Saskatchewan Transportation Company 2011 · 2017-08-28 · marketplace. Vital goods such as urgent...

2011Saskatchewan

Transpor ta t ion Company

A N N U A L R E P O R T

• Substantial ridership growth• Overall ridership of 288,164 passengers, up7.4 per cent over 2010. Sold 3,069 youthpasses during June, July and August; up 21per cent over 2010.

• Transported 22,723 seniors during the Mayand September seat sale; up 1,839 from2010.

• Travelled 3.2 million scheduled miles,serving 290 Saskatchewan communities.

• All coaches fueling in Regina and Saskatoonoperated on an average of two per centcanola biodiesel blend utilizing primarilySaskatchewan-grown, non-food-grade,canola.

• Operating subsidy requirement of $8.7million.

• Passenger satisfaction rating reached 93 percent, which is the highest on record for thecompany.

• Enhanced on-board amenities, addedsecurity, and continued facilityimprovements.

• Total revenue of $16.7 million.• Total expenses of $28.1 million.

Table of Contents

Letter of Transmittal 2Message from the Minister 2Message from the Chair 3Message from the President 4Achieving Strategic Goals 5Divisions of STC 28Year in Review 30Management Discussion and Analysis 35Balanced Scorecard 44Financial Results 50Corporate Governance 69Corporate Directory 90Route Map 92Corporate Profile 93Mission Statement 93Vision Statement 93Corporate Values 93

Corporate Mandate

The Saskatchewan Transportation Company(STC) is a provincial coach company whichprovides SAFE, AFFORDABLE andACCESSIBLE bus passenger and freightservices to Saskatchewan.

2011 AT A GLANCE

7.4%RIDERSHIP UP

OVER 2010

Letter of Transmittal

Saskatchewan Transportation Company 2011 Annual Report2

Regina, SaskatchewanMarch 31, 2012To Her HonourThe Honourable Vaughn Solomon Schofield, S.O.M., S.V.M.Lieutenant Governor of the Province of Saskatchewan

Dear Madame:

I have the honour to submit herewith the annual report ofthe Saskatchewan Transportation Company (STC) for theyear ended December 31, 2011, in accordance with TheCrown Corporations Act, 1993. The financial statements arein the form approved by the Treasury Board and havebeen duly certified by the company’s auditors.

I have the honour to be, Madame,Your obedient servant,

Honourable Jim ReiterMinister Responsible for STC

In 2011 STC continued to serve 290 communities bytransporting people and parcels across the province.

The 2011 passenger numbers show more people used STC’sservices. Ridership improvement of 7.4 per cent or nearly20,000 passengers over 2010 shows growth. It is encouragingto see STC play a part in the province’s accelerating economywith higher volumes, but also through agreements with localprivate businesses. Partnerships with interline carriers andrural businesses are beneficial to both STC’s business modeland the entities it partners with.

Inside this report you will find more information on STC’ssuccesses and on the company’s contributions toSaskatchewan’s economic development in 2011. I commendthe Board, all staff at STC, and the company’s private sectorpartners for their hard work in making 2011 a year ofimprovement.

I am pleased to present STC’s 2011 Annual Report.

Honourable Jim ReiterMinister Responsible for STC

Message from the Minister

Message from the Chair

Saskatchewan Transportation Company 2011 Annual Report

3

It is exciting to learn more people arediscovering the comfort, convenience,safety, and affordability of STC’sservices.

This is evident by the 7.4 per centincrease in passenger numbers over2010. 2011 marks the second

consecutive year of ridership growth. Improving passengervolumes has been a large focus of the Board. Ideas first trialedonly a few years ago such as seat sale offerings, on-boardamenity enhancements, and enhanced signage andadvertising have produced positive ridership results and willnow be operational staples for the company in years to come.

STC’s customer base is comprised of people from every agedemographic, including youth, people between the ages of 26and 59, and seniors. It is important to communicate that bustravel is an environmentally friendly, affordable andconvenient option for everyone. Adding Wi-Fi to over 75 percent of the fleet makes STC an increasingly attractive optionfor business travel.

By attracting first-time riders, STC also strengthens its image.Customers who travel with us have experienced howpleasant bus travel is first hand. At 93 per cent, passengers arenearly unanimous in their rating of STC’s services as good orexcellent. We are confident that introducing new riders toSTC will improve public perception of bus travel and willreshape its image as safe, clean, comfortable and affordable.

STC is also a major carrier of parcel express packages. Thisservice is unique and very valuable in many ways. Weekendservice on select routes, pick-up and delivery in majorcentres, and the reach of travelling to over 200 communitiesdifferentiates the company’s express service in themarketplace. Vital goods such as urgent medical supplies(blood), medical instruments, and agricultural parts areregularly transported.

Bus travel has consistently proven in studies to have apositive green impact. Promoting the numerousenvironmental benefits of travelling with STC is a point ofemphasis and cannot be overlooked in the value STCprovides to both Saskatchewan and its people.

STC will continue to work at containing controllable costsand looks forward to another year of driving towardsincreased ridership.

On behalf of the Board, I thank every staff member and all ofour private sector partners at our various locationsthroughout the province for their efforts and loyalty to STC.The significant ridership growth we achieved in 2011 wouldnot be possible without their commitment to excellentcustomer service. The commitment to excellence incustomer service is, after all, STC’s sole objective.

Wayne LorchChair of the 2011 STC Board of Directors

Message from the President


2011 - A year of substantial growth

While STC had many notableachievements in 2011, most notable isthe 7.4 per cent growth in ridershipover 2010. It has been some time sinceSTC had a year that experiencedimprovements of this level and very

few times since the company’s origins in 1946 have customerlevels spiked so rapidly from one year to another.

The continued commitment of employees is vital to theachievements of STC. Customer service is stressed at everylevel of the company and is a large part of the company’s 93per cent passenger satisfaction rating of good or excellent. Ithank each and every one of our staff for their efforts in 2011.

The extension of on-board amenities such as more leg roomand Wi-Fi to much of our fleet makes travelling moreenjoyable for our customers. Image enhancement initiativessuch as effective marketing campaigns have challengedconventional perceptions about bus travel. Increasinglypopular seat sales have given people more opportunities to trySTC’s services first hand. All of these factors have played a partin STC’s growth in 2011 as the company carried nearly 290,000passengers. Developing ideas to sustain this improvement isan exciting and welcomed challenge.

STC must ensure that costs do not rise at the same rate asvolumes and revenues grow. Part of the company’s mandate isefficiency. We do this in a variety of ways by attempting tomatch fleet sizes to passenger and freight levels, streamliningmaintenance processes, and implementing efficiencyprograms and procedures across all levels of administration.

The company upgraded the Point of Sale (POS) system in 2011and provided the system in our three main depots and certainagencies in the province. A number of efficiencies will berealized in the coming years thanks to the use of this system.Advantages such as automation of a number of manualprocesses and more complete data capture were paramount inthe decision to proceed with the POS upgrade. Additionalfinancial, marketing and customer service improvements are

also possible with the upgraded system and will be part ofSTC’s focus for the future.

STC reaches 290 communities and relies on many privatebusinesses to fulfill this commitment to Saskatchewan. Wethank all of our business partners – from local entrepreneursacting as agents, to carriers who are contracted to transportparcels and packages to various communities. Servicing such avast network would be nearly impossible without theirsupport.

STC continues to advance in the area of environmentalstewardship. Nearly 95 per cent of our passengers are aware ofthe environmental benefits of bus travel. The companyimplemented new strategies in 2011 to grow in this regard.The company focused on reducing electricity usage throughthe Server Virtualization project and installation of alternatingelectrical plugs in parking lots. Green initiatives will continueto be part of the company’s direction in 2012.

Safety is important to STC. Our over-the-road safety record is atestament to the professionalism of our motor coach operatorsand express staff. To deliver on our reputation, STC hasequipped all of its buses with Global Positioning System (GPS),employs security personnel at the three main depots, andemphasizes training to its front-line staff on First Aid,Workplace Hazardous Materials Information System(WHMIS) and other safety related courses.

A review of this annual report will detail STC’s value to thepeople of Saskatchewan. In terms of STC’s ridership growth,2011 was a great year for STC. The real challenge will beduplicating that success again. It is an opportunity we lookforward to, and we will serve our customers with pride.

Shawn GricePresident & CEO

CUSTOMER:STC meets the needs of customers

PUBLIC POLICY: STC is a good corporate citizen

FINANCIAL: STC is a fiscally responsible and accountable corporation

PEOPLE: STC is a high-quality employer

INNOVATION:STC is improving and innovating

STC’s strategic goalsare focused around

five pillars:customer, publicpolicy, financial,

people andinnovation.

ACHIEVINGSTRATEGIC

GOALS

The following section outlines STC’s high level accomplishments in achievingmilestones towards these goals in 2011 and initiatives for moving the companyforward in 2012. More detail on the 2011 accomplishments is available in theYear in Review section of this report.

Increased Ridership, Seat Sales and Amenities

Seat sales for youth and seniors were utilizedin 2011 to encourage passengers to ride withSTC. These sales showed great improvement

in 2011 over 2010 and, along with otherinitiatives, drove an overall increase in passengerridership. Seat sales will continue to be a valuablepromotional tool used by STC in 2012. The youthpass sale grew by 21 per cent and the senior saleshowed 9 per cent growth over 2010.

STC emphasizes maintaining a high level of passenger servicewhile running as efficiently as possible.

STC MEETS THENEEDS OF

CUSTOMERS

Achieving Customer Goals:


STC meets the needs of customers

STC’s standard for all new coaches will result in moreleg room and the continued implementation of user-friendly amenities such as fold-down trays andAC power outlets. Further investments in passengeramenities will strengthen the appeal of bus travel tonew target markets. STC is continually improvingin-depot services as well, providing amenities such aswireless internet, work desk kiosks, and batteryrecharge stations. STC’s efforts to upgrade amenitieswill bring Wi-Fi to customers on all buses in late2012. All STC coaches have enhanced securityincluding video recording equipment on the exteriorand interior.

Customers

Left: STC’s youth pass sales generated growth over the same months in 2010.

Right: Regina Customer Service Coordinator, Kevin Hall.


SafetySTC has an exemplary on-roadsafety record and maintains ahigh standard of maintenanceand mechanical reliability for its

fleet and equipment. Majorrepairs, installations and

maintenance work willcontinue to take place at

the Saskatoon garage,with the Reginagarage performingmore routinemaintenance andservicing.

Access to ServicesSTC’s passenger andparcel expressbusinesses willcontinue to serve asignificant portionof Saskatchewan.

The company iscommitted to

providing accessiblebus travel for

Saskatchewan people withspecial needs. The 2012

target for accessibility is that26 per cent of motor coachesoperated by STC will havebuilt-in chair lifts toaccommodate passengers with

wheelchairs. STC will alsocontinue to offer programs suchas monthly medical travel passesand an attendant program,which allows travelers withimpairments to bring anotherperson to accompany them ontheir journey.

Point of Sale (POS) SystemIn 2011, STC began theimplementation of its GalaxyPoint of Sale (POS) systemsoftware upgrade. The upgradedPOS will form the foundation formodern services, such as onlineticketing, and will create futureopportunities for newefficiencies by automatingprocesses that are currentlymanual. The 2011 upgradeincluded the ability for ticketagents to view a map of points ofservice and look up faresbetween any two service pointsin the STC network whilepreviously they could only lookup fares from their own location.

Online ticketing capability willbe introduced for select routesbeginning in late 2012. STC alsoplans to implement POS forSTC’s Parcel Express services inlate 2012.

Saskatoon Passenger ServiceAttendant Joanne Maitland, sellsthe first POS Ticket in Saskatoonthrough the upgraded POS system

Security Guards atSTC’s main locationslike Regina’s Dimitris

Grammatikos helpensure customer

safety.


Ride Rewards Loyalty ProgramIn 2011, STC will continue to focus on improvingcommunications with our customers. Part of achievingSTC’s customer goals will be managing the recentlyimplemented passenger loyalty program: Ride Rewards.The program will provide customers with monthly prizedraws and information regarding STC discountpromotions and notification of seat sales.STC will collect valuable customerinformation and will communicatewith customers through email.Advertising within STCterminals will promote theloyalty program.Communication withcustomers is accomplishedthrough the use of low costemail “blasts” once a month.

Rural Economic DevelopmentIn 2011, STC providedvaluable contributions to bothurban and rural areas. Inparticular the company providesservices that allow families who liveor work in rural areas access toprofessionals such as dentists and optometristswho ship supplies to communities province-wide. Thecompany supports the health system and municipalities;STC transports blood to hospitals every day andmunicipalities ship water samples for testing at labs.

STC will continue to foster business arrangements with theprivate sector, helping to facilitate a private sector driveneconomy in Saskatchewan. STC will maintain andcontinue to develop agreements and partnerships across

Saskatchewan with rural agents, inter-line contractors,contracted pick-up and delivery operators, and otherstrategic business partners.

While STC service schedules and frequencies are designedprimarily to optimize services for passengers, the companyrealizes its parcel express operation is the primary carrier

of parcels and freight in many ruralcommunities. STC is committed to

providing its freight customers withquality and reliable service. Door-

to-door pick-up and deliveryservices in major centres and

weekend delivery services tomany locations will continueto be part of the company’sexpress business.

Hosted Contact CentreIn 2011, STC contributed to

the Government ofSaskatchewan’s initiative to

reduce red tape. An exampleof this is STC’s new Hosted

Contact Centre (HCC), installed inspring 2011. The HCC is a web-based

telephone system that allows ticketagents from all three terminals to share

incoming customer calls from any location. For example,customer phone calls are rerouted to the Regina or PrinceAlbert depot if a Saskatoon ticket agent is unavailable totake the call. STC customers now enjoy the benefit ofhaving calls answered by other employees even whenticket agents from their location are busy serving othercustomers.

Customers (continued)

CU

ST

OM

E

R

AG E D E M

O

GR

AP

HI

CS

Age 40-5925.0%

Age 60+21.5%

Age 26-3920.1%

Under 1811.7%

18-2521.7%

Toddlers line up toboard a coach.


Regina Express Service Attendant, Barry Davis,loads blood products onto a STC coach.

Community Sponsorship

In 2011, STC demonstrated its commitmentto charitable and non-profit organizations.The company aided a number of

community support causes through donationsand in-kind assistance. Organizations such asthe Canadian Cancer Society, the Parkinson’sSociety, the Regina Food Bank, Terry FoxFoundation, Samaritan’s Purse OperationChristmas Child and Junior AchievementSaskatchewan received valuable support fromSTC.

Chief Operating Officer, Phil Bohay, barbequesfor STC’s employee fundraising event.

Achieving Public Policy Goals:

STC IS A GOOD

CORPORATECITIZEN


Generosity of STC People

Each year STC holds barbecues at each depot for staffto raise funds for the charity that has been chosen bythe company. In 2011, STC employees raised moneyfor the Little Bald Angels Charity, which supportspediatric cancer patients and their families inSaskatchewan.

Public PolicyRight: STC President & CEO, Shawn Grice,

(right) presents a donation to Ennis Sauer ofthe Little Bald Angels Charity.

Below: STC locations in Regina, Saskatoon,and Prince Albert served as a registered

distribution centre for Operation ChristmasChild which provides shoeboxes full ofpresents and necessary items to needy

children around the world.


Emergency ResponseThe diversity of Saskatchewan'sEmergency Measure Organizationactions in 2011 ranged from forestfire evacuations to flood relief. In2011, STC assisted northernSaskatchewan residents to evacuatefrom forest fires to safety andassisted Saskatchewan communitiesaffected by severe spring flooding bytransporting volunteers to ruralcommunities to assist withsandbagging. STC's actions werecoordinated by the provincialEmergency Measures Organization.

Far Left: Children on a facilitytour try out the luggage

compartment of a coach.

Left: Junior Achievement VerveSymposium sponsored by STC.

Right: Children enjoy one ofSTC’s guided tours.

Efficiency Targets

STC requires a grant from CrownInvestments Corporation (CIC) to fulfillits public policy role, financial success is

measured by operational efficiency targets(“passenger services loss per mile” and“operating cash loss as a percentage ofexpenditures”).

Upgraded amenities like on-board Wi-Fi helped drive STC’sridership growth in 2011.

STC IS A FISCALLY

RESP0NSIBLE &ACCOUNTABLECORPORATION

Achieving Financial Goals:


In 2011, profits from parcel express, bus wraps,charter services, signs on STC property and foreigncoach maintenance offset some of the passengerservices losses. In 2012, these alternative revenuesources will continue to offset some of the forecastedpassenger services losses.

Financial

International FinancialReporting Standards (IFRS)

STC’s Regina depot and head office.


STC has strictinternalfinancial andreportingcontrols and

the Companywill continue to implementpolicies and procedures tostrengthen these controls.

STC's approach to corporategovernance is consistent

with the guidelines set forthin the Canadian SecuritiesAdministrators (CSA) NationalPolicy 58-201 CorporateGovernance Guidelines andNational Instrument 58-101Disclosure of Corporate GovernancePractices. These CSA guidelinesoutline national governancerequirements for publicly tradedcompanies and address areas ofresponsibility for effectivecorporate governance. WhileSTC is not a publicly tradedcompany, its practices willremain benchmarked againstthese current industry bestpractices in 2012.

The conversion from CanadianGenerally Accepted AccountingPrinciples (GAAP) toInternational FinancialReporting Standards (IFRS) wascompleted in 2011.

LeanLean manufacturing, leanenterprise, or lean production,often simply, referred to as"Lean," is a production practicethat helps companies examinetheir own corporate processes tobecome more efficient. In 2011,STC engaged expertise to beginimplementing Lean processes tomake service and maintenanceprocesses more efficient. In 2012,STC will continue to maketransportation affordable forpeople in Saskatchewan bymanaging an efficient operationand by implementingimprovements to service, safetyand maintenance processes.

