At quarter's end, inventories are high compared to year-end due mainly to the harvest of the Taber beet crop in the first quarter of the fiscal year.
Cash requirements for working capital, for the funding of the special dividend and other capital expenditures are expected to be paid from available credit resources and from funds generated from operations.
Outstanding securities and dividend declaration
There was no change in outstanding securities for the quarter. As at January 30, 2013 there were 94,090,760 common shares outstanding.
On January 30, 2013, the Board of Directors has authorized and declared a special dividend of 36 cents per share to be paid to Shareholders of record on February 8, 2013, payable on or before February 28, 2013. In addition, the Board of Directors authorized the declaration of a quarterly dividend of 9 cents per share to be paid to Shareholders of record on March 31, 2013, payable on or before April 19, 2013.
Critical accounting estimate and accounting policies
There are no significant changes in the critical estimate and accounting policies disclosed in the Management's Discussion and Analysis of the September 29, 2012 Annual Report.
Future accounting changes
A number of new standards, and amendments to standards and interpretations, are not yet effective and have not been applied in preparing these unaudited condensed consolidated interim financial statements.
IFRS 9 Financial Instruments - This standard will replace IAS 39, Financial Instruments: Recognition and Measurement with a proposed single model for only two classification categories: amortized cost and fair value. The standard is currently required to be adopted for annual periods beginning January 1, 2015. The extent of the impact on the financial statements of the Company has not yet been determined.
IFRS 10 Consolidated Financial Statements - This standard provides additional guidance to determine whether an entity should be included within the consolidated financial statements of the Company. The standard is required to be adopted for annual periods beginning January 1, 2013. The extent of the impact on the financial statements of the Company has not yet been determined.
IFRS 13 Fair Value Measurement - This standard provides new guidance on fair value measurement and disclosure requirements. This standard is required to be adopted for annual periods beginning January 1, 2013. The extent of the impact on the financial statements of the Company has not yet been determined.
IAS 19 Employee Benefits - This standard includes the elimination of the option to defer the recognition of gains and losses, enhancing the guidance around measurement of plan assets and defined benefit obligations, streamlining the presentation of changes in assets and liabilities arising from defined benefit plans and the introduction of enhanced disclosures for defined benefit plans. This standard is effective for annual periods beginning January 1, 2013. The extent of the impact on the financial statements of the Company has not yet been determined.
Risk factors in the Company's business and operations are discussed in the Management's Discussion and Analysis of our Annual Report for the year ended September 29, 2012. This document is available on SEDAR at www.sedar.com or on one of our websites at www.lantic.ca or www.rogerssugar.com.
Industrial volume will be higher in fiscal 2013 as additional volume has been contracted for calendar 2013 with new and existing accounts. In addition the Company was able to contract for one year, starting in the spring of 2013, additional liquid sugar with one large bottler in western Canada. This should increase liquid volume in the second half of the fiscal year. Export volume is forecast to be lower this year as no U.S. special quotas are expected during the year as a result of large crops in the U.S. and Mexico. Overall the annual sales volume is forecast to be higher than last year.
The Taber sugar beet slicing campaign is expected to be completed by mid-February. We are now estimating total beet sugar production at approximately the same level of last year of approximately 118,000 metric tonnes, once the thick juice campaign is completed in the spring of 2013. This is higher than the sales forecast for the domestic market normally supplied from Taber and for export sales under the U.S. Canada specific quota and to Mexico. If other export or domestic opportunities do not occur, Taber will have to warehouse, until next year, some beet sugar, which would increase total distribution costs.
Less than half of fiscal 2013's natural gas requirements have been hedged at average prices comparable to those realized in fiscal 2012. Any un-hedged volume should benefit from the current low prices of natural gas and therefore increase the adjusted gross margin rate. In addition, futures positions for fiscal 2014 to 2015 have been taken. Some of these positions are at prices higher than the current market values, but are at the same or better levels than those achieved in fiscal 2012. We will continue to monitor natural gas market dynamics with the objective of minimizing natural gas costs.
Labour negotiations started in December 2012 for the renewal of the labour contracts terminating on February 28, 2013 for the Montreal refinery unionized employees. Negotiations for the Vancouver labour contract, also terminating on February 28, 2013, should start over the next few weeks.
The Financial Statement is available at this address : http://media3.marketwire.com/docs/rsi_fin_e.pdf
Mr. Dan Lafrance
Senior VP Finance, CFO and Secretary
(514) 527-1610 (FAX)
Visit our Websites at www.rogerssugar.com or www.Lantic.ca
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