Origin Agritech Limited

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Origin Agritech Limited Reports Unaudited Third Quarter Financial Results For Three Months Ended June 30, 2013

BEIJING, Aug. 6, 2013 /PRNewswire/ -- Origin Agritech Limited (NASDAQ GS: SEED) ("Origin", or the "Company"), a technology-focused supplier of crop seeds in China, today announced unaudited financial results for the third quarter ended June 30, 2013. Origin prepares its financial statements in accordance with generally accepted accounting principles (GAAP) of the United States.

FINANCIAL RESULTS OVERVIEW

For the third quarter of fiscal 2013, the Company reported revenues of RMB128.3 million (US$20.8 million) compared with RMB269.3 million for the three months ended June 30, 2012. Lower revenues this quarter were mainly due to later sales settlement in the fourth quarter with the distributors for the 2013 selling season.

Deferred revenues were RMB338.4 million (US$54.8 million) as of June 30, 2013 compared with RMB257.3 million on June 30, 2012. Excluding deferred government subsidies of RMB24.9 million, deferred revenues were RMB232.4 million on June 30, 2012. It is expected that the majority of deferred revenues will be recorded on the income statement in the fiscal fourth quarter of 2013.

Deferred revenues mainly reflect the value of Origin's crop seeds after a) sales arrangement is confirmed; b) delivery to the customer is made; and c) pre-payment from the customer is received, but before the final sales price is fixed and determined. The final sales price is primarily determined by sales incentives that Origin gives to its customers.

The sum of recognized revenues for the first nine months ended June 30, 2013 and deferred revenues as of June 30, 2013 was RMB516.9 million (US$84.7 million) compared with RMB543.4 million (excluding the deferred government subsidy of RMB 24.9 million) for the same period one year ago. This year-over-year decrease was mainly a result of increasing competition in the corn seed market and unfavorable weather for our Northeast operations.


As of June 30, 2012

As of June 30, 2013

Year-over-Year Change

Deferred revenues
excluding deferred
government subsidy

(1)

232,446

338,359


9-Month Revenues

(2)

310,986

178,544


(1) + (2)

543,432

516,903

-4.9%

Gross profit for the third quarter of fiscal 2013 was RMB36.9 million (US$6.0 million) compared to RMB54.2 million in the third quarter of fiscal 2012. Gross margin for the third quarter of fiscal 2013 increased to 28.7% from 20.1% for the same period of fiscal 2012. The increase in the gross margin was mainly due to improved cost control adopted since last year.

Total net operating expenses for the three months ended June 30, 2013 were RMB28.4 million (US$4.6 million) compared with RMB30.2 million during the same quarter in fiscal 2012. Specifically, selling and marketing expenses were RMB13.5 million (US$2.2 million) for the third quarter of fiscal 2013 compared with RMB10.3 million a year ago. The increase in expenses was mainly due to higher advertisement expense this quarter. General and administrative expenses were RMB13.6 million (US$2.2 million) compared with RMB12.9 million for the third quarter of fiscal 2012. The increase was mainly due to rising labor cost, partially offset by the cost controls adopted since last year. Research and development expenses increased by 22.2% year-over-year to RMB10.0 million (US$1.6 million) from RMB8.2 million for the third quarter of 2012, mainly due to higher compensation for the research staff and the hiring of additional research personnel.

Income from operations for the third quarter of fiscal 2013 amounted to RMB8.4 million (US$1.4 million) compared with RMB24.1 million for the same quarter in fiscal 2012.

Net income attributable to Origin for the third quarter of fiscal 2013 was RMB6.1 million (US$1.0 million), or RMB0.26 (US$0.04) per basic and diluted share, compared with a net income of RMB25.4 million, or RMB1.1 per basic and diluted share during the same quarter one year ago.

BALANCE SHEET

As of June 30, 2013, cash and cash equivalents were RMB132.0 million (US$21.4 million) and shareholders' equity attributable to the Company was RMB215.5 million (US$34.9 million). The Company had short-term loans of RMB105.4 million (US$17.1 million) and long-term borrowing of RMB58.8 million (US$9.5 million). Short-term loans were mainly for working capital, while long-term borrowing was used for the Xinjiang Origin corn seed production facilities. Advances from customers were RMB337.4 million (US$54.6 million) as of June 30, 2013.

In February 2013, the board of directors approved a share repurchase program for open market and negotiated transactions for a 12 month period in the amount of $5 million, under which 365,332 shares were bought in the NASDAQ market as of June 30, 2013, in compliance with US securities laws.

About Origin

Founded in 1997 and headquartered in the Zhong-Guan-Cun (ZGC) Life Science Park in Beijing, Origin Agritech Limited (NASDAQ GS: SEED) is China's leading agricultural biotechnology company specializing in crop seed breeding and genetic improvement, seed production, processing, distribution, and related technical services. Leading the development of crop seed biotechnologies, Origin Agritech's phytase corn was the first transgenic corn to receive the Bio-Safety Certificate from China's Ministry of Agriculture. Over the years, Origin has established a robust biotechnology seed pipeline including products with glyphosate tolerance and pest resistance (Bt) traits. Origin operates production centers, processing centers and breeding stations nationwide with sales centers located in key crop-planting regions. Product lines are vertically integrated for corn, rice and canola seeds. For further information, please visit the Company's website at: www.originseed.com.cn.