Employee Engagement

Excellence in service continues to be acornerstone for STC. It is vitallyimportant for STC’s success that the

Company attracts and retains talented andenergetic people who can continue to deliverthe high levels of service to STC passengers andexpress customers. As baby boomers plan andcontinue to retire, attracting and retainingskilled employees will continue to present achallenge for STC. STC will continue to focusits efforts on job-specific recruitment andretention, training and development, andemployee engagement.

Prince Albert Express ServiceAttendant, Brad Douglas.

STC IS A HIGH-QUALITY

EMPLOYER

Achieving People Goals:


Diversity

In 2011, STC continued to make progress towardsachieving a representative workforce. The companyexceeded the aboriginal, visible minority and womenin underrepresented occupations targets. Thecompany is committed to creating a workplace thatreflects Saskatchewan's diversity and will strive tocontinue this progress in 2012.

People


STC providesworkopportunitiesfor youth byparticipating in

the Gradworks Intern Program, aCrown Investments Corporation(CIC) sponsored programdesigned to provide recent post-secondary graduates withchallenging, career-focused,positions within Saskatchewan'sCrown Sector.

Training and development foremployees is one of the best toolsfor retaining people. Employeeswho are fully prepared to workwell in their jobs are engagedand ready to serve customers. In2011, STC offered safety training,job specific training and trainingrelated to new initiatives, such astraining provided to ticketagents in advance of upgradingthe Galaxy POS system.

Far Left: Saskatoon Express ServiceAttendant 2, Gloria Sanders.

Left: Regina Passenger ServiceAttendant, William Morrison.

Right: Gradworks Intern, Kaitlyn Rude.

Regina CustomerService Coordinator,

Gerald Gottinger,makes sure parcelsreach their properdestination quickly

and safely.

Going Green

STC supports and contributes toenvironmental stewardship. Bus travel isone of the greenest travel choices available.

In 2012 STC will be increasing the percentage ofbio-fuel used in the fleet from an average of 2 percent to 3 per cent and will continue to search outand implement new green initiatives. STC willcontinue communicating with customers toincrease public awareness that bus travelsignificantly reduces the environmental impact oftransportation in Saskatchewan. Customers haveacknowledged STC’s green footprint with 95 percent of passengers signaling that they are aware ofthe environmental friendliness of bus travel.

Prince Albert Motor CoachOperator, Ted Cloarec.

STC ISIMPROVING

& INNOVATING

Achieving Innovation Goals:

YOUR GREAT ESCAPE.

The Regina Inn is Teaming up With STC to Bring You Convenient, Fun-Packed Get-Aways!

To book: 1.800.667.8162 or online atwww.reginainn.com/promotions

*Hotel accommodation and STC tickets based on availability. Package price includes return fare for one bus passenger and accommodation in a standard guestroom. Add a second bus passenger for only $40. Terms and conditions apply. Visit wwww.reginainn.com/promotion for full details. Price does not include applicable taxes.

Hit the casino, dinner theatre, shopping, or make that early morning flight from Regina to a warmer destination without the worry of winter driving.

Package Includes*: bus transportation, an overnight stay at the Regina Inn, and a return trip for only

$165


Tourism and Brand Recognition

In 2011, STC laid the foundation for potential 2012growth in tourism and rural brand recognitionrelated opportunities. In 2011 the first of thesediscussions came to fruition and a partnership withthe Regina Inn was formed that offers customers adiscount travel package that includes bus fare and aone night stay at the Regina Inn.

Innovation

STC customers enjoy the new amenities such as WiFi andadditional leg room.


Further discussions with privatesector tourism businesses, TempleGardens Mineral Spa Resort andManitou Springs Resort andMineral Spa, and with varioussports related organizations, suchas the Regina Pats, regardingpotential partnerships areexpected to lead to new value in2012. STC will continue toexplore opportunities to promotebus transportation as a viablebusiness travel option. Theseopportunities will be pursued toincrease the potential for newridership in cities and rural areas.

New Parcel Express ProductIn 2012, STC will introduce anenvelope product for expresscustomers. The Econoletter is asmaller, rigid envelope which willaccommodate documents orother contents weighing up toone pound. The rigid envelopedesign is expected to attractcustomers by its convenience andability to preserve the quality ofpaper documents while shipping.

Right: “Parcel to ship? Send itby bus!” wraps were added

to many STC trailers.

Divisions of STC


CUSTOMER SERVICES AND OPERATIONS

The Customer Services and Operations division isresponsible for passenger, parcel express, and maintenanceservices. The division includes the following components:

Passenger ServicesPassenger Services is responsible for ensuring passengersenjoy safe and reliable transportation. Some of its functionsare operating motor coaches, issuing of tickets, scheduling,maintenance of tariffs, dispatching of buses and drivers, aswell as managing the network of 197 agencies and themaintenance and management of buildings. In addition toregular passenger services, charter services are alsooperated and managed in this area.

Parcel Express ServicesParcel Express Services is responsible for the freight andbaggage handling for all STC coaches and connectingcarriers. Door-to-door pickup and delivery services are alsoavailable in Regina, Saskatoon, Prince Albert and in somedesignated rural agencies.

Maintenance ServicesMaintenance Services’ primary responsibility is tomaintain, clean and provide storage for all STC vehicles. Itis also responsible for the procurement of all corporatevehicles. These duties are performed in the two servicegarages in Saskatoon and Regina. This area also providesmaintenance, cleaning services and storage to coaches ofother carriers on a contract basis. When required, it is alsoresponsible for on-the-road servicing of STC coaches.

FINANCE

The Finance division provides the information required tomonitor STC’s performance and make effective decisions.The division delivers accurate financial reporting,budgeting and forecasting; assesses risk and insurancerequirements; and, monitors internal control functions. Inaddition, specific groups within the division areresponsible for billing and collection of revenue, issuingpayments to suppliers, monitoring reports from agenciesand processing reclaims with partner carriers.

CORPORATE SYSTEMS AND TECHNOLOGY

STC’s Corporate Systems and Technology division isresponsible for implementing and maintaining efficientbusiness processes through the introduction of newtechnologies. It ensures that ticketing and freight systemsacross Saskatchewan are capable of serving STC’scustomers 24/7 in a quick and convenient manner.

It ensures the reliability and integrity of data, electroniccommunications, software applications and web services.The division also provides technical support across theprovince to employees operating a variety of systems thatsupport the business, as well as to major customers thathave STC shipping systems in their distribution centres.

The Corporate Systems and Technology division isresponsible for procurement and management of allcorporate hardware and software.

HUMAN RESOURCES AND PAYROLL

The Human Resources and Payroll division providesleadership and strategic human resource advice/support toensure STC has a strong and committed workforce. Toensure a standard of excellence, the division delivershuman resource services, including recruitment andretention; labour relations; human resource policy andplanning; learning and development; organizationaldevelopment and design; payroll and benefitsadministration; occupational health and safety; diversityand rehabilitation/return to work programs. The divisionalso plays a key role in representing the employer duringcollective agreement bargaining with the AmalgamatedTransit Union Local 1374 and contributing to a positiveemployer/employee relationship.

STRATEGIC PLANNING AND COMMUNICATIONS

The Strategic Planning and Communications division isresponsible for corporate communications and strategicplanning. The division establishes STC’s planning process,its strategic business plans and reports on performance andgovernance compliance. It is responsible for promotionaladvertising, corporate branding, public relations andensuring effective communications between the companyand its shareholder Crown Investments Corporation (CIC),the media and the Government of Saskatchewan. Thedivision also has responsibility for privacy of informationand requests under freedom of information legislation.


Year in Review

Building on the success of 2010, 2011 was a year of incrediblegrowth for passenger transportation at STC.

In 2010, STC reversed a trend of slumping ridership to carry3.8 per cent more passengers than in 2009. In 2011, STCexceeded the growth of 2010 by carrying 7.4 per cent morepassengers than the previous year. The combined growth in2010 and 2011 is nearly 30,000 new passengers or 3 per centof the province’s total population.

Many factors are responsible for the company’s successes in2011. Continued excellent customer service, ongoing imageenhancement, seat sales, the opportunity to offer service tomany non-traditional users such as business travelers, whoare finding they can remain productive using Wi-Fi whiletravelling, and continually seeking to improve the on-boardexperience of passengers drove the number of total riders in2011 to heights not seen in a decade.

Public perception of those who have never ridden the busreflects industry-wide concerns about safety, cleanliness, andconvenience of bus travel. However, customers who haveridden with STC rate the company very positively on thesefactors.

STC has worked tirelessly over the last few years tocounteract this attitude. Through a number of initiatives andinnovations, STC has grown its ridership in two successiveyears.

Ridership increasesSTC carried a total of 288,164 riders in 2011, an increase of7.4 per cent over 2010. In many respects, this was a landmarkyear for the company and was the highest ridership growthyear over year in recent history.

A number of factors contributed to the strong growth rate in2011, these include seat sales, increased amenities,advertising and customer-focused service.

Seat SalesThe company offered its highly popular seat sales to youthand seniors. The sales targeted each demographic with adiscounted offer. The sales were as follows:

• The Youth Pass was a $40 flat rate promotion for youthaged 12 to 25. Customers received unlimited travelanywhere along STC’s network during the calendarmonth. The pass was offered in June, July, and August.

• The $10 Seniors Anywhere Fare was a flat rate promotionthat allowed seniors (ages 60+) to travel anywhere onSTC’s network for just $10 per one way ticket for themonths of May and September.

Both sales are in their relative infancies as the first full yearthey were offered was 2010. With that in mind, 2011 built onthe momentum of 2010’s sales. STC sold 9 per cent moresenior fares in May and September of 2011 than in 2010 andsales of youth passes surpassed numbers from the previousyear by 21 per cent.

While short-term seat sales stimulated growth in youth andsenior ridership, passenger statistics show that ridership wasgrowing consistently in non-seat sale months. In addition,surveys revealed that ridership in the 26-59 age range is alsogrowing as more and more travellers are being attracted tothe convenience of travelling by bus. It is important for thecompany to attract riders of all ages for its long-termviability, and recent surveys show that the age distributionof STC passengers is almost equally spread across age groups.

AmenitiesAnother factor that contributed to the strong growth rate in2011 was increasing on-board amenities. Seeking ways toimprove the on-board experience is constantly emphasizedby STC and the company boasts a 93 per cent passengersatisfaction rating thanks in part to these initiatives.STC has always prided itself on offering an enjoyable ride to


passengers. Enhancing amenities was a focal point of thecompany’s goal to improve the on-board experience ofpatrons in 2011. Over 75 per cent of coaches had Wi-Fiinstalled as of year-end 2011 which allowed passengers tosurf the internet, do homework, or conduct business whiletravelling. By the end of 2012, the company plans to have100 per cent of its fleet equipped with Wi-Fi. A number ofSTC coaches are also equipped with extras such as fold-downtrays for selected seats, AC power outlets, blinds, andextended leg room.

STC also focuses on the in-terminal experience forcustomers. STC’s terminals in Regina, Saskatoon and PrinceAlbert include a variety of upgrades, such as lighting,seating, parking and public washroom improvements.Power charging stations were installed at all three terminalswhere STC provides Wi-Fi and a workspace for passengers onlayovers.

Marketing and Image EnhancementThrough a variety of communications methods, STC hascontinued to work to become a more customer-focusedbusiness.

In 2011, the company explored ways of offering on-boardentertainment to passengers as this was rated as desirable onthe 2010 passenger survey. The 2011 passenger surveyrevealed that on-board video has dropped on the list ofthings customers want most with increased leg room andWi-Fi moving above company provided videoentertainment. STC listens to customer feedback and will beproviding improved leg room on new coaches and willprovide Wi-Fi on 100 per cent of coaches by year end 2012.

A province-wide advertising campaign in 2011 promotedSTC buses as clean, safe and comfortable. Public perceptionof bus travel is an obstacle for carriers throughout the entireindustry with STC being no different. A focus has been put

on communicating the wide array of amenities available tocustomers. Continuing to deliver a high standard ofcleanliness and safety remains a top priority for thecompany.

New signage was installed in Regina on the building’sexterior, in the passenger lobby and in the express customerarea. In Saskatoon new exterior signage was installed.Prince Albert and Saskatoon received new in-terminaladvertising. The new signs will be updated to advertise seatsales and general passenger and express branding.

Automated announcements were added in the ReginaTerminal to ensure passengers are provided withinformation in a timely manner when ticket agents are busyserving other customers.

Beginning in 2011, STC launched its Ride Rewards programthat gives customers an opportunity to be informed ofcompany discounts and to be entered to win monthly prizes.This program has helped STC get more familiar with itscustomer base. Becoming a program member is just asbeneficial for a passenger riding weekly as it is for someonetrying STC for the first time.

Cross-promoting STC with initiatives such as CTV’sHometown Tour has continued to be successful. STCpurchases advertising from CTV and provides CTV with abus and driver for each stop on the Hometown Tour. STCreceives significant exposure from the event at ruralcommunities around the province. The company providedproduct information and asked customers to sign up for theSTC Ride Rewards loyalty program in each small town toencourage people from rural Saskatchewan to ride and shipwith STC. More opportunities to leverage the CTVpartnership and to enter partnerships with other businesseswill be explored in 2012 and beyond.



Employee CommitmentCustomer service is STC’s top priority and is frequentlystressed to employees at every level and in all departments.Customers interact with multiple employees every trip –from ticket agents and drivers to custodians and head officeemployees – and the checklist to ensure customer servicestandards are met is lengthy.

STC has methods in place to improve its customer service.Regular communication vehicles such as quarterly meetings,the employee intranet site and bi-monthly staff newsletterare used to communicate plans, company standards, and tokeep staff informed. Employee functions like annualsummer barbeques intend to keep morale high and staffengaged in community support initiatives.

As a byproduct of Saskatchewan’s growing economy,recruitment and retention of employees is an emergingchallenge in the marketplace. Recruiting skilled and talentedworkers is becoming more competitive in the transportationindustry. STC has and will continue to seek creativesolutions in its human resources initiatives, such as theutilization of targeted recruitments, technology, print, etc. toreach candidates in Saskatchewan and other provinces. In2011, STC strengthened relationships with employmentagencies and made targeted use of technology in the ongoingeffort to recruit talented and skilled people.

Ground work on employee engagement was done to startthe process of improving employee retention. Internshipprograms such as Gradworks are used to alleviate someworkforce challenges and provide real learningopportunities for recent graduates.

A greater emphasis will be placed on working withemployment agencies, employees, and job fairs to

communicate career and position opportunities within STCin 2012. STC will continue to make use of social media andthe STC website in a way that connects with youth. Thecompany encourages current employees to spread themessage that STC is a great place to work.

STC is proud to boast a workforce representative ofSaskatchewan’s general population. Aboriginal and visibleminority employees bring valued diversity to theorganization. As part of the company’s Balanced Scorecard,STC tracks the year-to-year staffing levels of variousminorities with the goal of creating a diverse workforce overthe next several years. In 2011, the company was on targetwith these measures. STC is continually working to attractdiverse and talented people to its team.

Environmental ResponsibilitySTC continues to place a high level of importance onenvironmental stewardship and it remains one of thecorporation’s top values.

By its very nature, bus transportation is helpful to theenvironment. One STC bus can displace emissions from 55private vehicles and Transport Canada reports bus travel ashaving the lowest social cost (air pollution, greenhouse gasemissions, noise, road congestion and accidents) perpassenger kilometer as compared to any other form oftransportation.i

STC has set targets to implement environmentally friendlyinitiatives annually as part of the corporation’s BalancedScorecard. In 2011, installation of alternating electricalplugs in parking lots will reduce corporate powerconsumption, and implementation of Network ServerVirtualization that allows one server to perform the role ofmany servers will reduce future costs for hardware, storage,

Year in Review (continued)

i Bruno Jacques, Economic and Environmental Analysis and Research, Transport Canada, “Estimates of the Full Cost of Transportation in Canada: An overview”(presented at the Mobility Pricing Conference, Toronto, Ontario, February 3, 2011).


memory and power. Environmental messaging is displayedconsistently throughout STC’s advertising and passengercommunications.

Service ChangesThe Canadian bus industry underwent some noteworthychanges in 2011. These changes impacted STC in 2011 andwill continue to do so for the foreseeable future. Theprovince of Alberta changed its bus service regulationsduring the year, opening competition along high volumeroutes and no longer directing carriers to continue runningon other low volume routes. This decision directlyimpacted STC when Greyhound Canada TransportationCorporation (GCTC or Greyhound) announced thediscontinuation of service between Alsask and Calgary.STC saw a serious decline in ridership in the fourth quarterof 2011 on this route and expects the Greyhound servicechanges to continue to have a negative effect on ridershipin 2012.

Prior to this announcement, STC connected with Greyhoundat Alsask on the Saskatoon - Alsask schedule to transportpassengers travelling west beyond Saskatchewan. With theloss of the Greyhound connection, Saskatoon passengerstravelling to Calgary would now have to travel througheither Edmonton or Swift Current.

With Greyhound’s decision to drop the Alsask to Calgaryschedule, STC modified the Saskatoon to Alsask schedule tokeep service seven days a week and changed the schedule todepart at 11:45 a.m., a more convenient time of day forcustomers in and between Alsask and Saskatoon.

A provider from Alsask launched a small passenger serviceto connect Alsask with Calgary in January 2012 that will atleast somewhat replace the loss of Greyhound service on thiscorridor. In addition, this provider, in cooperation withGreyhound, operates a seven day a week freight servicebetween Alsask and Calgary. The passenger and freight

service is under the name Alsask Bus Service Ltd. STC hasentered into an interline arrangement with Alsask BusService Ltd. to meet in Alsask on STC’s Saskatoon – Alsaskroute and transport passengers and freight continuingwestbound. This agreement increases convenience forpassengers attempting to travel from Saskatoon – Calgaryand all points in between. STC does not expect to fully re-establish the yearly ridership of approximately 12,000 thatwere previously using the Saskatoon-Alsask-Calgary route.

