Origin Agritech Limited Reports Unaudited Second Quarter Financial Results For Three Months Ended March 31, 2014 - KATV - Breaking News, Weather and Razorback Sports

Origin Agritech Limited Reports Unaudited Second Quarter Financial Results For Three Months Ended March 31, 2014

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SOURCE Origin Agritech Limited

BEIJING, May 8, 2014 /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 second quarter ended March 31, 2014. Origin prepares its financial statements in accordance with generally accepted accounting principles (GAAP) of the United States.

FINANCIAL RESULTS OVERVIEW

During the second quarter of fiscal year 2014, the Company generated revenues of RMB4.7 million (US$0.8 million) compared with RMB27.5 million for the three months ended March 31, 2013. Revenues generated this quarter were mainly a result of scrap sales. The revenues reported for the second quarter a year ago were mainly generated from corn seed toll production businesses, contract businesses where Origin produced and processed corn seeds for the other seed companies. As a reminder, the majority of Origin's revenues are recorded in the fiscal third and fourth quarters as a result of our revenue recognition policy.

Deferred revenues were RMB426.8 million (US$69.4 million) as of March 31, 2014 compared with RMB461.1 million on March 31, 2013. Deferred revenues declined year-over-year mainly due to lower shipping volume from the rice business as the result of market exit of one of our rice products. 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 offers to its customers. It is expected that the majority of these deferred revenues will be recorded on the income statement in the third to fourth fiscal quarters.

Gross loss for the second quarter of fiscal 2014 was RMB2.4 million (US$0.4 million) compared with a gross profit of RMB6.7 million in the second quarter of fiscal 2013. Negative gross margin was a result of scrap sales of some corn and rice seed products during this quarter.

Total operating expenses for the second quarter ended March 31, 2014 were RMB36.8 million (US$6.0 million), up from RMB30.3 million for the same period in fiscal 2013. The increase was mainly due to the increasing marketing activities, offset by expense control of other operating activities. Specifically, selling and marketing expenses were RMB17.1 million (US$2.8 million) for the second quarter of fiscal 2014, an increase of 93% from RMB8.8 million for the same period last year due to increasing marketing expenses. General and administrative expenses were RMB10.8 million (US$1.8 million) for the second quarter ended March 31, 2014, down 19% from RMB13.3 million one year ago. This cost decline was mainly due to continued expense control measures. Research and development expenses was RMB8.9 million (US$1.5 million) in the second quarter of fiscal 2014, which was consistent with RMB9.3 million for the same period last year.

Operating loss for the second quarter of 2014 amounted to RMB39.1 million (US$6.4 million) compared with an operating loss of RMB23.5 million for the same period in fiscal 2013.

Net loss for the second quarter of fiscal 2014 was RMB44.3 million (US$7.2 million), or net loss per basic and diluted share of RMB1.95 (US$0.32), compared to a net loss of RMB27.8 million, or net loss per basic and diluted share of RMB1.19 in the same period one year ago.

BALANCE SHEET

As of March 31, 2014, cash and cash equivalents were RMB70.2 million (US$11.4 million) and shareholders' equity attributable to the Company was RMB189.5 million (US$30.8 million). The Company had short-term borrowings of RMB277.3 million (US$45.1 million) and long-term borrowing of RMB59 million (US$9.6 million). Short-term borrowings were mainly for working capital, while long-term borrowing was used for the Xinjiang Origin corn seed production facilities.

Advances from customers were RMB180.6 million (US$29.4 million) as of March 31, 2014. These advances represent cash receipts for orders in the upcoming selling season.

About Origin

Founded in 1997 and headquartered in 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 log on to the Company's website at: www.originseed.com.cn.

Forward Looking Statement

This 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, you can identify forward-looking statements by terminology 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 negative of these terms or other comparable terminology. 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 forward-looking statements. 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 to be filed. We undertake no obligation to revise or update publicly any forward-looking statements for any reasons.


UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(In thousands, except share data)

 



Three Months ended March 31,



2013


2014



RMB


RMB


USD








Revenues


27,524


4,668


762

Cost of revenues


(20,801)


(7,018)


(1,145)

Gross profit


6,723


(2,350)


(383)

Operating expenses:







Selling and marketing


(8,849)


(17,089)


(2,789)

General and administrative


(13,262)


(10,808)


(1,764)

Research and development


(9,338)


(8,861)


(1,446)

Other operating income, net


1,178


6


1

Total operating expenses


(30,271)


(36,752)


(5,998)








Loss from operations


(23,548)


(39,102)


(6,381)


Interest expense


(1,177)


(5,027)


(820)