Forward Looking Statement

This press release contains forward-looking statements. All forward-looking statements included in this release are based on information available to us on the date hereof. These statements involve known and unknown risks, uncertainties and other factors, which may cause our actual results to differ materially from those implied by the forward-looking statements. In some cases, forward-looking statements can be identified by terminologies such as "may," "will," "should," "could," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "targets," "goals," "projects," "continue," or variations of such words, similar expressions, or the negation of these terms or other comparable terminologies. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. Neither we nor any other person can assume responsibility for the accuracy and completeness of the forward-looking statements herein. Important factors that may cause actual results to differ from expectations include, but are not limited to, those risk factors discussed in Origin's filings with the SEC including its annual report on Form 20-F. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.


UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME


(In thousands, except share data)



Three Months ended June 30,



2012




2013



RMB




RMB


US$

Revenues


269,319




128,337


20,771

Cost of revenues


(215,102)




(91,465)


(14,803)










Gross profit


54,217




36,872


5,968










Operating expenses:









Selling and marketing


(10,301)




(13,475)


(2,181)

General and administrative


(12,860)




(13,558)


(2,194)

Research and development


(8,206)




(10,028)


(1,623)

Other operating income

(expenses), net


1,208




8,627


1,396

Total operating expenses, net


(30,159)




(28,434)


(4,602)










Income from operations


24,058




8,438


1,366

 

Interest expense


(1,308)




(4,720)


(764)

Share of net income of equity

investments


721




(649)


(105)

Interest income


504




974


157










Income before income tax

expense


23,975




4,043


654

Income tax expense:









Current


(31)




(972)


(157)

Deferred


-




-


-

Income tax expense


(31)




(972)


(157)










Net income


23,944




3,071


497

Less: Net income (loss)

attributable to the non-controlling

interests


(1,500)




(3,054)


(494)










Net income attributable to Origin

Agritech Limited


25,444




6,125


991










Other comprehensive income









Net income


23,944




3,071


497

Foreign currency translation

difference


624




891


144

Comprehensive income


24,568




3,962


641










Less: Comprehensive income

(loss) attributable to

non-controlling interests


(1,500)




(3,054)


(494)

Comprehensive income

attributable to Origin Agritech

Limited


26,068




7,016


1,135










Net income per share – basic


1.09




0.26


0.04










Net income per share – diluted


1.09




0.26


0.04










Shares used in calculating basic

net income per share


23,382,812




23,199,700


23,199,700










Shares used in calculating diluted

net income per share


23,382,812




23,241,541


23,241,541











 


UNAUDITED CONSOLIDATED BALANCE SHEETS


(In thousands, except share data)



Jun 30    

September 30

      Jun 30




2012


2012


2013


2013




 RMB


RMB


 RMB


USD


Assets










Current assets:










Cash and cash equivalents


194,200


 

152,789


131,999


21,364


Accounts receivable


11,360


7,065


8,260


1,337


Dividend receivable


2,100


-


-


-


Due from related parties


2,207


2,082


2,000


324


Advances to suppliers


14,362


7,802


18,745


3,034


Advances to growers


56,294


88,194


48,026


7,773


Inventories


385,631


282,544


591,322


95,703


Income tax recoverable


2,110


2,159


1,163


188


Other current assets


15,387


16,407


7,146


1,157


Total current assets


683,651


 

559,042


808,661


130,880


Land use rights, net


32,249


32,318


31,739


5,137


Plant and equipment, net


298,806


317,085


346,171


56,026


Equity investments


22,154


22,433


21,594


3,495


Goodwill


11,973


11,973


11,973


1,938


Acquired intangible assets, net


26,790


25,585


24,343


3,940


Deferred income tax assets


3,028


1,755


1,755


284


Other assets


2,384


5,246


3,468


561


Total assets


1,081,035


 

975,437


1,249,704


202,261


Liabilities and equity










Current liabilities:










Short-term borrowings


39,000


35,000


97,440


15,770


Current portion of long-term

borrowings




4,000


8,000


1,295


 

Accounts payable


13,488


5,031


13,691


2,216


Due to growers


9,685


4,304


7,605


1,231


Due to related parties


12,150


2,769


16,766


2,714


Advances from customers


365,758


435,044


337,382


54,604


Deferred revenues


257,346


23,243


338,359


54,762


Income tax payable


39,060


39,060


39,060


6,322


Other payables and accrued expenses


41,606


56,744


46,501


7,526


Total current liabilities


778,093


605,195


904,804


146,440


Long-term borrowings


30,000


35,000


58,828


9,521


Other long-term liabilities


-


21,810


20,805


3,367


Total liabilities


808,093


662,005


984,437


159,328












 

 

 

Shareholders' equity:

Preferred stock (no par value;

1,000,000 shares authorized, none

issued)










Common stock (no par value;

60,000,000 shares authorized,

23,382,812, 23,382,812 and

23,141,980 shares issued and

outstanding as of June 30, 2012,

September 30, 2012 and June 30,

2013 respectively)


-


-






Additional paid-in capital


397,265


 

397,671


399,188


64,607


Retained deficit


(145,630)


 

(100,967)


(145,672)


(23,577)


Treasury stock at cost (498,851 and

864,183 shares as of June 30 and

September 30, 2012; and June 30,

2013, respectively)


(29,377)


 

 

 

(29,377)


(33,314)


(5,392)


Accumulated other comprehensive

loss


(4,906)


 

 

(6,280)


(4,699)


(759)


Total Origin Agritech Limited

shareholders' equity


217,352


261,047


 

215,503


34,879


     Non-controlling interests


55,590


52,385


49,764


8,054


Total equity


272,942


313,432


 

265,267


42,933


Total liabilities and equity


1,081,035


975,437


1,249,704


202,261













CONTACT:
Origin Agritech Limited
James Chen,
Chief Financial Officer
james.chen@originseed.com.cn

Grayling
Shiwei Yin, 646-284-9474
shiwei.yin@grayling.com

SOURCE Origin Agritech Limited

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