Origin Agritech Limited (NASDAQ: SEED) (“Origin” or the “Company”), a technology-focused supplier of crop seeds in China, today announced unaudited financial results for the second quarter ended March 31, 2010. Headquartered in Beijing, Origin Agritech Limited is China’s leading, vertically-integrated agricultural biotechnology company specializing in research, development and production to supply the growing populations of China. Origin holds the exclusive rights to the first transgenic (GM) commercial corn for China and 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 2010, the Company generated revenues of RMB 1.60 million (US $0.24 million), an increase of 38.55% from RMB 1.16 million (US $0.17 million) generated in the three months ended March 31, 2009. While the majority of our revenues are recognized in the third quarter, Origin does possess limited revenue mainly from the sale of non-standard seed contracts which may fluctuate from year to year. These generally do not comprise any significant portion of our overall annual revenues.

Gross loss for the three-months ended March 31, 2010 was RMB 5.94 million (US $0.87million) compared to RMB 3.37 (US $0.49 million) in the same period of the prior year.

Total operating expenses for the three-months ended March 31, 2010 were RMB 31.41 million (US $4.60 million) compared with RMB 31.29 million (US $4.58 million) reported for the same period in 2009. Selling and marketing expenses were RMB 9.10 million (US $1.33 million) for the second quarter of 2010, representing a decrease of 5.64% from RMB 9.64 million (US $1.41 million) for the same period of the last year. General and administrative expenses of RMB 14.83 million (US $2.17 million) for the second quarter ended March 31, 2010, decreased 3.88% from RMB 15.42 million (US $2.26 million) for the three months ended March 31, 2009 . Research and development expenses increased to RMB 7.49 million (US $1.10 million) for the three-months ended March 31, 2010 from RMB 6.22 million (US $0.91million) for the same quarter last year, with an increase of 20.44%, as a result of our increased spending to our genetic research efforts.

Operating loss for the second quarter of 2010 amounted to RMB 37.36million (US $5.47 million) compared with an operating loss of RMB 34.66 million (US $5.07 million) for the same period in 2009.

Net loss for the second quarter of 2010 was RMB 28.20 million (US $4.13 million), or RMB 1.23 (US $0.18) per diluted share, as compared to a net loss of RMB81.32 million (US$11.89 million), or RMB 3.53 (US $0.52) per diluted share in the same period one year ago.

BALANCE SHEET

Origin's balance sheet at March 31, 2010 included cash and cash equivalents of RMB392.13 million (US$57.44 million), an increase of 68.31% from RMB 232.99 million as of March 31, 2009. Our current cash and cash equivalents position is inclusive of the fact that as of March 31, 2010, we had repaid our note payable position of RMB118,015 million as of March 31, 2009. If these liabilities had remained outstanding, our cash position would be significantly higher. Origin Agritech Limited shareholders' equity of RMB161.82 million (US$23.70 million).

Deferred revenue was RMB 464.31 million (US $68.02 million) as at March 31, 2010 as compared to RMB 443.40 million (US $64.86million) as at the same period end date of last year.

The Company received advances from customers of RMB 270.41 million (US $39.61 million) as at March 31, 2010 as compared to RMB 165.21 million (US $24.17million) as at March 31, 2009.

FISCAL 2010 GUIDANCE

Based on its current outlook, and existing and anticipated business conditions, Origin reiterates the revenue guidance for FY 2010 in the range of RMB 630 million to RMB 660 million.

ORIGIN DEVELOPMENTS
  • In March 2010, Origin Agritech Limited announced the development of a strategic business unit for premium branded chemical products to complement their premium seed products. The company intends to continue the development into the agricultural chemical space with expansion into further agricultural products and geographies.
  • In November 2009, Origin Agritech Limited announced the approval of the first transgenic commercial corn for China. This GM phytase corn is set for commercial release for the 2011 selling season. The company intends to continue market expansion of this phytase product.
  • Since late 1990s, Origin Agritech Limited has developed its non-GM and GM genetic technology programs both internally and through joint programs with research entities in China. As a result, Origin has developed traits in corn including phytase, glyphosate tolerance, Bt, drought tolerance, and nitrogen efficiency in various stages of regulatory approval. The company intends to continue the development and market expansion of these genetic technology seed products, again, both internally and/or through various partnership arrangements. The company possesses the global exclusive rights to the glyphosate-resistant trait.

CONFERENCE CALL INFORMATION

The Company will host a teleconference on May 11, 2010, at 8:00 a.m. EDT /8:00 p.m. Beijing time to discuss the quarter end results. To participate in the call, please dial +1-877-407-9210 in North America, or +1-201-689-8049 internationally, approximately 15 minutes prior to the scheduled start time.

About Origin

Founded in 1997 and headquartered in Beijing, Origin Agritech Limited (NASDAQ GS: SEED) is China’s leading, vertically-integrated agricultural biotechnology company specializing in research, development and production to supply the growing populations of China. Origin develops, grows, processes, and markets high quality, hybrid crop seeds to farmers throughout China and parts of Southeast Asia via a network of approximately 3,800 first-level distributors and 65,000 second-level distributors and retailers, and possesses a pipeline of genetically modified seed products including glyphosate resistant corn and Bt Corn. The first genetically modified corn seed product for China, Phytase corn, was approved in November 2009 of which Origin possesses exclusive rights. For further information, please log on www.originagritech.com.