Share of net loss of equity investment


(340)


(217)


(35)

Interest income


20


104


17

Loss before income taxes


(25,045)


(44,242)


(7,219)

Income tax expense







Current


(1,456)


-


-

Deferred


-


-


-

Income tax expense


(1,456)


-


-


Net loss


(26,501)


(44,242)


(7,219)

Less: Net income attributable to the non-controlling interests


1,333


97


16








Net loss attributable to Origin Agritech Limited


(27,834)


(44,339)


(7,235)


Other comprehensive loss







Net loss


(26,501)


(44,242)


(7,219)

Foreign currency translation difference


192


(643)


(105)

Comprehensive loss


(26,309)


(44,885)


(7,324)

Less: Comprehensive income attributable to non-controlling interests


1,333


97


16

Comprehensive loss attributable to Origin Agritech Limited        


(27,642)


(44,982)


(7,340)








Net loss per share - basic


(1.19)


(1.95)


(0.32)

Net loss per share - diluted


(1.19)


(1.95)


(0.32)








Shares used in calculating basic and diluted net loss per share


23,373,458


22,743,853


22,743,853










UNAUDITED CONSOLIDATED BALANCE SHEETS




(In thousands, except share data)






3/31/2013


9/30/2013


3/31/2014


3/31/2014



RMB


RMB


RMB


US$

ASSETS









Current Assets









Cash and cash equivalents


188,924


131,978


70,235


11,416

Accounts receivable


8,990


1,949


5,128


834

Due from related parties


4,000


3,400


4,200


683

Advances to suppliers


18,041


9,768


8,554


1,390

Advances to growers


13,417


58,473


15,736


2,558

Inventories


649,801


470,811


748,182


121,614

Income tax recoverable


2,159


1,163


1,163


189

Other current assets


9,581


7,000


5,840


949

Total current assets


894,913


684,542


859,038


139,633

Restricted cash


-


14,350


14,350


2,333

Land use rights, net


30,861


33,205


34,780


5,653

Plant and equipment, net


350,403


354,735


347,518


56,488

Equity investments


22,243


24,894


24,398


3,966

Goodwill


11,973


11,973


11,973


1,946

Acquired intangible assets, net


25,168


23,117


25,537


4,151

Deferred income tax assets


1,755


-


-


-

Other assets


6,828


11,256


6,026


980

Total assets


1,344,144


1,158,072


1,323,620


215,150

LIABILITIES AND EQUITY









Current liabilities









Short-term borrowings


117,556


205,000


277,304


45,075

Current portion of long-term borrowings


8,000


16,500


16,500


2,682

Accounts payable


13,694


4,590


12,480


2,029

Due to growers


1,109


37,875


13,891


2,258

Due to related parties


17,582


1,530


6,229


1,013

Advances from customers


290,185


371,571


180,598


29,356

Deferred revenues


461,114


22,069


426,821


69,378

Income tax payable


39,060


39,060


39,060


6,349

Other payables and accrued expenses


50,736


53,783


39,402


6,405

Total current liabilities


999,036


751,978


1,012,285


164,545

Long-term borrowings


60,587


64,819


42,523


6,912

Other long-term liability


21,140


21,030


22,482


3,654

Total liabilities


1,080,763


837,827


1,077,290


175,111










Shareholders' equity:









Preferred stock (no par value; 1,000,000 shares authorized,none        issued)


-


-


-


-

Common stock (no par value; 60,000,000 shares authorized,        24,016,163, 24,016,163 and 24,016,163 shares issued as of        March 31, 2013, September 30, 2013 and March 31, 2014;        23,383,458, 22,905,926 and 22,738,541 shares outstanding as of

   March 31, 2013, September 30, 2013 and March 31, 2014)


 

-


 

-


 

-


 

-

Additional paid-in capital


398,812


399,564


400,276


65,063

Accumulated deficit


(151,797)


(93,473)


(168,841)


(27,444)

Treasury stock at cos ( 632,705, 1,110,237 and 1,277,622 shares as     of March 31, 2013, September 30, 2013 and March 31, 2014)


(30,863)


(35,659)


(37,429)


(6,084)

Accumulated other comprehensive loss


(5,588)


(4,390)


(4,461)


(726)

Total Origin Agritech Limited shareholders'equity           


210,564


266,042


189,545


30,809










Non-controlling interests


52,817


54,203


56,785


9,230

Total equity


263,381


320,245


246,330


40,039










Total liabilities and equity


1,344,144


1,158,072


1,323,620


215,150










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

Kay Liu
Investor Relations
ke.liu@originseed.com.cn
+86-10-5890-7536

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