GLG Life Tech Corporation Reports 2023 Annual & Fourth Quarter Financial Results
GLG Life Tech (TSX: GLG) has released its financial results for Q4 and fiscal year 2023, showing mixed results. Quarterly revenue rose 69% to $4.4 million, but annual revenue slightly decreased to $10.3 million. The company reported a gross profit of $2.2 million for 2023, down from $3.2 million in 2022, due to a 9% decline in gross profit margin. Net income from continuing operations fell by $4.7 million to $3.6 million in Q4 2023, while the annual net loss increased by $4.1 million to $13.0 million. Key developments include the incorporation of Qingdao Honghongyuan Health Industry Technology Co., and the agreement to transfer the Qingdao Runde facility, which aims to eliminate significant bank debt. The company is also under a delisting review by the Toronto Stock Exchange, with a 120-day window to address financial condition and market capitalization concerns.
- Quarterly revenue increased by 69% to $4.4 million.
- Net income attributable to the company from discontinued operations improved significantly to $7.5 million.
- Annual net loss increased by $4.1 million to $13.0 million.
- Gross profit decreased from $3.2 million to $2.2 million, with a 9% decline in gross profit margin.
- The company is under a delisting review by the Toronto Stock Exchange due to financial condition and market capitalization concerns.
- Q4 net income from continuing operations fell by $4.7 million.
- Issued a failure-to-file cease trade order due to delayed financial reports.
VANCOUVER, BC / ACCESSWIRE / June 28, 2024 / GLG Life Tech Corporation (TSX:GLG) ("GLG" or the "Company"), a global leader in the agricultural and commercial development of high-quality zero-calorie natural sweeteners, announces financial results for the three and twelve months ended December 31, 2023. The complete set of financial statements and management discussion and analysis are available on SEDAR and on the Company's website at www.glglifetech.com.
FINANCIAL SUMMARY
The Company reported revenues of
The Company reported revenues of
On a consolidated basis, including both continued and discontinued operations, the Company reported gross profit of
For the three months ended December 31, 2023, the Company had net income attributable to the Company from continuing operations of
The Company reported a net income per share from continuing operations of
CORPORATE DEVELOPMENTS
2023 AGM Voting Results
The Company held its Annual and Special General Meeting on June 16, 2023. The shareholders voted in all nominated directors, with favorable votes for each exceeding
Incorporation of, and Affiliation With, Honghongyuan
Qingdao Honghongyuan Health Industry Technology Co., Ltd. ("HHY") was incorporated in Qingdao, Shangdong province, China, in 2023. The Company, through its subsidiary, Qingdao Runde Biotechnology Company, Ltd. ("Runde"), signed a five-year lease agreement commencing August 1, 2023, and running through July 31, 2028, to lease, for an annual fee, the use of Runde's production facilities to HHY. In return, HHY is is licensed to use the Company's patents and know-how to produce products at the Runde facility for the benefit of the Company, for further sale and export to the Company's international customers. The Company will assist HHY in obtaining funding for the Company's orders. The agreement does not involve the disposition of any assets.
While HHY is owned by a third party, production by HHY for the Company leverages principally a) the existing production staff at Runde, and/or staff migrated from Runde to HHY, and b) the existing production know-how, including adherence to specific customer requirements and established protocols. From a customer perspective, practically, the change in production responsibilities is nominal. From a corporate perspective, the change brings certain tax benefits while effectively retaining control over production of the Company's goods.
Subsidiary Transfer Agreement and Special Shareholder Meeting
On February 20, 2024, the Company announce that it had signed an agreement, which, once fully approved, would result in the transfer of its Qingdao Runde Biotechnology Company, Ltd. ("Runde") production facility to Fengyang Xiaogang Hongzhang Health Industrial Park Co. Ltd ("Xiaogang"). This transfer, contingent on necessary shareholder and regulatory approvals, would eliminate significant bank debt from GLG's balance sheet.
Under the terms of the agreement, for the sale price of one Chinese RMB, one hundred percent of the equity in Runde, currently held by the Company's Anhui Runhai Biotechnology Joint Stock Company, Ltd. ("Runhai") subsidiary, will be transferred to Xiaogang. Xiaogang will thereafter own Runde's tangible assets and will have sole liability for Runde's bank debts. The Company will retain its intellectual property rights, including its proprietary technology and know-how in agriculture and natural sweetener production.
