Chai-Na-Ta Corp.
TSX : CC
OTC Bulletin Board : CCCFF

Chai-Na-Ta Corp.

November 14, 2005 17:00 ET

Chai-Na-Ta Corp. Reports 2005 Third Quarter Results

RICHMOND, BRITISH COLUMBIA--(CCNMatthews - Nov. 14, 2005) - (All amounts are in Canadian dollars)

Chai-Na-Ta Corp. (TSX:CC)(OTCBB:CCCFF), the world's largest supplier of North American ginseng, today announced third quarter 2005 net loss of $3.8 million, or $0.16 per basic share, compared to a net earnings of $252,000, or $0.01 per basic share, in the quarter ended September 30, 2004.

Revenue rose to $4.5 million in the 2005 third quarter from $2.7 million in the corresponding period last year.

Gross profit margin was 5% of sales revenue in the 2005 third quarter compared to 36% in the same period last year.

"Ginseng buyers are hesitant to buy root and reluctant to carry inventory due to root prices remaining volatile," said William Zen, Chairman and Chief Executive Officer. "In order to stimulate sales Chai-Na-Ta realized an average selling price of $10 per pound in the first nine months of 2005, a decrease of 58% over the average price for the same period last year."

The Company took a further write-down on inventory of $2.9 million in the 2005 third quarter to reduce the carrying value to its estimated net realizable value.

"In light of the continued province-wide rust problem and the downward price pressure on ginseng grown in British Columbia, Chai-Na-Ta has decided to stop planting in British Columbia in 2006 and thereafter and close its operations after the final harvest in 2008." Mr. Zen said.

The Company recorded a write-down on current ginseng crops of $2.5 million to reduce the carrying costs to its estimated net realizable value.

Selling, general and administrative expenses improved to 0.3 million in the quarter ended September 30, 2005, compared to $0.5 million in the same period last year.

In the nine months ended September 30, 2005, revenue fell to $4.9 million from $6.3 million in the same period last year. Gross profit margin dropped to 4% of sales revenue in the nine months ended September 30, 2005 from 41% in the first nine months of 2004.

Net loss in the first nine months of 2005 were $5.5 million, or $0.23 per basic share, compared to net earnings of $0.7 million, or $0.03 per basic share in the corresponding 2004 period. The net loss in 2005 resulted mainly from the write-downs of inventory and crop costs and lower sales volume in the nine months ended September 30, 2005 compared to the same period last year.

The cash deficit from operations was $2.0 million for the nine months ended September 30, 2005 compared to a deficit of $0.3 million in the comparable 2004 period. "The increase in deficit resulted mainly from lower revenue period over period. Notwithstanding this challenge, we are confident that our ability to generate cash in the short term through the sale of inventory and the financial support of our principal shareholder will be sufficient to finance the Company's operations," said Mr. Zen.

Chai-Na-Ta Corp., based in Richmond, British Columbia, is the world's largest supplier of North American ginseng. The Company farms, processes and distributes North American ginseng as bulk root, and supplies processed material for the manufacture of value-added ginseng-based products.

This news release contains forward-looking statements that reflect the Company's expectations regarding future events. These forward-looking statements involve risks and uncertainties, and actual events could differ materially from those projected. Such risks and uncertainties include, but are not limited to, the success of the Company's ongoing research programs, general business conditions, and other risks as outlined in the Company's periodic filings, Annual Report, and Form 20-F.

Contact Information

  • Chai-Na-Ta Corp.
    Wilman Wong
    Chief Financial Officer/Corporate Secretary
    (604) 272-4118 or Toll Free: 1-800-406-7668
    (604) 272-4113 (FAX)
    info@chainata.com
    www.chainata.com