Ceres Global Ag Corp.
TSX : CRP
TSX : CRP.WT

Ceres Global Ag Corp.

February 09, 2010 17:18 ET

Ceres Global Ag Corp. Announces Results for the Fiscal Quarter and Nine-Month Period Ended December 31, 2009

TORONTO, ONTARIO--(Marketwire - Feb. 9, 2010) -

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES OF AMERICA

The management of Ceres Global Ag Corp. ("Ceres" or the "Corporation") (TSX:CRP)(TSX:CRP.WT) is announcing its results for the fiscal quarter and nine-month period ended December 31, 2009.

The performance of the public market portfolio continued to improve during the third quarter of the fiscal year ending March 31, 2010 ("Q2 2010"). As at December 31, 2009, the net asset value attributable to each outstanding Common Share and related Warrant was $9.71, compared to the following values as at the following dates:

September 30, 2009: $ 9.02
June 30, 2009: $ 8.26
March 31, 2009: $ 7.42
December 31, 2008: $ 6.36

The net asset value as at December 31, 2009 represents an increase of 7.6% for the quarter then ended.

For the nine-month period ended December 31, 2009, Ceres reported net income of $28,069,321, which included an unrealized gain on investments in the amount of $19,182,229 (nine-month period ended December 31, 2008: net loss of $56,597,568, including an unrealized loss on investments of $34,212,869). For the quarter ended December 31, 2009, Ceres reported net income of $8,102,028, which included an unrealized gain on investments of $2,151,507 (quarter ended December 31, 2008: net loss of $29,521,078, which included an unrealized loss on investments of $3,053,068). For the nine-month period ended December 31, 2009, basic and diluted earnings per share were $2.20 (nine-month period ended December 31, 2008: basic and diluted loss per share was $4.39). For the quarter ended December 31, 2009, basic and diluted earnings per share was $0.65 (quarter ended December 31, 2008: basic and diluted loss per share was $2.29).

For the nine-month period ended December 31, 2009, Ceres earned dividend, interest and other revenues totalling $2,817,039 (nine-month period ended December 31, 2008: dividend, interest and other revenues totalled $2,039,938). For the quarter ended December 31, 2009, dividend, interest and other revenues totalled $1,235,665 (quarter ended December 31, 2008: dividends, interest and other revenues totalled $759,353).

Ceres invests primarily in equity and debt securities of publicly traded companies located in Canada, the United States of America and other countries. As at December 31, 2009, Ceres holds a portfolio primarily of publicly traded equity and debt securities in companies located in Canada, the United States of America and other countries. As at that date, the fair value of investments owned by Ceres totalled $143,956,433 and the cost thereof was $145,789,735 (March 31, 2009: portfolio of publicly traded equity securities having an aggregate fair value of $80,874,373 and an aggregate cost of $100,970,612). As at that date, the fair value of the Corporation's investment in securities of private companies represented 0.87% (March 31, 2009: 1.48%) of its total assets, and is not significant to its overall financial position.

As at December 31, 2009, the Corporation is liable to cover its short position on selected publicly traded equity securities. As at that date, the liability at fair value to cover short sales is $27,127,469, which includes an unrealized loss on short sales of $2,406,563 (March 31, 2009: fair value of liability was $14,828,063, including an unrealized loss of $1,457,940).

As at December 31, 2009, the Corporation had unearned premiums on written options. As at that date, the fair value of the unearned options was $113,602, which is net of an unrealized gain on the unearned premiums on written options in the amount of $106,557 (March 31, 2009: $362,292, net of an unrealized gain of $93,812).

As at December 31, 2009 and March 31, 2009, Ceres owned investments primarily in debt and equity securities of publicly traded issuers, in the following agricultural industry sub-sectors:

(at fair values)   Dec. 31, 2009 March 31, 2009
 
Fertilizers $ 49,317,888 $ 27,571,949
Agricultural commodity handlers and processors   33,835,143   10,432,554
Food manufacturing and retailing   25,613,582   10,470,188
Equipment manufacturers and distributors   14,637,662   18,974,941
Chemicals   8,290,204   5,700,716
Seed technology   6,476,607   5,566,956
Miscellaneous   5,785,347   2,157,069
  $ 143,956,433 $ 80,874,373

Investments sold short are in equity securities of publicly-traded issuers, in the following agricultural industry sub-sectors:

(at fair values)   Dec. 31, 2009   March 31, 2009  
   
Fertilizers $ (9,292,940 ) $ (7,019,907 )
Food manufacturing and retailing   (5,958,258 )   (2,567,872 )
Agricultural commodity handlers and processors   (3,435,231 )   (1,050,204 )
Chemicals   (3,317,410 )   (1,705,353 )
Miscellaneous   (2,776,512 )   (1,242,099 )
Equipment manufacturers and distributors   (2,347,118 )   (1,242,628 )
  $ (27,127,469 ) $ (14,828,063 )