Going forward, STC’s objective is to grow system wideridership by 1 per cent in each of the next five years.

Deregulation and route cuts by other carriers are a concernfor STC going forward as passengers looking to travel outsideof Saskatchewan rely on transportation companiesconnecting with STC. Maintaining a positive relationshipwith other industry players is essential to sustain STC’scustomer service standards.

Ensuring Passenger SafetyWhether it is by providing stress free passage throughdifficult road conditions, transporting parcels harmlessly totheir destination or handling unusual situations, safety isvitally important to STC.

Ensuring passengers are at ease starts with the company’sprofessionally trained motor coach operators. STC’sincomparable over the road safety record was put to the testin 2011 with storms, flooding, and record snowfalls hittingSaskatchewan. Through it all, STC still maintained itsenviable safety record.

Passengers riding with STC are encouraged to keep carry-onbaggage to a minimum and stow most luggage in the lowerbaggage compartment. Drivers have authority to inspectpassenger baggage and restrict carry-on baggage at theirdiscretion. Security personnel are present at STC’s primaryterminals to assist drivers and staff with these securitymeasures.


All buses are installed with Global Positioning Systems (GPS)and on-board cameras, both inside and out, for dispatchers tomonitor coaches and identify security or safety concerns.

STC continues to invest in the training and development ofemployees to enhance the customer service and the safetyexperience of the company’s passenger and freightcustomers. STC trains a number of employees each yearwith courses such as Cardiopulmonary Resuscitation (CPR)and First Aid.

Maintenance StandardsPart of STC’s primary mission is to provide safe and reliablepassenger and parcel express services to the residents ofSaskatchewan. Company maintenance standards align withthis mandate by ensuring all vehicles have a high safetystandard.

Mechanics adhere to a checklist of tests and inspections onevery regularly scheduled service to the engine and body ofthe coach. Major service and inspections are performed inSaskatoon while some routine inspections are conducted atRegina’s garage facility.

Operating EfficientlySimilar to all companies, STC must always be mindful ofcosts when conducting its business practices. STC has takensteps to manage efficiently, including annual route reviews,trials of new coaches to match to capacity and Lean reviewsof operations areas.

Short and long-term targets are an important part of STC’sbusiness plan. Undertaking cost efficiency strategies showsthe company’s commitment to the Government ofSaskatchewan and to Saskatchewan taxpayers. STCmonitors its progress in operating efficiently throughcompany scorecard measures such as operating cash loss as apercentage of overall expenditures and passenger service lossper mile. In 2011, STC exceeded its goals in both of these

metrics and provided Saskatchewan citizens with good valuefor their contributions. Customer service standards are notsacrificed at the expense of cost savings. Ninety-three percent of passengers rated STC’s service as “good” or“excellent.”

One example of how STC accomplishes efficiency goals isthe upgrading of technology. In 2011, STC accomplished thefirst phase of the installation of its upgraded passengerGalaxy Point of Sale (POS) system. The system was installedin STC’s three main terminals, Regina, Saskatoon, and PrinceAlbert first, and then extended to STC’s automated agencies.This initiative will bring about efficiencies such as theability to automate current manual processes and willprovide enhanced data capture.

The upgraded Galaxy system has many benefits over thecurrent system such as its user-friendly interface thatincludes a route map display for looking up the nearestavailable service points and connecting stops. This will beespecially beneficial for new employees who are not asfamiliar with STC’s current routes and would have to lookup scheduling information manually. Galaxy will also makeit easier to track ticket revenues, monthly ridership resultsand will also give STC the ability to look up a fare from anyorigin to any destination. The point-to-point pricing is themost attractive feature to STC ticket agents. In the non-upgraded system, ticket agents had to manually look upfares that were not from their location, in the upgradedsystem, fares between any two points in the STC network areavailable.

STC’s POS Working Committee looked at a number ofsystems before deciding on the upgraded Galaxy systemwhen tasked with this project. The decision was made to gowith the Galaxy product because it offered the most value,provided the best functionality and the most opportunity forfuture growth.

Year in Review (continued)


Community SupportIn 2011, STC sent children to summer camp, transportedelementary school safety patrollers from across the provinceto their year-end social, and provided complimentaryshipping to a number of worthy causes.

STC sponsored Junior Achievement’s second annual “VerveSymposium of Young Innovators and Entrepreneurs” (Verve)that was held on May 27-29, 2011. Verve is an annual youthconference designed to engage high school studentAchievers in a weekend conference focused onentrepreneurial challenges, inspiration through guestspeakers, and fun. Student delegates were from Regina,Whitecap Dakota First Nation, Edmonton, Calgary,Sherwood Park, Beaumont, and Saskatoon.

STC’s corporate stewardship goes beyond in-kind donations.Every year, the company raises money for charity throughtheir staff barbeques and other fundraising events. In 2011,the Little Bald Angels and Special Olympics were benefactorsof money raised by employees.

Economic SupportThrough company purchases and partnerships with theprivate sector, STC acknowledges the importance ofinvesting in Saskatchewan. In 2011, the company partneredwith 227 different businesses in almost 200 communities.STC’s relationships with the private sector facilitateeconomic development in Saskatchewan and allow STC toconduct its business in the most efficient way possible.These partnerships assist STC in remaining efficient and inproviding service to remote or outlying areas of theprovince. In larger urban centres, STC partners with privateoperators for freight pick-up and delivery services. There arenumerous other examples of private sector partnerships thatSTC has in place.

The following Management Discussion and Analysis(MD&A) highlights the primary factors that impacted STCoperations and financial results of the company for the yearended December 31, 2011. The MD&A providesmanagement’s perspective of the corporation for theprevious 12 months. It should be read in conjunction withthe audited financial statements and accompanying notes.The MD&A includes industry information, risk assessment,financial performance and the Balanced Scorecard.

Industry OverviewSTC has the bulk of the intercity bus passenger business inSaskatchewan. Greyhound operates two routes through theprovince (along the Trans-Canada and YellowheadHighways). There are also a number of private sectorcarriers who have interline and other contractualarrangements with STC to serve specific areas.

The motor carrier passenger industry has significanteconomic and societal influence on Canada and Canadiansproducing many benefits including: public mobility, cost-efficient transportation that stimulates economicdevelopment, environmentally-sound solutions to trafficcongestion, reduction of energy consumption and improvedair quality.

STC and other industry players are affected by many factorsfrom the dispersed population, ridership profiles,competition with other forms of travel, growing customerexpectations and public perception of bus travel. In 2011,STC responded and proactively managed these industrychallenges and will continue to do so in 2012. STC hasreinforced security, safety, comfort and affordability asbrand attributes.

Saskatchewan’s economic forecast remains strong, theprovince will lead the nation with a projected rise of 5.1%real gross domestic product (GDP) in 2011; for 2012 retailsales are up, wholesale sales are up and constructionpermits have increased.

RISK ASSESSMENT

Fleet AgeSTC has an aging fleet and without sustained increases incapital spending, the potential exists for a number of issuesto arise, including increased maintenance costs, poorcustomer experience and comfort, and the lack of ability tooffer on-board amenities. STC will continue to ensure thatas much of the company’s capital investment is directedtowards fleet to ensure modern and safe coach service isprovided for customers.

Greyhound Service CutsSTC’s business is closely tied to Greyhound throughinterline arrangements. STC agents and ticket office staffsell Greyhound tickets, making STC the face of Greyhoundin Saskatchewan. As Greyhound continues to make servicecuts, passenger and parcel customers will be impacted as aresult of connections no longer meeting their needs.Identity confusion between the two companies continues tobe a risk. In 2008, Greyhound removed its customer serviceagent in Regina, resulting in nearly all Greyhound serviceinquiries being directed at and managed by STC staff.

In 2009, Greyhound reduced frequency of bus service alongHighway 1 through Saskatchewan from three scheduleroutes to two daily in each direction. This reduction inservices impacted both STC’s passenger and expressconnections in Regina, Moose Jaw and Swift Current. Fewerconnections reduced STC’s revenues from Greyhoundcommissions and caused longer wait times for passengersand express shipments. STC experienced a 28.6 per centdecline in Greyhound passenger commissions and 10.7 percent decline in Greyhound express commission for 2009,with an overall financial loss of $251,800.

In late 2010, Greyhound reduced frequency of bus servicealong Highway 16, which reduced the number of schedulesbetween Yorkton and Saskatoon from four to two.


Management Discussion and Analysis


On October 24, 2011, Greyhound announced elimination ofservice between Calgary and Alsask, where Greyhoundmeets STC buses from Saskatoon. A provider from Alsasklaunched a small passenger service in January, 2012 toconnect Alsask with Calgary. STC is interlining with thisprovider.

Effective February 18, 2012, Greyhound will be reducing itsservice between Saskatoon and Edmonton along theYellowhead Route of the Trans-Canada Highway, and will beeliminating service along Saskatchewan Highway 40 andAlberta Highway 14. Three Saskatchewan communitiescurrently served by Greyhound (Cut Knife, Neilburg andMarsden) will no longer have passenger or parcel service asa result of these changes. STC will re-direct freight serviceformerly bound to these communities to North Battleford.

The Greyhound reduction means that service betweenSaskatoon and Edmonton will move from four trips daily totwo. The reduction in frequency along the YellowheadRoute will affect the ability of passengers to connect withbuses traveling to Edmonton. The Greyhound schedulereduction between Saskatoon and Edmonton will onlyallow those travelers from the Regina or Prince Albertschedule to make same-day connections along theYellowhead Route. STC will need to assess the implicationsof the schedule reductions between Edmonton andSaskatoon over the next six to twelve months.

STC will continue to monitor industry activity in order todetermine the effect on STC customers.

Increased Operating CostsFluctuating fuel prices will continue to impact thecompany going forward. Labour costs continue to comprisea large portion of STC’s operating costs. Mitigation of thisrisk includes having a designated vendor for fuel andputting human resource programs such as employeedevelopment in place to encourage retention of existingemployees.

Recruitment and Retention of EmployeesWith a growing number of employees approachingretirement coupled with increased employmentopportunities within the province, STC is challenged inboth its recruitment and retention initiatives. In 2011, STCexperienced an acute shortage of certified journeypersonmechanics – a situation that was made more difficult due toa continuing shortage of skilled tradespeople inSaskatchewan’s booming economy. Similar to 2010, STC’srecruitment and retention difficulties extended into otherareas of the company; to positions requiring professionalaccounting experience, motor coach operators, coachcleaners, and express service attendants.

Mitigation of this risk includes programs to retainemployees by increasing employee engagement such asenhancing change management involvement for projects,employee feedback through surveys and employee trainingand development. Mitigation of recruitment issues ispartially addressed through various approaches toattracting employees through advertising of availablepositions online, in print, through employment agencies. Amajor challenge is to properly forecast staffing needs intothe future, matching planned retirements, turnover andgrowth areas. Managing this while competing for limitedqualified resources is key to the company’s success.

Geographically Dispersed PopulationSaskatchewan has more than 16,000 miles of provincialhighways. Including municipal roads, Saskatchewan’s totalroad surface is approximately 119,000 miles.

In 2011, STC operated more than 3.2 million miles ofscheduled bus service and provided connections to 290communities. Frequency of service is limited on someroutes with low passenger numbers. This allows STC tocontain costs, but also negatively impacts passengerconvenience. STC receives requests from communitiescurrently without service. When reviewing these requests,


STC considers arrangements with the private sector tointerline with its existing network.

In all parts of Canada, profits from high-density routes areused to offset the losses on low-density routes (cross-subsidization). In Saskatchewan, nearly all of the routes arelow density, with insufficient revenues from the best routesto offset the associated losses (STC operates 29 routes; ofthese, only the routes linking Prince Albert-Saskatoon-Regina cover over-the-road costs). Thus, the company relieson subsidization from its shareholder, CIC, in order to fulfillSTC’s public policy role for the province.

Ridership Profile and Private Vehicle PreferenceSTC’s ridership profile is increasingly becoming moredispersed among all segments of the population. Whilemany customers choose to use STC out of necessity and donot have access to other modes of transportation, others arechoosing to ride with STC because of the convenience,environmental benefits, and the ability to relax or beproductive on-board with Wi-Fi. Despite this trend, thereare still many that will continue to prefer the convenienceand flexibility that private vehicles offer. STC manages thisby effectively communicating the numerous benefits of bustravel in order to overcome this challenge. This is beingaccomplished through STC’s advertising campaigns.

Competition with Air Transportation In addition to the private automobile, air service providesalternative transportation betweenSaskatchewan’s major cities, offering frequent, althoughsomewhat more costly, service between Regina andSaskatoon – one of STC’s profitable routes. STC isproactively communicating to customers the benefits of on-board amenities such as Wi-Fi offered along theSaskatoon-Regina route. In 2011, this amenity becameavailable on over 75 per cent of STC’s fleet.

Growing Customer ExpectationsCustomers increasingly express a preference for immediateand more personalized services. STC was pleased to offermore amenities in 2011 such as expanded availability of Wi-Fi. Expectations do come with costs, and STC mustcarefully evaluate those amenities which are affordable andwhich will be a sound investment for years to come.Passengers are increasingly bringing their own forms of Wi-Fi enabled entertainment on-board STC coaches and theSTC passenger survey shows that Wi-Fi access is now moreimportant to customers than on-board video supplied bythe carrier.

STC is responding to and managing customer trends byproviding as many amenities as is affordable andappropriate to ensure a more user-friendly travel experiencefor passengers. As SaskTel expands its new wireless service,STC anticipates it will upgrade its fleet to offer Wi-Fi on 100per cent of routes by year end 2012. This will enablecustomers to use their wireless devices to work or surf theinternet on any STC route.

Improving Public Perception of Bus TravelDespite positive reviews from STC customers (good orexcellent combined satisfaction rating of 93 per cent in2011), there remains a negative perception of bus travel inthe industry as a whole. STC customers know the companyprovides good, clean and dependable service. STC’schallenge is to utilize media and all other avenues to get thismessage out to people who have never travelled with STC.

The Canadian Bus Association best summarizes the largestchallenge to bus transportation as “despite its benefits, busis the least understood travel mode and often the leastrespected.”

Management of this industry challenge includesopportunities for STC to better promote its products and

Management Discussion and Analysis (continued)


services. Promotions are planned for 2012, building onlessons learned in previous years. STC’s Ride Rewardsloyalty program will launch on-line sign up in 2012 toattract new members and will allow the company toprovide customers with information on promotions.

FINANCIAL PERFORMANCE

IntroductionThe financial performance of the company is significantlyimpacted by its mandate to provide service on the widestpractical basis. Because of low population densities, thereare insufficient passenger and freight volumes to fullyrecover all operating costs. Thus, subsidization is requiredto serve such an extensive network. No dividend was paidto CIC in 2011 and STC will not be in a position to pay onein 2012.

In STC’s case, its financial performance is gauged bywhether its costs and subsidy are as low as possible. Thequality and magnitude of the services provided is relative toexpenditures incurred. Total cash loss as a percentage oftotal expenses (excluding amortization) in 2011 was 34.3per cent (32.9 per cent in 2010).

Operating and Capital GrantsSTC operations are subsidized through grants received fromCrown Investments Corporation (CIC), the centraloverseeing body of Saskatchewan’s Crowns. Each year, STCsubmits its performance measures and grant requirementsto CIC for review and approval. In 2011, STC receivedapproval for an operating grant of $8.9 million to cover itsestimated operating losses. Of the approved operatinggrant, only $8.7 million was utilized, due to improvedridership and increased passenger revenue. Additionally,STC received an approved 2011 capital grant of $2 millionto fund capital expenditures.

Other Revenue SourcesIn addition to its main lines of passenger and parcel expressbusiness, the company had a number of alternative revenuesources in 2011. The company: • provided maintenance and cleaning service to other

independent bus lines generating $538,000 in revenue;• leased excess space in terminals and garages totaling

$246,000;• wrapped trailers and buses with advertising resulting in

$54,000; and• obtained an additional $56,000 from automatic banking

machines and locker rentals.

STC also operates a limited number of charters, whichrepresented $240,000 in 2011 revenues. The operation ofcharters provides opportunities to better utilize the busfleet, as most take place on weekends when fewer scheduledtrips occur. Charters also increase the company’s visibilitywithin the community.

To minimize competition with private charter companies,STC keeps its charter rates somewhat higher than othercompanies. Requests for service that cannot beaccommodated by STC are referred to private sectoroperators. STC maintains strong working relationshipswith the private sector and provides extra capacity, whenpossible, to private charter companies when they havefailures or excess demand.

Financial ReportingThe Canadian Accounting Standards Board has confirmedthat publicly accountable enterprises will be required toadopt International Financial Reporting Standards (IFRS) inplace of Canadian Generally Accepted AccountingPrinciples (Canadian GAAP) for interim and annualreporting in fiscal years beginning on or after January 1,2011, including comparative figures for the prior year. InSeptember 2009, the Public Sector Accounting Board (PSAB)approved an amendment to the introduction of the Public


Sector Accounting Handbook which requires GovernmentBusiness Enterprises (GBEs) to adopt IFRS and OtherGovernment Organizations (OGOs) to adopt either IFRS orthe public sector handbook, whichever is considered themost appropriate basis of accounting.

The Crown Investments Corporation (CIC) believes thatIFRS is the most appropriate basis of accounting for all itssubsidiaries. Therefore, STC as an OGO proceeded with theadoption of IFRS.

STC has finalized its IFRS financial statement disclosuresand selection of accounting policies. These policies andfinancial statement disclosures have been reviewed byexternal auditors and approved by the STC Board ofDirectors. STC assessed its processes, systems, and internalcontrols and determined all to be adequate for IFRSimplementation.

