sstc 2013 annual report

ANNUAL REPORT | 2013SaSkatchewan Scrap tire corporation

WHO WE ARE

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TABLE OF CONTENTS

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CONTENTSMESSAGES PAGE 4

ABOUT SSTC PAGE 7

THE 3 PHASES PAGE 8

SUSTAINABILITY THROUGH MANAGING RESPONSIBLY PAGE 9

SUSTAINABILITY THROUGH ACCOUNTABILITY & TRANSPARENCY PAGE 10

SUSTAINABILITY THROUGH REvENUE GENERATION PAGE 11

SUSTAINABILITY THROUGH STOCKPILE ABATEMENT PAGE 12

SUSTAINABILITY THROUGH PARTNERSHIPS PAGE 13

SUSTAINABILITY THROUGH COMMUNITY INvOLvEMENT PAGE 14

SUSTAINABILITY THROUGH EdUCATION & AwARENESS PAGE 15

APPENDICESAPPENdIX A: BOARd OF dIRECTORS & STAFF PAGE 18

APPENdIX B: COMMUNITY dEMONSTRATION GRANT RECIPIENTS PAGE 19

APPENdIX C: FINANCIAL STATEMENTS PAGE 20

APPENdIX d: 2013 SCRAP TIRE SUPPLY PAGE 28

APPENdIX E: 2013 SCRAP TIRE COLLECTION & TRANSPORTATION PAGE 29

APPENdIX F: 2013 SCRAP TIRE PROCESSING & MANUFACTURING PAGE 30

APPENdIX G: 2013 SCRAP TIRE dIvERSION SUMMARY PAGE 31

On behalf of the Government of

Saskatchewan, I am pleased to extend

congratulations to the Saskatchewan

Scrap Tire Corporation for continuing

to meet the challenges of a busy and

event-filled year of recycling tires in

Saskatchewan.

This past year gives SSTC many

reasons to celebrate, in particular

the 15th anniversary of operating an

industry-led, province-wide recycling

program for scrap tires.

during this time, SSTC has overseen

the collection and recycling of more

than 10 million scrap tires of all sizes –

the equivalent of 20 million passenger

car tires. Saskatchewan’s scrap tire

recycling program has the broadest

and most comprehensive mandate of

any scrap tire recycling program across

the country.

The SSTC should be commended

on the implementation of its new

methodology for setting the recycling

fees for scrap tires, which will ensure

that the program and the organization

will remain viable and sustainable to

carry out its mandate.

with the prosperity and growth

the province is experiencing, the

Saskatchewan Scrap Tire Management

Program and the other provincial

recycling programs play an increasingly

important role in ensuring that the

environment is protected and our

quality of life is maintained.

Thank you to SSTC and its members

for helping to make Saskatchewan

an incredibly enviable place to live

and work. Best wishes for continued

success.

Sincerely,

Ken Cheveldayoff

A MESSAGEFROM THE MINISTER OF ENVIRONMENT

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A MESSAGEFROM THE CHAIRMAN

On behalf of the Board, I am pleased

to present SSTC’s 2013 Annual Report.

As you can see, SSTC continues to

deliver a program that has not only

diverted 20 million scrap tires from our

waste stream, but has also developed

a host of programs that will ensure

responsible tire management well into

the future.

Over 4,000 tires are purchased in

Saskatchewan every day and this

number continues to grow. In a year,

this equates to over 1.5 million tires –

enough to span across the province

one-and-a-half times. Before SSTC,

most consumers simply purchased

their new tires and drove off without a

second thought; and many of their end-

of-life tires ended up in local landfills,

were stockpiled, buried, burned, or

even dumped indiscriminately along

roadsides without much thought.

SSTC has helped change the way

Saskatchewan residents view tire

recycling and, with their support, we

have built one of the most successful

and innovative tire recycling programs

in Canada. Consumers have made

this possible by paying a recycling

fee when they purchase new tires

and the funds are remitted to SSTC.

All revenue generated from this fee

is spent on activities directly related

to the program including collecting,

transporting, and recycling of the

scrap tires. April 1, 2014, will see

a much-needed new rate schedule

which was developed with rate setting

experts to ensure the methodology

is consistent with other tire recycling

programs across Canada and is fair to

all consumers.

After 15 years of serving on SSTC’s

Board of directors, I will be retiring at

the end of this year. It has been a great

experience and I am very proud of the

important work that SSTC does each

and every day. I would especially like

to thank the Board, whose knowledge,

commitment, and focus have set the

successful direction of SSTC from the

beginning. I am excited about the

journey I am about to embark upon,

and equally excited about the journey

that SSTC is taking to ensure a strong

and sustainable future.

