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PIC Investment Group Inc. 2011 Annual Report History of PIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Presidents Message . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Caron Transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 ClearTech . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Panther Industries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Kipp Zonen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Hydor-Tech . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 G Mechanical . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Kreos Aviation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Adventure Destinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Round Table Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Minority Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Financial Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Charitable Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 contents 2011 Annual Report 1 HISTORY OF PIC In 1976 Prairie Industrial Chemicals Ltd. opened its doors. It was a start-up chemical distribution company with one supplier and four available products. The founders grew the business by being open for business twenty-four hours per day and seven days per week all year round. They understood their customers needs often before the customer identified the need on their own. Just four years later the company had annual sales in excess of 5 million and established branch offices and warehouses across the prairie provinces. By its fifteenth year combined sales surpassed 26 million dollars annually and the company had diversified into chemical packaging chemical manufacturing transportation importexport and property management. With a view to future growth through delegation and acquisition it underwent a major reorganisation. Separate companies were formed each with its own core business. Ownership remained with Prairie Industrial Chemicals but the name changed to more accurately reflect a broader corporate mandate. Today PIC Investment Group Inc is a diversified holding company that uses venture capital investment and provides hands-on management in order to grow. Through a set of investments including joint ventures wholly- owned partially-owned Operating Companies loans bridge financing and minority investments we provide service and support to all of the companies we invest in. We look for every opportunity to find synergy facilitate acquisitions and finance internal growth within existing companies. Analysis of new opportunities compares the return on investment against our best alternative for creating lift during the period of time we hold the investment. We seek to maximise lift by predicting our partners needs and help keep their business safe from the unexpected. 2 PIC Investment Group Inc. PRESIDENTS MESSAGE The journey through 2011 was one of the most stressful and challenging periods I have ever faced but in the end it was truly rewarding. We rode steadily down the strict path set out in the previous year. Instead of looking for new opportunities we focused our resources to help existing companies improve solidify their position grow their infrastructure plan their future and generally get better. We created Boards of Directors emphasised strategic planning completed legacy construction projects with our Operating Companies and prepared to take advantage of an improved general economy. We looked for signs in industries that we served that would show us the way to future opportunities. We researched and collaborated in order to refine our future plans. Each company clarified or perhaps verified its formula for success and applied that formula in order to excel. The direct service PIC Investment Group provides to many of the Operating Companies is characterised by administrative finance and accounting services that an Operating Company would otherwise acquire from a third- party provider. In addition we look out to a twenty-year horizon and try to plan ahead with the leadership of each company. By doing this we provide opportunities where a strategic fit might be or growth might exist. As a result the work our office produces hopefully goes unnoticed in the present but with the benefits realised in the future. Inside PIC we added human resources that would serve our Operating Companies and therefore help ensure their success. We pushed planning agendas in Operating Companies and we worked in businesses by helping wherever there was a gap. We added systems to enhance long-term efficiency and we shared mentorship resources between companies to reduce gaps due to inexperience. I spent a lot of time learning and understanding at a functional level what processes were going on within various Operating Companies. I learned Board of Director techniques that would be shared and applied within a governance process within our companies. I learned to communicate for the purpose of understanding the basic elements that drive a business. The result was that every one of our companies realised greater profitability. We paid down debt at an unprecedented rate and therefore we have positioned ourselves to take maximum advantage of the future and the Western Canadian economic boom. We have demonstrated the discipline of ensuring that our new investments serve to elevate the group. We have proven that concentration on hard work and execution pay off by positioning a company for growth. We are pointed in the right direction and all indications are that the road ahead is clear. Greg Yuel ...we have positioned ourselves to take maximum advantage of the future... 