Ridley : Reports Financial Results for Fiscal 2015 First Quarter

MANKATO, MINNESOTA--(Marketwired - Nov 6, 2014) - Ridley Inc. (TSX:RCL) today reported its financial results for the three months ended September 30, 2014. All currency amounts are stated in U.S. dollars unless otherwise noted.

For the three months ended September 30, 2014, Ridley's adjusted earnings before interest, taxes, depreciation and amortization ("adjusted EBITDA") were $8.9 million compared to $6.7 million last year. Consolidated net income (after income taxes) for the quarter was $4.7 million ($0.36 per share) compared to $3.1 million ($0.24 per share) last year.

Ridley's results in the first quarter of fiscal 2015 reflect a favourable economic environment for producers of meat, milk and egg products that has supported growth in sales of animal nutrition products in most species segments. Consolidated gross profit increased by 13.4% to $20.1 million from $17.8 million in the first quarter last year. Sales volume in the first quarter increased by 8.3% while average unit margins were slightly higher as a result of a continuing trend towards higher value-added products.

Operating income (before income taxes) increased by $1.9 million or 37.4% to $7.1 million in the first quarter of fiscal 2015. Ridley's U.S. Feed Operations (USFO) reported a $0.7 million increase in operating income for the period on sales growth in most species sectors. Ridley Block Operations (RBO) reported a $0.3 million increase in operating income over last year, mainly from continuation of profitable operating conditions for cattle producers. Ridley Feed Ingredients (RFI) reported operating income of $1.4 million in the first quarter of fiscal 2015, a $1.0 million increase over last year resulting from sales growth and improved unit margins. Ridley's share of net income of associate from its interest in Masterfeeds LP improved by $0.4 million in the first quarter this year over last year.

MANAGEMENT'S DISCUSSION AND ANALYSIS

This Management's Discussion and Analysis dated as at November 6, 2014 and the accompanying interim consolidated financial statements for the three months ended September 30, 2014 have been prepared in accordance with Canadian generally accepted accounting principles (GAAP) which incorporate International Financial Reporting Standards (IFRS).

FIRST QUARTER RESULTS

The following summary is presented to assist in understanding the first quarter results of fiscal 2015.

Summary of Results of Operations	Three Months Ended
	September 30
($000, except per share data)	2014	2013
Revenue	142,297	133,921
Gross profit	20,149	17,771
Operating income	7,107	5,172
Net income before exceptions	4,663	2,939
Exceptions, net of income taxes(i)	-	131
Net income for the period	4,663	3,070
Net income per share, basic and diluted	0.36	0.24
Adjusted EBITDA(ii)	8,922	6,686

	(i)		Exceptions - In the preceding summary data, net income is reported before exceptions.There were no exceptions in the first quarter of fiscal 2015. Exceptions in the first quarter last year were comprised of $0.3 million, net of income taxes, from the gain on the sale of a previously closed facility in Indiana, and $0.1 million, net of income taxes, for the asset impairment loss accrued for closure of a facility in Pennsylvania.
	(ii)		Adjusted EBITDA - Operating income before depreciation, amortization and exceptions.EBITDA does not have a standardized meaning prescribed by GAAP and, therefore, is not readily comparable to similar measures presented by other companies.However, management believes that this measure provides investors with useful supplemental information.

Results of Operations

Consolidated gross profit in the first quarter of fiscal 2015 was $20.1 million compared to $17.8 million in the same period last year. Gross profit is a key measure of the performance of Ridley's business and generally reflects the margin of net sales revenue over ingredient cost, less manufacturing expenses. The major driver of the 13.4% increase in gross profit in the first quarter this year was an 8.3% increase in overall tonnage volumes combined with a favourable product mix in most market segments. For much of last year and continuing in the current year to-date, livestock and poultry producers have benefited from the combination of high prices for their meat, milk and egg products and lower trending costs for corn and other commodities. In this positive economic environment for producers, demand has been sustained for higher value-added animal nutrition products.

