TORONTO, June 20, 2013 /CNW/ - Ceres Global Ag Corp. ("Ceres" or the
"Corporation") is announcing it has released its financial results for
the fourth quarter and the year ended March 31, 2013.
The following summarizes the financial results for the fiscal quarter
and fiscal year ended March 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 or year ended March 31, 2012, as
Consolidated and Riverland Ag revenues for the quarter ended March 31,
2013 were $60.4 million (2012: $37.1 million). Consolidated and
Riverland Ag revenues for the year ended March 31, 2013 were $223.1
million (2012: $184.4 million).
Consolidated and Riverland Ag gross profit for the quarter was $2.0
million (2012: $0.8 million). Consolidated and Riverland Ag gross
profit for the year ended March 31, 2013 was $2.0 million (2012: $16.0
Consolidated EBITDA for the quarter was a loss of $2.5 million (2012:
profit of $1.2 million). Consolidated EBITDA for the year was a loss of
$10.3 million (2012: profit of $5.9 million).
Riverland Ag EBITDA for the quarter was $1.0 million (2012: $0.3
million). Riverland Ag EBITDA for the year was a loss of $0.06 million
(2012: profit of $13.4 million).
Net income (loss):
Consolidated net income for the quarter was $0.8 million (2012: loss of
($0.4 million)), representing basic and fully diluted earnings per
share of $0.06 (2012: basic and diluted loss per share of ($0.03)).
Consolidated net loss for the year was ($11.5 million) (2012: loss of
($3.8 million)), representing basic and fully diluted loss per share of
($0.80) (2012: basic and diluted loss per share of ($0.25)).
Riverland Ag's net income for the quarter was $3.8 million (2012: net
loss of ($1.4 million)), representing basic and fully diluted earnings
per share of $0.27 (2012: basic and fully diluted loss per share of
($0.09)). Riverland Ag's net loss for the year was ($2.4 million)
(2012: net income of $3.8 million), representing basic and fully
diluted loss per share of ($0.17) (2012: basic and fully diluted
earnings per share of $0.25).
Cash and portfolio investment assets (consolidated):
As at March 31, 2013, cash and portfolio investments totalled $26.9
million, representing $1.88 per common share (2012: $39.6 million, $2.72 per share).
Shareholders' equity per common share (consolidated):
As at March 31, 2013, consolidated shareholders' equity per common share
was $10.11 (December 31, 2012: $9.89; September 30, 2012: $10.29; June
30, 2012: $10.61; March 31, 2012: $10.69).
The major factors contributing to earnings in Q4 2013, and to the
comparative improvement in earnings from Q4 2012 and Q3 2013, were:
Strategic Delivery of Inventory: In Q3 2013, a loss of $2.4 million was incurred as a result of a
strategic decision to deliver a significant amount of inventory in that
quarter against December 2012 futures contracts. Because some of these
inventories had been previously marked to market at levels higher than
delivery prices, a $2.4 million loss was incurred. In Q4 2013, the
gross profit percentage improved compared to Q3 2013 and Q4 2012, due
to realized trading gains during Q4. However, as reported in Q3,
earnings from operations and gross profit percentage were still lower
in this quarter compared to past historical levels due to depressed
carrying charges in cereal grains.
Early Debt Repayment Penalty and Interest Expense: In Q3 2013, Riverland Ag incurred a charge of $2.5 million as an early
repayment penalty related to paying off the balance of its long-term
debt. In Q4 2013, no such penalty was incurred and interest expense
for Q4 2013 was $1.76 million, as opposed to interest expense of $5.0
million in Q3 2013, which included the early repayment penalty of $2.5
Sale of facilities in Ralston, Wyoming and Powell, Wyoming: On the sale of the two facilities in Q4 2013, Ceres recognized a gain
of USD$9.6 million (CAD$9.6 million).
Canadian Dollar: A loss of $0.6 million on currency hedging transactions in Q4 2013,
compared to a loss of $0.4 million in Q3 2013, and compared to a gain
of $0.8 million on currency hedging transactions in Q4 2012.