2011 Annual Report 3 4 PIC Investment Group Inc. helpwanted 2011 Annual Report 5 Caron Transportation Systems followed up its best financial results to date in 2010 with an even more impressive 2011. We surpassed all prior years financial results by a wide margin with our highest ever revenue totals and net profit margins. We started the year with an exceptionally strong month of October and the results continued ahead of forecast throughout the year. We continued to struggle with keeping our trucks manned with drivers yet managed to produce record revenue numbers while being up to 15 short of drivers during the summer months. We established some new driver hiring initiatives throughout the year focusing on brand awareness through billboard and radio advertising campaigns. Our driver levels have begun to improve towards the end of the year and we will continue to aggressively pursue the hiring of drivers into the future. Sales revenue for 2011 was up significantly from 2010. Caron Transportations Systems had a 25 revenue increase while Interload Services Ltd. had an increase of 34. Overall our combined revenues increased 26 for a total of more than 95 million. Most of our increase in revenue for Caron Transportation Systems can be attributed to organic growth with higher volumes with existing customers. Our new Saskatoon terminal has finally opened for business and is truly a first class facility. The extremely wet start to spring and summer put construction behind schedule and pushed our move-in date back months. We officially moved in mid-September and are looking forward to servicing our existing customers more efficiently as well as opening up the potential for new blocks of business. As our business continues to grow so does our need for more office space. We have begun the initial stages of planning for a head office expansion and hope to see physical construction begin early in the new year. We anticipate 2012 to continue being very busy for us and look forward to the challenge of maintaining our strong financial results. Bruno Muller Our new Saskatoon terminal has finally opened for business and is truly a first class facility. 6 PIC Investment Group Inc. 2011 Annual Report 7 Steady improvement combined with new successes best sums up 2011 at ClearTech improvement in developing core competencies and infrastructure plus successes in areas such as new products service offerings and recruitment. We understand that our success is not an entitlement we have to earn it every day. We spent the last year earning our success by focusing on what works and focusing on by adding value to our loyal client base. It is said that the world is changing that you can no longer corner a market. You can however find a corner of the market and serve it better than your competition. Our corner of the market is filled with vibrant dedicated customers who provide a high level of value to those they serve. One of our core initiatives is to find new products new services and new ways to make it easy for those customers to do business with us rather than find new customers for our products. Continuous improvement in every level of our organisation and in every transaction is also critical to the success of those who choose ClearTech as their supplier of choice. Sales truly is the heartbeat of ClearTechs ongoing success. As a sales organisation we believe that we can achieve everything we want to achieve if we are first helping our customers to achieve their goals. On that note I am pleased to share that our sales team chose 2010 to launch a new process system of competency based sales processes. This system has our sales team becoming more focused on core competencies follow through and continuous improvement benefiting both our customers and our own organisation. From a facilities perspective we also continue to improve. Capital projects in Edmonton have improved storage capacities automation systems and overall capabilities. This has positioned us to respond at a higher level to the needs of our customer base particularly in Alberta and neighboring provinces. Improvements to our core capabilities in sodium hypochlorite are slated for Richmond and Saskatoon in the 2012 fiscal year. Also in Saskatoon we are very excited to be relocating our head office within Saskatoon early in the new year. Our new location will provide a people friendly environment and provide room for growth into the foreseeable future. Many thanks to our sister companies Round Table Management and G Mechanical for their hard work in getting us into the new offices. The changes and improvements to our systems and facilities keep us confident for the future and we remain convinced of ClearTechs potential for growth. I am proud of the work our employees are doing to move ClearTech forward and thank each of them for their continued focus on our customers. Randy Bracewell Sales truly is the heartbeat of ClearTechs ongoing success. 