Direct production costs and manufacturing overheads, which are included in gross profits, increased by 7.3% in the first quarter over last year, largely in line with increased sales volumes. Labor, employee benefit expense and utilities accounted for most of the increase in manufacturing costs in the first quarter this year.

Operating expenses, which include technical services, selling, and administrative, and research and development costs, were $13.0 million in the first quarter compared to $12.6 million last year. Earnings exceptions, which are also included in operating expenses, were $0.4 million (pre-tax) in the first quarter last year for the gain on the sale of the site of the former Castleton, Indiana facility and $0.2 million (pre-tax) for the asset impairment loss from the closure of the Chambersburg, Pennsylvania facility. There were no exceptions in the first quarter of the current fiscal year. Excluding exceptions, the increase of $0.2 million in operating expenses this year mainly reflects increased employee benefits expense.

Operating income (before income taxes) increased by $1.9 million or 37.4% to $7.1 million in the first quarter of fiscal 2015. Each of the operating divisions of Ridley reported increased operating income on increased sales in the first quarter this year over the same period last year.

Ridley owns a non-controlling interest in Masterfeeds LP, an animal nutrition business in Canada formed in 2012 by the merger of Ridley's Canadian feed operations with that of Ag Processing Inc. Ridley's share of the earnings of the Masterfeeds limited partnership is reported as share of net income or loss of associate, which in the first quarter of fiscal 2015 was income of $0.4 million.

Net income (net of income tax expense) for the first quarter of fiscal 2015 was $4.7 million ($0.36 per share) compared to $3.1 million ($0.24 per share) in the same period of fiscal 2014.

Adjusted EBITDA is comprised of operating income before interest, taxes, depreciation, amortization and exceptions. Operating income is defined as net income before finance expense, finance income, income tax expense and share of net income or loss of associate. For the three months ended September 30, 2014, adjusted EBITDA was $8.9 million compared to $6.7 million for the same period last year. The main part of the increase of $2.2 million in adjusted EBITDA reflects a $1.9 million increase in operating income this year and $0.2 million of offsetting exceptions in the prior year.

The following table is a reconciliation of adjusted EBITDA to net income, the most closely comparable GAAP measure to adjusted EBITDA:

Adjusted EBITDA	Three Months Ended
	September 30
($000)	2014		2013
Net income for the period	4,663		3,070
Income tax expense	2,563		1,849
Share of net (income) loss of associate	(401	)	18
Finance expense	302		266
Finance income	(20	)	(31	)
Operating income	7,107		5,172
Depreciation of property, plant and equipment	1,556		1,498
Amortization of intangible assets	259		233
Gain on sale of facilities	-		(420	)
Asset impairment loss	-		203
Adjusted EBITDA	8,922		6,686

Ridley reports its financial results according to IFRS that have been incorporated into the CPA Canada Handbook. However, Ridley has included in this management discussion and analysis certain non-IFRS financial measures and ratios that it believes provide useful information in measuring the financial performance and financial condition of Ridley. These measures and ratios do not have a standardized meaning prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other public companies, nor should they be construed as an alternative to other financial measures described by IFRS.

Comprehensive Income

Comprehensive income (loss) is the change in net assets that results from transactions, events and circumstances from sources other than investments by and/or distributions to shareholders. Accumulated other comprehensive income is comprised entirely of unrealized gains and losses on translation of financial statements of related entities with foreign functional currency to U.S. dollar reporting currency. Comprehensive income for the three months ended September 30, 2014 was $3.4 million, which was comprised of net income of $4.7 million, as reported above, less unrealized losses of $1.2 million on the translation of the financial statements of related entities with foreign functional currency to U.S. dollar reporting currency.

SEGMENT RESULTS

The following is a summary of consolidated operating income (loss) of the reporting segments of the Company's operations for the first quarters of fiscal 2015 and 2014. "Corporate" in this presentation includes the consolidating elimination of intersegment sales.

