Consolidating and cooperating to prepare for the

ANNUAL REPORT 2015
Consolidating and cooperating to prepare for the future
Consolidating and cooperating
to prepare for the future
ANNUAL REPORT 2015
Consolidating and cooperating
to prepare for the future
ANNUAL REPORT 2015
#ConsolidatingCooperatingForTheFuture
#ConsolidatingCooperatingForTheFuture
Contents
7
15
17
21
25
36
38
39
40
41
41
42
43
57
58
President’s message
Management Discussion and Analysis
Agri-business Division
Retail and Innovation Division
Meat Division
Cooperative Overview
Management report
Independent auditors’ report
Consolidated balance sheet
Consolidated statement of earnings
Consolidated statement of reserve
Consolidated statement of cash flows
Notes to consolidated financial statements
Financial review
Affiliated cooperatives and auxiliary members
Head Office
La Coop fédérée
9001 de l’Acadie Blvd
Suite 200
Montréal (Québec) H4N 3H7
Telephone : 514 384-6450
Fax : 514 858-2025
Editorial Content
General Secretariat, Sustainable Development
and Co-operative Affairs
Jean-François Harel
Guylaine Gagnon
Patrick Dupuis
Marie-Hélène Gaudin
Website
lacoop.coop
Communications, Public Affairs and Brands,
Ben Marc Dienderé
On peut obtenir la version française
de ce rapport sur le site internet de
La Coop fédérée à l’adresse lacoop.coop
ou obtenir une copie imprimé
en communiquant avec le service
des communications au
514 384-6450.
Artistic Direction, Graphic Design and printing
Creative Services
Denis Duquet
Samar Gharib
Bernard Diamant
Olivier Bloquiau
Suzanne Turcot
Michaël Guimond
Printing Services
Pierre Cyr
Photography
Martine Doyon, photograph
martinedoyon.com
Colour Separation and Printing
Imprimerie l’Empreinte
Consolidating
and cooperating
to prepare for
the future
ANNUAL REPORT 2015
Mission
Rooted in the agricultural community
and leveraging its collective strengths, La Coop fédérée contributes to feeding
the world.
Goal
Building on a cooperative model that is
profitable and responsive, to be recognized
as a leader in the Canadian agriculture
and agri-food sectors, and the retail sector
in Eastern Canada.
Values
Honesty
Each of us acts with an ongoing commitment to transparency,
whether it is within the enterprise or with regards to relations
with member-cooperatives and other stakeholders in La Coop
network. Each one of us must be able to recognize our mistakes,
give credit where credit is due and seek to avoid any conflicts
of interest.
Equity
Everyone, including work groups, must treat their colleagues
and partners in a fair and equitable manner. We believe that
every individual deserves to find their place within the larger
La Coop network, be acknowledged and have room to grow.
Responsability
Each person is accountable for their duties within La
Coop fédérée, as they ensure the proper management
of the members’ assets. While fulfilling their individual,
mutual and collective commitments, each person must
answer for their own actions, while also adhering to the
goals of sustainable development.
Solidarity
Driven by the desire to assist one another, we guide each other
in the advancement of our common objectives and projects
to achieve them together. Working together in an open and
cohesive manner, we collectively support the decisions that
affect the common good of La Coop’s network.
1
ANNUAL REPORT 2015
HIGHLIGHTS
2015
Revenu
es
Earning
s before
Operati
ng earn
patron
age refu
nds and
ings
income
taxes
Patron
age refu
nds
Net earn
Accoun
ings
ts receiv
able an
d inven
tories
Curren
t assets
Workin
Propert
g capit
Propert
y, plan
y, plan
t and e
t and e
quipme
nt, at c
nt, net
Long-te
ost
carryin
g amou
nt
Total a
rm deb
ssets
t, inclu
Preferr
al
quipme
ding cu
rrent p
ed share
s and L
ortion
a Coop
’s equit
Numbe
y
r of em
2014
[in thousands of dollars]
ployee
s
$5,991,969
$5,376,073
$55,966
$44,762
$95,702
$73,806
$35,000
$25,000
$44,489
$37,087
$1,074,397
$782,215
$1,140,143
$827,372
$(6,346) *
$274,029
$1,478,267
$1,257,399
$690,653
$501,739
$2,298,308
$1,737,587
$662,233
$314,392
$761,635
$702,473
12,211
10,202
* The credit facility is included in working capital for ratio calculation purposes in 2015
to comply with the presentation adopted in the consolidated financial statements.
2
EARNINGS BEFORE
PATRONAGE REFUNDS
AND INCOME TAXES
REVENUES
[IN THOUSANDS OF DOLLARS]
2015
[IN THOUSANDS OF DOLLARS]
2015
$5,991,969
$95,702
2014
$5,376,073
$73,806
2014
2013
$5,185,952
$23,727
2013
2012
$4,947,409
$96,585
2012
2011
$4,442,438
$92,686
2011
2015
PATRONAGE REFUNDS
WORKING CAPITAL
[IN THOUSANDS OF DOLLARS]
[IN THOUSANDS OF DOLLARS]
2015
$35,000
$(6,346) *
2014
$25,000
$274,029
2014
2013
$—
$206,559
2013
2012
$32,216
$212,606
2012
2011
$36,500
$170,068
2011
PREFERRED SHARES
AND LA COOP’S EQUITY
[IN THOUSANDS OF DOLLARS]
$761,635
2015
$702,473
2014
$594,107
2013
$590,372
2012
$457,121
2011
* The credit facility is included in working capital for ratio calculation purposes in 2015
to comply with the presentation adopted in the consolidated financial statements.
3
ANNUAL REPORT 2015
Board members making
decisions to prepare a
better future are active
agricultural producers.
4
Board of
directors
Denis Richard, ASC
President
Executive Committee Member
Ghislain Gervais
1st Vice-President
Executive Committee Member
Luc Forget, ASC
2nd Vice-President
Executive Committee Member
5
ANNUAL REPORT 2015
Board of
directors
Serge Boivin
Executive Committee Member
Muriel Dubois, agr.
Executive Committee Member
Marc A. Turcotte, ASC
Audit Committee Member
Normand Marcil
Audit Committee Member
Françoise Mongrain
Jean Bissonnette, ASC
Audit Committee President
Mathieu Couture, agr.
Audit Committee Member
Benoit Massicotte
Audit Committee Member
Rosaire Beaulieu
Richard Ferland
Cathy Fraser
Stéphane Morel
6
PRESIDENT’S
MESSAGE
Denis Richard, ASC
President
Preparing for the future with clarity and confidence
Integration, consolidation and optimization were the keywords at La Coop
fédérée (La Coop) in fiscal 2015. Following years of expansion and large-scale
projects, we refocused our actions and planned for the next major phase of
growth.
The future promises to be eventful and we will focus on fulfilling the mission
we set for ourselves: “Rooted in the agricultural community and leveraging its
collective strength, La Coop fédérée contributes to feeding the world.”