8 PIC Investment Group Inc. Wow. This is the word that sums up 2011 for Panther Industries. Our company experienced another record breaking year exceeding last years financial by 32 This is due to our core products being the main course for the oilfield. Whats interesting and exciting about this is that we have not yet satisfied the hunger that is out there. Before addressing how we are going to feed this beast I want to acknowledge that a record year could not have been accomplished without the cooperation of our suppliers and sister companies. ClearTech allowed us to put an HCL tank at their 180th location which was instrumental in our success for supplying HCL. This was designed to be a winwin and wow did it ever. This gave Panther the option to ship via rail to help feed the appetite for HCL in Southern Alberta. Caron was another great asset. Caron invested in more trucks allowing us to ship more tonnes and help with lead times to our customers. This past year the two sister companies and ourselves worked on communication and have routine talks. This has changed our relationship from good to fantastic and this was a major contributor for our wow year. Since we have not yet satisfied this hunger Panther has made it a priority to look forward ten years. In doing so we have put our name on 9 acres of undeveloped land in Edmonton and are in the process of putting together a site plan with future growth in mind. To give you an idea of how exciting the times are right now our 10 year plan looks more like 5 Plans are in motion to build another HCL storage site with the availability of transloading. This is welcome news to our customers and supplier Erco Worldwide. It is projected that Panther will be providing over eighty thousand tonnes of HCL into the gas and oil market in the next several years. To add to our menu Panther is looking at a Saskatchewan opportunity that will help us get into the brine business. In doing so we will be able to service two suppliers creating a synergy greater than the one that already exists. We are excited about this venture and already have plans on taking this to a whole new level. Panther is in constant discussion regarding preparation at the same time we have our fingers on the pulse of our customers and suppliers. The positive momentum does not stop there. Adding to our wow season we have finally found the automation Panther has been looking for. It has taken eight years to find equipment that we were happy with but we found it. Equipment is already at the plant and is planned to be put in this upcoming spring. Once set up our automation will resolve our shortage of man power allowing us to package tonnes in 8 hours that normally would take 24. We are all very excited to get this equipment so we can revisit some opportunities that we once had to decline. As I said wow is the only way to describe 2011. Panther is looking forward to the next couple of years. The projection is for 20 growth in 2012 and 26 growth in 2013. Jack Schneider ...Panther will be providing over eighty thousand tonnes of HCL into the gas and oil market... 2011 Annual Report 9 The big question for 2011 was can we continue the growth we have seen in 2010 The answer is clear yes. The 2011 results in solar radiation sensor sales show the same as last year growth of more than 15. The business outlook for 2012 does not differ too much from 2011 although the world economy shows some slow down. At the end of 2010 Kipp Zonen contracted a consultant to guide the company through the process of creating a Strategic Plan Planning for Growth. The plan was adopted at the beginning of 2011 and the roll out is in full progress. During the year the company decided to discontinue the investment in Mierij Meteo Nederland BV allowing us to concentrate fully on the strategic markets of Kipp Zonen. Kipp Zonen acts in markets that maintain a high priority position on worldwide political agendas with items such as climate agriculture development hydrology and renewable energy. Better and accurate forecasting of weather helps us in better dealing with weather disasters saving both lives and expense. Better weather forecasting better understanding of water management and research in improving crop yield helps to satisfy the growing need for food. Improving efficiencies in solar energy harvesting brings down costs and creates independence from overreliance on fossil energy resources. Growing markets are China Mediterranean Countries USA and India. In order to meet requirements from Chinese authorities we have started successfully some limited specific