th Annual Meeting of Red River Ward Weisensel called the meeting to order at 7:00 pm. Cooperative Ltd. be adopted as received. Moved: William (Bill) Carlson #60259 3. NATIONAL ANTHEM Seconded: Marvin Silver #405020 Carried 9. BUSINESS ARISING FROM THE MINUTES 4. WELCOME AND INTRODUCTIONS There were no matters arising from the 80th AGM minutes minutes. W. Weisensel, on behalf of the Board of Directors and Management, welcomed the 298 registered members and their guests to the Annual 10. BOARD OF DIRECTORS’ REPORT General Meeting and confirmed that quorum was achieved. He thanked the members for their attendance, participation and their support W. Weisensel referred the members to the detailed reports included in of their Red River Co-op gas bars, food stores and pharmacies. He the 2018 Annual Report booklet. reviewed the contents of the 2018 Annual Report booklet. W. Weisensel • W. Weisensel highlighted points within the reports: welcomed and thanked other co-ops and credit unions members in o R ed River Co-op paid $35.7 million in cash to the membership in attendance. He introduced fellow Directors, Marlene Boersch Vice- February 2019. President; Anna Maria Magnifico Secretary, absent due to a family matter, o Unlike other retailers, Red River Co-op’s profits remain with our Jim Huggard, Glenn Williams Acting-Secretary, Kristen Wittman, and members as reflected in the $162 million of patronage paid out to Donna Zwarich, as well as Chief Executive Officer Doug Wiebe, and members over the last 5 years. Executive Assistant René Baker recording secretary for the meeting. o Three additional food stores were acquired in 2018; Stonewall, Selkirk, and Lorette. 5. ADOPTION OF AGENDA o R ed River continues modernization of their facilities. Grant Park food store is expected to be complete in May with many similar W. Weisensel stated the meeting should conclude close to 9:00 pm and upgrades seen at the Southdale food store. encouraged members to approach Directors or Management after the o R ed River Co-op is focused on local issues and concerns unlike meeting if time did not allow for further questions or comments. national and trans-national competitors. Red River supports many local suppliers. Motion that the agenda for the 81st Annual Meeting of Red River o The Board approved donations of over $115,000 to community Cooperative Ltd. be adopted as presented. organizations. A full listing of the organizations can be found (in Moved: Sheila Snider #197550 the annual report booklet and) on the website. The last 5 years, Seconded: Louis Ricciuto #421205 Carried the membership has collectively donated over $800,000 to the communities we serve. 6. RULES OF ORDER W. Weisensel reviewed the Rules of Order with the members and W. Weisensel concluded by thanking the membership for their continued informed members that any resolutions need to be submitted in writing support of their Red River Co-op. by 8:00 pm to the Resolution Committee, M. Boersch and D. Zwarich. If any procedural matters arise requiring ruling Kristen Wittman would act 11. RETAIL REPORT as parliamentarian. Doug Wiebe, Chief Executive Officer introduced the Executive Leadership Team and presented the Retail Report. Motion that the rules and regulations governing the annual meeting be • D. Wiebe shared Red River Co-op’s 2018 accomplishments, focus, goals accepted as presented. and continued areas of commitment; Moved: Gladys Wirth #391852 o Guiding statements were updated to better align and engage our Seconded: Eva Bell #323895 Carried staff with the future direction of Red River Co-op. o Upgrading of all petroleum assets scheduled for completion by the 7. MOMENT OF SILENCE end of 2020. A moment of silence was observed in memory of those members who o Shared that Co-ops are governed by the seven international passed this past year. principles, by these principles Red River has and continues to strongly invest and support local through employment, local entrepreneurs as well as its continued support towards community donations and sponsorships while focusing on returning profits to the members. o D . Wiebe advised the membership on FCLs contribution to Red River’s annual bottom-line which contributed to the $41 million returned to the members.

8 | RED RIVER COOPERATIVE LTD | 2019 ANNUAL REPORT 12. PRESENTATION OF AUDITED FINANCIAL STATEMENTS 16. HUMAN RESOURCES REPORT Judy Yeo, Chief Financial Officer, presented the Financial Statements for Murray Dehn, Vice-President Human Resources shared the needs and the year ending October 2018. Throughout the report Members were goals to support and engage the 614 employees at Red River Co-op. asked to refer to the financial statements provided in the Annual Report • R ed River is committed to creating goals and action plans for the booklet they received at registration. employees.  • J. Yeo highlighted points of the financial statements; Management’s • With proper identification, training and succession planning Red responsibility, sales, margins, expenses, savings from operations, the River’s goal is to hire future managers from within our employee balance sheet, and the cash flow statement. base. • Throughout 2018 staff were involved in various training events as 13. AUDIT REPORT well as volunteer initiatives, Jeff Eckstein, CPA, CA and Partner with Myers Norris Penny, and Lead • R ed River monitors workload to ensure fair compensation as well as Engagement Partner of the Red River Co-op audit, with the assistance of a healthy Work-Life Balance. the FCL internal audit team, reported that the audit was completed in an M. Dehn presented this years Red River Co-op’s Brand Ambassador effective and efficient manner. J. Eckstein confirmed MNP received the award, who had been chosen by our employees to Leona Makowsky. full cooperation and support from Management, the Audit Committee and the Board of Directors throughout the process. The Independent 17. APPROVAL OF THE MANAGEMENTS REPORT Auditors Report is included on page 23 of the Annual Report booklet. Motion that the 2018 Board of Directors’ Report, Retail, Audit, Energy He pointed out the note on each financial incorrectly stated that the Division, Food Division and Human Resources Division Reports be statements are in millions of dollars. J Eckstein stated the audit report is approved as presented. an unqualified, or clean audit opinion dated January 7, 2019. Moved: Murray Dehn #139604 Seconded: Denis Bourrier #407767 Carried 14. ENERGY DIVISION REPORT Gordon Grainger, Vice-President Energy Operations reported on the DISCUSSION highlights of the Energy Division in 2018. Board and Management responded to questions from the floor. • Man y gas bar locations received interior and exterior upgrades as • #165945 Evan Chrisp well the new Co-operative Coffee Program. Mr. Chrisp referred to page 18 in the annual report and questioned the • The availability of purchasing carwash codes at non carwash sites increase of the Director remuneration. has been expanded to all Winnipeg locations. o W. Weisensel requested his question be deferred as it relates to the • The future expansion of the bulk delivery service will improve service Director Compensation agenda later in the meeting. in our trading area. Work Alone Pendants were implemented for the safety of our bulk delivery drivers. • #32238 Ron Kehler • R ed River continues to provide full service to members and Why is Red River utilizing a bank in Calgary to send out cheques, and not non-members as well as healthy, fresh and local items within the a credit union? convenience stores. o J. Yeo responded: The equity cheques are written on a HSBC due • R ed River continues to monitor the energy market and the trends to to the large volume of 300,000+ cheques. FCL negotiates for better serve its members. the service on behalf of the retail members. Red River utilizes the services of FCL to process and clear the cheques for us. 15. FOOD DIVISION REPORT Page 32 of report - How are customer lists an intangible asset? Paul Bustard, Vice-President Food Operations, reported on the growth, o J. Yeo responded: These customer lists are the pharmacy patient upgrades and offerings at Red River Co-op locations. lists from the purchase of the Safeway stores. Those patient lists • R ed River Co-op had sales increases in the 3 urban food stores and were recorded with a value, they are not being sold or shared. Main Street pharmacy locations. Did Co-op take advantage of the federal funds under the environmental • The food store locations expanded to include a food store in Selkirk, program? Stonewall and Lorette. o D . Wiebe responded: Clarified Loblaws received $12m in subsidy • New Health and Wellness department was opened at the Southdale which has received some public controversy. Red River did not food store with a designated Health and Wellness advisor. A second participate in the federal application however we are part of the Health and Wellness department advisor will be available at the EV charging stations across western Canada, and there is federal newly renovated Grant Park food store location in May. funding involved to subsidize that portion of the business. Red River • R ed River Co-op supports local; carries over 600 items grown, raised did receive funding through Manitoba Hydro on energy efficiencies or produced in Manitoba. for Southdale and the Grant Park food stores. • R ed River Co-op Food Stores supported community initiatives such as Socks for Siloam, with member support, donated 27,744 pairs of socks in the winter. • Food Operations partnered with Green Action Centre donating the profits from single-use plastic shopping bags to this organization to assist with their waste reduction efforts.

RED RIVER COOPERATIVE LTD | 2019 ANNUAL REPORT | 9 Minutes of the 81st Annual Meeting APRIL 11, 2019

• #197550 Sheila Snider • #60259 Bill Carlson Are you still looking for a location for a store in the North End to replace Is the market share still growing? the one on Main Street that was closed? o G. Grainger responded: The Winnipeg market share has flattened o D . Wiebe responded: Red River Co-op continues to search the out, at over 42% market share. Rural markets are very strong at city and surrounding area for opportunities for food stores with 40-60%. The bulk division is not included in the market share pharmacy or stand-alone pharmacy. Feasibility studies are reports but has strong growth. completed and presented to the Board of Directors for any new development. • #274079 Tina Neudorf Why is there not an easier way to correct membership number error? Why is the Red River Co-op membership not valued in other towns and o D . Wiebe – Red River’s intention with the current process is cities? designed to make it easier for the member to correct the error right o D . Wiebe responded: There are 170 independent retails across at the location as opposed to coming down to the head office. western Canada and each one has its own membership base. Red River Co-op memberships are valid at any of the rural or city Red • #011523 Pat Carroll River gas bars, food stores and pharmacy locations. What is the policy on rotating the external audit firm? o D . Wiebe commented that patronage and cashback is viewed as an o W. Weisensel responded: The current practice has been to test ownership program. The Co-operative Retailing System is pursuing the market approximately every 3 years. At present MNP has a path to provide a loyalty/rewards program to entice members to completed the audit the past 2 years. PwC the 2 years prior, and FCL support other retail co-ops outside of their trading areas. retail audit before that. Presently, the Board and Management are satisfied with the auditor and the work is going well. • #105924 Mickey Hersak Does Human Resources do exit interviews with employees that move on Commented that the greeting at the gas bars needs to be improved to from the company? include “hello”. Questioned the marketing strategy of stocking the gas o M . Dehn responded: There is an exit interview questionnaire and bar locations with toys from questionable sources. process with all staff that end their employment with Red River. o G. Grainger responder: This is a decision of the owner operator as Mr. Carroll commented: He encouraged the Co-op to investigate and most gas bar locations are run with agency agreements. The toys pursue possible amalgamation opportunities; applauded the Board for in question are obtained from a reputable Canadian supplier and do the work they do for the small remuneration they receive; and suggested sell very well. to eliminate plastic bags and use paper bags. • #53283 Wayne Bell • #206370 Randy Znamirowski Concern that the fuel trucks block off some of the pumps during business Commented on the small compensation the Board receives for their hours; is there any possible way to change this process? work; and applauded the significant improvement of the net savings. o G. Grainger responded: Red River works with the fuel provider to Asked for an explanation of the negative working capital. ensure the least disruption of service for our members. Due to the o J. Yeo responded; Referred the membership to the financial sales volume it may be required to have the fuel delivered during statements on page 33 note 10, and explained throughout the year the day. Red River has access to funds from FCL, which we use like a line of credit to minimize our interest expense while covering off risks. • #84141 Henry Peters How is FCL doing? Asked for clarification with the price spread between regular and o D . Wiebe responded: FCL had a record year in 2018, the refining premium wholesale per litre? operations were extremely strong. Red River received a portion of o G. Grainger responded: We price our sites competitively in the earnings from the refinery complex. A large portion of our earnings markets where we do business. The cost differential and the come from the energy side of the business. Red River is the largest volumes that we move effects the spread. The Energy division retailer of petroleum in Western Canada for the co-operative reviews the spread constantly. retailing system. Red River received the largest patronage refund of any retail co-op in the system. FCL had a very strong year due • #106193 Gordon Machej to some anomalies in the energy sector that have since leveled off, What are the plans for the St. Norbert Marketplace? however we still anticipate a strong year in 2019. o D . Wiebe responded: FCL will be rebuilding the St. Norbert location. Red River is currently negotiating with Federated. Management • #101593 Diane Frolick plans to bring a feasibility to the Board to discuss and review this Asked Management to comment on the stand-alone pharmacies and the opportunity. Red River’s intent is to run the facility with possible possibility of stand-alone bakeries. options of lease and/or ownership. o D . Wiebe responded: Red River continues to investigate the opportunities for stand-alone pharmacies. Red River will only W. Weisensel thanked the membership for their questions and pursue opportunities viable to the co-op. Bakery stand-alone has viewpoints both oral and written and encouraged members to approach not been identified as a market opportunity as it is a challenge to the Board and/or Management for further discussion and dialogue at the make money in bakery in our stores today. Red River’s focus is to end of the meeting. improve our operations before expanding outside of our stores.

