TORONTO, Feb. 14, 2014 /CNW/ - Ceres Global Ag Corp. ("Ceres" or the
"Corporation") announces it has released its financial results for the
three-month and nine-month periods ended December 31, 2013. The
following are key highlights during the quarter:
Riverland Ag's results were consistent with expectations at this stage
of the turnaround, but an abnormally large grain harvest in North
America is expected to provide Riverland Ag with improved market
conditions going forward;
Stewart Southern Railway Inc. ("the SSR") continued its strong operating
performance with record grain and oil volumes during the quarter;
Mass grading and general site preparation work continued at the proposed
Northgate Commodities Logistics Centre ("NCLC"); and,
Ceres sold off the bulk of its non-core portfolio investments for
proceeds of $3.2 million.
"While the results of the Ceres companies have performed to expectations
during the early phases of this turnaround period, there is still
substantial work to do to improve the utilization and profitability of
the Riverland Ag assets, as well as grow the business opportunities at
the SSR," said Michael Detlefsen, President and CEO of Ceres.
"However, the Board's recent strong endorsement of the continued
development of the NCLC site is expected to add incremental energy
transload revenues and create a potential catalyst for improved growth
and profitability of Riverland," he added.
Subsequent to quarter-end, Ceres decided to use Riverland Ag to design
and develop the grain facility at NCLC to take full advantage of NCLC's
strategic location. Ceres also announced a plan to spend up to an
additional $17.4 million of capital at the NCLC during the 2014
construction season to:
Complete the remaining site preparation and the installation of rail and
associated infrastructure to allow manifest and unit trains to cross
the border into Canada and to facilitate the trans-loading of
agricultural, petroleum and other bulk commodity products;
Fund the planning and design of the grain transload facility and the
planning, design and initial construction of oil and natural gas
liquids transload facilities.
"Ceres expects to fund the NCLC developments with cash flow from
operations, bank debt and selective non-core asset sales," said Jason
Gould, Interim CFO of Ceres. "Included among the sources of cash this
quarter are proceeds from the sale of non-core portfolio investments
and funds from the SSR, which repaid shareholder loans and paid its
first cash dividend," he added.
The following is a summary of the financial results for the fiscal
quarter ended December 31, 2013, and certain figures reporting the
financial position as at that date, for Ceres on a consolidated basis,
and for its operating subsidiaries Riverland Ag Corp. and Riverland
Agriculture, Ltd. (collectively referred to as "Riverland Ag").
Figures for 2012 are for the quarter ended December 31, 2012, as
Consolidated and Riverland Ag revenues for the quarter ended December
31, 2013 were $54.8 million (2012: $84.6 million).
Consolidated and Riverland Ag gross profit for the quarter was $0.1
million (2012: gross loss of ($2.4 million)).
Consolidated EBITDA for the quarter was a loss of $1.6 million (2012:
loss of $5.3 million).
Riverland Ag EBITDA for the quarter was a loss of $0.3 million (2012:
loss of $2.7 million).
Consolidated net loss for the quarter was $2.1 million, representing
basic and fully diluted loss per share of $0.15 (2012: net loss of $7.1
million, basic and diluted loss per share of $0.50).
Riverland Ag's net loss for the quarter was $1.2 million, representing
basic and fully diluted loss per share of $0.08 (2012: net loss of $4.8
million, basic and fully diluted loss per share of $0.34).
Cash and portfolio investment assets (consolidated):
As at December 31, 2013, cash and portfolio investments totalled $7.3
million, representing $0.51 per common share (September 30, 2013: $15.9 million, $1.12 per share;
June 30, 2013: $24.1 million, $1.68 per share; March 31, 2013: $26.9 million, $1.88 per share; December 31,
2012: $29.8 million, $2.08 per share).
Shareholders' equity per common share (consolidated):
As at December 31, 2013, consolidated shareholders' equity per common
share was $9.10 (September 30, 2013: $9.00; June 30, 2013: $9.96; March
31, 2013: $10.11; December 31, 2012: $9.89).