Operating Income (Loss)	Three Months Ended
	September 30
($000)	2014		2013
U.S. Feed Operations (USFO)	3,074		2,406
Ridley Feed Ingredients (RFI)	1,366		375
Ridley Block Operations (RBO)	3,510		3,215
Corporate	(843	)	(824	)
Consolidated operating income	7,107		5,172

U.S. Feed Operations (USFO)

The USFO segment consists of twenty full-line production facilities, operating in the United States as Hubbard Feeds. USFO plants derive most of their business from manufacturing and marketing a broad range of complete feeds, supplements and premixes to meat, milk and egg producers, and owners of equine and companion animals located mostly in the Midwestern United States.

Tonnage volume increased by 6.3% in the first quarter of fiscal 2015 compared to last year. Volume in the quarter was higher relative to last year due to strong sales in the dairy, swine and beef sectors, which continue to respond positively to good producer economics this year. Gross profits in the first quarter this year were $11.3 million compared to $10.3 million in the same period last year. The $1.0 million increase in gross profits reflects increased tonnage volume in the period and improved unit margins in dairy and lifestyle products that largely offset increased production costs.

Operating expenses increased by $0.3 million in the first quarter this year. Operating expenses last year included a $0.4 million gain on the sale of property from a closed feed manufacturing facility and a $0.2 million asset impairment loss on the Chambersburg, Pennsylvania facility which was closed following the first quarter last year. Excluding these exceptions from last year, USFO operating expenses in the first quarter of fiscal 2015 increased by $0.1 million over last year. Operating income for the first quarter of fiscal 2015 was $3.1 million, an increase of $0.7 million over last year.

Ridley Feed Ingredients (RFI)

The RFI segment manufactures and distributes vitamin and trace mineral premixes, small packaged specialty products, medicated and non-medicated feed additives, and micro feed ingredients to customers throughout North America from its production facility in Mendota, Illinois.

Revenue in the first quarter of fiscal 2015, including intersegment sales, increased by $6.0 million or 22.6% over the same period last year as a result of sales growth in most value-added product categories. Gross profit of $2.5 million in the first quarter increased by $1.0 million over last year, mainly the result of increased sales and improved unit margins. Operating expenses in the first quarter were not materially changed from the prior year. Operating income for the first quarter was $1.4 million, an increase of $1.0 million over last year reflecting the increase in gross profit for the period.

Ridley Block Operations (RBO)

The RBO segment manufactures and markets a complete range of block supplements, including low moisture, pressed, compressed, composite and poured blocks, minerals, and dried molasses from eight U.S. facilities.

RBO's tonnage volume in the first quarter of fiscal 2015 increased by 5.6% over last year, mainly from a continuation of favourable producer economics in the beef sector. Gross profits of $6.4 million in the first quarter this year increased by $0.4 million or 6.5% over last year reflecting increased sales volumes. Operating expenses in the first quarter of fiscal 2015 increased by $0.1 million from last year, mainly the result of higher administrative expenses. Operating income increased over last year by $0.3 million in the first quarter in line with the increase in gross profits, partly offset by increased operating expenses.

LIQUIDITY, CAPITAL RESOURCES, AND CASH FLOW

Ridley's net working capital and debt-to-equity positions are summarized below.

Balances as of: ($000)	September 30 2014		June 30 2014		March 31 2014		December 31 2013		September 30 2013
Net working capital(i)	35,256		34,730		36,078		36,200		38,517
Net debt (cash surplus)(ii)	16,311		19,003		(4,051	)	5,152		14,607
Equity	119,830		116,387		138,073		131,004		124,516
Debt to capitalization ratio(iii)	11.5	%	13.6	%	-	%	3.5	%	11.0	%

	(i)		Net working capital is defined as current assets (excluding cash) less current liabilities (excluding outstanding cheques in excess of bank balances, short-term debt, and the current portion of long-term debt).
	(ii)		Net debt (cash surplus) is defined as bank obligations and outstanding cheques in excess of bank balances less cash and short-term deposits.
	(iii)		Capitalization is debt (bank obligations) plus equity.

