GLG Life Tech Corporation
TSX : GLG

GLG Life Tech Corporation

November 14, 2008 17:58 ET

GLG Life Tech Corporation Reports Third Quarter Results

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 14, 2008) - GLG Life Tech Corporation ("GLG" or the "Company") (TSX:GLG), a world leader in the production of high-quality stevia, reports financial results for the third quarter 2008. During the period, the Company sustained increased production levels of high grade stevia extract using its new line announced in May 2008. In addition, GLG management worked extensively during the quarter with local Chinese Government officials in the areas of Mingguang and Dongtai, China on this year's stevia leaf harvest.

The Company made progress in implementing its new quality based stevia purchase program which is important to improve the quality of the leaf purchased and to control the cost of leaf as it is a key input into GLG's manufacturing cost.

The two major plant expansion projects underway at the Company's wholly owned subsidiaries in Mingguang and Dongtai, China have made substantial progress. Each of the two leaf processing facilities are expected to be operational late in the fourth quarter and are expected to increase GLG's raw stevia leaf processing capacity from 5,000 to 25,000 metric tons (MT), a 400% increase from Q1 2008. These two facilities are key in increasing overall output of high grade stevia ("HGS") extract and for fully leveraging the new 500 MT HGS facility that became operational in May of 2008.

GLG ended the quarter with an order backlog of US$32 million as of September 30, 2008 for delivery over the period Q4 2008 to Q3 2009. The increased plant capacity for overall HGS throughput expected by the end of 2008 is reflected in the preliminary 2009 financial guidance provided.

GLG and Weider Global Nutrition LLC ("Weider") signed a definitive agreement during the third quarter to establish a new venture focused on the sale and distribution of consumer and industrial stevia products. GLG has a 55% controlling interest in this venture named GLG-Weider Sweet Naturals Corporation ("Sweet Naturals"). Sweet Naturals utilizes the experience and strength of Weider in the health, fitness, nutritional and dietary supplements industry as well as its global network presence in over 120 countries. By combining these interests with GLG's capabilities in extraction and quality manufacturing, the new venture company will focus on delivering high grade stevia products to customers around the world.

During the quarter, the new venture sales team was very active in developing sales leads with food, beverage, dietary supplements and pharmaceutical companies around the world. Marketing efforts were launched in the U.S. and Europe with attendance to several major trade shows as well as advertising, public relations and key event sponsorship opportunities. The Sweet Naturals sales team has developed 200 active sales prospects as of October 31, 2008. The current estimated value of these sales prospects is US$25 million in 2009 and US$75 million in 2010.

Third Quarter 2008 Financial Results

Summary of Third Quarter Results

The following results have been derived from and should be read in conjunction with the consolidated financial statements of GLG for the quarter ending September 30, 2008, and its annual consolidated financial statements for the year ended December 31, 2007. Certain 2007 comparative figures have been reclassified to conform to the current financial statement presentation.



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In thousands Canadian $ Q3 08 Q3 07 % Change
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Revenue $ 3,391 $ 2,259 50.1
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Gross Profit $ 921 $ 823 11.9
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% of Revenue 27.1% 36.4% (9.3)
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Expenses $ 1,722 $ 532 (223.7)
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% of Revenue 50.8% 23.6% (27.2)
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Income from Operations (Loss) ($801) $ 291 (375)
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% of Revenue (23.6%) 12.9% (36.5)
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Other Income (Expenses) ($91) ($434) (79)
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% of Revenue (2.7%) (19.2%) 16.5
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Net Income (Loss) Before Tax and
Non-Controlling Interests ($892) ($143) 526
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Net Income (Loss) After Tax and
Non-Controlling Interests ($877) ($143) 515
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Earnings per share (Basic) ($0.01) ($0.00) (100)
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Earnings per share (Fully Diluted) ($0.01) ($0.00) (100)
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Depreciation and Amortization $ 591 $ 140 323
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% of Revenue 17.4% 6.2% (11.2)
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Total Comprehensive Income (Loss) $ 1,890 ($470) 501%
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% of Revenue 55.7% 20.8% 34.9%
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EBITDA ($149) $431 (135)
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% of Revenue (4.4%) 19.1% (23.5)
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Capital Expenditures $ 17.3 $ 0.02 82,210
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September 30, December 31,
In thousands Canadian $ 2008 2007
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Cash $ 30,190 $ 28,253
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Current Ratio 1.99 3.09
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Working Capital $ 29,073 $ 29,843
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Total Assets $133,855 $ 89,014
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Total Liabilities $ 29,390 $ 14,261
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Advances from Customers $ 24,214 $ 6,549
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Loans Payable (Current Portion) - $ 6,000
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Total Equity $104,236 $ 74,753
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Revenue

