Registration No. 333-199200
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Ontario, Canada
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700
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Not Applicable
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||
(Province or other jurisdiction of incorporation or organization)
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(Primary Standard Industrial Classification Code Number)
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(I.R.S. Employer
Identification Number)
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Riccardo Leofanti, Esq.
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Stacy McLean, Esq.
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Skadden, Arps, Slate, Meagher & Flom LLP
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Blake, Cassels & Graydon LLP
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222 Bay Street, Suite 1750, P.O. Box 258
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199 Bay Street, Suite 4000, Commerce Court West
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Toronto, Ontario, Canada M5K 1J5
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Toronto, Ontario, Canada M5L 1A9
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(416) 777-4700
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416-863-2400
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Exhibit Number
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Description
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1.1
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Standby Purchase Agreement dated October 7, 2014 by and among the Registrant and the Standby Purchasers named therein.1
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2.1
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The Registrant’s annual information form for the year ended March 31, 2014, dated June 30, 2014.1
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2.2
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The Registrant’s audited consolidated financial statements comprising the consolidated balance sheets as at March 31, 2014 and 2013 and statements of comprehensive loss, changes in shareholders’ equity and cash flows for the years ended March 31, 2014 and 2013, together with the notes thereto and the independent auditor’s report thereon.1
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2.3
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The Registrant’s management’s discussion and analysis of financial condition and results of operations for the year ended March 31, 2014.1
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2.4
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The Registrant’s unaudited condensed consolidated interim financial statements for the three-month periods ended June 30, 2014 and 2013, together with the notes thereto.1
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2.5
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The Registrant’s management’s discussion and analysis of financial condition and results of operations for the three-month period ended June 30, 2014.1
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2.6
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The Registrant’s management proxy circular dated as of September 3, 2014 relating to the annual meeting of shareholders of the Registrant held on September 29, 2014.1
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2.7
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The Registrant’s material change report dated July 8, 2014 relating to the senior secured term loan agreement entered into by the Registrant and Macquarie Bank Ltd. on June 30, 2014.1
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2.8
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The Registrant's material change report dated July 28, 2014 relating to the appointment of Patrick Bracken as its new President and Chief Executive Officer and a member of the Registrant’s Board of Directors.1
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2.9
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The Registrant’s unaudited condensed consolidated interim financial statements for the three-month and six-month periods ended September 30, 2014 and 2013, together with the notes thereto.
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2.10
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The Registrant’s management’s discussion and analysis of financial condition and results of operations for the three-month and six-month periods ended September 30, 2014.
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2.11 | The Registrant’s material change report, dated October 21, 2014, relating to the filing of the prospectus, dated October 21, 2014, and the pricing of, and the record date for, the offering of Rights described therein. | |
3.1
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Consent of KPMG LLP.
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4.1
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Powers of Attorney.1
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1
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Previously filed.
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CERES GLOBAL AG CORP.
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|||
By:
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/s/ Patrick Bracken | ||
Patrick Bracken
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|||
President and Chief Executive Officer
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Signature
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Title
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/s/ Patrick Bracken |
Patrick Bracken
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President and Chief Executive Officer
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(Principal Executive Officer)
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*
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Mark Kucala
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Vice-President and Chief Financial Officer
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(Principal Financial Officer and Principal Accounting Officer)
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*
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Harvey T. Joel
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Director
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*
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Gary W. Mize
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Director
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*
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Douglas E. Speers
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Director
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*
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James T. Vanasek
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Director
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*
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Harold M. Wolkin
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Director
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* By:
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/s/ Patrick Bracken | |||
Patrick Bracken
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||||
Attorney-in-fact
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RIVERLAND AG CORP.
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(Authorized Representative)
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|||
By:
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/s/ Mark Kucala | ||
Name:
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Mark Kucala
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Title:
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Chief Financial Officer
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Exhibit Number
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Description
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1.1
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Standby Purchase Agreement dated October 7, 2014 by and among the Registrant and the Standby Purchasers named therein.1
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2.1
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The Registrant’s annual information form for the year ended March 31, 2014, dated June 30, 2014.1
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2.2
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The Registrant’s audited consolidated financial statements comprising the consolidated balance sheets as at March 31, 2014 and 2013 and statements of comprehensive loss, changes in shareholders’ equity and cash flows for the years ended March 31, 2014 and 2013, together with the notes thereto and the independent auditor’s report thereon.1
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2.3
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The Registrant’s management’s discussion and analysis of financial condition and results of operations for the year ended March 31, 2014.1
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2.4
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The Registrant’s unaudited condensed consolidated interim financial statements for the three-month periods ended June 30, 2014 and 2013, together with the notes thereto.1
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2.5
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The Registrant’s management’s discussion and analysis of financial condition and results of operations for the three-month period ended June 30, 2014.1
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2.6
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The Registrant’s management proxy circular dated as of September 3, 2014 relating to the annual meeting of shareholders of the Registrant held on September 29, 2014.1
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2.7
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The Registrant’s material change report dated July 8, 2014 relating to the senior secured term loan agreement entered into by the Registrant and Macquarie Bank Ltd. on June 30, 2014.1
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2.8
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The Registrant's material change report dated July 28, 2014 relating to the appointment of Patrick Bracken as its new President and Chief Executive Officer and a member of the Registrant’s Board of Directors.1
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2.9
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The Registrant’s unaudited condensed consolidated interim financial statements for the three-month and six-month periods ended September 30, 2014 and 2013, together with the notes thereto.
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2.10
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The Registrant’s management’s discussion and analysis of financial condition and results of operations for the three-month and six-month periods ended September 30, 2014.
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2.11 | The Registrant’s material change report, dated October 21, 2014, relating to the filing of the prospectus, dated October 21, 2014, and the pricing of, and the record date for, the offering of Rights described therein. | |
3.1
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Consent of KPMG LLP.
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4.1
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Powers of Attorney.1
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1
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Previously filed.
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CERES GLOBAL AG CORP.
Table of Contents
September 30, 2014
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Page
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Interim Condensed Consolidated Balance Sheets
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1
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Interim Condensed Consolidated Statements of Comprehensive Income (Loss)
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2
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Interim Condensed Consolidated Statements of Cash Flows
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3
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Interim Condensed Consolidated Statements of Changes in Shareholders’ Equity
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4
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Notes to the Interim Condensed Consolidated Financial Statements
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5 – 24
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Consolidated Balance Sheets
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(Unaudited)
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||||||||||||
Note
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September 30, 2014
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March 31, 2014
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||||||||||
ASSETS
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||||||||||||
Current
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||||||||||||
Cash
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$ | 13,713,418 | $ | 12,009,400 | ||||||||
Portfolio investments, at fair value
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4 | 848,163 | 848,163 | |||||||||
Due from Brokers
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5 | 6,213,098 | 4,620,007 | |||||||||
Derivatives
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12(a) | 4,578,810 | 2,965,891 | |||||||||
Accounts receivable, trade
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4,661,222 | 6,757,757 | ||||||||||
Inventories, grains
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131,047,903 | 113,320,466 | ||||||||||
GST - HST recoverable
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707,070 | 1,469,543 | ||||||||||
Income taxes recoverable
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75,673 | 58,465 | ||||||||||
Assets held for sale
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6 | - | 18,233,455 | |||||||||
Prepaid expenses and sundry assets
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3,468,626 | 1,477,376 | ||||||||||
Current assets
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165,313,983 | 161,760,523 | ||||||||||
Investments in associates
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5,686,893 | 4,625,667 | ||||||||||
Intangible assets
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334,680 | 331,650 | ||||||||||
Investment property
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7 | - | 14,803,988 | |||||||||
Property, plant and equipment
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8 | 93,424,110 | 50,687,083 | |||||||||
Non-current assets
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99,445,683 | 70,448,388 | ||||||||||
TOTAL ASSETS
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$ | 264,759,666 | $ | 232,208,911 | ||||||||
LIABILITIES
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Current
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||||||||||||
Bank indebtedness
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9 | $ | 77,790,788 | $ | 71,746,950 | |||||||
Term loan
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10 | 22,312,000 | - | |||||||||
Accounts payable and accrued liabilities
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22,132,899 | 7,567,634 | ||||||||||
Repurchase obligations
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11 | - | 15,941,080 | |||||||||
Derivatives
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12(a) | 6,322,763 | 1,752,256 | |||||||||
Provision for future payments to Front Street Capital
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15 | 864,000 | 970,000 | |||||||||
Current liabilities
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129,422,450 | 97,977,920 | ||||||||||
Non-current liability, deferred income taxes
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310,667 | 156,534 | ||||||||||
TOTAL LIABILITIES
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129,733,117 | 98,134,454 | ||||||||||
SHAREHOLDERS' EQUITY
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||||||||||||
Common shares
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13(e) | 137,100,022 | 137,100,022 | |||||||||
Deferred share units
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14 | 187,713 | 62,500 | |||||||||
Contributed surplus
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9,228,422 | 9,228,422 | ||||||||||
Currency translation account
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9,092,661 | 8,072,943 | ||||||||||
Deficit
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(20,582,269 | ) | (20,389,430 | ) | ||||||||
TOTAL SHAREHOLDERS' EQUITY
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135,026,549 | 134,074,457 | ||||||||||
COMMITMENTS
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8 | |||||||||||
CONTINGENT LIABILITY
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18 | |||||||||||
SUBSEQUENT EVENT
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19 | |||||||||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
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$ | 264,759,666 | $ | 232,208,911 | ||||||||
The accompanying notes are an integral part of these financial statements.