Once again, in 2015, La Coop reported solid financial results. Sales continued to grow, hovering around the $6 billion mark, $2 billion more than the
level just five years ago. Earnings before patronage refunds and income taxes
reached $95.7 million, one of La Coop’s best performances ever.
These solid results should not obscure the significant challenges ahead,
challenges that we must anticipate and deal with. More than ever, we are
living in a fast-paced world in which the way things are done change very
quickly. Achieving a significant critical mass is no longer sufficient to survive
in business. Reacting to changes quickly is also key for success. Those who
complacently stick to the seeming comfort of the status quo would be doomed
to failure.
When the sea is rough, the crew must stay the course to bring the ship to
the right port. That’s why it’s important for a business to have a clear goal to
guide its actions when times get difficult.
That’s what we understood when developing our goal during the fiscal
year: “Building on a cooperative model that is profitable and responsive,
La Coop aims to be recognized as a leader in the Canadian agricultural and
agri-food sectors and the retail sector in Eastern Canada.”
Profitability and responsiveness will be the keywords underlying the decisions shaping our business model. Our goals are clearly defined, so is our field
of action. To achieve our ambition, we must operate as a high-performing organization providing increasingly better services to our clients, both members and
non-members.
The transactions completed in recent years have raised La Coop’s development potential. With our diversified and balanced portfolio of businesses, the
risk of a downturn in one particular industry has now been mitigated. The
past fiscal year provides proof of this approach.
7
ANNUAL REPORT 2015
2015 overview
Following the far-reaching changes in 2014, we consolidated and integrated
our gains in fiscal 2015. Although the pace of our investments and growth in
operations was slowed down, La Coop is still alertly on the lookout to seize
market opportunities.
Our businesses are now grouped under three divisions that are similar in
scale in terms of their sales volume: Agri-business (farm supplies and grain
marketing), Retail and Innovation (hardware, renovation centres, energy and
innovation), and Meat (pork chain and pork and poultry processing). The
challenges faced and the opportunities available are specific to each division.
Despite falling commodity prices, the Agri-business Division is reaping the
benefits of the numerous acquisitions made in recent years. With the acquisitions made and the partnerships forged outside Québec, La Coop continues to
maintain its competitiveness for both animal and crop production.
Our goal for the Agri-business Division’s geographic expansion is also very
clear. As the Western Canada market represents high potential for La Coop,
we built a new urea storage dome in the region in 2015.
The geographic expansion strategy is also proceeding in the Maritimes
with the acquisition of Coop Atlantique’s agricultural businesses. In parallel,
we are sustaining our investments in Québec, as demonstrated by our interest in CanEst Transit acquired more than a year ago. With this terminal for
cleaning and containerizing agricultural products, we can diversify our grain
marketing operations.
Meanwhile, the urea plant project with IFFCO is on hold, awaiting the return
of improved market conditions. The price of urea has hit a five-year low and
naturally, investors are cautious. Nonetheless, the project fundamentals remain
promising. La Coop and the other potential developers and investors have not
given up on the idea of building a plant in Bécancour. The support of the
government, leading Québec institutions and local players is solid. This project
still has significant potential to be a driving force for the development of La
Coop’s network.
The Retail and Innovation Division underwent a year of transition. The 100 %
acquisition of Groupe BMR during the fiscal year has long-term potential for
the organization and the network. That said, an acquisition of such scale
requires adjustments in the short term, especially given the difficult conditions and sluggish growth in the Québec renovation and construction materials market.
Despite adverse market conditions, numerous projects required by the transition were carried out diligently: banner conversions, changes to supply logistics to serve twice as many stores, cultural transition for human resources, and
streamlining of certain corporate stores. All in all, it was a very challenging year,
which will serve as a springboard for the future.
Sonic Energy will also face numerous challenges. This sector has generated
attractive profits in recent years, stemming in part to our strategic partnerships
with Norcan and Propane Québec Inc.
8
PRESIDENT’S MESSAGE
However, Sonic Energy operates in a market subject to strong pressures.
Demand for petroleum products is stagnating, and even declining, in the case
of light fuel oil. Competition is fierce with the presence of multinationals and
new players, such as the recently merged entity of Pétro-T and Groupe Harnois.
Against this background, La Coop made decisions to ensure Sonic Energy’s
longevity and long-term growth, entering into an agreement with Groupe
Filgo to merge their energy product distribution services and service station
operations. If the Competition Bureau gives the merger the green light, a new
entity will be created, equally owned by La Coop and Groupe Filgo. This joining
of forces would augur well for both organizations, our partners in the energy
market and our members.
The Meat Division (Olymel) generated record revenues over the past fiscal
year. Olymel’s strength in product marketing was bolstered by the weak
Canadian dollar which drove sales in international markets. In domestic markets, performance improved, driven by the significant turnaround in results of
the pork processing and poultry sectors.
Olymel continued with its development efforts amid a highly competitive
environment, signing an agreement in principle with ATRAHAN Transformation inc., a family business with a slaughtering capacity of nearly one million
hogs per year. If the Competition Bureau approves the transaction, this project
will generate additional supply volumes as well as synergy benefits to both
companies.
Olymel also entered into another agreement in principle with Les Aliments
Lucyporc to create an equally owned partnership with its owner Groupe
Robitaille. This agreement also requires the Competition Bureau’s approval.
Aliments Lucyporc specializes in niche products such as Nagano pork. If it
materializes, the partnership will create synergies in market development,
technical expertise and value-added processing.
The Cooperative Pork Chain is also continuing its expansion. The large breeding facility for sows is now a reality in Témiscamingue with the first batch of
piglets on their way in the Fugèreville Municipality. Initiatives are underway in
surrounding areas to set up similar facilities. We are particularly proud of our
transparent approach with communities, based on the principles of sustainability. Our way of doing business has created a dialogue conducive to finding
the most inclusive of solutions.
Fiscal 2015 was one of the best years in La Coop’s history for financial
performance. I wish to highlight the exceptional work done in this respect
by our Chief Executive Officer Gaétan Desroches, and his colleagues François
Dupont and Sébastien Léveillé and their respective teams.
I also wish to draw your attention to the professionalism of Réjean Nadeau,
President and Chief Executive Officer of Olymel, and his team, who delivered
highly satisfactory results. I would be remiss not to mention the extraordinary
efforts of our some 12,000 employees – the strength of an organization lies in
the quality of its human resources.
9
ANNUAL REPORT 2015
To achieve our goal, we must operate as a high-performing
organization providing increasingly better services to our
clients, both members and non-members.
I also express my thanks to my colleagues on the Board of Directors for
their solidarity, commitment and openness to change.
During the fiscal year, La Coop was selected as one of 2016 Aon Best Employers,
which recognizes organizations that have created excellent work environments. This recognition would not have been possible without the support
and work of all our employees. I thank them and applaud their contribution.
Their commitment will be the key factor to successfully meet future challenges, which will not be in short supply !
A fast-paced world
We forget sometimes how quickly things can change. Do we remember that
the first smart phones with touchscreens came to the market less than
10 years ago ? Today, everyone or nearly everyone has one in their pocket, and
for some, for more than 23 hours a day ! This is nothing less than a revolution,
both at the individual and society level, a revolution that has also affected the
world of agriculture. Agricultural producers have gone digital, La Coop as well.
