Origin Agritech Limited (NASDAQ: SEED) (“Origin” or the “Company”), a technology-focused supplier of hybrid and genetically modified crop seeds in China, today announced unaudited financial results for the first quarter ended December 31, 2010. 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 2011, the Company generated revenues of RMB 17.19 million (US$2.60 million), a decrease of 55.47% from RMB 38.60 million (US$5.65 million) generated in the three months ended December 31, 2009. RMB 16.83 million of the revenues this quarter were a result of the sales of canola seed products, 241,309 kg, for the three months ended December 31, 2010. The small remainder was a result of scrap sales. Across the industry, canola seeds, amongst other seed groups, sold lower volumes as a result of the changing planting schedules of farmers. The majority of Origin’s revenues are recorded in the fiscal third quarter as a result of our revenue recognition policy. The goods already sold and shipped to customers can be seen as Deferred Revenue line on the balance sheet and the Advances from Customers records the advance cash receipts from customers this selling season.
Gross profit for the three-months ended December 31, 2010 was RMB 8.61 million (US$1.3 million) compared to RMB 20.58 million (US$3.01 million) in the same period of the prior year. Gross margins for canola seeds for this quarter (exclusive of scrap sales) were 58.67% versus 53.3% for the canola seed sales for the same quarter in last year. This is a result of the higher pricing structure of our canola seed products this year.Total operating expenses for the three-months ended December 31, 2010 were RMB 39.02 million (US$5.89 million) compared with RMB 38.96 million (US$5.71 million) reported for the same period in 2009. Selling and marketing expenses were RMB 10.64 million (US$1.61 million) for the first quarter of fiscal 2011 year, representing a increase of 1.59% from RMB 10.48 million (US$1.53 million) for the same period of the last year. General and administrative expenses of RMB 20.76 million (US$3.14 million) for the first quarter ended December 31, 2010, increased 1.76% from RMB 20.41 million (US$2.99 million) for the three months ended December 31, 2009. The research and development expenses increased to RMB 12.26 million (US$1.85 million) for the three-months ended December 31, 2010 from RMB 8.08 million (US$1.18 million) for the same quarter last year, with an increase of 51.73%. On a year over year comparison, our operating expenses are relatively flat annually in the general and administrative and selling and marketing categories, with an increasing spend toward our R&D. This is in line with our corporate goals of maintenance our existing infrastructure inclusive of our distribution network, and expanding our biotechnology portfolio.