Unearned options premiums on written call and put options for publicly traded companies are in the following agricultural industry sub-sectors:

(at fair values)     Dec. 31, 2009   March 31, 2009  
Fertilizers $ (59,123 ) $ (183,981 )
Chemicals     (24,591 )   (20,793 )
Miscellaneous     (15,500 )   -  
Seed technology     (6,278 )   (42,845 )
Agricultural commodity handlers and processors     (5,755 )   (68,048 )
Equipment manufacturers and distributors     (1,570 )   (46,625 )
Food manufacturing and retailing     (785 )   -  
  $ (113,602 ) $ (362,292 )

As at December 31, 2009, the Corporation's investment in private companies represented 0.87% (March 31, 2009: 1.48%) of total assets.

As at December 31, 2009, the top-ten holdings of the Corporation, ranked by fair value, are:

Name of investee   Fair value
Potash Corporation of Saskatchewan Inc. $ 9,165,658
Agrium Inc.   5,038,318
Hanfeng Evergreen Inc.   4,291,841
Bunge Limited   4,181,037
FMC Corporation   3,938,512
Sociedad Quimica y Minera de Chile   3,928,258
Cosan Limited   3,773,754
Wilmar International Limited   3,609,182
The Andersons Inc.   3,377,318
Archer Daniels Midland Company   3,372,880
  $ 44,676,757

As at December 31, 2009, the fair values of the top-ten holdings of the Corporation, ranked by agricultural industry sub-sectors, are:

    Fair Value
Fertilizers $ 22,424,074
Agricultural commodity handlers and processors   14,540,417
Chemicals   3,938,512
Miscellaneous   3,773,754
  $ 44,676,757
 
As at March 31, 2009, the top-ten holdings ranked by fair value are:  
 
Name of investee   Fair value
AG Growth Income Fund $ 11,169,768
Potash Corporation of Saskatchewan Inc.   5,181,405
Hemisphere GPS Inc.   4,263,673
FMC Corporation   3,811,947
Hanfeng Evergreen Inc.   3,762,074
The Mosaic Company   3,738,330
Terra Industries Inc.   3,621,159
CF Industries Holdings Inc.   3,331,533
Saputo Inc.   3,292,045
Monsanto Company   2,427,703
  $ 44,599,637

As at March 31, 2009, the fair values of the top-ten holdings of the Corporation, ranked by agricultural industry sub-sectors, are:

    Fair Value
Fertilizers $ 19,634,501
Equipment manufacturers and distributors   15,433,441
Chemicals   3,811,947
Food manufacturing and retailing   3,292,045
Seed technology   2,427,703
  $ 44,599,637

The Corporation's public portfolio continued the positive performance reported in the previous two quarters despite, from a price perspective, agriculture investments and related soft commodities experiencing relatively flat-to-declining performance in the third quarter that was a continuation of performance in the first six months. However, one exception to this was the performance of the fertilizer stocks in the third quarter, which seemed to be influenced by new concerns about future food shortages and a market perception that a price floor was reached in the Potash sector. The portfolio benefited from a move to more fertilizer companies towards the end of this quarter.

We believe that many agricultural commodities have reached a price floor. We expect the price of those commodities to trend upwards as 2010 progresses and play catch up with the broader commodity moves. We reiterate our comments from the previous quarter that we see certain events taking place that support a rise in global prices going forward. In particular, lower 2009 application of fertilizers and weather events in India caused a domino effect worldwide in future planting decisions, and will influence all soft commodities globally, going forward. The effects of these events (and others) were highlighted at the Food and Agriculture Organization of the United Nations summit in Rome, Italy, which has raised the profile of food supply and security issues.

Ceres management continues to analyze larger investment opportunities in both public and private companies consistent with the strategy outlined in Ceres' IPO, to determine whether they represent better long-term opportunities for capital appreciation compared to the current portfolio of publicly traded investments. Primary focus is on opportunities in agriculture infrastructure along with turnaround opportunities. With respect to the current public portfolio, it has been positioned to take advantage of a rise in soft commodities, while concurrently maintaining its option writing and shorting strategies to soften any unforeseen market corrections.