The intensification of world trade is also shaking up our business environment. The signing of the Trans-Pacific Partnership has wide-ranging impact.
While it is essential for Canada, the agreement will create new cracks – although
smaller in scale than expected – in trade barriers affecting the supply management system. On the upside, for a number of export sectors (particularly
cattle, pork, maple syrup), crucial export channels have been secured.
Our world must also deal with the challenge of climate change. The Paris
Agreement is a step forward in this respect. The 195 signatory countries have
officially recognized that the current efforts are insufficient to contain global
warming to below 2°C. This Agreement lays the foundation for a process aimed
at resolving the problem. Our actions are consistent with this approach, particularly as we are one of the founding members of Coop Carbone, whose aim
is to create projects in Québec to cut greenhouse gas emissions and to reduce
transaction costs for buying carbon credits.
Also on the environmental front, the Québec government adopted the
Stratégie québécoise sur les pesticides 2015-2018. This strategy for pesticides
relies mainly on an environment ministry report showing that the presence of
residues of certain pesticides has been growing in waterways. Having taken
note of this finding, we will continue to regulate ourselves in a professional
manner and act proactively to improve the situation.
Consumers are also changing rapidly and becoming increasingly demanding.
Given the vast amount of information available online, they are better informed, price conscious and sensitive to product attributes, particularly ethical
conduct, transparency, stewardship of the natural heritage and animal
well-being. Ensuring client loyalty is a significant challenge.
10
PRESIDENT’S MESSAGE
In the face of such changes, businesses are not just standing idle, they are
adapting. In the agri-food sector, the merger between Dow and Dupont, two
giants in the seeds and agrochemical businesses, speaks for itself. Let’s be
clear, this merger could lay the foundations for market dynamics that could
lead to the consolidation of other large players, and we will also have to adapt
to such possibilities.
We are operating in a highly competitive market. But, with our ongoing
actions, we make sure that we implement business solutions for our clients,
both members and non-members. Vertical coordination, operational excellence,
value-added processing, partnerships and strategic acquisitions are some of
the tools we have to achieve our ambition.
Our network must also keep on modernizing. Regarding governance,
we have in fact adopted new rules for member representation within the
network in order to adapt to the decline in the number of cooperatives and
their increasing heterogeneity.
Fiscal 2015 also saw the completion of the network strategic planning
process launched in 2013. We are now in the process of implementing the key
recommendations and it is very likely that strategic planning will become a
quasi-permanent exercise.
The network consolidation plan, also called Vision 2020, is one such example
which extends the planning and thinking process into the heart of the
network’s business model. The aim of this process is to analyze the current
state, identify and consider potential consolidation models, and select the
most suitable. This critical process will be completed in spring 2016.
La Coop is ranked as the world’s 24th largest agri-food cooperative. The
cooperative model is resilient and continues to prove its worth. I am convinced
that, guided by its mission and ambition, La Coop will rise to the challenges
and will remain a force in the cooperative world for future generations.
I wish to extend my thanks to all the directors across the large cooperative
network. It’s your dedication that gives meaning to our collective actions,
making it possible to continually improve our business model and fulfill our
main purpose – help improve our members’ competitiveness and ensure
longevity for their business.
Denis Richard
President
11
ANNUAL REPORT 2015
Talented and experienced
managers prepare the
future of a strong
cooperative network.
12
Management
Gaétan Desroches, agr.
Chief Executive Officer
Paul Noiseux
Chief Financial Officer
Jean-François Harel, ASC
General Secretary, Sustainable Development
and Cooperative Affairs
13
ANNUAL REPORT 2015
Management
Sébastien Léveillé
Executive Vice-President,
Agri-business
François Dupont
Executive Vice-President,
Retail and Innovation
Bertrand Gagnon
Senior Vice-President, Projects,
Management Consulting
and Technologies
Ben Marc Diendéré
Senior Vice-President,
Communications and Public Affairs
Mario Leclerc
Senior Vice-President,
Human Resources
Alain Garneau
Senior Vice-President,
Legal Affairs
14
MANAGEMENT
DISCUSSION AND ANALYSIS
Gaétan Desroches, agr.
Chief Executive Officer
Preparing today for tomorrow’s growth
La Coop fédérée (La Coop) generated $5.992 billion in sales and earnings before
patronage refunds and income taxes of $95.7 million for the year ended
October 31, 2015, compared with $5.376 billion and $73.8 million, respectively, in fiscal 2014.
NUMBER
The improvement in results stemmed partly from better
financial perforOF EMPLOYEES
mances reported by the Meat Division (subsidiary Olymel LP) and the Agribusiness Division, while the Retail and Innovation Division experienced a more
difficult year.
Highlights
SALES
$5.992 BILLION
2015
$
The Meat Division reported the best results in its 25-year history, driven
primarily by higher profitability in the bacon and further-processed pork
sectors as well as sustained growth in contributions made by the poultry and
Western fresh pork sectors. The Division’s earnings were bolstered by
improved meat margins, higher volumes and the lower exchange rate.
12 211
2015
In the Agri-business Division, all the operating sectors generated results
that helped increase consolidated earnings over prior year performance. This
Division’s contribution was increased by a significant gain resulting from the
disposal of assets. In the Retail and Innovation Division, the Hardware Department generated an operating loss following the closure of the Trois-Rivières
distribution centre and the difficult economic conditions in retail sales. This
loss was partly offset by the Sonic Energy Sector’s results.
10 202
2014
Meat Division sales grew by $52.4 million, driven essentially by higher
sales volume in the processed pork, bacon and processed poultry sectors,
while selling prices in the fresh pork sectors declined following decreases in
livestock prices.
NUMBER
SALES
The Agri-business
Division’s external sales rose $135.7
million, due essentially
OF EMPLOYEES
to higher animal
feed input costs combined with
higher
volumes. In addition,
$5.992 BILLION
demand for fertilizers was higher. Subsidiaries outside Québec reported significant increases in sales as Ontario subsidiaries seized opportunities created
2015
by weather conditions in spring and fall, which were conducive to corn and
wheat cultivation. Sales in the Grain and Feedmill Supply Sector declined as
the 2014 harvest resulted in a lower trading volume.
12 211
2015
$
2014
$5.376 BILLION
EARNINGS BEFORE
PATRONAGE REFUNDS
AND INCOME TAXES
95.7 73.8
$MILLION
$MILLION
2015
2014
Retail and Innovation Division sales grew by $427.8 million with the consolidation of Groupe BMR’s total sales following the acquisition of 100% of its
shares. This increase was partly offset, however, by a substantial decrease in
petroleum product prices in the Sonic Energy Sector.
Cost of sales and selling and administrative expenses totalled $5.909 billion
2014
compared with $5.307 billion for the previous fiscal year. The increase resulted
mainly from higher input costs and sales growth.
10 202
2014
$5.376 BILLION
15
ANNUAL REPORT 2015
The improvement in results stemmed partly from better
financial performances reported by the Meat Division
(subsidiary Olymel LP) and the Agri-business Division.