As at March 31, 2013, the Corporation's net book value per share was
$10.11, up from $9.89 as at December 31, 2012. The increase in net
book value per share during the quarter is attributable to the
consolidated net income of $0.8 million for Q4 2013, and a currency
translation gain in Q4 2013 of $2.3 million related to the un-hedged
portion of Ceres' investment in the net assets of Riverland Ag. The
currency translation gain was caused by the decline in Q4 2013 of 2.12%
in the value of the Canadian dollar against the U.S. dollar.
Financial and Operational Highlights for the year include:
The sale of the Wyoming facilities for proceeds of USD$12.4 million
resulted in a gain of USD$9.6 million. Concurrently, we entered into a
management agreement to operate the facility and develop a plan for the
procurement of barley.
Entering into a third-party storage and handling agreement with
Consolidated Grain and Barge, a leading commodities player and Barge
operator in the United States, at our Mississippi River system facility
at Savage, Minnesota.
Conducting a strategic review of Riverland Ag's business and assets in
conjunction with Barclays Capital.
Ceres' 25% share in the net earnings of Stewart Southern Railway Inc.
("SSR") in 2013 totaled $1.2 million, which represents a 71.14% return
for 2013 on the original investment, and was driven by strong crude
oil-by-rail shipments that averaged 27,000 bpd in the fourth quarter
and by an increasing volume of grain shipments.
Expansion was completed at the oil shipping terminal on the SSR, which
raised capacity to 45,000 bpd.
In Q4 2013, the SSR began a rail car storage program, which will
diversify SSR's revenue base.
During Q4 2013, Ceres announced its intention to develop a Logistics Hub
on approximately 1,500 acres of land acquired in Northgate,
Saskatchewan, on the Border with North Dakota. This facility will act
as the direct gateway to the Burlington Northern Santa Fe Network for
Saskatchewan and Western Canada grain, oil and related commodities. As
part of this Logistics Hub, Ceres has entered into an Memorandum of
Understanding with The Scoular Company ("Scoular"), whereby Scoular
will own and operate the grain facility and tie it into its extensive
network through the United States and globally.
Ceres, in conjunction with Barclays Capital, has also completed its
strategic review of the assets and operations of Riverland Ag. The
following are the key findings and plans going forward:
Driven by significant recent changes in U.S based grain markets,
specifically the withdrawal of financial players from the futures
markets and decreasing stocks of grains, Riverland Ag's model of
relying on earning carrying income from grain markets in contango will
not yield satisfactory earnings;
Going forward, Riverland Ag will develop a more balanced business model
incorporating more customer-focused merchandising, long-term third
party storage contracts, more strategic use of its position in the
regular delivery markets of oats and spring wheat, and limited carrying
Certain assets have been identified as being non-core to this strategy
or may have higher value to other industry participants than to
Riverland Ag; and
Divisional management at Riverland Ag will be focused on implementing
the operational components of this strategy, while Ceres management
will continue to work with Barclays to unlock the value of these
Riverland Ag's new operational direction will be implemented
immediately; however, it will take a number of quarters until
management's efforts are reflected in increased earnings and net asset
value growth. Recent macro environment events such as the removal of
the Canadian Wheat Board monopoly, reduced North American oats
carryover inventory and strong worldwide wheat production provide a
more favourable environment in which to implement this new strategic
"We have completed our strategic review of the Riverland assets, which
have significantly under-performed over the past two years due to
changing markets and a static business model, said Michael Detlefsen,
President of Ceres. "Going forward, Riverland management will implement
a revamped strategy and Ceres will work with Barclays and Riverland
management to maximize the value of the Riverland assets," he added.
