Origin Agritech Limited Reports Unaudited First Quarter Financial Results For Three Months Ended December 31, 2012 Deferred revenues of core businesses increased by 19.7% year-over-year Revenues of higher-margin canola seed business increased by 9.1% year-over-year PR Newswire BEIJING, Feb. 5, 2013 BEIJING, Feb. 5, 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 first quarter ended December 31, 2012. Origin prepares its financial statements in accordance with generally accepted accounting principles (GAAP) of the United States. FINANCIAL RESULTS OVERVIEW During the first quarter of fiscal year 2013, the Company generated revenues of RMB22.7 million (US$3.6 million) compared with RMB26.9 million in the three months ended December 31, 2011. The decrease in revenues was mainly due to a restructuring of the pesticide business last year. Revenues from the higher-margin canola seed business were RMB21.7 million (US$3.5 million) in the first quarter, up 9.1% from the same quarter one year ago. Deferred revenues increased 17.5% year-over-year to RMB317.4 million (US$50.5 million) as of December 31, 2012. Deferred revenues for the first quarter of fiscal 2013 included deferred revenues from corn seed toll production of RMB23.9 million from Xinjiang Origin, while the deferred revenues reported a year ago included RMB24.9 million of deferred government subsidies. Excluding these two items, deferred revenues from the Company's core businesses increased by 19.7% year-over-year, mainly due to an increase in the corn seed volume shipped during the 2013 selling season. 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 quarter ending June 30, 2013. Gross profit for the three months ended December 31, 2012 was RMB11.9 million (US$1.9 million), up 9.2% from RMB10.9 million in the same period of the prior year. Total operating expenses for the first quarter ended December 31, 2012 were RMB34.1 million (US$5.4 million), representing a 23.5% decrease from the RMB 44.6 million reported for the same period in 2011. The corporate restructuring, as discussed in the Company's 20-F filing with SEC, has led to lower operating expenses. Selling and marketing expenses were RMB16.8 million (US$2.7 million) for the first quarter of fiscal 2013, a decrease of 7.7% from RMB18.2 million for the same period last year mainly due to lower transportation costs. General and administrative expenses were RMB12.6 million (US$2.0 million) for the first quarter ended December 31, 2012, down 36.4% from RMB19.8 million one year ago. The decline was mainly due to the expense control measures adopted since last year. Research and development expenses increased to RMB10.1 million (US$1.6 million) in the first quarter of fiscal 2013 from RMB7.7 million for the same quarter last year, mainly due to higher staff compensation and addition of research personnel during this period. Operating loss for the first quarter of fiscal 2013 decreased to RMB22.2 million (US$3.5 million) from an operating loss of RMB 33.8 million for the same period in fiscal 2012. Net loss for the first quarter of fiscal 2013 decreased to RMB23.0 million (US$3.7 million), or net loss per share of RMB0.98 (US$0.16), from a net loss of RMB34.5 million, or net loss per share of RMB1.48 in the same period one year ago. BALANCE SHEET As of December 31, 2012, cash and cash equivalents were RMB222.8 million (US$35.4 million) and shareholders' equity was RMB239.3 million (US$38.1 million). The Company had short-term loans of RMB153.0 million (US$24.3 million) and long-term borrowing of RMB56.0 million (US$8.9 million). Short-term loans were mainly for the working capital, while long-term borrowing of bank loans were used for the Xinjiang Origin corn seed production facilities. Advances from customers were RMB366.2 million (US$58.2 million) as of December 31, 2012. These advances represent cash receipts for orders in the upcoming selling season. GOVERNMENT SUPPORT The Chinese government has recently increased its efforts to support leading crop seed companies, especially companies with national Breed-Produce-Distribute Vertically-Integrated Crop Seed Licenses (BPDVI License). As one of the first 32 companies nationwide to have been awarded the BPDVI seed license, Origin has received RMB13.6 million (US$2.2 million) in government subsidies from various levels of the government during the first quarter. These subsidiaries are booked under "other payables and accrued expenses" on the balance sheets. With increasing government attention focused on crop seed technologies, further government supports are expected to help strengthen the Company's leading position in seed technology, production, and distribution. 