Highlight
Financial expenses for fiscal 2015 increased to $27.5 million from $24.7 million
for the previous fiscal year, owing to the increase in debt partly offset by lower
interest rates.
Including the results of all of our Divisions, La Coop reported consolidated
operating earnings of $56 million, compared with $44.8 million in 2014.
NOMBRE
D’EMPLOYÉS
The other contributions to earnings included
the share of results of joint
EXCÉDENT
ventures – entities in which La Coop has a joint
interest.
This share increased
AVANT
IMPÔTS
to $37.3VENTES
million from $33.3 million for the previous fiscal year, stemming from
5,992
MILLIARDS
improved
performance$at most entities in which La Coop has an interest.
12 211
2015
The share of results of entities subject to significant influence – entities
2015
in which we have an interest under 50% – amounted
toMILLIONS
a loss$ of $0.5 million,
MILLIONS $
compared with a loss of $4.6 million in 2014. The lower loss is attributable to
the change in the composition of interests held during the fiscal year, particularly the interest in BMR, which was converted from an interest in an entity
under significant influence to an interest in a subsidiary following the
acquisition.
95,7 73,8
10 202
2014
$
Other investments, which represent interest and dividend income from
other investments, totalled $1.8 million compared with $2 million for the
prior fiscal year.
2014
Gains (losses) on disposal and remeasurement
2015 of assets
2014 amounted to a
5,376
MILLIARDS
$ compared with a loss of $1.6 million in 2014. The
gain of $1.1
million in 2015
gain realized in 2015 stemmed primarily from the sale of production rights
offset by the remeasurement of long-term assets. The loss in 2014 resulted
from the disposal of an investment, partly offset by a gain on the sale of
broiler production rights.
Earnings before patronage refunds and income taxes totalled $95.7 million
compared with $73.8 million last fiscal year.
For the year ended October 31, 2015, after deducting $35 million in declared
patronage refunds and $16.2 million in income taxes, La Coop reported
$44.5 million in net earnings compared with $37.1 million in fiscal 2014.
Segmented information for La Coop’s three
divisions - Agri-business, Retail and Innovation,
Meat - is discussed below.
16
Agri-business
Division
Preparing the future by
optimizing member
and client services.
#ConsolidatingCooperatingForTheFuture
17
ANNUAL REPORT 2015
Agri-business
Division
Sébastien Léveillé
Executive Vice-President, Agri-business
Our goal
Provide to our members, retailers and clients
customized business solutions and
technologies for optimizing performance,
maximizing profitability and promoting
business growth.
Operating sectors
Animal Production, Crop Production
Grains, Marketing and Business Intelligence
and Agri-economics.
18
AGRI-BUSINESS DIVISION
The dairy production and other ruminants sector grew its
market share in Québec through its services tailored to the
needs, size and specific behaviours of dairy producers.
Sales of the Agri-business Division, after eliminating intersegment transactions, increased by $139.2 million to $1.765 billion.
Highlights
Besides the gains on disposal of large asset items, the operating results
improved in most of the Agri-business Division’s sectors.
Sales in the Animal Production Sector were up nearly $70 million from the
past fiscal year, once again driven by the implementation and adaptation of
NUMBER
the Chrysalide model in two network monogastric plants. This
transformation
OF
EMPLOYEES
process will be completed in 2016 with the addition of a third and last monogastric plant to the network.
SALES
$1.765 BILLION
2015
According to la Fédération des producteurs de lait du Québec, the number
of dairy farms declined by 144 in 2015. Nonetheless, the dairy production and
other ruminants sector grew its market share in Québec through its services
tailored to the needs, size and specific behaviours of dairy producers. Hog and
poultry feed sales volumes were also up.
$
578
2015
While the 2014 season was not conducive to corn cultivation, spring 2015
provided more favourable weather conditions in Québec despite a short
window for sowing. As a result, combined with higher industrial volumes,
fertilizer sales volumes and raw material prices were up, driving sales higher
in this sector.
2014
569
Agronomy Company of Canada and Agrico Canada Ltd. generated
2014combined
sales up 18.8% from last year. These two subsidiaries were well positioned to
$1.625 BILLION
meet higher demand generated by the spring and fall sowing seasons that
were ideal for corn and wheat cultivation in Ontario. Agrico Canada’s sales
volumes in Manitoba were also up.
Seed Department sales declined for fiscal 2015. Sales of soya fell while
corn and cereal sales rose.
Net sales of crop protection products also declined by 3% as weather
conditions in the 2015 season led to a reduced use of herbicides and insecticides. However, La Coop network’s market share, which has been growing
since 2011, expanded again.
RESULTS OF SUBSIDIARIES
OUTSIDE QUÉBEC*
SALES
SALES
SALES
SALES
590.6 702.7 626.4 710.8
$MILLION
$MILLION
$MILLION
$MILLION
EARNINGS
EARNINGS
EARNINGS
EARNINGS
24.6 24.4
$MILLION
$MILLION
2012
2015
2013
24.6 28.0
$MILLION
$MILLION
2015
2014
2015
2015
*SALES AND EARNINGS BEFORE INCOMES TAXES FOR:
Agronomy Company of Canada, Agrico Canada L.P.
and Grower Direct Exports
19
ANNUAL REPORT 2015
Highlight
NUMBER
OF EMPLOYEES
Sales at the Grain and Feedmill Supply EARNINGS
Sector wereBEFORE
down slightly by 2%
from last year. Although the disappointingPATRONAGE
2014 corn harvest
resulted in a
REFUNDS
sharp drop in marketed volumes, the Sector’s
net
contribution
AND INCOME TAXESwas higher
than inSALES
the past year as the marketing strategy was tailored to shorter
timeframes
and more attractive market segments. The volumes traded by
$1.765
BILLION
Elite Grain grew 15% following the early harvest in September 2015.
54.1 39.1
2015
AgriEst,
Coop Agriculture Centre’s sales decreased, owing primarily to the
$MILLION
$MILLION
implementation of an agreement for the marketing
of grains.
578
2015
569
2014
$
2014
$1.625 BILLION
20
2015
2014
Retail and Innovation
Division
Preparing the future by
supporting cooperatives,
development and
their region.
#ConsolidatingCooperatingForTheFuture
21
ANNUAL REPORT 2015
Retail and Innovation
Division
François Dupont
Executive Vice-President Retail and Innovation
Our goal
Develop the full potential value of our retail assets and innovation
initiatives with the quality of our offering and products while
maximizing the synergies between these different activities.
Operating sectors
Sonic Energies: Petroleum products distributed to agricultural,
residential and industrial clients and a network of
185 service stations;
Hardware and Farm Machinery: Unimat and BMR banners
in Québec, Ontario and the Maritimes;
Innovation: Development of economic activities in
the field of bioproducts and alternative energy.
22
RETAIL AND INNOVATION DIVISION
Highlights
NUMBER
The Retail and Innovation Division reported sales of $1,410
billion for fiscal
OF EMPLOYEES
2015, up $428 million from $981.5 million in fiscal 2014.
