VANCOUVER, B.C., Nov. 14, 2013 (GLOBE NEWSWIRE) -- GLG Life Tech Corporation (TSX:GLG) ("GLG" or the "Company"), a vertically-integrated leader in the agricultural and commercial development of high quality stevia, announces financial results for the nine months ended September 30, 2013. The complete set of interim financial statements and management discussion and analysis are available on SEDAR and on the Company's website www.glglifetech.com.

Revenue for the quarter grew to $5.2 million, a 48% improvement over the second quarter. Revenue for the nine months ended September 30, 2013 was $11.9 million, 12% lower than the prior period, the decline resulting from the Company's change in business focus to international customers and recurring revenue from a focus on selling large amounts of stevia extract to other stevia providers in 2012. During the 9 month period, International sales have grown by 217% compared with the equivalent period in 2012.

The Company's quarterly net loss of $14.3 million and nine month net loss of $24.4 million are increased over $12.0 million in the prior period in 2012 (19% increase) and $22.5 million (9% increase) in the first nine months of 2012. These net losses include inventory impairment charges of $8.6 million and capacity charges of $1.5 million during the third quarter and inventory impairment charges of $8.6 million and capacity charges of $4.8 million for the nine month period. While the capacity charges negatively affect gross margins and current profitability, with the growth in the stevia market worldwide GLG anticipates that its ability to produce 1,500 tonnes of high purity stevia products will enhance the Company's attractiveness as a large scale producer as stevia becomes a mainstream product. The inventory impairment charge reflects a technical obsolescence provision.

The Company continues to make progress in developing its business with COFCO in China. There are three main healthy food and beverage formulation projects underway pursuant to the Company's previously announced strategic collaboration for the Chinese market with COFCO Nutrition and Health Research Institute Co Ltd.("COFCO NHRI"), a 100% owned subsidiary of China National Cereals, Oils, and Foodstuff Corporation ("COFCO".) Projects include dairy products for the COFCO Mengniu Dairy Subsidiary and food & beverage products for COFCO's China Foods subsidiary. The objective of these formulation projects is to create reduced calorie healthier products for COFCO subsidiaries and introduce products into the China market. The two parties are also assessing some of GLG's existing stevia sweetened products for distribution in China including tabletop. Lastly, the two parties are in discussions on advancing the China Sugar Reserve Healthy Sugar project. Given the market coverage afforded by the COFCO collaboration, the Company sold its interest in its consumer products subsidiary during the third quarter.

Net Cash from operating activities during the quarter was $0.9 million, a $2.0 million improvement from cash used in operations of $1.1 million in the prior period. Cash increased by $1.5 million during the nine month period to $4.6 million. Working capital declined over the quarter, driven by loans reclassified as current ($9.6 million)and inventory impairment charges ($8.6 million). Working capital year-to-date has improved to a deficit of $19.2 million as at September 30, 2013 compared to a working capital deficit of $33.9 million as at December 31, 2012.

Results from Operations

The following results from operations have been derived from and should be read in conjunction with the Company's annual consolidated financial statements for 2012 and the condensed interim consolidated financial statements for the nine month period ended September30, 2013.

Revenue

Revenue for the three months ended September 30, 2013 was $5.2 million, a decrease of 6% compared to $5.5 million in revenue for the same period last year. The total revenue was composed of $5.2 million for stevia sales and $0.0 million for discontinued operations.

Revenue for the nine months ended September 30, 2013 was $11.9 million, a decrease of 8% compared to $12.9 million in revenue for the same period last year. 

Stevia Business

Stevia sales of $5.2 million for the three months ended September 30, 2013 were decreased by 8% compared to the stevia sales of $5.7 million in the prior period. This 8% decrease in sales comparing the third quarter in 2013 to the third quarter in 2012 was driven by lower volumes of stevia extract sales to other stevia providers. In the third quarter of 2012 the Company needed to focus on reducing its inventory to meet short term obligations and aggressively sold off some of its inventories to other stevia providers in order to accomplish this. The Company has focused in 2013 on building its international customer base and sales to these customers have increased 111% during the three months ended September 30, 2013 compared to the prior period. The Company has proactively made a change in business focus towards international customers who buy stevia on a recurring basis compared to the sales of large quantities of stevia extracts to other stevia providers who purchase large quantities less frequently. International sales activity has also increased following the resumption of the Company's shares trading on the TSX. The Company will continue to focus on increasing its international customer business and also plans to continue to sell stevia extracts to other stevia providers. Pricing on its high purity stevia extracts was flat compared to the pricing for the same period in 2012. Pricing for low purity stevia extracts was stable to slightly lower in the third quarter 2013 compared to the same period in 2012.