Net working capital balances increased by $0.5 million in the three months between June 30, 2014 and September 30, 2014. Accounts receivable were higher by $5.5 million from the prior quarter on seasonally increased sales revenues. Inventories were lower by $3.1 million reflecting the management of raw material stocks in response to tighter supply conditions for certain feed ingredients. Income taxes payable were also higher by $2.2 million.

Net debt of $16.3 million as at September 30, 2014 was comprised of a $15.6 million balance in revolving credit and $1.8 million in outstanding cheques less $1.1 million of cash and short term deposits. The Company's borrowing limit under its loan agreement with U.S. Bank was unchanged at $50.0 million as at September 30, 2014.

For the first quarter of fiscal 2015, cash generated from operations net of investing activities was $2.7 million compared to $1.3 million in the same three-month period last year. The following is a summary of cash generated or utilized by business operations, net of capital expenditures on property, plant and equipment and intangible assets.

Summary of Cash Flows Net of Investing Activities	Three Months Ended
	September 30
($000)	2014		2013
Net income	4,663		3,070
Depreciation and amortization	1,815		1,731
Other items not affecting cash(i)	(234	)	(276	)
Net change in non-cash working capital balances(ii)	(779	)	(3,054	)
Net post-employment benefit expense (contributions)(iii)	(247	)	653
Net cash from operating activities	5,218		2,124
Capital expenditures, including other intangibles	(2,338	)	(1,486	)
Net proceeds on property disposals	-		755
Increase in loans receivable, net	(162	)	(61	)
Cash flows net of investing activities	2,718		1,332

	(i)		Other items not affecting cash include deferred income taxes, asset impairment losses or reversals, gains or losses on sale of property, plant and equipment and facilities, share of income of associate, and other non-cash expenses.
	(ii)		Net change in non-cash working capital balances and other balances related to operations.
	(iii)		Post-employment benefit expense net of employer contributions to post-employment benefit plans.

Capital Expenditures

Capital expenditures on property, plant and equipment, and intangible assets (software) in the first quarter of fiscal 2015 were $2.3 million, compared to $1.5 million in the same period a year ago. Increased capital expenditures this year reflect the initiation of two facility expansion projects. RBO is constructing a new $8.0 million feed supplement block manufacturing facility adjacent to its existing facility in Flemingsburg, Kentucky. RFI has commenced construction of a $4.5 million addition to its facility in Mendota, Illinois. Both projects are expected to be completed in fiscal 2016.

Investment in Masterfeeds LP

Masterfeeds LP ("Masterfeeds") is a limited partnership formed by the merger in 2012 of the Canadian livestock and poultry feed and nutrition businesses of Ridley Inc. and Ag Processing Inc. Ridley retains a non-controlling equity interest in Masterfeeds, reported as an investment in associate, which was $17.9 million as at September 30, 2014. Results of the Company's Canadian operations were reported in fiscal 2013 and 2014 as net income from discontinued operations.

On December 18, 2013 a fire at the Humboldt, Saskatchewan feed plant owned and operated by Masterfeeds caused significant damage to the building structure and manufacturing equipment forcing the facility to close while repairs are made. The cost of repairs to the damaged structure and equipment is expected to be substantially covered by insurance. Production at the facility will resume on a staged basis in the spring of 2015.

Outstanding Share Data

The Company's share capital consists of an unlimited number of common shares authorized with no par value. On December 12, 2013, the Company received approval from The Toronto Stock Exchange (the "TSX") to initiate a normal course issuer bid ("NCIB") for the Company's shares through the facilities of the TSX. The shares repurchase program permits the Company to purchase for cancellation up to 639,499 of its common shares over the twelve-month period ending December 15, 2014. As at November 6, 2014, the Company had not repurchased any shares under the current NCIB. The number of shares outstanding as at September 30, 2014 and as at November 6, 2014 was 12,789,978.

