Growing Relationships to Maximize Success!®

2015 Annual Report

CEO MessageRick Vaughan, CEO

Thank You to all of our customers and members this past year for your valued business and continued support. Thank You to all of the IAS employees for their hard work and dedication this past year. Our employees’ dedication and their families’ flexibility and patience are very important. This commitment enables Innovative Ag Services to provide the levels of service we do for our customers and their farming operations.

Innovative Ag Services has completed another successful year. Total sales for fiscal 2015 were $637 mil (FY14 $826 mil). Earnings for fiscal 2015 were $18.8 mil (FY14 $24.5 mil) with IAS local earnings at $12.9 mil (FY14 $11.8 mil) and regional earnings plus investments at $5.9 mil (FY14 $12.7 mil). All division reports are highlighted in this publication.    

The grain division’s improved earnings were supported from additional bushels of production and marketing opportunities that are indicative of adequate supply levels in the corn and bean complex. Agronomy volumes, gross margins and service revenues turned in another excellent year, but were down some as we transition to more challenging crop production economics. Our feed business had an excellent year, producing additional volumes and local earnings growth. The energy division was down slightly due to lower LP volumes from drying corn and milder winter temperatures. Pine Lake’s earnings this year were closer to what we would consider normal after last year’s exceptional earnings year. The combination of these division results produced a very respectable year for Innovative Ag Services. It is our mission each year to strive to do better, producing excellent results for our current and future customer/members and for our employees and their families.

IAS has a very strong balance sheet today due to our financial performance over the last several years. Total capital improvements were $20.8 million in fiscal 2015. Highlights of the capital improvements are included in the division articles. This amount of capital improvements in facilities and equipment is larger

than a normal year budget. We are committed to accelerating improvements over the next few years to our fixed asset base. These improvements will ensure premium service for our customers/members and will also add efficiencies to our seasonal and day to day operations.

Patronage rates for fiscal 2015 are included in this publication. The cash portion of total dividends will be 50% again this year. Additionally, IAS will pass through the Domestic Production Activities Deduction (Section 199) equivalent of $.024/bushel on all member grain sold to IAS during our fiscal 2015 year.  In addition to these fiscal year end profits, IAS retuned over $3.8 million of past allocated profits to past and current members. Total cash returned to members surpassed $8.7 million and produced an effective cash yield of 98% on this year’s allocated patronage. Fiscal year 2015 patronage checks will be mailed near Thanksgiving. We are pleased and proud to be able to return these levels of profits to our owners and reinvest these levels of capital back into your business.

The Board of Directors, employees and I Thank You for your support this past year and for your continued patronage!

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Board President’s Messageby Randy Blake, President

Once again this year I would like to start out my article with a big thank you to all of the employees of Innovative Ag Services (IAS) and Pine Lake Ethanol. Thanks to all their hard work and dedication to our customers. IAS finished the year with strong earnings and continues to perform above industry standards. The board of directors realizes that it’s the employees who make the biggest difference in a company and we are proud to be associated with such an outstanding group of individuals. We applaud their efforts.

This past year I have once again had the honor of serving as president of your board of directors. This has allowed me to work with a knowledgeable and committed group of directors who share the common goal of helping IAS become the finest cooperative it can be. Thank you for allowing me to be your chairman, and thank you for your dedication to IAS.

At this time I would like to highlight some of the board’s activities this past year.

This past spring we held a 3 day director retreat. Also in attendance was the senior leadership team of IAS. Each one of the individuals did a comprehensive presentation of their respective divisions which included feed, grain, agronomy, operations, energy, human resources, accounting and IT. The insight that the board gained on how all of these divisions operated was invaluable along with the personal interaction we had with our senior staff. Also in attendance were guest speakers from CF Industries, United Suppliers, and Archer Daniels Midland.