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||||||||||||
ON BEHALF OF THE BOARD
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Interim Condensed Consolidated Statements of Comprehensive Income (Loss)
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||||||||||||||||||||
For the three-month and six-month periods ended September 30
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||||||||||||||||||||
(Unaudited)
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||||||||||||||||||||
3 months
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6 months
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|||||||||||||||||||
Note
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2014
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2013
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2014
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2013
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||||||||||||||||
REVENUES
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$ | 17,126,266 | $ | 74,378,249 | $ | 68,583,986 | $ | 144,091,591 | ||||||||||||
Cost of sales
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(11,801,539 | ) | (71,747,467 | ) | (62,093,199 | ) | (143,517,471 | ) | ||||||||||||
GROSS PROFIT
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5,324,727 | 2,630,782 | 6,490,787 | 574,120 | ||||||||||||||||
General and administrative expenses
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15 | (2,919,310 | ) | (11,531,995 | ) | (6,329,915 | ) | (14,448,936 | ) | |||||||||||
INCOME (LOSS) FROM OPERATIONS
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2,405,417 | (8,901,213 | ) | 160,872 | (13,874,816 | ) | ||||||||||||||
Finance income (loss)
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12(b) | (1,818 | ) | (1,862,684 | ) | (147,252 | ) | (1,672,229 | ) | |||||||||||
Finance expenses
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(523,475 | ) | (934,004 | ) | (1,169,135 | ) | (2,324,012 | ) | ||||||||||||
INCOME (LOSS) BEFORE INCOME TAXES AND UNDERNOTED ITEM
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1,880,124 | (11,697,901 | ) | (1,155,515 | ) | (17,871,057 | ) | |||||||||||||
Income taxes (recovery)
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168,958 | (234,224 | ) | 286,050 | (204,134 | ) | ||||||||||||||
INCOME (LOSS) BEFORE UNDERNOTED ITEM
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1,711,166 | (11,463,677 | ) | (1,441,565 | ) | (17,666,923 | ) | |||||||||||||
Share of net income (loss) in investments in associates
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201,633 | (224,103 | ) | 1,248,726 | 139,062 | |||||||||||||||
NET INCOME (LOSS) FOR THE PERIOD
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1,912,799 | (11,687,780 | ) | (192,839 | ) | (17,527,861 | ) | |||||||||||||
Other comprehensive gain (loss) for the period
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||||||||||||||||||||
Gain (loss) on translation of foreign currency accounts of foreign operations
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4,976,660 | (2,205,268 | ) | 1,019,718 | 1,584,430 | |||||||||||||||
TOTAL COMPREHENSIVE GAIN (LOSS) FOR THE PERIOD
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$ | 6,889,459 | $ | (13,893,048 | ) | $ | 826,879 | $ | (15,943,431 | ) | ||||||||||
WEIGHTED-AVERAGE NUMBER OF SHARES FOR THE PERIOD
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14,208,208 | 14,289,539 | 14,208,208 | 14,311,749 | ||||||||||||||||
PROFIT (LOSS) PER SHARE
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||||||||||||||||||||
Basic
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$ | 0.13 | $ | (0.82 | ) | $ | (0.01 | ) | $ | (1.22 | ) | |||||||||
Diluted
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$ | 0.13 | $ | (0.82 | ) | $ | (0.01 | ) | $ | (1.22 | ) | |||||||||
Supplemental disclosure of selected information:
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||||||||||||||||||||
Depreciation included in Cost of sales
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$ | 761,297 | $ | 695,596 | $ | 1,292,723 | $ | 1,390,133 | ||||||||||||
Depreciation included in General and administrative expenses
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$ | 12,995 | $ | 37,615 | $ | 53,442 | $ | 76,088 | ||||||||||||
Amortization of financing costs included in Finance expenses
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$ | 146,934 | $ | 112,152 | $ | 294,111 | $ | 222,684 | ||||||||||||
Personnel costs included in Cost of sales
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$ | 409,974 | $ | 403,347 | $ | 830,986 | $ | 708,939 | ||||||||||||
Personnel costs included in General and administrative expenses
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$ | 94,487 | $ | 101,794 | $ | 204,074 | $ | 196,858 | ||||||||||||
The accompanying notes are an integral part of these financial statements.
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CERES GLOBAL AG CORP.
|
||||||||||||||||||||
Interim Condensed Consolidated Statements of Cash Flows
|
||||||||||||||||||||
For the three-month and six-month periods ended September 30
|
||||||||||||||||||||
(Unaudited)
|
||||||||||||||||||||
Note
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3 months
|
6 months
|
||||||||||||||||||
2014
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2013
|
2014
|
2013
|
|||||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||||||||||||||
Net income (loss) for the period
|
$ | 1,912,799 | $ | (11,687,780 | ) | $ | (192,839 | ) | $ | (17,527,861 | ) | |||||||||
Adjustments for:
|
||||||||||||||||||||
Depreciation of property, plant and equipment
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774,292 | 733,211 | 1,346,165 | 1,466,221 | ||||||||||||||||
Realized gain on sale of property, plant and equipment
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12(b) | - | (176,786 | ) | - | (176,786 | ) | |||||||||||||
Change in fair value of investments
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- | 2,022,278 | - | 1,400,833 | ||||||||||||||||
Finance expense
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523,475 | 934,004 | 1,169,135 | 2,324,012 | ||||||||||||||||
Income taxes
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168,958 | (234,224 | ) | 286,050 | (204,134 | ) | ||||||||||||||
Deferred share units issued to Directors and fair value adjustment
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14 | 74,627 | - | 143,925 | - | |||||||||||||||
Share of net income in investments in associates
|
(201,633 | ) | 224,103 | (1,248,726 | ) | (139,062 | ) | |||||||||||||
3,252,518 | (8,185,194 | ) | 1,503,710 | (12,856,777 | ) | |||||||||||||||
Changes in non-cash working capital accounts
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17 | (36,727,867 | ) | 4,230,383 | 156,325 | 66,031,448 | ||||||||||||||
Interest paid
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(318,462 | ) | (806,005 | ) | (956,106 | ) | (2,322,678 | ) | ||||||||||||
Income taxes paid
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(3,360 | ) | (67,506 | ) | (3,360 | ) | (67,506 | ) | ||||||||||||
Cash flow provided by (used in) operating activities
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(33,797,171 | ) | (4,828,322 | ) | 700,569 | 50,784,487 | ||||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||||||||||||||
Proceeds from disposition of assets held for sale
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- | - | 6,759,240 | - | ||||||||||||||||
Dividend received from associate
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- | - | 187,500 | - | ||||||||||||||||
Proceeds from sale of property, plant and equipment
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- | 1,496,071 | - | 1,496,071 | ||||||||||||||||
Acquisition of, and costs capitalized on, investment property
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7 | - | (2,027,907 | ) | (5,052,271 | ) | (4,059,306 | ) | ||||||||||||
Acquisition of property, plant and equipment
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8 | (11,926,909 | ) | (549,426 | ) | (12,495,019 | ) | (617,166 | ) | |||||||||||
Cash flow used in investing activities
|
(11,926,909 | ) | (1,081,262 | ) | (10,600,550 | ) | (3,180,401 | ) | ||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||||||||||||||
Net proceeds from (repayment of) bank indebtedness
|
32,701,500 | 813,300 | 5,446,500 | (28,862,400 | ) | |||||||||||||||
Proceeds from term loan
|
- | - | 21,323,000 | - | ||||||||||||||||
Net repayment of repurchase obligations
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- | - | (15,720,457 | ) | (27,130,501 | ) | ||||||||||||||
Financing costs paid
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- | - | (479,688 | ) | - | |||||||||||||||
Deferred share units redeemed
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- | - | (18,712 | ) | - | |||||||||||||||
Repurchase of common shares under normal course issuer bid
|
- | (895,710 | ) | - | (895,710 | ) | ||||||||||||||
Cash flow provided by (used in) financing activities
|
32,701,500 | (82,410 | ) | 10,550,643 | (56,888,611 | ) | ||||||||||||||
Foreign exchange cash flow adjustment on accounts denominated in a foreign currency
|
1,135,086 | (168,592 | ) | 1,053,356 | (327,121 | ) | ||||||||||||||
Increase (decrease) in cash for the period
|
(11,887,494 | ) | (6,160,586 | ) | 1,704,018 | (9,611,646 | ) | |||||||||||||
Cash, beginning of period
|
25,600,912 | 16,992,776 | 12,009,400 | 20,443,836 | ||||||||||||||||
Cash, end of period
|
$ | 13,713,418 | $ | 10,832,190 | $ | 13,713,418 | $ | 10,832,190 | ||||||||||||
The accompanying notes are an integral part of these financial statements
|
CERES GLOBAL AG CORP.