Sincerely,

don Taylor

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2013 AnnuAl RepoRt SASkAtchewAn ScRAp t iRe coRpoRAtion

2013 was an exciting and busy year for

Saskatchewan Scrap Tire Corporation

(SSTC).

In many ways the program is far

different from when it was launched

15 years ago however, tire collection

and diversion remains constant.

Managing scrap tires and tire recycling

in a booming, growing province brings

increasing challenges for retailers,

recyclers and SSTC alike.

This past year, a large part of our

operations involved ensuring the

sustainability of this program into the

future. After a great deal of internal

review and strategic thinking, the

Board’s direction was clarified in the

2014 - 2018 Program Management

Plan that was approved by the Ministry

of Environment, december 18, 2013.

This was a significant milestone in our

program, and one that ensures that we

can meet our program obligations.

The key piece of our Plan was

the development of an objective

methodology for rate setting, one that

reduces cross subsidization across

all tire categories. Applying the new

methodology has resulted in new tire

recycling fees for the province. with

this new rate structure in place, SSTC

will be in a position of cost-recovery

that will ensure program sustainability,

and ensure sufficient revenue is

generated so that program liabilities

such as Phase 3 – cleanup and

recycling of private stockpiles – can be

completed.

Sustainability is defined in many ways,

meaning different things to each of

us. At SSTC, sustainability is how we

define our success. with an eye to the

future, we look forward to working

with the Ministry and all the program

stakeholders to continue to deliver

a vibrant and responsive solution to

scrap tire management throughout the

province.

Sincerely,

Theresa McQuoid

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A MESSAGEFROM THE ExECuTIVE DIRECTOR

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The Saskatchewan Scrap Tire

Corporation (SSTC) is a non-profit, non-

government, industry-led organization

that delivers a province-wide tire

recycling program.

Through the Environmental

Management and Protection

Act (EMPA) and the Scrap Tire

Management Regulations (1998),

thereunder Section 4(1), the authority

is provided to make scrap tires a

designated material. Therefore, SSTC

being the only approved scrap tire-

recycling program in Saskatchewan

is mandated to impose and collect a

tire recycling fee on the sale of all new

tires.

Established in 1996, SSTC has grown

to include 1,360 registered retailers

and a strong recycling network of

haulers and processors who are

involved in the collecting and recycling

of over one million scrap tires per

year. Since its inception, SSTC has

diverted over 20 million used tires

from the Saskatchewan waste stream

and cleaned up decades worth of old

tires from municipal landfills. These

tires have been recycled into useful,

marketable products.

SSTC works cooperatively with

Tire Retailers, Auto dealers, Rural

Municipalities, local governments,

Regional waste Authorities,

Processors, Collectors and the general

public to ensure that scrap tires are

recycled in an environmentally friendly

and sound manner.

ABOUT SSTC

NO. 1CURRENT GENERATION TIRES

This is the daily activity of gathering

scrap tires accumulated at the retail

level. At no cost to the Tire Retailer, tires

are picked up under SSTC program and

diverted from landfill disposal and from

the environment in general.

NO. 2LANDFILL CLEANUP

This phase of the program involved

removing tires from registered landfills in

Saskatchewan. when the work wrapped

up in 2010, the SSTC had removed the

equivalent of two million passenger car

tires from more than 300 landfill sites

around the province. In exchange for

the free clean up, municipalities were

required to pass bylaws banning scrap

tire disposal from their landfills.

NO. 3PRIVATE STOCKPILES

Black Gold Rush is Phase 3 of SSTC’s

program and offers a one-time, free

cleanup of stockpiled tires on private

land and urban residential property.

Prior to SSTC’s existence, most farmers

and landowners simply stockpiled tires,

as there was no other disposal option.

The program has removed 258,163 scrap

tires from 113 Rural Municipalities to date.

THE 3 PHASES

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Over 4,000 tires are purchased in Saskatchewan every day – and the number continues to grow. In a year, this equates to over 1.5

million tires; that is enough tires to span across the province one and a half times. Prior to SSTC’s program, almost all of these tires

ended up in our local landfills as domestic waste, were stockpiled, buried or even burned.

Through its approved 2014 - 2018 Program Management Plan, SSTC provides a comprehensive program that manages all tire

waste in three phases. These three phases help SSTC ensure that all waste tire material is removed from the waste stream

and is recycled responsibly to help maintain a clean and healthy environment for generations to come.

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ExECUTIVE COmmITTEE

The Executive Committee is comprised

of the Chairman, vice Chairman

and Treasurer who act as officers

of the Board. This committee has

the authority and ability to execute

decisions in the absence of SSTC

directors. The Executive Committee is

responsible for the oversight of Board

activities, Board policy and to help

ensure that emerging issues are dealt

with in a manner consistent with the

vision of the Board.