This past summer the Board hosted at one of its meetings Brad Oelmann, CEO of United Suppliers. United Suppliers is a regional cooperative that is a major supplier of crop inputs to IAS. At the time of the meeting United Suppliers was in the process of putting together a merger with Land O’Lakes which would combine their seed, crop protection and crop nutrient businesses. The reasons given for the merger were increased capabilities in technology, product innovation, sustainability and talent base. This merger has since been approved and IAS looks forward to working with the new entity. Speaking of mergers this past year there has been a flurry of merger attempts by local cooperatives across the state of Iowa. Some have been successful and others have not. Although IAS will continue to look at merger opportunities when they come along the board knows that internal growth is always the most preferred and sustainable growth IAS can achieve.

During the past year board members have attended various annual meetings which included Co-Bank, CHS and Land O’Lakes. Attending these meetings always gives our board members insight into the profitability and direction of these cooperatives of which we are a member. The Iowa Institute of Cooperatives always hosts various director training workshops throughout the year. I personally attended a board president conference which always includes a trip to the state capital to visit with our state legislators and lobby for various bills on behalf of our members. I feel that having interaction with our legislators is essential for bills to be passed that are favorable to Iowa agriculture.

The board would like to thank all of our members and customers this past year. We will continue to work with management to provide our customers with excellent service and competitively priced products while still achieving growth and profitability for our members.

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Growing Relationships to Maximize Success!™

Exceptional Customer

Experience

Employee Excellence

Continuous Improvement Stewardship

Preferred Business Partners

Employees Focused on Customer Success

• Collaborate and Consult• Verify What We Will Do• Execute• Confirm the Results• Measure Satisfaction

Provide Access to Information, Expertise and

Resources

Build on New Innovation and Technology

Maximize the Value of Individual Operations

Invest in Infrastructure that Enhances the Overall

Customer Experience

Take Ownership in a Safety Culture

Foster an Environment of Pride, Teamwork,

Empowerment, Accountability and Fiscal

Responsibility

Strive to Support Work Life Balance

Expect OpenCommunications

Expanding and Improving Information Systems

Continual Review of Operating Efficiency

Benchmark Performance to Ensure Long Term

Sustainability

Research and Development of Innovation

On Going Review of Strategic Plan and Goals

Employee• Provide a Stable and Safe

Work Environment

Owners• Maintain Financial

Stability and Equity Revolvement through Prudent Decision Making and Risk Management

Community• Commitment to Social Responsibility in the

Communities We Reside in Through Financial Support for Activities that Align with Our Purpose and Encouraging Employee Involvement

Environment• Encourage Environmentally Sound Decisions• Train Employees & Customers to Monitor, Track & Stay

in Compliance with Local, State & Federal Regulations

Engage in Relationships Where Both Parties are

Willing to:

• Be Transparent with Information

• Explore Ways to Extract Cost from the Channel

• Work Towards Common Goals

• Share Financial Resources

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Financials

Income Statement FY ‘15 FY ‘14

Grain Sales $ 419,068,476 $ 582,361,408 Merchandise Sales $ 218,120,480 $ 243,292,166 Total Sales $ 637,188,956 $ 825,653,574 Cost of Sales $ 591,471,898 $ 778,447,810 Gross Commodity Savings $ 45,717,058 $ 47,205,764 Other Income $ 27,674,217 $ 29,778,392 Gross Operating Revenues $ 73,391,275 $ 76,984,156 Operating Expenses $ 60,525,860 $ 65,222,529 Local Income $ 12,865,415 $ 11,761,627 Patronage Income and Investment Income $ 5,972,140 $ 12,707,829 Net Savings Before Taxes $ 18,837,555 $ 24,469,456 Income Taxes $ 866,702 $ 2,532,779 Net Savings After Taxes $ 17,970,853 $ 21,936,677 Earnings/(Loss) Attributable to $ 199,373 $ 821,123 Noncontrolling interest Net Savings $ 18,170,226 $ 22,757,799

*This income statement reflects the results of operations of PLCP, LLLP on the equity method as an investment.