The areas with the most significant differences fromCanadian GAAP to IFRS are related to accounting forproperty and equipment, an accrual for compensatedabsences and financial statement disclosures.

During 2011, STC prepared quarterly and annual financialstatements in accordance with IFRS. IFRS 1 ‘First timeadoption of IFRS’ requires certain disclosures relating to thetransition to IFRS be presented in the notes to the financialstatements. In addition, 2010 comparative balances in thefinancial statements and MD&A are presented under IFRS.

In 2011, STC continued with a rigorous set of standards forfinancial controls and reporting for all levels of itsorganization. As directed by CIC, STC’s Chief ExecutiveOfficer and Chief Financial Officer are required to certifythat these standards have been implemented and theinternal controls over financial reporting are operatingeffectively with no material weaknesses identified. Theprocess of complying with these standards is referred to asCEO/CFO Certification.

Passenger ServiceIn 2011, ridership was 288,164, representing an increase of7.4 per cent over 2010. As demonstrated in the followingchart, STC is continuing the trend of increasing ridershipwhich began in 2010. This trend will be very difficult tomaintain in 2012. STC anticipates losing passengers due tothe Greyhound cuts along connecting corridors.

STC Ridership History 2002 - 2011

The table below offers a snapshot comparison of passengerservice financial results.

Passenger Service LossPer Mile (Revenue –Cost = Loss/mile)

Passenger ServiceRevenue

Passenger ServiceOperating Expense

$2.44/mile($2.39-$4.83)

$7,712,000

$15,576,000

$2.29/mile($2.30 - $4.59)

$7,363,000

$14,716,000

20102011


2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

266

300

280

260

240

220

200

180

160

140

120

100

259 258

267277

273 270

259268

288(thousands)


STC continued with two successful seat sale campaigns in2011. In May and September, STC offered a senior seat salethat allowed those 60 years of age and over to travelanywhere on STC’s network for a flat $10 one-way fare.2011 senior seat sale results contributed to an improvementof 9 per cent in senior ridership in May and September.

In June, July and August, STC offered youth aged 12-25 a$40 unlimited monthly pass. These results were a 21 percent increase in youth pass sales in June, July and Augustover the same months in 2010.

Parcel Express ServiceSTC route scheduling and frequency is designed to optimizeservices for the passenger side of the business. STC,however, has unique strengths with respect to its parcelexpress service. The breadth of its network is unparalleledby other couriers in Saskatchewan. STC provides service onweekends for a number of schedules, as does GLC on routesit serves.

Remote communities rely on STC for many of theirdeliveries. STC carries water samples to labs in majorcentres to ensure communities have access to safe drinkingwater. Blood supplies are transported by STC to hospitalsand clinics across Saskatchewan. There are numerous otherexamples of individuals and businesses that rely on STC toship their packages in a fast and convenient manner. Parcelexpress service tends to be somewhat seasonal for STC, withincreased freight activity generally occurring during farmseeding, harvest, construction season, drilling season andthe winter holiday/Christmas season.

In 2011, STC continued to equip buses with trailers to carryadditional freight. This allows the company to increase itsfreight hauling capacity and revenue-generatingcapabilities.

Parcel Express Line of Business Financial ResultsSTC experienced a slight downturn in profit in the parcelexpress line of business from 2010 to 2011. This was due tothe loss of some larger freight contracts. One customermoved core parts of their parcel business to one supplierrather than using several carriers. Another customer startedusing their own trucks for particular corridors which hadpreviously been delivered by STC’s freight services.

The loss has been mitigated by efforts throughout 2011 toincrease sales in this area and two new freight forwardingopportunities were established in 2011.

A comparison of 2011 and 2010 revenues, expenses andprofits are provided in the table below:

Bus Maintenance ServicesSTC also provides maintenance and cleaning services forother bus companies, providing revenue streams of$538,000 for 2011, compared to $568,000 in 2010. Expensesassociated with such work were $354,000 in 2011 comparedto $388,000 in 2010. The loss of revenue is reflective ofmechanic shortages and the loss of foreign coach revenuefrom Greyhound because of the changes on the Alsaskroute. The workload of STC mechanics continues to beprioritized based on STC’s own fleet maintenance needs.Maintenance service expenditures for STC coaches and fleetwere $3,388,000 in 2011, compared to $3,119,000 in 2010.This is due to an older fleet with more maintenance issues.

2011 2010

Parcel Express Revenues $7,939,000 $7,872,000

Parcel Express Expenses $5,876,000 $5,701,000

Parcel Express Profits $2,063,000 $2,171,000


There were a number of improvements made to the fleet in2011, including installation of Wi-Fi service in over 75 percent of buses and continued deep cleaning of coaches. STCundertook a process improvement review of itsmaintenance operations which identified opportunities forconsideration. These process improvement reviews,sometimes known as “Lean” reviews, will continue in 2012.One example of an improvement because of the Leanreview is improved service times for inspections.

Property, Plant and EquipmentCapital spending was $0.9 million in 2011 compared to $2.1 million in 2010. The 2011 capital plan includedspending on fleet and a new bus wash system. The fleet andbus wash were ordered in 2011. The 2011 capital plan wasin line with traditional levels; however, late delivery of thecoaches and the bus wash will mean that this capital spendwill now occur in 2012.

STC also invested in its facilities ($50,000), corporatesystems and technology ($628,000), other equipment($141,000), and fleet renewal ($57,000). Technologyspending included upgrades to the Galaxy Ticketing Pointof Sale (POS) system.

FACILITIES

STC owns and operates passenger and freight terminals inRegina, Saskatoon and Prince Albert. It owns and operatesservice garages in Regina and Saskatoon. The companyowns a passenger and freight terminal in Moose Jaw, andcontracts the operation of the facility to an agent.

Prince Albert As in the other two terminals, outside electrical plugs wereconverted to increase energy efficiency.

Regina Security enhancements were added such as additionalsecurity cameras and card access points that ensure onlySTC staff are allowed into employee only areas.

SaskatoonSeveral express and passenger terminal improvements werecompleted, including paving and installation of an aircurtain door in the garage, and, continuation of energyefficient lighting installation.

Corporate Systems and Technology In 2011, STC upgraded its ticketing system that has been inuse since 2001 with a more modern, efficient and flexibleversion. This upgraded system has many benefits over thecurrent system and the successful implementation of theticketing phase is benefiting both employees andcustomers. The system is compatible with many other STCapplications, giving STC the ability to eliminate duplicationof information and reduce time on system maintenance. In2012, STC will implement further software upgradesincluding an upgraded point of sale system for parcelexpress as well as online ticketing for selected origins anddestinations.


STC FACILITIES Age (yrs)

Moose Jaw*Passenger and Parcel Express Terminal 16

Prince AlbertPassenger and Parcel Express Terminal 17

Regina• Passenger and Parcel Express Terminal 3• Service Garage 63

Saskatoon• Passenger Terminal 37• Parcel Express Building 34• Service Garage 29*STC owns the property but does not operate it


Fleet and EquipmentThe company strives to match its bus fleet to passengervolumes on various routes. Accordingly, units range in sizefrom 18 to 55-seat coaches. In 2011, STC operated a total of43 coaches and 29 freight trailers. STC’s coaches are 23 percent wheelchair-accessible and plans are to increase thisfigure to 26 per cent in 2012.

In 2011, STC ordered two mid-size coaches and threemedium-size trailers. All coaches in STC’s fleet have GlobalPositioning Systems (GPS) and surveillance capability, eighthave electrical outlets for passenger use and over 75 per centare Wi-Fi capable. These options will become standard onfuture fleet purchases.

Collective BargainingThe collective bargaining process was successfullyconcluded in 2011 between the company and theAmalgamated Transit Union (ATU) Local 1374. The term ofthe current Agreement is January 1, 2010 to December 31,2012. STC management plans to open negotiations with theATU in the fall of 2012 and look forward to a potentialsettlement prior to the expiry of the current agreement.

STC FUTURE OUTLOOK

In the coming years, STC will continue to control coststhrough prudent financial management, highlighted by afocus on efficiency and productivity gains throughout theCorporation. Company efficiency efforts and resourcemanagement will be balanced with such cost drivers ascontinued customer growth and non-controllable costincreases such as fuel.

Leveraged relationships, such as those with STC agents willcontinue to be utilized to support STC’s ability to fulfill itsmandate of safe, affordable and accessible bus passenger andfreight services in a cost effective manner. STC continues tosupport the Saskatchewan economy by partnering with

private enterprise, and by providing transportation links forbusiness across the province.

The company’s strong reputation for superior customerservice and growing passenger ridership will continue to besupported through programs designed to help consumersand businesses realize the benefits of bus travel.

2011’s successful marketing campaign and seat sales willcontinue to add value for passengers and thecommunication around them will be strengthened with themanagement of the recently launched passenger RideRewards program. STC will continue to implementinitiatives to sustain passenger growth including upgradesto bus amenities and increasing in-depot signage.

Population demographics and the ability to hire skilled staffin Saskatchewan will affect all companies over the planninghorizon. STC will continue to focus on people, includingjob specific recruitment and retention, training anddevelopment, and employee engagement, to have asuccessful workforce and to counteract the effects of thelabour shortage.

STC will continue to promote the environmental benefits ofbus travel.


Management’s Responsibility for Reporting on Performance

Management has presented its performance information in the Balanced Scorecard.

The information is, to the best of our ability, reliable (that is, reasonably free of errors or omissions and represents what it claims),consistent (that is, prepared using consistent policies and methods, explains significant variances, and reports results againstpreviously approved targets), and understandable. To provide a better understanding of the information, management has definedthe terms and calculations and has disclosed limitations.

Management has the primary responsibility for the integrity and objectivity of the performance information reported in theBalanced Scorecard. To fulfill this responsibility, the company maintains appropriate systems of internal controls and procedures.These systems provide reasonable assurance that information presented is reliable and consistent.

On behalf of the company, on March 31, 2012,

Shawn GricePresident & CEO

2011 Balanced Scorecard


SCORECARD DISCUSSION

Saskatchewan Transportation Company’s BalancedScorecard demonstrates the company’s accountability tothe public. It contains objectives, measures, and targetswhich were created based on the strategic directionprovided by STC’s Board of Directors, as well as the overallstrategic direction of Crown Investments Corporation (CIC).

Following the Saskatchewan Provincial Auditor’s audit ofthe balanced scorecard in 2006, as well as feedbackreceived from CIC, our measures and reporting havechanged over the past few years and will continuouslyevolve to improve alignment with the company’s strategicplan, demonstrate STC’s contribution to the priorities of theCrown sector and improve clarity in the reporting of theresults.

DISCUSSION OF 2011 RESULTS

Customer• 93 per cent of passengers who voluntarily responded toSTC’s passenger survey rated the company’s services as“good” or “excellent”, a 1 per cent increase from 2010.

• STC’s average fare as of December 31, 2011 was 3 percent, or $0.95 below the Western Canadian Average of$31.35.

• STC owns and operates 43 coaches, 10 of which areequipped for wheelchair accessibility.

Public Policy• All coaches refueling in Saskatoon and Regina operatedon a 2 per cent canola biodiesel blend utilizing 98 percent Saskatchewan grown canola seed.

• Year-end passenger survey results for 2011 show 94.8per cent of respondents indicate that bus travel isenvironmentally friendly.

Financial• While STC requires grants from CIC to fulfill its publicpolicy role, it measures its financial success by settingefficiency targets (“passenger services loss per mile” and“operating cash loss as a percentage of overallexpenditures”) and by implementing expenditurecontrols to meet those targets. In 2011, higher thanbudgeted passenger service revenues coupled withslightly lower than budgeted expenses allowed STC toexceed its goals.

• STC was in full compliance with best practices ofcorporate governance as defined by the CanadianSecurities Administrators (CSA). Please see theCorporate Governance section of the Annual Report fordetails.

People• After falling below target in 2010, STC is exceeding itsgoal for employee satisfaction in 2011. A lengthycollective bargaining process was completed prior to theemployee survey which provided stability over terms andconditions of employment.

• STC strives to employ a representative workforcereflecting diversity targets of the Saskatchewan HumanRights Commission (SHRC). STC is exceeding this goalin three areas and remains committed to growingrepresentation in all target areas.

• The company emphasizes training among all itsemployees and exceeded 2011’s goal.

Innovation• The 7.4 per cent increase in passenger numbers reflectsimprovements to the on-board experience of passengers,successful seat sales, and an effective advertisingcampaign that focused on image enhancement.

• STC continues to care about the company’senvironmental impact. Two new environmental initiativeswere launched in 2011, meeting the corporate target.



100%

94%

Support building our future by protectingour environment M5

M6

Percentage of STC vehiclesfuelled in Regina and Saskatoonthat contain a 2% biodieselblend

Percentage of passengers awarethat bus transportation isenvironmentally friendly

Objective Measures Target 2011 2011 Actual 2012 Target

100%

93%

100%

94.8%

WE ARE GOOD CORPORATE CITIZENS

PUBLIC POLICY

92%

- 1% to+4%

290

26%

Customers are satisfied with the servicethey receive

Fares and discounts are competitive andsatisfactory to our customers

Routes serve a significant portion ofSaskatchewan

A portion of our passenger bus fleet isequipped for wheelchair accessibility

M1

M2

M3

M4

Passenger survey satisfactionrating

Fares are at or near the WesternCanadian Average

Number of communities served

Percentage of fleet that iswheelchair accessible


92%

- 1% to+4%

290

25%

93%

3% belowWCA

290

23%

WE MEET THE NEEDS OF OUR CUSTOMERS

CUSTOMER


35.3%

$2.52

FullCompliance(FC)

Cash loss is as low as possible

Operating costs are as low as possible

Meet or exceed all Board of Directorgovernance requirements

M7

M8

M9

Operating cash loss as apercentage of overall expenditures

Passenger services loss per mile

“Best Practices” for Boardgovernance


35.0%

$2.55

FullCompliance(FC)

34.3%

$2.44

FullCompliance(FC)

WE ARE A FISCALLY RESPONSIBLE AND ACCOUNTABLE CORPORATION

FINANCIAL

67%

100

16.0%

13.1%

3.8%

9.7%

Employer of choice in Saskatchewan

We promote safety and career enhancementtraining for our employees

Support development of a representativeworkforce in Saskatchewan

M10

M11

M12

Employee satisfaction surveyrating

Number of safety, technical andprofessional developmenttraining opportunities attended

Percentage of employees fromtarget groups in overall workforce

Women in UnderrepresentedOccupations

Aboriginal

Visible Minority

Persons with Disabilities


65%

100

16.0%

13.1%

3.8%

9.7%

66%

181

19.0%

13.9%

5.6%

4.3%

WE ARE A HIGH-QUALITY EMPLOYER

PEOPLE

2011 Balanced Scorecard cont



226

1.0%

2

Grow our business operations with otherprivate entities

Build our customer base and promote theCorporation

Assist Saskatchewan to "go green"

M13

M14

M15

Total agreements andpartnerships

Percentage growth in passengernumbers

New environmental initiativesundertaken


228

1.0%

2

227

7.4%

2

WE ARE IMPROVING & INNOVATING

INNOVATION


Explanation of Measurement Terms

WE MEET THE NEEDS OF OUR CUSTOMERS

M1 Passenger Survey Satisfaction Rating is the overall satisfactionlevel of our bus-riding (passengers) customers. This information isobtained through a semi-annual, voluntary, passenger sample survey.It represents the total percentage of respondents who rate theiroverall satisfaction with the services provided by STC as “good” or“excellent”.

M2 Fares are at or Near the Western Canadian Average and are setwithin a range of 1 per cent below the Western Canadian Average(WCA) to 4 per cent above the average. The WCA is determined bythe rates charged at the end of each quarter by Greyhound Canada inSaskatchewan, Manitoba, Alberta and British Columbia.

M3 Number of Communities Served is all communities with at leastone of the following: a flag-stop, scheduled passenger service and/orfreight only service.

M4 Percentage of Fleet that is wheelchair accessible includes thepercentage of total motor coaches owned by STC that have built-inchair lifts.

WE ARE A GOOD CORPORATE CITIZEN

M5 Percentage of STC Buses Fueling in Regina and Saskatoon Witha 2% Biodiesel Blend is 100%. Calculation applies only to dieselpowered vehicles.

M6 Percentage of Passengers Aware that Bus Transportation isEnvironmentally Friendly. This information is obtained through a semi-annual, voluntary, passenger sample survey and represents thetotal percentage of respondents who rate riding the bus asenvironmentally friendly.

WE ARE A FISCALLY RESPONSIBLE AND ACCOUNTABLECORPORATION

M7 Operating Cash Loss as a Percentage of Overall Expenditures iskept as low as possible. The percentage is calculated as theoperating cash loss divided by the total expenses (excludingamortization) for the year.

M8 Passenger Services Loss per Mile is the difference between thepassenger expense and revenue per mile. Revenue per mile iscalculated as total passenger revenues, divided by the totalscheduled miles and service miles. Passenger expense per mile iscalculated as the total passenger expenses divided by the totalscheduled miles and service miles.

M9 “Best Practices” for Board Governance is measured by eithermeeting or exceeding all corporate governance requirements as setforth by the Canadian Securities Administrators (CSA) NationalPolicy 58-201 Corporate Governance Guidelines and NationalInstrument 58-101 Disclosure of Corporate Governance Practices.These CSA guidelines outline national governance requirements forpublicly traded companies and address areas of responsibility foreffective corporate governance. While STC is not a publicly tradedcompany, its practices are benchmarked against these currentindustry best practices each year.

WE ARE A HIGH-QUALITY EMPLOYER

M10 Employee Satisfaction Survey Ratings are obtained from theresponses to a specific satisfaction question included in acomprehensive employee survey. The question measures the overallsatisfaction of STC employees. The survey is conducted annually andresponses are voluntary.

