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Origin Agritech Limited Reports Unaudited Third Quarter Financial Results For Three Months Ended June 30, 2014
Date:8/3/2014

BEIJING, Aug. 3, 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 third quarter ended June 30, 2014. Origin prepares its financial statements in accordance with generally accepted accounting principles (GAAP) of the United States.

FINANCIAL RESULTS OVERVIEWFor the third quarter of fiscal 2014, the Company reported revenues of RMB92.9 million (US$15.1 million) compared with RMB128.3 million for the three months ended June 30, 2013. Lower revenues this quarter were mainly due to the lower sales volume of the rice seed business as the result of increasing competition.

Deferred revenues were RMB342.1 million (US$55.6 million) as of June 30, 2014 compared with RMB338.4 million on June 30, 2013. It is expected that the majority of deferred revenues will be recorded on the income statement in the fiscal fourth quarter of 2014. Deferred revenues mainly reflect the value of Origin's crop seeds after: a) the 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.

Gross profit for the third quarter of fiscal 2014 was RMB21.2 million (US$3.5 million) compared to RMB36.9 million in the third quarter of fiscal 2013. Gross margin for the third quarter of fiscal 2014 decreased to 22.9% from 28.7% for the same period of fiscal 2013 due to higher production cost and unfavorable product mix.

Total net operating expenses for the three months ended June 30, 2014 were RMB27.5 million (US$4.5 million) compared with RMB28.4 million during the same quarter in fiscal 2013. Specifically, selling and marketing expenses were RMB10.5 million (US$1.7 million) for the third quarter of fiscal 2014 compared with RMB13.5 million a year ago. The decrease in selling expenses was mainly due to lower transportation expenses this quarter. General and administrative expenses were RMB10.6 million (US$1.7 million) compared with RMB13.6 million for the third quarter of fiscal 2013. The decrease was mainly due to the continued implementation of expense control measures. Research and development expenses were RMB8.8 million (US$1.4 million) in the third quarter of fiscal 2014, which was slightly down from RMB10.0 million for the same period last year.

Loss from operations for the third quarter of fiscal 2014 amounted to RMB6.3 million (US$1.0 million) compared with profit of RMB8.4 million for the same quarter in fiscal 2013.

Net loss for the third quarter of fiscal 2014 was RMB14.7 million (US$2.4 million), or net loss per basic and diluted share of RMB0.65 (US$0.11), compared to a net profit of RMB6.1 million, or net profit per basic and diluted share of RMB0.26 in the same period one year ago.

BALANCE SHEETAs of June 30, 2014, cash and cash equivalents were RMB90.4 million (US$14.7 million) and shareholders' equity attributable to the Company was RMB175.2 million (US$28.5 million). The Company had short-term borrowings of RMB285 million (US$46.3 million) and long-term borrowings of RMB64.8 million (US$10.5 million). Short-term borrowings were mainly for working capital, while long-term borrowings were mainly used for the Xinjiang Origin corn seed production facilities. Advances from customers were RMB209.9 million (US$34.1 million) as of June 30, 2014.

In June 2014, the Company disposed of the subsidiary, Kunfeng, for the amount of RMB 12 million (US$1.9 million), and the realized loss from this disposition was RMB 2.7 million (US$0.4 million).

About OriginFounded 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 StatementThis 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 June 30,20132014RMBRMBUSDRevenues

128,33792,93515,139Cost of revenues

(91,465)(71,686)(11,677)Gross profit

36,87221,2493,462Operating expenses:Selling and marketing

(13,475)(10,549)(1,718)General and administrative

(13,558)(10,561)(1,720)Research and development

(10,028)(8,778)(1,430)Other operating income, net

8,6282,372386Total operating expenses

(28,434)(27,516)(4,482)Income (loss) from operations

8,438(6,267)(1,020)Interest expense

(4,720)(5,276)(859)Share of net loss of equity investment

(649)(279)(46)Loss on liquidation of a subsidiary

-(2,666)(434)Interest income

9746310Income (loss) before income taxes

4,043(14,425)(2,349)Income tax expenseCurrent

(972)(677)(110)Deferred

---Income tax expense

(972)(677)(110)Net Income (loss)