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Assets FY ‘15 FY ‘14

Current Assets Cash $ 12,200,605 $ 53,508,397AR Net $ 15,890,206 $ 18,696,811Margin Deposits & Derivatives $ 9,611,504 $ – Inventory $ 53,026,947 $ 37,075,706Prepaid Expenses and Other Current Assets $ 11,357,712 $ 18,505,608 Current Assets $ 102,086,974 $ 127,786,522

Investments $ 47,672,214 $ 46,422,357 Fixed Assets Property & Equipment $ 142,579,245 $ 124,013,169 Accumulated Depreciation $ (66,312,460) $ (56,581,487) Net Property & Equipment $ 76,266,785 $ 67,431,682 Other Assets $ 1,044,908 $ 2,426,927 Total Assets $ 227,070,881 $ 244,067,488

Liabilities and Member Equity FY ‘15 FY ‘14

Current Liabilities Current Portion LT Debt $ 81,819 $ 3,625,588 Accounts Payable $ 42,961,925 $ 44,714,397 Accrued Expenses $ 5,896,653 $ 6,453,626 Margin Liability on Hedges $ – $ 3,732,560 Adjustment to Market on Open Contracts $ 4,416,012 $ 9,255,095 Allocated Patronage Refunds $ 4,435,096 $ 4,792,630 Total Current Liabilities $ 57,791,505 $ 72,573,896 Long-Term Deferred Liabilities $ 14,393,930 $ 12,108,867 Long-Term Debt $ 15,000,000 $ 24,246,819 Member Equity Memberships and Subscriptions $ 1,430,224 $ 1,344,409 Additional Paid in Capital $ 799,889 $ 799,889 Allocated Earnings $ 34,412,472 $ 33,543,761 Allocated Patronage Refunds $ 4,435,096 $ 4,792,630 Cooperative Education $ 40,036 $ 40,036 Retained Earnings $ 106,485,421 $ 97,196,337 Accum and Other Comp Inc/Loss $ (7,717,692) $ (2,579,156)Total Member Equity $ 139,885,446 $ 135,137,906

Total Liabilities & Member Equity $ 227,070,881 $ 244,067,488

*This balance sheet reflects PLCP, LLLP recorded on the equity method as an investment.

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Distribution of Net IncomePatronage Dividend Cash Patronage Dividend (50%) $ 4,435,096 Deferred Patronage Dividend (50%) $ 4,435,096 Addition to Retained Earnings $ 9,300,034 Net Savings $ 18,170,226

Patronage Distribution Rates Grain Purchased and Sold Bushels 0.037 ¢Grain Services 12.00 %Agronomy Sales & Service 3.00 %Feed & Feed Services 3.00 %Refined Fuels Gallons 4.23 ¢Propane Gallons 6.62 ¢

Millions24

20

16

12

8

4

02010 2011 2012 2013

Patronage &Investment Income

Local Income

2014 2015

Profitability

Finance & IT Fiscal 2015 was another successful year. The strengths of our diverse business units; grain, agronomy, livestock nutrients and energy allowed us to continue to deliver strong financial performance. Our sound results for the year allowed us to continue to improve our financial strength. This allows us to make the needed capital investments that

allow us to handle the size, speed and space during the busy planting and harvesting seasons while simultaneously meeting our debt obligations, and balance returns to you, our member owners.

We recognize much of our current years’ success is the result of several key decisions and investments made

in previous years. With this in mind we carefully plan our current and future investment decisions in expansions and upgrades of our existing operations to add value in the short term and for years to come.

In addition to our respectable patronage for 2015, we will be passing through a 2.4¢ per bushel DPAD deduction on all member grain sold to IAS during our fiscal year ended August. Each member will receive a statement in early December that shows their grain sales to IAS during this period with their corresponding tax deduction.

We also continue to work on improvements in our business processes and business intelligence to help us improve efficiencies and our knowledge base to deliver consistent high quality service that you deserve and expect.

Thank You for your business.