FINANCE COmmITTEE

This committee oversees and

reviews the financial activity of the

Corporation. The Committee assists

with the review of SSTC’s financial and

annual budget. The Finance Committee

is also responsible for overseeing

the preparation and maintenance of

financial records and for ensuring the

credibility of these records through

the process of an annual financial audit

and the review of annual budgets and

monthly financial statements.

INDUSTRy COmmITTEE

This Industry Committee is responsible

for assisting with the development of

policies and executing strategies that

benefit the growth and stability of

the scrap tire recycling industry. The

Committee is also a liaison between

the industry and the Board, handling all

issues and concerns brought forward.

SuSTAINAbIlITY THROugH

MANAGING RESPONSIBLY

SSTC is accountable to its stakeholders, the provincial government, and the public for the collection, processing and

environmentally sound disposal of scrap tires in Saskatchewan. Managing these functions responsibly is essential to program

success and sustainability.

To ensure the efficient and effective operations of SSTC, three main committees are in place to assist the Board in dealing with

specific issues faced by the program. The Board directives are carried out by:

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SSTC continues to increase the focus on compliance with program guidelines and contractual obligations of stakeholders to

ensure a fair and level playing field for all participants. SSTC ensures transparency by communicating openly and honestly

with all stakeholder groups which includes the Ministry of Environment, the Board of directors, Tire Retailers, and all

other program participants through a variety of mediums, all operating in compliance with the Scrap Tire Management

Regulations, 1998. Accountability of program operations is provided through:

ANNUAL AUDIT

SSTC is charged with the

administration of the collected Tire

Recycling Fees and managing the

operations of the program. SSTC

has procedures in place to ensure

proper financial management and

accountability. A comprehensive

financial administration and

accounting system is maintained to

manage and report on revenues and

expenditures resulting from SSTC

activities. SSTC’s financial activity is

reviewed annually by an independent

auditing firm that provides assurances

that the corporation is conducting

business in accordance with acceptable

accounting practices.

RETAILER COmPLIANCE

Responsibility of ensuring that all

consumer-paid tire recycling fees

are collected and reported and that

all retailers are compliant with the

Regulations is achieved through

Retailer Compliance Reviews.

COLLECTOR & PROCESSOR AUDITS

As contributing participants in the

day to day activities of SSTC these

stakeholders have a prominent role

in the movement of scrap tires.

Evaluation and audits of these

stakeholders involve many facets of

their business in accordance with the

SSTC policy defined in the Collector

and Processor Guidelines manual.


ACCOUNTABILITY & TRANSPARENCY

45%

36%

9%

10%

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SSTC uses a Tire Recycling Fee (TRF) to provide program revenue for the collection, transportation, responsible recycling,

and administration of regulated tires in Saskatchewan. Currently the program uses TRFs for the following tire categories:

passenger car/light truck, medium truck, farm/agriculture, off the road (medium and large). These fees apply to all dealers

and Retailers in the province who sell new tires or lease vehicles/equipment that have new tires.

The program is funded through recycling fees paid by consumers purchasing new tires. All revenue generated from the

TRF is spent on activities related to the program. Over 80% of the money is paid to the processors and haulers to collect,

transport and recycle the scrap tires. The remainder is committed to program management, consumer education and

awareness, and community involvement.


REVENUE GENERATION

45% PROCESSING/RECYCLING

36% TRANSPORTATION/COLLECTION

10% COMMUNITY CLEANUP/GRANTS

9% AdMINISTRATION

For every new tire sold, the Retailer collects the TRF or environmental fee, and is required to report all new tire sales and funds to SSTC. The TRFs are set by SSTC and vary according to the type of tire.

2013 ExPENDITuRE bREAkDOwN

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Phase 3 of SSTC program, branded

as BLACK GOLD RUSh, offers a

one-time, free cleanup of stockpiles

on private land and urban residential

property. The program works in

partnership with municipality offices

and service groups to design a

collection event that meets the needs

of each community while removing

thousands of abandoned scrap tires.

• 32 Rural Municipalities targeted in

northeast Saskatchewan

• 95,656 scrap tires removed for a

total weight of 4.4 million pounds

• $800,000 spent on Black Gold Rush

Program in 2013

RETURN2RETAILER; a program

providing residents with an

opportunity to drop off 10 rimless

scrap tires, free of charge at select

Tire Retailers. The program, designed

as a leave behind program for

residents in areas that previously

participated in Black Gold Rush,

captures tires that may have been

missed and prevents future stockpiles

from reoccurring.