Revenue for the third quarter ending September 30, 2008 was $3,391,332, an increase of 50.1% over $2,258,810 in revenue for the third quarter in 2007. Stevia revenue was $3,302,176 for the third quarter in 2008, a 65% increase compared to $2,002,653 in the third quarter 2007. Revenue for the third quarter was lower than management expected by approximately $2.0 million and was affected by the following two factors:

(1) Shipping Delays - Two key shipments of high grade stevia that were produced within the quarter were subsequently recognized as revenue on October 11, 2008 due to shipping delays for high grade stevia goods;

(2) Availability of Sufficient Power - The impact of the Olympics in China restricted utilities availability. This affected the Company's ability to operate its Qingdao production facility during the third quarter and resulted in less production time than during the second quarter. To reduce the impact of future power interruptions, the Company purchased a power generator for its Qingdao operations.

Gross Profit

Gross profit for the quarter ending September 30, 2008 was $920,678, an increase of 11.9% over $823,085 in gross profit for Q3 2007. Gross profit reflects margin from GLG stevia operations as well as from procurement revenues related to the YHT chain store business. The main driver for the increase in gross profit for the third quarter 2008 compared to the same period 2007 was higher stevia sales which offset lower gross profit from the procurement operations. Gross profit includes all direct and indirect manufacturing costs including depreciation.

Expenses

The SG&A increase (Expenses less depreciation, amortization and stock compensation expense) for the third quarter 2008 over the third quarter 2007 was $951,558 or a 181% increase. This increase was driven primarily by increases in consolidated salary and wages, consulting fees, office expenses, professional fees and listing expenses. The total of these five categories for the third quarter was $1,169,196 and represent 96% of the increase between the third quarter 2008 and the third quarter 2007.

Cost increases for the third quarter are both 1) one-time related development costs for the Company related to the start-up of its new plants in China and its GLG-Weider Sweet Naturals venture 2) ongoing operating costs related to the hiring of additional staff in China for the new production line and new plants. GLG has increased its employee base to 543 as of September 30, 2008 from year-end 2007 levels of 215 reflecting a 153% increase. A large proportion of employee additions have been made in advance of beginning production the new facilities. As a result, certain salary and salary related costs for new production employees that appear in the third quarter SG&A costs will move to direct production costs once the new facilities begin operations (scheduled for late Q4 2008). Approximately 21% of third quarter SG&A expense was either one-time in nature or salaries of employees that will ultimately be part of production costs once plants are in operation.

EBITDA

EBITDA for the quarter ending September 30, 2008 was ($149,297), a decrease of 135% over $430,753 in EBITDA in Q3 2007. The EBITDA loss on revenues has narrowed by $228,402 for the third quarter 2008 relative to the second quarter 2008, a 60% improvement. EBITDA was also impacted by net increases in SG&A related expenses of $352,192 over the second quarter of 2008.These higher expenses are directly attributable to additional staff being hired in China to operate the new greenfield production facilities scheduled for commencement of operations in the fourth quarter of 2008 and other start-up related expenses in China. The Company has also incurred a significant increase in expenses as a result of the start-up of its new GLG-Weider Sweet Naturals venture and higher public company and corporate governance costs associated with its December 2007 TSX listing and corporate development projects undertaken in the third quarter.

Net Income (loss)

Net loss for the third quarter 2008 was $876,668, an increase of 515% over third quarter 2007 net loss of $142,556. The basic earnings (loss) per share (EPS) were ($0.01) for the third quarter 2008 compared with $0.00 for the third quarter of 2007. Earnings were primarily impacted by larger expenses driven by three main categories, (1) higher corporate operating expenses associated with the Company's move to the TSX in December 2007, (2) start-up expenses in China associated with the two new Greenfield production facilities and (3) expenses related to the development of the new venture, "GLG-Weider Sweet Naturals" in advance of material revenues commencing. Net income (loss) for the third quarter 2008 was ($876,668), versus a loss of ($1,068,286) in the second quarter of 2008. The loss for the third quarter narrowed by $191,618 from the loss in the second quarter reflecting a higher gross profit of $538,834 from stevia sales for the third quarter relative to the second quarter of 2008 as well as lower other income (expenses) of $86,571 in the third quarter compared to those incurred during the second quarter. Higher sales, general and administration costs in the third quarter of $352,192 relative to the second quarter of 2008 offset the gains from a higher gross profit and lower other income (expenses) in the third quarter in comparison to the second quarter of 2008.

