Please see this summary of the questions GLG Life Tech is most asked by investors, with the company’s responses.
When will the shares trade again?
We filed our audited financial statements and other annual documents on August 14, 2012, and at the same time filed our first and second quarter 2012 results. (See the financials section of our website.) Since we had been under a Cease Trade Order for more than 90 days, the late release resulted in a mandatory review by the British Columbia Securities Commission. The review is ongoing, after which we anticipate that our shares will resume trading on the Toronto Stock Exchange.
Are you still in business?
Very much so. We sold $6.7 million of stevia in the second quarter of 2012. We have reduced our debt, lowered our operating costs, written down our inventory to reflect current pricing, and diversified our customer base. We now have over 20 agents and distributors and 2 major flavour houses distributing our products. We have a number of new customers, several of which are global MNC’s.
What about last year’s loss?
Our consolidated loss for 2011 was $90.5 million however a large amount of that loss was due to asset impairment charges and start-up charges associated with our new consumer products subsidiary. Of the loss, approximately $23 million is attributed to the start-up and operating losses of the company’s consumer products subsidiary (AN0C), and $60.5 million was in other non-cash charges, including write downs in inventory ($29.7 million), receivables ($6.4 million), and asset impairment ($12.2 million charge against goodwill and intangible assets). The (EBITDA) loss on our $17.1 million in stevia sales in 2011 was $5.5 million.
How do you see the stevia market in the future?
A cursory Google search for stevia gives an indication of how much activity is currently taking place in the stevia market with new countries approving stevia and new products being launched using stevia. Management expects that the stevia market will continue to expand, as consumers continue to seek natural sweetener alternatives and new countries approve stevia as a food additive. Recently the industry had endured a period of downward pressure on pricing, as small suppliers and traders entered the market increasing the supply of stevia extract relative to the demand. A recent Food Navigator article (October 24, 2012) has pointed out that issues such as sustainability and corporate social responsibility are going to lead to food and beverage companies increasingly seeking out companies that directly control their supply chain. They believe that the inevitable outcome will be industry consolidation towards credible suppliers. Please refer to glglifetech.com/supply-chain-overview.html for why we believe GLG will be one of those players as the market consolidates.
What do you think will be GLG’s role in the market going forward?
Although the size of our operation (two modern production facilities at a combined extractive capacity of 3,000 metric tons per year) leads to high facility charges that affects our profitability at low volumes, we remain convinced that the ability to supply stevia in large quantities, at a low price, with consistent quality is of utmost importance to current our and potential customers. Management believes that stevia has entered the mainstream sweetener market like sugar, HFCS and the artificial sweeteners. We have built our company to be a key supplier in this market. We have a fully integrated supply chain from our patented leaf to our stevia finished products including food and beverage formulation capability and we adhere to the highest standards of quality, traceablity and transparency.