10 | RED RIVER COOPERATIVE LTD | 2019 ANNUAL REPORT 18. MOTION TO CLOSE RESOLUTIONS • #257894 Ken Lamoureux There were no resolutions submitted by 8:00pm so the following motion Comments: It is common practice, good governance, to have the board was considered. select the number of members with in a range of the bylaws. Online voting at the credit union has doubled the number of votes over the past Motion that resolutions be closed. 3 years. Moved: Bruce Froebe #185476 Seconded Sheila Snider #194550 Carried 20. DIRECTOR COMPENSATION W. Weisensel shared the background that led to the recommendations 19. BY-LAW CHANGES to increase Director compensation. The membership approved the K. Wittman reviewed the highlights which were available on the website recommendation to increase director per diems from $250 to $350 per the week of March 4, 2019 and provided in the annual report. The meeting 4 years ago. The Board has recognized many significant changes main change is to allow members to vote by electronic ballot; if the of the business over the past several years; the addition of the food amendments are approved members will be able to vote by mail or email. stores/pharmacy; increased time spent in representation and preparation The existing by-laws were streamlined and prepared for the membership for meetings and responsibilities as a member of the Board; the length to approve by ordinary resolution at the AGM. and level of intensity of the Committee and Board meetings; as well as the increased potential liability of being a director, such as additional Motion to approve the by-laws be accepted as presented. health & safety and environmental legislated requirements. As per the Moved: Kristen Wittman #106089 2017 Koenig and Associates Director compensation review, Red River’s Seconded Rene Zegalski #147113 Carried current level of director compensation is significantly below what is available in other organizations of similar size and complexity. From the DISCUSSION perspective of gross revenues, Red River would be among the largest of co-operative sector businesses examined in the Koenig and Associates • #206370 Randy Znamirowski study. The average retainer of the organizations studied was $25,000 What process will be in place to ensure security of ballot? per year and the average meeting per diem was $500. o K . Wittman responded: With the work of the scrutineers, who supervise and govern the voting process, there will be security Motion to approve that Director compensation be changed to a monthly measures in place. Members would receive a unique identifier retainer of $500; and a meeting per diem of $550, providing the meeting to their membership number allowing the process to remain is less than six working hours. If the meeting is greater than six working anonymous. Credit unions have had electronic voting for several hours Directors would receive $195 per hour or part thereof for every years; which gives us a secure model to follow. hour over 6 working hours. • #32238 Ron Kehler Moved: Ward Weisensel #198348 Does the Board have authority to determine the number of directors? Is Seconded Bruce Froebe #185476 Carried this not indicated in the articles as to how many directors are to be in our co-op? • #292902 John McLeod o K . Wittman clarified the articles for RRC define a range of the How many hours of preparations is there between meetings? number of directors, between 3 and 11. Currently Red River has o W. Weisensel responded: Preparation for meetings varies however a board of 7. As the business grows and expands, the board will approximately 3-4 hours. There is additional preparation for need to be responsive to Management’s needs. This may require external meetings as well. the need to increase the size of the board to be better able to be Does the Board of Directors have liability insurance? responsive to management and members in order to address the o W. Weisensel confirmed that Red River Co-op carries Director more significant responsibilities. Indemnification Insurance. Why is the age being lowered from 18 to 16? o K . Wittman clarified in the proposed by-laws the age for 21. MOTION TO APPOINTMENT EXTERNAL membership is 16, the same as before: the age did not change. The AUDITORS FOR 2019 FISCAL YEAR age is 16 as pursuant to the Co-op Act. Why must a Member vote for the number of directors that is equivalent Donna Zwarich, Chair of the Audit Committee, thanked the Red River to the open positions on the Board? finance team, the FCL internal audit team, and MNP external audit o K Wittman explained the hope was not to draft the bylaws during team. D. Zwarich advised that Management and the Board of Directors the evening. She proposed to have a vote on the streamlined were pleased with the level of service provided by MNP and the ease of bylaws. Any amendments to the bylaws may be brought forward communication with all teams involved. to the Governance and Compensation Committee for future consideration. Motion to approve Meyers Norris Penny (MNP) be appointed as external o W. Weisensel clarified the requirements of the voting for the auditors for 2018-2019 fiscal year. number of directors is to avoid the possibility of any special interest Moved: Donna Zwarich #33023 group being able to dominate the election process. Seconded: Ron Keller #32238 Carried

RED RIVER COOPERATIVE LTD | 2019 ANNUAL REPORT | 11 Minutes of the 81st Annual Meeting APRIL 11, 2019

22. DIRECTOR ELECTION RESULTS • #101593 Diane Frolick Chair was turned over to M. Boersch, who introduced the 3 independent What were the results of the other 3 candidates? scrutineers, Dale Ward, Wayne Hacking and Bert Weber. • #115233 Patrick Carroll D. Ward, Chair of Independent Scrutineers reported on the election Requested the results of the 6 candidates that ran for the 2019 Election activities and results. results. D. Ward explained the primary role of the scrutineers was to oversee the o The results of the other 3 candidates: voting process, and ensure its accuracy and integrity. D. Ward outlined Ken Lamouroux 2,607 the process of the election and timelines that were adhered to and Ivan Horvey 2,667 discussed the verification, safety, and security process of the ballots. He Umar Huyat 930 ensured that member confidentiality was protected throughout the process, and certified that the 2019 Board of Directors Election process The total votes of the 6 candidates equaled 19,227. was properly conducted in all aspects. (19,227/3votes per ballot = 6,409 valid ballots)

D. Ward introduced the 6 candidates that stood for the 2019 Director’s 23. MOTION TO DESTROY THE BALLOTS election. Motion that the ballots of the 2019 election be destroyed. Moved: Dale Ward #89165 The results were as follows: Seconded John McLeod #292902 Carried Total eligible voters 291,055 Total ballots returned 6,618 W. Weisensel resumed the chair. Spoiled ballots 209 • Donna Zwarich thanked the membership for their support on being Valid ballots 6,409 re-elected to the Board of Directors. • Ward Weisensel thanked the membership for their support and will Candidates Votes Received continue to work hard to grow our co-op for our members. (Alphabetical Order) Magnifico, Anna Maria* 3,669 24.NEW BUSINESS Weisensel, Ward* 4,434 W. Weisensel asked if there was any new business to discuss. No new Zwarich, Donna* 4,920 business was presented.

Anna Maria Magnifico*, Ward Weisensel*, and Donna Zwarich* were 24.ADJOURNMENT declared elected. W. Weisensel thanked the membership for their attendance, participation and supporting their co-op. He thanked Management and D. Ward invited any questions or concerns from members in regards to staff for all their efforts for the past year, as well as for their preparations the 2019 Director Election results. for the AGM. W. Weisensel thanked his fellow Directors. He requested the membership to complete and leave the member evaluation on • #165945 Evan Chrisp their table. He reminded the membership to approach any of the Board Concerned the numbers of votes of those elected did not add up to the members or Management if they have further questions or comments. total votes. o D . Ward explained only the elected candidate votes were shared. Motion that the meeting be adjourned at 9:09 p.m. Moved: [Man] [inaudible] [02:09:06] • #35891 George Aradi Second Louis Ricciut #421205 Carried Commented his disappointment on the low voting numbers. 25. DOOR PRIZES • #101593 Diane Frolick What percentage of spoiled ballots was due to the number of candidates Door prizes were drawn for and distributed to members present. to be voted for? Further to the number of votes required on the ballot feels it was unfair not to be allowed to be amend by-law tonight. o Dale Ward did not have the exact number but shared it would have been the majority. The instructions were very clear on the ballot, there may have been instances where some ballots were purposely spoiled. o K Wittman responded that the Governance Committee will accept proposals for amendments to the bylaws through the course of this year and will bring forward those amendments at next year’s AGM. The written proposals may be submitted to Red River Co-op head office attention René Baker.

12 | RED RIVER COOPERATIVE LTD | 2019 ANNUAL REPORT BOARD REPORTS

Working together to make a difference in members’ lives Board of Directors Report

Your Board of Directors is responsible for the stewardship of your co-operative, providing leadership and guidance to our Chief Executive Officer, monitoring the co-operative’s performance and reporting to the membership.

We are pleased to report that 2019 was an excellent year The competition in the grocery business is very intense and we for your Co-op. continue to work on the challenges this presents. We continue to see growth in volumes and we are in the process of making Red River Co-op continued to invest and upgrade our petroleum significant upgrades at our locations to keep the Co-op “look operating facilities to ensure that they continue to reflect the and feel” consistent with our long-term business plan, which brand image that our customers and members expect. is to increase overall sales. We completed the upgrades to our facility in Grant Park. Our location in St. Vital is currently Significant exterior upgrades were completed at our North Main, being renovated. We have also announced our intention to Owen, Grandmont, Charleswood, Keewatin, Gateway, Stonewall, build two new stores in St. Norbert and Seasons of Tuxedo Gimli and Oakbank gas bars. We continue to look at additional in partnership with Federated Co-operatives Limited (FCL). locations that can provide a good business case for Red River We will also be testing an e-commerce offering at our food Co-op and its members. store in Grant Park. We want to thank the membership for We are now in our fifth year in the grocery and pharmacy business supporting our grocery stores, particularly at our Grant Park with our St. Vital, Grant Park, Southdale, Main Street locations; location during the disruption associated with its remodel, our second year in the grocery business in Selkirk, Stonewall and and we ask that you continue to give us the opportunity Lorette; and in our first year in Gimli with the takeover of the to earn your business in the months and years ahead. Super A Foods last summer. During 2019, Red River Co-op, with the assistance of MNP, completed an extensive Maturity Threat Analysis to determine our current cyber security posture as it relates to protection of data and business continuity. Management is working with our IT provider to maintain or upgrade our systems and practices to protect your Co-op.

Earnings from our core operations were good in 2019, which enabled your Co-op to pay $33.7 million in cash to our membership this past February. During the last five years, $159.5 million in cash has been paid to members. This is a record that you can be proud of.