• 13 new Retailer locations across the

province were introduced, for a total

of 21 participating Retailers

• 3,777 tires collected at

participating Retailers

• $40,000 spent which

includes collection, processing

and advertising

PhASE 2: LANDFILL CLEANUP

was a major move toward stockpile

abatement in Saskatchewan. After

a 10 year lifespan, Phase 2 wrapped

up in 2010 with over 300 municipal

landfills cleaned of landfilled tires.

OThER STOCKPILES: Auto Recyclers,

Bike Tire Retailers and department

of Highways (road clean up) all found

waste solutions through SSTC’s

stockpile management program.

• Over 20, 299 tires were collected

from these sources and recycled

responsibly

• 36 Businesses

• 522 bicycle tubes and tires collected

from registered bike Retailers


STOCKPILE ABATEMENT

In addition to keeping over 1,500,000 current generation tires out of landfills yearly, SSTC is mandated to address historical

waste tire material. This is limited to tires located in landfills and on private lands, as outlined in the Scrap Tire Management

Regulations. SSTC has chosen to include other registered sites such as Auto Recyclers and Bicycle Retailers and department

of Highways ensuring sound waste tire management.

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RECyCLE SASKATChEwAN (RS)

RS exists for the education of

responsible recycling in Saskatchewan;

promotes awareness of Product

Management Programs and acts a

unified voice for these programs.

Together, SSTC and RS supports

the province wide cause of creating

a recycling minded culture in the

province by growing and advancing

stewardship programs.

SASKATChEwAN wASTE REDUCTION COUNCIL (SwRC)

The SwRC is a strong recycling voice

in the province and brings together

the major players of the recycling

industry in Saskatchewan to create a

solid, unified presence for the benefit

of the environment. Each year, SSTC

partners with SwRC in their summer

student program; the students are

typically hired for specific projects like

the “Be Tire Smart” campaign or the

Community demonstration Program.

CANADIAN ASSOCIATION OF TIRE RECyCLING AGENCIES (CATRA)

CATRA is comprised of leaders from

the tire recycling programs in Canada.

Its purpose is to work together for the

betterment of tire recycling initiatives

in Canada. CATRA’s goal is to enhance

the effectiveness of scrap tire diversion

and recycling across the country

through sharing of information,

expertise and resources.

RUBBER ASSOCIATION OF CANADA (RAC)

The Rubber Association of Canada

(RAC) designed an advocacy campaign

“Be Tire Smart” to educate consumers

about the benefits of proper tire

inflation and maintenance, which, in

turn, increases tire life and reduces

waste. SSTC also has a responsibility to

educate consumers about proper tire

care and waste reduction, and partners

with the RAC to promote the program

through Summer Car Care Clinics.


PARTNERSHIPS

SSTC works with and supports a number of organizations that share the same environmental beliefs. SSTC realizes and

appreciates the benefits of partnerships in the promotion of this industry and in the common goal of support, harmonization

and advancing responsible stewardship.

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COMMUNITY INVOLVEMENT

130 ScRAp tiReS collected And

oVeR 600 ReSidentS weRe

educAted about recycling

while partnering with the City of

Regina’s Household Hazardous

waste Roundup event

7 new community demonStRAtion

gRAnt pRojectS weRe AppRoVed worth $30,000 in funding for a total

of 76 since the program began in 2010

$66,000 pAid to SeRVice gRoupS for their efforts during the Black Gold

Rush program

Communities around the province invest considerable resources to support recycling as a way to protect the environment

and enhance quality of life for Saskatchewan residents. SSTC’s program supports these efforts through various events and

programs that fosters public awareness and ultimately a change in how residents view scrap tire management.

Understanding needs, concerns and perspectives of program

stakeholders is important to SSTC and is addressed through

newsletters, website, social media, direct communications,

surveys, etc.

• Treads newsletter released quarterly to all program

participants

• website received over 17,000 visits, two thirds of which

were unique visitors

• Launched Facebook and Twitter pages

• Produced “dawn of the Treads” video to educate

consumers of the importance of tire recycling

• Introduced “Summer Tire Family” social media campaign

to increase program awareness

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• 35,000 residents educated in partnership with Bike Regina

to promote bike tire recycling

• Radio advertising promoting Be Tire Smart week, Black

Gold Rush and Return to Retailer programs

• Educated over 2,500 municipal decision makers at SARM/

SUMA Conferences

• Promoted tire recycling to over 51,000 attendees at the

Regina and Saskatoon home shows

• Busboards, radio and newspaper advertising making over

500,000 impressions


EdUCATION & AWARENESS

AwAReneSSeducAtion

SSTC focuses its stakeholder outreach on a broad education and communications campaign, raising consumer awareness

while helping Saskatchewan residents understand the purpose of SSTC’s mandate and programs.

