Feronia Inc. Reports Q2 2013 Results
(firmenpresse) - TORONTO, ONTARIO -- (Marketwired) -- 08/28/13 -- Feronia Inc. ("Feronia" or the "Company") (TSX VENTURE: FRN) today released its unaudited financial results for the three and six months ended June 30, 2013. All amounts in this release are expressed in US dollars unless otherwise indicated.
Q2 2013 Highlights and Developments
Subsequent Events
Bill Dry, CEO of Feronia commented: "Our palm oil business continues to progress well and the improvements we are making on the ground are reflected in the record levels of FFB harvest, CPO production and replanting achieved in the quarter. Having completed all major construction relating to the mill at Yaligimba, we are undertaking final testing and expect to commence oil production imminently.
"In our arable business, we have made progress in demonstrating commercial yields and we have made our first sales of rice into the local market. Both of these achievements are significant milestones."
About Feronia Inc.
Operational Summary and Key Metrics by Division
Palm Oil Operations
The following table shows key data relating to the operations of Plantations et Huileries du Congo S.c.A.R.L ("PHC"), as at and for the six months ending June 30, 2013:
Notes:
The following tables show key data relating to PHC's assets and infrastructure as at June 30, 2013.
Notes:
Key Developments
Arable Farming Operations
Key Metrics:
Key Developments
OUTLOOK
The Company's strategy for its oil palm plantations business continues to be to maximize returns from existing plantings while investing in new plantings and the required processing capacity. CPO production at the new palm oil mill at Yaligimba is expected to commence imminently and will provide the Company with access to an additional 3,757 ha of mature oil palms for the production of CPO, an increase of 62.1% from the area currently accessible.
The Company has made progress in establishing commercially viable rice yields at its arable operation, has established a pricing formula and is making sales to high quality local counterparties. This furthers our confidence in the favorable dynamics of the local rice market. The Company is currently evaluating how to prudently expand its arable farming operation in light of these recent positive developments.
In summary, the key objectives of the Company for 2013 are as follows:
As previously disclosed by the Company, on December 24, 2011, the government of the DRC promulgated a new law, "Loi Portant Principes Fondamentaux Relatifs a L'Agriculture" (the "Agriculture Law"), for the stated purposes of developing and modernizing the country's agricultural sector. Feronia continues to seek clarification on the implications of this legislation from local counsel and government in the DRC. If the Agriculture Law is interpreted by the DRC government to apply to the existing concession rights held by the Company and the Agriculture Law is not amended, it could have a material and substantial adverse effect on the value of its business and its share price. In such case, Feronia may be required to sell or otherwise dispose of a sufficient interest in its operating subsidiaries so as to ensure that it meets local ownership requirements. There is no assurance that such a sale or disposition would be completed at fair market value or otherwise on acceptable terms to Feronia. Please refer to the Company's Management Discussion and Analysis for the three months ended June 30, 2013 available on for a full discussion on the Agriculture Law.
Financial Discussion - Three and six months ended June 30, 2013
Revenue and Gross Margin
Notes
Total revenues for Q2 2013 were $2,182,000, an 8% increase on Q1 2012 revenues of $2,025,000 and arose because of:
Total revenue for the six months ended June 30, 2013 was $3,394,000, a 14% reduction from the same period in 2012 (H1 2012: $3,959,000) and arose because of:
The following table provides a summary of palm fruit production and CPO:
Notes
Cash Used in Operating Activities
Cash used in operating activities for the six months ended June 30, 2013 was $9,196,000 (H1 2012: $2,095,000).
Selling, General and Administrative Costs
Selling, general and administrative costs for Q2 2013 of $2,635,000 (Q2 2012: $2,015,000) were $620,000 higher than in Q2 2012, an increase of 31%. The increase was predominantly a result of:
Selling, general and administrative costs for the six months ended June 30, 2013 of $5,045,000 were $343,000 higher than in the same period in 2012, a 7% increase (H1 2012: $4,702,000). The increase was predominantly a result of:
CASHFLOWS AND LIQUIDITY
The cash balance at June 30, 2013 was $2,425,000 compared to $1,260,000 as at December 31, 2012. The increase in the cash balance of $1,165,000 was a result of a net cash loss from operations of $5,377,000, capital expenditure of $4,098,000 and an increase in working capital of $3,819,000 offset by the issue of shares for cash of $14,393,000.
The cash outflow attributable to the increase in working capital during the six months to June 30, 2013 of $3,819,000 (H1 2012: $2,481,000) comprised of an increase in accounts receivable of $944,000, an increase in inventory of $452,000, a decrease in accounts payable of $2,538,000 and a decrease in prepayments of $115,000.
Cash inflows from financing activities during Q2 2013 were $1,375,000 (Q2 2012: $40,000) which relates to financing activities undertaken near the end of the previous quarter. Financing activities for the six months to June 30, 2013 totalled $14,393,000 (H1 2012: $40,000).
Investing activities resulted in cash outflows of $4,098,000 for the six months ended June 30, 2013 (H1 2012: $5,699,000).