Community investment has always been an important component of our goal to be active in our local communities. Over the last year, the Board approved funding to 80 charities and non-profits. In 2019, over $180,000 was donated to worthy organizations bringing the total donated during the last five years to $790,815. We are proud of our activities in this area and appreciate the opportunity to work with the many BOARD OF DIRECTORS organizations that make our communities a better place for President Ward Weisensel all. The Committees of the Board were very active in 2019. The Vice-President Glenn Williams individual Committee reports are included in this Annual Report. Secretary Kristen Wittman Director Marlene Boersch The Audit Committee worked closely with our appointed auditors, Director Jim Huggard MNP LLP, to facilitate the audit of the annual financial statements. Director Anna Maria Magnifico We are pleased to report that the audit process went smoothly. Director Donna Zwarich The Nominations Committee was active during the year ensuring that NOMINATIONS COMMITTEE a slate of candidates was available for this year’s director elections. Director Jim Huggard – Chair This year, four candidates are standing for election to fill two vacancies. Director Glenn Williams The Governance and Compensation Committee ensured that good Director Donna Zwarich governance practices are closely followed by Red River Co-op. The President Ward Weisensel – Board Committee also oversees the compensation policies of Red River. Chair/Ex-Officio member

The success of Red River Co-op is largely related to the continuing AUDIT COMMITTEE strong support received from our membership. There is no doubt that member support is the most important factor that has enabled Red Director Donna Zwarich – Chair River Co-op to successfully grow the business to what it is today. Director Marlene Boersch Director Jim Huggard Your co-operative is currently in a strong position and is well Director Anna Maria Magnifico recognized in the community. In the years ahead we must President Ward Weisensel – Board continue to improve our products and operations so that your Chair/Ex-Officio member Co-op is able to meet the changing demands of a very competitive marketplace, in an effort to better serve our membership. GOVERNANCE & COMPENSATION We want to express our thanks to the management and COMMITTEE staff for their efforts during the past year. Also, my thanks Director Anna Maria Magnifico –Chair go to my fellow directors for their commitment to our Co- Director Glenn Williams op, their leadership and guidance during the past year. Director Kristen Wittman President Ward Weisensel – Board Most important we want to thank the members Chair/Ex-Officio member for your support during the past year.

Respectfully submitted on behalf of the Red River Board of Directors. Ward Weisensel, President Glenn Williams, Vice-President Kristen Wittman, Secretary Marlene Boersch Jim Huggard Anna Marie Magnifico Donna Zwarich

RED RIVER COOPERATIVE LTD | 2019 ANNUAL REPORT | 15 Audit Committee Nominations Report Committee Report

The mandate of the Audit Committee is to assist The Committee is mandated to oversee a free, fair, the Board in fulfilling its independent oversight efficient and secure annual Board election process role by monitoring the integrity of: culminating in the announcement of members elected as Directors at the Annual General Meeting (AGM).  the financial and management reporting process,  internal controls, This year’s election will be our first year to include the  risk management, electronic ballot option. Additionally, the candidate  environmental management, questions were reviewed and updated.  potential conflicts of interest, and  the independence and performance of the external auditor. This year, there are two vacancies on the Board as a result of terms expiring. The members who are elected at this year’s AGM This was the third fiscal year with MNP LLP as our external will hold the position for a three-year term expiring in 2023. auditors and we have been very pleased with their contribution to our business, in particular, with the addition of the four rural In preparation for the annual call for nominations each fall, food stores in Selkirk, Stonewall, Lorette and Gimli. Their expertise the Committee reviews the eligibility criteria which covers in the area of cyber security has also been of great benefit in Director responsibilities, qualifications, desired competencies ensuring that our systems are secure and face minimal risk. and attributes. Consistent with the bylaws, Directors must be members who have purchased a minimum of $250 in goods or Red River Cooperative Ltd. continued to retain Federated services from Red River Co-op in the most recent fiscal year. Co-operatives Limited (FCL) as our internal auditors. Our external and internal audit teams have an excellent working relationship. Upon close of nominations, the Committee reviewed and The Audit Committee held meetings with senior management as approved the slate of candidates and recommended them to well as with the external and internal auditors throughout the the Board. The Committee also recommended the appointment year. Both our internal and external auditors are comfortable with of an independent panel of scrutineers to supervise the the control environment at Red River Cooperative Ltd. and we will voting process, and an Elections Officer to oversee the use continue to ensure that our control environment is appropriate. of social media and other campaigning activities of the candidates. The independent scrutineers will supervise the The Committee is pleased to advise members that in the opinion voting process and tabulation of ballots cast and will report of the external auditor, the company’s financial statements the final election results to members at the 2020 AGM. present fairly, in all material respects, the financial position of Red River Cooperative Ltd. as at October 31, 2019 and the results of its A complete review of the Director election process is currently operations and cash flows for the year then ended in accordance underway in hopes that an updated Director Election with Canadian Accounting Standards for Private Enterprises (ASPE). Handbook will be developed for the 2021 campaign period. This will provide potential candidates with more clarity as Respectfully submitted on behalf of the Committee: to expectations and commitments required of a Director. Donna Zwarich, Chair Marlene Boersch Respectfully submitted, Jim Huggard Jim Huggard, Chair Anna Maria Magnifico Glenn Williams Ward Weisensel, Ex-Officio Donna Zwarich Ward Weisensel, Ex-Officio

16 | RED RIVER COOPERATIVE LTD | 2019 ANNUAL REPORT Governance and Compensation Committee Report

Under its terms of reference, the Committee is mandated to The Committee reviewed its current Director/Officer liability oversee all governance matters, including strategic planning, insurance policy; mindful of the prevalent risk from cyber threats, and to ensure compliance with other governance goals our Co-op plans to acquire specific coverage for cyber liability. generally considered to be “best practices” in modern corporate governance. The Committee has adopted 15 goals to guide Red In early June, the Board held its annual strategic planning River Co-op governance. Based on these goals, the Compliance session which included Red River Co-op senior leadership as and Disclosure Report is posted on Red River Co-op’s website well as Federated Co-operatives Limited (FCL) district and under “Your Local Co-op/About Us/Board of Directors.” head office staff. Given the rapid transformation taking place in the retail sector affecting our energy and food business, The Committee met twice this past year, in October and in 2020 we will be devoting two days to a more in-depth December 2019. We reviewed matters related to senior strategic planning session with independent facilitators and/ management structure, compensation and evaluation, as well, or retail experts to more fully determine how our Co-op will as human resources policies for Red River Co-op employees. meet the longer-term implications these challenges present. We continue to monitor progress in achieving greater diversity among our employees at all levels across our operations to Members will be presented with proposed amendments better reflect society-at-large. During the year we endorsed to Red River Co-op bylaws which affect any surplus management’s Best Employer Strategy which covers changes transfers to Co-op’s special reserves. to current HR policies to strengthen diversity and inclusion, Finally, as part of our Board commitment to greater gender pay gap and various employee benefits; we also reviewed accountability to our members, we include in the succession planning at the executive leadership level. annual report the attendance record of our Directors during the past year as well as remuneration paid.

Respectfully submitted Anna Maria Magnifico, Chair Glenn Williams Kristen Wittman Ward Weisensel, Ex-Officio

RED RIVER COOPERATIVE LTD | 2019 ANNUAL REPORT | 17 BOARD ATTENDANCE AND RENUMERATION

Ward Weisensel Jim Huggard President Apr. 2017 - Oct. 2019 Director Nov. 2016 - Oct. 2019 Vice-President Nov. 2016 - Apr. 2017 Term Expires: 2021 Term Expires: 2022 Attendance Record 16/16 Attendance Record 24/24 Board Meetings 10/10 Board Meetings 10/10 Committee Meetings 4/4 Committee Meetings 8/8 Special Meetings 2/2 Special Meetings 6/6 Remuneration $6,446 Remuneration $15,711 Glenn Williams Marlene Boersch Vice-Chair May 2019 – Oct. 2019 Vice-President Apr. 2017 – May 2019 Term Expires: 2021 Secretary Nov. 2016 - Apr. 2017 Attendance Record 20/20 Term Expires: 2020 Board Meetings 10/10 Attendance Record 16/16 Committee Meetings 6/6 Board Meetings 10/10 Special Meetings 4/4 Committee Meetings 3/3 Remuneration $12,196 Special Meetings 3/3 Remuneration $10,345 Kristen Wittman Secretary May 2019 – Oct. 2019 Anna Maria Magnifico Term Expires: 2020 Secretary Apr. 2017 – May 2019 Attendance Record 20/20 Term Expires: 2022 Board Meetings 10/10 Attendance Record 21/23 Committee Meetings 6/6 Board Meetings 8/10 Special Meetings 4/4 Committee Meetings 7/7 Remuneration $12,771 Special Meetings 6/6 Remuneration $13,121 Donna Zwarich Director Nov. 2016 - Oct. 2019 Term Expires: 2022 Attendance Record 18/18 Board Meetings 10/10 Committee Meetings 3/3 Special Meetings 5/5 Remuneration $11,596

18 | RED RIVER COOPERATIVE LTD | 2019 ANNUAL REPORT FINANCIAL STATEMENTS As of October 31, 2019

$37.8M $52.8M $649.9M PATRONAGE ALLOCATION NET INCOME IN 2019 SALES IN 2019 IN 2019 Management's Responsibility

20 | RED RIVER COOPERATIVE LTD | 2019 ANNUAL REPORT | FINANCIAL STATEMENTS Independent Auditors' Report Independent Auditor's Report

To the Members of Red River Cooperative Ltd.:

Opinion

We have audited the consolidated financial statements of Red River Cooperative Ltd. (the "Cooperative"), which comprise the consolidated balance sheet as at October 31, 2019, and the consolidated statements of net savings and retained savings and cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Cooperative as at October 31, 2019, and the results of its operations and its cash flows for the year then ended in accordance with Canadian accounting standards for private enterprises.

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 Audit of the Consolidated Financial Statements section of our report. We are independent of the Cooperative in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Other Information

Management is responsible for the other information. The other information comprises the information included in the annual report, but does not include the consolidated financial statements and our auditor's report thereon. The annual report is expected to be made available to us after the date of this auditor’s report.

Our opinion on the financial statements does not cover the other information and we will not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above when it becomes available 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.

When we read 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 Canadian accounting standards for private enterprises, 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 Cooperative’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 Cooperative or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Cooperative’s financial reporting process.