SELECTED QUARTERLY FINANCIAL INFORMATION

($000, except per share data)	Fiscal Year	First Quarter	Second Quarter	Third Quarter	Fourth Quarter
Revenue(i)	2015	142,297
	2014	133,921	152,535	147,581	134,654
	2013	143,061	157,065	144,571	130,053
Net income before discontinued operations andexceptions(ii) net of income taxes	2015	4,663
	2014	2,853	7,304	7,972	2,252
	2013	5,135	5,689	5,539	1,561
Net income per share before discontinuedoperations and exceptions(ii) net of incometaxes	2015	0.36
	2014	0.22	0.57	0.62	0.18
	2013	0.40	0.45	0.43	0.12
Net income(iii)	2015	4,663
	2014	3,070	7,288	7,968	2,343
	2013	5,073	6,370	5,413	1,647
Net income per share	2015	0.36
	2014	0.24	0.57	0.62	0.19
	2013	0.40	0.50	0.42	0.12

	(i)		Revenue in fiscal 2013 and 2014 has been restated to exclude discontinued operations comprised of the Company's Canadian feed operations, which were substantially merged into Masterfeeds LP in November 2012.
	(ii)		Exceptions include asset impairment losses and recoveries, gains and losses on the sale of facilities, and other costs.
	(iii)		Net income in fiscal 2013 and 2014 reflects the Company's adoption of amendments to IAS 19.

SEASONALITY AND COMMODITY VARIABILITY

The Company experiences seasonal variations in revenue. Historically, revenue is strongest in the second and third fiscal quarters when colder weather from October to March typically increases demand for beef cattle feed. Other product lines are only marginally affected by seasonal conditions. Certain of the raw materials comprising the Company's products incorporate commodity-based products and the by-products of commodity processing. Fluctuating commodity prices may therefore influence revenues and associated cost of sales as the Company's selling prices are adjusted to reflect current raw materials markets.

INTERNAL CONTROL OVER FINANCIAL REPORTING

The Chief Executive Officer and Chief Financial Officer have each signed form "52-109F2 - Certification of Interim Filings" and filed it with the appropriate securities regulators in Canada in compliance with National Instrument 52-109: Certification of Disclosure in Issuers' Annual and Interim Filings issued by the Canadian Securities Administrators. There has been no change in Ridley's internal controls over financial reporting or disclosure controls and procedures that occurred during the most recent interim period that has materially affected, or is reasonably likely to materially affect, Ridley's internal control over financial reporting.

FORWARD-LOOKING INFORMATION

This report contains forward-looking information. The forward-looking information includes statements concerning Ridley's outlook for the future, as well as other statements of beliefs, plans and strategies or anticipated events, and similar expressions concerning matters that are not historical facts. Forward-looking information and statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in, contemplated or implied by, such statements. These risks and uncertainties include the ability to make effective acquisitions and successfully integrate newly acquired businesses into existing operations, the availability and prices of raw materials and supplies, livestock disease, product pricing, the competitive environment and related market conditions, operating efficiencies, access to capital, the cost of compliance with environmental and health standards and other regulatory requirements affecting Ridley's business, adverse results from ongoing litigation, and actions of domestic and foreign governments. Other risks are outlined in the Risk Management section of Management's Discussion and Analysis included in Ridley's Annual Report. Unless otherwise required by applicable securities law, Ridley disclaims any intention or obligation to publicly update or revise this information, whether as a result of new information, future events or otherwise. Ridley cautions readers not to place undue reliance upon forward-looking statements.

OUTLOOK

The major external drivers of Ridley's animal nutrition business are the prevailing economic conditions for producers of meat, milk and egg products, as well as market dynamics for feed ingredients purchased by producers or used as raw materials in the production of feed products, and weather related factors that affect the availability and quality of pastures and forages for livestock. Ridley's sales tonnage volume last year (fiscal 2014) was sustained by a positive economic environment for livestock and poultry producers and a favourably cold, snowy winter. Current economic conditions remain generally favourable for producers of meat, milk and egg products. Most feed grains and ingredient prices are lower at the present time relative to last year, which is beneficial for producers' cost of production. The contraction of herd populations during previous periods of high feed costs continues to provide support to producer prices in most sectors of livestock and poultry production.