IAS Board of Directors

Randy BlakePresidentBellevue, IA

Paul Cook1st Vice PresidentHubbard, IA

Stan NormanNew Providence, IA

Steve Perry2nd Vice PresidentNew Providence, IA

Joe ThraenertElma, IA

Loren Manternach SecretaryCascade, IA

LeAllan BuergerMonona, IA

Tim BurrackArlington, IA

Adam HillEllsworth, IA

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Innovative Ag Services, Co. Annual Meeting Minutes December 1, 2014 The ninth annual meeting of Innovative Ag Services Co. was held at the PIPAC Center in Cedar Falls on Monday, December 1, 2014. The meeting was called to order at 3:00 p.m. by Chairman Randy Blake.

Minutes of the 2013 Annual Meeting were read. It was moved and seconded to approve the minutes. Motion carried.

Ballots were mailed out to all of the company’s members. The ballots contained one item of business that being the election of new directors for the company - Candidates include: Randy Blake, Paul Cook, Stan Norman, and Loren Manternach.

Two IAS members, Chad Adams and Kraig Manternach tallied the ballots and provided a signed affidavit of the election results. The results reported that Randy Blake, Paul Cook and Stan Norman were elected to three year terms and Loren Manternach was elected to a two year term.

It was moved and seconded to accept the results of the election and destroy the ballots. Motion carried.

Randy Blake reported that the board of directors reviewed the auditors’ report issued by Meriwether Wilson and Company at a previous meeting and approved its statements of operations for the fiscal year ending on August 31, 2014. The content of the auditors’ report is on record and a summary of it was recently sent out to the patrons in the annual report.

Dividend payments approved by the board were recently mailed.

There was no other old business.

There was also no new business brought from the floor.

The meeting was adjourned at 3:10 p.m.

Submitted by Loren Manternach, Secretary

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Pine Lake Corn ProcessorsFocused on efficient operations and quality distiller’s grain. The year was marked with oil dropping to $40 per barrel, while being as high as $120/barrel in 2014. The ethanol industry has always experienced dramatic changes in commodity prices and this year was certainly no different. The ethanol industry continued the impressive export record by shipping 1 billion gallons of ethanol to places like Canada, Brazil, UAE, Mexico, Korea, China and many other countries throughout the world.

In addition to lower oil prices the industry struggled with the dry distillers grain (DDG) selling for nearly record low prices as a % of corn cost. Chinese imports of DDG have been very erratic at best, therefore resulting in dramatic swings in DDG price relative to corn. Even with these issues, US produced ethanol is the lowest cost motor fuel and lowest cost “octane booster” of any major liquid fuel produced in the world.

The plant operation experienced unprecedented records in ethanol production, DDG production, ethanol yield, and natural gas usage per bushel all while maintaining operating costs well below industry average.

In the operations group we have Keith Halfwassen (Maintenance Manager), Ed Kryfka (Operations Manager), Wendy Clikeman (Lab Manager) and Dave McLean (Operations Support Manager) leading several key improvements over the past several years.

• Yield improved to 2.86 gal/bu (un-denatured), with denaturant this yield is 2.88gal/bu. Both of these yield numbers rank in the top 10% of operating plants. The reason yield is so important for improved performance is the value of ethanol versus DDG on a per pound basis is nearly 4 to 1. In other words ethanol is four times more valuable than DDG on a per pound basis. The yield increase improved margins by $440K

• Production for the plant was 33.5M gallons of denatured ethanol. An improvement of nearly 3M gallons from the previous year. The improved production resulted in increased margins of $692K. For the year the plant operated at 164% of design capacity. A tremendous accomplishment for the entire plant operation group.

• Natural gas efficiency improved by 5% reducing the natural gas cost by over $230K.

With the recent success of building the 5th fermenter which reduced chemical cost, improved the yield and allowed for increased production we demonstrated the payoff of the fermenter in 1 year. In late 2015 we completed the construction of a 6th fermenter, a 3rd hammer mill and a 3rd liquefaction tank, a third air compressor and a 5th cooling tower. These projects will further reduce the chemical cost, improve the yield and increase the production of the facility in FY2016 and beyond.