|
||||||||||||||||||||||||||||||||
Interim Condensed Consolidated Statements of Changes in Shareholders' Equity
|
||||||||||||||||||||||||||||||||
For the six-month periods ended September 30
|
||||||||||||||||||||||||||||||||
(Unaudited)
|
||||||||||||||||||||||||||||||||
Note
|
Common shares
|
Warrants
|
Deferred share units
|
Contributed surplus
|
Currency translation account
|
Deficit
|
Total
|
|||||||||||||||||||||||||
Balances, April 1, 2014
|
$ | 137,100,022 | $ | - | $ | 62,500 | $ | 9,228,422 | $ | 8,072,943 | $ | (20,389,430 | ) | $ | 134,074,457 | |||||||||||||||||
Changes in six-month period ended September 30, 2014
|
||||||||||||||||||||||||||||||||
Issuance of Deferred Share Units
|
14 | - | - | 146,356 | - | - | - | 146,356 | ||||||||||||||||||||||||
Redemption of Deferred Share Units for cash
|
14 | - | - | (18,712 | ) | - | - | - | (18,712 | ) | ||||||||||||||||||||||
Fair value adjustment of Deferred Share Units
|
14 | - | - | (2,431 | ) | - | - | - | (2,431 | ) | ||||||||||||||||||||||
Other comprehensive loss
|
- | - | - | - | 1,019,718 | - | 1,019,718 | |||||||||||||||||||||||||
Net loss for the period
|
- | - | - | - | - | (192,839 | ) | (192,839 | ) | |||||||||||||||||||||||
Balances, September 30, 2014
|
$ | 137,100,022 | $ | - | $ | 187,713 | $ | 9,228,422 | $ | 9,092,661 | $ | (20,582,269 | ) | $ | 135,026,549 | |||||||||||||||||
Balances, April 1, 2013
|
$ | 138,298,904 | $ | 202,384 | $ | - | $ | 9,026,038 | $ | (1,292,904 | ) | $ | (1,353,911 | ) | $ | 144,880,511 | ||||||||||||||||
Changes in six-month period ended September 30, 2013
|
||||||||||||||||||||||||||||||||
Expiry of warrants, June 11, 2013
|
13 | (c) | - | (202,384 | ) | - | 202,384 | - | - | - | ||||||||||||||||||||||
Repurchases under normal course issuer bid
|
13 | (b) | (1,113,892 | ) | - | - | - | - | 218,182 | (895,710 | ) | |||||||||||||||||||||
Other comprehensive income
|
- | - | - | - | 1,584,430 | - | 1,584,430 | |||||||||||||||||||||||||
Net loss for the period
|
- | - | - | - | - | (17,527,861 | ) | (17,527,861 | ) | |||||||||||||||||||||||
Balances, September 30, 2013
|
$ | 137,185,012 | $ | - | $ | - | $ | 9,228,422 | $ | 291,526 | $ | (18,663,590 | ) | $ | 128,041,370 | |||||||||||||||||
The accompanying notes are an integral part of these financial statements
|
CERES GLOBAL AG CORP.
Notes to the Interim Condensed Consolidated Financial Statements
September 30, 2014
(Unaudited)
|
1.
|
CORPORATE STATUS, REPORTING ENTITY AND NATURE OF OPERATIONS
|
2.
|
BASIS OF PREPARATION
|
CERES GLOBAL AG CORP.
Notes to the Interim Condensed Consolidated Financial Statements
September 30, 2014
(Unaudited)
|
2.
|
BASIS OF PREPARATION (continued)
|
|
·
|
Derivative financial instruments are measured at fair value;
|
|
·
|
Financial instruments at fair value through profit or loss are measured at fair value; and
|
|
·
|
Inventories are measured at fair value less costs to sell.
|
3.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
CERES GLOBAL AG CORP.
Notes to the Interim Condensed Consolidated Financial Statements
September 30, 2014
(Unaudited)
|
4.
|
PORTFOLIO INVESTMENTS
|
September 30, 2014
|
March 31, 2014
|
|||||||
Total fair value
|
$ | 848,163 | $ | 848,163 | ||||
Total cost
|
$ | 7,231,818 | $ | 7,231,818 |
5.
|
DUE FROM (TO) BROKERS
|
September 30, 2014
|
March 31,2014
|
|||||||
Due from Brokers
|
||||||||
Margin deposits
|
$ | 5,246,002 | $ | 4,725,570 | ||||
Unrealized gains on future contracts and options, at fair value
|
967,096 | 55,242 | ||||||
6,213,098 | 4,780,812 | |||||||
Due to Brokers
|
||||||||
Unrealized losses on future contracts and options, at fair value
|
- | (160,805 | ) | |||||
$ | 6,213,098 | $ | 4,620,007 |
CERES GLOBAL AG CORP.
Notes to the Interim Condensed Consolidated Financial Statements
September 30, 2014
(Unaudited)
|
6.
|
ASSETS HELD FOR SALE
|
March 31, 2014
|
Manitowoc
|
Savage
|
Totals
|
|||||||||
Land
|
$ | 118,782 | $ | 1,093,308 | $ | 1,212,090 | ||||||
Buildings and silos / elevators
|
6,830,873 | 9,973,350 | 16,804,223 | |||||||||
Machinery and equipment
|
504,838 | 261,206 | 766,044 | |||||||||
Furniture and fixtures, computers, office equipment and other assets
|
200,556 | 51,490 | 252,046 | |||||||||
7,655,049 | 11,379,354 | 19,034,403 | ||||||||||
Impairment loss on reclassification as assets held for sale
|
(763,201 | ) | - | (763,201 | ) | |||||||
Foreign currency translation adjustment
|
(37,747 | ) | - | (37,747 | ) | |||||||
$ | 6,854,101 | $ | 11,379,354 | $ | 18,233,455 |
CERES GLOBAL AG CORP.
Notes to the Interim Condensed Consolidated Financial Statements
September 30, 2014
(Unaudited)
|
7.
|
INVESTMENT PROPERTY
|
September 30, 2014
|
March 31, 2014
|
|||||||
Cost, as at beginning of period
|
$ | 14,803,988 | $ | 4,975,921 | ||||
Investment property additions
|
- | 12,397 | ||||||
Development and other construction costs capitalized
|
5,061,659 | 9,794,316 | ||||||
Foreign currency translation adjustments
|
(9,388 | ) | 21,354 | |||||
19,856,259 | 14,803,988 | |||||||
Amount reclassified to Property, plant and equipment
|
(19,856,259 | ) | - | |||||
Cost, as at end of period
|
$ | - | $ | 14,803,988 |
8.
|
PROPERTY, PLANT AND EQUIPMENT
|
September 30, 2014
|
March 31, 2014
|
|||||||
Buildings and silos/elevators
|
$ | 60,412,009 | $ | 46,732,781 | ||||
Machinery and equipment
|
4,049,096 | 3,621,399 | ||||||
Furniture, fixtures, computers, office equipment & other assets
|
1,351,062 | 2,859,008 | ||||||
Land
|
25,340,747 | 5,045,257 | ||||||
Construction in progress
|
13,078,695 | - | ||||||
104,231,609 | 58,258,445 | |||||||
Less: accumulated depreciation
|
(10,807,499 | ) | (7,571,362 | ) | ||||
$ | 93,424,110 | $ | 50,687,083 |
CERES GLOBAL AG CORP.