The transformation process in the Hardware and Materials Department
continued again this year. After having held a minority interest in Groupe BMR
for two years, La Coop became its sole owner in January 2015. For BMR,
*
completing the integration of Unimat merchants proved to be challenging.
In particular, adapting logistics and client service was a highly complex
process. We must commend the dedication of the BMR team for its efforts
and creativity in limiting the inconveniences and rapidly making the required
rectifications. The transformation would not have been possible without
the cooperation and patience of our merchants and their teams, which were
also called upon to deploy exceptional efforts. In parallel, a core team at the
Trois-Rivières distribution centre had to manage the winding up of hardware
operations. The quality of their work, amid difficult conditions, was also highly
commendable.
2,045
2015
342
2014
Consolidated sales of the Hardware and Materials Department
on an annual
basis were comparable to prior year sales. Amid difficult market conditions in
the construction and renovation industry that persisted in 2015 as well,
corporate stores reported lower results, although strong turnaround
measures were implemented. Extraordinary and non-recurring expenses
relating to the winding up of the hardware business at the Trois-Rivières
distribution centre and the closure of two corporate stores also affected the
Department’s results.
The Farm Machinery Department grew its sales by 9.1%, driven by the
addition of new product lines and growth in our more traditional product
lines. The Department also increased its contribution considerably.
6,200
6,000
5,800
2015
$
2014
$981.5 MILLION
NUMBER
OF EMPLOYEES
* BMR included
342
2014
5,600
5,400
5,200
5,000
2014
2013
2012
2011
2010
4,800
$1.410 BILLION
2,045*
2015
Hardware
sales in
Québec
6,400
SALES
$ million
Source: Statistics Canada
23
ANNUAL REPORT 2015
The transformation process in the Hardware and
Materials Department continued again this year.
For the Sonic Energy Sector, fiscal 2015 was marked by a significant decline
in prices of oil-based energy products. The Sector’s sales were down 23%.
Oil sales volumes declined while service stations and propane generated
higher volumes. These results stemmed partly from the fact that fiscal 2015
comprised 53 weeks and partly due to an early corn drying season compared
with past seasons. The acquisition of a propane distributor was also a contributory factor. Sonic Energy generated a higher contribution than in the past
year owing partly to exceptional gains made by our supply companies Groupe
Norcan and Propane Québec inc.
Among other initiatives, the Innovation and Development Sector partnered
with the Ontario Federation of Agriculture in a ground breaking Canadian
project to harvest and market corn stalks on a limited scale for the production
of second generation ethanol.
$93
2012
$98
$94
2011
$62
$72
2001
2002
$37
$31
$26
2000
$26
$30
$42
$49
$57
$68
(Brent, US$)
$79
$100
Average annual
crude prices
per barrel
$95
.
2003
2004
2005
2006
2007
2008
2009
2010
2013
2014
2015
2016*
* January only
24
Meat
Division
Preparing for the future
to feed the world.
#ConsolidatingCooperatingForTheFuture
25
ANNUAL REPORT 2015
Denis Richard
President of La Coop fédérée and Chairman
of the Board of Olymel L.P.
Jean-François Harel
General Secretary of La Coop fédérée
and Secretary of the Board of Olymel L.P.
Réjean Nadeau
President and Chief Executive
Officer of Olymel L.P.
Gaétan Desroches
Chief Executive Officer
of La Coop fédérée
Paul Noiseux
Chief Financial Officer
of La Coop fédérée and Olymel L.P.
Meat
Division
Feeding the world by manufacturing
products of irreproachable quality.
Operating sectors
Hog production, slaughtering and butchering,
pork processing, poultry slaughtering
and cutting, poultry processing, marketing
of pork and poultry products across Canada
and in over 65 countries.
26
Réjean Nadeau
President and Chief Executive Officer,
Olymel L.P.
Olymel reported the best results of its history in fiscal 2015. Sales reached
$2.805 billion, up $49 million from $2.756 billion last year. Sales growth was
however limited as the higher sales generated in most operating sectors was
largely offset by lower selling prices in the fresh pork sector.
Despite the recovery in the U.S., fiscal 2015 saw uncertain economic
conditions across the world. The Canadian dollar, which started to trend
NUMBER
downwards last year, continued to do so and Olymel benefited
from its generally
EMPLOYEES
favourable impact. On the downside, meat marginsOF
in the
Eastern fresh pork
sector were the lowest in the past ten years.
The strong results in fiscal 2015 were driven by several factors, including in
particular sharp decreases in raw material costs and the considerably higher
volumes in the processed pork and bacon sector. Other contributory factors
were the excellent results recorded in the poultry and Western fresh pork
sectors. In the coming years and amid global conditions that pose numerous
challenges, we will continue our intensive efforts to maintain high profitability by enhancing added value and cutting costs.
9,874
2015
Hog production
The Western hog production sector reported solid results for fiscal 2015, but
fell short of the exceptional earnings generated in fiscal 2014 amid excellent
market conditions. This performance is attributable to a sharp drop in selling
prices as well as higher feed costs which account for 60% of the cost of
producing one hog. Olysky’s annual production exceeded last year’s result
by 10%. Olymel also acquired the inventory of Peace Pork (OlyNorth), an
Alberta producer. Olymel’s annual production in the West totalled over
1.1 million hogs, meeting nearly 50% of the supply needs of the Red Deer plant.
8,994
2014
In its second year of operations within Olymel, and as was the case during
the previous fiscal year, Eastern hog production – which comprises the operations of Sogeporc, OlyEst as well as Fermes Boréales’ breeding facilities for
sows – reported a loss. This negative performance stems from, among other
factors, the implementation of the pork chain. In fiscal 2016, Olymel will
however continue to pursue its business goals of ensuring better coordination of the production chain in the East. After successfully completing all the
steps for complying with current regulatory and environmental standards,
Les Fermes Boréales launched its operations in Témiscamingue with the first
of five breeding facilities for sows (2,360 sows). This ambitious project, developed and managed by Olymel, aims to establish business partnerships
with investor-cooperatives and independent producers in order to share the
ownership and the risks, and ensure stable supplies for the coming years.
27
Highlight
SALES
$2.805 BILLION
2015
$
2014
$2.756 BILLION
ANNUAL REPORT 2015
Olymel reported the best results of its history in fiscal 2015.
Fresh pork
Despite a favourable exchange rate and higher slaughtering volumes, the Eastern
fresh pork sector posted negative results for the third consecutive year, owing
partly to the closure of the Russian market in fiscal 2014 and the loss of accreditation of plants in Eastern Canada for the Chinese market. This situation is
expected to change in fiscal 2016 as the Vallée-Jonction and Princeville plants
are once again eligible to export to China. Also, results were adversely affected
by the strike at the Vallée-Jonction plant during winter 2015 and the technical
problems that forced the Saint-Esprit plant to scale back its operations by half
during the summer
Olymel also completed a significant transaction in fiscal 2015 by acquiring all the shares of Yamachiche-based ATRAHAN Transformation Inc., a hog
slaughterhouse and meat cutting plant with an annual slaughtering capacity of about 900,000 hogs. At the end of the fiscal year, Olymel announced
the signing of an agreement in principle with Groupe Robitaille for a 50-50
partnership in Lucyporc, a hog slaughterhouse and meat cutting plant
specializing in niche products such as Nagano pork, also located in the municipality of Yamachiche, Québec. Both transactions will consist in an exchange of
shares and must be approved by the Competition Bureau. These partnerships
aim to secure a significant portion of our supplies and to generate synergies
for consolidating Olymel’s position in different markets.