WHO WE ARE

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APPENdICES

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AppendiX A

APPENdIX AbOARD OF DIRECTORS & STAFF

DON TAyLOR | ChAIR

Saskatchewan Association of Rural Municipalities

LANNy mCINNES | VICE ChAIR

Retail Council of Canada

JOANNE FEDyK | TREASURER

Saskatchewan waste Reduction Council

KEVIN LANE | DIRECTOR

CAA Saskatchewan

PAT ZATyLNy | DIRECTOR

Canada west Equipment dealers Association

LEN RITChOT | DIRECTOR

western Canada Tire dealers Association

DEBRA BUTTON | DIRECTOR

Saskatchewan Urban Municipalities Association

KIm yEE | ADVISOR

Saskatchewan Environment (non-voting)

ThERESA mCQUOID

Executive director

KELCEy hARASEN

Administrative Assistant

JACKIE KUNTZ

director, Special Projects

JEREmy GOURLAy

Accounting & Audit Compliance

JOLENE KAINZ

Retailer & Collector Services

SSTC bOARD OF DIRECTORSSSTC is governed by a Board of directors which is comprised of seven directors:

SSTC STAFFSSTC’s staff is in charge of the daily activities directly related to scrap tire recycling:

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APPENdIX BCOMMuNITY DEMONSTRATION gRANT RECIPIENTS

ESTERhAZy COmmUNITy DAyCARE COOPERATIVE

DAyCARE ImPROVEmENTS

As part of a series of major improvements to its backyard

and play area, the Esterhazy and Community daycare

Cooperative used rubber paving blocks to create sidewalks

and crumb rubber under the play structures to create a

safer play environment for the children.

hAZLET SChOOL PLAyGROUND UPDATE

After installing a colored Pour-in-Place recycled rubber

surfacing, Hazlet School Playground has an area that can

be used by people of all ages in the community. The area

houses play structures for the daycare/school children as

well as outside gym/fitness equipment for other community

residents. The recycled rubber surfacing product is slip

resistant and durable enough to withstand high-impact use.

mIDALE AND DISTRICT LIONS CLUB mANLEy PARK

After having to dismantle an unsafe playground, and forced

to go years without, the Midale Lions Club established a

project to refurbish Manley Park – rich in small town history.

with the use of green colored SoftStuff recycled rubber

crumb material, the playground is not only bright and

attractive, but safe for kids of all ages to enjoy.

ThE ESTEVAN DAyCARE COOPERATIVE

with the vision to create a safe outdoor learning

environment for children to learn, explore and grow in,

the Estevan daycare Cooperative was able to build an

ecofriendly area featuring slip resistant rubber surfacing

and will be fully accessible for people with disabilities.

TOwN OF TISDALE KINETTE PLAyGROUND

After participating in the Black Gold Rush Program offered

by SSTC, the Tisdale Middle School Business Club felt it

was vital to create public awareness and the showcase the

importance of recycling by creating a green environment.

The recycled rubber base for their playground is now a

unique showpiece in their community for all youth to enjoy.

VILLAGE OF LIBERTy PLAyGROUND UPGRADE

After replacing some of its aging playground equipment,

the Town of Liberty used crumb rubber underneath the play

structures for the added safety benefit.

TOwN OF LAShBURN hERITAGE PARK REVITILIZATION

As its only public play area in Lashburn, it was time to

revitalize Heritage Park Playground. The Pour-in-Place

rubber surfacing with colored splash details will allow

children and families to enjoy a clean, safe and fun

environment for years to come.

The Community demonstration Grant Program (CdG) awards eligible communities grant monies for the purchase and

installation of Saskatchewan-manufactured recycled rubber products. The program allows recycled scrap tires to come back

“full circle” into communities throughout the province.

A total of seven projects were selected under the 2013 Community demonstration Grant Program, totaling

$30,000 in grant monies being awarded to the following projects:

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AppendiX c

APPENdIX CFINANCIAl STATEMENTS

TO THE MEMbERS OF SASkATCHEwAN SCRAP TIRE CORPORATION:Management is responsible for the preparation and presentation of the accompanying financial

statements, including responsibility for significant accounting judgments and estimates in accordance

with Canadian accounting standards for not-for-profit organizations and ensuring that all information

in the annual report is consistent with the statements. This responsibility includes selecting

appropriate accounting principles and methods, and making decisions affecting the measurement of

transactions in which objective judgment is required.

In discharging its responsibilities for the integrity and fairness of the financial statements,

management designs and maintains the necessary accounting systems and related internal controls

to provide reasonable assurance that transactions are authorized, assets are safeguarded and

financial records are properly maintained to provide reliable information for the preparation of

financial statements.

