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United Farmers of Alberta Co-operative Limited
2011 SUMMARY OF OPERATIONS
Consolidated Income Statement
For the period ended
(Stated in thousands of Canadian dollars)
December 25,
2011
December 26,
2010
Revenue $ 2,108,450 $ 1,742,941
Cost of sales (1,863,489) (1,526,635)
Gross margin 244,961 216,306
Operating and administrative expenses (189,767) (215,090)
Other income 2,012 1,629
Earnings before the under noted (EBITDA) 57,206 2,845
Depreciation and amortization (40,813) (42,413)
Impairment of goodwill – (26,575)
Interest (14,174) (21,152)
Foreign currency exchange gain (loss) on advances to foreign subsidiary 1,171 (1,235)
Income (loss) before patronage and income taxes 3,390 (88,530)
Patronage allocation (7,000) –
Income taxes recovery 3,847 23,744
Net income (loss) $ 237 $ (64,786)
Revenues were $2,108.5 million, up from $1,742.9 million in the previous year, driven primarily by volume and
price increases in the Petroleum division. Volumes increased to 1,473.4 million litres, up by 106.6 million litres over
2010, while average sales revenue measured in cents per litre (“cpl”) increased from 86 cpl in 2010 to 106 cpl in
2011. Also contributing to the growth in consolidated revenues was the Wholesale Sports division, which saw an
increase in sales of $9.6 million or 5% compared to 2010. AgriBusiness core sales grew in 2011, although total
sales were marginally lower than previous year as a result of a planned exit from the grain trading business.
Gross margin on consolidated sales was $245.0 million, up from $216.3 million in 2010. Approximately half of this
growth was contributed by the Petroleum division‟s higher volumes and market-driven inventory valuation gains.
Margins from AgriBusiness provided a $7.2 million improvement over the prior year. Factors contributing to the
AgriBusiness margin growth included improved retail management, special promotions, favourable product mix,
and improved inventory management. Wholesale Sports also showed gross margin improvement of $4.0 million
over prior year due to higher volumes, including full year sales from the two Canadian stores that opened in 2010.
Wholesale Sports margin percentages were pressured downwards due to strategic initiatives taken to reduce slow
moving inventory, but were still higher than 2010.
Operating and administrative expenses were $189.8 million, a decrease of $25.3 million over the prior year. A
significant part of this decrease is from reduced staffing and a reduction in bad debt expense. In addition, UFA‟s
comparative costs for fiscal 2010 were adversely impacted by a one time early termination fees of $13.9 million
paid to long-term note holders. The Wholesale Sports division incurred an increase of $2.4 million in operating
costs due to the full year‟s effect of two new stores that opened in 2010.
Other income at $2.0 million increased slightly by $0.4 million compared to the prior year at $1.6 million. Other
income in 2011 includes a gain of $3.1 million from sale of the Calgary farm store. The gain was offset by lower
interest income and increased costs of the credit program offered by the Bank of Nova Scotia.
EBITDA contribution was $57.2 million, compared to $2.8 million in 2010.
2011 SUMMARY OF OPERATIONS 13
UFA 2011 Unabridged Annual Report 15