3,071(15,102)(2,459)Less: Net loss attributable to the non-controlling interests

(3,054)(432)(70)Net income (loss) attributable to Origin Agritech Limited

6,125(14,670)(2,389)Other comprehensive income (loss)Net income (loss)

3,071(15,102)(2,459)Foreign currency translation difference

891122Comprehensive income (loss)3,962(15,090)(2,457)Less: Comprehensive loss attributable to non-controlling interests

(3,054)(432)(70)Comprehensive income (loss) attributable to Origin Agritech Limited7,016(14,658)(2,387)Net loss per share – basic

0.26(0.65)(0.11)Net loss per share – diluted

0.26(0.65)(0.11)Shares used in calculating basic net loss per share

23,199,70022,743,85322,743,853Shares used in calculating diluted net loss per share

23,241,54122,743,85322,743,853 

 UNAUDITED CONSOLIDATED BALANCE SHEETS(In thousands, except share data)6/30/20139/30/20136/30/20146/30/2014RMBRMBRMBUS$ASSETSCurrent AssetsCash and cash equivalents

131,999131,978

90,39814,692Accounts receivable

8,2601,949

4,209684Due from related parties

2,0003,400

2,400390Advances to suppliers

18,7459,768

19,8263,222Advances to growers

48,02658,473

22,7843,703Inventories

591,322470,811

698,395113,509Income tax recoverable

1,1631,163

498Other current assets

7,1467,000

5,111831Total current assets808,661684,542

843,172137,039Restricted cash

-14,350

14,3502,332Land use rights, net

31,73933,205

31,0715,050Plant and equipment, net

346,171354,735

341,48155,500Equity investments

21,59424,894

21,1193,432Goodwill

11,97311,973

11,9731,946Acquired intangible assets, net

24,34323,117

25,2364,102Deferred income tax assets

1,755-

--Other assets

3,46811,256

2,299374Total assets1,249,7041,158,072

1,290,701209,775LIABILITIES AND EQUITYCurrent liabilitiesShort-term borrowings

97,440205,000

285,00046,320Current portion of long-term borrowings

8,00016,500

21,5003,495Accounts payable

13,6914,590

13,0692,124Due to growers

7,60537,875

16,6652,709Due to related parties

16,7661,530

16,2302,638Advances from customers

337,382371,571

209,89734,114Deferred revenues

338,35922,069

342,14655,608Income tax payable

39,06039,060

39,0606,348Other payables and accrued expenses

46,50153,783

52,9288,602Total current liabilities904,804751,978

996,495161,958Long-term borrowings

58,82864,819

43,3297,042Other long-term liability

20,80521,030

19,4683,164Total liabilities984,437837,827

1,059,292172,164Shareholders' 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 June 30, 2013, September 30, 2013 and June 30, 2014;

23,151,980, 22,905,926 and 22,738,541 shares outstanding as of June 30, 2013, September 30, 2013 and June 30, 2014)

--

--Additional paid-in capital

399,188399,564

400,60665,110Accumulated deficit

(145,672)(93,473)

(183,511)(29,826)Treasury stock at cost (864,183, 1,110,237 and 1,277,622 shares as of June 30, 2013, September 30, 2013 and June 30, 2014)

(33,314)(35,659)

(37,445)(6,086)Accumulated other comprehensive loss

(4,699)(4,390)

(4,450)(722)Total Origin Agritech Limited shareholders' equity 

215,503266,042

175,20028,476Non-controlling interests

49,76454,203

56,2099,135Total equity265,267320,245

231,40937,611Total liabilities and equity1,249,7041,158,072

1,290,701209,775 

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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SOURCE Origin Agritech Limited
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