True North Square - 242 Hargrave Street, Suite 1200, Winnipeg, Manitoba, R3C 0T8, Phone: (204) 775-4531, 1 (877) 500-0795

FINANCIAL STATEMENTS | RED RIVER COOPERATIVE LTD | 2019 ANNUAL REPORT | 21 Independent Auditors' Report

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 a 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 fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic 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 omissions, 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 Cooperative’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 events or conditions that may cast significant doubt on the Cooperative’s ability to continue as a going 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 financial statements or, if such disclosures 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 Cooperative to cease to continue as a going concern.  Evaluate 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.  Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Cooperative to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Winnipeg, Manitoba

January 6, 2020 Chartered Professional Accountants

22 | RED RIVER COOPERATIVE LTD | 2019 ANNUAL REPORT | FINANCIAL STATEMENTS Consolidated Balance Sheet As at October 31, 2019

The accompanying notes are an integral part of these financial statements

FINANCIAL STATEMENTS | RED RIVER COOPERATIVE LTD | 2019 ANNUAL REPORT | 23 Consolidated Statement of Net Savings and Retained Savings For the Year Ended October 31, 2019 Red River Cooperative Ltd. Consolidated Statement of Net Savings and Statement of Retained Savings For the Year Ended October 31, 2019

2019 % 2018 %

Sales (Note 15) $ 649,917,772 100.0 $ 647,568,159 100.0

Cost of goods sold 577,198,683 88.8 580,045,154 89.6

Gross margin 72,719,089 11.2 67,523,005 10.4

Expenses

Operating and administration 69,594,538 10.7 59,715,160 9.2 Net interest (Note 16) (892,262) (0.1) (648,581) (0.1)

68,702,276 10.6 59,066,579 9.1

Savings from operations 4,016,813 0.6 8,456,426 1.3

Patronage refunds 53,667,178 8.3 63,378,873 9.8

Savings before income taxes 57,683,991 8.9 71,835,299 11.1

Income taxes (Note 18) 4,830,479 0.7 7,818,274 1.2

Net savings $ 52,853,512 8.2 $ 64,017,025 9.9

Retained savings, beginning of year $ 18,603,019 $ 2,815,499

Net savings 52,853,512 64,017,025 Transfer to special reserve (Note 14) (11,991,396) - Transfer to general reserve (Note 14) (2,876,985) (7,091,767) Patronage allocation to members (Note 13) (37,901,591) (41,137,738)

Retained savings, end of year (Note 14) $ 18,686,559 $ 18,603,019

The accompanying notes are an integral part of these financial statements

24The | REDaccompanying RIVER COOPERATIVE notes LTD are | an2019 integral ANNUAL partREPORT of |these FINANCIAL financial STATEMENTS statements

2 Consolidated StatementRed River Cooperative of Cash Ltd. Flows For the Year Ended October 31, 2019 Consolidated Statement of Cash Flows For the Year Ended October 31, 2019

2019 2018 Operating activities Net savings $ 52,853,512 $ 64,017,025 Adjustments for: Depreciation 6,420,252 5,802,356 FCL patronage refund (53,667,178) (63,378,873) Loss on the disposal of property, plant and equipment 213,497 447,329

Changes in non-cash operating working capital: Accounts receivable 1,425,570 (2,996,172) Income taxes recoverable (1,560,723) 1,489,728 Inventories (700,508) (2,254,598) Prepaid expenses (13,180) (29,959) Long-term receivables (1,767,120) 2,849 Accounts payable and trust liabilities 4,789,400 7,673,098 Customer prepaid accounts (30,779) 169,587 Net working capital on business combinations 644,777 - Cash provided by operating activities 8,607,520 10,942,370

Investing activities Redemption of FCL shares 49,499,859 30,602,627 Additions to property, plant and equipment (8,513,154) (10,602,423) Additions to intangible assets (60,000) - Proceeds from the disposal of property, plant and equipment 53,657 25,223 Investment in other organizations (12) 50 Cash consideration on business combinations (1,899,796) -

Cash provided by investing activities 39,080,554 20,025,477

Financing activities Increase in long-term debt - 604,511 Repayment of long-term debt (923,197) (1,687,267) Share capital issued 54,025 62,990 GST on allocation 1,843,138 1,329,741 Redemption of share capital (38,778,730) (30,107,640)

Cash used for financing activities (37,804,764) (29,797,665)

Net increase in cash and cash equivalents 9,883,310 1,170,182 Cash and cash equivalents, beginning of year 9,408,475 8,238,293

Cash and cash equivalents, end of year $ 19,291,785 $ 9,408,475

Cash and cash equivalents are comprised of: Cash and cash equivalents $ 1,577,190 $ 1,408,475 FCL special deposit 17,714,595 8,000,000 $ 19,291,785 $ 9,408,475

The accompanying notes are an integral part of these financial statements The accompanying notes are an integral part of these financial statements

FINANCIAL STATEMENTS | RED RIVER COOPERATIVE LTD | 2019 ANNUAL REPORT 3 | 25 Consolidated Notes to the Financial Statements For the Year Ended October 31, 2019 Red River Cooperative Ltd. Consolidated Notes to the Financial Statements For the Year Ended October 31, 2019

1. Incorporation and operations

Red River Cooperative Ltd. ("the Cooperative") was incorporated under The Cooperatives Act of Manitoba on September 15, 1937. The primary business of the Cooperative is operating retail petroleum and food store outlets in Winnipeg and surrounding area.

2. Significant accounting policies

The consolidiated financial statements have been prepared by management in accordance with Canadian accounting standards for private enterprises. A precise determination of many assets and liabilities is dependent upon future events and consequently, the preparation of these consolidated financial statements involves the use of estimates and approximations. Areas subject to estimation include valuation of accounts receivable, inventory, useful life of property, plant and equipment, impairment of long-lived assets, goodwill and intangible assets, income taxes, accrued liabilities and potential contingencies. These estimates also affect the disclosure of contingencies at the date of the consolidated financial statements and the reported amounts of assets, liabilities, revenues and expenses. Actual results could differ from those estimates.

These consolidated financial statements have been prepared to reflect the following significant accounting policies:

(a) Basis of consolidation i. Subsidiaries The consolidated financial statements include the accounts of the Cooperative and its subsidiaries. Subsidiaries are entities that the Cooperative controls. Subsidiaries are fully consolidated from the date that control commences until the date that control ceases. ii. Transactions eliminated on consolidation Inter-group balances and transactions, and any unrealized income and expenses arising from said transactions, are eliminated in preparing the consolidated financial statements.

(b) Definition of financial year

The Cooperative's financial year ends on the Saturday closest to October 31. As a result, the Cooperative's fiscal year is usually fifty-two weeks in duration, but includes a fifty-third week approximately every five years. Fiscal 2019 year is comprised of fifty-three weeks and 2018 was comprised of fifty-two weeks.

(c) Cash and cash equivalents

Cash and cash equivalents are defined as cash and investments with an initial maturity of less than three months.

26 | RED RIVER COOPERATIVE LTD | 2019 ANNUAL REPORT | FINANCIAL STATEMENTS 4 Consolidated Notes to the Financial Statements For the Year Ended October 31, 2019 Red River Cooperative Ltd. Consolidated Notes to the Financial Statements For the Year Ended October 31, 2019

(d) Inventories

Inventories are valued using a weighted average formula, first-in first-out method, and the retail method. Inventories are stated at the lower of cost and net realizable value. The cost of retail inventories is determined using the weighted average cost on a first-in, first-out method of accounting for petroleum inventories and the retail method of accounting for grocery inventories, and on a first-in, first-out cost method for all other food store commodities. Costs include the cost of purchased goods net of vendor allowances, plus other costs incurred in bringing all other food store commodities inventories to their present location and condition.

The Cooperative estimates net realizable value as the amount that inventories are expected to be sold for, taking into consideration fluctuations of retail price due to seasonality less estimated costs necessary to make the sale. Inventories are written down to net realizable value when the cost of inventories is determined to be not recoverable due to obsolescence, damage or permanent declines in selling prices.

(e) Investments

The Cooperative's investments are accounted for using the cost method. Accordingly, the investments are recorded at acquisition cost, less any provisions for permanent impairment or adjustments for patronage refunds or share redemptions. All transactions with FCL are disclosed in a separate note (Note 4).

(f) Financial instruments

Financial instruments are recorded at fair value on initial recognition and are subsequently recorded at amortized cost, unless management has elected to carry the instruments at fair value. The Cooperative has not elected to carry any such financial instruments at fair value. Financial instruments, which are subsequently measured at amortized cost, are adjusted by transaction and financing costs incurred on acquisition.

Financial assets are assessed for impairment on an annual basis at the end of the fiscal year if there are indicators of impairment. If there is an indicator of impairment, the Cooperative determines if there is a significant adverse change in the expected amount or timing of future cash flows from the financial asset. If there is a significant adverse change in the expected cash flows, the carrying value of the financial asset is reduced to the highest of the present value of the expected cash flows, the amount that could be realized from selling the financial asset or the amount the Cooperative could realize by exercising its right to any collateral. If events and circumstances reverse in a future period, an impairment loss will be reversed to the extent of the improvement, not exceeding the initial carrying value.

(g) Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Depreciation is taken over the estimated useful lives of the assets using the following methods and rates:

Buildings Straight-line 25 years Pavement Declining balance 8% Signs Declining balance 20% Tanks Declining balance 10% & 30% Furniture & equipment Straight-line & declining balance 5 years & 20% - 55% Vehicles Declining balance 30% Vehicle equipment Declining balance 15%

FINANCIAL STATEMENTS | RED RIVER COOPERATIVE LTD | 2019 ANNUAL REPORT | 27 5 Consolidated NotesRed River to Cooperative the Financial Ltd. Statements For the Year Ended October 31, 2019 Consolidated Notes to the Financial Statements For the Year Ended October 31, 2019

Leasehold improvements are amortized on a straight-line basis over the lease term. Assets under construction and land are not amortized.

Expenditures for maintenance and repairs are charged to operating expenses as incurred. Significant expenditures for improvements are capitalized. Gains or losses realized on the disposal of property, plant and equipment are reflected in operations in the year of disposition.

Claims for assistance under various FCL programs are recorded as a reduction of the cost of related assets in the period in which eligible expenditures are incurred, with any depreciation calculated on the net amount.

An impairment loss is recognized when the carrying amount of a long-lived asset is not recoverable and exceeds its fair value. No such impairment loss was recorded during the year.

(h) Asset retirement obligation

The Cooperative has a liability for an asset retirement obligation in the period in which a legal liability is incurred. The liability is based on management's best estimate. The liability is subsequently adjusted for the passage of time, which is recognized as an accretion expense in the statement of operations. The liability is also adjusted due to revisions in either the timing or the amount of the original estimated cash flows associated with the liability. Actual costs incurred upon settlement of the asset retirement obligations are charged against the asset retirement obligation to the extent of the liability recorded.

(i) Share capital

The Cooperative approves an allocation to members subsequent to year end. The amount is recorded as an addition to share capital and a reduction in retained savings. The Cooperative records the redemption of shares that is to be paid to members at the time it has been approved by the Board of Directors.

(j) Revenue recognition

The Cooperative recognizes revenue when evidence of an arrangement exists, delivery or change of ownership has occurred, the price has been determined, and collection is reasonably assured.

(k) Income taxes

The Cooperative follows the taxes payable method whereby only current income tax assets and liabilities are recognized to the extent they remain unpaid or are recoverable. In addition, the benefit relating to a tax loss incurred in the current period and carried back to prior periods is recognized as a current asset. Current income tax assets and liabilities are measured using substantively enacted tax rates and laws expected to apply when the tax liabilities or assets are to be either settled or realized.

(l) Goodwill

Goodwill resulting from business combinations represents the portion of the purchase price that was in excess of the fair value of the net identifiable assets acquired. Goodwill is not amortized and is tested for impairment whenever changes in circumstances indicate that the carrying amount of the reporting unit to which goodwill is assigned exceeds the fair value of the reporting unit. If the carrying value of the reporting unit to which goodwill has been assigned exceeds its fair value, then, with respect to the reporting unit’s goodwill, any excess of its carrying value over its fair value is expensed. Impairment losses relating to goodwill cannot be reversed in future years.

28 | RED RIVER COOPERATIVE LTD | 2019 ANNUAL REPORT | FINANCIAL STATEMENTS 6 Consolidated NotesRed River to Cooperative the Financial Ltd. Statements For the Year Ended October 31, 2019 Consolidated Notes to the Financial Statements For the Year Ended October 31, 2019

(m) Intangible assets

Intangible assets consists of below market leases, lease enhancements, customer lists and franchise fees. Intangible assets are carried at cost, less accumulated amortization and accumulated impairment losses, if any. Finite life intangible assets are tested for impairment when events or circumstances indicate the carrying value may not be recoverable. When the recoverable amount is less than the carrying value an impairment loss is recognized in net savings for the year.

Below market leases and lease enhancements, once functional, are amortized on a straight-line basis over their useful lives of 2 to 32 years. Customer lists are amortized on a straight-line basis over their useful lives of 10 to 15 years.

