FERONIA REPORTS SECOND QUARTER 2011 RESULTS UNDER IFRS
TORONTO, ONTARIO - August 29, 2011: Feronia Inc. (“Feronia” or the “Company”) (TSX-V: FRN) today released its unaudited consolidated financial results for the three months and six months ended June 30 2011. All amounts in this release are expressed in US dollars unless otherwise indicated.
Bill Dry, CEO of Feronia, commented: “Feronia continues to make significant progress towards its objectives of oil palm replanting, increased palm oil production and land preparation for the arable farming operations in the second quarter (first half) of 2011. On a year over year basis, palm oil production was up 36% at 2,231 tonnes in Q2 2011, with a further 1,039 hectares of new palms planted to July 2011. Arable farming operations have also made significant progress including completing the reclamation of 1,900 hectares of abandoned farmland by the end of June 2011 in preparation for the first crop sowing in September.”
Second Quarter 2011 Financial Highlights:
Revenue was $1,614,262, an increase of 41% from $1,143,668 in the second quarter of 2010.
Net income was $1,865,670 for the second quarter in 2011 compared to a loss of $1,596,428 in the second quarter of 2010. This was primarily due to a gain of $4,601,246 recognized in the second quarter for the revaluation of biological assets, compared to a gain of $493,363 in the second quarter of 2010.
Basic and diluted EPS for the quarter was positive $0.01 compared to negative $0.04 for 2010 Q2.
Cash balance as at June 30, 2011 was $27,883,375 compared to $2,920,591 at June 30, 2010. The cash balance at December 31, 2010 was $8,907,686.
Achievement of Milestones in 2011:
“During the first half we completed an equity financing of $28,778,750 to fund the construction of a new palm oil mill, accelerate the replanting programme in our oil palm plantations, rehabilitate our oil palm seed production facility and expand our arable farming operations. The rehabilitation of two palm oil mills together with improved infrastructure has enabled progress in both fruit volumes and palm oil extraction. Completing the reclamation of the first 2,000 hectares of land for our arable farming operations is a major step forward in Feronia’s food production plans,” said Mr. Dry.
During the first quarter of 2011, Feronia’s revenue was $1,614,252, an increase of 41% from $1,143,668 in the first quarter of 2010. Revenue for the six months to June 30, 2011 was $3,092,743, an increase of 78% from $1,736,470 in the six months to June 30, 2010.
During the quarter, Feronia produced approximately 11,921 tonnes of palm fruit which were processed to produce 2,231 tonnes of CPO, compared to 9,864 tonnes of palm fruit, producing 1,644 tonnes of CPO in the second quarter of 2010. The average sales price for CPO realized in the quarter was $1,013 per tonne. In the six months to June 30, 2011, the Company produced 23,832 tonnes of palm fruit which were processed to produce 4,295 tonnes of CPO, compared to 16,660 tonnes of palm fruit, producing 2,757 tonnes of CPO in the six months to June 30, 2010. The oil extraction rate increased to 18.7% in the second quarter of 2011 compared to 16.7% in the second quarter of 2010. In the six months to June 30, 2011, the oil extraction rate was 18.0% compared to 16.6% in the six months to June 30, 2010.
Operating costs for the second quarter of 2011 were $2,873,646, an increase of $2,066,566, or 256%, compared to the second quarter of 2010. The increase in the second quarter of 2011 was primarily a result of an increase in general and operating expense of $600,825 and professional fees of $872,338. The primary reasons for the increase in general and administrative expenses relate to the conversion of all senior management from contractors to employees and a terminal payment. A significant component of the professional fees relate to costs related to the conversion to IFRS and the completion of the first quarter financial statements.
Net Income for the Year
The net income for the second quarter of 2011 was $1,865,670 compared to a loss of $1,596,428 in the second quarter of 2010. Net income for the six months to June 30, 2011 was $567,776 compared to a loss of $2,760,560 for the six months ended June 30, 2010.
Capital expenditures in the second quarter increased by $2,466,134. The major items were as follows:
Rehabilitation of the palm oil mills to increase oil extraction rates and operating efficiencies.
Replanting programme on the oil palm estates, planting 1,027 hectares to quarter-end.
Recent Developments by Business Segment
Palm Oil Operations:
Global spot CPO prices have remained firmly over $1000 per tonne having reached a high of $1,335 in the first quarter of 2011. During the second quarter, the spot CPO prices averaged over $1,125 per tonne.
At the end of July 2011, the Company’s palm oil mills had achieved an average oil extraction rate of 17.6% for the first seven months of 2011, a further improvement over the 17.4% achieved in the six months to June 30, 2011.
At the end of July, the Company had planted 1,039 hectares this year.
Arable Farm Operations:
Land preparation continues to advance, with over 2,000 hectares of abandoned farmland reclaimed by the end of July.
The site for the crop drying, storage and processing complex is being prepared and services arranged.
Orders have been placed for tractors, cultivation and sowing equipment for the planned expansion of the arable area.
“Feronia continues to make excellent progress at both its Palm Oil and Arable Farm Operations” said Ravi Sood, Chairman of Feronia. “The Company continues to make operational improvements at all levels. The team continues to demonstrate its ability to deploy capital effectively to increase both the scale and efficiency of the operations. We are optimistic that the Company will succeed in meeting its target of planting 2,000 ha of oil palm by year-end and its first commercial crop of rice on 2,000 ha in the third and fourth quarters.”
About Feronia Inc.
Feronia Inc. is a large-scale commercial farmland and plantation operator in the Democratic Republic of the Congo (“DRC”). The Company uses modern agricultural practices to operate and develop its oil palm plantations and arable farming business division. Feronia believes in the immense agricultural potential of the DRC for high-quality foodstuffs and edible oils given its ideal climate, excellent soil and highly skilled and experienced workforce. Feronia’s management team is comprised of senior agriculturalists with extensive experience in managing both plantations and large-scale mechanized farming operations in emerging markets. Feronia is committed to sustainable agriculture, environmental protection and providing support for local communities. For more information please see, www.feronia.com.
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 “plans”, “proposes”, “estimates”, “intends”, “expects”, “believes”, “may”, “will” and include without limitation, statements regarding the stated use of proceeds; plan of operations and comparative advantages; and benefits of this investment. 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, regulatory risks, risks inherent in foreign operations, commodity prices, competition, and investments having no history of operations. 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.
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