Drought conditions that stimulate demand for feed supplementation have tended to be a positive factor for Ridley in prior years; however, at the present time, in most of Ridley's trading area in the Southeastern and Midwestern states, pastures are green and forage availability is high. Lower trending prices for feed ingredients, which generally move in tandem with commodities, tend to be a negative factor for Ridley's unit margins through the effect on the value of raw material inventories and the margin between ingredient cost and market driven prices of feed products. Consequently, the potential for volatility in feed ingredient prices and the abundance of livestock forage in much of the Midwest will be amongst the more significant drivers of Ridley's results in fiscal 2015.

Ridley Inc., headquartered in Mankato, Minnesota, is one of North America's leading commercial animal nutrition companies. Ridley employs approximately 700 people in the manufacture, sales and marketing of a full range of animal nutrition products under highly regarded trade names. Ridley's common shares are listed on The Toronto Stock Exchange (trading symbol: RCL). Additional information, including the notes to the interim financial statements and Ridley's Annual Information Form (AIF), are available at www.sedar.com. Visit our website at www.ridleyinc.com.

CONSOLIDATED BALANCE SHEETS
(Expressed in thousands of U.S. dollars)(unaudited)
		Note	September 30 2014		June 30 2014		September 30 2013
ASSETS
Current assets
	Cash		1,073		1,115		1,353
	Accounts receivable		27,703		22,238		25,955
	Inventories	7	40,158		43,225		40,778
	Income taxes recoverable		78		225		749
	Prepaid and other current assets		1,636		1,478		1,935
	Current portion of loans receivable		478		296		408
Total current assets			71,126		68,577		71,178
Non-current assets
	Loans receivable		104		124		72
	Assets-held-for-sale	9	200		200		200
	Property, plant and equipment		65,664		64,902		63,724
	Deferred income tax asset		6,968		7,386		7,617
	Investment in associate	10	17,918		18,401		17,579
	Intangible assets		7,772		8,020		8,474
	Goodwill		38,928		38,928		38,928
Total non-current assets			137,554		137,961		136,594
TOTAL ASSETS			208,680		206,538		207,772
LIABILITIES and SHAREHOLDERS' EQUITY
Current liabilities
	Outstanding cheques in excess of bank balances		1,800		1,790		584
	Accounts payable and accrued liabilities		32,234		31,745		30,617
	Advances from customers		364		987		691
	Income taxes payable		2,199		-		-
	Short-term debt		15,584		18,328		-
Total current liabilities			52,181		52,850		31,892
Non-current liabilities
	Long-term debt		-		-		15,376
	Deferred income tax liability		16,160		16,077		16,939
	Other accrued liabilities		1,115		1,584		1,286
	Post-employment benefit obligations		19,394		19,640		17,763
Total non-current liabilities			36,669		37,301		51,364
Total liabilities			88,850		90,151		83,256
Shareholders' equity
Share capital		12	53,159		53,159		53,159
Retained earnings			68,092		63,429		69,967
Accumulated other comprehensive income (loss)			(1,421	)	(201	)	1,390
			66,671		63,228		71,357
Total shareholders' equity			119,830		116,387		124,516
TOTAL LIABILITIES and SHAREHOLDERS' EQUITY			208,680		206,538		207,772

Refer to accompanying notes to the interim consolidated financial statements. Certain prior period figures have been reclassified to conform to presentation in the current period - See Note 17.

Approved by the Board of Directors

(signed)	"B. P. Martin"		(signed)	"W. Harden"
	B.P. Martin, Director			W. Harden, Director

CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(Expressed in thousands of U.S. dollars)(unaudited)
		Three Months Ended September 30
	Note	2014		2013
Revenue		142,297		133,921
Cost of sales	7	122,148		116,150
Gross profit		20,149		17,771
Operating (income) expenses
Technical services, selling and administrative		12,872		12,655
Other expense		69		75
Gain on sale of facilities	9	-		(420	)
Research and development		101		86
Asset impairment	9	-		203
Net operating expenses		13,042		12,599
Operating income		7,107		5,172
Share of net income (loss) of associate	10	401		(18	)
Finance expense		(302	)	(266	)
Finance income		20		31
Income before income taxes		7,226		4,919
Income tax expense	11	2,563		1,849
Net income for the period		4,663		3,070
Retained earnings, beginning of period		63,429		66,897
Net income for the period		4,663		3,070
Retained earnings, end of period		68,092		69,967
Net income per share, basic and diluted		0.36		0.24