manufacturing in China. Kipp Zonen has launched a new range of solar radiation measuring sensors with a smart interface allowing for cost effective interfacing with the control and management systems in solar power plants. The interface supplies compatibility with various industrial standards. In order to catch up with higher demand and need for shorter delivery times we improved capacity in bottle neck areas in the manufacturing process by investing in new climate test chambers and calibration facilities. Furthermore plans are developed to secure the supply of critical components such as optical glass for our sensors. The lookout for 2012 is not as clear as it has been in the previous years. Although we feel comfortable in our markets and about the outlook we will evaluate investments in growth of staff and equipment more carefully and proceed with caution. Ben Dieterink proceed with caution ...we improved capacity in bottle neck areas in the manufacturing process... 10 PIC Investment Group Inc. boil wateradvisory As I look back on the past year it is clear to me Hydor-Tech has delivered on the strategic plan we developed 5 years ago. We set out to prepare the company for long sustainable growth and to position ourselves to produce a healthier income statement which would allow us to continue to explore new products as well as new markets. Our priority has been to geographically position the company in a way that allows our Distributors the ability to maximise on their potential and to ensure our stakeholders are rewarded for the investment they have made in our company. The most challenging aspect of the year while at the same time the most satisfying was the completion of our multi-million dollar Edmonton Plant expansion. By installing some of the latest technology it will enable the company to manufacture our product safer and much faster. The completion earlier this year has announced Hydor-Tech as a significant Western Canadian Chemical Manufacturing company. The performance of our Distributors during 2011 was a testament to their knowledge and expertise in treating water and as a result of their abilities Hydor-Tech produced another record breaking year. Every member of our team was asked to raise the bar to ensure our customers received the quality of product they have come to expect while we were under construction and I am proud to say that our team performed admirably. Our 2011 performance saw Hydor-Tech grow by more than 25 over the previous year. As we closed each quarter we were able to report our strongest performances yet and as a result we reported record high sales revenues record high production volumes along with record high earnings. Heavier than normal snow fall in Alberta and the heavy rains in British Columbia in late 2010 through to the spring of 2011 had a tremendous positive impact on the amount of water that needed to be treated and resulted in a better than expected performance. Following our clearly defined strategic plan and not losing focus on what is important allowed Hydor-Tech to continue to service and support our Distributors better by providing the most cost effective products possible while continuing opportunities for growth. The success of Hydor-Tech in the recent past has without doubt come from the total dedication of our hard working employees and the exceptional ability of our Distributors. As our journey to improve Hydor- Tech continues it is my belief that our efforts will have a lasting and positive effect on many. Ian Lewis Every member of our team was asked to raise the bar to ensure our customers received the quality of product they have come to expect... 2011 Annual Report 11 2011 was a year of execution. We spent the first part of the fiscal year expediting the completion of challenging projects to create capacity. This allowed us to concentrate on adding quality clientele bidding and winning profitable projects and building on our efficiencies. It was about taking what we had learned in 2010 and implementing and executing on process and procedure. Our management team was rounded out with the addition of an in house controller that greatly improved our ability to access timely financial information. This dovetailed into the implementation of industry specific software Timberline. This project management program has given us the ability to track specific categories on each job providing real time quality information we can use to make effective management decisions. In 2011 we focused on running leaner and more efficiently with our labor force. We undertook a Talent Triage challenging ourselves to reduce our numbers to maintain the best and the brightest on our project teams. The efforts of our Foremen and remaining staff reflected in G Mechanical experiencing the most positive six months of revenue and profit we have encountered as a company. We are excited about our management infrastructure providing leadership and vision for the current business climate but also affording us the ability to support a substantial increase in sales revenue in