M11 Number of Safety, Technical and Professional DevelopmentTraining Opportunities Attended in the workplace. This representsthe total number of employees who attended either an in-house orexternally delivered seminar, training session or workshop during theyear.

M12 Percentage of Employees from Target Groups in the OverallWorkforce includes employees of aboriginal ancestry, visibleminorities, disabled employees and women in under-representedoccupations. These numbers represent the percentage of employeesfrom each target group in the overall STC workforce (excludingcasual employees) as of the last day of the year.

WE ARE IMPROVING & INNOVATING

M13 The number of Total Agreements and Partnerships with privatesector entities is summed and reported at the last day of the quarter.The total includes the total number of operating STC agents,interline carriers, contract carriers and pick-up and delivery serviceoperators. It also includes other partnerships and agreements thatmeet specified criteria to be included in the reported results.

M14 Percentage Growth in Passenger Numbers is the percentagegrowth in ridership on scheduled routes year-over-year.

M15 New Environmental Initiatives Undertaken represents STC’sstrengthened strategic focus on the environment. It may includenew promotions, partnerships, community support initiatives andworkplace/asset enhancements.

FINANCIALSTATEMENTS

DECEMBER 312011

Management’s Responsibility for Financial Reporting


Management has prepared the financial statements of the Company in accordance with International FinancialReporting Standards. The financial data included elsewhere in this report is consistent with the financial statementsand the underlying information from which the Company prepared these financial statements.

Management has the primary responsibility for the integrity and objectivity of the financial statements. To fulfill thisresponsibility, the Company maintains appropriate systems of internal controls, policies and procedures. Thesesystems provide reasonable assurance that assets are safeguarded and that the books and records reflect the authorizedtransactions of the Company.

MNP LLP, the Company’s external auditors, have examined the December 31, 2011 financial statements, and theirreport follows.

The Board of Directors of Saskatchewan Transportation Company has examined and approved the statements.

On behalf of the Company,

Shawn Grice Jason SherwinPresident & CEO CFO

February 28, 2012

Annual Statement of Management Responsibility


I, Shawn Grice, the President and Chief Executive Officer of the Saskatchewan Transportation Company, and I, JasonSherwin, the Chief Financial Officer of the Saskatchewan Transportation Company, certify the following:

a. That we have reviewed the financial statements included in the Annual Report of the Saskatchewan TransportationCompany. Based on our knowledge, having exercised reasonable diligence, the financial statements included in theAnnual Report, fairly present, in all material respects the financial condition, results of operations, and cash flows,as of December 31, 2011.

b. That based on our knowledge, having exercised reasonable diligence, the financial statements included in theAnnual Report of the Saskatchewan Transportation Company do not contain any untrue statements of materialfact, or omit to state a material fact that is either required to be stated or that is necessary to make a statement notmisleading in light of the circumstances under which it was made.

c. That the Saskatchewan Transportation Company is responsible for establishing and maintaining effective internalcontrols over financial reporting, which includes safeguarding of assets and compliance with applicable legislativeauthorities; and the Saskatchewan Transportation Company has designed internal controls over financial reportingthat are appropriate to the circumstances of the Saskatchewan Transportation Company.

d. That the Saskatchewan Transportation Company conducted its assessment of the effectiveness of the corporation’sinternal controls over financial reporting and, based on the results of this assessment, the SaskatchewanTransportation Company can provide reasonable assurance that internal controls over financial reporting as ofDecember 31, 2011 were operating effectively and no material weaknesses were found in the design or operation ofthe internal controls over financial reporting.

Shawn Grice Jason SherwinPresident & CEO CFO

February 28, 2012


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

1.877.500.0780 P: 306.790.7900 F: 306.790.7990 mnp.ca

Independent Auditors’ Report Members of the Legislative Assembly of Saskatchewan: We have audited the statement of financial position of Saskatchewan Transportation Company as at December 31, 2011, December 31, 2010, and January 1, 2010 and, the statements of comprehensive income, changes in equity, and cash flows for the years ended December 31, 2011 and December 31, 2010, and a summary of significant accounting policies and other explanatory notes. Management’s Responsibility for Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or misstatement. Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or misstatement. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe the audit evidence obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, these financial statements present fairly, in all material respects, the financial position of Saskatchewan Transportation Company as at December 31, 2011, December 31, 2010, and January 1, 2010 and its financial performance and its cash flows for the years ended December 31, 2011 and December 31, 2010 in accordance with International Financial Reporting Standards.

Regina, Saskatchewan February 28, 2012 Chartered Accountants

Statement of Financial Position


As at December 31, 2011

As at December 31, 2010

As at January 1, 2010

(Thousands of Dollars)

AssetsCurrentCash $ 2,606 $ 1,119 $ 1,324Accounts receivable (note 5) 1,422 1,454 1,402Inventories (note 7) 376 377 393Prepaid expenses 482 466 508

4,886 3,416 3,627

Non-currentProperty and equipment (note 8) 35,735 37,564 38,613

$ 40,621 $ 40,980 $ 42,240

Liabilities and Province's EquityLiabilitiesCurrentTrade and other payables $ 3,333 $ 2,977 $ 2,680

Non-currentDeferred capital grant (note 9) 29,257 29,673 31,239

32,590 32,650 33,919

Province of Saskatchewan's EquityContributed surplus 465 465 465Retained earnings 7,566 7,865 7,856

8,031 8,330 8,321$ 40,621 $ 40,980 $ 42,240

See accompanying notes

Approved by the Board on February 28, 2012

Wayne Lorch Mervin SchneiderDirector Director


RevenueExpress services $ 7,939 $ 7,872Passenger services 7,712 7,363Other 1,033 1,032Loss on disposal of property and equipment (12) (19)

16,672 16,248

ExpensesOperating costs other than those listed below 10,583 9,958Salaries, wages and short-term employee benefits 14,813 14,301Depreciation (note 8) 2,691 2,846

28,087 27,105

Loss before the following (11,415) (10,857)Operating grant (note 10) 8,700 8,400Capital grant (note 9) 2,416 2,466Net (loss) profit and comprehensive income $ (299) $ 9


Balance at January 1, 2010 $ 7,856 $ 465 $ 8,321Net profit and comprehensive income 9 - 9

Balance at December 31, 2010 7,865 465 8,330

Balance at January 1, 2011 7,865 465 8,330Net loss and comprehensive income (299) - (299)

Balance at December 31, 2011 $ 7,566 $ 465 $ 8,031


Statement of Comprehensive Income Year Ended December 31

Statement of Changes in Equity

2011 2010


Retained Earnings Contributed Surplus

Attributable to the Province of Saskatchewan

Total Equity



Operating ActivitiesNet (loss) profit and comprehensive income $ (299) $ 9

Items not involving cash:Depreciation (note 8) 2,691 2,846Loss on disposal of property and equipment 12 19Recognition of capital grant (note 9) (2,416) (2,466)

Net change in non-cash working capital (note 12) 373 303Cash provided by operating activities 361 711

Investing ActivitiesAdditions to property and equipment (note 8) (876) (2,094)Proceeds on disposal of property and equipment 2 278Cash used in investing activities (874) (1,816)

Financing ActivitiesCapital grant received (note 9) 2,000 900Repayment of operating demand loan - (150)Cash provided by financing activities 2,000 750

Increase (Decrease) in cash 1,487 (355)Cash, beginning of year 1,119 1,474Cash, end of year $ 2,606 $ 1,119


Statement of Cash Flows Year Ended December 31

2011 2010(Thousands of Dollars)

Notes to Financial Statements Year Ended December 31, 2011


1. STATUS OF THE COMPANYThe Saskatchewan Transportation Company [STC; theCompany] was originally established in 1946 by Order inCouncil #168 to act as a common carrier providingpassenger service transportation, parcel express and freightservices. STC’s powers, duties and conditions wereaffirmed in 1993 by Order in Council #5. STC iscontinued under The Crown Corporations Act, 1993. STCis a corporation domiciled in Canada. The address of theCompany’s registered office and principal place of businessis 1717 Saskatchewan Drive, Regina, SK, S4P 2E2.

The financial results of STC are included in theconsolidated financial statements of Crown InvestmentsCorporation of Saskatchewan [CIC].

STC is a Provincial Crown Corporation and therefore notsubject to Federal or Provincial income taxes in Canada.

STC’s passenger rates are subject to rate regulation by theMotor Carrier Committee of the Saskatchewan HighwayTraffic Board, which is a related party. The committeereviews applications for operating authority certificatesunder the Traffic Safety Act, and fixes rates and conditionsof carriage for holders of these certificates or licenses ofauthority. STC holds operating authority on the routes itoperates, but must seek approval for passenger ratechanges from the Motor Carrier Committee.

2. OPERATIONS AND FINANCINGAs a matter of public policy, STC will continue to providebus passenger and express service to the communities ofSaskatchewan. The Company will ensure that itscommitment to servicing the Province is kept uppermostin all of its planning. As a result of the public policyrationale for the operation of certain non-commercialroutes, STC continues to be dependent upon CIC for itsfunding.

By way of Orders in Council #16/2011 STC wasauthorized to obtain grant funding up to $10.9 million(2010 - $9.9 million, Order in Council #4/2010) for

operating and capital requirements in 2011. During theyear, STC requested and received $10.7 million of the$10.9 million authorized (2010 – $9.3 million of the$9.9 million authorized).

3. BASIS OF PREPARATIONa. Statement of compliance

The year-end financial statements have been preparedin accordance with International Financial ReportingStandards (IFRS), as issued by the InternationalAccounting Standards Board. As these financialstatements represent the Company’s initialpresentation of its earnings, financial position andcash flows under IFRS, they were prepared inaccordance with IFRS 1, First-time Adoption of IFRS.The policies set out have been consistently applied toall the periods presented.

The Company’s financial statements were previouslyprepared in accordance with Canadian GenerallyAccepted Accounting Principles (GAAP). CanadianGAAP differs in some areas from IFRS. In preparingthe financial statements, management has amendedcertain accounting and valuation methods previouslyapplied in the Canadian GAAP financial statements tocomply with IFRS. The comparative figures for 2010have been restated to reflect these adjustments.Certain information that is considered material to theunderstanding of the Company’s financial statementsalong with reconciliations and descriptions of theeffect of the transition from Canadian GAAP to IFRSon equity, earnings, and comprehensive income areincluded in Note 15.

b. Basis of measurementThe financial statements have been prepared on thehistorical cost basis.

c. Functional and presentation currencyThese financial statements are presented in CanadianDollars, which is the Company’s functional currency.


d. Use of estimates and judgmentsThe preparation of financial statements in conformitywith IFRS requires management to make estimatesand assumptions that affect the application ofaccounting policies and reported amounts of assets,liabilities, income and expenses. Actual results maydiffer from these estimates.

Estimates and underlying assumptions are reviewedon an on-going basis. Revisions to accountingestimates are recognized in the period in which theestimates are revised and in any future periodsaffected.

Accounts receivable are stated after evaluation as totheir collectability and an appropriate allowance fordoubtful accounts is provided where considerednecessary. Provisions are made for slow moving andobsolete inventory. Depreciation is based on theestimated useful lives of property and equipment.Tangible assets are reviewed for impairment annuallyusing estimates of recoverable amounts to determineif there is an impairment loss. The accrual forcompensated absences is based on historical usage.

4. SIGNIFICANT ACCOUNTING POLICIESa. Cash

Cash is measured at fair value which approximatescost.

b. InventoriesInventories of vehicle parts and supplies are stated atthe lower of cost and net realizable value and arecosted using the first-in, first-out (FIFO) method.

c. Property and equipmentProperty and equipment are recorded at cost lessaccumulated depreciation and any provisions forimpairment. Cost includes expenditure that is directlyattributable to the acquisition of the asset. The costof self-constructed assets includes materials,services, direct labour and directly attributableoverheads.

The costs of maintenance, repairs, renewals orreplacements which do not extend productive life arecharged to operations as incurred. The costs ofreplacements and improvements which extendproductive life are capitalized. The cost of replacingpart of an item of property and equipment isrecognized in the carrying amount of the item if it isprobable that the future economic benefits embodiedwithin the part will flow to the Company and its costcan be measured reliably. The carrying amount of thereplaced part is derecognized. The costs of the day-to-day servicing of property and equipment arerecognized in net profit (loss) and comprehensiveincome as incurred.

When property and equipment are disposed of orretired, the related costs and accumulateddepreciation are eliminated from the accounts. Anyresulting gains or losses are reflected in net earningsfor the period.

d. Operating grant revenueOperating grants from CIC are recognized as revenuewhen received.

e. Capital grant revenueCapital grants related to depreciable property aredeferred as received and are recognized as revenueover the life of the asset. The Company recognizes aportion of the capital grant as revenue each yearequivalent to the amount of depreciation recognizedon the assets acquired with the grant funds.

Capital grants related to the acquisition of land andrelated costs are recognized as a direct increase inretained earnings.

f. Depreciation of property and equipmentDepreciation is recorded on buildings, vehicles, andequipment, on the straight-line basis over theestimated productive life of each asset. Depreciationcommences when the property and equipment isready for its intended use. The estimated useful life

Notes to Financial Statements (continued)


of property and equipment is based on manufacturer’sguidance, past experience and future expectationsregarding the potential for technical obsolescence.The estimated useful lives are reviewed annually andany changes are applied prospectively.

The estimated useful lives of the major classes ofproperty and equipment are as follows:

Buildings 10 - 50 yearsVehicles 5 - 15 yearsOther equipment 3 - 10 years

g. Impairment of accounts receivable A provision for impairment is made and animpairment loss is recognized in net profit (loss) andcomprehensive income when there is objectiveevidence that the Company will not be able to collectall of the amounts due under the original terms of theaccounts receivable. The carrying amount of thereceivable is reduced through use of an allowanceaccount. Impaired debts are written off against theallowance account when they are assessed asuncollectible.

h. Impairment of non-financial assetsAt each reporting date, the Company reviews thecarrying amount of its non-financial assets todetermine whether there is any indication that thoseassets have suffered an impairment loss. If any suchindication exists, the recoverable amount of the assetis estimated in order to determine the extent, if any,of the impairment loss.

The recoverable amount is the higher of fair value lesscosts to sell and value in use. In assessing value inuse, the estimated future cash flows are discounted totheir present value using a discount rate that reflectscurrent market assessments of the time value ofmoney and the risks specific to the asset for whichthe estimates of future cash flows have not beenadjusted.

If the recoverable amount of an asset is estimated tobe less than its carrying amount, the carrying amountof the asset is reduced to its recoverable amount. Animpairment loss is recognized immediately in netprofit (loss) and comprehensive income.

i. Revenue recognitionPassenger and express service revenue is generallyrecognized upon the completion of service. Interlinepassenger and express services are treated as beingcomplete when the passenger or parcel is turned overto the connecting carrier.

Other revenues, including charter, space leasing, busadvertising, vending, and maintenance, arerecognized when earned.

j. Employee benefitsThe Company participates in two pension plans. Oneis a defined benefit plan established pursuant to thePublic Employees Benefits Agency. The other is theCapital Pension Plan which is a defined contributionplan sponsored by CIC. STC’s contributions to thedefined benefit plan and the defined contributionplan are expensed during the period. All eligibleemployees hired after September 1, 1980 areparticipants in the defined contribution plan.

The Company’s financial obligations to each plan islimited to making regular payments to match theamounts contributed by the employees for currentservices.

k. Financial instrumentsThe Company classifies its financial instruments intoone of the following categories: financial instrumentsat fair value through profit or loss; held-to-maturity;loans and receivables; and other liabilities.All financial instruments are measured at fair valueon initial recognition and recorded on the statementof financial position. Transaction costs are includedin the initial carrying amount of financial instruments



except for financial assets classified as fair valuethrough profit and loss, in which case the transactioncosts are expensed as incurred. Measurement insubsequent periods depends on the classification ofthe financial instrument.

Financial instruments classified as fair value throughprofit or loss are subsequently measured at fair value,with changes in fair value recognized in the statementof comprehensive income. Financial instrumentsclassified as loans and receivables and otherliabilities are subsequently measured at fair value lessany allowances and impairments.

l. Compensated absencesThe Company recognizes an accrual to the extent thatcompensated absences for individuals in the comingyear are expected to be greater than the sick leaveentitlements earned in the coming year.

m. New standards and interpretations not yet adoptedA number of new standards, and amendments tostandards and interpretations, are not yet effective forthe period ended December 31, 2011, and have notbeen applied in preparing these financial statements.In particular, the following new and amendedstandards which become effective for annual periodsbeginning on or after January 1, 2013:

IFRS 9, Financial InstrumentsIFRS 10, Consolidated Financial StatementsIFRS 11, Joint ArrangementsIFRS 12, Disclosure of Interests in Other EntitiesIFRS 13, Fair Value MeasurementIAS 1, Presentation of financial statementsIAS 12, Income TaxesIAS 19, Employee BenefitsIAS 27, Separate Financial StatementsIAS 28, Investments in Associates and Joint Ventures

The extent of the impact on adoption of thesestandards is not known at this time.

Classification Level Carrying amount Fair value Carrying amount Fair value

Cash FV 1 $ 2,606 $ 2,606 $ 1,119 $ 1,119Accounts receivable L&R N/A 1,422 1,422 1,454 1,454Trade and other payables OL N/A 3,333 3,333 2,977 2,977

Classification details are: FV – fair value through profit or loss, L&R – loans and receivables, OL – other financial liabilities



5. FINANCIAL RISK MANAGEMENTFair valueThe Company, as part of its operations, carries a number of financial instruments which includes cash, accounts receivable,and trade and other payables. The carrying amount of STC’s financial instruments approximates their fair value due to theshort-term maturities of these items.

