Mr. Ravi Sood reports
FERONIA INC. REPORTS 2010 RESULTS
Feronia Inc. has released its audited annual financial results for the year ended Dec. 31, 2010. All amounts in this release are expressed in United States dollars unless otherwise indicated.
James Siggs, chief executive officer of Feronia, commented: "We are pleased to report that Feronia continued to track according to plan in 2010. As expected, palm oil production was down on a quarter-over-quarter basis in the last quarter of 2010 due to the normal seasonality of production. However, on a year-over-year basis, production was up, and we have met our key operational targets."
Fourth quarter and 2010 financial highlights
- Crude palm oil production increased by 31 per cent compared with 2009.
- EBITDA (earnings before interest, taxes, depreciation and amortization) was negative $244,580 for the quarter and negative $6,160,009 for the year, an improvement from negative $10,828,544 for the year 2009.
- Net loss was $139,508 for the quarter and $6,529,254 for the year compared with a loss of $10,872,281 for the year 2009.
- RTO (recovery time objective) costs of $1,343,940 were fully expensed in the year.
- Basic and diluted EPS (earnings per share) for the year was negative nine cents compared with negative 70 cents for 2009.
- Cash balance as at Dec. 31, 2010, was $8,907,686 compared with $477,617 as at Dec. 31, 2009.
Achievement of milestones in 2010
During the year the company completed the listing of its shares on the TSX Venture Exchange and an equity financing of $16,825,706 to finance the rehabilitation of its oil palm plantations. Excluding the costs associated with completing the listing, the company's yearly operating loss was down substantially compared with 2009.
"Following the completion of the financings in September, 2010, and Marc, 2011, Feronia's current business plan is well funded. In the fourth quarter of 2010 and the first quarter of 2011, the company has made several key investments in its oil palm plantations and arable farming operations as part of its aggressive growth program," said Mr. Siggs.
Revenue
During the fourth quarter, Feronia's revenue was $877,939, a decrease of 32 per cent from $1,290,793 in the third quarter.
During the year, Feronia produced approximately 30,420 tonnes of palm fruit which was processed to produce 4,952 tonnes of crude palm oil (CPO), representing an increase of approximately 31 per cent on a year-over-year basis. As at Dec. 31, 2010, Feronia had 16,868 hectares of oil palm planted including 1,027 hectares of replanting in the year.
Selling, general and administration expenses (SG&A)
SG&A expenses decreased to $7,919,058 in 2010 compared with $11,137,465 in 2009 which included a writedown of $10,569,288 on the fair value of the assets on the acquisition of PHC.
Net loss for the year
The net loss for the fourth quarter of 2010 was $139,508 compared with a loss of $2,989,901 in the third quarter of 2010. The net loss for 2010 was $6,529,254 compared with $10,872,281 in 2009. However, the results for 2009 include only four months postacquisition of Feronia's subsidiary Plantations et Huileries Du Congo SCARL, whereas the 2010 results include a complete year and also include the costs associated with the reverse takeover transaction.
Capital expenditures
Capital expenditures in the fourth quarter increased by $1,544,290, totalling $5,426,933 for the year. The major items were as follows:
- Rehabilitation of the palm oil mills to increase oil extraction rates and operating efficiencies;
- Replanting program of 1,027 hectares on the oil palm estates;
- Development of the arable farm, reclaiming 600 hectares.
Recent developments by business segment
Palm oil operations
- Global spot CPO prices have remained firmly over $1,000 per tonne having reached a high of $1,335 in the first quarter of 2011.
- An order has been received from a West African operator for 756,000 oil palm seeds for delivery in 2011.
- The company planted 1,027 hectares in the year, over its annual target of 1,000 hectares.
Arable farm operations
- Land preparation is well advanced, with 1,396 hectares of abandoned farmland reclaimed and ready for cultivation at the end of March, 2011.
- Key capital equipment such as tractors, combines, sowing equipment and a grain drying installation have been purchased and delivered to site in first quarter 2011 in time for the first commercial sowing of edible beans.
- One hundred eleven hectares of rice were planted in March, 2011, in order to provide seed for the major sowing in September, 2011.
Outlook
"Feronia continues to expand its operations according to plan," said Ravi Sood, chairman of Feronia. "Having completed a substantial equity issue in the first quarter of 2011, the company is now able to accelerate the expansion of its oil palm plantations by increasing its planting activities and building a new high throughput palm oil mill earlier than previously budgeted. We anticipate that this will improve overall efficiencies and help reduce production costs. The company is also progressing the expansion of its arable farming operations and evaluating other related opportunities including the local production of various fertilizers. With the price of food and vegetable oils reaching new highs around the world the commercial opportunity for Feronia and its strategic importance globally continues to grow."
We seek Safe Harbor.