The Board of directors and Finance Committee are composed entirely of directors who are

neither management nor employees of the Organization. The Board is responsible for overseeing

management in the performance of its financial reporting responsibilities, and for approving the

financial information included in the annual report. The Board fulfils these responsibilities by

reviewing the financial information prepared by management and discussing relevant matters

with management and external auditors. The Board is also responsible for recommending the

appointment of the Organization’s external auditors.

MNP LLP is appointed by the members to audit the financial statements and report directly to them;

their report follows. The external auditors have full and free access to, and meet periodically and

separately with, both the Board and management to discuss their audit findings.

February 28, 2014

Management


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Independent Auditors’ Report

To the Members of Saskatchewan Scrap Tire Corporation:

We have audited the accompanying financial statements of Saskatchewan Scrap Tire Corporation, which comprise the statement offinancial position as at December 31, 2013, and the statements of operations and reserves and cash flows for the year then ended, anda summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of these financial statements in accordance with Canadianaccounting standards for not-for-profit organizations, and for such internal control as management determines is necessary to enablethe preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors' ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance withCanadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan andperform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. Theprocedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financialstatements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to theentity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit alsoincludes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made bymanagement, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the financial statements present fairly, in all material respects, the financial position of Saskatchewan Scrap TireCorporation as at December 31, 2013 and its financial performance and cash flows for the year then ended in accordance withCanadian accounting standards for not-for-profit organizations.

Regina, Saskatchewan

February 28, 2014 Chartered Accountants

ACCOUNTING › CONSULTING › TAXSUITE 900, ROYAL BANK BUILDING, 2010 - 11TH AVENUE, REGINA SK, S4P 0J3

1.877.500.0780 P: 306.790.7900 F: 306.790.7990 MNP.ca

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AppendiX c

Saskatchewan Scrap Tire CorporationStatement of Financial Position

As at December 31, 2013

2013 2012

AssetsCurrent

Cash and cash equivalents 541,495 1,026,415Marketable securities (Note 3) 976,206 960,309Accounts receivable 48,973 37,715Prepaid expenses and deposits 33,304 14,565

1,599,978 2,039,004

Capital assets (Note 4) 67,921 91,527

Investments 474,308 412,699

2,142,207 2,543,230

LiabilitiesCurrent

Accounts payable and accruals 701,022 616,778Goods and services tax payable 27,462 29,803

728,484 646,581

Commitments (Note 7)

ReservesStablization reserve (Note 5) 1,413,723 1,896,649

2,142,207 2,543,230

Approved on behalf of the Board

Director Director

The accompanying notes are an integral part of these financial statements

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Saskatchewan Scrap Tire CorporationStatement of Operations and Changes in Reserves

For the year ended December 31, 2013

2013 2012

Revenue Tire recycling fee (Note 2) 8,211,563 7,909,788Other 42,877 48,360Unrealized gain on investments 48,194 21,195

8,302,634 7,979,343

Recycling costs Recycling fee commission 137,931 146,618Processing and collection costs 6,739,940 6,578,815Professional fees - program compliance 70,061 115,939Special projects 887,863 764,301

7,835,795 7,605,673

Program administration expenses Advertising, sponsorships and memberships 122,562 106,380Amortization 28,315 28,483Bad debts 46,611 9,656Computer support 39,850 30,159Conferences 3,796 3,247Directors' remuneration 19,950 16,864Equipment rental 5,438 6,327Insurance and licenses 16,146 18,705Canadian Association of Tire Recycling Agencies (CATRA) 17,109 13,104Meeting expense 4,433 3,767Office operations 11,652 9,737Postage 7,970 5,266Printing and publications 38,370 28,837Professional fees 175,008 107,786Recycle Sask 24,034 5,786Rent 39,763 38,856Salaries, wages and benefits 317,270 287,318Stationary and supplies 4,315 4,796Telephone, fax and internet 9,594 8,039Training and education - 740Travel 17,579 11,625

949,765 745,478

Net loss (482,926) (371,808)

Transfer from stablization reserve (Note 5) 482,926 371,808

Unrestricted reserve, end of year - -


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AppendiX c

Saskatchewan Scrap Tire CorporationStatement of Cash Flows


2013 2012

Cash provided by (used for) the following activities Operating

Cash received from customers 8,153,695 7,881,658Cash paid to suppliers (8,330,203) (7,934,501)Cash paid for salaries and benefits (317,270) (287,318)Other revenue 42,877 48,360

(450,901) (291,801)

Investing Purchase of capital assets (4,707) (49,602)Purchase of investments (13,415) (15,315)Proceeds on disposal of investments - 477,584

(18,122) 412,667

(Decrease) increase in cash resources (469,023) 120,866Cash resources, beginning of year 1,986,724 1,865,858

Cash resources, end of year 1,517,701 1,986,724

Cash resources are composed of: Cash 541,495 1,026,415Marketable securities 976,206 960,309

1,517,701 1,986,724


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Saskatchewan Scrap Tire CorporationNotes to the Financial Statements


1. Incorporation and nature of the organization

Saskatchewan Scrap Tire Corporation (the “Corporation”) was incorporated under the Not-for-profit Corporation's Act and isexempt from income taxes. The purpose of the Corporation is to establish and manage a mandatory scrap tire wastereduction program on behalf of its members as set out in The Scrap Tire Management Regulations.

