TORONTO, Nov. 14, 2011 /CNW/ - Ceres Global Ag Corp. ("Ceres" or the
"Corporation") announces its results for the second fiscal quarter
ended September 30, 2011.
Revenues, gross profit and EBITDA amounts were lower this quarter, as
compared to the second quarter last year and the previous quarter, as a
result of lower overall facility utilization at Riverland Ag. The key
driver of this lower facility utilization was the active delivery
against future contracts in the spring wheat market as noted in the
previous quarter. These positions were not fully replaced during the
quarter, resulting in lower overall inventory and carrying income
related to spring wheat. It may take a number of quarters to finish
strategically rebuilding inventory levels. In addition, a narrowing of
the carrying charges in the oats and soft wheat markets also reduced
revenues and earnings during the quarter. The combination of these
factors may mean that it will take Riverland Ag a number of quarters to
re-establish its earnings to past levels.
Despite lower financial results, we remain positive about the strategic
location and value of Riverland Ag's assets, and continue to assess
complementary upstream and downstream investment opportunities.
The following are strategic highlights for the quarter ended September
Successfully completed the purchase of a 4.5 million bushel grain
storage facility in Manitowoc, Wisconsin, which added to the company's
position as one of the leading independent grain storage companies in
Added a new pipeline inventory management customer for approximately 1.0
m bushels on an annual basis; and,
The Canadian Government began the process to eliminate the monopoly
marketing powers for wheat, durum and barley of the Canadian Wheat
Board. Management accelerated the execution of a number of strategic
initiatives to further enhance the position of Riverland Ag's assets
concerning these impending changes.
The following is a summary of financial results for the fiscal quarter
ended September 30, 2011, for both Ceres on a consolidated basis and
for its operating subsidiary Riverland Ag:
Consolidated and Riverland Ag revenues were $35 million (2010: $54.1
Consolidated and Riverland Ag gross profit was $4.1 million (2010: $6.0
Consolidated EBITDA was $2,400 (2010: $15.1 million) representing EBITDA
per share of $0.00 (2010: $0.98);
Riverland Ag EBITDA was $3.3 million (2010: $5.5 million) representing
EBITDA per share of $0.22 (2010: $0.36);
Consolidated net loss was ($2.0 million) (2010: net income of $12.5
million), representing basic and fully diluted earnings (loss) per
share of ($0.14) for 2011 (2010: basic and diluted earnings per share
Riverland Ag's net income was $1.3 million (2010: $2.9 million),
representing basic and fully diluted earnings per share of $0.08 (2010:
As at September 30, 2011, cash and remaining portfolio investments
totalled $48.3 million, representing $3.22 per share as at that date; and,
As at September 30, 2011, consolidated shareholders' equity per common
share was $11.07 (June 30, 2011: $10.58).
Normal Course Issuer Bid
On October 13, 2011, Ceres announced a normal course issuer bid
commencing on October 17, 2011 with the intention of purchasing up to
1,184,334 shares. Under the previous normal course issuer bid that was
in place during the quarter, Ceres purchased 154,339 shares for a total
cost of $1,115,545 (being an average purchase price of $7.23).
Over the four full quarters ended September 30, 2011, Riverland Ag has
reported aggregate EBITDA of $18.0 million, aggregating $1.18 per Ceres
common share, and aggregate net income of $6.8 million representing
$0.45 per Ceres common share (four full quarters ended June 30, 2011:
aggregate EBITDA of $20.1 million, aggregating $1.32 per Ceres common
share, and aggregate net income of $8.5 million representing $0.56 per
Ceres common share).
Despite lower earnings during the quarter, consolidated shareholder's
equity increased as a result of the strength of the U.S. dollar and the
resulting conversion to Canadian dollars of the U.S. dollar investment
in Riverland Ag.
The interim condensed consolidated financial statements for the
three-month and six-month periods ended September 30, 2011 and the
notes related thereto, and the Interim Management's Discussion and
Analysis are available under Ceres profile on www.sedar.com and have been posted on the company's web site at www.ceresglobalagcorp.com. Unless otherwise indicated, all amounts are reported in Canadian
"While disappointed in the drop in earnings in this quarter, we are
working with Riverland Ag's management to strategically rebuild
inventories and increase the volume of customer storage contracts,"
said Michael Detlefsen, President of Ceres. Mr. Detlefsen added, "And
we continue to strengthen the positive position of Riverland's
strategic assets to take maximum advantage of emerging changes and
opportunities in the North American grain industry."
As mentioned previously, on August 2011, the Minneapolis Grain Exchange
announced that it has removed the U.S origin condition for wheat
delivered against its Hard Red Spring Wheat futures contract, effective
no later than the May 2013 contract. With a significant portion of
delivery space on this futures contract and its strategic location of
its assets close to major flour milling assets, Riverland Ag is
uniquely positioned to take advantage of potential increased flows of
spring wheat, particularly from Canada. However, it should be cautioned
that the exact timing and extent of these opportunities is unknown at
Jason Gould, Chief Financial Officer of Ceres, said: "With the financial
strength and flexibility resulting from the combination of Ceres'
corporate balance sheet and Riverland Ag's available credit facilities,
we are strongly positioned to pursue inventory purchases and asset
acquisitions in this changing North America grain market."
Non-IFRS Financial Measure
EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization)
is not a standardized financial measure prescribed by IFRS; however,
management believes that most of its shareholders, creditors, other
stakeholders and investment analysts benefit from using this
performance measure in analyzing Ceres' results. Ceres also uses this
measure internally to monitor the Corporation's performance.
In calculating EBITDA, Ceres excludes its share of the net income or
loss from investments in associates. Ceres may calculate EBITDA
differently than other companies; therefore, Ceres' EBITDA may not be
comparable to similar measures presented by other issuers. Investors
are cautioned that EBITDA should not be construed as an alternative to
net income or loss, or to other standardized financial measures
determined in accordance with IFRS, and is not intended to represent
cash flows or results of operations in accordance with IFRS.
About Ceres Global Ag Corp.
Ceres Global Ag Corp. owns 100% of Riverland Ag Corp. and has
significant capital available to invest in this and related businesses.
Riverland Ag Corp. is an agricultural grain storage and supply chain
business operating 15 grain storage facilities in Minnesota, North
Dakota, Wyoming, New York, Wisconsin and Ontario having aggregate
storage capacity of approximately 55 million bushels. Ceres common
shares trade on the Toronto Stock Exchange under the symbol "CRP".
This news release contains forward-looking statements concerning the
Corporation's business and operations. The Corporation cautions that,
by their nature, forward-looking statements involve risks and
uncertainty. The Corporation's future actual results could vary
materially from those expressed or implied in such statements.
Reference should be made to the Corporation's annual audited financial
statements, its management discussion and analysis, or the initial
public offering prospectus dated December 13, 2007 for a description of
the major risk factors.
SOURCE Ceres Global Ag Corp.
For further information:
Jason Gould, Chief Financial Officer, at (416) 915-2426