Last, the efforts made by Olymel and its industry partners in previous years
in collaboration with the Équipe québécoise de santé porcine (EQST) to test
for the porcine epidemic diarrhea virus (PEDv) paid off as this illness was eradicated from Québec at the end of 2015.
In 2016, the persistently difficult conditions in the Eastern fresh pork sector
will require us to take robust efforts to optimize our operations and ensure a
return to profitability. We will have to intensify our efforts, particularly to
leverage synergies resulting from new partnerships concluded in fiscal 2015
and which should enable us to explore new markets, reduce costs and generate additional revenues. We must also review our product portfolio to enhance
its value.
28
MEAT DIVISION
Reversing the negative trend during the two previous fiscal years, the Western
fresh pork sector generated profits in fiscal 2015. This return to profitability was
driven by higher slaughtering volumes, a more favourable exchange rate as well
as an improved meat margin, which contrasts with conditions in the East. The
meat margin is higher in the West compared with the East owing to lower supply
costs, higher value-added products, and more lucrative markets such as China.
Note that at the beginning of fiscal 2015, Olymel’s share in total Canadian
pork exports worldwide amounted to 31.5% for a slaughtering volume of 27.6%.
Processed pork and bacon
In fiscal 2015, the secondary pork processing sector’s results largely exceeded
2014 performance, driven mostly by an improved meat margin stemming
from a favourable client mix, higher selling prices and volumes, and the
weakening of the Canadian dollar. However, sustaining these excellent results
in fiscal 2016 amid higher raw material costs will require us to seek efficiency
gains and implement cost control measures.
The bacon sector also reported an impressive increase in earnings in fiscal
2015 compared with the prior year, generating profits for the third consecutive
year. In contrast to the past fiscal year, this sector experienced in particular a
considerable increase in volumes and a significant drop in raw material costs.
Fresh and processed poultry
The primary poultry processing sector generated positive results, exceeding
prior year performance. Live poultry prices were down for the second consecutive year while chicken meat prices were sustained by higher pork and beef
prices, two factors that helped improve the meat margin. Olymel’s results
were bolstered by the fiscal 2015 results at Sunnymel and Volaille Giannone
Inc., which also benefited from the higher meat margin stemming from the
decline in live poultry costs, and from increased volumes.
The turkey sector generated profits in fiscal 2015, although lower than in
the past fiscal year. The meat margin was down owing to higher raw material
costs and selling prices weakening under market pressures.
The secondary poultry processing sector generated positive results in fiscal
2015, albeit well below 2014 performance, even though new contracts boosted
sales volumes. Earnings were dragged down by the lower meat margin resulting
partly from increased supply costs and partly from the launch of a new cooking
line at the Sainte-Rosalie plant. Measures must be taken in fiscal 2016 to rein
in rising operating costs in facilities. Selling prices must be sustained by continuing the development of national and private brands. Last, Olymel intends to
make a significant investment in the Brampton plant in Ontario to capitalize on
the sharp increase in demand in breaded chicken products.
29
ANNUAL REPORT 2015
Highlight
NUMBER
OF EMPLOYEES
9,874
2015
8,994
2014
A business leader in its field
In 2015, Olymel continued to focus on its human resources, developing in
particular innovative personnel recruitment and retention strategies as well
SALES training tools, crucial for maintaining our position as a comas tailor-made
petitive
and innovative business. Yet again, Olymel earned client recognition
$2.805 BILLION
by winning several awards thanks to the quality of the personnel’s work and
client service. We renewed four labour contracts in four facilities. The frequen2015
cy and
gravity of workplace injuries decreased again, a trend that is maintained through compliance with safety rules and the numerous preventive
measures applied in our facilities. Our commitments regarding the quality of
our products, food safety, respect for the environment and animal well-being
have been uncompromisingly fulfilled, in accordance with the highest industry
standards. These are indispensable conditions for Olymel to remain as a leader
in Canada’s agri-food processing sector.
$
25 years of history – a launching pad for the future
In 2016, Olymel will be celebrating a quarter century of operations. Acquisitions, 2014
mergers and partnerships have marked these 25 years of history, making
Olymel one of the largest businesses in its sector in Canada. Our employees,
management
and owners can take great pride in looking back at the path
$2.756
BILLION
travelled since 1991. We have integrated information technologies, successfully taken on numerous challenges in markets around the world, adapted to
currency fluctuations and developed innovative solutions for changing consumer trends. Our capacity to understand the issues, deal with challenges,
satisfy client requirements and to adapt, regardless of market conditions, has
made our organization stronger. Needless to say, all through these 25 years,
Olymel has been able to count on the loyalty of its clients and suppliers, who
have been and remain the pillars of our success. The year 2016 will provide us
with numerous opportunities to express our gratitude.
30
MEAT DIVISION
In the future, Olymel’s management has the firm intention to continue
developing the organization as part of a strategic vision to sustain growth
and fulfil its mission to feed the world based on an effective and profitable
business model. We will realize this strategic vision over the coming years
by establishing new business partnerships, by persevering with the smooth
coordination of production and processing, by adding greater value to products,
by strengthening the culture of innovation and by ensuring exemplary
practices as an employer and agri-food business. There can be no better way
to celebrate our 25th anniversary than by making this strategic vision a reality.
The success of this vision will depend, as was the case during the first
quarter century of our existence, on the commitment of all our employees.
I take this opportunity to express my heartfelt thanks for the work accomplished in fiscal 2015 and for all of Olymel’s successes in the past 25 years made
possible through their contribution.
I would also like to express my appreciation to the Board of Directors and its
chairman Denis Richard for their unwavering support and thoughtful advice.
Réjean Nadeau
President and Chief Executive Officer, Olymel L.P.
31
ANNUAL REPORT 2015
Management discussion and analysis
Continued
Administrative Departments
Administrative Departments’ net expenses, including the real estate subsidiary’s
results, totalled $22.4 million compared with $30.4 million for the previous
fiscal year.
Human Resources
La Coop and its subsidiaries had a roster of 12,211 employees as at year-end,
up from 10,202 in the prior year. This increase resulted primarily from the
BMR acquisition but the workforce also fluctuated throughout the year depending on personnel transfers and different operational needs.
Following the different strategies used to engage all our employees, we
were recognized as one of AON Best Employers 2016 in the Gold category, and
also won the North American CandE 2015 award for delivering outstanding
candidate experience during hiring processes.