2. Significant accounting policies

The financial statements have been prepared in accordance with Canadian not-for-profit accounting standards and includethe following significant accounting policies:

Going concern

These financial statements have been prepared on a going concern basis, which contemplates the realization of assets andthe payment of liabilities in the ordinary course of business.

The SSTC has identified that the sustainability of the program depends on its ability to adequately fund its mandatedactivities. The 2014-2018 Saskatchewan Scrap Tire Coporation Product Management Plan outlines measures to solidifythe program and create a foundation for continued success.

The key piece of the plan is the development and implementation of the TRF Rate Setting Methodology. This methodologygives credibility to rate setting and ensures that the tire recycling fee accurately reflects the cost of managing scrap tires inaccordance with the requirements set out in the Scrap Tire Management Regulations.

In December 2013, the Ministry of Environment approved the 2014-2018 Saskatchewan Scrap Tire Coporation ProductManagement Plan.

It is the belief of management that these measures adequately address the going concern issues.

Revenue recognition

Revenue from tire recycling fees is recognized when retailers submit reports for tires sold. All other revenue is recognized inthe period it is earned.

Cash and cash equivalents

Cash and cash equivalents include balances with banks and short-term investments with maturities of three months or less.

Capital assets

Capital assets are initially recorded at cost. Amortization is provided using the method and rates intended to amortize thecost of assets over their estimated useful lives.

Method RateComputer equipment declining balance 30 %Computer software declining balance 100 %Office equipment declining balance 20 %

In the year of acquisition, amortization is taken at one-half of the above rates.

Measurement uncertainty

The preparation of financial statements in conformity with Canadian accounting standards for not-for-profit organizationsrequires management to make estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenuesand expenses during the reporting period. Accounts receivable are stated after evaluation as to their collectability and anappropriate allowance for doubtful accounts is provided where considered necessary. Amortization is based on theestimated useful lives of capital assets.

Financial instruments

The Corporation recognizes its financial instruments when the Corporation becomes party to the contractual provisions ofthe financial instrument. All financial instruments are initially recorded at their fair value.

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26

AppendiX

APPENdIX AFROM THE ExECuTIVE DIRECTOR

26

AppendiX c



The Corporation subsequently measures all its financial assets and liabilities at amortized cost, except for marketablesecurities and investments in equity instruments that are quoted in an active market, which are measured at fair value.Changes in fair value are recognized in the statements of operations and changes in reserves in the period incurred. Fairvalue is determined by published price quotations.

Financial assets measured at amortized cost include cash and cash equivalents and accounts receivable. Financial assetsmeasured at fair value include marketable securities and investments. Financial liabilities measured at amortized costinclude accounts payable and accruals.

Transaction costs and financing fees directly attributable to the origination, acquisition, issuance or assumption of financialinstruments subsequently measured at fair value are immediately recognized in the deficiency of revenues over expensesfor the current period. Conversely, transaction costs and financing fees are added to the carrying amount for those financialinstruments subsequently measured at amortized cost or cost.

3. Marketable securities

Marketable securities consist of cash and money market mutual funds with interest rates of 1% (2012 - 1.45% to 2.00%)and no fixed maturity dates (2012 - December 5, 2013).

4. Capital assets

2013 2012Accumulated Net book Net book

Cost amortization value value

Computer equipment 223,869 165,253 58,616 81,201Computer software 23,450 22,140 1,310 333Office equipment 53,818 45,823 7,995 9,993

301,137 233,216 67,921 91,527

5. Stabilization reserve

In 2006, the Board internally restricted funds through the establishment of a stabilization reserve to ensure that funds areavailable to meet financial obligations of the Corporation.

The amount of $482,926 (2012 - $371,807) was transferred from the reserve as at December 31, 2013 and is subject tochange at the discretion of the Board of Directors. The ending balance includes $67,921 (2012 - $91,527) invested inCapital Assets.

2013 2012

Stabilization reserve, opening balance 1,896,649 2,268,457Transfer from unrestricted reserve (482,926) (371,808)

1,413,723 1,896,649

6. Unrestricted reserve

The opening balance in unrestricted reserve was $nil (2012 - $nil).