For the upcoming year we are working on the oil extraction pilot trials in the plant operation to assure ourselves that the oil extraction will be successful and we are also investigating ways to increase the capacity of the distillation to fully realize the improved capacity of fermentation. If the trials are successful we will be starting corn oil extraction later this fiscal year and expanding the rectifier, stripper and mole sieve capacity by 5% in the spring of 2016.

Mike Miller completed his first full year as our controller. Scott Zabler completed his 9th year as General Manger overseeing all the ethanol and DDG sales and coordinating those sales with the purchasing of corn, natural gas and chemicals.

From Pine Lake Corn Processors we would like to thank all of our corn suppliers for the continued supply of very high quality corn as well as all of our distiller grain customers as they continue to purchase our high quality distiller grain week in and week out.

All of this success was made possible by our 31 employees that have demonstrated great skill, commitment and hard work to all of our futures.

Human Resource Update

As the Human Resource (HR) team has reported in the many Ag Biz newsletters to you this past year, change has been ongoing at IAS. We are fortunate to have seen many successes during this change process.

As you know the HR teams main focuses in 2015 was to increase our learning initiatives. We have implemented our new learning management system this past fiscal year. This new platform has given all of us access to over 300 courses and has improved our tracking and reporting ability. The system is still new to all of us but we are quickly getting acclimated to what it has to offer. We also have been successful in bringing our ADP system to its most current upgraded version. The ADP platform houses our payroll, timekeeping, intranet, benefits, HR forms, etc. This new platform is a more streamlined way of delivering information as well.

Every day the HR department is working to maintain and look for improvement in many of the programs we manage here at IAS. We continue to manage recruitment, workers compensation, benefits administration, employee relations, HR legal compliance, communications, payroll, and training and development. Along with these responsibilities requires management of many human resource information systems (HRIS). What does this all mean? We not only run the programs we also manage the

content and sometimes programming behind them as well. There is never a dull moment and we love the support that IAS has given us as we manage these very valuable platforms.

Coming in FY 2016 we will see additional improvements to the ADP platform through an improved Performance Mgmt. Module, Workforce Analytics Module and a module to the system that will help us manage the ever changing requirements dictated by the new Affordable Care Act Regulations that are now in place. These technological upgrades we are putting in place will continue to help streamline our online environment and help position us for successful deployment of these resources as we grow and expand our organization over time.

IAS believes that these investments will provide tools to our employee base that will help us to be better equipped to help our customers, and deliver on the exceptional customer experience that we believe in.

In closing, the HR team and the employees of IAS thank you for all your support and business

throughout the year and look forward to serving you in 2016. If you have feedback for the HR group please feel free to call (319) 465-2022 or email us at hr.dept@ias.coop

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Grain Division

Innovative Ag Services (IAS) grain division had another solid year thanks to the continued support from our valued member owners. The marketing year saw many of the same challenges that the past 2 years had to offer. The biggest change we saw evolve over this past year is the fact that both corn and soybean values have unfortunately dropped below cost of production. This was brought on by excellent growing conditions this summer and the anticipation of an excellent 2015 corn and soybean crop.

Harvest 2014 saw a good crop throughout much of the IAS trade area. Certain areas had the misfortune to get hit by hail but that area was mainly confined to the extreme southwest corner of our IAS growing area. The Iowa ethanol plants continue to grind away a large portion of our corn crop. Ethanol margins for our plant stayed positive for most of the year but nothing like the higher margins the plants experienced over the previous 12 months. Farmer holding and the backwardation in the ethanol values continued to create cash inverses for corn and marketing challenges associated with those inverses.