Notes to the Interim Condensed Consolidated Financial Statements
September 30, 2014
(Unaudited)
|
8.
|
PROPERTY, PLANT AND EQUIPMENT (continued)
|
9.
|
BANK INDEBTEDNESS
|
September 30, 2014
|
March 31, 2014
|
|||||||||||||||
in US$
|
in C$
|
in US$
|
in C$
|
|||||||||||||
Revolving line of credit
|
$ | 70,000,000 | $ | 78,092,000 | $ | 65,000,000 | $ | 71,857,500 | ||||||||
Unamortized financing costs
|
(270,000 | ) | (301,212 | ) | (100,000 | ) | (110,550 | ) | ||||||||
$ | 69,730,000 | $ | 77,790,788 | $ | 64,900,000 | $ | 71,746,950 |
10.
|
TERM LOAN
|
CERES GLOBAL AG CORP.
Notes to the Interim Condensed Consolidated Financial Statements
September 30, 2014
(Unaudited)
|
10.
|
TERM LOAN (continued)
|
September 30, 2014
|
March 31, 2014
|
|||||||||||||||
in US$
|
in C$
|
in US$
|
in C$
|
|||||||||||||
Term loan payable
|
$ | 20,000,000 | $ | 22,132,000 | $ | - | $ | - |
11.
|
REPURCHASE OBLIGATIONS
|
12.
|
FINANCIAL INSTRUMENTS
|
|
(a)
|
Fair value of financial instruments
|
CERES GLOBAL AG CORP.
Notes to the Interim Condensed Consolidated Financial Statements
September 30, 2014
(Unaudited)
|
September 30, 2014
|
March 31, 2014
|
|||||||
Derivative assets
|
||||||||
Unrealized gains on open cash contracts
|
$ | 4,578,810 | $ | 2,965,891 | ||||
Derivative liabilities
|
||||||||
Unrealized losses on open cash contracts
|
$ | (6,322,763 | ) | $ | (1,752,256 | ) |
12.
|
FINANCIAL INSTRUMENTS (continued)
|
|
(b)
|
Finance (loss) income
|
3 months
|
6 months
|
|||||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||
Interest and other revenues
|
$ | 17,879 | $ | 1 | $ | 17,879 | $ | 3 | ||||||||
Realized gain on sales of property, plant and equipment
|
- | 176,786 | - | 176,786 | ||||||||||||
Realized and unrealized gain (loss) on currency-hedging
|
327,603 | - | 327,603 | (468,891 | ) | |||||||||||
Realized and unrealized (loss) gain on foreign exchange
|
(347,300 | ) | (17,193 | ) | (492,734 | ) | 20,706 | |||||||||
Unrealized increase in fair value of investments
|
- | (2,022,278 | ) | - | (1,400,833 | ) | ||||||||||
- | ||||||||||||||||
$ | (1,818 | ) | $ | (1,862,684 | ) | $ | (147,252 | ) | $ | (1,672,229 | ) |
|
(c)
|
Management of financial instruments risks
|
CERES GLOBAL AG CORP.
Notes to the Interim Condensed Consolidated Financial Statements
September 30, 2014
(Unaudited)
|
12.
|
FINANCIAL INSTRUMENTS (continued)
|
|
(c)
|
Management of financial instruments risks (continued)
|
September 30, 2014
|
March 31, 2014
|
|||||||||||||||
Change in fair value of investments
|
Increase (decrease) in net income
|
Increase (decrease) in earnings per share
|
Increase (decrease) in net income
|
Increase (decrease) in earnings per share
|
||||||||||||
10% increase in fair value
|
$ | 84,816 | $ | 0.01 | $ | 84,816 | $ | 0.01 | ||||||||
10% decrease in fair value
|
$ | (84,816 | ) | $ | (0.01 | ) | $ | (84,816 | ) | $ | (0.01 | ) |
September 30, 2014
|
March 31, 2014
|
|||||||||||||||
Change in bid/ask prices of commodities
|
Increase (decrease) in net income
|
Increase (decrease) in earnings per share
|
Increase (decrease) in net income
|
Increase (decrease) in earnings per share
|
||||||||||||
5% increase in bid-ask prices
|
$ | 79,193 | $ | 0.006 | $ | 21,599 | $ | 0.002 | ||||||||
5% decrease in bid-ask prices
|
$ | (79,193 | ) | $ | (0.006 | ) | $ | (21,599 | ) | $ | (0.002 | ) |
CERES GLOBAL AG CORP.
Notes to the Interim Condensed Consolidated Financial Statements
September 30, 2014
(Unaudited)
|
12.
|
FINANCIAL INSTRUMENTS (continued)
|
|
(c)
|
Management of financial instruments risks (continued)
|
September 30, 2014
|
March 31, 2014
|
|||||||||||||||
Change in interest rate on revolving facility
|
Increase in net loss
|
Increase in loss per share
|
Increase in net loss
|
Increase in loss per share
|
||||||||||||
25 bps increase in annual interest rate
|
$ | (194,404 | ) | $ | (0.01 | ) | $ | (179,644 | ) | $ | (0.01 | ) |
|
Credit risk
|
CERES GLOBAL AG CORP.
Notes to the Interim Condensed Consolidated Financial Statements
September 30, 2014
(Unaudited)
|
12.
|
FINANCIAL INSTRUMENTS (continued)
|
|
(c)
|
Management of financial instruments risks (continued)
|
September 30, 2014
|
Carrying amount
|
Contractual cash flows
|
1 year
|
2 years
|
3 to 5 years
|
More than 5 years
|
||||||||||||||||||
Bank indebtedness
|
$ | 77,790,788 | $ | 78,092,000 | $ | 78,092,000 | $ | - | $ | - | $ | - | ||||||||||||
Term loan
|
22,312,000 | 22,312,000 | 22,312,000 | - | - | - | ||||||||||||||||||
Accounts payable and accrued liabilities
|
22,132,899 | 22,132,899 | 22,132,899 | - | - | - | ||||||||||||||||||
Derivatives
|
6,322,763 | 6,322,763 | 6,322,763 | - | - | - | ||||||||||||||||||
Provision for future payments to Front Street Capital
|
864,000 | 864,000 | 864,000 | - | - | - | ||||||||||||||||||
$ | 129,422,450 | $ | 129,723,662 | $ | 129,723,662 | $ | - | $ | - | $ | - |
March 31, 2014
|
Carrying amount
|
Contractual cash flows
|
1 year
|
2 years
|
3 to 5 years
|
More than 5 years
|
||||||||||||||||||
Bank indebtedness
|
$ | 71,746,950 | $ | 71,857,500 | $ | 71,857,500 | $ | - | $ | - | $ | - | ||||||||||||
Accounts payable and accrued liabilities
|
7,567,634 | 7,567,634 | 7,567,634 | - | - | - | ||||||||||||||||||
Repurchase obligations
|
15,941,080 | 15,941,080 | 15,941,080 | - | - | - | ||||||||||||||||||
Derivatives
|
1,752,256 | 1,752,256 | 1,752,256 | - | - | - | ||||||||||||||||||
Provision for future payments to Front Street Capital
|
970,000 | 970,000 | 970,000 | - | - | - | ||||||||||||||||||
$ | 97,977,920 | $ | 98,088,470 | $ | 98,088,470 | $ | - | $ | - | $ | - |
CERES GLOBAL AG CORP.
Notes to the Interim Condensed Consolidated Financial Statements
September 30, 2014
(Unaudited)
|
12.
|
FINANCIAL INSTRUMENTS (continued)
|
|
(c)
|
Management of financial instruments risks (continued)
|
September 30, 2014
|
March 31, 2014
|
|||||||||||||||
Currency
|
Net asset exposure*
|
Net futures contracts (to buy foreign currency)
|
Net asset exposure
|
Net futures contracts (to buy foreign currency)
|
||||||||||||
U.S. dollars
|
$ | 13,580,961 | $ | 14,600,000 | $ | 5,175,147 | $ | - |
September 30, 2014
|
March 31, 2014
|
|||||||||||||||
Change in foreign exchange rate
|
Increase (decrease)in net income
|
Increase (decrease) in earnings per share
|
Increase (decrease) in net income
|
Increase (decrease) in earnings per share
|
||||||||||||
C$ 5% stronger
|
$ | (719,522 | ) | $ | (0.05 | ) | $ | (272,537 | ) | $ | (0.02 | ) | ||||
C$ 5% weaker
|
$ | 795,261 | $ | 0.06 | $ | 301,225 | $ | 0.02 |
CERES GLOBAL AG CORP.