Comprehensive Income

The Company recorded total comprehensive income of $1,890,023 for the three months ended September 30, 2008, comprising ($876,668) of net loss and $2,766,691 of other comprehensive income. For the nine months ended September 30, 2008, the Company recorded $5,590,805 of total comprehensive income, comprising ($2,296,944) of net loss and $7,887,749 of other comprehensive income. Other comprehensive income solely comprised the currency translation adjustments recorded on the revaluation of the Company's investments in self-sustaining Chinese subsidiaries due to strengthening in the RMB. This gain is held in accumulated other comprehensive income until realized, at which time it will be included in net income.

Updates on Key Industry and Corporate Developments

Venture Company Sweet Naturals Established with Weider Global Nutrition

On September 9, 2008 GLG announced that it had signed a definitive agreement to establish the GLG-Weider Sweet Naturals venture with Weider Global Nutrition of Salt Lake City, Utah, dedicated to the sale of dietary and tabletop supplements containing various GLG stevia products. The key product offerings of the venture are high quality stevia extract including Rebpure™, an industrial powder with 97% pure Rebaudioside A.

With the changes made to the GLG-Cargill supply agreement in August 2008, GLG has more freedom to pursue sales of stevia extract to food and beverage companies worldwide. It is the intention of the GLG-Weider Sweet Naturals venture to primarily focus on the sale of wholesale stevia extract products to these companies for use in a wide range of applications such as chocolates, teas, sports drinks and other beverages, dairy and confectionary products.

GLG's Rebsweet™ industrial powder is also going to be used in dietary supplement products marketed by the venture. Initial sales of formulated and granulated product were sold to Weider Canada for use in the current distribution of Stevia Sweet™, a tabletop stevia product using GLG's Rebsweet™ formula. Stevia Sweet™ is currently found throughout Canada in Wal-Mart, Safeway and Sobeys West.

The new Sweet Naturals team, in addition to developing its own products, will also market existing Weider products, which are unique and proprietary and which will utilize GLG's Rebsweet™ (RA80) and Rebpure™ (RA97) stevia. Initial Weider brands to be relaunched include Sweete™ tabletop sweetener, Advanced Fruits™ and Quick2Sip™ drink mix lines. These consumer products will continue to expand their sales on a global basis through Weider's global network of mainstream multi-national distributors and retailers.

CDN $38.7 Million Secured in Lines of Credit in China

On July 29 2008, GLG announced it had arranged secured credit lines of approximately CDN$38.7 million (approximately RMB 250 million) with banks and financial service institutions in China. The term of these credit lines commenced on July 28, 2008 and will end on July 27, 2009. The interest rates, which will range from 6.73% to 7.47%, are based on the benchmark one-year lending rate with discounts applied. The Company's intended use for these funds includes the purchase of additional high quality stevia leaf for customers other than the Company's strategic partner and to finance the expansion of extraction facilities in Dongtai and Mingguang.

GLG's 2008 Stevia Leaf Harvest in China

During 2008, the Company worked to develop its stevia seed, seedling and leaf growth business successfully as planned through its Bengbu Seed Base operation (formally AHTD) wholly owned subsidiary. GLG benefited greatly from its exclusive growing areas in Mingguang and Dongtai, China during the stevia harvest that took place from August through October 2008.

Highlights:

a. Local Chinese Governments strongly supported GLG's rights to purchase leaf in both Mingguang and Dongtai.

b. GLG was given first right to purchase leaf in these exclusive growing areas supported by Governments.

c. GLG and the Chinese Government introduced new quality measures based on official China national standards for the stevia leaf purchase process of 2008. The standards included the requirement for farmers to meet certain quality standards in the raw leaf crop or to face downward price adjustments if quality offered to GLG did not meet Chinese national standard.

d. Farmers were given the choice to sell any unaccepted or rejected lower quality leaf to other competitors.

e. GLG successfully increased the quality of the stevia leaf it purchased in 2008 from that purchased during the 2007 harvest.

f. Pricing for leaf was higher than GLG expected, however, GLG managed to purchase stevia leaf more competitively than those competitors who bought leaf with no quality standards in place. This focus on quality plus GLG's other manufacturing cost advantages are expected to allow GLG to maintain a very competitive cost position versus other China extract providers and other worldwide competitors.

g. GLG is very satisfied with the progress made in educating the farmers on stevia leaf quality and from the support of the local China Governments to ensure there is a growing high quality stevia leaf supply in the future.

