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Origin Agritech Limited (NASDAQ: SEED) (“Origin”, the “Company”, “us” or “our”) , a technology-focused supplier of hybrid and genetically modified crop seeds in China, today announced unaudited financial results for the second quarter ended March 31, 2012. 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 2012, the Company generated revenues of RMB14.74 million (US$2.34 million), compared with RMB1.09 million for the three months ended March 31, 2011. Revenues generated in the second quarter were mainly a result of scrap sales. As a reminder, the majority of Origin’s revenues are recorded in the fiscal third quarter as a result of our revenue recognition policy.
Deferred revenues were RMB480.70 million (US$76.37 million) as of March 31, 2012 compared with RMB443.56 million on March 31, 2011. Deferred revenues reflect the value of Origin’s crop seeds a) after 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 gives to its customers. It is expected that the majority of these deferred revenues will be recorded on the income statement in the fiscal 2012 third quarter ending June 30, 2012.
After the divestiture of Jilin Changrong Hi-tech Seed Company Limited (“Jilin Changrong”) in fiscal year 2011, Changchun Origin Seed Technology Development Limited (“Changchun Origin”) started operation in the same Northeastern region in fiscal year 2012. Jilin Changrong was a former subsidiary of the Company and Changchun Origin is a current subsidiary of the Company. Excluding Jilin Changrong’s deferred revenues as of March 31, 2011 and Changchun Origin’s deferred revenues and a deferred government subsidy as of March 31, 2012, deferred revenues increased 30.91% year-over-year from RMB326.38 million as of March 31, 2011 to RMB427.36 million as of March 31, 2012. This year-over-year increase in deferred revenues was mainly due to corn seed shipping volume increase during the current planting season. The table below lists the deferred revenues with and without the Jilin Changrong and Changchun Origin contributions.
Deferred Revenues excluding JilinChangrong and Changchun Origin anddeferred government subsidy
As of March 31, 2011
As of March 31, 2012
Gross loss for the second quarter of fiscal 2012 was RMB2.95 million (US$0.47 million) compared with gross loss of RMB7.04 million in the second quarter of fiscal 2011. Negative gross margin was a result of scrap sales of some corn and rice seed products, and pesticide during the second quarter.