Under supplemental agreements expected to be signed by Runhai and Xiaogang in the coming weeks (and subsequently signed), Xiaogang will utilize Runde for the benefit of GLG and GLG's customers. Xiaogang will partner with Qingdao Honghongyuan Health Industry Technology Co., Ltd. ("HHY") - the operating entity previously formed to manage Runde's production operations - such that Runde's production continues unchanged under HHY's processes and management. Xiaogang, via HHY, will produce goods at Runde exclusively for GLG, except for domestic China sales. In this manner, GLG's customers can rely on the same production expertise, processes, and highest quality standards remaining in place after this asset transfer becomes fully effective.
The agreement concerning Runde provides that the equity transfer will only become effective upon completion of the Company's regulatory obligations, including putting the agreement forth to the Company's shareholders for a shareholder vote and additional securities-/exchange-related obligations. This agreement was put to shareholder vote at a special shareholder meeting and approved by the shareholders with over
The Company continues to own and oversee its Runhai stevia and monk fruit manufacturing facility, located in Anhui province. The Company currently centers its stevia and monk fruit production operations at the Runde facility and plans to continue doing so, via Xiaogang and HHY, after the transaction is made fully effective, with the ability to later augment Runde's operations with production operations at Runhai.
Delisting Review
On April 3, 2024, the Company announced that the Toronto Stock Exchange had commenced a delisting review, effective April 2, 2024. The TSX is providing the Company a 120-day window in which to remedy several long-standing deficiencies, including the Company's financial condition and/or operating results and the Company's share price and market capitalization.
At this time, the Company cannot provide any assurance that it will be able to remedy the deficiencies identified by the TSX within the 120-day window or thereafter. Even if the Company is successful in its debt restructuring plans, there is no guarantee that this will be sufficient to address the TSX's financial concerns. Further, even if those concerns were adequately addressed, there is no guarantee that the Company's share price, trading activity, or market capitalization would improve sufficiently to avoid continued TSX concern in those areas.
The Company confirms that it has been in contact with the TSX Venture Exchange ("TSX-V") regarding an application for a listing on the TSX-V to maintain trading continuity in the event that the Company is delisted from the TSX. While the Company is applying for a listing on the TSX-V, there is no guarantee that such a listing application will be successful, or that another market for the Company's securities will be available if the Company is delisted from the TSX.
Delay in Filing Financials and Cease Trade Order
As a result of the Company's failure to file its 2023 financials (consisting of annual financial statements, its management discussion and analysis relating to its annual financial statements, and its Annual Information Form and CEO and CFO certifications, all in respect of its year ended December 31, 2023) by March 31, 2024, the British Columbia Securities Commission ("BCSC") issued a failure-to-file cease trade order ("FFCTO"). The failure to file timely resulted from the late-coming court orders regarding Runyang's bankruptcy proceedings and the additional financial and audit work necessitated by those orders.
The Company is presently delayed in completing and filing its 2024 Q1 interim financial reports (consisting of 2024 Q1 quarterly financial statements, its management discussion and analysis relating to those quarterly financial statements, and its CEO and CFO certifications). Management is working on determining an expected filing date for the 2024 Q1 interim financial reports now that the 2023 financials have been filed.
Management will also be seeking to have the FFCTO rescinded now that the 2023 financials have been filed.
SELECTED FINANCIALS
As noted above, the complete set of financial statements and management discussion and analysis for the year ended December 31, 2023, are available on SEDAR and on the Company's website at www.glglifetech.com.
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 2023 and 2022.
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Note regarding presentation of financials:
Discontinued Operations / Restatement - Runyang
In March 2024, the Company received a series of Chinese court orders ("Court Orders"), which stated that the Company's Dongtai Runyang Stevia High Tech Company, Ltd.'s ("Runyang") assets were seized in April 2022 and were auctioned in January 2023. Court Orders also declared Runyang bankrupt in November 2023. Accordingly, the Company reclassified Runyang's operations as discontinued operations on a retrospective basis for the years ended December 31, 2023 and 2022.
Further, based on these Court Orders:
Runyang's assets were reclassified as held-for-sale in 2022, which necessitated restatement of amounts reported in 2022, with the restated amounts reflecting a reversal of asset depreciation charges.