Revisions to the Strategic Alliance Supply Agreement with Cargill; US$20M Stevia Raw Leaf Financing

On August 11, 2008, GLG completed the previously announced revisions to the strategic alliance supply agreement with Cargill and a US$20M financing for the purchase of raw stevia leaf.

Highlights of amendments to the original agreement include:

a. The Company and Cargill have agreed to reduce the rolling three year minimum commitment to a rolling twelve month commitment. For the period from October 1, 2008 to September 30, 2009, the twelve month committed revenue to GLG is estimated at a minimum of US$25 million. For each of years two and three, once volume and price have been agreed upon, Cargill will be required to either take the committed volume or pay the agreed price.

b. The Company will take the lead role in arranging working capital financing for the Company's stevia leaf purchases each year beyond 2008 and Cargill may assist or participate but will not be required to do so.

c. Cargill has provided a US$20 million loan facility to GLG to allow GLG to make leaf purchases from its suppliers during the current growing season. As security for that financing, GLG has provided Cargill with a general security agreement securing all the assets of GLG, which includes provisions for accommodation of other leaf financing lenders as well as term lenders for capital expenditure and working capital purposes. The term of this financing is for fifteen months at a floating rate based on LIBOR + 6%.

d. Cargill and the Company have agreed to amend the exclusivity terms to allow the Company to develop its stevia extract business with customers other than Cargill.

e. Cargill will pay the Company a one-time restructuring fee of US$ 2.5 million.

f. Cargill will provide the Company with an additional US$5 million through the exercise of warrants of GLG.

g. GLG is no longer obligated to offer up to 93% of its production of RA extract to Cargill. This clause has been replaced with a proactive forecasting process between the two parties to address Cargill's future stevia extract requirements.

Key provisions that remain unchanged from the original agreement include:

a) GLG will provide a minimum of 80% of Cargill's global requirements of RA stevia extract for the first five years of the agreement.

b) GLG will be Cargill's exclusive Chinese supplier of RA stevia extract for the term of the agreement. GLG will also be Cargill's agent in China for any additional RA stevia extract sourcing opportunities that should arise.

c) New product opportunities from GLG are to be offered to Cargill on a right of first refusal basis.

d) Should Cargill wish to terminate the agreement early, it may do so on three years notice.

Restructure of YHT Retail Chain Store Business in China

On September 8, 2008, the Company negotiated and signed a Heads of Agreement with Shandong Yong He Tang Health Products Chain Stores Limited ("YHT") to restructure its existing business relationship with YHT from direct operational involvement in YHT's business to a relationship of passive investor in YHT. The course of action was seen by Management as the best strategy to create value for its shareholders and to maintain focus on furthering the stevia business opportunity.

The Heads of Agreement key terms include:

(a) The two parties' intent is to terminate the amended and assigned supply agreement as of December 31, 2008.

(b) The two parties' intent is to terminate GLG's right of first refusal to purchase YHT.

(c) No additional interest is to be accrued by GLG on the existing loan balance starting the month of September 2008.

(d) No additional commissions will be charged by GLG to YHT starting the month of September 2008.

(e) GLG is to convert all amounts owed into shares in YHT at a 2.2 conversion rate (e.g. for every $1 in debt, GLG will receive $2.20 in equity) and will become a passive shareholder in YHT.

(f) If this agreement is not finalized by December 31, 2008, the Company will resume the interest on loan receivable and commission income from the month of September 2008.

(g) The Head of Terms negotiation is open until December 31, 2008 and as of the date of the financial statements, no conclusion has been reached.

Stevia Industry Regulatory Developments

Recently, there has been movement across scientific bodies worldwide for the approval of the use of stevia in food and beverage applications as a new all natural sugar substitute. This movement has resulted in the removal of restrictions on stevia in many countries, which heretofore have only allowed stevia to be consumed as a dietary supplement.