Notes to the Interim Condensed Consolidated Financial Statements
September 30, 2014
(Unaudited)
|
CERES GLOBAL AG CORP.
Notes to the Interim Condensed Consolidated Financial Statements
September 30, 2014
(Unaudited)
|
12.
|
FINANCIAL INSTRUMENTS (continued)
|
|
(d)
|
Fair value measurements
|
September 30, 2014
|
Note
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||||
Portfolio investments
|
4 | $ | - | $ | - | $ | 848,163 | $ | 848,163 | |||||||||||
Due from Broker, unrealized gains on futures and options
|
5 | 967,096 | - | - | 967,096 | |||||||||||||||
Derivative assets
|
12 | (a) | - | 4,578,810 | - | 4,578,810 | ||||||||||||||
Inventories, grains
|
131,047,903 | - | 131,047,903 | |||||||||||||||||
Due from Broker, unrealized losses on futures and options
|
5 | - | - | - | - | |||||||||||||||
Derivative liabilities
|
12 | (a) | - | (6,322,763 | ) | - | (6,322,763 | ) | ||||||||||||
Provision for future payments to Front Street Capital
|
15 | - | (864,000 | ) | - | (864,000 | ) | |||||||||||||
$ | 967,096 | $ | 128,439,950 | $ | 848,163 | $ | 130,255,209 |
Balance, April 1, 2014
|
$ | 848,163 | ||
Transfers from Level 3
|
- | |||
Net Purchase
|
- | |||
Change in fair value of Level 3 Portfolio investments
|
- | |||
$ | 848,163 |
CERES GLOBAL AG CORP.
Notes to the Interim Condensed Consolidated Financial Statements
September 30, 2014
(Unaudited)
|
12.
|
FINANCIAL INSTRUMENTS (continued)
|
|
(d)
|
Fair value measurements (continued)
|
March 31, 2014
|
Note
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||||
Portfolio investments
|
4 | $ | - | $ | - | $ | 848,163 | $ | 848,163 | |||||||||||
Due from Broker, unrealized gains on futures and options
|
5 | 55,242 | - | - | 55,242 | |||||||||||||||
Derivative assets
|
12 | (a) | - | 2,965,891 | - | 2,965,891 | ||||||||||||||
Inventories, grains
|
109,684,490 | - | 109,684,490 | |||||||||||||||||
Due from Broker, unrealized losses on futures and options
|
5 | (160,805 | ) | - | - | (160,805 | ) | |||||||||||||
Derivative liabilities
|
12 | (a) | - | (1,752,256 | ) | - | (1,752,256 | ) | ||||||||||||
Provision for future payments to Front Street Capital
|
15 | - | (970,000 | ) | - | (970,000 | ) | |||||||||||||
$ | (105,563 | ) | $ | 109,928,125 | $ | 848,163 | $ | 110,670,725 |
13.
|
SHARE CAPITAL AND WARRANTS
|
|
(a)
|
Authorized
|
|
(b)
|
Normal Course Issuer Bids
|
CERES GLOBAL AG CORP.
Notes to the Interim Condensed Consolidated Financial Statements
September 30, 2014
(Unaudited)
|
13.
|
SHARE CAPITAL AND WARRANTS (continued)
|
|
(c)
|
Expiry of Common Share Purchase Warrants
|
|
(d)
|
Stock Options and Stock Appreciation Rights
|
CERES GLOBAL AG CORP.
Notes to the Interim Condensed Consolidated Financial Statements
September 30, 2014
(Unaudited)
|
13.
|
SHARE CAPITAL AND WARRANTS (continued)
|
|
(e)
|
Issued and outstanding as at September 30, 2014 and March 31, 2014
|
Common shares
|
Warrants
|
|||||||||||||||
# | $ | # | $ | |||||||||||||
Balances, April 1, 2013
|
14,334,699 | $ | 138,298,904 | 150,000 | $ | 202,384 | ||||||||||
Changes in FYE 2014
|
||||||||||||||||
Expiry of Warrants, June 11, 2013
|
- | - | (150,000 | ) | (202,384 | ) | ||||||||||
Repurchases under normal course issuer bid
|
(126,020 | ) | (1,198,882 | ) | - | - | ||||||||||
Balances, March 31, 2014
|
14,208,679 | $ | 137,100,022 | - | $ | - | ||||||||||
Changes in FYTD 2015
|
||||||||||||||||
Adjustment to outstanding common shares
|
(471 | ) | - | - | - | |||||||||||
Share issuance costs
|
- | - | - | - | ||||||||||||
Balances, September 30, 2014
|
14,208,208 | $ | 137,100,022 | - | $ | - |
14.
|
DEFERRED SHARE UNIT PLAN
|
CERES GLOBAL AG CORP.
Notes to the Interim Condensed Consolidated Financial Statements
September 30, 2014
(Unaudited)
|
14.
|
DEFERRED SHARE UNIT PLAN (continued)
|
September 30, 2014
|
March 31, 2014
|
|||||||||||||||
Number of units
|
Fair Market Value
|
Number of units
|
Fair Market Value
|
|||||||||||||
Balance, beginning of period
|
8,912.73 | $ | 7.01 | - | $ | - | ||||||||||
Units redeemed
|
(2,673.83 | ) | $ | 7.00 | - | $ | - | |||||||||
Units issued
|
21,203.35 | $ | 6.84 | 8,912.73 | $ | 7.01 | ||||||||||
Balance, end of period
|
27,442.25 | $ | 6.84 | 8,912.73 | $ | 7.01 |
15.
|
MANAGEMENT FEES
|
Management fees and related expenses
|
3 months
|
6 months
|
||||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||
Management fees and related HST
|
$ | - | $ | 764,921 | $ | - | $ | 1,543,249 | ||||||||
Provision for management transition payment and related HST
|
— | 5,650,000 | - | 5,650,000 | ||||||||||||
Adjustment to the provision for future payments to Front Street Capital
|
(58,000 | ) | 1,582,000 | (106,000 | ) | 1,582,000 | ||||||||||
$ | (58,000 | ) | $ | 7,996,921 | $ | (106,000 | ) | $ | 8,775,249 |
|
·
|
The Management Agreement was terminated effective November 30, 2013;
|
|
·
|
Monthly management fee payments to the Front Street Capital ended September 30, 2013;
|
|
·
|
On October 1, 2013, Ceres paid the Front Street Capital $5 million plus HST of $650,000;
|
|
·
|
Front Street Capital will be paid an additional $1 million if the five-day volume-weighted average price of Ceres’ common shares (the “5-day VWAP”) reaches $10 within five years, and a further $1 million if the 5-day VWAP reaches $11 at any time during that 5-year period;
|
|
·
|
The additional payments will become payable immediately if, prior to the fifth anniversary of the date of the Transition Agreement, there occurs either a change in control or a going private transaction for a price in excess of $7.85 per share;
|
CERES GLOBAL AG CORP.
Notes to the Interim Condensed Consolidated Financial Statements
September 30, 2014
(Unaudited)
|
15.
|
MANAGEMENT FEES (continued)
|
|
·
|
Ceres shall deposit into an escrow fund five percent of any gross sale proceeds in excess of net book value and direct transaction costs from the sale of any of Ceres’ assets, to a maximum amount of $1 million, and such escrow fund amount shall be paid to the Manager if the 5-day VWAP does not reach $10 within five years
|
16.
|
RELATED PARTY TRANSACTIONS
|
3 months
|
6 months
|
|||||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||
Salaries, senior executive officers
|
$ | 375,900 | $ | 328,685 | $ | 1,204,925 | $ | 520,554 | ||||||||
Benefits, senior executive officers
|
8,953 | 10,107 | 16,312 | 20,068 | ||||||||||||
Directors' fees
|
116,860 | 49,625 | 253,299 | 187,968 | ||||||||||||
$ | 501,713 | $ | 388,417 | $ | 1,474,536 | $ | 728,590 |
CERES GLOBAL AG CORP.