the foreseeable future. The opportunity for growth is there. The construction market remains robust. We continue to see tremendous development in both the residential and commercial fields. From a revenue perspective multi-residential projects comprised the majority of our total in 2011. However we did see a dramatic increase in the number of commercial projects we were involved with and see the evolution towards more commercial prospects as a positive direction for G Mechanical. Now more than ever we are confident in G Mechanicals position in the marketplace our ability to build on the success that we have experienced in the last year and to taking advantage of the tremendous opportunities available in Saskatoon. TJ Smith work in progress This project management program has given us the ability to track specific categories on each job... 12 PIC Investment Group Inc. departures Transition and transformation were the themes for the year for Kreos and Central Aircraft Maintenance CAM for 2011. Kreos saw its charter activity rise steadily throughout the year peaking in June with a record month of activity and revenue. The summer months were slower as we experienced some turnover in the Leadership of our Operations Team. We now have two talented leaders who have filled the Operations Manager and Chief Pilot positions and they have been diligently working to ensure that Kreos is well positioned for the future. 2011 also saw the training of two new jet pilots and the promotion of a couple of pilots into more senior positions. Charter activity is ramping back up again and Kreos will be looking to add additional pilot positions for existing aircraft. Kreos also saw movement on airport real estate with new tenants filling the vacancies at our facilities and also two new hangar tenants essentially bringing us to full capacity on these properties. The FBO is now online and has received nothing but rave reviews for the facility and the service. An FBO manager was hired in the spring and she has done a fantastic job of creating and implementing all of the systems necessary to run an operation of this type. At CAM 2011 was a year of ups and downs. Revenues were relatively flat from 2010 despite a very large customer starting their own Aircraft Maintenance Organisation. CAM had to fill this void by adding new customers and revenue streams. CAM will look to build on this for 2012 and we should see an increase in revenues and profits over 2011. The strong team of Aircraft Maintenance Engineers AMEs remained stable in 2011 as did the Leadership positions for CAM. CAM did have to employ contract AMEs as well as two apprentices during the busy summer months to meet the needs of our customers and the projects they had taken on but are now back to regular staffing levels. A key addition to the Team in 2011 was the newly created inventory and stores position. This position is absolutely critical in managing existing inventory and creating and building better relationships with our suppliers. CAM has undertaken an ambitious Quality Management System initiative that will be a focal point for 2012 as this is the foundation for an overall system that Kreos will be looking to implement in late 2012 into 2013. As always team development and new business generation will be key success factors for CAM in 2012. With a commitment to our customersled by our frontline staff of pilots FBO staff AMEs and customer relationsand a focus on ensuring that extraordinary service is a daily event the foundations have been established for Kreos to have a breakout year in 2012. Craig Bell We now have two talented Leaders... 2011 Annual Report 13 The concept of developing a greater critical mass of facilities and destinations under the umbrella of ADI is proving its worth. As the destination tourism industry struggles to draw participants and often even to survive the guest numbers and annual revenue for ADI continues to grow at respectable rates. Guest numbers were up 20 for Selwyn Lake Lodge were stable for Twin Falls and grew by over 15 for Thompsons Otter Lake Resort. Utilisation of day-use lakes was up while utilisation of outpost camps lagged behind previous years. An analysis of the Thompsons Otter Lake Resort bookings reveals that guest numbers were limited by available space in peak periods and by the on-site housing of a large number 3050 of mine personnel. As a result guests are booking with deposits well into 2012 and 2013 to ensure they have accommodations for coming seasons. Overall revenue at Thompsons grew by nearly 80 as a result of the year round operation. Selwyn Lake Lodge while increasing guest numbers failed to improve the bottom line. The single greatest drain on revenue from Selwyn was increased costs attributed to higher fuel costs which impacted power generation boat operations and guest movement both in wheeled air and float operation to the lodge and return. With little reason to believe this cost will decline the decision has been taken to significantly increase trip rates for 2012. There is no indication to date that