FAO/World Health Organization Joint Expert Committee on Food Additives (JECFA) Approval

In June of this year the Joint Expert Committee on Food Additives, administered jointly by the World Health Organization and the Food and Agricultural Organization of the United Nations, raised the Acceptable Daily Intake (ADI) level for stevia. JECFA is an international scientific committee established in 1956 to evaluate food additives. Leading the global scientific community in research and in establishing the principles and guidelines of safety assessment for chemicals in food, the committee has evaluated more than 1500 food additives, approximately 40 contaminants and naturally occurring toxicants, and residues of approximately 90 veterinary drugs.

After over a decade of study, JECFA published approval of stevia stating that "95 percent steviol glycosides are safe for human use in the range of four milligrams per kilogram of body weight per day". This doubled the ADI level previously set by JECFA from earlier studies. These findings added to its previous releases in 2006, which established that "stevioside and rebaudioside A are not genotoxic in vitro or in vivo". JECFA has been instrumental in paving the way for the establishment of safe and healthy food additives for over 50 years.

Australia and New Zealand Approval

In October the Australian and New Zealand food and safety regulatory body FSANZ also approved stevia for use in food and beverages as an ingredient. The approval was based on research and data published by JECFA as well as 10-year studies conducted by the Plant Science Group at Central Queensland University and Australian Stevia Mills. The petition and subsequent approval of stevia are part of a movement towards the development of healthier products in the food and beverage industry which are driven by both consumer and regulatory demand.

Other Governments

In addition to governments such as Australia and New Zealand, announcements have been made for the allowance of stevia to be sold in Switzerland. Europe has traditionally been the strictest regulatory community for stevia but interest from industry players in the European region remains strong as the developments and studies published by JECFA are followed.

Currently, stevia is approved as a food additive in many countries such as China, Japan, Paraguay, Korea, Brazil, Israel and Malaysia. In Paraguay, it has been used for over 200 years to sweeten food and beverages. In other parts of the world, stevia is very widely used and even now accounts for over 40% of the sweetener market in Japan. Korea and Japan are currently the largest markets for stevia.

United States Food and Drug Administration (FDA)

In the United States, leading industry players including Cargill in partnership with The Coca-Cola Company, PepsiCo in partnership with Merisant and others have submitted applications to the FDA for the approval of stevia as an additive in food and beverages. Stevia remains acceptable for sale under its current status as a dietary supplement.

In May of this year, Cargill, the world's leading agricultural and food products provider, published studies in the peer-reviewed scientific journal Food and Chemical Toxicology that made findings regarding the safety of stevia and one of its particular extracts Rebaudioside A. According to the study, "the safety evaluation program included metabolism and pharmacokinetic studies, general and multi-generational safety studies, intake studies and human studies." Further, "the newly published data complemented the body of existing scientific research on steviol glycosides...affirmed positive safety data from earlier studies on purified steviol glycosides...and have proven definitively that (stevia) is safe".

These studies were submitted to the FDA among a host of other scientific data that included years of in-depth study and clinical trials that supported the use of stevia as a safe and healthy food ingredient. The studies were accompanied by an application for approval as a food ingredient under GRAS (Generally Regarded as Safe) status. The FDA requires a minimum of 180 days to complete its review of the data and application before issuing its opinion.

PepsiCo and Merisant, through its subsidiary The Whole Earth Sweetener Company, have also submitted similar scientific data as well as an application for GRAS approval.

Financial Outlook for the Remainder of GLG's 2008 Fiscal Year



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2008 Revised Estimate 2007 Actual
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Revenue $10 to $12 million $9.1 million
EBITDA ($0.2) to 0.2 million $1.5 million
Capital Expenditures (CAPEX) $55 to $60 million $6.5 million


2008 Revenue Outlook

GLG has reduced revenue guidance from $16-18 million to $10-12 million for the 2008 fiscal period. The reduction primarily is a result of the delay in the expected start up of the Company's new leaf processing facilities in Mingguang and Dongtai, China. The commencement of these new operations was previously expected to occur at the beginning of the fourth quarter 2008. It is now expected that these facilities will not be operational until late in the fourth quarter, a delay of approximately two months. The chief cause of the two-month delay in construction schedule was directly attributable to earthquake relief efforts. GLG's construction contractors were ordered by the Chinese Government to assist in reconstruction efforts in the earthquake affected areas in China and therefore cannot meet the original Mingguang and Dongtai construction schedules. The impact of the earthquake on GLG supply contracts for the construction of the new facilities is a force majeure event. GLG and suppliers have worked to manage this impact on the construction schedule and minimize it to only a two-month delay. Also impacting the overall 2008 revenue outlook were power shortages during the third quarter as a result of the 2008 Olympics that affected the Company's facilities in Qingdao, China.