Notes to the Interim Condensed Consolidated Financial Statements
September 30, 2014
(Unaudited)
|
17.
|
CHANGES IN NON-CASH WORKING CAPITAL ACCOUNTS
|
3 months
|
6 months
|
|||||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||
(Increase) decrease in due from Broker, commodity futures contracts
|
$ | (698,615 | ) | $ | (1,848,153 | ) | $ | (1,514,320 | ) | $ | 3,674,840 | |||||
Decrease (increase) in net derivative assets
|
3,108,378 | (2,169,121 | ) | 2,898,690 | (2,350,933 | ) | ||||||||||
Decrease (increase) in accounts receivable
|
7,623,430 | 3,301,775 | 2,107,397 | (3,092,422 | ) | |||||||||||
(Increase) decrease in inventories
|
(52,203,371 | ) | (18,880,912 | ) | (16,298,613 | ) | 42,628,401 | |||||||||
Decrease (increase) in GST - HST recoverable
|
1,007,004 | - | 762,473 | - | ||||||||||||
(Increase) decrease in prepaid expenses and sundry assets
|
(2,192,416 | ) | 274,690 | (1,992,173 | ) | 451,060 | ||||||||||
Increase in accounts payable and accrued liabilities
|
6,685,723 | 16,815,144 | 14,298,871 | 16,915,351 | ||||||||||||
Increase in management fees payable
|
- | 7,238,145 | - | 7,253,716 | ||||||||||||
Decrease in provision for future payments to Front Street Capital
|
(58,000 | ) | - | (106,000 | ) | - | ||||||||||
(Decrease) increase in due to Manager
|
- | (501,185 | ) | - | 551,435 | |||||||||||
$ | (36,727,867 | ) | $ | 4,230,383 | $ | 156,325 | $ | 66,031,448 |
18.
|
CONTINGENT LIABILITY
|
19.
|
SUBSEQUENT EVENT
|
CERES GLOBAL AG CORP.
Notes to the Interim Condensed Consolidated Financial Statements
September 30, 2014
(Unaudited)
|
19.
|
SUBSEQUENT EVENT (continued)
|
|
-
|
The expected transition towards more integration in the North American grain commodity markets as a result of the deregulation and privatization of the Canadian Wheat Board, which has effectively dismantled the monopoly in marketing wheat crops in Canada enabling farmers to gain more direct access to open markets;
|
|
-
|
Volume and quality of grain held on-farm by producers in North America are expected to increase as a result large old crop carryover inventories and a sizable new crop on the horizon;
|
|
-
|
No material change in the regulatory environment in Canada and the United States;
|
|
-
|
Supply and demand factors as well as the pricing environment for grains and other agricultural commodities;
|
|
-
|
Fluctuation of currency and interest rates;
|
|
-
|
General financial conditions for Western Canadian and American agricultural producers;
|
|
-
|
Market share that will be achieved by the Corporation;
|
|
-
|
The successful financing and completion of the NCLC, including the rights offering, and all required regulatory permits and approvals;
|
|
-
|
Adequate and timely service from the Burlington Northern Santa Fe railroad at the NCLC;
|
|
-
|
The ability of Ceres to successfully plan, design, build and operate the Northgate grain elevator;
|
|
-
|
Ceres’ ability to obtain financing and to re-finance the term loan on acceptable terms;
|
|
-
|
Ceres and Riverland Ag’s ability to successfully defend itself against, or settle, the dispute with The Scoular Company;
|
|
-
|
The successful internalization of Ceres’ management, processes and procedures;
|
|
-
|
Riverland Ag’s ability to realize the economic benefits resulting from the synergies with NCLC;
|
|
-
|
Riverland Ag’s ability to maintain existing customer contracts and relationships;
|
|
-
|
Continued compliance by Riverland Ag with its loan covenants; and
|
|
-
|
The ability of Stewart Southern Railway Inc. to continue its growth in grain and oil shipments by rail, without service disruption.
|
|
1.
|
Grain Storage, Handling and Merchandising – represented by Riverland Ag, a collection of North American commercial grain storage and handling assets; and
|
|
2.
|
Commodity Logistics – represented by the proposed Northgate commodities logistics centre in Northgate, Saskatchewan, and 25% interest in Stewart Southern Railway Inc. (the “SSR”).
|
|
·
|
Revenues of $17.1 million (2013: $74.4 million); the reduction in revenues compared to 2013 is primarily due to lower grain prices and inventory quantities;
|
|
·
|
Gross profit of $5.3 million (2013: $2.6 million);
|
|
·
|
Income from operations of $2.4 million (2013: loss from operations of $8.9 million);
|
|
·
|
EBITDA was $3.2 million for the quarter (2013: loss of $10.2 million);
|
|
·
|
Net income of $1.9 million (2013: net loss of $11.7 million);
|
|
·
|
Basic and fully diluted consolidated earnings per share was $0.13 (2013: loss $0.82 per share);
|
|
·
|
Revenues of $68.6 million (2013: $144.1 million); the reduction in revenues compared to 2013 is primarily due to lower grain prices and inventory quantities;
|
|
·
|
Gross profit of $6.5 million (2013: $0.6 million);
|
|
·
|
Income from operations of $0.2 million (2013: loss from operations of $13.9 million);
|
|
·
|
EBITDA was $1.4 million (2013: loss of $14.3 million);
|
|
·
|
Net loss of $0.2 million (2013: net loss of $17.5 million);
|
3 months
|
6 months
|
|||||||||||||||
(in millions)
|
2014
|
2013
|
2014
|
2013
|
||||||||||||
Net trading margin
|
$ | 7.9 | $ | 5.8 | $ | 10.7 | $ | 6.7 | ||||||||
Storage and rental income
|
1.6 | 1.4 | 3.6 | 2.5 | ||||||||||||
Operating expenses included in Cost of sales
|
(3.4 | ) | (3.9 | ) | (6.5 | ) | (7.2 | ) | ||||||||
Depreciation expense included in Cost of sales
|
(0.8 | ) | (0.7 | ) | (1.3 | ) | (1.4 | ) | ||||||||
Gross profit
|
$ | 5.3 | $ | 2.6 | $ | 6.5 | $ | 0.6 |
|
·
|
An increase in net trading margin – representing both realized and unrealized gains recognized on the appreciation of basis and flat price trading positions – is attributable to an increase in demand for the commodities that the Corporation merchandises in relation to the supply of premium quality in the marketplace.
|
|
·
|
An increase in storage and rental income earned at its elevator facilities for storing and handling third-party customers’ grain, which increased by $0.8 million. This increase was due to additional third-party storage agreements and bushels in-store throughout the first six-month period of the fiscal year compared to the same period in 2013. In addition, storage income earned on outstanding bushels that were delivered against futures
|
|
·
|
A reduction in elevator facility operating expenses of $0.7 million for the six-month period ended September 30, 2014 compared to the same period ended September 30, 2013 is due to two events that generated operating cost savings:
|
|
(i)
|
the sale of the Corporation’s Manitowoc, Wisconsin, facility in the current fiscal year, and
|
|
(ii)
|
the sale of the Corporation’s Wahpeton, North Dakota, facility in the prior fiscal year.
|
|
·
|
A reduction of $0.1 million in depreciation expense on the Company’s elevators, property, plant and equipment occurred due to the current year sale of the Manitowoc, Wisconsin, facility for the six-month period ended September 30, 2014 compared to the same period in 2013.
|
|
·
|
An increase net trading margin of $2.1 million, which is driven by an increase in demand for the commodities that the Corporation merchandises in relation to the supply of premium quality in the marketplace.
|
|
·
|
An increase in storage and rental income earned at its elevators facilities for storing and handling third-party customers’ grain, which increased $0.2 million and is attributable to an increase in the number of third-party storage agreements during the current year quarter compared to the same quarter ended September 30, 2013.
|
|
·
|
A reduction in operating expenses of $0.5 million at the elevator facilities due to the sale of the Manitowoc, Wisconsin, facility, which was sold in the first quarter of the current year, but was owned and operated during the quarter ended September 30, 2013.
|
3 months
|
6 months
|
|||||||||||||||
(Bushels in millions)
|
2014
|
2013
|
2014
|
2013
|
||||||||||||
Company-owned bushels handled
|
4.17 | 10.63 | 8.19 | 18.47 | ||||||||||||
Third-party bushels handled
|
5.18 | 2.29 | 12.74 | 3.97 | ||||||||||||
Total bushels handled
|
9.35 | 12.92 | 20.93 | 22.44 |
3 months
|
6 months
|
|||||||||||||||
(Dollars per bushel handled)
|
2014
|
2013
|
2014
|
2013
|
||||||||||||
Net trading margin
|
$ | 1.89 | $ | 0.55 | $ | 1.31 | $ | 0.36 | ||||||||
Storage and rental income
|
0.31 | 0.61 | 0.28 | 0.63 | ||||||||||||
Operating and depreciation expense
|
(0.45 | ) | (0.36 | ) | (0.37 | ) | (0.38 | ) |
|
·
|
An increase in net trading margin of $1.34 and $0.95 per bushel handled for the quarter and six-month period ended September 30, 2014 compared to 2013, respectively, is reflective of the increase in realized and unrealized gains recognized on the appreciation of basis and flat price trading position. This was driven by an increase in demand for the commodities that the Corporation merchandises in relation to the supply of premium quality in the marketplace.