(n) Business combinations

Business combinations are accounted for using the acquisition method. The application of this method requires certain estimates and assumptions especially concerning the determination of the fair value of the acquired intangible assets, property, plant and equipment, as well as the liabilities assumed at the date of the acquisition, based on information available at that date.

At the acquisition date, the Cooperative recognizes, separately from goodwill, the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the subsidiary. Identifiable assets acquired and liabilities assumed are measured at their acquisition-date fair values. Any non-controlling interest in a subsidiary is measured either at fair value or at the non-controlling interest's proportionate share of the subsidiary's identifiable net assets.

The consideration transferred for each acquisition is measured as the sum of the acquisition-date fair values of the assets transferred, the liabilities incurred, and equity instruments issued by the Cooperative to obtain control of the subsidiary.

3. Financial instruments and risk management

The significant financial risks to which the Cooperative is exposed are credit risk, interest rate risk and liquidity risk.

(a) Credit risk

The Cooperative is exposed to credit risk on accounts receivable from its customers. The Cooperative manages credit risk through an active credit management program. The Cooperative does not have a significant exposure to any individual customer.

(b) Interest rate risk

Interest rate risk is the risk that the value of a financial instrument might be adversely affected by a change in interest rates. Changes in market interest rates may have an effect on cash flows associated with some financial assets and liabilities, known as cash flow risk, and on the fair value of other financial assets or liabilities, known as price risk. The Cooperative's sensitivity to fluctuations in interest rates is limited to its cash and funds on deposit. The Cooperative manages its exposure to interest rate risk through floating rate deposits and borrowings.

FINANCIAL STATEMENTS | RED RIVER COOPERATIVE LTD | 2019 ANNUAL REPORT7 | 29 Consolidated NotesRed River to Cooperative the Financial Ltd. Statements For the Year Ended October 31, 2019 Consolidated Notes to the Financial Statements For the Year Ended October 31, 2019

(c) Liquidity risk

Liquidity risk is the risk that the Cooperative will encounter difficulty in meeting obligations associated with financial liabilities. The Cooperative is exposed to liquidity risk arising primarily from the current obligations. The Cooperative's ability to meet obligations depends on funds generated by its operations.

4. Transactions with Federated Co-operatives Limited (FCL)

(a) FCL special deposit

Amounts held with FCL as special deposits earn interest at rates based on prime rates.

(b) Patronage refund

The Cooperative, along with other Cooperatives in Western Canada, own FCL. At the end of each year, FCL divides a substantial portion of its net savings among these retail Cooperatives in proportion to the business done by each with FCL. During FCL's fiscal year ended October 31, 2019, the Cooperative purchased goods amounting to $484,600,020 (2018 - $503,729,164) from FCL in the normal course of operations.

Purchases resulted in a patronage refund from FCL which was received as non-cash consideration in the form of additional shares in FCL. FCL, based on its available cash flow, redeemed an amount of FCL shares held by the Cooperative. The amounts of the patronage refund and shares redeemed are as follows:

2019 2018

Opening investment balance $ 148,937,829 $ 116,161,583 Patronage refund 53,667,178 63,378,873 Share redemptions (49,499,859) (30,602,627)

Closing investment balance $ 153,105,148 $ 148,937,829

(c) Asset retirement obligation

The Cooperative participates in a contaminated site management program established by FCL to manage its asset retirement obligations. This program limits the Cooperative’s liability to $25,000 per site as long as the Cooperative continues to exercise due diligence. The Cooperative has 39 sites under this program. Management believes that due diligence has been exercised and that the impact of the asset retirement obligation to the Cooperative's financial statements is not significant.

(d) Purchase commitments

(i) Under the terms of the agreement with FCL, the Cooperative has committed to purchase petroleum products, at market price, from FCL for its gas bar and cardlock operations over a ten year period commencing from December 7, 2009. Failure to meet this commitment would require the Cooperative to immediately pay outstanding gas bar and cardlock loan balances owed to FCL, plus repay any gas bar and cardlock grants received, including interest on the grants compounded annually at 10% from the grant date. Total grants received during this period amounted to approximately $19,584,771 (2018 - $22,500,802). Management intends to fulfill all existing contracts with FCL.

30 | RED RIVER COOPERATIVE LTD | 2019 ANNUAL REPORT | FINANCIAL STATEMENTS 8 Consolidated Notes to the Financial Statements For the Year Ended October 31, 2019 Red River Cooperative Ltd. Consolidated Notes to the Financial Statements For the Year Ended October 31, 2019

(ii) Under the terms of the agreement with FCL, the Cooperative has committed to purchase petroleum products, at market price, from the FCL corporate bulk plant over a ten year period commencing from December 9, 2011. Failure to meet this commitment would require the Cooperative to pay a portion of the capital costs of the bulk plant to FCL determined by a formula based upon usage. Management intends to fulfill all existing contracts with FCL.

(iii) Under the terms of the agreement with FCL, the Cooperative has committed to purchase all food, pharmacy, and food-related products typically sold in a retail store, provided such products are sold or otherwise provided by FCL, for a period of 30 years, commencing May 2014. Failure to meet this commitment would require the Cooperative to pay to FCL an amount equal to the aggregate net wholesale profits attributable to the sale of such products from date of breach to end of the exclusive term, and repay any assistance received from FCL on a prorated basis. Management intends to fulfill all commitments with FCL.

5. Accounts receivable - customer

Shown net of an allowance for doubtful accounts of $446,679 (2018 - $228,210).

6. Long-term receivable

2019 2019 2018 2018 Total Current Portion Deferred Portion Current Portion Deferred Portion

Loan receivable (1) $ 103,306 $ 13,623 $ 89,683 $ 13,623 $ 103,305 Loan receivable (2) 7,713 4,551 3,162 4,329 7,714 Loan receivable (3) 1,786,116 42,838 1,743,278 - - Loan receivable (4) - - - 1,044 -

$ 1,897,135 $ 61,012 $ 1,836,123 $ 18,996 $ 111,019

(1) Finance loan receivable at $1,135 per month plus interest at 8%.

(2) Finance loan receivable at $403 per month including interest at 5%.

(3) Finance loan receivable over 35 years at $5,042 per month including interest at 1%.

(4) Finance loan received in full during 2019.

FINANCIAL STATEMENTS | RED RIVER COOPERATIVE LTD | 2019 ANNUAL REPORT | 31

9 Consolidated Notes to the Financial Statements For the Year Ended October 31, 2019 Red River Cooperative Ltd. Consolidated Notes to the Financial Statements For the Year Ended October 31, 2019

7. Property, plant and equipment

Accumulated 2019 2018 Original Cost Depreciation Book Value Book Value

Land $ 13,875,372 $ - $ 13,875,372 $ 12,792,010 Buildings 30,262,301 10,656,028 19,606,273 20,383,856 Pavement 8,451,771 4,181,882 4,269,889 4,418,256 Signs 530,966 377,173 153,793 144,614 Tanks 782,927 482,713 300,214 422,092 Furniture & equipment 36,797,793 24,432,843 12,364,950 10,564,668 Leasehold improvements 12,104,358 2,307,286 9,797,072 7,723,128 Vehicles 1,386,935 1,011,445 375,490 531,069 Vehicle equipment 1,442,048 884,390 557,658 521,656 Under construction 402,688 - 402,688 752,804

$ 106,037,159 $ 44,333,760 $ 61,703,399 $ 58,254,153

Depreciation for the current year included in operating and administration expense was $5,747,547 (2018 - $5,129,650).

8. Intangible assets Accumulated 2019 2018 Original Cost Amortization Book Value Book Value

Customer lists $ 2,535,000 $ 932,417 $ 1,602,583 $ 1,772,750 Below market leases 3,375,894 705,069 2,670,825 2,799,019 Lease enhancements 5,947,950 1,722,084 4,225,866 4,600,210 Franchise fees 60,000 - 60,000 -

Intangible assets $ 11,918,844 $ 3,359,570 $ 8,559,274 $ 9,171,979

Amortization for the current year included in operating and administration expense was $672,705 (2018 - $672,706).

9. Goodwill

The changes in the carrying amount of goodwill for October 31, 2019 are as follows:

2019 2018

Balance, beginning of year $ 6,011,138 $ 6,011,138 Additions to goodwill (Note 21) 304,226 - Impairment losses - - Balance, end of year $ 6,315,364 $ 6,011,138

10 32 | RED RIVER COOPERATIVE LTD | 2019 ANNUAL REPORT | FINANCIAL STATEMENTS Consolidated Notes to the Financial Statements For the Year Ended October 31, 2019 Red River Cooperative Ltd. Consolidated Notes to the Financial Statements For the Year Ended October 31, 2019

10. Line of credit

The Cooperative has a $1,000,000 (2018 - $1,000,000) line of credit of which no amount has been drawn as at October 31, 2019 (2018 - $nil). The line of credit is secured by a promissory note and a general security agreement covering all present and after acquired property. Interest on the line of credit is prime plus 0.25%.

The Cooperative has available a $21,450,000 (2018 - $25,740,000) line of credit with Federated Co-operatives Limited of which no amount has been drawn as at October 31, 2019 (2018 - $nil). The amount available to the Cooperative declines by 10% of the initial amount available over the life of the agreement which expires June 1, 2024.

The Cooperative has available a $6,320,000 (2018 - $7,110,000) line of credit with Federated Co-operatives Limited of which no amount has been drawn as at October 31, 2019 (2018 - $nil). The amount available to the Cooperative declines by 10% of the initial amount available over the life of the agreement which expires September 1, 2027.

Amounts drawn on each line bear interest as determined by Federated Co-operatives Limited primary financial institution which was 3.95% per annum at October 31, 2019 (2018 - 3.95%).

FCL reserves the right to take a security interest in the property and associated assets of the Cooperative at any time, upon reasonable notice, over the term of the loans or until all amounts owing have been paid in full.

11. Accounts payable and trust liabilities

2019 2018

FCL payables $ 51,041,467 $ 46,789,540 Other payables 10,554,448 11,820,271 Trust liabilities: Payroll deductions 1,192 79,364 Carbon tax 2,031,096 - Provincial sales tax 54,541 193,329 Workers Compensation Board 8,784 19,624

$ 63,691,528 $ 58,902,128

12. Long-term debt

2019 2019 2018 2018 Total Current Portion Deferred Portion Current Portion Deferred Portion FCL $ 923,197 $ 923,197 $ - $ 923,197 $ 923,197

The Federated Co-operatives Limited gas bar upgrade loan bears no interest and is repayable at $923,197 per year, with the remaining balance due in 2020. Security for this loan is a first security interest in the equipment purchased with a net book value of $1,141,007 (2018 - $1,456,642).

The loan is subject to certain measurable covenants. As at October 31, 2019, the Cooperative is in compliance with all such covenants.

