Ceres Global Ag Corp. Announces Results For The First Quarter Ended June 30, 2011
Riverland Ag Has Now Been Owned For Four Full Quarters
For Immediate Release
Toronto, ON, (September 7, 2011) – Ceres Global Ag Corp. (“Ceres” or the “Corporation”) is pleased to announce its results for the first fiscal quarter ended June 30, 2011. As of June 30, 2011, Ceres has owned its operating subsidiary, Riverland Ag Corp. (“Riverland Ag”) for four full quarters. Since acquiring Riverland Ag in June 2010, Ceres has worked closely with Riverland Ag’s management team to improve operating and reporting systems, enhance risk management practices, identify and pursue strategic priorities and initiatives, and complete several capital investment projects. To fund future strategic investments and cereal grain market opportunities, the remaining portfolio investments within Ceres have largely been converted to cash. Riverland Ag’s bank lines have been increased.
The following are strategic initiative highlights for the quarter ended June 30, 2011:
- The 2.3 million bushel expansion of Riverland Ag’s Malt One facility in Minneapolis was substantially completed and is now ready to receive grain from the 2011 harvest;
- The purchase of a 4.5 million bushel grain storage facility in Manitowoc, Wisconsin was negotiated (the transaction closed in July); and
- The amount available under Riverland Ag’s committed revolving line of credit was increased from USD$115 million to USD$180 million.
Shortly after the end of the first quarter, Mr. Craig Reiners was appointed to the position of Chief Operating Officer of Riverland Ag. Mr. Reiners, a highly recognized leader in the grain industry, will enhance Riverland Ag’s existing expertise in risk management, grain storage operations and customer relationships.
The following is a summary of financial results for the fiscal quarter ended June 30, 2011, for both Ceres on a consolidated basis and for its operating subsidiary Riverland Ag:
(Note: The comparative amounts below for the quarter ended June 30, 2010 includes only 19 days of results for Riverland Ag.)
- Consolidated and Riverland Ag revenues were $89.6 million (2010: $17.9 million);
- Gross profit:
- Consolidated and Riverland Ag gross profit was $6.2 million (2010: $1.1 million);
- Consolidated EBITDA was $3.5 million (2010: $7.2 million) representing EBITDA per share of $0.23 (2010: $0.55); o Riverland Ag EBITDA was $5.3 million (2010: $1.1 million) representing EBITDA per share of $0.35 (2010: $0.08);
- Net income:
- Consolidated net income was $345,000 (2010: $6.6 million), representing basic and fully diluted earnings per share of $0.02 for 2011 (2010: $0.50). Included in net income for 2010 was a gain on the acquisition of Riverland Ag Corp. of $23.0 million); o Riverland Ag’s net income was $2.2 million (2010: $434,000), representing basic and fully diluted earnings per share of $0.14 (2010: $0.03);
- Liquid assets:
- As at June 30, 2011, cash and remaining portfolio investments totalled $60.9 million, representing $4.02 per share as at that date; and,
- Shareholders’ equity:
- As at June 30, 2011, consolidated shareholders’ equity per common share was $10.58 (March 31, 2011: $10.59).
Revenues were higher in the quarter and inventories were lower at the end of the quarter as a result of active delivery against its future contracts and merchandising opportunities in the quarter. Overall, gross profit and EBITDA maintained the levels of the previous quarter ended March 31, 2011.
The interim condensed consolidated financial statements for the quarter ended June 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 dollars.
Over the last four full quarters since the purchase of Riverland Ag, Riverland Ag has reported 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.
“We were very pleased to complete the expansion of the Malt One facility in Minneapolis, and to have negotiated the acquisition of a 4.5 million bushel facility in Wisconsin,” said Michael Detlefsen, President of Ceres, “and we continue to actively pursue a large number of both internal and external growth opportunities.”
Jason Gould, Chief Financial Officer of Ceres, said: “We continue to liquidate our remaining portfolio investment and are in a strong position to support further investments in the growth of Riverland Ag and related businesses. As well, the expansion of Riverland Ag’s credit facilities ensures that it has sufficient financial flexibility to pursue opportunities in the grain markets.”
Recent Industry Developments
In August 2011, the Government of Canada announced its intention to introduce legislation this autumn, which will end the Canadian Wheat Board’s marketing monopoly on wheat and barley. The legislation is expected to take effect August 2012, the beginning of the 2012/13 crop marketing year.
Also in 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.
While it is unclear what effect these developments will have on Riverland Ag, management believes these changes will be positive given the nature and location of Riverland Ag’s assets.
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”.
For further information, contact:
Chief Financial Officer
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.