the new guest rate will significantly impact bookings into the future. Twin Falls while experiencing some of the best walleye fishing of the past decade continues to struggle to attract guests. A revised price schedule with more of an al a carte format has been developed for 2012 in an effort to make this destination attractive to a greater number of guests. Continuous improvement of facilities at Thompsons has not only opened the resort to year round utilisation but has justified increased usage rates. The three new duplex buildings came on stream this season and despite rates starting at 400 per night were wildly popular. The new five bedroom back bay facility was heavily utilised while the lakeshore twelve- unit facility was fully occupied throughout the year. Rebuilding of the games cabin greatly improved the attractiveness of that facility as well. Selwyn constructed new staff housing for employees this spring replacing several of the shack tents which have served as housing for the past eighteen years. Fish TV a popular fishing show filmed a half hour walleye fishing experience at Twin Falls and half hour Northern Pike and half hour Northern pike lake trout combo shows at Selwyn this past spring which have begun to air and will air multiple times on several different networks over the coming winter. With assistance from Tourism Saskatchewan this is seen as a sound marketing investment. With improved rate structure tighter cost control and increased guest numbers ADI is rapidly moving to become a contributing member of the PIC Group of Companies. Jim Yuel ...ADI is rapidly moving to become a contributing member of the PIC Group of Companies. 14 PIC Investment Group Inc. 2011 was the year of big projects for Round Table Management RTM. Work is now complete at the new Caron Transportation Systems CTS facility at the BizHub Industrial Park in Saskatoon and they were able to move in at the end of September. It is a great facility with a leading edge yard that will allow CTS to serve its ever growing business. Work continues on ClearTech Industries CTI new corporate head office in Saskatoon and CTI should be starting to move in before the end of 2011. This premier facility will allow CTI room for growth as well as a fresh modern work environment for new and existing employees. 2011 also saw the start of the biggest project to date for RTM with the design and development of a new office building in the historic warehouse district of Saskatoon. This 50000 square foot Class A building will be Leed Gold Certified and home to one or more top tier companies. Ground should be broken late 2011early 2012 with construction throughout 2012 and into 2013. 2011 saw a contraction in some of the holdings in Manitoba and this will continue in 2012. RTM is taking the opportunity to increase its holdings in areas where there is better growth and management potential. Lease transactions were strong in 2011 with existing and new tenants for vacant properties. Work continues on property development for future needs for sister companies in Alberta and BC. An important step was taken in the evolution of RTM for 20112012 and beyond and that was the recent creation of a Business Development Manager position. This is a full time position that will be responsible for existing and future tenants as well as finding and creating new opportunities for RTM. This is an exciting development for RTM as it will help us better meet the needs of new and existing customers. RTM will continue to evolve as a 3rd party owner developer of property and buildings but will always maintain its primary goal of supporting its sister companies at PIC Group in managing their current and future real estate needs. Kevin Roufosse Craig Bell for lease l e a s e d RTM is taking the opportunity to increase its holdings in areas where there is better growth and management potential. 2011 Annual Report 15 ClubMynx Fitness Inc. Dawn Wotherspoon 103 23rd Street East Saskatoon SK S7K 0J1 In 2008 PIC entered into an Angel Investment partnership and loan with a young entrepreneur and former PIC Group employee Dawn Wotherspoon. To date the results have been a testament to both the Angel Investment process and Dawns dedication to the business. The private group fitness facility located in downtown Saskatoon continues to thrive. The fitness facility has brought a unique element to the fitness industry in Saskatoon by offering fun non-intimidating exercise options designed to help participants stay motivated in their fitness programs. Defyrus Peter Blaney 150 William Street Kingston ON K7L 2C9 Participation with other minority investors under the management of Tancho Innovation Capital provided the opportunity for PIC to participate in technology commercialisation. Defyrus is a private life sciences biodefence company that collaborates with domestic and international military R D partners to develop a range of therapeutics as medical countermeasures for civilians and military personnel. minority investment portfolio The reason PIC Investment Group Inc. negotiates