The following summarizes the classification, carrying amounts and fair values of the Company’s financial instruments:

2011 2010


Fair value hierarchyFair value measurements are categorized into levels withina fair value hierarchy based on the nature of inputs usedin the valuation.

Level 1 – Quoted prices are readily available from anactive market.Level 2 – Inputs, other than quoted prices included inlevel 1, that are observable either directly or indirectly.Level 3 – Inputs are not based on observable market date.

The Company’s financial instruments (other than Cash)have not been classified in the fair value hierarchy giventhat carrying value approximates fair value due to theirimmediate or short-term maturity.

Credit riskCredit risk is the risk that one party to a transaction willfail to discharge an obligation and cause the other party toincur a financial loss. The Company extends credit to itscustomers in the normal course of business and is exposedto credit risk in the event of non-performance bycustomers, but does not anticipate such non-performance.The carrying amounts for accounts receivable are net ofapplicable allowances for doubtful accounts, which areestimated based on past experience, specific risksidentified with the customer and other relevantinformation. STC monitors the credit risk and credit ratingof customers on a regular basis. Cash is held with a majorchartered Canadian bank and management believes therisk of loss to be minimal.

The maximum exposure to credit risk is $4.03 million(2010 - $2.57 million) equal to the carrying value of theCompany’s financial assets (cash - $2.61 million (2010 -$1.12 million) and accounts receivable - $1.42 million(2010 - $1.45 million)).

The following table sets out details of the age ofreceivables and allowance for doubtful accounts:

6. CAPITAL MANAGEMENTSTC’s objective when managing its capital structure is toensure adequate funding exists to support the operationsand growth strategies for the Company.

STC obtains its funding from CIC by way of operating andcapital grants authorized by Orders in Council.Throughout the year, operating and capital grant draws aremade as necessary based on cash flow forecasts. STC alsohas an available line of credit of $500 thousand at theCIBC that it can draw upon.

STC’s capital structure consists of equity, primarily in theform of retained earnings. STC does not have any debt.

STC’s capital structure is as follows:


Contributed surplus $ 465 $ 465Retained earnings 7,566 7,865

$ 8,031 $ 8,330



Gross accounts receivable:Current $ 836 $ 1,009Up to three months past due date 522 532Greater than three months past due date 224 78

1,582 1,619Allowance for doubtful accounts,

opening balance (165) (170)Accounts written off 5 5Allowance for doubtful accounts,

ending balance (160) (165)Net accounts receivable $1,422 $ 1,454


8. PROPERTY AND EQUIPMENT(Thousands of Dollars)

Land Buildings Vehicles Other equipment Total Cost or deemed costBalance at January 1, 2010 $ 4,654 $ 33,028 $ 15,613 $ 7,037 $ 60,332Additions - 595 906 593 2,094Disposals - - (1,007) (138) (1,145)Balance at December 31, 2010 4,654 33,623 15,512 7,492 61,281

Balance at January 1, 2011 4,654 33,623 15,512 7,492 61,281Additions - 50 57 769 876Disposals - - (115) (467) (582)Balance at December 31, 2011 $ 4,654 $ 33,673 $ 15,454 $ 7,794 $ 61,575

DepreciationBalance at January 1, 2010 $ - $ 7,969 $ 8,822 $ 4,928 $ 21,719Depreciation for the year - 996 1,082 768 2,846Disposals - - (715) (133) (848)Balance at December 31, 2010 - 8,965 9,189 5,563 23,717

Balance at January 1, 2011 - 8,965 9,189 5,563 23,717Depreciation for the year - 949 1,013 729 2,691Disposals - - (105) (463) (568)Balance at December 31, 2011 $ - $ 9,914 $ 10,097 $ 5,829 $ 25,840

Carrying AmountsAt January 1, 2010 $ 4,654 $ 25,059 $ 6,791 $ 2,109 $ 38,613At December 31, 2010 4,654 24,658 6,323 1,929 37,564

At January 1, 2011 4,654 24,658 6,323 1,929 37,564At December 31, 2011 $ 4,654 $ 23,759 $ 5,357 $ 1,965 $ 35,735

The Company monitors and assesses its financialperformance against its plans in order to ensure that it iscontinuing its commitment to serve the province byproviding bus passenger and express service to thecommunities of Saskatchewan. STC achieves this byadhering to its balanced scorecard objectives, measures,

and targets that have been approved by the STC Board ofDirectors and CIC.

7. INVENTORIESDuring the year, $324 thousand (2010 - $338 thousand)of vehicle parts and supplies were consumed.



9. CAPITAL GRANTOrder in Council #16/2011 authorized STC to obtain grantfunding up to $2.0 million for capital requirements in2011. During the year, STC obtained $2.0 million (2010- $0.9 million, Order in Council #4/2010) of capitalfunding from CIC.

Deferred capital grant consists of the following:

10. OPERATING GRANTOrder in Council #16/2011 authorized STC to obtain grantfunding up to $8.9 million for operating requirements in2011. During the year, STC obtained $8.7 million (2010- $8.4 million) from CIC.

11. PENSION CONTRIBUTIONSThe Company participates in two pension plans. STC’scontributions to the Public Service Superannuation Planwhich were expensed during the year were $4 thousand(2010 - $8 thousand). STC’s contributions to the CapitalPension Plan which were expensed in the year were $774thousand (2010 - $765 thousand).

12. NET CHANGE IN NON-CASH WORKING CAPITAL

13. RELATED PARTY TRANSACTIONSIncluded in these financial statements are transactionswith various Saskatchewan Crown corporations, ministries,agencies, boards and commissions related to the Companyby virtue of common control by the Government ofSaskatchewan and non-Crown corporations and enterprisessubject to joint control and significant influence by theGovernment of Saskatchewan (collectively referred to as“related parties”). STC has elected to take a partialexemption under IAS 24 – Related Party Disclosureswhich allows government related entities to limit theextent of disclosures about related party transactions withgovernment or other government related entities.

Routine operating transactions with related parties aresettled at prevailing market prices under normal tradeterms.

On October 15, 2008, STC sold its former Regina headoffice building and land to SaskPower, a SaskatchewanCrown Corporation. The sale was recorded as a relatedparty transaction and as such, the excess of considerationreceived over the net book value of the property wascredited to contributed surplus ($465 thousand).


(Increase) Decrease in:Accounts receivable $ 32 $ (52)Inventories 1 16Prepaid expenses (16) 42

17 6

Increase (Decrease) in:Trade and other payables 356 297

$ 373 $ 303



Deferred capital grant, beginning of year $ 29,673 $ 31,239Capital grant received 2,000 900Capital grant revenue recognized (2,416) (2,466)

$ 29,257 $ 29,673


In addition, the Company pays Saskatchewan ProvincialSales Tax to the Saskatchewan Ministry of Finance on allits taxable purchases. Taxes paid are recorded as part ofthe cost of these purchases.

Key management personnel compensationKey management personnel consist of the Company’sdirectors and executive officers. Compensation to keymanagement personnel consisted of short-term employeebenefits (director remuneration, executive salaries andnon-cash benefits) and post-employment benefits(Company contributions to defined contribution pensionplan for executive).

Key management personnel compensation comprised:

14. COMMITMENTSThe following significant purchase commitments exist atDecember 31, 2011:

a. $143 thousand to complete the installation of thebus wash at the Saskatoon Maintenance facility. Theinstallation is expected to be completed in March2012.

b. $208 thousand to complete the point of sale upgradeproject. The project is expected to be completed inthe fourth quarter of 2012.

c. $741 thousand for the purchase of 2 - 30 passengercoaches. The coaches were ordered in 2011 withdelivery expected in April 2012.

15. TRANSITION TO IFRSAs stated in Note 3(a), these financial statements areprepared in accordance with IFRS. The accountingpolicies set out in Note 4 have been applied in preparingthe financial statements for the year ended December 31,2011 (including comparative figures for December 31,2010) and in the preparation of an opening IFRSstatement of financial position at January 1, 2010 (theCompany’s date of transition).

In preparing its opening IFRS statement of financialposition, the Company has adjusted amounts reportedpreviously in financial statements prepared in accordancewith Canadian GAAP. The following reconciliationsprovide an explanation of the transition adjustments fromprevious Canadian GAAP to IFRS.

Explanations of IFRS transition adjustments in thefollowing reconciliations are:

a. Componentization of assets under IAS 16 - Property,Plant & Equipment - The differences are a result ofthe retrospective adjustment for the timing ofdepreciation and therefore the timing of capital grantrevenue recognition. Any future differences are also aresult of timing differences of depreciation and grantrecognition for a given period as compared to thetiming under Canadian GAAP. This is due to thechange of useful life for certain components of assets.

b. Accrual for compensated absences - Compensatedabsences were not recognized as a liability underprevious Canadian GAAP. IAS 19 – Employeebenefits requires the Company to recognize anaccrual to the extent that compensated absences forindividuals in the coming year are expected to begreater than the sick leave entitlements earned in thecoming year.


Short-term employee benefits $ 985 $ 929Post-employment benefits 51 49

$ 1,036 $ 978




Reconciliation of Statement of Financial Position as of January 1, 2010 (Thousands of Dollars)

ASSETS ASSETSCurrent CurrentCash $ 1,324 $ - $ 1,324 Cash Accounts receivable 1,402 - 1,402 Accounts receivableInventories 393 - 393 InventoriesPrepaid expenses 508 - 508 Prepaid expensesTotal current assets 3,627 - 3,627 Total current assets

Non-current Non-currentProperty, plant and equipment 40,193 (1,580) 38,613 Property and equipmentTotal assets 43,820 (1,580) 42,240 Total assets

LIABILITIES AND PROVINCE’S EQUITY LIABILITIES AND PROVINCE’S EQUITYLiabilities LiabilitiesCurrent CurrentAccounts payable and accrued liabilities 2,575 105 2,680 Trade and other payables

Non-current Non-currentDeferred capital grant 32,142 (903) 31,239 Deferred capital grantTotal Liabilities 34,717 (798) 33,919 Total Liabilities

Province of Saskatchewan’s Equity Province of Saskatchewan’s EquityContributed surplus 465 - 465 Contributed surplusRetained earnings 8,638 (782) 7,856 Retained earningsTotal Equity 9,103 (782) 8,321 Total EquityTotal Liabilities and Equity $ 43,820 $ (1,580) $ 42,240 Total Liabilities and Equity

Canadian GAAP balance

IFRSadjustments

Canadian GAAP accounts

IFRS balance

IFRS accounts


Reconciliation of Statement of Financial Position as of December 31, 2010 (Thousands of Dollars)

ASSETS ASSETSCurrent CurrentCash $ 1,119 $ - $ 1,119 Cash Accounts receivable 1,454 - 1,454 Accounts receivableInventories 377 - 377 InventoriesPrepaid expenses 466 - 466 Prepaid expensesTotal current assets 3,416 - 3,416 Total current assets

Non-current Non-currentProperty, plant and equipment 39,238 (1,674) 37,564 Property and equipmentTotal assets 42,654 (1,674) 40,980 Total assets

LIABILITIES AND PROVINCE’S EQUITY LIABILITIES AND PROVINCE’S EQUITYLiabilities LiabilitiesCurrent CurrentAccounts payable and accrued liabilities 2,872 105 2,977 Trade and other payables

Non-current Non-currentDeferred capital grant 30,590 (917) 29,673 Deferred capital grantTotal Liabilities 33,462 (812) 32,650 Total Liabilities

Province of Saskatchewan’s Equity Province of Saskatchewan’s EquityContributed surplus 465 - 465 Contributed surplusRetained earnings 8,727 (862) 7,865 Retained earningsTotal Equity 9,192 (862) 8,330 Total EquityTotal Liabilities and Equity $ 42,654 $ (1,674) $ 40,980 Total Liabilities and Equity



IFRSadjustments


IFRS balance

IFRS accounts


Reconciliation of Statement of Comprehensive Income for the year ended December 31, 2010 (Thousands of Dollars)

Revenue RevenueExpress services $ 7,872 $ - $ 7,872 Express servicesPassenger services 7,363 - 7,363 Passenger servicesOther 1,032 - 1,032 Other Gain(loss) on disposal of property, (48) 29 (19) Gain(loss) on disposal of property and plant and equipment equipment

Total Revenue 16,219 29 16,248 Total Revenue

Expenses ExpensesOperating 20,805 - 9,958 Operating costs other than those

listed belowAdministration 3,454 - 14,301 Salaries, wages and short –term

employee benefitsAmortization 2,723 123 2,846 DepreciationLoss before the following (10,763) (94) (10,857) Loss before the following

Operating grant 8,400 - 8,400 Operating grantCapital grant 2,452 14 2,466 Capital grantNet Earnings $ 89 $ (80) $ 9 Net Profit and Comprehensive Income


IFRSadjustments


IFRS balance

IFRS accounts



AUTHORITY

Established in 1946, the Saskatchewan TransportationCompany (STC; the Corporation) is a Crown Corporation ofthe province of Saskatchewan. STC is subject to The CrownCorporations Act, 1993, which provides the CrownInvestments Corporation (CIC) of Saskatchewan, theholding company for Saskatchewan’s Crown Corporations,the authority to establish the direction of the Corporation.

BOARD OF DIRECTORS

Role of the BoardThe primary function of the STC Board of Directors (Board)is to represent the shareholder as stewards of theCorporation. The Board has a statutory authority andobligation to oversee the affairs and business of theCorporation. The Board oversees Executive Officers, whoare responsible for day-to-day operations, and through theChief Executive Officer (CEO), sets the standards oforganizational conduct and performance.The CEO leads the development and implementation ofstrategic initiatives, policies, operating and capital budgets,makes recommendations and implements Board-approvedinitiatives, liaises with the Minister acting on behalf of theProvince and shareholder, and manages the day-to-daybusiness. The Minister Responsible for STC and Cabinet aretasked to communicate broad objectives for theCorporation and empower the Board to oversee thebusiness of the Corporation.

The Board has its own Terms of Reference, along withresponsibilities laid out in accordance with industries’“best practices” for corporate governance, as developed bythe Canadian Securities Administrators.

Board CompositionThe STC Board consists of independent directors who areappointed for a set term by the Lieutenant Governor inCouncil. The Lieutenant Governor in Council alsodesignates the Chair and Vice Chair of the Board.

Board CompensationDirectors are paid an annual retainer and per diems: TheBoard Chair receives an annual retainer of $10,000 and a$600 meeting fee. Board members receive an annualretainer of $7,000 and a $500 meeting fee. CommitteeChairs receive a $550 Committee Chair meeting fee.

Corporate Governance

Corporate Governance


Jonathan AbrametzSaskatoon-based triallawyer (KMP Law North)practices no-fault and tortauto injury claims, claimsagainst drunk driverswho cause injuries, and

Criminal defense. Mr.Abrametz is involved in manycharitable and communityorganizations, and facilitateseducational sectionals for theSaskatchewan Bar Admission course.

Board Vice-ChairAudit and Finance Committee MemberCompensation Committee Member

Wayne LorchRegina-based owner/President of Performance Marine (recipientof numerous customer service awards) and P.W. Lorch &Associates Ltd., an investment company and developer of

Saskatchewan resort and commercial properties. 50 years ofbusiness experience in retail, manufacturing, Crown sector,

international trade and investment, former Assistant Deputy Ministerof Saskatchewan Economic Development and Trade, as well as a two-year postingas Director of Economic Development and Trade at the Office of Saskatchewan’sAgent General in London, England. Past President/multiple Paul Harris FellowRegina Rotary Club, Past Director Regina and Saskatchewan Chambers ofCommerce, founding committee member of the Western Canada Farm ProgressShow, founding Director of the Saskatchewan Trade and Export Partnership (STEP)and member of the Federal Minister’s advisory committee on judicial appointmentsfor Saskatchewan. Supporter and sponsor of numerous community causes andevents, including the annual Regina Dragon Boat Festival, hospital Mother-BabyCare Project, the Canadian Progress Club Regina Centre’s annual Charity Auctionand Plywood Cup. Featured in 2009 Saskatchewan publication Birth of a Boom:Lives & Legacies of Saskatchewan Entrepreneurs.

Board ChairAudit and Finance Committee MemberCompensation Committee Member

In 2011, the composition of the Board was as follows:


John BreakeyEstevan-based oil,land services and

farm entrepreneur, retired.Owner and manager of threeother family corporationsinvolved in oil and landoperations. Past experience as afinancial fieldman with FarmDebt Review Board. Regularparticipant in local charities andcommunity organizations.

Governance and CorporateResponsibility Committee ChairCompensation CommitteeMember

Amanda CrashleyBig River-based Insurance

broker, volunteer and motherof three. Insurance Broker for fourteenyears. Highly involved in community,active volunteer with minor sports andcultural boards and associations. Boardmember for Ladder Valley CommunityCentre Co-op, Big River and DistrictRecreation and Cultural Board and theliaison to the Minor Sports Board. Alsoinvolved in various communityfundraising projects each year.

Governance and CorporateResponsibility Committee Member

Mervin SchneiderPrince Albert-based

Chartered Accountant,retired partner with Deloitte &Touche. Over 30 years of experienceas a Chartered Accountant includingExecutive Committee, OfficeManaging Partner and Audit andAssurance Partner. Currently involvedin serving on a number of profit andnon-profit Boards, for example, RotaryClub of Prince Albert, and KinsmenCommunity Group Home Society.Carrying on a small businessconsulting practice. Completedtraining and received CharteredDirector (C.Dir.) designation fromMcMaster University.

Audit and Finance Committee ChairCompensation Committee Member


Bill MissalLang-areafarmer, retired.

Past experience as adriver educator (Prairie ViewSchool District) as well as trafficsafety representative (SGI) andtraffic safety co-ordinator anddirector (Saskatchewan SafetyCouncil). Assists withmanagement and operation of aRegina retirement home. Currentmember of the Highway TrafficBoard.