IAS continued our accelerated pace of capital expenditures this past year. Speed and space continues to be a major focus within the IAS grain division. Major improvements were made at our Monona location this year. We tore down 13 small grain bins and replaced them with two new bins with a net added storage capacity of over 600,000 bushels. A new double driveway, increased legging capacity, overhead load out bins and a new larger grain dryer were also added

to the scope of this project. Two new grain bins were also added at our Waukon location which increased their capacity by over 1,200,000 bushels. We also added an additional 4,700 bph corn dryer at Waukon and increased our receiving capabilities. A new 700,000 bu bin was added at our Faulkner location to complement the one added two years ago. A new higher capacity grain dryer was also added at the Elma location. On June 22 our Packard location received considerable damage due to extreme high winds. Several grain bins, towers, receiving legs and conveyors were completely destroyed in the storm. Millwright crews and electricians have been working very hard to try and get the facility operational by the fall 2015 harvest.

As a member of IAS you can be proud to be part of a company that excels in every division. The grain division has developed an overall marketing package that strives to take care of your individual needs no matter what size of farming operation that you

run. We are a leader in the direct ship business with over 50 million bushels handled yearly. We currently have over 58 million bushels of licensed storage capacity, a large fleet of hopper trucks and a very competitive grain policy. We have market access to all the local processors and supply you the needed leverage for all your grain with rail access to markets outside of Iowa and the United States. We have an excellent marketing staff that can help you with a marketing plan that best fits your farming operation.

All of us at IAS thank you for your continued support and look forward to assisting you with all of your marketing needs for the coming year.

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Agronomy Division The agronomy division at Innovative Ag Services (IAS) is very excited to announce that we had another good year. Volumes were down in general due to lower grain markets, but IAS was able to adjust some operational opportunities to manage the lower revenue. We believe we will have a large increase in volume when we report next year’s financials.

We are looking forward to fiscal year 2016 for several reasons. First off, the crops are extremely good and dry in general. This will increase gross revenue per acre compared to average yields drastically. Secondly, we were able to learn from the stresses that were felt by this year’s crops, so we will be able to mitigate those stresses moving forward with products, technologies, and management practices using our Innovative Advanced Solutions Strategy. Third, as we move out of our pilot year and into the second full year of Sustain, we will be able to continue to use better nutrient practices to maximize profit for the grower, along with being good stewards of the land. We will continue to try to add applications to most acres while reducing the total units of nitrogen being applied. All in the effort to apply the nitrogen when and where the plant needs it, and filter

as little as possible into the water. We will do this through several avenues: fall NH3, spring NH3, manure, UAN and urea pre-plant, UAN side-dress with toolbars or Y drops, urea top-dress, and finally slow release nitrogen.

We will continue to focus on the utilization of starter fertilizers and their efficiency and profitability for our growers. We have a couple brand new growth stimulant products that we will focus on this coming year called Toggle and Optify Stretch. Optify Stretch will be used in addition with starters. Toggle will be applied at the V4-V8 window and also at tassel applications. We will also continue enhancing our Innovative Advanced Seed Treatment to maximize every soybean acre.

For major capital expenditures we will be adding an 8,000 ton UAN tank in Monticello along with a chemical shed. A new chemical shed will also go up in Faulkner. At several other locations we plan to add starter fertilizer and chemical storage. We will continue to upgrade our application and rental fleet as well.

With resistance of water hemp happening at a rapid rate, we will find that chemical rates, residuals

with every application, and also applications will continue to increase requiring application power along with storage. IAS believes we are prepared for this. This resistance has also given suppliers the confidence to raise prices on the valuable products our customers need. Glyphosate alone will likely see devaluation in fiscal 2016.

Fertilizer continues to fall in price and for the most part be in the range of bushels per acre in comparison to history and will likely stay there for the next year. Supply and demand will continue to drive pricing of fertilizer looking at both domestic and international markets. The number of suppliers in the fertilizer industry continues to dwindle, which can make it more challenging at times to bring pricing where we think it should be.

The agronomy team thanks you for your continued business and looks forward to working with you in 2016.