Stevia sales of $11.9 million for the nine months ended September 30, 2013 were decreased by 8% compared to the stevia sales of $13.0 million in the prior period. The 8% decrease in sales comparing the nine months of 2013 to the nine months in 2012 was driven by a change in business focus towards international customers who buy stevia on a recurring basis compared to the sales of large quantities of stevia extracts to other stevia providers who purchase large quantities less frequently. 

Discontinued Operations

The Company's consumer products business had sales of $0.0 million in the third quarter of 2013 compared to $0.1 million in the comparative period. This represents a 100% decrease compared to the sales in the previous period. 

Cost of Sales

Cost of sales for the three months ended September 30, 2013 was $6.9 million compared to $8.0 million for the same period last year or a decrease of 14%. Cost of sales as a percentage of revenues was 132% compared to 142% in the prior period, a decrease of 10%. This was composed of $6.9 million for the stevia business and $0.0 million for the discontinued operations. The cost of sales for the stevia business as a percentage of revenue was higher in the current period compared to prior year due to the higher impact of capacity charges representing 22% of cost of sales in the current period compared to 19% in the prior period. These capacity charges ordinarily would flow to inventory; however, only two of GLG's manufacturing facilities were operating during the third quarter.

Cost of sales for the nine months ended September 30, 2013 was $15.4 million compared to $16.5 million for the same period last year or a decrease of 6%. Cost of sales as a percentage of revenues was 130% compared to 127% in the prior period, an increase of 3%. This was composed of $15.4 million for the stevia business and $0.0 million for the discontinued operations. The cost of sales for the stevia business as a percentage of revenue was higher in the current period compared to prior year due to the higher impact of capacity charges representing 31% of cost of sales in the current period compared to 28% in the prior period. These charges ordinarily would flow to inventory; however, only two of GLG's manufacturing facilities were operating during the nine months of the year.

Stevia Business

For the three months ended September 30, 2013, the cost of sales related to the stevia business was $6.9 million compared to $8.0 million in cost of sales for the same period last year ($1.1 million or 14% decrease). Cost of sales for stevia as a percentage of revenues was 132% compared to 142% in the prior period, a decrease of 10%. The cost of sales for the stevia business as a percentage of revenue was higher in the current period compared to prior year due to the higher impact of capacity charges representing 22% of cost of sales in the current period compared to 19% in the prior period. Cost of goods sold exceed revenues generated due to the capacity charges to the cost of goods sold that would ordinarily would flow to inventory. Two of GLG's manufacturing facilities were operating during the third quarter and capacity charges of $1.5 million were charged to cost of sales compared to $1.5 million charged to cost of sales in 2012. 

For the nine months ended September 30, 2013 the cost of sales related to the stevia business was $15.4 million compared to $16.5 million in cost of sales for the same period last year ($1.1 million or 6% decrease). Cost of sales for stevia as a percentage of revenues was 130% compared to 127% in the prior period, an increase of 3%. The cost of sales for the stevia business as a percentage of revenue was higher in the current period compared to prior year due to the higher impact of capacity charges representing 31% of cost of sales in the current period compared to 28% in the prior period. Cost of goods sold exceed revenues generated due to the capacity charges to the cost of goods sold that would ordinarily would flow to inventory. Two of GLG's manufacturing facilities were operating during the period and capacity charges of $4.8 million were charged to cost of sales compared to $4.6 million charged to cost of sales in 2012. 