"In addition, Ceres expects to increase the value of its commodity
logistics assets, adding incremental businesses and growing traffic
volumes on the SSR, and continuing to work with its partners to build
"Ceres' strong balance sheet has allowed it to pursue the Northgate
opportunity aggressively" said Jason Gould, Chief Financial Officer of
Ceres. Mr. Gould continued "Our strong liquidity at Ceres will allow
us to continue to support Northgate and other initiatives we are
We are encouraged by the sale of Wyoming facilities in the fourth
quarter of 2013 and the agreement to manage the facility and its grain
origination for Briess Industries Inc. ("Briess"). With supply/demand
challenges on smaller grains caused by the recent drought and cropping
pattern changes, we are starting to see processing companies
reassessing and subsequently increasing their supplies of key cereal
grain inputs, leading to changes in both their longer term storage and
origination strategies. As exemplified by the Wyoming transactions,
Riverland Ag is well positioned to benefit from this strategic shift,
as many of its storage assets are strategically located close to these
major processing facilities.
During the year, SSR benefited from being at the forefront of the crude
oil by rail expansion in Canada. SSR will continue to work with its
key customers to continue to grow its operations. With its recent move
into rail car storage, SSR is becoming an even more compelling option
for oil shipments. In addition, with drilling activity continuing to
expand in the Stoughton draw area, SSR will look to add new customers
going forward in areas such as oil services.
SSR and our Northgate project offer unique shipping alternatives for the
steadily growing commodities being exported from Saskatchewan and
Western Canada. The recent initiation of the site preparation phase of
the Northgate logistics hub is a welcome step forward in the
Corporation's plan for the site. Northgate is expected to better
position Ceres and its partners to take advantage of the growth of
commodity exports from Saskatchewan and Western Canada, as well as
import oil drilling supplies and animal feed ingredients from the
United States. The Corporation and its partners expect to be
operational with Phase One of its grain, oil and oil supply operation
in early 2014, with the potential to begin shipping products in late
The following table represents an analysis of the components of Ceres'
equity attributable to shareholders as at March 31, 2013 and reflects
the value at which individual items are carried on Ceres' balance sheet
(in millions of dollars, except total equity attributable per share
Cash and cash equivalents (note 1)
Other current assets
Investment in the SSR (note 2)
Investment in land and capitalized costs representing the future
Northgate Commodities Logistics Hub ("Northgate") (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
Total Equity Attributable per share outstanding
Cash and cash equivalents exclude cash held by subsidiaries.
SSR is 25% owned by Ceres and is accounted for using the equity method.
The investment in Northgate represents an investment in approximately
1,500 acres of land in Saskatchewan and North Dakota, plus capitalized
costs incurred to ready the site for the future development of the
commodities logistics hub.
Ceres owns 100% of Riverland Ag and consolidates the accounts of
Riverland Ag in the annual financial statements. In this analysis, the
investment in Riverland Ag is accounted for using the equity method.
The net working capital of Riverland Ag represents primarily the owned
inventory which is marked to market, less all bank indebtedness. The
aggregate of other assets is substantially offset by the aggregate of
Represents approximately 52 million bushels of storage space at an
average net book value of $1.26 per bushel.
Canterra is 25% owned by Riverland Ag and is accounted for using the
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 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. is a Toronto-based asset management corporation
with two main investment areas: its Grain Handling and Storage unit,
anchored by its 100% ownership of Riverland Ag Corp.; and its Commodity
Logistics unit, containing its 25% interest in Stewart Southern Railway
Inc. and its development of the Northgate, SK Commodity Logistics Hub.
Ceres also has significant capital available to invest in these and
related businesses. Riverland Ag Corp. is a collection of (11) grain
storage and handling assets in Minnesota, North Dakota, New York,
Wisconsin and Ontario having aggregate storage capacity of
approximately 52 million bushels. Stewart Southern Railway Inc. is a
short line rail company that operates in Southeastern Saskatchewan. The
Northgate Commodity Logistics Hub is a $90 million grain, oil and
oilfield supplies transloading site being developed in conjunction with
Scoular Grain and several potential energy company partners, connected
to the Burlington Northern Santa Fe Railroad and expected to open in
the fall of 2013. 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, 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" 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 annual MD&A for the
quarter and year ended March 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
SOURCE: Ceres Global Ag Corp.
For further information:
Jason Gould, Chief Financial Officer, at (416) 915-2426.