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 is a different kind of business, kind different isa Co-op River Red and we operate our business with five guidingpillars five with our business operate we and 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