LIQUIDITY AND CAPITAL RESOURCES
As at June 30, 2013, the Company had cash totalling $2,425,000. The Company intends to use these funds to meet funding requirements associated with the growth and development of its business. This includes the rehabilitation of roads and other infrastructure on oil palm estates, new planting on oil palm estates, purchase of farm machinery and equipment, purchase of grain storage and processing plant, planting of crops, acquisition of IT hardware and software and further development of business systems. Over the next twelve months, the Company plans to 1) maximize returns from existing plantings while investing in new plantings and the required processing capacity; 2) commission the new palm oil mill at Yaligimba; 3) incur expenditure to maintain the Company's oil palm plantations, including the ongoing cost of new plantations as planned; 4) incur fertilizer, maintenance, harvesting, transport and processing costs; 5) prove commercial yields at its arable farming division before further expansion; and 6) incur general corporate and operating expenses.
The Company recorded net cash outflows in operations and investing activities for the 2012 calendar year and it is possible that this will continue for an additional few years as the Company continues to make significant investments in equipment and infrastructure activities necessary to commercialize its products. Feronia's actual funding requirements will vary based on the factors noted above and its relationships with lead customers and strategic partners.
As part of the first tranche of a non-brokered private placement with Golden Oil Holdings Limited completed on January 15, 2013, the Company issued 42,028,000 Common Shares for aggregate gross proceeds of CDN$5,043,360 ($5,116,007) at a purchase price of CDN$0.12 per share. In the second tranche completed on March 21, 2013, the Company issued 58,800,774 Common Shares to Golden Oil Holdings Limited for aggregate gross proceeds of CDN$7,056,093 ($6,883,993) at a purchase price of CDN$0.12 per share. Pursuant to the second tranche, the Company also issued 20,281,455 common shares to certain other qualifying shareholders of the Company for aggregate gross proceeds of CDN$2,433,774 ($2,392,857).
The proceeds are being used by the Company for working capital and capital expenditure purposes.
Continuing operations of Feronia are dependent upon its ability to continue to raise adequate financing and to commence profitable operations in the future. There can be no assurance that the Company will be able to continue raising adequate financing or commence profitable operations in the future. See "Risks and Uncertainties" below.
Major outstanding anticipated capital expenditure cash requirements (other than expenditures for oil palm rehabilitation and planting) as at the date of this MD&A relate to work undertaken to complete the new oil palm mill at Yaligimba (estimated to be $450,000), which will be paid in Q3 2013 rather than Q2 2013 as previously reported.
Non-GAAP Financial Measures
Gross margin is not a financial measure recognized by IFRS and does not have a standardized meaning prescribed by IFRS. The Company's method of calculating gross margin may differ from other methods used. Gross margin is presented in this MD&A as additional information regarding the Company's financial performance. Gross margin has been calculated by deducting cost of sales from revenue.
Risks and Uncertainties
The Company is subject to various business, financial and operational risks that could materially adversely affect the Company's future business, operations and financial condition and could cause such future business, operations and financial condition to differ materially from the forward-looking statements and information contained in this MD&A. For a more comprehensive discussion of the risks faced by the Company, please refer to the Company's annual management's discussion and analysis for the year ended December 31, 2012, available at .
Cautionary Notes
Except for statements of historical fact contained herein, the information in this press release constitutes "forward-looking information" within the meaning of Canadian securities law. Such forward-looking information may be identified by words such as "anticipates", "plans", "proposes", "estimates", "intends", "expects", "believes", "may" and "will". There can be no assurance that such statements will prove to be accurate; actual results and future events could differ materially from such statements. Factors that could cause actual results to differ materially include, among others: risks related to foreign operations (including various political, economic and other risks and uncertainties), the interpretation and implementation of the Agriculture Law, termination or non-renewal of concession rights or expropriation of property rights, political instability and bureaucracy, limited operating history, lack of profitability, lack of infrastructure in the DRC, high inflation rates, limited availability of debt financing in the DRC, fluctuations in currency exchange rates, competition from other businesses, reliance on various factors (including local labour, importation of machinery and other key items and business relationships), the Company's reliance on one major customer, lower productivity at the Company's plantations and arable farming operations, risks related to the agricultural industry (including adverse weather conditions, shifting weather patterns, and crop failure due to infestations), a shift in commodity trends and demands, vulnerability to fluctuations in the world market, the lack of availability of qualified management personnel and stock market volatility. Most of these factors are outside the control of the Company. Investors are cautioned not to put undue reliance on forward-looking information. Except as otherwise required by applicable securities statutes or regulation, the Company expressly disclaims any intent or obligation to update publicly forward-looking information, whether as a result of new information, future events or otherwise.
Neither the TSX Venture Exchange nor its regulation services provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Contacts:
Feronia Inc.
Ravi Sood
Executive Chairman
(416) 907-2026
Feronia Inc.
Bill Dry
CEO
+44 (0) 7887 525 046
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Datum: 28.08.2013 - 21:00 Uhr
Sprache: Deutsch
News-ID 291886
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contact information:
Town:
TORONTO, ONTARIO
Kategorie:
Farming
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