Letter To Shareholders First Quarter Ended June 30, 2011

We are pleased to report to our fellow shareholders on Ceres’ results and activities for the first quarter ended June 30, 2011.

Highlights for the first quarter ended June 30, 2011 were as follows:

  1. EBITDA:
    1. Consolidated $3.5 million ($0.23 per share); Riverland Ag $5.3 million ($0.35 per share);
  2. Net income:
    1. Consolidated $345,000 ($0.02 per share); Riverland Ag $2.2 million ($0.14 per share). Consolidated net income for the quarter includes Ceres’ share of General and administrative expenses of $1.4 million, and a Finance loss of $453,000;
  3. Cash and Portfolio Investments:
    1. As at June 30, 2011, total of $60.9 million ($4.02 per share);
  4. Shareholders’ equity per common share:
    1. As at June 30, 2011, Shareholders’ equity per common share was $10.58;
  5. Strategic Initiatives:
    1. 2.3 million bushel expansion of the Malt One facility in Minneapolis was substantially completed; purchase of a 4.5 million bushel facility in Wisconsin was negotiated (and closed in July 2011);
  6. Financing:
    1. Riverland Ag’s committed revolving line of credit was increased from USD$115 million to USD$180 million; and,
  7. Management:
    1. Mr. Craig Reiners was appointed Chief Operating Officer of Riverland Ag.

In the 2011 Annual Report, we reported in some detail on the purchase of Riverland Ag Corp., which transformed Ceres from an investment company to an operating company. Ceres has now owned Riverland Ag for a full four quarters. We are pleased with the financial results, operational improvements and strategic initiatives that have been achieved over this period. Over the last four full quarters, Riverland Ag’s aggregate EBITDA was $20.1 million, representing $1.32 per Ceres common share, and its aggregate net income was $8.5 million, representing $0.56 per Ceres common share.

The grain industry continues to evolve. The Canadian Government recently announced its intention to end the Canadian Wheat Board’s marketing monopoly on wheat and barley effective August 2012. In August, the Minneapolis Grain exchange announced that it has removed the U.S. origin condition for wheat delivered against its Hard Red Spring Wheat contract, effective no later than the May 2013 contract. We remain focused on investing in infrastructure assets at critical points in the agricultural value chain, such as strategically-located grain elevators, key logistics links and selected further processing operations, to capitalize on opportunities as the industry continues to evolve.



Looking ahead for the remainder of our fiscal year ending March 31, 2012, Riverland Ag will continue to make operational improvements, bring its new capacity fully into operation, capitalize on margin opportunities presented in the cereal grain markets, and pursue opportunities to expand capacity. At Ceres, management will continue to monetize Ceres’ remaining portfolio investments and continue to invest in business opportunities related to Riverland Ag.


Gary Selke, Chief Executive Officer
Michael Detlefsen, President
Jason Gould, Chief Financial Officer

September 7, 2011


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