and participates in minority investments is to facilitate entrepreneurship and help existing businesses grow. PIC assesses risk and makes investment decisions based on the criteria listed on our website. Our intention is always to maximise our return either long-term or short-term by bringing some synergy or expertise to the business. Our assistance intends to enable the business to reward or redeem our investment. The basic underlying motive is a belief that a strong and vibrant economy is constructed by growing one business at a time. Our focus at the beginning of the year was conservative with a restraint on new initiatives. As the year progressed the human resources required to analyse and manage new investments started to show available capacity. We began to accept new minority investment opportunities. Lessons from the past resulted in additions that were more thoughtful and would require an affordable amount of management effort. 16 PIC Investment Group Inc. Doepker Industries Ltd. Dave Doepker PO Box 10 Anaheim SK S0K 0G0 Doepker is an internationally recognised bulk trailer manufacturer with particular strength in the agriculture market. Our involvement helped Doepker through the economic crisis and intends to position the business to take advantage of growth opportunities going forward. Our participation has been active in the aspects of asset management and corporate finance. Through the Board we contribute business strategy and planning. MPT Mustard Products Technologies Inc John Cross 101 111 Research Drive Saskatoon SK S7N 3R2 We are backing a Board and Management with a proven track record in agriculture. MPT manufactures innovative high value mustard biopesticide formulations and use strategic distributor partners for sales and marketing. Phenomenome Discoveries Inc. John Hyshka 204 407 Downey Road Saskatoon SK S7N 4L8 A world-leading human health research company focusing on the discovery and development of novel disease screening treatment and health monitoring products to address diseases such as cancer multiple sclerosis and Alzheimers. minority investment portfolio continued 2011 Annual Report 17 TinyEYE Technologies Corporation Greg Sutton 127 116 Research Drive Saskatoon SK S7N 3R3 TinyEYE provides speech-language pathology services to school districts health regions and private individuals over the internet using software web cameras and headsets. TinyEYE is now the worlds leading provider of online speech therapy telepractice by individual professionals working independently all over the world. Therapy has been provided to clients in Canada the U.S.A. China Jamaica New Zealand and Saudi Arabia. TitanStar Properties Inc. Rick Turner 590 1333 West Broadway Vancouver BC V6H 4C1 The sole business of the Company is the ownership of real property interests consistent with a well-established investment policy. The Company seeks to create a portfolio of real estate assets in the United States with value to be maximised through the acquisition of well-positioned undervalued or underperforming assets. 101178518 Saskatchewan Ltd Aaron Wignes PO Box 1901 Saskatoon SK S7K 3S5 We entered a partnership with a local general contractor whom we have known for approximately ten years. This investment exemplifies the mandate of PIC in its minority holdings. We are providing an opportunity to our partner to build a bigger project than what he could accomplish on his own. In exchange PIC gains a return on our investment as well as an opportunity to work with a partner in residential construction on a limited basis. 101178518101178518 18 PIC Investment Group Inc. financial report PIC is primarily an owner-operator of the companies that are showcased in the preceding pages. Other opportunities outside of the companies in which PIC enjoys direct majority ownership include investments as a minority shareholder and the participation in other financing options such as syndicated loans bridge financing capital asset lending and inventory financing. Investments of this type can take place at any time throughout the year and although small and risky they can be rewarding. A wide variety of terms are possible depending on the needs of the recipient party and the level of risk and resources PIC must commit. Participation in this manner serves to keep PIC Investment Group connected to the markets in which these opportunities are revealed and allows PIC Investment Group to function as an operating company If you have read the 2011 annual report in numerical order and if you realise that PIC is primarily the sum of its parts then you will not be surprised to read that once again PIC had the best financial year in its history. Our consolidated sales grew by over thirty-four million dollars which is our largest year-over-year increase. It would appear that the financial people within PIC were too busy counting beans to go and borrow any new ones. It is with a high level of confidence that I say this is the first year that the PIC Group of companies did not place any new long-term debt. 2011 again saw record growth in the size of our balance sheet. However with the strength of our operating results our consolidated financial leverage is lower than it has ever been. Based on our investment and growth plans for 2012 and beyond I am sure our bankers will be happy to know that we will be looking for money soon. 2011 marks another significant milestone in that the summation of shareholders equity and minority interest has topped one hundred million dollars for the first time. I can remember in the fall of 1994 when Jim Yuel set the audacious goal of reaching one-hundred million dollars in sales. We reached that plateau in 2003. 