11 FINANCIAL STATEMENTS | RED RIVER COOPERATIVE LTD | 2019 ANNUAL REPORT | 33 Consolidated Notes to the Financial Statements For the Year Ended October 31, 2019 Red River Cooperative Ltd. Consolidated Notes to the Financial Statements For the Year Ended October 31, 2019

13. Share capital

Authorized, unlimited @ $1 2019 2018

Balance, beginning of year $ 92,256,719 $ 80,192,603 Allocation to members 37,901,591 41,137,738 Cash from new members 54,025 62,990 GST on allocation 1,843,138 1,329,741 Shares transferred from reserves 37,205 30,411 132,092,678 122,753,483

General repayment 34,300,506 27,466,877 Shares transferred to reserves 704,223 389,124 Withdrawals and retirements 879,186 516,656 Withholding tax 3,599,038 2,124,107 39,482,953 30,496,764

Balance, end of year $ 92,609,725 $ 92,256,719

14. Reserves and retained savings

Special General Retained Reserve Reserve Savings 2019 2018

Balance, beginning of year $ 57,152,759 $ 34,228,534 $ 18,603,019 $ 109,984,312 $ 86,746,312

Net savings distributed to retained savings - - 52,853,512 52,853,512 64,017,025

Patronage allocation - - (37,901,591) (37,901,591) (41,137,738)

Shares transferred - 667,018 - 667,018 358,713

Reserve transfers 11,991,396 2,876,985 (14,868,381) - -

Balance, end of year $ 69,144,155 $ 37,772,537 $ 18,686,559 $ 125,603,251 $ 109,984,312

12 34 | RED RIVER COOPERATIVE LTD | 2019 ANNUAL REPORT | FINANCIAL STATEMENTS Consolidated Notes to the Financial Statements For the Year Ended October 31, 2019 Red River Cooperative Ltd. Consolidated Notes to the Financial Statements For the Year Ended October 31, 2019

15. Sales 2019 2018

Gas bars $ 472,450,290 $ 495,741,315 Bulk petroleum 56,283,392 58,098,585 Food stores 120,360,027 93,728,259 Subsidiaries 824,063 -

$ 649,917,772 $ 647,568,159

The Cooperative's business operations consist of four segments. All sales are to external customers and no single customer accounts for more than 10% of sales.

16. Net interest 2019 2018 Interest expense on short-term debt $ 11,573 $ 2,530 Interest revenue (903,835) (651,111)

$ (892,262) $ (648,581)

17. Pension plan

The Cooperative participates in a multi-employer defined contribution plan whereby the Cooperative and participating employees contribute equal amounts up to the maximum allowed under the Income Tax Act. The Cooperative has no unfunded liability under this plan. During the year, the Cooperative recorded $1,010,625 (2018 - $933,358) of expense relating to the plan. There were no significant changes to the rate of employer contributions during the year.

18. Income taxes

The Cooperative accounts for income taxes using the taxes payable method. As a result, the Cooperative's income tax expense varies from the amount that would otherwise result from the application of the statutory income tax rates as set out below: 2019 2018 Savings before income taxes $ 57,683,991 $ 71,835,299

Expected income tax expense at the combined tax rate of 26.8% (2018 - 26.9%) net of the general rate reduction 15,459,310 19,323,695 Increase (decrease) in income tax expense resulting from: Non-taxable income and non-deductible expense 65,914 129,677 Patronage allocation to members of $37,901,591 (2018 - $41,137,738) (10,157,626) (11,066,052)

Income or expenses claimed in different periods for income tax purposes: Capital cost allowance in excess of depreciation (482,247) (275,096)

Other items that impact income taxes: Manufacturing and processing investment tax credit (54,879) (3,661) Patronage carry forward - (278,042) Prior year tax adjustment 7 (12,247) Income tax expense $ 4,830,479 $ 7,818,274

13

FINANCIAL STATEMENTS | RED RIVER COOPERATIVE LTD | 2019 ANNUAL REPORT | 35 Consolidated Notes to the Financial Statements For the Year Ended October 31, 2019 Red River Cooperative Ltd. Consolidated Notes to the Financial Statements For the Year Ended October 31, 2019

19. Subsequent event

Patronage allocation to members

Subsequent to October 31, 2019 the Board of Directors approved a patronage allocation to members in the amount of $37,901,591 (2018 - $41,137,738).

20. Commitments

The Cooperative is committed to the renovation of a food store. The estimated cost of the renovation is $5.9 million. The Cooperative is committed to the rebuild of a gas bar. The estimated cost of the project is $9.3 million. These projects will be financed through operations or Federated Co-operatives Limited.

21. Business combinations

On April 1, 2019, the Cooperative acquired 100% of the shares of Nova Star Refrigeration, Air Conditioning, Heating Ltd. The Cooperative determined the acquisition constituted a business combination and applied the consolidation method to record the transaction.

On July 7, 2019, the Cooperative acquired the business operations and the assets associated with the Super A food store in Gimli. The Cooperative determined the acquisition constituted a business combination and applied the acquisition method to record the transaction. The businesses have been integrated and are reported within the Food stores division segments from the date of acquisition.

The acquisitions had the following effect on the Cooperative’s assets and liabilities on acquisition date:

Fair value at the acquisition date

Property, plant and equipment $ 950,793 Inventories 426,256 Other current assets 336,629 Financial liabilities (118,108)

Net identifiable assets and liabilities 1,595,570

Goodwill on acquisitions recognized 304,226

Total cost of acquisition $ 1,899,796

Cash consideration $ 1,899,796

14 36 | RED RIVER COOPERATIVE LTD | 2019 ANNUAL REPORT | FINANCIAL STATEMENTS Consolidated Notes to the Financial Statements For the Year Ended October 31, 2019 Red River Cooperative Ltd. Consolidated Notes to the Financial Statements For the Year Ended October 31, 2019

22. Operating leases

The Cooperative is committed to operating leases. Total minimum lease payments are as follows:

2020 $ 2,524,935 2021 2,536,284 2022 2,470,793 2023 2,567,755 2024 2,786,844 Subsequent payments 43,414,634

$ 56,301,245

23. Group entities

Outlined in the table below is a list of the Cooperative's subsidiaries:

Name of subsidiary Ownership interest Nova Star Refrigeration, Air Conditioning, Heating Ltd. 100% Red River CL Ltd. 100% Red River JJ Ltd. 100%

15 FINANCIAL STATEMENTS | RED RIVER COOPERATIVE LTD | 2019 ANNUAL REPORT | 37 38 | RED RIVER COOPERATIVE LTD | 2019 ANNUAL REPORT DIVISION REPORTS

Red River Co-op offers a variety of services to best serve its communities. About Us

FOOD STORES Red River Co-op provides fast, friendly, and professional service at our seven food store locations: Grant Park, Southdale, St. Vital, Lorette, Selkirk, Stonewall and Gimli. Visit us for competitive prices on a vast selection of food products including fresh, local produce and meats, baked goods and our private food labels.

GAS BARS/CONVENIENCE STORES Our gas bars continue to offer full service in an increasingly self-service world. Attendants offer to fill up the tank, clean the windshield, and check the oil. We have three grades of Top Tier gasoline and diesel at each pump. Our convenience stores offer fresh brewed, ethically sourced Co-operative Coffee, a large selection of cold beverages and a wide variety of affordable snacks.

CAR WASHES All of our car washes use industry leading products like Turtle Wax, and our most recently upgraded facilities offer the choice between Touchless and Soft Touch Car Washes. For added convenience, car wash codes can now be used at any of our car wash locations.

BULK FUEL/CARDLOCKS We have a fleet of delivery units which provide farms and businesses with convenient service. Our cardlocks offer readily available fuel for farmers and commercial vehicle drivers 24 hours a day, 365 days a year. We use the latest in environmental protection equipment to ensure safe, reliable product dispensing.

ABOUT YOUR CO-OP Red River Co-op is a dynamic, Winnipeg-based Co-op with over 312,000 members and annual sales of just under 650 million. We have a distinguished 81-year history of serving local communities and have become one of Manitoba’s most trusted and valued brands, not just by sales or market share, but by reputation.

We serve our members daily in our food stores and pharmacies, at our home office, gas bars, car washes and cardlocks, and through our bulk fuel delivery to farms and businesses. We are a proud member of the Co-operative Retailing System, and the second-largest retail Co-operative in Western Canada.

40 | RED RIVER COOPERATIVE LTD | 2019 ANNUAL REPORT RED RIVER COOPERATIVE LTD | 2019 ANNUAL REPORT | 41 Food and Pharmacy Sara Fournier VP of Food Operations

2019 was another exciting year for growth at Red River Co-op.

Our new food store in Gimli was acquired from Super A Foods in A new initiative of charging for plastic bags in retail stores July as the seventh Red River Co-op grocery store. We will also reduced consumption of over three million bags from the be opening a brand new store in St. Norbert and construction previous year and provided a donation to the Green Action for our new location at Seasons of Tuxedo will start this summer, Center of $12,755 for their food waste reduction and and both locations will offer pharmacy services to our members. composting programs.

We renovated our Grant Park food store and launched Our continued focus on locally made product with our our impressive modernized look and new offerings to the partnership with Food and Beverage Manitoba had great community in October. By the end of 2020 we will have four success with sales growing for the third consecutive year; of seven current food stores renovated and modernized. from $403,410 to $1,410,041.

Our Health & Wellness department enjoyed at our Southdale Food and Beverage Manitoba awarded Red River Co-op with food store expanded at our Grant Park store and will be included the “Favorite Local Retailer” recognition in 2019. This is the in the St. Vital store once our renovations are completed in third time Red River Co-op was voted number one in this the fall. This section provides customers with natural choice category in four years. products which includes supplements, vitamins, personal/ skin care, and pet care to name a few. We also carry several locally made products in the Heath & Wellness section.

On November 30 we opened up our first Chopped Leaf franchise in our Grant Park food store. This is the first Chopped Leaf in Winnipeg and it offers chef designed salads, wraps and soups that can be ordered to go, eat in or on Skip the Dishes and DoorDash. We are working on our partnership with Jugo Juice and will have that franchise open its first location with us at the Grant Park food store next to Chopped Leaf later this year. Jugo Juice’s main product line is healthy smoothies and juices, but also offers wraps and sandwiches.

42 | RED RIVER COOPERATIVE LTD | 2019 ANNUAL REPORT Two of our food store managers were recognized by Canadian Each of our gas bar and food store locations are now listed on the Grocer magazine nationwide; Cindy Waytiuk for Top Woman in “Go Here” mobile app to designate where people with Crohn’s and Grocery award and Erin Bean for Generation Next award giving Colitis can quickly locate a public washroom. great exposure to Red River Co-op. Having recently joined the team in January 2020, I am very We have had two great partnerships this past year with the local excited by the continuous growth of the food division at Red River divisions of Diabetes Canada and Crohn’s and Colitis Canada. Co-op. With the focus, energy and enthusiasm of our team, as well as the support from our partners at Federated Co-operatives DIABETES CANADA Limited, I am confident that we can continue to offer Red River We hosted Diabetes Awareness clinics at each of our pharmacy Co-op members and customers the best customer service and locations, run by Diabetes Canada staff and volunteers from the exceptional grocery and pharmacy experiences while supporting Lion’s Club. We also ran two Diabetes Canada fundraisers: the the communities in which we do business. We will work hard to be Blue Circle campaign raising $6,361 which exceeded our $5,000 your grocery and pharmacy destination. fundraising goal, and a one-day Put a Squeeze on Diabetes lemonade stand blitz at Red River Co-op gas bars that garnered $1,698. The proceeds went to the Diabetes Canada D-Camps, so children living with type 1 diabetes can attend a supported camp near Kenora.

CROHN’S AND COLITIS Red River Co-op sponsored the Crohn’s and Colitis Canada’s Gutsy and Glamorous Gala, which brought community leaders together to raise funds for research and patient programs.