The value of the order backlog that GLG has as of September 30, 2008 is approximately US$32 million for delivery in the fourth quarter of 2008 and the first nine months of 2009.

2008 EBITDA Outlook

EBITDA guidance has also been reduced from the original 2008 guidance of $2.6 million to $3.0 million to a revised 2008 outlook of ($0.2) million to $0.2 million as a direct result of the reduction in revenue outlook related to the commencement of operations at the two new facilities in Mingguang and Dongtai.

2008 Capital Expenditures (Capex) Outlook

There are four key capital projects for the Company in 2008 which constitute its largest capital program to date. By the end of 2008, the Company expects its capacity for stevia extract production to increase by over 400% which will position it to meet forecasted customer demand for the balance of 2008 and its preliminary revenue outlook for 2009. The two new leaf processing facilities located in Mingguang and Dongtai, China are nearing completion which is currently expected to occur late in the fourth quarter of 2008.

To Management's knowledge, these two facilities will be the largest leaf processing plants available in the world today. Completion of these two plants will provide the required leaf processing capacity for GLG to meet its current order backlog and allow it to fully leverage its new 500 metric ton (MT) high grade stevia processing facility completed in May 2008.

One of the four capital projects, a 500 MT high grade stevia facility to be located in Dongtai, has been temporarily put on hold. Additional capacity would facilitate further economies of scale and could be needed to meet upcoming demand based on new developments in the market. The Company is currently taking time to examine the optimal design for a larger high grade stevia facility to address this increasingly growing demand. For this reason, this project has been moved to 2009 and is no longer included in the 2008 Capital Expenditures Outlook. Guidance therefore for Capital Expenditures in 2008 is reduced from $65-75 million to $55-60 million.

Management expects to have sufficient capital to complete the 2008 business plan based on the September 30, 2008 cash position of $30.4 million and the lines of credit that it has arranged in China of 250 million RMB (approximately $CDN45 million).

2009 Preliminary Outlook

The Company is also providing preliminary financial guidance for its 2009 fiscal year (January 1, 2009 through December 31, 2009). Revenues are expected to be driven primarily by the Company's core stevia extract business. The Company expects to exit 2008 with significantly higher production capacity than that with which it started. The Company already has approximately US$30 million under contract for delivery in 2009. This would equate to CDN$33.3 million using an average of $0.90 per $US exchange rate assumption for 2009. Capital expenditures at the low end of the range include plans to build an additional high grade stevia facility in 2009. The high end of the capital expenditure range would include the high grade facility as well as an additional leaf processing capacity expansion which would be driven by additional sales contract commitments from potential customers.



GLG Preliminary Financial Guidance for 2009
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(Canadian dollars) 2009 Estimate
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Revenue $50 to $60 million
EBITDA $8 to $12 million
Capital Expenditures $15 to $30 million


Management's Discussion and Analysis containing a complete review of financial results as well as financial statements and the Annual Information Form are available on the Company's website at www.glglifetech.com or on SEDAR at www.sedar.com.

About GLG Life Tech Corporation

GLG Life Tech Corporation specializes in growing, refining, and producing high grade stevia extract, a natural, zero-calorie sweetener. With fully integrated stevia operations, GLG is the leading supplier of high quality stevia production in China. The Company is also engaged in the distribution of nutritional products in China and holds exclusive agreements with Weider Global Nutrition and Shandong Yong He Tang Health Products Chain Stores Ltd., whose franchise network includes over 1,400 locations. Please visit www.glglifetech.com for further information.

Forward-looking statements: Certain statements in this press release constitute "forward-looking statements". Such forward-looking statements include, without limitation, statements evaluating the market and general economic conditions and discussing future-oriented costs, expenditures and other financial or operating performances. 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, 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. Please refer to the heading "Risk Factors" in our Annual Information Form in respect of our year-ended December 31, 2007 and the risk factors in our Management's Discussion and Analysis ("MD&A") for the year ended December 31, 2007 for a discussion of these and other factors underlying forward-looking statement, both of which are available on SEDAR at www.sedar.com under the Company's names. 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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