Q2 Financial Report - 2014

Our business in Ukraine, as is the case with most of our new business in emerging markets, is
primarily comprised of turn-key projects that bundle our commercial grain handling equipment
with large diameter storage bins and are sold to large corporate farms, commercial grain handlers
and port facilities. Our customers in Ukraine are predominantly well capitalized entities that either
qualify for EDC insurance, direct financing or are able to pay cash in advance of shipment, and
they generally transact a significant portion of their business in U.S. dollars and accordingly are
largely insulated from volatility in local currencies. We remain in regular contact with our
customers in the region and to date there has not been an indication that their capital expenditure
plans have been substantially impacted by the recent events and accordingly we continue to ship
product to Ukraine.
In the six months ended June 30, 2014 sales to RUK were $12 million and as at June 30, 2014
committed orders for future shipments to RUK approximate $53 million, the significant majority
of which are in Ukraine. Sales in the first six months of 2014 were largely consistent with
expectations and reflect AGI’s production scheduling as well as customer timelines. Of the $53
million in committed orders, management estimates $15 million to $20 million will ship in fiscal
2015. The majority of the 2015 shipments relate to a large port facility and reflect both the
complexity of the project as the site continues to undergo design changes as well as delays related
to financing structure that resulted in part from the unrest in Ukraine. Of the $53 million in
committed orders, $20 million will be shipped based on existing export credit agency facilities or
cash deposits while shipment of the remaining $33 million is subject to receipt of additional export
credit agency support or cash deposits.
The situation in Ukraine and the region is very fluid. Although at this time our customers have not
changed their view with respect to our capital projects this may change if the situation worsens.
Our business may also be adversely affected in the event of negative developments with respect to
currency controls, trade sanctions, a deterioration in or expansion of the current political, social or
military situation or if the current situation is protracted. Export Development Canada is currently
reviewing new credit applications on a case-by-case basis and future business in the region may be
constrained in the absence of export credit agency support. (See also, "Risk and Uncertainties -
International Sales and Operations").
DETAILED OPERATING RESULTS
(thousands of dollars)
Three Months Ended
June 30
Six Months Ended
June 30
2014 2013 2014 2013
Trade sales (1) $112,422 $93,882 $198,603 $153,795
Gain (loss) on FX 416 (562) (1,487) (928)
Sales 112,838 93,320 197,116 152,867
Cost of inventories 73,014 63,011 128,950 101,827
Depreciation/Amortization 1,744 1,423 3,356 2,815
Cost of sales 74,758 64,434 132,306 104,642
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