|
|
·
|
While storage and rental income increased $0.2 million and $1.1 million for the quarter and six-month period ended September 30, 2014 compared to 2013, respectively, the storage and rental income dollars per bushel handled decreased $0.30 and $0.35 for the respective periods. The decline on a per bushel basis over both periods is due to new storage agreements being in place in the quarter and six-month period ended September 30, 2014 compared to 2013. Storage agreements consist of a storage rate per bushel and a per bushel handling fee, with the handling fee rate being less than the storage rate. Therefore, since the Company handled more third-party bushels in the six-month period and quarter ended September 30, 2014 compared to 2013, the storage and rental income per bushel handled is lower.
|
|
·
|
The operating and depreciation expense per bushel handled increased $0.09 and decreased $0.01 for the quarter and six-month period ended September 30, 2014 compared to 2013, respectively, due to the following:
|
|
(i)
|
The increase in per bushel handled operating and depreciation expense for the quarter-ended September 30, 2014 is due to a 28% decline in bushels handled compared to only a 9% decrease in operating and depreciation expenses for the quarter compared to the same quarter ended September 30, 2013.
|
|
(ii)
|
The slight decline in per bushel handled operating and depreciation expense for
|
|
·
|
A provision for $5.0 million for the management transition payment that was made on October 1, 2013 to Front Street Capital;
|
|
·
|
A provision of $1.4 million for contingent additional payments to Front Street Capital;
|
|
·
|
HST of $0.8 million on these provisions for payments to Front Street Capital; and
|
|
·
|
Expenses of $0.8 million related to the Special Committee of the Board of Directors and the expenses associated with the negotiation of the early termination of the management agreement.
|
3 months
|
6 months
|
|||||||||||||||
(in thousands of C$)
|
2014
|
2013
|
2014
|
2013
|
||||||||||||
Interest and other revenues
|
$ | 18 | $ | - | $ | 18 | $ | - | ||||||||
Realized gain on sales of property, plant and equipment
|
- | 176 | - | 177 | ||||||||||||
Realized and unrealized gain (loss) on currency-hedging
|
328 | - | 328 | (469 | ) | |||||||||||
Realized and unrealized (loss) gain on foreign exchange
|
(348 | ) | (17 | ) | (493 | ) | 21 | |||||||||
Unrealized increase in fair value of investments
|
- | (2,022 | ) | - | (1,401 | ) | ||||||||||
- | ||||||||||||||||
$ | (2 | ) | $ | (1,863 | ) | $ | (147 | ) | $ | (1,672 | ) |
EBITDA (in thousands of dollars)
|
||||||||||
Periods ended September 30, 2014
|
3 months, 2014
|
6 months, 2014
|
||||||||
Net (loss) income for the period
|
$ | 1,912.8 | $ | (192.8 | ) | |||||
Add (deduct):
|
finance expenses
|
523.5 | 1,169.1 | |||||||
income taxes expense
|
169.0 | 286.1 | ||||||||
share of net (income) loss in associates
|
(201.6 | ) | (1,248.7 | ) | ||||||
depreciation on property, plant and equipment
|
774.3 | 1,346.2 | ||||||||
$ | 3,178.0 | $ | 1,359.9 |
EBITDA (in thousands of dollars)
|
||||||||||
Periods ended September 30, 2013
|
3 months, 2013
|
6 months, 2013
|
||||||||
Net (loss) income for the period
|
$ | (11,687.8 | ) | $ | (17,527.9 | ) | ||||
Add (deduct):
|
finance expenses
|
934.0 | 2,324.0 | |||||||
gain on sale of property, plant and equipment
|
(176.8 | ) | (176.8 | ) | ||||||
income taxes recovery
|
(234.2 | ) | (204.1 | ) | ||||||
share of net (income) loss in associates
|
224.1 | (139.1 | ) | |||||||
depreciation on property, plant and equipment
|
733.2 | 1,466.2 | ||||||||
$ | (10,207.5 | ) | $ | (14,257.7 | ) |
3 months
|
3 months
|
3 months
|
3 months
|
3 months
|
3 months
|
3 months
|
3 months
|
|||||||||||||||||||||||||
Reporting dates
|
2014-09-30 | 2014-06-30 | 2014-03-31 | 2013-12-31 | 2013-09-30 | 2013-06-30 | 2013-03-31 | 2012-12-31 | ||||||||||||||||||||||||
(in millions except per share)
|
Q2 2015 | Q1 2015 | Q4 2014 | Q3 2014 | Q2 2014 | Q1 2014 | Q4 2013 | Q3 2013 | ||||||||||||||||||||||||
Revenues
|
$ | 17.1 | $ | 51.5 | $ | 33.5 | $ | 54.8 | $ | 74.4 | $ | 69.7 | $ | 60.4 | $ | 84.6 | ||||||||||||||||
Gross profit (loss)
|
$ | 5.3 | $ | 1.2 | $ | 3.7 | $ | 0.1 | $ | 2.6 | $ | (2.1 | ) | $ | 2.0 | $ | (2.4 | ) | ||||||||||||||
Income (loss) from operations
|
$ | 2.4 | $ | (2.2 | ) | $ | 2.4 | $ | (1.3 | ) | $ | (8.9 | ) | $ | (5.0 | ) | $ | (1.0 | ) | $ | (5.0 | ) | ||||||||||
Net income (loss)
|
$ | 1.9 | $ | (2.1 | ) | $ | 0.4 | $ | (2.1 | ) | $ | (11.7 | ) | $ | (5.8 | ) | $ | 0.8 | $ | (7.1 | ) | |||||||||||
Weighted-average number of common shares for the quarter
|
14.2 | 14.2 | 14.2 | 14.2 | 14.3 | 14.3 | 14.3 | 14.3 | ||||||||||||||||||||||||
Basic and fully diluted earnings (loss) per share
|
$ | 0.13 | $ | (0.15 | ) | $ | 0.03 | $ | (0.15 | ) | $ | (0.82 | ) | $ | (0.41 | ) | $ | 0.06 | $ | (0.50 | ) | |||||||||||
EBITDA, consolidated
|
$ | 3.2 | $ | (1.8 | ) | $ | 3.1 | $ | (1.6 | ) | $ | (10.2 | ) | $ | (4.1 | ) | $ | (2.5 | ) | $ | (5.3 | ) | ||||||||||
EBITDA per share, consolidated
|
$ | 0.23 | $ | (0.13 | ) | $ | 0.22 | $ | (0.12 | ) | $ | (0.71 | ) | $ | (0.28 | ) | $ | (0.17 | ) | $ | (0.37 | ) | ||||||||||
Cash and portfolio investments, net of shorts and options, as
|
$ | 13.7 | $ | 26.4 | $ | 12.9 | $ | 7.3 | $ | 15.9 | $ | 24.1 | $ | 26.9 | $ | 29.8 | ||||||||||||||||
Shareholders' equity, as at
|
$ | 135.0 | $ | 128.1 | $ | 134.1 | $ | 129.3 | $ | 128.0 | $ | 142.8 | $ | 144.9 | $ | 141.8 | ||||||||||||||||
Shareholders' equity per common share, as at reporting date
|
$ | 9.50 | $ | 9.01 | $ | 9.44 | $ | 9.10 | $ | 9.00 | $ | 9.96 | $ | 10.11 | $ | 9.89 |
Cash and portfolio investments
|
$ | 1.7 | ||
Due from Brokers & Derivatives
|
$ | 3.2 | ||
Trade accounts receivables
|
$ | (2.1 | ) | |
Inventories
|
$ | 17.7 | ||
Assets held for sale
|
$ | (18.2 | ) | |
Prepaid expenses and sundry assets
|
$ | 2.0 | ||
Investments in associates
|
$ | 1.1 | ||
Investment property
|
$ | (14.8 | ) | |
Property, plant and equipment
|
$ | 42.7 |
|
(i)
|
the reclassification of its Savage, Minnesota, facility from assets held for sale;
|
|
(ii)
|
the reclassification of capitalized costs relating to NCLC from investment property;
|
|
(iii)
|
acquisitions of property, plant and equipment during the six-month period ending September 30, 2014.
|
|
(i)
|
the addition of Ceres’ new term loan facility of C$22.3 million (US$20 million);
|
|
(ii)
|
an increase in trade accounts payable and other liabilities of $14.6 million, which is most significantly composed of unsettled grain purchases at September 30, 2014.
