TORONTO, Nov. 13, 2012 /CNW/ - Ceres Global Ag Corp. ("Ceres" or the
"Corporation") announces its results for the second quarter ended
September 30, 2012:
The following summarizes the financial results for the fiscal quarter
ended September 30, 2012, for Ceres on a consolidated basis and for its
operating subsidiary Riverland Ag:
Consolidated and Riverland Ag revenues were $35.1 million (2011: $35.0
Consolidated and Riverland Ag gross profit was $1.1 million (2011: $4.2
Consolidated EBITDA was $0.08 million (2011: $2,400).
Riverland Ag EBITDA was $0.7 million (2011: $3.3 million).
Net income (loss):
Consolidated net loss was ($1.1 million) (2011: net loss of ($2.0
million)), representing basic and fully diluted loss per share of
($0.08) (2011: basic and diluted loss per share of ($0.14)).
Riverland Ag's net loss was ($1.0 million) (2011: net income of $1.3
million), representing basic and fully diluted loss per share of
($0.07) (2011: basic and fully diluted earnings per share of $0.08).
Cash and portfolio investment assets:
As at September 30, 2012, cash and portfolio investments totalled $34.0
million, representing $2.37 per common share (March 31, 2012: $39.6 million, $2.72 per share).
Shareholders' equity per common share:
As at September 30, 2012, consolidated shareholders' equity per common
share was $10.29 (June 30, 2012: $10.61; March 31, 2012: $10.69;
December 31, 2011: 10.83; September 30, 2011: $11.07).
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. For the quarter ended September 30, 2012, Ceres
purchased 110,100 shares for a total cost of approximately $0.66
million. The average purchase price during this quarter, under the
normal course issuer bid, was $5.99 (quarter ended June 30, 2012:
118,400 shares were purchased for $0.76 million, average purchase price
was $6.45; quarter ended March 31, 2012: 109,800 shares were purchased
for $0.64 million, average purchase price was $5.78).
Consolidated EBITDA in Q2 of $0.08 million improved from a loss of $2.63
million in Q1 largely due to a gain on currency hedging transactions in
Q2 compared to a loss on currency hedging transactions in Q1.
Riverland Ag's EBITDA in Q2 decreased by $0.46 million compared to Q1,
reflecting a decrease in Gross profit of $0.36 million and a slight
increase in general and administrative expenses.
As at September 30, 2012, the Corporation's net book value per share was
$10.29, down from $10.61 as at the prior quarter-end. The decrease
during the quarter is attributable to the consolidated net loss of $1.1
million, a currency translation loss of $3.9 million related to the
un-hedged portion of Ceres' investment in the net assets of Riverland
Ag and is offset by discounts totaling $0.4 million realized on shares
repurchased in the Normal Course Issuer Bid. .
As in previous quarter results, Riverland Ag's results were low due to a
combination of lower inventory levels and reduced carrying income.
However, during this quarter, progress was made in rebuilding
inventories as the Company benefits from a strong North American cereal
The Canadian Wheat Board's monopoly on wheat and barley sales was
eliminated during the quarter, and Riverland Ag began purchasing
Canadian wheat for the first time. Canadian wheat is now eligible for
delivery against the Minneapolis Spring Wheat Futures contract, which
facilitates the integration of the North American market. These
Canadian wheat purchases have contributed to rebuilding inventories
during the quarter. The availability of Canadian wheat has created
arbitrage opportunities for Riverland Ag's assets. During the quarter,
the Minneapolis futures market further strengthened its position as the
leading price discovery contract for Canadian hard red spring wheat.
With over 30% of the delivery space on this contract, Riverland Ag is
in a strong position to benefit from these changes.
A large cereal grain crop was harvested in the northern U.S. plains and
western Canada, helping to push the Minneapolis spring wheat futures
markets into a contango structure that should be favourable for
Riverland Ag's earnings going forward. The combination of this large
crop and the deregulation of the Canadian Wheat Board should help
Riverland Ag continue to rebuild its inventories. The transition to an
open market in Canada has been slower than originally expected, as
farmers have been reluctant to move wheat off of the farm in the levels
originally anticipated. As a result, we expect to have slower than
expected build in inventories in the third quarter with spill over into
the fourth quarter. This will have the impact of deferring earnings
expected in the third quarter to the fourth quarter. We continue to
believe that the flow of Canadian grain to the United States will
increase over the next few quarters. As one of the largest independent
grain companies, with 55 million bushels of storage located in the
Upper Lakes and Mississippi River area strategically close to the
Canadian border, Riverland Ag is in a unique position to benefit from
the structural changes occurring in the North American cereal grain
Our 25% investment in Stewart Southern Railway ("SSR"), located in the
southeastern area of Saskatchewan, continued its strong growth
trajectory during the quarter. It achieved record profitability for
the quarter with Ceres' 25% ownership interest generating $334,500 of
equity earnings during the quarter ($146,600 in Q1). This significant
growth is directly attributable to increased shipments of oil. Daily
volume of oil shipments averaged over 15,500 barrels per day during the
quarter, which is up significantly from the previous quarter, and is
expected to continue to increase in coming quarters. Shipments of
agricultural commodities also began to increase, as this area returned
to significant agricultural production after 2 years of excessive
moisture, which drove down production. An expansion to increase the
rail capacity of the oil terminal to 40,000 barrels of oil per day is
expected to be completed and operational by the end of the next
quarter. Ceres' management is also working hard to expand and
diversify Ceres' emerging Commodity Logistics Division, with our
initiatives continuing to gain momentum during the quarter.
The interim condensed consolidated financial statements for the quarter
and six-month period ended September 30, 2012 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
"We are pleased with the progress and results from our Commodities
Logistics Division, and have several other exciting logistics projects
in development" said Michael Detlefsen, President of Ceres. "While
Riverland Ag's results are disappointing, we continue to believe that
the large North American cereal grain crop and the deregulation of the
Canadian Wheat Board will create substantial market opportunities for
Riverland Ag. We are working closely with Riverland Ag's management to
maximize the value generated by that company, including initiating a
strategic review of certain Riverland Ag assets to determine if they
are best managed by Riverland Ag or by others," he added.
Jason Gould, Chief Financial Officer of Ceres, said: "Our balance sheet
remains strong despite the challenges at Riverland Ag and resources are
available to support continued growth of our key investments." Mr.
Gould added, "Our investment in the Commodity Logistics Division is
showing significant value creation that our shareholders will see as
each quarter progresses."
Non-IFRS Financial Measures
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 (loss)
from investments in associates and the loss on impairment of property,
plant and equipment. 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., owns a 25%
interest in Stewart Southern Railway Inc., and has significant capital
available to invest in these and related businesses. Riverland Ag Corp.
is an agricultural grain storage and handling 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 56 million bushels. Stewart Southern Railway
Inc. is a short line rail company that operates in Southeastern
Saskatchewan as our commodities logistics division. 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:
contact Jason Gould, Chief Financial Officer, at (416) 915-2426.