Included in the results for this quarter is Ceres' 25% share of the net
income of the SSR in Q3 2014 in the amount of $0.4 million, compared to
Ceres' share of net income for Q2 2014 and Q1 2014, which was a net
loss ($0.1) million and net income $0.3 million respectively. The
primary cause of the share of net loss in Q2 2014 is a one-time
non-cash charge the SSR recognized in the quarter, for which Ceres'
share was approximately $0.3 million. If not for that one-time
non-cash charge, Ceres' share of net income in the SSR for Q2 2014
would have been $0.2 million. During the quarter, the SSR transported
an average of approximately 30,000 barrels per day. Grain movement
continued to increase, with the SSR setting a record with over 450
carloads shipped during the quarter.
As at December 31, 2013, the Corporation's net book value per share was
$9.10, up from $9.00 at September 30, 2013 but down from $9.96 as at
June 30, 2013 and $10.11 as at March 31, 2013. The increase in net
book value per share during the quarter is attributable to the decline
in the value of the Canadian dollar relative to the U.S. dollar during
the quarter and the resulting currency translation gain of $3.5 million
related to Ceres' investment in the net assets of Riverland Ag. The
currency translation gain in Q3 2014 was caused by an increase in the
value of the U.S. dollar against the Canadian dollar of 3.23 percent.
Ceres' decision to use its 100% subsidiary, Riverland Ag, to pursue the
development of the grain facility at NCLC was driven by the uniqueness
of NCLC's location, which is in the heart of a wheat and oat production
region that makes sense on both an individual and combined basis with
Riverland Ag. There is approximately 178 million bushels of Canadian
production (wheat, canola, oats etc.) within 100 miles of Northgate,
Saskatchewan. This location offers access to BNSF's rail system and an
ability to buy freight transport, to which no other elevator in Western
Canada has access. This site would allow Riverland Ag to market new
crops such as canola, which can be shipped to Mexican customers in unit
trains using the most efficient single carrier route. It would also
allow Riverland Ag to develop a Durum export program through its
facility in Duluth and make better use of that facility. The addition
of this location would allow Riverland Ag to complete a transformation
from a passive storage model to an active grain trading company. In
addition, sweet light crude oil production in the Northgate draw area
is estimated at 40,000 bpd increasing to possibly 75,000 to 125,000 in
the next 3-5 years which provides and excellent market for an oil
transloading facility at the NCLC.
The NCLC is advancing with site preparations and mass grading work
continuing to progress. The NCLC continues to be subject to receipt of
remaining governmental permits and approvals, including reaching
satisfactory arrangements with Canadian and US customs authorities.
While management is working diligently to finalize these arrangements,
the timing for the overall completion of the project and initial rail
shipments will depend on receipt of these governmental permits and
The following table represents an analysis of the components of Ceres'
equity attributable to shareholders as at December 31, 2013 and
September 30, 2013 and reflects the value at which individual items are
carried on Ceres' balance sheet (in millions of Canadian dollars,
except total equity attributable per share issued and outstanding):
Cash and cash equivalents (note 1)
Accounts receivable and sundry current assets
Investment in SSR (note 2)
Investment in land and capitalized costs in NCLC (note 3)
Investment in Riverland Ag (note 4)
Net working capital, net of all debt (note 5)
Fixed assets, at net book value (note 6)
Investment in Canterra Seeds Holdings, Ltd. ("Canterra")
Total investment in Riverland Ag
Less: All (current) liabilities
Total equity attributable to Shareholders
Number of common shares issued and outstanding
Total equity attributable per share issued and outstanding
Cash and cash equivalents exclude cash held by subsidiaries.
SSR is 25 percent owned by Ceres and is accounted for using the equity
The investment in NCLC represents an investment in approximately 1,300
acres of land in Saskatchewan and North Dakota, plus costs capitalized
to ready the site for the development of the logistics centre.
Ceres owns 100 percent of Riverland Ag and consolidates the accounts of
Riverland Ag in the annual and interim financial statements. In the
foregoing analysis, the investment in Riverland Ag is accounted for
using the equity method.
The net working capital of Riverland Ag represents primarily the
aggregate of owned inventory (marked to market), trade accounts
receivable and amounts due from brokers, less all bank indebtedness.
The aggregate of other current assets is substantially offset by the
aggregate of other liabilities.
