Ceres Global Ag Corp. Announces Results for the Fourth Quarter
06/13/2012| 08:24am US/Eastern
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announces its results for the fourth quarter and fiscal year
ended March 31, 2012:
The following summarizes the financial results for the fiscal
year ended March 31, 2012, for
Ceres on a consolidated basis and for its operating
subsidiary Riverland Ag:
• Revenues:
o Consolidated and Riverland Ag revenues were $184.4
million (2011: $147.3 million);
• Gross profit:
o Consolidated and Riverland Ag gross profit was $16.0
million (2011: $18.3 million);
• EBITDA:
o Consolidated EBITDA was $5.9 million (2011: $34.9
million), representing EBITDA
per share of $0.40 (2011: $2.27; 2011 included a gain on
acquisition of subsidiary of
$23.0 million, representing $1.56 per share);
o Riverland Ag EBITDA was $13.4 million (2011: $15.9
million), representing
EBITDA per share of $0.90 (2011: $1.03);
• Net income (loss):
o Consolidated net loss was ($3.8 million) (2011: net
income of $25.7 million), representing basic and fully
diluted loss per share of ($0.25) for 2012 (2011: basic and
diluted earnings per share of $1.74);
o Riverland Ag's net income was $3.8 million (2011:
$6.7 million), representing basic and fully diluted earnings
per share of $0.25 (2011: $0.44);
• Cash and portfolio investment assets:
o As at March 31, 2012, cash and portfolio investments
totalled $39.6 million, representing $2.72 per share as at
that date (2011: $64.4 million, $4.23 per share); and,
• Shareholders' equity per common share:
o As at March 31, 2012, consolidated shareholders'
equity per common share was
$10.69 (December 31, 2011: 10.83; September 30, 2011: $11.07;
June 30, 2011:
$10.58).
• Normal Course Issuer Bid
o 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
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period from October 17, 2011 to March 31, 2012, Ceres
purchased 373,796 shares for a total cost of approximately
$2.0 million (reflecting an average purchase price per share
of $5.42).
Consolidated EBITDA for the Corporation and EBITDA for
Riverland Ag for the fiscal year ended March 31, 2012 was
$5.9 million and $13.4 million, respectively, compared to
$34.9 million and $15.9 million for the previous year.
Consolidated EBITDA for 2011 included a gain on acquisition
of subsidiaries of $23.0 million. Over the four full quarters
ended March 31, 2012, Riverland Ag has reported aggregate
EBITDA of $13.4 million, aggregating $0.90 per Ceres common
share, and aggregate net income of $3.8 million representing
$0.25 per Ceres common share (four full quarters ended
December 31, 2011: aggregate EBITDA of $18 million,
aggregating $1.19 per Ceres common share, and aggregate net
income of $7.1 million representing $0.47 per Ceres common
share).
As at March 31, 2012, the Corporation's net book value per
share was $10.69, down from $10.83 as at the prior
quarter-end, but up from $10.52 as at March 31, 2011. The
decrease during the fourth quarter is attributable primarily
to the strength in the Canadian dollar and the related effect
on the un-hedged portion of the investment in the net assets
of Riverland Ag, denominated in U.S. dollars. In addition, a
disappointing operating performance at Riverland Ag
contributed to the decrease in net book value per share.
The challenged results of this past year were due primarily
to the performance of our wholly owned subsidiary, Riverland
Ag. As mentioned in previous quarter results, its challenged
performance was the result of a combination of lower
inventory levels and reduced carrying income due to inverted
oats and spring wheat markets and narrower carrying charges
for soft winter wheat. As previously disclosed, Management
believes that it could be a number of quarters until
Riverland Ag recovers to previous earnings levels.
Since the end of the last fiscal year ended March 31, 2012,
it now appears we are seeing some improvement, as the oat and
spring wheat futures markets have now reversed to a contango
structure that will be favourable for our earnings.
Nonetheless, the second leg of the recovery will require us
to rebuild our inventory. In that area, we are cautiously
optimistic that this year's North American harvest is shaping
up to be strong with both large planting intentions and good
weather as at the date of preparation of this release. In
addition, two recent acquisitions, located in Ralston,
Wyoming and Manitowoc, Wisconsin, will benefit from being
under our complete control at this year's harvest for the
first time, which should result in improved performance. In
the case of Ralston, we have contracted farmer production of
barley at a 40% increase to what was achieved last year.
The removal of the Canadian Wheat Board monopoly on wheat and
barley sales, effective August
1, 2012, coupled with the Minneapolis Grain Exchange's
acceptance of Canadian spring wheat, should help Riverland Ag
rebuild inventories. It should increase the size and enhance
the liquidity of the Minneapolis spring wheat futures market,
making this contract less susceptible to supply disruptions,
such as those which caused last year's inversion and drove
much of the reduction in Riverland's inventory positions.
With approximately 30% of the delivery space on the
Minneapolis Spring Wheat futures market, Riverland Ag is in a
strong position to benefit from these changes. Management
believes that there will be increased southward movement of
Canadian Grain to the United States for U.S. domestic
consumption and to utilize the American grain export
infrastructure. This could increase the demand for storage
space in the United States, and Riverland Ag could play a
role in meeting this demand. Consequently, Riverland Ag
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is readying itself for these changes and working to identify
and capitalize on the emerging opportunities.
While Riverland Ag's results for this past year were
disappointing, Management is starting to see a more positive
future when the 2012 harvest begins. 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 market that will
likely result in a more integrated market. We continue to
remain positive about the strategic location and value of
Riverland Ag's assets, and continue to assess complementary
upstream and downstream investment opportunities.
Another positive development has been the improved
performance of our 25% investment in Stewart Southern Railway
("SSR"), located in the southeastern area of Saskatchewan. As
noted in the previous quarter, SSR began shipping oil on its
line in late January/February and volumes have steadily
increased. In Q4 2012, the SSR achieved positive earnings in
a month for the first time in since Ceres made its
investment. This improvement is directly attributable to
shipping oil by rail that is occurring on the line. It is
expected that daily volume of oil shipments will increase
from approximately 4,000 boe/d that was achieved in March
2012 to approximately 16,000 boe/d by late summer or early
fall of 2012. As well, grain volumes shipped could rise
significantly from last year, if this area of Saskatchewan is
able to produce a crop, after the disappointments of the past
two years due to significant moisture levels. Ceres is
working with our partners and customers of SSR to identify
opportunities for expanding the volume and efficiency of this
rail line. Management is also working hard to expand and
diversify Ceres' emerging commodity logistics division, with
several initiatives in the very early stages of
development.
The annual consolidated financial statements for the year
ended March 31, 2012 and the notes related thereto, and the
Annual 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 dollars.
"While very disappointed in the results of this past year, we
recognize the cyclicality of this industry and are working
hard to position Riverland Ag to benefit from pending
structural changes in the North American cereal grain market
as well as build-up our emerging commodities logistics
business." said Michael Detlefsen, President of Ceres. Mr.
Detlefsen added, "Our assets are strategically located in a
key area of production, consumption and delivery and we
believe that their strategic value has never been
greater."
Jason Gould, Chief Financial Officer of Ceres, said: "The
recent developments related to the SSR have made this a
compelling growth story going forward and gives us a strong
second business in addition to Riverland Ag to invest in."
Mr. Gould added, "Ceres has a strong balance sheet and
management is working hard to deploy its ample cash in
support of its grain and commodity logistics businesses."
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
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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 this 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 55 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".
For further information, contact Jason Gould, Chief Financial
Officer, at (416) 915-2426.
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.
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