Audit and Finance Committee Member Governance and Corporate ResponsibilityCommittee Member

Corporate Governance (continued)

Mervin MassierSaskatoon-based

consultant.Banking/financial backgroundincludes senior positions withConcentra Financial CorporateBanking, Barclays Bank of Canada, andNorthland Bank. Current/pastmembership with the SaskatoonChamber of Commerce, SaskatchewanChamber of Commerce, PrairieImplement Manufacturer’sAssociation, the North SaskatoonBusiness Association and TreasuryManagement Association of Canada.

Governance and CorporateResponsibility Committee Member

Delmer WagnerMoose Jaw-based Directorof Education, retired.

Over 30 years of experience in theeducation field, including, Director ofEducation, Superintendent of StudentServices, Principal, Vice-Principal andteacher. Published author of numerouseducation related articles and studies.Highly involved in the communityincluding a member of the League ofEducation Administrators,Superintendents and Directors, Knightsof Columbus, etc.


BOARD COMMITTEES

To assist the Board in fulfilling its obligations and meetingits responsibilities, the Board has statutory authority toestablish any committees it considers necessary for theefficient conduct of the Corporation’s business affairs and toprescribe duties to any committee it appoints. Eachcommittee has its own Terms of Reference, outlining itsauthority and its areas of responsibility. Delegation ofresponsibility by the Board to a committee does not absolvethe full Board from responsibility for a committee’s work ordecisions. The Board Chair is ex-officio on all BoardCommittees and may attend any meeting as appropriate.

The following committees acted in an advisory capacity tothe Board of Directors in 2011.

Audit and FinanceChair: Mervin SchneiderCommittee Members: Jonathan Abrametz, Wayne Lorch, Bill Missal

The Audit and Finance Committee assists the Board infulfilling its obligations and responsibilities for:

• overseeing the overall financial management of STC toensure the integrity of internal financial controls andreporting processes;

• overseeing the provision of relevant and timely financialinformation to the Board;

• the appointment of the external auditor; and,ensuring appropriate follow-up of audit results.

Governance and Corporate ResponsibilityChair: John BreakeyCommittee Members: Delmer Wagner, Amanda Crashley,Mervin Massier

The Governance and Corporate Responsibility Committeeassists the Board in fulfilling its obligations andresponsibilities for:

• developing and recommending best corporategovernance practices and the annual strategic planningprocesses;

• overseeing human resource strategies, programs andpractices;

• keeping current with developments and emerging bestpractices in corporate governance;

• ensuring the Corporation is proactive in addressing safety,health, and environment issues, and is in compliancewith all statutory requirements;

• identifying and recommending competent, skilledcandidates for appointment to the Board;

• reviewing the Board’s Committee Terms of Reference andthe skills matrix required for Board complement;

• managing evaluations of the Board, Committees, Chairand Director performance; and,

• providing oversight to the Corporation’s code of conductand ethics.



CompensationChair: Wayne LorchCommittee Members: Jonathan Abrametz, MervinSchneider, John Breakey

The Compensation Committee assists the Board in fulfillingits obligations and responsibilities for:

• making recommendations on the recruitment of thePresident and CEO;

• making recommendations on the goals and objectives,conducting annual performance evaluations, andrecommending a compensation package for the President& CEO; and,

• making recommendations on Executive Compensation inaccordance with CIC’s Executive CompensationFramework.

CORPORATE GOVERNANCE PRACTICES

STC’s approach to corporate governance practices isconsistent with the guidelines set forth in the CanadianSecurities Administrators (CSA) National Policy 58-201Corporate Governance Guidelines and National Instrument58-101 Disclosure of Corporate Governance Practices. TheseCSA guidelines outline national governance requirementsfor publicly traded companies and address areas ofresponsibility for effective corporate governance. While theSaskatchewan Transportation Company is not a publiclytraded company, its practices are benchmarked againstthese current industry best practices.



NP 58-201, section 3.1The Board should have a majority of independentdirectors.

NI 58-101F1, sections 1(a) to (d)1(a) Disclose the identity of directors who areindependent.1(b) Disclose the identity of directors who are notindependent and the basis for that determination.1(c) Disclose whether the majority of directors areindependent.1(d) Disclose whether a director is a director or anyother issuer that is a reporting issuer.

All directors of the STC Board are independent members.

Wayne Lorch (Chair): INDEPENDENTPresident, Performance Marine

Jonathan Abrametz: INDEPENDENTLawyer, KMP Law North

John Breakey: INDEPENDENTPresident, Lakewood Holdings Corporation and A.L. BreakeyOil Holdings Ltd.

Mervin C. Massier: INDEPENDENTRetired, Banking Industry Professional

Bill Missal: INDEPENDENTRetired, Business Person

Mervin Schneider: INDEPENDENTRetired, Financial Industry Professional

Delmer Wagner: INDEPENDENTRetired, Director of Education

Amanda Crashley: INDEPENDENTInsurance Broker

Section 1(d) does not apply to STC. STC does not have sharecapital and is not an issuer.

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Corporate Governance Scorecard

CSA Corporate Governance Policy,NP 58-201, and Disclosure Instrument,NI 58-101F1 (Summary)

STC GovernancePractices - 2011

Consistentwith CSAGuidelines

COMPOSITION OF THE BOARD






NP 58-201, section 3.2The Chair of the Board should be an independentdirector who is the effective leader of the Board andwho ensures that the Board’s agenda will enable it tosuccessfully carry out its duties.

NI 58-101F1, sections 1(f)1(f) Disclose whether the Chair of the Board is anindependent director; disclose the identity of the Chair and describe the role of the Chair.

The Chair of the Board is an independent director whoprovides effective leadership in all Board activities. Throughmeeting agendas, the Chair ensures that all requiredinformation and decision items are brought forward in atimely and effective manner enabling the Board to successfullycarry out its mandate and responsibilities. The Chair alsoserves as liaison between the Board and the shareholder.

Wayne Lorch is the Chair of the Board and is an independentdirector. The Chair reports to the CIC Board of Directors and isresponsible to ensure that the shareholder receives accurate,relevant and timely information respecting Board actions andcritical corporate issues and initiatives. As the chiefspokesperson for the Board, the Chair communicates theBoard’s views, and reports back to the Board, respectingcommunications with the shareholder.

The Chair functions in a leadership capacity, and has thestatutory authority and obligation to preside over meetings ofthe Board, and to perform duties and exercise the powersassigned by the Board. The Chair’s primary responsibilities areto: • chair meetings of the Board, ensuring that meetings are

properly convened, business is conducted legally andaccurate minutes of proceedings are recorded;

• work with the CEO and Corporate Secretary to set Boardmeeting schedules and establish agendas;

• monitor meeting attendance and encourage fullparticipation of directors at meetings;

• maintain open channels of communication with directorsbetween meetings;

• champion the Corporate approach to governance; • provide leadership in Board organization, optimizing Board

and Committee structures and operations; • take a lead role in assessing and addressing any concerns

related to the performance of the Board, its Committees orindividual members;

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COMPOSITION OF THE BOARD (continued)






• assist directors to achieve full utilization of individualabilities, recommending orientation and trainingopportunities;

• work with Committee Chairs to establish effectivecommunications, information sharing mechanisms andestablish clear delineation of responsibilities;

• act as an ex-officio member of all Board Committees; • coach, support and assist the CEO and senior management; • monitor and influence the strategic agenda of the

Corporation, providing leadership and advice respectingstrategic planning processes, supporting material andoutcomes; and,

• work with the CEO to develop and maintain productiverelationships and represent the Corporation.

NP 58-201, section 3.3The independent directors should hold regularlyscheduled meetings at which non-independentdirectors and members of management are not inattendance.

NI 58-101F1, sections 1(e)1(e) Disclose where the independent directors holdregularly scheduled meetings at which members ofmanagement are not present; disclose the number ofsuch meetings held in previous 12 months; if suchmeetings are not held, disclose what the Board doesto facilitate open and candid discussion amongindependent directors.

As a standing agenda item, the Board holds an in-camerasession without management presence at each regularmeeting.

The Board held regularly scheduled meetings at whichmembers of management were not present. There were seven(7) regular Board meetings held in 2011, five (5) of whichincluded in-camera sessions, the two (2) conference callmeetings did not include in-camera sessions. The Boardfacilitates open and candid discussions by holding in-camerasessions during these regular meetings without managementpresence.

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MEETINGS OF INDEPENDENT DIRECTORS

COMPOSITION OF THE BOARD (continued)






NI 58-101F1, sections 1(g)1(g) Disclose the attendance record of each directorfor Board meetings held in the most recentlycompleted financial year.

NP 58-201, section 3.4The Board should adopt a written mandate in whichit explicitly acknowledges responsibility for thestewardship of the issuer, including responsibilityfor:

(a) to the extent feasible, satisfying itself as to theintegrity of the chief executive officer (the CEO) andother executive officers and that the CEO and otherexecutive officers create a culture of integritythroughout the organization;

(b) adopting a strategic planning process andapproving, on at least an annual basis, a strategicplan which takes into account, among other things,the opportunities and risks of the business;

The function of the Board is to act as stewards of theCorporation. The Board has a statutory authority andobligation to manage the affairs and business of theCorporation. While the fundamental objective of the Board isto act in the best interests of the Corporation, the Board has aresponsibility to ensure congruence between shareholderexpectations, corporate plans and management performance.

The Board of Directors has a written Terms of Reference, whichis reviewed annually. These terms outline its responsibilitiesand principal duties.

a. One of the Board’s principal duties is to appoint, monitorand evaluate the performance of the President & CEO,taking appropriate action as warranted. The Governance

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There were seven (7) Board meetings in the calendar year 2011.The following are thedirector’s attendance statistics:

Director Meetings Attended*Wayne Lorch (Chair) 7 of 7Jonathan Abrametz 7 of 7John Breakey 6 of 7Mervin C. Massier 7 of 7Bill Missal 7 of 7Mervin Schneider 5 of 7Delmer Wagner 7 of 7Amanda Crashley 7 of 7

* For the purpose of this report, members who attended meetings inpart were considered to be present.

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BOARD MANDATE

MEETINGS OF INDEPENDENT DIRECTORS (continued)






(c) the identification of the principal risks of theissuer’s business, and ensuring the implementationof appropriate systems to manage these risks;

(d) succession planning (including appointing,training and monitoring senior management);

(e) adopting a communication policy for the issuer;

(f) the issuer’s internal control and managementinformation systems; and,

(g) developing the issuer’s approach to corporategovernance, including developing a set of corporategovernance principles and guidelines that arespecifically applicable to the issuer.

The written mandate of the Board should also setout measures for receiving feedback fromstakeholders (e.g., the Board may wish to establish aprocess to permit stakeholders to directly contactthe independent directors), and expectations andresponsibilities of directors, including basic dutiesand responsibilities with respect to attendance atBoard meetings and advance review of meetingmaterials.

and Corporate Responsibility Committee has establishedreporting standards to promote a culture of ethicalbusiness conduct among other executive officers.

b. The Board participates in an annual strategic planningprocess with officers and senior management. Theoutcome of this process establishes the core objectives andstrategic direction of the Corporation for the upcomingyear. A complete strategic plan is approved annually andincludes the identification of business opportunities,threats, new initiatives, operating goals and performancemeasures.

c. A principal duty of the Board is to identify principal risksof the business in which the Corporation is engaged, toachieve a proper balance between risks incurred andpotential returns, and to oversee the implementation ofappropriate systems to manage the risks. The Boarddelegates this responsibility to the Audit and FinanceCommittee.

d. The Board has delegated the responsibility of successionplanning to the Governance and Corporate ResponsibilityCommittee to oversee. The Committee reviews the planon an annual basis and reports its findings to the Board.

e. The Board adopts policies and processes to enable effectivecommunication with the shareholder, stakeholders andthe public.

f. The Board monitors the integrity of the Corporation’sinternal control and management information systems.

g. The Board has delegated the Corporation’s approach tocorporate governance to the Governance and CorporateResponsibility Committee to oversee.

STC surveys internal and external stakeholders to obtainfeedback about Corporate activities. The Chair of the Boardparticipates in a forum established by CIC, which iscomprised of the chairs of all subsidiary Crown Boards andsenior CIC officials, where issues of mutual interest andconcern are shared.

BOARD MANDATE (continued)






NI 58-101F1, sections 2Disclose the text of the Board’s written mandate. �

The Board’s Terms of Reference outlines expectations andresponsibilities of directors and it also provides the Chair theright to recommend to CIC the removal or replacement of amember that has missed two consecutive regularly scheduledBoard meetings or has attended fewer than sixty percent of allmeetings held in any year.

STC is not an issuer.

The Board’s principal responsibilities are described in the NP58-201, section 3.4. The text of the Board’s Terms of Referencecan be obtained by contacting the Corporate Secretary to theBoard.

NP 58-201, section 3.5The Board should develop clear position descriptionsfor the Chair of the Board and the Chair of each BoardCommittee. In addition, the Board, together with theCEO, should develop a clear position description forthe CEO, which includes delineating management’sresponsibilities.

The Board should also develop or approve thecorporate goals and objectives that the CEO isresponsible for meeting.

The Crown Corporations Act, 1993 subsection 23 (5) and CIC“Chair of the Board Terms of Reference” outline the primaryduties of the Chair of the Board. There is a Terms of Referencefor the Board and each Committee of the Board and writtenposition descriptions are in place for the Chair, eachCommittee chair, and the CEO.

The Board’s Terms of Reference sets out matters that requireBoard approval and delegate other matters to management.

The Board annually approves a strategic business plan andperformance management plan, which includes the Corporateobjectives and goals (balanced scorecard targets) for theupcoming year. The CEO is ultimately responsible to theBoard for meeting these goals and objectives.

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BOARD MANDATE (continued)

POSITION DESCRIPTIONS



CSA Corporate Governance Policy, NP58-201, and Disclosure Instrument, NI58-101F1 (Summary)



NI 58-101F1, sections 3(a) and (b)3(a) Disclose whether the Board has developed writtenposition descriptions for the chair of the Board and theChair of each Board Committee and, if not, describehow the Board delineates the role and responsibilitiesof each such position.

3(b) Disclose whether the Board and CEO havedeveloped a written position description for the CEO.

In addition to the Terms of Reference, which have beendeveloped for the Board and Board Committees, a checklist ofannual deliverables guide the Board’s and Committees’planning and decision making, ensuring that all governancerequirements are met.

Through regular evaluations of performance, the Companycan satisfy itself that all governance requirements for theChair of the Board, Chair of Board Committees and CEO aremet. Specific written position descriptions are in place toensure governance standards are met in this area.

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NP 58-201, section 3.6The Board should ensure that all new directorsreceive a comprehensive orientation. All newdirectors should fully understand the role of theBoard and its Committees, as well as thecontribution individual directors are expected tomake (including, in particular, the commitment oftime and resources that the issuer expects from itsdirectors). All new directors should also understandthe nature and operation of the issuer’s business.

NP 58-201, section 3.7The Board should provide continuing educationopportunities for all directors, so that individualsmay maintain or enhance their skills and abilities asdirectors, as well as to ensure their knowledge andunderstanding of the issuer’s business remainscurrent.

Orientation sessions are held between management anddirectors, providing insights into the business and itsoperations. Written reference materials are provided tosupplement these orientation sessions. The Board also receivesregular operations and management updates at each of itsregular meetings. In the circumstance that there are new Boardmembers appointed, a Board orientation will be scheduled.

CIC’s Board Training Program covers all the CrownCorporations’ education programs. All STC Board membershave the opportunity to take part in various sessions of thistraining throughout the year. Currently, modules are availablefrom McMaster University’s DeGroote School of Business fordirector certification.

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ORIENTATION AND CONTINUING EDUCATION

POSITION DESCRIPTIONS (continued)


NP 58-201, section 3.8The Board should adopt a written code of businessconduct and ethics (a code). The code should beapplicable to directors, officers and employees of theissuer. The code should constitute written standardsthat are reasonably designed to promote integrity and to deter wrongdoing. In particular, it shouldaddress the following issues: (a) conflicts of interest, including transactions and

agreements in respect of which a director orexecutive officer has a material interest;

(b) protection and proper use of corporate assets and opportunities; (c) confidentiality of corporate information; (d) fair dealing with the issuer’s security holders,

customers, suppliers, competitors and employees; (e) compliance with laws, rules and regulations; and, (f) reporting of any illegal or unethical behaviour.

NP 58-201, section 3.9The Board should be responsible for monitoringcompliance with the code. Any waivers from the code that are granted for the benefit of the issuer’s directors or executive officers should be granted by the Board (or a Board Committee) only.

NI 58-101F1, sections 5(a)5(a) Disclose whether the Board has adopted a written code of ethical business conduct for thedirectors, officers and employees of the corporation;how to obtain a copy of the Code; how the Boardmonitors compliance with the Code and reference any material change report in the most recentfinancial year relating to any conduct of a director or officer that constitutes a departure from the code.

Directors and officers must comply with The CrownCorporations Act, 1993 Part VI, which explicitly outlines dutyof care, conflict of interest and indemnification.

The Board must also comply with CIC’s Directors’ Code ofConduct, which is applicable to all directors of its subsidiaryCrown Boards. A copy of the Director’s Code of Conduct can beobtained by contacting the Corporate Secretary to the Board.

Officers and employees of the Corporation must comply withSTC’s Code of Conduct. Management reports on thecompliance with the Corporations Code of Ethical Conduct tothe Governance and Corporate Responsibility Committee ateach of its regular meetings.

The Governance and Corporate Responsibility Committee hasthe duty and responsibility to administer the Director’s Codeof Conduct, reports on compliance with the code and providesadvice to the directors on conflict of interest.

A copy of CIC’s Code of Conduct can be obtained by contactingthe Corporate Secretary to the Board.