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Feed Division The Innovative Ag Services (IAS) feed division is pleased to announce that 2015 was a very successful year. Profitability has been very good with volumes up in all specie areas and at all of the IAS feed mills. Support of the IAS feed business from our members is the key to our success. Thank you for your business.

The key to our swine feed business has been helping our producers secure sources of feeder pigs and finishing sites within our trade area. Along with placing pigs in sites across the IAS geography, the IAS swine sales team remains focused on helping our producers with production and management systems to make better decisions. In addition, the IAS MetaFarms Bureau continues to grow providing producers with better information as they work to increase efficiency and profitability in their swine operations.

Our beef business continues to be the market share leader in East Central Iowa. The IAS beef team remains focused on records and performance monitoring to assist producers in

making the best production and management decisions. There have been a significant number of confinement cattle barns built in Eastern Iowa adding to our business growth. The cow/calf business has been a focus area with growth in 2015 as well.

Dairy business growth has been a 3 pronged approach for IAS. The IAS dairy sales team has been growing our lactation dairy feed business and the calf and heifer business. The calf and heifer business has been a focus and is a strength of our sales team. Working with our producers on the latest technology will continue to be a priority. In addition we work closely with a number of independent dairy consultant partners bringing significant dairy business to our mill locations.

The IAS manufacturing and delivery teams are working to efficiently and profitably get feed mixed and delivered to our producer’s operations. Volumes in some of our mills have been at record levels. To handle the increased volumes and efficiently

manufacture and deliver feed, IAS is investing in capacity, automation, and information systems to improve. This past year we have focused on the Elkader facility improving ingredient flow and handling through the facility along with automating the facility. Working to get the most out of our manufacturing and delivery systems will continue to be a priority.

Building the IAS Brand not only in how we approach the feed business, but in the products and services we bring to the market has expanded in 2015. We plan to continue building the IAS Brand increasing our focus and streamlining our brand offerings. This will also help our manufacturing and delivery efficiency.

Although livestock margins will be under pressure the next 12 months, we feel livestock numbers and the feed business will be strong through the next year. We look forward to meeting your livestock and feed business needs and thank you for your business!

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Energy Division This past fiscal year turned out to be less of a challenge than the previous year. After experiencing the challenges of logistics and supply of propane the past couple years, IAS has invested in more storage to help alleviate those issues. Along with propane storage, we have added to our pressure vessel transport fleet to accommodate customers with quicker service. On the refined fuel side, we have purchased a liquid fuel transport tanker and a larger tankwagon delivery truck to help maintain the growing demands of the customer. We will continue to upgrade and add additional equipment to keep up with those demands. With tremendous drivers and employees, we strive to continue providing value added service to our customers.

What Mother Nature gives, she can also take away. Based on the much higher demand of propane in Fiscal Year 2014, propane sales were up 20% from FY13. After finishing FY15, we

were back to a more typical year, with sales down 16% from FY14. Refined fuels have had a slight increase in sales with gasoline edging diesel fuel on the increase. LP Merchandise took a fall in sales, as you recall FY14 was a boom in sales to farmers building new shops with heating systems. Margins have remained consistent with all products.

Predictions for 2016 fuel prices appear to be on the same pace as what we have experienced the last half of FY15. Crude and fuel inventories have put pressure on the markets and barring any big Middle East or Syria issues, we should see markets soften this winter. Crude has had a struggle getting to $50/barrel. Propane prices are harder to predict. Inventories have built at historic proportions, but heavy exports can deplete supply very fast. I do believe that prices will stay in a range that will be much easier to manage than past several years. Energy price forecasts are highly

uncertain and with any predictions, prices could differ significantly from the forecast levels.

Innovative Ag Services has been committed to growing our energy business in its current market as well as increasing our footprint into more of the IAS territory. With that commitment, the energy team will continue to analyze what areas we can establish new storage facilities and routes to service our customer’s needs.