Represents approximately 51 million bushels of storage space at an
average net book value of USD$1.26 per bushel (September 30, 2013:
USD$1.18 per bushel).
Canterra is 25 percent owned by Riverland Ag and is accounted for using
the equity method.
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 gain (loss) on sale or
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
alternatives to net income or loss, or to other standardized financial
measures determined in accordance with IFRS, and are not intended to
represent cash flows or results of operations in accordance with IFRS.
About Ceres Global Ag Corp.
Ceres Global Ag Corp. is a Toronto-based company focused on two primary
businesses: a Grain Storage, Handling and Merchandising unit, anchored
by its 100% ownership of Riverland Ag Corp., and a Commodity Logistics
unit, containing its 25% interest in Stewart Southern Railway Inc. and
its development of the Northgate, SK Commodity Logistics Centre.
Riverland Ag Corp. is a collection of ten (10) grain storage and
handling assets in Minnesota, New York, Wisconsin and Ontario having
aggregate storage capacity of approximately 51 million bushels.
Riverland Ag also manages two (2) facilities in Wyoming on behalf of
its customer-owner. Stewart Southern Railway Inc. is a short-line
railway with a range of 130 kilometres that operates in South-eastern
Saskatchewan. The Northgate Commodity Logistics Centre is a proposed
$90 million grain, oil and oilfield supplies transloading site being
developed in conjunction with Riverland Ag and several potential energy
company partners, connected to the Burlington Northern Santa Fe
Railroad and expected to open in the summer of 2014. Ceres common
shares trade on the Toronto Stock Exchange under the symbol "CRP".
Cautionary Notice: This news release contains "forward-looking information" within the
meaning of applicable Canadian securities legislation and United States
securities laws. Forward-looking information may include, but is not
limited to, statements regarding future operations and results,
anticipated business prospects and financial performance of Ceres and
its subsidiaries, including the plans, costs, timing and capital for
the development of the Northgate Commodities Logistics Centre,
expectations or projections about the future, strategies and goals for
growth, expected and future cash flows, costs, planned capital
expenditures, anticipated capital projects, construction and completion
dates, operating and financial results, critical accounting estimates
and the expected financial and operational consequences of future
commitments. Generally, forward-looking information can be identified by the use of
forward-looking terminology such as "plans", "expects" or "does not
expect", "is expected", "budget", "scheduled", "estimates",
"forecasts", "intends", "anticipates" or "does not anticipate",
"believes", "may have implications" or variations of such words and
phrases or statements that certain actions, events or results "may",
"could", "would", "might", or "will be taken", "occur", or "be
achieved". Forward-looking information is based on the opinions and
estimates of management at the date the information is made, and is
based on a number of assumptions and subject to a variety of risks and
uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the
forward-looking information. Key assumptions upon which such
forward-looking information is based are listed in the "Forward-Looking
Information" section of the interim MD&A for the quarter ended December
31, 2013. Many such assumptions are based on factors and events that
are not within the control of Ceres and there is no assurance they will
prove to be correct. Factors that could cause actual results to vary
materially from results anticipated by such forward-looking information
include, among others, risks related to weather, politics and
governments, changes in environmental and other laws and regulations,
competitive factors in agricultural, food processing and feed sectors,
construction and completion of capital projects, labour, equipment and
material costs, access to capital markets, interest and currency
exchange rates, technological developments, global and local economic
conditions, the ability of Ceres to successfully implement strategic
initiatives and whether such strategic initiatives will yield the
expected benefits, the operating performance of the Corporation's
assets, the availability and price of commodities and regulatory
environment, processes and decisions. Although Ceres has attempted to
identify important factors that could cause actual actions, events or
results to differ materially from those described in forward-looking
information, there may be other factors that cause actions, events or
results that are not anticipated, estimated or intended. There can be
no assurance that forward-looking information will prove to be
accurate, as actual results and future events could differ materially
from those anticipated in such information. Ceres undertakes no
obligation to update forward-looking information if circumstances or
management's estimates or opinions should change, except as required by
applicable securities laws. The reader is cautioned not to place undue
reliance on forward-looking information.
SOURCE: Ceres Global Ag Corp.
For further information:
Michael Detlefsen, Chief Executive Officer, at (416) 572-7631.