|
|
(iii)
|
the increase in Riverland Ag’s credit facility compared to March 31, 2014, which is attributable to increased ownership in inventory quantities at September 30, 2014.
|
(in millions of CAD)
|
Increase (decrease)
|
|||
Cash
|
$ | 1.7 | ||
Due from Brokers and net derivative assets
|
(1.3 | ) | ||
Accounts receivable, trade
|
(2.1 | ) | ||
Inventories
|
17.7 | |||
Other current assets, excluding assets held for sale
|
1.2 | |||
Bank indebtedness and repurchase obligations
|
9.9 | |||
Term loan
|
(22.3 | ) | ||
Other current liabilities
|
(14.4 | ) | ||
$ | (9.6 | ) |
|
(i)
|
exercise their respective Basic Subscription Privileges in full and thereby purchase, by themselves or through their respective affiliates, an aggregate of 4,785,635 Common Shares; and
|
|
(ii)
|
purchase, by themselves or through their respective affiliates, at the Subscription Price, an aggregate of 8,056,830 Common Shares offered pursuant to the Offering that are not otherwise purchased pursuant to the Offering (the “Standby Shares”), all for investment only and not with a view to resale or distribution. The Standby Purchasers have thereby committed to purchase an aggregate of 12,842,465 Common Shares and Standby Shares, representing total gross proceeds to the Corporation of $75,000,000. This prospectus qualifies the distribution of the Standby Shares in each province and territory of Canada.
|
(Dollars in millions)
|
|||||
Description
|
Amount
|
Timing
|
|||
Rail Tracks and Site Preparation
|
$ | 8.9 |
Completed October 2014
|
||
Grain Transload Facility
|
2.4 |
Completed October 2014
|
|||
Grain Elevator
|
40.0 |
Finalize design and begin construction, with target Phase 1 completion by October 2015 and Phase 2 completion by March 2016.
|
|||
Oil & Gas Transload Facility
|
5.0 |
Complete feasibility study and initiate design proposals and construction, with preliminary target completion by October 2016.
|
|||
Other NCLC projects and general corporate expenses
|
17.1 |
Complete feasibility study and initiate design proposals and construction, with preliminary target completion by October 2016.
|
|||
Total Use of Net Proceeds
|
$ | 73.4 |
(in millions of dollars)
|
Carrying amount
|
Contractual cash flows
|
1 year
|
2 years
|
3 to 5 years
|
More than 5 years
|
||||||||||||||||||
Bank indebtedness
|
$ | 77.8 | $ | 78.1 | $ | 78.1 | $ | - | $ | - | $ | - | ||||||||||||
Term loan
|
$ | 22.3 | $ | 22.3 | $ | 22.3 | - | - | - | |||||||||||||||
Accounts payable and accrued liabilities
|
$ | 22.1 | $ | 22.1 | $ | 22.1 | - | - | - | |||||||||||||||
Derivatives
|
$ | 6.3 | $ | 6.3 | $ | 6.3 | - | - | - | |||||||||||||||
Provision for future payments to Front Street Capital
|
$ | 0.9 | $ | 0.9 | $ | 0.9 | - | - | - | |||||||||||||||
$ | 129.4 | $ | 129.7 | $ | 129.7 | $ | - | $ | - | $ | - |
|
·
|
The Management Agreement was terminated effective November 30, 2013;
|
|
·
|
Monthly management fee payments to Front Street Capital ceased at the end of September 2013;
|
|
·
|
On October 1, 2013, Ceres paid Front Street Capital $5.0 million plus HST of $0.65 million;
|
|
·
|
Front Street Capital will be paid an additional $1.0 million if the five-day volume-weighted average price of Ceres’ common shares on the TSX (the “5-day VWAP”) reaches $10 within five years, and a further $1.0 million if the 5-day VWAP reaches $11. These payments will become immediately payable if there occurs prior to the fifth anniversary of the date of the Transition Agreement either a change in control or a going private transaction (at a price in excess of $7.85 per share);
|
|
·
|
Ceres will deposit into an escrow fund 5% of any gross sale proceeds in excess of net book value and direct transaction costs from the sale of any of Ceres’ assets, to a maximum amount of $1.0 million and such escrow fund shall be paid to Front Street Capital if the 5-day VWAP does not reach $10 within five years;
|
Management fees and related expenses
|
||||||||
(in millions of CAD)
|
2014
|
2013
|
||||||
Management fees and related HST
|
$ | - | $ | 0.8 | ||||
Provision for management transition payment and related HST
|
- | $ | 5.6 | |||||
Adjustment to the provisions for future payments to Front Street Capital
|
(0.1 | ) | 1.6 | |||||
$ | (0.1 | ) | $ | 8.0 |
·
|
Management commits to a plan to sell a property;
|
·
|
It is unlikely that the disposal plan will be significantly modified or discontinued;
|
·
|
The property is available for immediate sale in its present condition;
|
·
|
Actions required to complete the sale of the property have been initiated;
|
·
|
Sale of the property is highly probable and management expects the completed sale will occur within one year; and
|
·
|
The property is actively being marketed for sale at a price that is reasonable given its current market value.
|
Buildings, silos/elevators, and improvements
|
15 – 31 years
|
|
Machinery and equipment
|
7 – 15 years
|
|
Furniture, fixtures, office equipment, computer software and other property, plant and equipment
|
7 years
|
Item 1
|
Name and Address of Company
|
|
Ceres Global Ag Corp. (“Ceres” or the “Corporation”)
36 Toronto Street, Suite 850
Toronto, ON M5C 2C5
|
||
Item 2
|
Date of Material Change
|
|
October 21, 2014
|
||
Item 3
|
News Release
|
|
A news release in respect of the material change described in this Report was issued by the Corporation on October 21, 2014. The news release was distributed in Canada through Canada Newswire and was filed on the System for Electronic Document Analysis and Retrieval (SEDAR). A copy of the text of the news release is attached as Schedule “A”.
|
||
Item 4
|
Summary of Material Change
|
|
The Corporation announced that it has filed a final short form prospectus in respect of its previously announced, fully backstopped rights offering (the “Offering”) in Canada and the United States. Under the proposed terms of the Offering, each registered holder (“Shareholder”) of Ceres common shares (“Common Share”) as of the close of business on October 30, 2014 (the “Record Date”) will be issued one right (a “Right”) for each Common Share held. For every 1.1063 Rights held, Shareholders will be entitled to purchase one Common Share at a subscription price of $5.84 during the subscription period commencing November 7, 2014 and ending at 5:00 p.m. (Toronto time) on November 28, 2014.
In support of the Offering, the Corporation has entered into an amended and restated standby purchase agreement with VN Capital Fund C, LP (“VN Capital”), a limited partnership controlled by P. Donnell Noone and James Vanasek, Whitebox Multi-Strategy Partners, L.P. and Whitebox Credit Arbitrage Partners, L.P. (together, “Whitebox”), Highbridge International LLC and Highbridge Tactical Credit & Convertibles Master Fund, L.P. (together, “Highbridge”, and collectively with VN Capital and Whitebox, the “Standby Purchasers”), under which the Standby Purchasers have agreed to subscribe for up to $45,000,000, $25,000,000 and $5,000,000 of Common Shares, respectively, including the Common Shares that are not otherwise subscribed for by other shareholders under the Offering.
In consideration for the Standby Purchasers agreeing to provide the standby commitment, VN Capital, Whitebox and Highbridge will be entitled to warrants to purchase 1,250,000, 694,445 and 138,889 Common Shares, respectively, regardless of the number of Common Shares the Standby Purchasers actually subscribe for pursuant to the standby commitment. The warrants will be exercisable for two years from the date of the final prospectus at the subscription price of the Offering and will be subject to, among other things, the approval of disinterested shareholders at the next annual meeting of shareholders. In the event such approval is not obtained at the meeting, Ceres will pay to the applicable Standby Purchasers a cash payment equal to the in-the-money value of the warrants (based on the 5-day VWAP on the TSX), provided that such amount shall not be less than 2% nor greater than 4% of such Standby Purchasers’ subscription commitment.
|
||
Item 5
|
Full Description of Material Change
|
|
Please refer to the Corporation’s October 21, 2014 press release attached as Schedule “A”.
|
||
Item 6
|
Reliance on subsection 7.1(2) or (3) of National Instrument 51-102
|
|
Not Applicable
|
Item 7
|
Omitted Information
|
|
Not Applicable
|
||
Item 8
|
Executive Officer
|
|
Further information can be obtained from Mark Kucala, Chief Financial Officer of the Corporation, at 1-952-746-6802.
|
||
Item 9
|
Date of Report
|
|
October 23, 2014
|