The key factors that impact stevia cost of sales and gross profit percentages in each period include:

1. Capacity utilization of stevia manufacturing plants;
2. The price paid for stevia leaf and the stevia leaf quality, which is impacted by crop quality for a particular year/period and the price per kilogram for which the extract is sold. These are the most important factors that will impact the gross profit of GLG's stevia business;
3. salaries and wages of manufacturing labour;
4. Other factors which also impact stevia cost of sales to a lesser degree include:

• Water and power consumption;
• Manufacturing overhead used in the production of stevia extract, including supplies, power and water;
• Net VAT paid on export sales;
• Exchange rate changes;
• Depreciation and capacity utilization of the stevia extract processing plants; and
• Depreciation of intangible assets related to intellectual property.

GLG's stevia business is affected by seasonality. The harvest of the stevia leaves typically occurs starting at the end of the July and continues through the fall of each year. GLG's operations in China are also impacted by Chinese New Year celebrations during the month of January or February each year, during which many businesses close down operations for approximately two weeks. GLG's production year runs from October 1 to September 30 each year. 

Discontinued Operations

For the three months ended September 30, 2013, cost of sales related to the discontinued operations was $0.0 million compared to $0.1 million for the prior period. Discontinued operations' costs of goods sold includes costs associated with bottling the beverage products, supplies and ingredients used to manufacture the beverages, and shipping the products to the different distribution channels.    

For the nine months ended September 30, 2013, cost of sales related to the discontinued operations was $0.0 million compared to $0.6 million for the prior period. 

Gross Profit (Loss)

Gross loss for the three months ended September 30, 2013 was $1.7 million, a decrease of 29% over $2.5 million in gross loss for the comparable period in 2012. The gross profit margin for the three month period ended September 30, 2013 for the Company as a whole was a negative 32% compared to a negative 45% for the three months ended September 30, 2012 or a decrease of 13% from the previous year. On a disaggregated basis stevia products had a gross margin of negative 32% and the discontinued operations had a gross margin of 0%. The gross margin in stevia products was significantly impacted by the capacity and other fixed charges to the cost of goods sold. These capacity charges ordinarily would ordinarily flow to inventory; however, only one of GLG's manufacturing facilities was operating during the quarter and capacity charges of approximately $1.5 million were incurred.

Gross loss for the nine months ended September 30, 2013 was $3.6 million, a decrease of 2% over $3.6 million in gross loss for the comparable period in 2012. The gross profit margin for the nine month period ended September 30, 2013 for the Company as a whole was a negative 30% compared to a negative 28% for the nine months ended September 30, 2012 or an increase of 2% from the previous year. On a disaggregated basis stevia products had a gross margin of negative 30% and the discontinued operations had a gross margin of 80%. The gross margin in stevia products was significantly impacted by the capacity and other fixed charges to the cost of goods sold. These capacity charges ordinarily would ordinarily flow to inventory; however, only one of GLG's manufacturing facilities was operating during the quarter and capacity charges of approximately $4.6 million were incurred.

Stevia Business

The decrease in gross loss for the stevia business for the third quarter of 2013 compared to the third quarter of 2012 can be attributed to the factors detailed in the cost of sales and revenues section. Gross loss for the third quarter 2013 as a percentage of revenue was 32% compared to 45% for the previous period.

The increase in gross loss for the stevia business for the nine months of 2013 compared to the nine months of 2012 can be attributed to the factors detailed in the cost of sales and revenues section. Gross loss for the nine month period ended September 30, 2013 as a percentage of revenues was 30% compared to 28% for the previous period.

Discontinued Operations

For the discontinued operations the gross profit was $0.0 million or 0% of revenues for the third quarter of 2013 compared with negative $0.1 million or negative 16% for the comparable period. For the discontinued operations the gross profit was $0.1 million or 80% of revenues for the nine months of 2013 compared with negative $0.1 million or negative 21% for the comparable period. 

Selling, General, and Administration Expenses

Selling, General and administration ("SG&A") expenses include sales, marketing, general, and administration costs ("G&A"), stock -based compensation, and depreciation and amortization expenses on G&A fixed assets. A breakdown of SG&A expenses into these components is presented on the following page:

G&A for the stevia business for the three months ended September 30, 2013 was $1.3 million compared to $1.7 million in the same period in 2012 or $0.4 million decrease year over year. G&A for the stevia business for the nine months ended September 30, 2013 was $5.8 million compared to $5.3 million in the same period in 2012 or a $0.7 million decrease year over year. 