Financial position
As at October 31, 2015, La Coop’s consolidated balance sheet showed assets
totalling nearly $2.3 billion, up from $1.7 billion as at the end of the previous
fiscal year, stemming mainly from the Groupe BMR acquisition in January
2015.
Working capital represented a credit balance of $6.3 million compared
with $274 million for the previous year. The difference resulted from the inclusion of the credit facility in the current portion of long-term debt. La Coop
reported a consolidated debt ratio of 47:53 at the end of fiscal 2015 compared
with 33:67 at the end of the previous fiscal year.
Preferred shares, share capital and reserve totalled $761.6 million as
at year-end compared with $702.5 million as at the end of fiscal 2014. These
items accounted for 33.1% of total assets in 2015 compared with 40.4% as at
the previous year-end. La Coop’s reserve as at October 31, 2015 amounted to
$384.4 million, representing 50.5% of preferred shares and equity.
Liquidity and capital resources
As at October 31, 2015, La Coop had access to the capital resources it needs
through agreements with Canadian financial institutions. Since October
31, 2013, La Coop’s agreements with a syndicate of financial institutions
consist in an overall credit facility of $625 million including a tranche of
$150 million which is subject to compliance with certain conditions during the
fiscal year as defined in the credit agreement. Also, an additional $25 million
was granted under an accordion feature resulting in a total amount of
$650 million. The terms and conditions underlying the credit facility are
currently being renegotiated with a view to its renewal. As it is due to
expire in June 2016, the credit facility was presented under current liabilities.
Drawdowns amounted to $404.3 million at the end of fiscal 2015 compared
with $211.7 million in 2014.
La Coop has other borrowing arrangements, such as a balance of purchase
price payable, consisting of four annual principal payments of $20 million,
beginning in January 2016. La Coop also has two term credit facilities,
comprising a fixed-rate $60 million facility repayable in three annual
payments starting in July 2020 and a 6.5% fixed-rate $25 million facility
repayable in December 2019.
32
MANAGEMENT DISCUSSION AND ANALYSIS
Following the different strategies used to engage
all our employees, we were recognized as one of
AON Best Employers 2016 in the Gold category.
The credit facility, the 5% fixed-rate term credit facility and term note are
collateralized by first rank hypothecs on a majority of the current and
future property, plant and equipment and intangible assets of Olymel L.P. and
its subsidiaries. In addition, following renegotiation of the credit facility, the
poultry production quota rights held by La Coop are also collateralized by first
rank hypothecs.
To reduce its borrowing requirements, La Coop manages working capital
prudently and determines its capacity to invest in property, plant and equipment based on cash flows from each of its operating sectors. For each quarter
of fiscal 2015, La Coop met its financial obligations and complied with financial
covenants under its financing agreements.
Risks and uncertainties
In the normal course of business, La Coop is exposed to various risk factors
that may affect its profitability.
Input price fluctuation risks
Input prices are determined by several factors beyond La Coop’s control.
Extreme price volatility results from constant changes in supply markets.
La Coop’s economic environment is regulated by national and provincial
policies affecting slaughterhouse supply. As a result, changes in market policy
influence slaughtering volumes availability and livestock prices. La Coop
strives to maintain stringent controls over production costs to offset exposure
to supply prices and costs, which are beyond its control. La Coop mitigates this
risk factor by operating in a variety of sectors.
Although concessions were made in sectors covered by supply management, the conclusion of the Trans-Pacific Partnership secures crucial export
channels for La Coop, primarily for pork exports to Japan. Significant risk
remains regarding access to certain other markets, such as Russia, as this
depends on political decisions. Modest growth of about 3% observed and
expected worldwide will affect the potential of export markets.
Food safety risks
La Coop is exposed to a number of industry-related risks, primarily in its food
processing and marketing operations. La Coop must manage exposure to risks
related to consumer product spoilage and contamination, and any related
liability. La Coop ensures compliance with government requirements through
stringent food safety controls at all its plants.
33
ANNUAL REPORT 2015
This year’s results demonstrate that our strategic choices
and orientations are already paying off.
Livestock health risks
The prospect of livestock contamination and epidemics is a significant risk
factor for La Coop. Epidemics can have a major impact on production at
processing plants and their access to raw material supply. Quality management is of utmost importance to La Coop. Accordingly, improving internal
traceability procedures and collaborating on a national strategy with government bodies are part of sound livestock management.
Environmental risks
La Coop takes measures to mitigate the environmental footprint and reduce
the risk arising from its operations, products and services. Its environmental
policy also demonstrates the commitments that La Coop makes with respect
to prevailing regulatory requirements and best practices in its operating
sectors. La Coop demonstrates social responsibility by taking actions to
protect the environment and by committing itself to sustainable development.
The Environment Department implemented an ISO 14001–based Environmental Management System (EMS) in facilities belonging to La Coop and its
partners.
Financial instrument risks
La Coop has provided information on its exposure to financial instrument
risks, including credit risk, liquidity risk, market risk and the other price
risks. A note to the consolidated financial statements discloses the nature
and extent of risks arising from financial instruments and related risk management.
34
MANAGEMENT DISCUSSION AND ANALYSIS
Conclusion
La Coop sustained its strong performance in 2015. We are boldly meeting
the challenges to our long-term survival in the agri-business and agri-food
industries where price volatility, regulatory changes, globalization and the
digital shift are the rules of the game. This year’s results demonstrate that our
strategic choices and orientations are already paying off. We have improved
La Coop’s overall performance, its agility and competitiveness to the benefit of our
network, our members, clients and business partners. We continued to spread the
message of a more prosperous La Coop network, a leader with roots in rich rural
and regional traditions and whose strength lies across all the components of the
food chain.
In 2015, we continued with La Coop’s organizational transformation in line
with our mission and ambition. We will focus our management efforts on our
core and traditional sector – agri-business and agri-food – while integrating and
consolidating the retail sector. The restructuring of La Coop into three grand
sectors – agri-business, retail and innovation, meat – was completed. A review of
our business processes in finance and information technology is underway.
In 2015, we continued to integrate BMR, repositioned our Sonic Energy Sector, worked on the implementation of network planning (Vision 2020), and reviewed our
investment portfolio.
Fiscal 2015 was also the year in which La Coop was ranked among Canada’s best
employers.
In 2016, we will:
• Continue to strive for prosperity in Québec by creating a stable platform for future growth
• Transform ourselves while maintaining our values and cooperative DNA and making
judicious decisions
• Promote excellence and introduce new technological and digital practices
• Support the next generation
• Confirm our expansion outside Québec; find the means to consolidate our value
chain and reach the top
I would like to take this opportunity to warmly thank my colleagues on the
management committee, the leaders across our network of affiliated cooperatives
and at our Olymel and BMR subsidiaries as well as all the employees in Québec
and in Canada for their loyalty, their commitment and their support in achieving
the current year’s results.
To conclude this report, I would like to extend my heartfelt thanks to our
President, Denis Richard, and all members of La Coop’s Board of Directors, for the
exceptional trust they showed me during fiscal 2015.