The Audit and Finance Committee assists the Board infulfilling its financial accountability by maintaining oversightof the Corporation’s budget and financial operations;reviewing internal controls; participating in the auditprocesses; monitoring capital assets; reviewing and

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CODE OF BUSINESS CONDUCT AND ETHICS






NI 58-101F1, sections 5(b)5(b) Describe steps that the Board takes to ensuredirectors exercise independent judgment inconsidering transactions and agreements where adirector or officer has a material interest.

recommending on capital activities; and ensuring systems arein place to identify and manage risk.

The Chair of the Audit and Finance Committee reports to theBoard any such issues addressed by the Committee, and alldirectors receive summaries of risk management reports.

The Governance and Corporate Responsibility Committeereviews, develops and maintains corporate governancepractices and oversees the Board’s nominating and governanceactivities. Duties and responsibilities include: overseeingprocesses for evaluating the performance of the Board,Committees, Chair, directors and CEO and ensuring Boardorientation and opportunity for professional development.The Chair of the Governance and Corporate ResponsibilityCommittee reports to the Board any such issues addressed bythe Committee.

No waivers from the Code were granted to any directors in2011. In 2011, the Governance and Corporate ResponsibilityCommittee received a report on officer and employeecompliance with the Code at each quarterly meeting.

Where a director has, or is perceived to have, a personalinterest in a transaction being considered by the Corporation,the director has a fiduciary responsibility to declare suchinterest at the meeting at which the matter is beingconsidered.

The CEO monitors agenda items to identify any issues where adirector or officer may have a material interest and such itemswould not be distributed to the director

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CODE OF BUSINESS CONDUCT AND ETHICS (continued)






NI 58-101F1, sections 5(c)5(c) Describe other steps the Board takes to encourageand promote a culture of ethical business conduct.

The Governance and Corporate Responsibility Committee hasbeen tasked with this undertaking to ensure that the Board isin full compliance with industry best practices in corporategovernance..

NP 58-201, section 3.10The Board should appoint a nominating Committeecomposed entirely of independent directors.

NI 58-101F1, sections 6(a) and (b)6(a) Describe the process by which the Board identifies new candidates for Board nomination.6(b) Disclose whether the Board has a nominatingCommittee composed entirely of independentdirectors and, if not, describe the steps the Board takes to encourage an objective nomination process.

The Governance and Corporate Responsibility Committeeserves as the nominating Committee and is comprised of allindependent Board members.

The Governance and Corporate Responsibility Committee (thenominating Committee) is comprised of all independent Boardmembers. They review skills and composition of currentdirectors annually and perform a needs and skills assessmentwhen the need for a new member arises.

The Committee identifies skill sets required on the Board andseeks input from directors as well as independent sources andprofessional associations for nominees. It then recommends tothe Board those nominees that have the required competenciesto fill any identified skill gap(s).

Potential candidates’ Curriculum Vitaes (CVs) are reviewed todetermine a fit with the Board’s needs. The Chair of theGovernance Committee produces a short list of candidates.The Committee makes recommendations to the Board and theBoard then makes recommendations to the shareholder. Theshareholder has the legislative authority to make Boardappointments and all appointments are by Order in Council.

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CODE OF BUSINESS CONDUCT AND ETHICS (continued)

NOMINATIONS OF DIRECTORS






NP 58-201, section 3.11The nominating Committee should have a writtencharter that clearly establishes the Committee’spurpose, responsibilities, member qualifications,member appointment and removal, structure andoperations (including any authority to delegate toindividual members and subCommittees).

NI 58-101F1, sections 6(c)6(c) If the Board has a nominating Committee,describe the responsibilities, powers and operationof the Committee.

NP 58-201, section 3.12Prior to nominating or appointing individuals asdirectors, the Board should adopt a process involvingthe following steps: (a) Consider what competencies and skills the

Board, as a whole, should possess. In doing so,the Board should recognize that the particularcompetencies and skills required for one issuermay not be the same as those required foranother.

(b) Assess what competencies and skills eachexisting director possesses. It is unlikely thatany one director will have all the competenciesand skills required by the Board. Instead, theBoard should be considered as a group, witheach individual making his or her owncontribution. Attention should also be paid tothe personality and other qualities of eachdirector, as these may ultimately determine theboardroom dynamic.

The Governance and Corporate Responsibility Committee’sTerms of Reference establishes the Committee’s role andresponsibility to act as advisors to the Board regardingpurpose and responsibilities that include the objectives toadvise the Board regarding nominees for positions on theBoard of Directors.

The Governance and Corporate Responsibility Committeeperforms the function of the nominating Committee and itsTerms of Reference describes the responsibilities, powersand operation of the Committee. The Committee isappointed by the Board and serves in an advisory capacity.A copy of the Committee’s Terms of Reference can beobtained by contacting the Corporate Secretary to the Board.

The Board’s nomination process meets these guidelines.

As stated in its Terms of Reference, the Board shall becomprised of not more than ten (10) members. Boardmembers are appointed by Order in Council.

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NOMINATIONS OF DIRECTORS (continued)






The Board should also consider the appropriate sizeof the Board, with a view to facilitating effectivedecision-making.

NP 58-201, section 3.13The nominating Committee should be responsiblefor identifying individuals qualified to become newBoard members and recommending to the Board thenew director nominees for the next annual meetingof shareholders.

NP 58-201, section 3.14In making its recommendations, the nominatingCommittee should consider: (a) the competencies and skills that the Board

considers to be necessary for the Board, as awhole, to possess;

(b) the competencies and skills that the Boardconsiders each existing director to possess; and,

(c) the competencies and skills each new nomineewill bring to the boardroom.

The nominating Committee should also considerwhether or not each new nominee can devotesufficient time and resources to his or her duties as aBoard member.

As outlined in its Terms of Reference, the Governance andCorporate Responsibility Committee has the responsibility toadvise the Board regarding the composition of the Board andputs forward, for consideration, qualified nominations to fillvacant positions, which are then forwarded to CIC forconsideration and decision.

The process followed by the Governance and CorporateResponsibility Committee complies with that set out in theseguidelines.

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NOMINATIONS OF DIRECTORS (continued)






NP 58-201, section 3.15The Board should appoint a CompensationCommittee composed entirely of independentdirectors.

NI 58-101F1, sections 7(a) and (b)7(a) Describe the process by which the Boarddetermines compensation for the directors andofficers of the Corporation.7(b) Disclose whether the Board has a CompensationCommittee composed entirely of independentdirectors and, if not, describe the steps the Boardtakes to ensure an objective process for determiningsuch compensation.

NP 58-201, section 3.16The Compensation Committee should have awritten charter that establishes the Committee’spurpose, responsibilities, member qualifications,member appointment and removal, structure andoperations (including any authority to delegate toindividual members or subcommittees), and themanner of reporting to the Board. In addition, theCompensation Committee should be givenauthority to engage and compensate any outsideadvisor that it determines to be necessary to permitit to carry out its duties.

NI 58-101F1, sections 7(c)7(c) If the Board has a Compensation Committee,describe the responsibilities, powers and operationof the Committee.

The Board appoints a Compensation Committee. Thecomposition of this Committee is the Board Chair, the ViceChair, the Chair of Governance and Corporate Responsibilityand the Chair of Audit and Finance.

Board Compensation is paid in accordance with The CrownCorporations Act, 1993, subsection 9 and CIC’s remunerationschedule. These documents outline the annualremuneration and rates of reimbursement for the expensesincurred by directors of subsidiary Crown Corporations. Acopy of CIC’s remuneration and expense guidelines fordirectors can be obtained by contacting CIC or the CorporateSecretary to the Board.

An Executive compensation framework has been establishedby CIC. The Board has the authority to approvecompensation and benefit packages within that framework.

The Compensation Committee is established by the Board ofDirectors and has a Terms of Reference that establishes theduties and responsibilities of this Committee.

If the Committee deems it necessary, it has the authority toengage outside professional advisors to properly dischargeits functions, duties and responsibilities.

The Committee shall be advisory to the Board and in suchcapacity shall:

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COMPENSATION






NP 58-201, section 3.17The Compensation Committee should beresponsible for: (a) reviewing and approving corporate goals andobjectives relevant to CEO compensation, evaluatingthe CEO’s performance in light of those corporategoals and objectives, and determining (or makingrecommendations to the Board with respect to) theCEO’s compensation level based on this evaluation; (b) making recommendations to the Board withrespect to non-CEO officer and directorcompensation, incentive-compensation plans andequity-based plans; and, (c) reviewing executive compensation disclosurebefore the issuer publicly discloses this information.

NI 58-101F1, sections 7(d)7(d) If a compensation consultant has been retained,at any time during the Corporation’s most recentlycompleted fiscal year, to assist in determiningcompensation for any of the Corporation’s directorsand officers, disclose the identity of the consultantand briefly summarize their mandate. If retained toperform any other work, state the fact and brieflydescribe the nature of the work.

Make recommendations on the recruitment of the Presidentand CEO;Make recommendations on the goals and objectives, conductannual performance evaluations, and recommend acompensation package for the President & CEO; and,Make recommendations on Executive Compensation inaccordance with CIC’s Executive Compensation Framework.

For (a) & (b): these responsibilities are addressed as describedabove in section 7 (c).

CEO, officer and employee compensation disclosure occurs inthe form of an annual payee list, which is recommended to theBoard by the Audit and Finance Committee. Upon Boardapproval, the payee list is submitted and publicly disclosedthrough tabling with the Crown and Central AgenciesCommittee of the legislature. Under The Crown EmploymentContracts Act, the CEO, officers and senior managers, whoreport directly to the CEO, are also required to file theiremployment contract details to the Clerk of the ExecutiveCouncil.

In 2011, the Corporation did not retain a compensationconsultant.

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COMPENSATION (continued)






NI 58-101F1, sections 8If the Board has standing Committees of the Board,other than audit, compensation and nominatingCommittees, identify the Committees and describetheir function.

Committees of the Board include the Governance andCorporate Responsibility Committee, the Audit and FinanceCommittee and the Compensation Committee. Theirfunctions are described in previous sections. The Board doesnot have any other Committees.

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NP 58-201, section 3.18The Board, its Committees and each individualdirector should be regularly assessed regardinghis, her or its effectiveness and contribution. Anassessment should consider (a) in the case of the Board or a Board Committee,its mandate or charter, and (b) in the case of an individual director, theapplicable position description(s), as well as thecompetencies and skills each individual directoris expected to bring to the Board.

NI 58-101F1, sections 9(a)9(a) Disclose whether the Board, its Committeesand individual directors are regularly assessedwith respect to their effectiveness andcontributions and, if yes, describe the processused.

The Governance and Corporate Responsibility Committee,with the assistance of the Corporate Secretary to the Board, isresponsible for conducting such evaluations and reportingresults to the Board.

All CIC subsidiary Crown Corporation Boards conductperformance evaluations on a two year cycle. Director peer,Committee Chair and Committee evaluations were conductedin 2009 and all CIC subsidiary Crown Boards completedperformance evaluations of the Board and the Board Chair in2010. Director peer, Committee Chair and Board Committeeevaluations were conducted in 2011.

The Board and its Committees review their Terms of Referenceannually. Directors’ skills are reviewed annually; individualdirectors are plotted on a skills matrix and are assessed as partof a regular peer review.

The evaluations are conducted using an instrument developedby CIC. Directors complete surveys, which allow them toprovide feedback in writing on the effectiveness of the Board,Committees, Chairs and individual directors.The Governance and Corporate Responsibility Committeeoutlines evaluation results, which are submitted to the Boardfor review and approval. The Committee tracksimplementation of any action items

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BOARD ASSESSMENTS

OTHER BOARD COMMITTEES

Corporate Directory


EXECUTIVE OFFICERS

SHAWN GRICEPresident and Chief Executive OfficerShawn Grice was appointed as STC’s President and ChiefExecutive Officer in August 2010, after acting in the rolesince February 2010. Before becoming CEO, Mr. Griceserved as Chief Financial Officer (CFO) since 1998. Previousto his joining the company, Mr. Grice was employed withCrown Investments Corporation, the SaskatchewanDepartment of Finance, and KPMG Peat Marwick Thorne.Mr. Grice graduated with a Bachelor of Commerce (GreatDistinction) from the University of Saskatchewan and alsoholds a Chartered Accountant (CA) designation. Mr. Griceis a Board member with the Canadian Bus Association. Heis also a Board member and Finance Chair with the ReginaDowntown Business Improvement District.

JASON SHERWINChief Financial OfficerJason Sherwin was appointed Chief Financial Officer inApril 2011, after acting in the role since February 2010. Mr.Sherwin rejoined the company in January 2009 as Directorof Finance, having worked with STC previously from 1999-2004 as Assistant Controller. Prior to 2009, Mr. Sherwinwas employed with Greystone Managed Investments Inc.as Manager, Real Estate Portfolio Administration and asController with PW Group. Mr. Sherwin also heldaccounting positions with Markusson New Holland andKPMG. He graduated with a Bachelor of Commerce(Distinction) from the University of Saskatchewan and alsoholds a Chartered Accountant (CA) designation.

PHIL BOHAYChief Operating OfficerPhil Bohay joined STC in June 2008 to head STC CustomerServices and Operations. Mr. Bohay was employed for 36years with SaskTel in various areas of the company,working his way up to senior management positions,culminating in General Manager, Customer Services-Business Sales. Mr. Bohay holds a Master of BusinessAdministration degree from the University of Regina, is agraduate of the Duke University Program for ManagerDevelopment and holds a certificate in AdvancedMarketing from the Banff School of Management. Mr.Bohay is a Board member with the Canadian BusAssociation. He served as a board member for JuniorAchievement, Southern Saskatchewan from 2008 to 2010.

BRAD DEWALDExecutive Director, Corporate Systems and TechnologyBrad Dewald was first employed at STC from May 2000 toOctober 2004, and returned in October 2006 as Director ofCorporate Systems and Technology. From November 2004to September 2006, Mr. Dewald led SaskEnergy’sInformation Technology team, and prior to joining STC in2000, he was the technical lead for 12 years at theSaskatchewan Liquor and Gaming Authority. He also spentfour years in the consulting industry where he was a keymember of a team that first automated Saskatchewan’sjustice system. Mr. Dewald graduated with a BusinessDiploma majoring in Data Processing.

DON ASHExecutive Director, Human Resources and PayrollDon Ash was first employed at STC from 1995 to 1998 asDirector Human Resources, Vice President CustomerServices and Acting President. He returned in January 2012as Executive Director, Human Resources and Payroll. Mr.Ash brings a wealth of executive, leadership andmanagement experience from his four years at CrownInvestments Corporation, seven years at SaskEnergy, sevenyears at SaskPower, and from his own consulting firm. Mr.Ash is a Certified Human Resource Professional (CHRP) anda member of the Saskatchewan Association of HumanResource Professionals. Mr. Ash is a graduate of theVocational Rehabilitation Research Institute,Rehabilitation Supervisors Program, Calgary Alberta; LifeSkills Coach from the University of Regina; and currently astudent with Royal Roads University, British Columbia inthe Graduate Certification in Executive Coaching.

DEANNA BERGBUSCHExecutive Director, Strategic Planning andCommunicationsDeanna Bergbusch joined STC in May 2011 to lead StrategicPlanning and Communications. Ms. Bergbusch spent 18years with SaskTel in positions of increasing responsibilityincluding ten years as a Director of various divisions:customer service, wholesale marketing and sales, corporateproject management office and human resources strategicplanning. Ms. Bergbusch moved to the Director, EnterprisePlanning Office at Information Service Corporation (ISC)in April 2008 to create their Enterprise ProjectManagement Office and Strategic Planning discipline. Ms.Bergbusch has a Bachelor of Commerce degree(Entrepreneurship and Marketing) from McGill Universityand a Master of Business Administration (MBA) from theUniversity of Saskatchewan. She holds a ProjectManagement Professional (PMP) designation and aStrategic Planner certification.


Salary ranges for STC’s Executive Team, as of December 31, 2011, are:• President and Chief Executive Officer: $138,861 to $173,576

• Other Executive members: $100,326 to $147,539

December 31, 2011

STC Operated Passenger &Parcel Express Routes

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STC ROUTE MAP

• Established in 1946• Operates 29 bus routes, travelling 3.2 million milesper year

• Serves 290 communities in Saskatchewan• Has 197 agents operating in Saskatchewan• Owns and operates passenger and parcel expressterminals in Regina, Saskatoon and Prince Albert

• Operates two service garages; one in Saskatoon andthe other in Regina

• Maintains its head office in Regina• Has a fleet of 43 coaches, 23 per cent of which arewheelchair accessible, varying in size from 18 seatsto 55 seats, as well as a freight truck and 29 freighttrailers

• Employs 231 people; approximately 84 per cent ofSTC’s workforce is unionized (194 out of 231 as ofDecember 31, 2011)

• The Amalgamated Transit Union Local 1374represents the in-scope employees

• $12.9 million of annual payroll (2010: $12.0million)

• $40.6 million of assets (2010: $41.0 million) • $16.7 million of revenues (2010: $16.2 million)• $28.1 million of operating expenses (2010: $27.1million)

• $0.9 million of capital expenditures (2010: $2.1million)*

* The remaining 2011 capital is primarily for fleetordered in 2011 which will be delivered in 2012

MissionTo provide value to Saskatchewan residents withconvenient, affordable, safe, clean, comfortable,courteous, environmentally friendly and reliablepassenger and freight transportation services.

Vision To be the best passenger and freight transportationCompany in Canada.

ValuesAll business activities are conducted in a manner that is:• Honest• Dependable• Innovative• Respectful • Socially and Environmentally Responsible

2011 CORPORATE PROFILE

Annual Report Design: Bradbury Branding & Design www.bradburydesign.com

RIDE IN COMFORT,RIDE SAFELY,

RIDE WITH STC.

Saskatchewan Transportation Company 2011 · 2017-08-28 · marketplace. Vital goods such as urgent...

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