Amounts related to Runyang's interest payable were restated for 2022 to reverse a late payment compensation charge recorded in 2022. In the course of this reversal, the Company similarly reversed a late payment compensation charge for its Anhui Runhai Joint Stock Company, Ltd. ("Runhai") subsidiary.
As previously announced, the Company deems Runyang's court-ordered bankruptcy to be favorable, as Runyang had been idled for many years with liabilities significantly outweighing assets. As of December 31, 2023, the Company recorded nil assets and nil liabilities for Runyang. The Company does not have any future plans for the Runyang subsidiary and expects to wind it down.
Discontinued Operations / Restatement - Runde
In August 2023, the Company through its subsidiary, Qingdao Runde Biotechnology Company, Ltd. ("Runde") entered into an agreement with a third party, Qingdao Honghongyuan Health Industry Technology Co., Ltd. ("HHY"), incorporated in Qingdao, China in 2023. With this agreement in place, Runde transferred most of its employees to HHY and HHY, with the former Runde production and oversight personnel performing their same operations, still at the Runde facility but operating under the name of HHY, commenced production of products to be sold to the Company (and in turn, the Company's customers). While HHY is owned by a third party, production by HHY for the Company leverages principally a) the production staff formerly employed by Runde and transferred to HHY and b) the existing production know-how, including adherence to specific customer requirements and established protocols.
Further, in January 2024, the Company entered into an ownership transfer agreement to sell
On the basis of Runde's cessation of production under its own name, the Company has reclassified Runde's operations as discontinued operations on a retrospective basis for the years ended December 31, 2023 and 2022.
Additionally, the Company restated a 2022 amount in term loans due resulting from an incorrect exchange rate used.
Note: The reclassifications described above have been effectuated on an annual basis for each of 2023 and 2022; thus, on a quarterly basis, with the full component of the annual changes reflected in the fourth quarters of each of 2023 and 2022, respectively, some quarterly comparative information may be particularly impacted by the reclassifications. Management intends in subsequent financial reports to distribute the annual reclassification impacts to a quarterly basis, in part to refine the quarterly comparative presentation.
Revenue
Revenue for the three months ended December 31, 2023, increased by
Revenue for the twelve months ended December 31, 2023, decreased by
Cost of Sales
For the quarter ended December 31, 2023, the cost of sales increased was
For the twelve months ended December 31, 2023, the cost of sales was
Capacity charges charged to the cost of sales ordinarily would flow to inventory and are a significant component of the cost of sales. Only two of GLG's manufacturing facilities were operating during 2023, and capacity charges of
Gross Profit
Gross profit for the three months ended December 31, 2023, was
Gross profit for the twelve months ended December 31, 2023, was
On a consolidated basis, including both continued and discontinued operations, gross profit for the twelve months ended December 31, 2023, was
Net Income (Loss) Attributable to the Company
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For the three months ended December 31, 2023, the Company had net income attributable to the Company from continuing operations of
For the year ended December 31, 2023, the Company had a net loss attributable to the Company from continuing operations of
Quarterly Basic and Diluted Loss per Share
The basic loss and diluted income per share from continuing operations was
The basic loss and diluted loss per share from continuing operations was
Additional Information
Additional information relating to the Company, including our Annual Information Form, is available on SEDAR (www.sedar.com). Additional information relating to the Company is also available on our website (www.glglifetech.com).
For further information, please contact:
Simon Springett, Investor Relations
Phone: +1 (604) 669-2602 ext. 101
Fax: +1 (604) 662-8858
Email: ir@glglifetech.com
About GLG Life Tech Corporation
GLG Life Tech Corporation is a global leader in the supply of high-purity zero calorie natural sweeteners including stevia and monk fruit extracts used in food and beverages. GLG's vertically integrated operations, which incorporate our Fairness to Farmers program and emphasize sustainability throughout, cover each step in the stevia and monk fruit supply chains including non-GMO seed and seedling breeding, natural propagation, growth and harvest, proprietary extraction and refining, marketing and distribution of the finished products. Additionally, to further meet the varied needs of the food and beverage industry, GLG has launched its Naturals+ product line, enabling it to supply a host of complementary ingredients reliably sourced through its supplier network in China. For further information, please visit www.glglifetech.com.
Forward-looking statements: This press release may contain certain information that may constitute "forward-looking statements" and "forward looking information" (collectively, "forward-looking statements") within the meaning of applicable securities laws. 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 that 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, 2023. 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.
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