2005 marked one-hundred million dollars in assets and now 2011 marks one-hundred million in shareholders equity and minority interest. It has been a highlight of my career to have been a part of setting this success story into motion and to marvel at the places that this group of people has taken us. It is amazing that a lot of the team that assembled for the meetings in 1994 is still contributing to our success. Something that speaks to the culture of our companies is that in the past month I have spoken to or seen the three founders Doris Finlay and Rick of this great company that have retired. It is a paradox and a tribute to our leaders that we have such longevity yet are so well positioned for the future. Hugh MacGowan 2011 Annual Report 19 Year ending September 30 2011 thousands 2011 2010 Current assets 60834 50207 Total assets 187485 166083 Current liabilities 42083 35583 Total liabilities 69370 67964 Minority interest 32827 26093 Shareholders interest 85288 72026 Sales 245487 211325 Profit before taxes and pref dividends 28940 22394 Income taxes 6128 4922 Net profit 13925 11243 Retained earnings beginning 64090 53625 Dividends 778 778 Retained earnings ending 77236 64090 Shares outstanding 23991 23991 Book value per share 3232 2680 Earnings per share 560 448 Net Profit 20072011 millions Sales 20072011 millions Cashflow For Operations 20072011 millions 13.9 11.2 9.8 7.1 6.5 2011 2010 2009 2008 2007 245.5 211.3 190.5190.4 162.4 2011 2010 2009 2008 2007 24.6 20.7 15.9 18.1 14.8 2011 2010 2009 2008 2007 2 0 1 1 net profit 13.9 m i l l i o n Charitable Contributions Our 2011 contributions were well over the Canadian and Provincial averages in-part due to the significant need in our communities coupled with the shrinking access to funding most charities experienced. We continue to focus on five main categories disease research youth development municipalprovincial economic development nature and community quality of life. Our participation within each category will fluctuate each year depending on what is required and our ability to affect the outcome. The Capital campaign required for the Childrens Hospital Foundations investment in that facility took place in earnest during 2011 and will continue for the next number of years. The PIC Group will continue its support of this project. For some organisations the funds contributed by the PIC Group represent a small portion of a large fundraising effort. Other organisations can list or describe the impact that each dollar has. Both situations are valid and worthy of our support. In a world where the needs are so great we have difficulty in choosing who we could and should support. Many credible reputable organisations would benefit from our assistance therefore we must discern where our support for those in need is best allocated. Canada 20 PIC Investment Group Inc. 2011 Annual Report 21 OPERATING COMPANIES Caron Transportation Systems 301 Streambank Avenue Sherwood Park AB T8H 1N1 ClearTech Industries Inc. 2302 Hanselman Avenue Saskatoon SK S7L 5Z3 Panther Industries Inc. PO Box 698 Davidson SK S0G 1A0 Kipp Zonen B.V. Delftechpark 36 2628 XH Delft The Netherlands Hydor-Tech Limited 201 7164 120th Street Surrey BC V3W 3M8 G Mechanical Ltd. 229 Avenue I South Saskatoon SK S7M 1X8 Kreos Aviation Hangar 16 16 Wayne Hicks Lane Saskatoon SK S7L 6S2 Adventure Destinations International Hangar 11 J.G. Diefenbaker Airport Saskatoon SK S7L 5X4 Round Table Management Ltd. 255 Robin Crescent Saskatoon SK S7L 6M8 MINORITY INTERESTS ClubMynx Fitness Inc. 103 23rd Street East Saskatoon SK S7K 0J1 Defyrus Tancho Innovation Capital 150 William Street Kingston ON K7L 2C9 Doepker Industries Ltd. PO Box 10 Annaheim SK S0K 0G0 MPT Mustard Products Technologies Inc 101 111 Research Drive Saskatoon SK S7N 3R2 Phenomenome Discoveries Inc. 204 407 Downey Road Saskatoon SK S7N 4L8 TinyEYE Technologies Corporation 127 116 Research Drive Saskatoon SK S7N 3R3 TitanStar Properties Inc. 590 1333 West Broadway Vancouver BC V6H 4C1 101178518 Saskatchewan Ltd PO Box 1901 Saskatoon SK S7K 3S5 SOLICITOR Stevenson Hood Thornton Beaubier 500 123 2nd Avenue South Saskatoon SK S7K 7E6 AUDITOR Hergott Duval Stack Partners 1200 410 22nd Street East Saskatoon SK S7K 5T6 PRIMARY FINANCIAL SERVICES PROVIDER BMO 101 2nd Avenue Saskatoon SK S7K 3L4 255 Robin Crescent Saskatoon SK S7L 6M8 Tel 306 664-3955 PIC Investment Group Inc. Printed in Canada Designed by Dark Horse Communications