7. Commitments

The Corporation has entered into various lease agreements with estimated minimum annual payments as follows:2014 43,6732015 44,6012016 34,046

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27




8. Financial instruments

The Corporation, as part of its operations, carries a number of financial instruments. It is management's opinion that theCorporation is not exposed to significant interest, currency, credit, liquidity or other price risks arising from these financialinstruments except as otherwise disclosed.

Liquidity risk

Liquidity risk is the risk that the Corporation will encounter difficulty in meeting obligations associated with financial liabilities.The Corporation exposure to liquidity risk is dependent on the receipt of tire recycling fees, collection of accountsreceivable, purchasing commitments and obligations or raising funds to meet commitments and sustain operations.

Other price risk

Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changesin market prices, whether those changes are caused by factors specific to the individual financial instrument or its issuer, orfactors affecting all similar financial instruments traded in the market. The Corporation enters into transactions topurchase/sell equity investments for which the market price fluctuates.

9. Comparative figures

Certain comparative figures have been reclassified to conform with current year presentation.

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APPENdIX d2013 SCRAP TIRE SuPPlY

28

AppendiX d

TIRE TYPE uNITS SOlD (2013)

PERCENT OF ANNuAl

SAlES

uNITS SOlD (2012)

PERCENT OF CHANgE

YEAR-OVER-YEAR

PLTT 1,063,418 67 % 1,024,201 4 %

MTRK 200,561 13 % 197,324 2 %

AG 44,215 3 % 39,205 13 %

OTR I 7,415 0.5 % 6,507 14 %

OTR II 1,507 0.1 % 1,517 - 1 %

vehicle Sales

(5 PLTT Tires/unit)279,770 18 % 276,815 1 %

TOTAL 1,596,886 1,545,569

SSTC has over 1,360 Registered Retailers that reported total sales of 1,596,886 tires in

2013, including those on new vehicles and/or equipment.

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APPENdIX E2013 SCRAP TIRE COllECTION & TRANSPORTATION

The SSTC has four registered tire collection companies that are responsible for the collection and

transportation of scrap tires. Collectors picked up 799,416 scrap tires in 2013, or 47,572,027 lbs (approximately 2,378,601 million passenger car tire equivalents.)

TIRE TYPE

uNITS COllECTED (2013)

uNITS COllECTED (2012)

PERCENT OF CHANgE

YEAR-OVER-YEAR

PLTT 666,874 669,302 0.5 %

MTRK 118,250 110,089 7 %

AG 12,412 9,886 26 %

OTR I 1,641 1,370 20 %

OTR II 239 144 66 %

TOTAL: (UNITS)

799,416 790,791

TOTAL: (wEIGhT)

47,572,027

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AppendiX F

APPENdIX F2013 SCRAP TIRE PROCESSINg & MANuFACTuRINg

Saskatchewan has two registered Processors located in the province who were contracted to convert

43,230,282 lbs of scrap tire material into useable, marketable crumb, mulch, molded or stamped

product and other uses.

MATERIAl 2013 2012PERCENT

OF CHANgE YEAR-OVER-YEAR

CRUMB 5,470,983 6,324,984 - 14 %

TIRE SHREd/MULCH 30,843,411 7,623,401 305 %

PROdUCT -

MOLdEd/STAMPEd1,781,217 915,066 95 %

ENERGY 974,660 --- 100 %

OTHER -

MATERIAL TRANSFER2,078,030 584,899 255 %

wASTE STEEL/FIBRE 2,081,981 3,757,001 - 45%

TOTAL 43,230,282 19,205,351

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APPENdIX G2013 SCRAP TIRE DIVERSION SuMMARY

2013 (POuNDS)

2012 (POuNDS)

PERCENT OF CHANgE

YEAR-OVER-YEAR

CARRY OvER INvENTORY

FROM PREvIOUS YEAR66,813,640 38,623,210 73 %

RECEIvEd TIRE vOLUME

(POUNdS) FROM PROGRAM47,572,027 47,396,321 1.5 %

TIRE vOLUME RECYCLEd 43,230,282 19,205,351 125 %

CLOSING INvENTORY 71,603,635 66,814,180 8 %

PO bOx 1936 | REgINA, SASkATCHEwAN | S4P 3E1 420-2220 12TH AVENuE | REgINA, SASkATCHEwAN | S4P 0M8

SCRAPTIRE.SK.CA

PHONE 306.721.8473 FAx 306.721.1585 [email protected]

sstc 2013 annual report

Documents

sstc page

scrap tires

scrap tire supply page

partnerships page

phases page

year of recycling tires

community involvement

revenue generation page