Stock-based compensation was $0.3 million for the three months ended September 30, 2013 compared with $0.3 million in the same quarter of 2012. The number of common shares available for issue under the stock compensation plan is 10% of the issued and outstanding common shares. During the quarter, compensation from vesting stock based compensation awards was recognized, due to previously granted options and restricted shares. Stock-based compensation was $0.8 million for the nine months ended September 30, 2013 compared with $1.4 million in the same period of 2012.

G&A related depreciation and amortization expenses for the three months ended September 30, 2013 were $0.2 million compared to $0.1 million for the prior year. G&A related depreciation and amortization expenses for the nine months ended September 30, 2013 were $0.5 million compared to the $0.3 million for the prior year.

Other Expenses

Other expenses for the three months ended September 30, 2013 was $10.8 million, a $3.3 million increase compared to $7.5 million for the same period in 2012. During the three months ended September 30, 2013 the Company took an impairment charge on inventory of $8.6 million. Other expenses for the nine months ended September 30, 2013 was $13.7 million, a $4.0 million increase compared to $9.7 million for the same period in 2012. 

During the three month period ending September 30, 2013, the Company recorded an inventory impairment charge of $8.6 million ($4.9 million in 2012) as an obsolescence provision. During the nine month period ending September 30, 2012, the Company recorded an inventory impairment charge of $8.6 million ($4.9 million in 2012) as an obsolescence provision.

Net (Loss) Attributable to the Company

For the three months ended September 30, 2013, the Company had a net loss attributable to the Company of $14.3 million, an increase of $2.2 million over the comparable period in 2012 ($12.1 million loss). The increase in net loss was driven by: (1) a decrease in gross loss of $0.7 million and (2) a decrease in G&A expenses of $0.3 million. These items were offset by (3) an increase in other expenses of $3.2 million.

For the nine months ended September 30, 2013, the Company had a net loss attributable to the Company of $24.3 million, an increase of $3.9 million over the comparable period in 2012 ($20.4 million loss). The increase in net loss was driven by: (1) an increase in other expenses of $3.7 million, (2) an increase in gross loss of $0.1 million, and (3) an increase in G&A expenses of $0.1 million. 

Liquidity and Capital Resources

The Company continues to progress with the following measures to manage cash flow of the Company: paying down short term loans and refinancing short term loans into loans with longer maturities and refinancing with longer term debt with its Chairman, reducing accounts payable and negotiating with creditors extended payment terms, working closely with the banks to manage their loans, and reducing operating expenditures including general and administrative expenses and production-related expenses.

Forward-looking statements: This press release contains certain information that may constitute "forward-looking statements" and "forward looking information" (collectively, "forward-looking statements") within the meaning of applicable securities laws. Such forward-looking statements include, without limitation, statements evaluating the market, potential demand for stevia and general economic conditions and discussing future-oriented costs and expenditures. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes" or variations of such words and phrases or words and phrases that state or indicate that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved.

While the Company has based these forward-looking statements on its current expectations about future events, the statements are not guarantees of the Company's future performance and are subject to risks, uncertainties, assumptions and other factors which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Such factors include amongst others the effects of general economic conditions, consumer demand for our products and new orders from our customers and distributors, changing foreign exchange rates and actions by government authorities, uncertainties associated with legal proceedings and negotiations, industry supply levels, competitive pricing pressures and misjudgments in the course of preparing forward-looking statements. Specific reference is made to the risks set forth under the heading "Risk Factors" in the Company's Annual Information Form for the financial year ended December 31, 2012. In light of these factors, the forward-looking events discussed in this press release might not occur.

Further, although the Company has attempted to identify factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

As there can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements, readers should not place undue reliance on forward-looking statements.

CONTACT: Stuart Wooldridge
         Phone: +1 (604) 669-2602 ext 104
         Email: ir@glglifetech.com