LOCAL BOREAL WILDCRAFT TEA

LUCKY WINNERS OF OUR GROCERY GRAB CONTEST AT OUR GRANT PARK GRAND OPENING

RED RIVER COOPERATIVE LTD | 2019 ANNUAL REPORT | 43 Energy

Gordon Grainger RENOVATED NIVERVILLE GAS BAR VP of Energy Operations

The Energy Division continues to evolve with the changes in INTERIOR market trends, federal and provincial legislation, technology Interior upgrades were completed at five locations in 2019 - advancements, and changes in Manitoba’s demographics. 1082 Ellice Avenue, 1681 Grant Avenue, 747 Pembina Highway, Within this report I will recap a number of projects and 345 Osborne Street, and 650 Archibald Street. The upgrades programs that where initiated or completed throughout 2019. included new décor and a revamped floor plan. The beverage counters were converted to include the Co-operative Coffee Sales were consistent to our previous year and the program and the addition of the Big Cool Twist program. End contribution remained positive. With the continued support bunk sandwich cases were installed where possible and included of our wholesale, Federated Co-operatives Limited (FCL), we a new gondola concept to merchandise confectionary items. were pleased to provide a strong return to our members. The energy team understands that there are many choices in the PROPANE FILLING PLANT-DAKOTA GAS BAR market and are very appreciative of the support shown by our In July we installed a propane dispensing plant at our Dakota more than 312,000 members. It is our goal to continue to gas bar. We had identified the south St. Vital area as a gap in our earn that support throughout the coming years at the pumps, propane dispensing network and we now have the capability to our bulk delivery units, at the car washes, and within our fill both propane powered vehicles and bottles at this location. convenience stores. DELIVERY UNITS On behalf of the Energy Division I would like to convey our In October we introduced our bulk oil delivery unit into the thanks for your continued support. market. This unit delivers bulk oils and packaged oil to our commercial and farm accounts in Winnipeg and rural areas. We UPGRADES have partnered with our neighbouring Co-ops through a shared Exterior upgrades where completed at nine locations within delivery service, where we will deliver on behalf of those Co-ops Winnipeg and rural areas in 2019 - 2535 Main Street, 1376 to their members. Early in 2019, we purchased a new tandem Regent Avenue West, 3357 Pembina Highway, 3425 Roblin and pup delivery unit to better serve the Ste. Agathe area. Boulevard, 1008 Keewatin Street, 1123 Gateway Road, 491 4th Street E in Stonewall, 3 Co-op Drive in Oakbank, and NIVERVILLE GAS BAR OPENING 83 Centre Street in Gimli. These projects involved the After three months of reconstruction, our gas bar in Niverville replacement of the fascia on the canopies and pylon sign reopened a newly redesigned site which includes a 6-pump to meet new brand standards, replacement of the islands, fuelling configuration, new canopy and new technology that and the addition of energy efficient LED lighting. We have includes “Tap & Pay” and coloured monitors to allow for future three sites, Kenaston, Selkirk, and Headingley that have video advertising. not completed their exterior upgrade. These sites will be upgraded when they complete their major rebuilds. DRYDEN EQUITY DAYS In February we held a two-day Equity event, allowing members from the Dryden area to stop by and pick up their equity cheque and meet management. Members were able to enjoy a complimentary cup of Co-operative Coffee and a complimentary cookie. Attendance was strong and we received many positive comments from our Dryden members.

44 | RED RIVER COOPERATIVE LTD | 2019 ANNUAL REPORT SAMPLING (C-STORE) In 2019 we began sampling new and unique products such as Blue Monkey coconut chips at our gas bars. To support our sampling program we hired a part-time sample champion to sample coffee and other Co-op label products. Please keep watch for these sampling opportunities at our locations to try these great products.

FREE CAR WASHES FOR A YEAR The “Free Car Washes For A Year” campaign ran three times in 2019. Customers who purchased a Co-op car wash could enter their name in a draw for a chance to win washes for a year. There were 15 prize winners drawn from all participating car wash locations in the Co-operative Retailing System, Red River Co-op will run the campaign again in 2020 at all of our gas bars.

TRAVEL MUGS In early March, Co-operative Coffee locations began promoting Co-op branded reusable travel mugs. The mugs provide a reusable, sustainable option for customers who want to enjoy their coffee on-the-go. These mugs sell for $6.99 each and include a free coffee refill with the initial purchase. All future refills are 99 cents.

COFFEE BEANS & PODS All Co-operative Coffee locations are selling retail packs of Co-operative Coffee, allowing customers to make their favorite brew at home. The displayers are located at the This is part of Tesla’s Canadian project to tactically place beverage counter or coffee island. The price point for this superchargers across the country to allow Tesla vehicle owners to product is the same as our food stores. drive the Trans-Canada Highway from Vancouver to Halifax.

ELECTRIC VEHICLES The Co-operative Retailing System will be offering universal Red River Co-op has signed a multi-year deal with Tesla Inc. chargers at select locations throughout Western Canada Red River to provide parking spaces for five charging stations on our Co-op will be installing four locations in the city of Winnipeg at Dryden location. Superchargers typically charge a vehicle in our St. Vital and Southdale food stores and our Charleswood and about 30 to 40 minutes. Grandmont gas bars. Construction will begin in 2020.

RED RIVER COOPERATIVE LTD | 2019 ANNUAL REPORT | 45 Human Resources Murray Dehn VP of Human Resources

I am honored to address the strategic direction for tactics whole selves to work. In order to get there, we must first define centering around our people. We are building a great people- attributes of a respectful workplace, recognize the role that we all centred organization! We have to. In the retail business, our play in influencing a respectful workplace, and develop strategies staff must be focused on service – and they are! As you to encourage co-operation and inclusion. know, we have a fantastic group of employees who come to work every day ready and willing to serve our members. Why are we doing this? To establish a sense of belonging for everyone. We want each individual to bring their best self OUR CULTURE forward, and staff can only do so if they know they are welcome There is such a camaraderie here. To come through the doors of and they belong here. our gas bars, food stores, pharmacy and admin office and feel it every single day is like nothing else. I am lucky because I get to WHAT DOES A SAFE WORKPLACE LOOK LIKE? work with these amazing individuals – each one singularly unique, It looks like one where staff are reporting unsafe conditions, but together providing a synergy like I’ve seen nowhere else. I where staff are reporting near misses, where staff are being get to watch them have amazing interactions with our member- supported to report injuries, where safety concerns of employees owners. Often, I will just view from a distance with a smile on my are taken seriously. face as I watch our staff interact with you our members. Our bulk petroleum drivers are now compliant with the National As leaders of our organization, we realize the item of utmost Safety Code. All of our drivers wear work alone monitors, which importance is that we create and manage culture. On a daily gives us confidence that they are safe and sound, even though they basis we support our site managers to guide and foster our are working by themselves. They are ensuring their work is done people in order to help them leverage their skills towards serving safely to protect themselves and those on the road around them. our membership. Our gas bars and food stores are reporting near misses to identify WHY ARE STAFF COMING TO RED RIVER? trends and alert us to potential systemic, underlying safety issues. People are choosing to work at Red River Co-op for very specific reasons. In talking with some of our newest employees, it is apparent to me that they are seeking us out because of the way Red River Co-op serves people. We are building a strong reputation in the community as one that attracts service- oriented employees, being a great place to work, and of being stewards of our community.

DIVERSITY AND INCLUSION PROGRAM 2020 is the year that will see us move from merely measuring our diversity numbers to implementing a robust Diversity and Inclusion Program. One that supports employees to bring their

46 | RED RIVER COOPERATIVE LTD | 2019 ANNUAL REPORT Finally, a safe work place is one where conversations about safety Mental Health: It should come as no surprise, but there is a are happening on a regular basis. They occur regularly at our growing need for the awareness and adoption of mental health daily huddles and safety meetings. I am happy to see that we are programs in a workplace. For several years we have partnered with truly building a culture of safety at our Co-op. Homewood Solutions to provide the resources to our employees with an Employee and Family Assistance Program. This program WHAT ELSE WILL 2020 SEE AT RED RIVER CO-OP? is 100% funded by the employer, so employees and their families It will see programs that are specific to Leadership Development: can rest assured they will get the service they require at no cost recently our CFO of six years retired – Judy Yeo. Judy was a to them. We are also researching early Mental Health Coaching long serving, dedicated manager of the Co-op Retailing System, programs to assist our HR department in providing tools for our serving 30 years across a few different Co-ops. If you look at managers and/or employees on assisting those who may have our Senior Leadership team today, you will notice a few of us disclosed or are suffering from a mental illness. with grey hair. We must start taking steps to prepare the next generation of senior leadership at our Co-op. We must ensure IN CONCLUSION they are equipped to assume these responsible positions once Our employees are on a terrific path to lead this co-op into their time comes. the future. With the support of our membership, and our management team, we will be able to provide excellent service, Succession planning at every level of management is a big brilliant careers, and exciting opportunities to any employee who priority of our HR Division this year. With two impending new is up for the challenge. food store openings, we need to recruit and develop customer service skills in approximately 140 new front-line staff, as well as leadership skills in approximately 15 new managers.

Several of our gas bar managers are progressing through our “Advance” gas bar manager training program so they can leverage their skills.

By defining our brand over the past several years, we have defined who a Red River Co-op manager is. We figured out how to leverage natural skills they have inside them already. We discovered how to train them with new skills they need to succeed through experiential training. This year we will see us execute more training programs. Community Investment

One of the defining factors that makes Red River Co-op a Red River Co-op made a donation of $70,798 to the CHFM different kind of business is the investments we make in for the redevelopment of their indoor/outdoor play space the communities that we do business so that they may for their Youth and Adolescent Program, bringing them become better places to work, live and play. within arm’s reach of their fundraising goal.

In 2019, we increased our donations through our Through the Co-op Community Spaces program, $61,400 Community Investment Program over the previous was awarded to the Spence Neighbourhood Association $180,369 donations to year by $55,000. We supported 80 charities and non- for their community greenhouse initiative. The Co-op 80 organizations within the communities we serve. profits with $180,369 in donations solicited through Community Greenhouse will provide a space for the the online application process. The organizations community to grow food year-round, enriching the health Over $10 million IONS in sales of over 600 local, Manitoba grown and made products. AT FRO supported align with Red River Co-op’s values and and wellbeing of the Spence community. ON M D make a positive difference in our members’ lives. They range from health organizations, sport and recreation, Red River Co-op sponsored four key Manitoba Moose $61,102 $10,000 arts, youth education, animal welfare, environmental games that support Winnipeg Harvest, Siloam Mission, St. Amant and the Christmas Cheer Board with donations. causes, and cooking and healthy eating programming. raised through our Bomber Collector Cup sales for the Our partnership with the Manitoba Moose organization in support of the redevelopment We hosted Fuel Good Day on September 17 where we allowed us to reach more people and bolster our support $9,696 of an indoor/outdoor play space for their Youth and pledged to donate five cents of every litre of fuel sold at for these important charities. Adolescent Mental Health Program. our gas bars that day to the Children’s Hospital Foundation donated through the COMMUNITY SPACES PROGRAM of Manitoba (CHFM) and the Gimli Humane Society. At In addition, Red River Co-op food stores support Siloam to the Mission and Winnipeg Harvest year-round with food for the Spence Community the end of the day, we were able to donate $61,102 to the $61,400 Greenhouse Initiative. collection bins and by hosting Shop for Siloam events. In Children’s Hospital Foundation of Manitoba and $10,000 of meat, bread, to the Gimli Humane Society for food and veterinary 2019, 144,496 lbs of food was collected and donated to fruits/vegetables, dairy and care of animals. Winnipeg Harvest. Siloam Mission collected 3,446 lbs of 144,496 lbs other grocery items donated to food and 68 lbs of hygiene items as well as 10,500 toques Funds were also raised for the CHFM through our sale of during our Toques for Siloam drive before the holidays. donated to schools, PAC Blue Bombers collector cups this CFL season. Red River Our food stores located outside of Winnipeg’s perimeter committees and school programs through our Co-op donated one dollar per cup sold for a total of collect for their community’s local food banks as well. Donations to $16,690 $9,696. Combined with the donation from Fuel Good Day, 3,446 lbs of food toques 68 lbs of hygiene items 10,500 donated volunteer hours for 325+ D-Camps, so children living with type 1 diabetes can go $8,050 to a supported camp. donated to the and over 3 million plastic bags saved from the landfill $12,755 through our reusable bag program. raised through donations to 9 different local foundations chosen by our $6,080 food stores. new moms gifted personalized gifts of a year’s worth of clothing, toys and various baby 55 items through in support of organizations that add vibrancy to our communities and make them better places to live, work and play. Organizations like the $216,535 Manitoba Moose, Winnipeg Folk Festival, Gimli FUEL GOOD DAY AT THE CHARLESWOOD GAS BAR WITH THE CHILDREN’S HOSPITAL FOUNDATION OF MANITOBA Film Fest, Dryden Ice Dogs and many more.