Gaétan Desroches
Chief Executive Officer
35
ANNUAL REPORT 2015
Cooperative Overview
La Coop fédérée subscribes to the Statement on Cooperative Identity of the International Cooperative Alliance
and has endorsed the guidelines that stem from the seven principles of cooperative ethics recognized around the world.
The following pages present a first overview of the actions of La Coop in this respect.
1. Voluntary and Open Membership
La Coop fédérée is a federation of agricultural cooperatives. It is owned
by 114 local and regional cooperatives, of which 51 are traditional agricultural cooperatives, 21 are consumer cooperatives and
42 are farm machinery cooperatives (CUMA). Under these sectors,
La Coop fédérée and its affiliated cooperatives make up La Coop network
and represent more than 90,000 farmer and consumer members.
Furthermore, we would like to highlight that last year was marked
by numerous membership requests from CUMAs, which saw their
number, as members of La Coop network, double throughout the year.
Throughout the fiscal year, La Coop fédérée invested $1.8 million
in training and pursued the implementation of a management tool
which enables the integration of the organizational values in the
Performance and Development Management Program for employees.
La Coop also pursued its education and training objectives
amongst certain target groups, such as young farmers and women.
It also offered bursaries to students and provided financial support to
teaching institutions for an amount totalling $40 000.
There are multiple informational publications within La Coop
fédérée. To name a few: Coopérateur magazine published ninetimes a year, breaking news published weekly online through
2. Democratic Power Exercised by Members
At La Coop fédérée, representative democracy is demonstrated at the Flash Coopérateur, as well as many intranet sites intended for
annual general meeting, where representatives from cooperatives various professional groups.
take part in deciding on the main orientations for the cooperative
enterprise. The number of delegates, which each cooperative has the 6. Cooperation amongst Cooperatives
right to send to the meeting, is established according to a formula La Coop fédérée makes a point to be present within local, regional,
that takes into account both the number of members in the coopera- national and international cooperative structures, such as the Conseil
tive and the volume of business that it carries out with La Coop fédérée. québécois de la coopération et de la mutualité, Cooperatives and
At the last annual general meeting, 214 representatives exercised Mutuals Canada, the Fondation québécoise pour l’éducation à la
their right, out of a possible total of 332, representing a 64% rate coopération et à la mutualité, the Société de coopération pour le déveof democratic participation. Throughout the year, the President’s Tour, loppement international (SOCODEVI), the Chair in Management and
the Presidents’ Forum and the semi-annual meeting, also allow for Governance of Cooperatives and Mutuals at the Research Institute on
elected representatives of La Coop network to work together and direct Cooperatives and Mutuals at the University of Sherbrooke (IRECUS) as
well as the Co-operators Group Limited, Cooperative Research Farms,
the actions of La Coop fédérée’s Board of Directors.
Gène+, the Interprovincial Cooperative and the Independent Lumber
Dealers Co-operative.
3. Member Economic Participation
Throughout the fiscal year, a study trip for presidents is organized
At the end of the 2014-2015 fiscal year, affiliated members held
$199.8 million in La Coop fédérée shares and $384.4 million in the under the theme of inter-co-operation and several visits, especially to
collective reserve. This reserve ensures the future development of the Mondragon, have allowed them to explore co-operation from new
enterprise and supports various activities that meet the needs of angles.
affiliated members.
In addition, in 2015, La Coop fédérée declared $35 million as the 7. Community Involvement
overall amount for member dividends, which includes the total divi- In order to ensure its longevity and to maintain its relevance,
dends shared with cooperatives over the last five years of $128.8 million. La Coop fédérée focuses on innovation, notably the development
Lastly, La Coop fédérée resolved to purchase class B common of bio-products and renewable energy sources. It is pursuing trials aishares from its members that were issued between 2000 and 2002 med at putting poor quality soils and crop residues to work through
their biomass potential and has also implemented the Sustainable
for a cash consideration totalling $10 million.
Agriculture showcase which deals mostly with soil conservation.
La Coop fédérée has pursued implementation initiatives for environ4. Autonomy & Independence
La Coop fédérée ensures its independence by maintaining a distance mental management systems in its establishments and the large
from lenders by maintaining prudent financial ratios. It applies prin- events that it organizes are now eco-friendly.
Throughout the 2015 fiscal year, La Coop fédérée invested nearly
ciples of sound governance, especially by separating the positions of
President and Chief Executive Officer, through the independence of $600,000 to support deserving organizations and events through
directors with regard to management, and by seeking results that are donations and sponsorships. The agricultural community, youth and
sustainable. La Coop fédérée also recognizes the autonomy and inde- the cultural community were the main causes supported by La Coop
fédérée.
pendence of its affiliated cooperatives.
Finally, La Coop fédérée took it upon itself to donate half of the
$560,000 raised during the 2015 fiscal year to the young recipients
5. Education, Training & Information
La Coop fédérée offers a training program to support the elected of the Fonds coopératif d’aide à la relève agricole .This year, 63 new
representatives of the network in their role within the agricultural young farmers met the required conditions, which raised the cumucooperative movement. To this day, 334 members of boards of direc- lative number of young recipients of the fund to 482.
tors have passed through this program, representing 64% of the targeted representatives. Employee development is also a key element of
Our Working Alliance, which unites employees, managers, and the
organization through mutual commitments.
36
Contents
7
15
17
21
25
36
38
39
40
41
41
42
43
57
58
President’s message
Management Discussion and Analysis
Agri-business Division
Retail and Innovation Division
Meat Division
Cooperative Overview
Management report
Independent auditors’ report
Consolidated balance sheet
Consolidated statement of earnings
Consolidated statement of reserve
Consolidated statement of cash flows
Notes to consolidated financial statements
Financial review
Affiliated cooperatives and auxiliary members
Head Office
La Coop fédérée
9001 de l’Acadie Blvd
Suite 200
Montréal (Québec) H4N 3H7
Telephone : 514 384-6450
Fax : 514 858-2025
Editorial Content
General Secretariat, Sustainable Development
and Co-operative Affairs
Jean-François Harel
Guylaine Gagnon
Patrick Dupuis
Marie-Hélène Gaudin
Website
lacoop.coop
Communications, Public Affairs and Brands,
Ben Marc Dienderé
On peut obtenir la version française
de ce rapport sur le site internet de
La Coop fédérée à l’adresse lacoop.coop
ou obtenir une copie imprimé
en communiquant avec le service
des communications au
514 384-6450.
Artistic Direction, Graphic Design and printing
Creative Services
Denis Duquet
Samar Gharib
Bernard Diamant
Olivier Bloquiau
Suzanne Turcot
Michaël Guimond
Printing Services
Pierre Cyr
Photography
Martine Doyon, photograph
martinedoyon.com
Colour Separation and Printing
Imprimerie l’Empreinte
Consolidating
and cooperating
to prepare for
the future
ANNUAL REPORT 2015
Consolidating and cooperating to prepare for the future
Consolidating and cooperating
to prepare for the future
ANNUAL REPORT 2015
Consolidating and cooperating
to prepare for the future
ANNUAL REPORT 2015
#ConsolidatingCooperatingForTheFuture
#ConsolidatingCooperatingForTheFuture