Forward Looking Statement

This 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," “intends,” "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 reason.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share data)
 
Three months ended March 31,
2009   2009   2010   2010
RMB US$ RMB US$
(unaudited) (unaudited) (unaudited) (unaudited)
Revenues 1,157 169 1,603 235
Cost of revenues (4,528)   (662)   (7,546)   (1,105)
Gross profit (3,371)   (493)   (5,943)   (870)
Operating expenses:
Selling and marketing (9,642) (1,410) (9,098) (1,333)
General and administrative (15,424) (2,256) (14,826) (2,172)
Research and development (6,219)   (910)   (7,490)   (1,097)
Total operating expenses (31,285)   (4,576)   (31,414)   (4,602)
Loss from operations (34,656) (5,069) (37,357) (5,472)
Interest expense (7,138) (1,044) (2,947) (432)
Share of earnings in equity investee companies 341 50 485 71
Interest income 422 62 332 49
Other income (loss) (51,097)   (7,475)   7   1
Loss before income taxes and non-controlling interest (92,128) (13,476) (39,480) (5,783)
Income tax expense
Current (62) (9) (66) (10)
Deferred 8,031   1,175   8,564   1,254
Income tax expense 7,969   1,166   8,498   1,245
Net loss (84,159) (12,310) (30,982) (4,538)
Less: Net income attributable to the non-controlling interest 2,835   415   2,781   407
Net loss attributable to Origin Agritech Limited (81,324)   (11,895)   (28,201)   (4,131)
Net loss per share – basic (3.53)   (0.52)   (1.23)   (0.18)
Net loss per share – diluted (3.53)   (0.52)   (1.23)   (0.18)
Shares used in calculating basic net loss per share 23,013,692   23,013,692   23,013,692   23,013,692
Shares used in calculating diluted net loss per share 23,013,692   23,013,692   23,013,692   23,013,692
 

CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
     
March 31,   September 30,   March 31,
2009 2009 2010   2010
RMB RMB RMB US$
(unaudited) (unaudited) (unaudited)
Assets
Current assets:
Cash and cash equivalents 232,985 121,255 392,131 57,444
Restricted bank deposits - 500 - -
Accounts receivable 3,918 5,692 9,256 1,356
Due from related parties 4,789 7,004 5,524 809
Advances to suppliers 6,232 1,937 10,383 1,521
Advances to growers 6,070 24,681 6,772 992
Inventories 655,392 341,770 492,833 72,196
Income tax recoverable 1,697 1,725 1,725 253
Prepaid expenses and other current assets 14,504   8,725   9,422   1,380
Total current assets 925,587 513,289 928,046 135,951
Land use rights, net 20,755 20,496 20,254 2,967
Plant and equipment, net 144,722 152,962 151,508 22,195
Equity investments 66,090 65,453 66,356 9,721
Goodwill 16,665 16,665 16,665 2,441
Acquired intangible assets, net 30,280 36,648 37,590 5,507
Deferred income tax assets 36,371 15,040 25,716 3,767
Other assets 17,702   3,991   3,853   564
Total assets 1,258,172   824,544   1,249,988   183,113
Liabilities, non-controlling interest and Origin Agritech Limited shareholders’ equity
Current liabilities:
Short-term borrowings 207,340 80,290 216,900 31,774
Accounts payable 16,760 13,938 23,232 3,403
Note payable 118,015 117,896 - -
Due to growers 493 9,619 598 88
Due to related parties 27,361 15,699 8,902 1,304
Advances from customers 165,214 219,963 270,413 39,613
Deferred revenues 443,391 18,280 464,309 68,018
Income tax payable 39,059 39,661 39,076 5,724
Other payables and accrued expenses 37,826   31,476   27,053   3,963
Total current liabilities 1,055,459 546,822 1,050,483 153,887
Other long-term liabilities 3,658   -   400   59
Total liabilities 1,059,117 546,822 1,050,883 153,946
Commitments and contingencies - - - -
Equity:
Origin Agritech Limited Shareholders’ equity:
Preferred stock - - - -
Common stock - - - -
Additional paid-in capital 391,215 391,620 382,205 55,990
Retained earnings (deficit) (185,497) (125,507) (180,633) (26,461)
Treasury stock at cost (498,851 shares) (29,377) (29,377) (29,377) (4,304)
Accumulated other comprehensive loss (10,495)   (10,403)   (10,380)   (1,521)
Total Origin Agritech Limited shareholders' equity 165,846 226,333 161,815 23,704
Non-controlling interest 33,209 51,389 37,290 5,463
Total equity 199,055   277,722   199,105   29,167
Total liabilities and shareholders’ equity 1,258,172   824,544   1,249,988   183,113

Copyright Business Wire 2010