48 | RED RIVER COOPERATIVE LTD | 2019 ANNUAL REPORT Community Support Highlights $180,369 donations to 80 organizations within the communities we serve. Over $10 million IONS in sales of over 600 local, Manitoba grown and made products. AT FRO ON M $61,102 D $10,000 raised through our Bomber Collector Cup sales for the $9,696 in support of the redevelopment of an indoor/outdoor play space for their Youth and Adolescent Mental Health Program. donated through the COMMUNITY SPACES PROGRAM to the for the Spence Community $61,400 Greenhouse Initiative. of meat, bread, fruits/vegetables, dairy and other grocery items donated to 144,496 lbs

donated to schools, PAC committees and school programs through our Donations to $16,690 3,446 lbs of food toques 68 lbs of hygiene items 10,500 donated volunteer hours for 325+ D-Camps, so children living with type 1 diabetes can go $8,050 to a supported camp. donated to the and over 3 million plastic bags saved from the landfill $12,755 through our reusable bag program. raised through donations to 9 different local foundations chosen by our $6,080 food stores. new moms gifted personalized gifts of a year’s worth of clothing, toys and various baby 55 items through in support of organizations that add vibrancy to our communities and make them better places to live, work and play. Organizations like the $216,535 Manitoba Moose, Winnipeg Folk Festival, Gimli Film Fest, Dryden Ice Dogs and many more.

RED RIVER COOPERATIVE LTD | 2019 ANNUAL REPORT | 49 Supporting our Community NON-PROFITS AND CHARITIES SUPPORTED THROUGH RED RIVER CO-OP’S COMMUNITY INVESTMENT PROGRAM

1st Crestview Scout Group Conseil jeunesse provincial Nature Manitoba Sturgeon Heights Community Centre A & O Support Services Corydon Community Centre North Point Douglas for Older Adults Women's Centre Teulon and Area Canada Crohn’s and Colitis Canada Ltd. Day Committee ALS Society NorWest Co-op Community Dakota Community Centre- Food Centre Teulon Ride in Rally Alzheimer’s Society of Manitoba Dakota Scholarship Program OHEYS Autism Theatre by the River Aquatic Synchro Club Eastman Flames U14AA Pembina Trails Voices Triathlon Manitoba Archwood School Fit from Within-Women's Health Clinic Prairie Children's Centre University Winnipeg - Assiniboine Memorial Cooperative Scholarships Curling Club Fort Garry Women's Prairie Theatre Exchange Resource Centre West Broadway Youth Outreach Assiniboine Park Conservancy Prairie Wildlife Green Action Centre Rehabilitation Centre Winnipeg Foundation Bear Clan Inc. Interest Fund Habitat for Humanity Pride Winnipeg Festival Inc. Behavioural Health Foundation Winnipeg Fringe Festival IISD Experimental Lakes Area Rainbow Trout Music Festival Bike Dump Winnipeg Humane Society Indigenous Languages Red River Exhibition Foundation Bike Week Winnipeg of Manitoba - Cooperative Scholarships Winnipeg International Writers Festival Bookmates Inc. Jenna's Toonies for Tulips- Roblin Park Community Centre Quest to End Parkinson's Winnipeg Police Association- Bridgwater Trails Rossbrook House Cool 2be Kind Neighbourhood Association Jocelyn Hutton Foundation Royal Winnipeg Ballet Women's Health Canada Royal Winnipeg Ballet Kenora District Festival Research Foundation of the Arts Movember- Running Room Canadian Institute of Reading Recovery Kidney Foundation of Canada Share the Magic Book Program

Canadian Sports Centre Knowles Centre Siloam Mission

Cancer Care Foundation Lakewood School South West District Palliative Care Inc. CancerCare Manitoba Leukemia and Lymphoma Foundation Society of Manitoba Springfield Chickendaze- Oakbank Cerebral Palsy Manitoba Brain Injury Association St. Amant Foundation Inc. Children's Rehabilitation Foundation Manitoba Chamber Orchestra Stonewall Kinsmen Club

Children’s Wish Foundation Manitoba Museum Stonewall Quarry Days

Manitoba Schizophrenia Society Stony Mountain Community Association MS Society of Manitoba

Myeloma Canada

50 | RED RIVER COOPERATIVE LTD | 2019 ANNUAL REPORT Environmental Sustainability

MEASURING & MINIMIZING OUR ENERGY EFFICIENT UPGRADES CARBON FOOTPRINT Red River Co-op’s energy efficiency improvements started in Red River Co-op continues to work towards reducing its 2017 with an extensive upgrade to the refrigeration equipment, environmental impact by improving the energy efficiency of lighting and HVAC systems at our food store in Southdale. the buildings and equipment in our operations. This benefits This was followed by the same energy efficient upgrades at the environment, provides an opportunity to reduce operating the Grant Park food store. Both upgrades combined, reduced costs and reduces demand on local utilities. Red River Co-op our carbon footprint by 1,988 tCO2e over last year. We’re acknowledges that there are still improvements to be made anticipating similar efficiency improvements with the and we believe that the current upgrades that have taken renovation currently taking place at the St. Vital food store at place at our food stores and gas bars, as well as those being 850 Dakota St., which will also experience an upgrade to the planned for 2020, will continue to reduce our overall impact refrigeration equipment and lighting within the store. on the environment. At the gas bars, Red River Co-op is working with Federated In 2019 Red River Co-op had a total carbon footprint of Co-operatives Limited (FCL) on improving the current 5,978 tonnes of carbon dioxide equivalent (tCO2e). This is a water reclamation systems at the car wash sites. The water reduction of 951 tCO2e or 13.7% compared to the previous reclamation system is operational at the Ness gas bar. To year and a total of 1,546 tCO2e over the last two years. date we’ve updated the lighting systems of 14 sites to LED with the intention to update another eight sites this year.

CARBON FOOTPRINT (tCO2e) Tesla Canada has completed the installation of six 2017 2018 2019 supercharging stations at the gas bar in Dryden, Ontario and Food stores & pharmacies 5,374 4,234 3,245 we are also in the process of installing four new universal EV Gas bars, cardlock & bulk 2150 2,695 2,733 charging stations within our network of locations. Total 7,524 6,929 5,978

WATER CONSUMPTION (m3) Water Consumption 304,752 309,162 291,844

Greenhouse gas emissions from 183 vehicles driven in one year or the ➤ equivalent to 3,443,795 km driven by an average passenger vehicle. Fun Facts CO2 emissions from 146 homes’ electricity use for a year or the ➤  Red River Co-op’s reduction equivalent to 99.5 homes’ energy use for a year. of 951 tCO2e in 2019 Carbon sequestered by 14,259 tree seedlings grown for 10 years or is equivalent to ➤  the equivalent to 1,126 acres of forests in one year.

RED RIVER COOPERATIVE LTD | 2019 ANNUAL REPORT | 51 Statement on the Co-operative Identity International Co-op 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.

VALUES Co-operatives are based on the values of self-help, self-responsibility, democracy, equality, equity and solidarity. In the tradition of their founders, co-operative members believe in the ethical values of honesty, openness, social responsibility and caring for others.

PRINCIPLES AUTONOMY AND INDEPENDENCE The co-operative principles are guidelines by which Co-operatives are autonomous, self-help organizations co-operatives put their values into practice. controlled by their members. If they enter into agreements VOLUNTARY AND OPEN MEMBERSHIP with other organizations, including governments, or raise capital from external sources, they do so on terms Co-operatives are voluntary organizations, open to all that ensure democratic control by their members persons able to use their services and willing to accept the responsibilities of membership, without gender, and maintain their co-operative autonomy. social, racial, political or religious discrimination. EDUCATION, TRAINING AND INFORMATION DEMOCRATIC MEMBER CONTROL Co-operatives provide education and training for their members, elected representatives, managers, and employees so they can Co-operatives are democratic organizations controlled by their members, who actively participate in setting contribute effectively to the development of their co-operatives. their policies and making decisions. Men and women They inform the general public – particularly young people and serving as elected representatives are accountable to the opinion leaders – about the nature and benefits of co-operation. membership. In primary co-operatives members have equal CO-OPERATION AMONG CO-OPERATIVES voting rights (one member, one vote) and co-operatives at Co-operatives serve their members most effectively and other levels are also organized in a democratic manner. strengthen the co-operative movement by working together MEMBER ECONOMIC PARTICIPATION through local, national, regional and international structures. Members contribute equitably to, and democratically control, CONCERN FOR COMMUNITY the capital of their co-operative. At least part of that capital is Co-operatives work for the sustainable development of their usually the common property of the co-operative. Members communities through policies approved by their 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 transactions with the co-operative; and supporting other activities approved by the membership.

52 | RED RIVER COOPERATIVE LTD | 2019 ANNUAL REPORT Code of Ethical Standards for Co-operatives

We recognize that this consumer-owned co-operative has a responsibility to respect, to promote, and to protect the rights of consumers, and that these rights include:

THE RIGHT TO SAFETY • THE RIGHT TO BE INFORMED • THE RIGHT TO CHOOSE • THE RIGHT TO BE HEARD

In support of its responsibility to appreciate the rights of consumers, this co-operative shall aim to observe and apply in all of its activities, the following:

ETHICAL STANDARDS APPLICATION OF THE CODE 1. All claims, statements, information, advice, and Having acknowledged that the consumer has certain rights, proposals shall be honest and factual. and being resolved to conduct our activities in the interests of the consumer, we shall, at all times, when applying this 2 . Sufficientdisclosure of pertinent facts and information code or interpreting its intent, emphasize ethical human shall be made to enable others to adequately relations and values rather than technicalities or legalisms. judge the offered product, service, or proposal, and its suitability for the purpose to be served. Our test for compliance to this Code of Ethical Standards shall be the effect of a communication or action on the 3 . Due regard shall be given to public decency and good taste. ordinary or trusting mind. We recognize that it is not sufficient that a discerning, knowledgeable, or analytical person may 4. Unfair exploitation in any form shall be avoided. derive a correct interpretation if others may be misled. 5 . Comparison of co-operative merchandising, products, The Code of Ethical Standards is adopted by the Board services, philosophy, principles, or practices, to of Directors as an official policy of Federated Co- those of others shall only be made honestly and operatives Limited, and is recommended for adoption fairly, and without intent to harmfully disparage. by all retail co-operatives served by FCL. 6 . The interests of the membership as a whole shall be paramount to the interests of the institution.

7. The co-operative shall aim to be equitable in the treatment of its members.

8 . Knowingly advising or persuading individuals to take action that may not be in their best interests shall be avoided.

RED RIVER COOPERATIVE LTD | 2019 ANNUAL REPORT | 53 Notes

54 | RED RIVER COOPERATIVE LTD | 2019 ANNUAL REPORT

HEAD OFFICE 10 Prairie Way Winnipeg, Manitoba R2J 3J8

204-631-4600 Fax: 204-633-8391 1-800-763-8704

www.redriverco-op.crs