Origin Agritech Limited Reports Unaudited First Quarter Financial Results For Three Months Ended December 31, 2012

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)
                                         December 31 September 30 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
Other payables and accrued expenses      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)
                                                      

Treasury stock at cost (498,851 shares)  (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
james.chen@originseed.com.cn 

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

SOURCE Origin Agritech Limited

Website: http://www.originseed.com.cn/