IAS values its customers who continue to share their experience with their friends and neighbors about our great service and competitive prices. It is because of these dedicated customers that we are able to offer these services. Our team is proud of our success this year and look forward to continuing to grow our energy business!

Commited to Social & Environmental Responsibility Innovative Ag Services (IAS) prides itself in giving support to the communities we reside in. We feel fortunate to have an opportunity to give back to our customer and employees.

We reach out to these local areas and organizations in a variety of ways. We give support through monetary donations, our employees donate their time to work local events, and we participate in educational opportunities to share knowledge with those people who are interested in agriculture. Every year we get more and more requests to speak to high school and college age students about our company. This past fiscal year we have had the opportunity through partnerships with community

colleges and some of our vendors to host international students and employees with facility tours as well as support internship opportunities.

We continue to utilize the Land O’ Lakes Matching Funds program as well as utilize a matching program through our bank Co-Bank. This has been a great partnership to support IAS’s efforts to continue the tradition of giving back each year. This past fiscal year we have given to a variety of programs: 4-H, fire departments, FFA, athletic booster clubs, county fair groups, public libraries, American Cancer Society, local food pantries, Relay for Life and several others.

IAS is also very active in the Sustain Nutrient Management Strategy. It allows growers to optimize their use of crop nutrients while helping them significantly invest in their land and their future. As consumer demand and government regulations begin to require all members of the food supply chain to comply with environmentally sustainable agriculture practices, SUSTAIN growers will be recognized as adding value to their industry while maintaining or increasing yield.

IAS is already working on fiscal 2016 initiatives and we look forward to serving and supporting our local communities during this new year.

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IAS Focused on Safety Culture Continuous improvement, that core strategy from our purpose statement has been and remains to be one of the biggest focus areas of our safety & compliance initiatives. Innovative Ag Services (IAS) commitment to improving the safety culture of the organization remains strong.

This past year we heightened our knowledge and awareness even further in the area of DOT inspections. With the assistance of United Suppliers Loss Control, we conducted some random Level 1 truck/trailer inspections within the company. These inspections allowed IAS to measure the effectiveness of past training and further educate employees in this area. Our CSA2010 scoring with the Federal DOT has improved significantly with an overall reduction in the number of violations we received this past year.

IAS improved our Workers’ Comp rating this past year as well. Incurred losses from workplace injuries were reduced by 69% this past year and nearly 80% vs. two years ago. The goal of the organization is zero lost time accidents; the current trend is certainly an indication that the initiatives are paying off.

Another area we are continuing to make improvement in is our internal incident investigations. Spending more time in discovering the root causes of incidents will allow us to better educate or make changes in processes & procedures to ensure we can avoid the same things from reoccurring.

We are currently making improvements to our internal site audit processes. Accountability by

all for safety & compliance is the backbone of any healthy safety culture so auditing ourselves periodically during the year addresses shortcomings in documentation or facility maintenance that need to be improved.

IAS is committed to providing a safe workplace for its employees and customers. Our # 1 priority is that each and every employee returns home safely to their families each night. Our initiatives are making a difference and we will live our purpose statement by continually identifying ways in which we can improve.

Thanks for your support!

The core values of the IAS Purpose Statement “Growing Relationships to Maximize Success!” have been positively impacted by the enhancement of our safety emphasis:

Delivering Exceptional Customer Experiences

Employee Excellence by taking ownership of an improved safety culture

Continuous Improvement of processes and training

Stewardship in providing a stable and safe working environment

Growing Relationships to Maximize Success!®

visit our website:

www.ias.coop©2015 Innovative Ag Services. All Rights Reserved.

Iowa Locations

AckleyAldenAlta VistaAndrewAustinvilleCascadeCenter JunctionCentral City

ClevesElkaderEllsworthElmaFarleyFaulknerGarden CityHopkinton

HubbardIndependenceLawn HillManchesterMononaMonticelloOranOwasa

PackardUnionWaukonWilliamsWinthrop

Wisconsin Locations

Cuba CityHazel GreenPlatteville