Refer to accompanying notes to the interim consolidated financial statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Expressed in thousands of U.S. dollars)(unaudited)
	Three Months Ended September 30
	2014		2013
Net income for the period	4,663		3,070
Items that may be reclassified to net income:
Unrealized gain (loss) on translation of financial statements of related entities with foreign functional currency to U.S. dollar reporting currency	(1,220	)	522
Other comprehensive income (loss) for the period	(1,220	)	522
Comprehensive income for the period	3,443		3,592

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Expressed in thousands of U.S. dollars)(unaudited)
	Note	Share capital	Retained earnings	Accumulated other comprehensive income (loss)	Total Equity
Balance at June 30, 2013		53,159	66,897	868	120,924
Change in currency translation		-	-	522	522
Net income for the period		-	3,070	-	3,070
Balance at September 30, 2013	12	53,159	69,967	1,390	124,516

	Note	Share capital	Retained earnings	Accumulated other comprehensive income (loss)		Total Equity
Balance at June 30, 2014		53,159	63,429	(201	)	116,387
Change in currency translation		-	-	(1,220	)	(1,220	)
Net income for the period		-	4,663	-		4,663
Balance at September 30, 2014	12	53,159	68,092	(1,421	)	119,830

Accumulated other comprehensive income (loss) is comprised entirely of the unrealized loss on translation of financial statements of related entities with foreign functional currency to U.S. dollar reporting currency.

Refer to accompanying notes to the interim consolidated financial statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in thousands of U.S. dollars)(unaudited)
			Three Months Ended September 30
		Note	2014		2013
Cash flow from operating activities
Net income for the period			4,663		3,070
Add (deduct) items not affecting cash:
	Depreciation of property, plant and equipment		1,556		1,498
	Deferred income taxes		152		(96	)
	Asset impairment loss	9	-		203
	Share of net income of associate	10	(401	)	18
	(Gain) loss on sale of property, plant and equipment		9		13
	Gain on sale of facilities	9	-		(420	)
	Amortization of intangible assets		259		233
	Post-employment benefit expense		744		655
	Other items not affecting cash		32		20
			7,014		5,194
Net change in non-cash working capital and other balances related to operations:
	Accounts receivable		(5,491	)	(836	)
	Inventories	7	3,067		1,200
	Prepaid and other current assets		(158	)	(1,094	)
	Accounts payable and accrued liabilities		54		180
	Advances from customers		(623	)	24
	Income taxes payable and recoverable		2,346		(2,542	)
			(805	)	(3,068	)
Contributions to post-employment benefit plans			(991	)	(2	)
Net cash from operating activities			5,218		2,124
Cash flow from investing activities
	Proceeds on disposal of property, plant and equipment and facilities		-		755
	Purchase of property, plant and equipment		(2,327	)	(1,455	)
	Purchase of intangible assets		(11	)	(31	)
	(Increase) decrease in loans receivable, net		(162	)	(61	)
Net cash for investing activities			(2,500	)	(792	)
Cash flow from financing activities
	Repayment of short- and long-term debt		(4,609	)	(2,026	)
	Proceeds from short- and long-term debt		1,859		5,367
Net cash from (for) financing activities			(2,750	)	3,341
Effect of exchange rate changes on cash			(20	)	1
Increase (decrease) in cash and cash equivalents			(52	)	4,674
Cash and cash equivalents - beginning of period			(675	)	(3,905	)
Cash and cash equivalents - end of period			(727	)	769
Cash and cash equivalents are comprised of:
	Cash		1,073		1,353
	Outstanding cheques in excess of bank balances		(1,800	)	(584	)
			(727	)	769

Refer to accompanying notes to the interim consolidated financial statements. Certain prior period figures have been reclassified to conform to presentation in the current period - See Note 17.