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: http://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 December 31, 2011 2012 RMB RMB USD Revenues 26,931 22,683 3,607 Cost of revenues (16,058) (10,810) (1,719) Gross profit 10,873 11,873 1,888 Operating expenses: Selling and marketing (18,183) (16,817) (2,674) General and administrative (19,844) (12,588) (2,002) Research and development (7,724) (10,061) (1,600) Other operating income, net 1,121 5,367 854 Total operating expenses (44,630) (34,099) (5,422) Loss from operations (33,757) (22,226) (3,534) (942) (2,143) (341) Interest expense Share of net income of equity 664 150 24 investment Interest income 628 540 86 Loss before income taxes (33,407) (23,679) (3,765) Income tax expense Current (152) (217) (35) - - - Deferred Income tax expense (152) (217) (35) (33,559) (23,896) (3,800) Net loss Less: Net income (loss) attributable to 934 (900) (143) the non-controlling interests Net loss attributable to Origin (34,493) (22,996) (3,657) Agritech Limited Other comprehensive income (loss) Net loss (33,559) (23,896) (3,800) Foreign currency translation 492 499 79 difference Comprehensive loss (33,067) (23,397) (3,721) Less: Comprehensive income attributable to non-controlling 934 (900) (143) interests Comprehensive loss (34,001) (22,497) (3,578) attributable to Origin Agritech Limited Net loss per share – basic (1.48) (0.98) (0.16) Net loss per share – diluted (1.48) (0.98) (0.16) Shares used in calculating basic and 23,382,812 23,382,812 23,382,812 diluted net loss per share UNAUDITED CONSOLIDATED BALANCE SHEETS (In thousands, except share data) December31 September30 December 31 2011 2012 2012 2012 RMB RMB RMB USD Assets Current assets: Cash and cash equivalents 192,003 222,805 35,431 152,789 Accounts receivable 8,654 7,065 7,200 1,145 Due from related parties 207 2,082 2,000 318 Advances to suppliers 11,132 7,802 6,940 1,104 Advances to growers 6,646 88,194 2,254 358 Inventories 552,988 282,544 649,227 103,240 Income tax recoverable 2,155 2,159 2,159 343 13,597 16,407 7,891 1,255 Other current assets Total current assets 787,382 900,476 143,194 559,042 Land use rights, net 32,914 32,318 32,341 4,808 Plant and equipment, net 202,571 317,085 340,282 54,112 Equity investments 21,167 22,433 22,584 3,591 Goodwill 11,973 11,973 11,973 1,904 Acquired intangible assets, net 27,642 25,585 25,093 4,325 Deferred income tax assets 3,028 1,755 1,755 279 Other assets 45,109 5,246 12,787 2,033 Total assets 1,131,786 1,347,291 214,246 975,437 Liabilities and equity Current liabilities: Short-term borrowings 105,000 35,000 145,000 23,058 Current portion of long-term 4,000 8,000 1,272 borrowings 21,645 5,031 13,217 2,102 Accounts payable Due to growers 10,170 4,304 19,486 3,099 Due to related parties 6,826 2,769 15,400 2,449 Advances from 377,234 435,044 366,162 58,227 customers Deferred revenues 270,060 23,243 317,424 50,477 Income tax payable 39,059 39,060 39,060 6,211 Otherpayablesandaccruedexpenses 47,985 56,744 55,282 8,791 Total current liabilities 877,979 605,195 979,031 155,686 Long-term borrowings 35,000 56,000 8,905 Other long-term liabilities - 21,810 21,475 3,415 Total liabilities 877,979 662,005 1,056,506 168,006 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 23,382,812 shares issued and - - - - outstanding as of December 31, 2011, September 30, 2012 and December 31, 2012 respectively) Additional paid-in capital 395,402 398,421 63,357 397,671 Retained deficit (134,025) (123,963) (19,713) (100,967) Treasurystockatcost(498,851shares) (29,377) (29,377) (4,672) (29,377) Accumulated other comprehensive (5,905) (5,781) (919) loss (6,280) Total Origin Agritech Limited 226,095 261,047 239,300 38,053 shareholders' equity Non-controlling interests 27,712 52,385 51,485 8,187 Total equity 253,807 313,432 290,785 46,240 1,131,786 975,437 1,347,291 214,246 Total liabilities and equity CONTACT: Origin Agritech Limited James Chen, Chief Financial Officer firstname.lastname@example.org Grayling Shiwei Yin, 646-284-9474 email@example.com SOURCE Origin Agritech Limited Website: http://www.originseed.com.cn/
Origin Agritech Limited Reports Unaudited First Quarter Financial Results For Three Months Ended December 31, 2012
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