CERES GLOBAL AG CORP.
Summary Interim Statements of Income and Deficit
For the three-month period and nine-month period ended December 31, 2009

(with comparative figures for the three-month period and nine-month period ended December 31, 2008) (Unaudited)

  3 months ended 9 months ended 3 months ended 9 months ended
    Dec. 31, 2009   Dec. 31, 2009   Dec. 31, 2008   Dec. 31, 2008
Dividend, interest and other revenues $ 1,235,665 $ 2,817,039 $ 759,353 $ 2,039,938
Operating expenses   1,228,869   3,354,622   866,555   3,528,274
Income (loss) from operations   6,796   (537,583)   (107,202)   (1,488,336)
Realized gain (loss) on sale of investments   4,067,647   3,675,955   (21,426,881)   (13,735,089)
Realized gain (loss) on  currency hedging transactions   1,760,232   6,797,078   (7,822,356)   (9,826,032)
Realized and unrealized gain (loss) on foreign exchange   115,846   (1,048,358)   2,888,427   2,664,758
Change in unrealized gain (loss) on investments   2,151,507   19,182,229   (3,053,068)   (34,212,869)
Income (loss) before income taxes   8,102,028   28,069,321   (29,521,080)   (56,597,568)
Income taxes                
Provision for (recovery of) current income taxes   -   -   (397,407)   123,655
Provision for (recovery of) future income taxes   -   -   397,407   (123,655)
    -   -   -   -
Net income (loss) for the period   8,102,028   28,069,321   (29,521,080)   (56,597,568)
Deficit, beginning of period   (28,607,298)   (48,574,591)   (32,672,273)   (5,595,785)
Deficit, end of period $ (20,505,270) $ (20,505,270) $ (62,193,353) $ (62,193,353)
 
Earnings (loss) per share                
  Basic $ 0.65 $ 2.20 $ (2.29) $ (4.39)
  Fully diluted $ 0.65 $ 2.20 $ (2.29) $ (4.39)

For the nine-month period ended December 31, 2009, operating expenses totalled $3,354,622 (nine-month period ended December 31, 2008: operating expenses totalled $3,528,274). Of that amount, management fees totalled $1,765,026 (2008: $2,044,741), portfolio transaction costs totalled $576,427 (2008: $647,861), and general and administrative expenses totalled $375,334 (2008: $424,970).

For the quarter ended December 31, 2009, operating expenses totalled $1,228,869 (quarter ended December 31, 2008: $866,553). Of that amount, management fees totalled $622,993 (2008: $441,628), portfolio transaction costs totalled $188,827 (2008: $203,571), and general and administrative expenses totalled $151,414 (2008: $96,347).

CERES GLOBAL AG CORP.
Summary Balance Sheet
As at December 31, 2009 and March 31, 2009

    Dec. 31, 2009   March 31, 2009
ASSETS   (unaudited)   (audited)
  Cash $ 4,483,365 $ 14,233,183
  Investments owned, at fair value   143,956,433   80,874,373
  Unrealized gain on forward foreign exchange contracts   195,622   397,957
  Dividends and interest receivable, and due from broker   539,401   19,480,815
  Income taxes recoverable   28,236   43,568
  Prepaid expenses   -   22,425
TOTAL ASSETS $ 149,203,057 $ 115,052,321
 
LIABILITIES        
  Accounts payable, accruals and provisions $ 539,993 $ 387,108
  Due to broker   55,786   1,884,870
  Unearned premium on written options, at fair value   113,602   362,292
  Unrealized loss on forward foreign exchange contracts   37,966   1,953,876
  Investments sold short, at fair value   27,127,469   14,828,063
TOTAL LIABILITIES   27,874,816   19,416,209
 
SHAREHOLDERS' EQUITY        
  Common shares   130,715,107   135,197,540
  Warrants   9,026,038   9,013,163
  Contributed surplus   2,092,366   -
  Deficit   (20,505,270)   (48,574,591)
TOTAL SHAREHOLDERS' EQUITY   121,328,241   95,636,112
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 149,203,057 $ 115,052,321

Ceres is an investment company. Its investments in debt and equity securities are classified as held-for-trading, and measured and reported at fair value with unrealized gains or losses recognized in operations for the period.

Under the terms and conditions of a normal course issuer bid, during the quarter ended December 31, 2009, Ceres repurchased 245,300 shares under this normal course issuer bid, for a cost of $1,550,041 (quarter ended September 30, 2009: 164,600 Shares were repurchased at a cost of $950,804, and quarter ended June 30, 2009: 13,315 Shares were repurchased at a cost of $82,343). The stated capital value of the repurchased Shares during the nine-month period ended December 31, 2009 was $4,675,553. The excess of the stated capital value of the repurchased Shares over the cost of repurchasing the Shares, being $2,096,366, has been recognized as Contributed Surplus and is included in Shareholders' Equity on the balance sheet as at December 31, 2009.

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 and 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.

Contact Information

  • Ceres Global Ag Corp.
    Jason Gould
    Chief Financial Officer
    (416) 915-2426