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 third quarter ended June 30, 2011. Origin prepares its financial statements in accordance with generally accepted accounting principles (GAAP) of the United States.

FINANCIAL RESULTS OVERVIEW

During the third quarter of fiscal 2011, the Company generated revenues of RMB244.7 million (US$37.4 million), compared with RMB462.2 million (US$68.1 million) generated in the three months ended June 30, 2010. The goods already sold and delivered 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. The lower amount of revenues this quarter is in part due to a later application of the distributor discount this 2011 selling season resulting in a later recognition of revenue this year.

Gross profit for the three months ended June 30, 2011 was RMB85.8 million (US$13.1 million) compared to RMB190.9 million (US$28.1 million) in the same period of the prior year.

Total net operating expenses for the three months ended June 30, 2011 were RMB51.8 million (US$7.9 million) compared with RMB37.5 million (US$5.5 million) reported for the same period in 2010. Selling and marketing expenses were RMB12.6 million (US$1.9 million) for the third quarter of 2011, compared with RMB9.4 million (US$1.4 million) for the same period of the last year. General and administrative (“G&A”) expenses of RMB23.8 million (US$3.6 million) for the third quarter ended June 30, 2011, compared with RMB17.6 million (US$2.6 million) for the same period one year ago. Research and development (“R&D”) expenses increased by 46.4% to RMB15.5 million (US$2.4 million) for the three months ended June 30, 2011 from RMB10.6 million (US$1.6 million) for the same quarter last year. The increase in operational expenses, spread throughout the three sub-categories, was in part due RMB15.6 million (US$2.35 million) in bonus charges and staff benefits from Changrong awarded in this current quarter which usually occur in the fourth quarter.

Income from operations for the third quarter of 2011 amounted to RMB34.0 million (US$5.2 million) compared with an operating income of RMB153.4 million (US$22.6 million) for the same period in 2010.

Net income attributable to Origin for the third quarter of 2011 was RMB13.9 million (US$2.1 million), or RMB 0.60 (US$0.09) per share - both basic and diluted, as compared to a net income of RMB105.2 million (US$15.5 million), or RMB 4.57 (US$0.67) per share - both basic and diluted in the same period one year ago.

BALANCE SHEET

Origin’s balance sheet at June 30, 2011 included cash and cash equivalents of RMB220.0 million (US$34.0 million), and shareholders' equity of RMB238.2 million (US$36.8 million). Short term borrowings decreased from RMB 136.9 million (US$20.2 million) at June 30, 2010 to RMB 20.0 million (US$ 3.1 million) at June 30, 2011.

Deferred revenue was RMB287.2 million (US$44.4 million) at June 30, 2011 as compared to RMB42.1 million (US$6.2 million) at the same period-end date as of last year. This represents a portion of our orders received and goods delivered for this selling season.

Advances from customers was RMB290.8 million (US$44.9 million) at June 30, 2011 period as compared to RMB275.4 million (US$40.6 million) a year ago. This represents our cash receipts for future orders.

FISCAL 2011 GUIDANCE

Based on its current outlook, and existing and anticipated business conditions, Origin lowers the revenue guidance for FY 2011 in the range of RMB 530 million to RMB 550 million.

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," "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.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(In thousands, except share data)
  3 Months ended June 30,
2010   2011
RMB       US$ RMB       US$
 
Revenues 462,230 68,066 244,688 37,356
Cost of revenues (271,328)       (39,955) (158,886)       (24,257)
 
Gross profit 190,902       28,111 85,802       13,099
 
Operating expenses:
Selling and marketing (9,395) (1,383) (12,552) (1,916)
General and administrative (17,560) (2,586) (23,756) (3,627)
Research and development (10,588)       (1,559) (15,506)       (2,367)
 
Total operating expenses (37,543)       (5,528) (51,814)       (7,910)
 
Income from operations 153,359 22,583 33,988 5,189
Interest expense (2,444) (360) (327) (50)
Share of net income (loss) in equity investments (2,449) (361) 2,430 371
Interest income 1,212 178 660 101
Gain from disposal of an equity investment 15,559 2,291 - -
Other income (loss), net 1,097       162 (97)       (15)
 
Income before income taxes 166,334 24,493 36,654 5,596
Income tax expense
Current (15,181) (2,235) (1,739) (265)
Deferred (19,996)       (2,945) (3,754)       (573)
 
Income tax expense (35,177)       (5,180) (5,493)       (838)
 
Net income 131,157 19,313 31,161 4,758
Less: Net income attributable to the non-controlling interests 25,997       3,828 17,236       2,631
 
Net income attributable to Origin Agritech Limited 105,160       15,485 13,925       2,127
 
Other comprehensive income
Net income 131,157 19,313 31,161 4,758
Foreign currency translation difference 282       42 712       166
Comprehensive income 131,439 19,355 31,873 4,924
 
Less: Comprehensive income attributable to non-controlling interests 25,997       3,828 17,236       2,631
Comprehensive income attributable to Origin Agritech Limited 105,442       15,527 14,637       2,293
 
Net income attributable to Origin Agritech Limited per share – basic 4.57       0.67 0.60       0.09
 
Net income attributable to Origin Agritech Limited per share – diluted 4.52       0.67 0.60       0.09
 
Shares used in calculating basic net income per share 23,013,692       23,013,692 23,313,970       23,313,970
 
Shares used in calculating diluted net income per share 23,256,539       23,256,539 23,335,835       23,335,835
 

UNAUDITED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)
 

June 30, 2010
 

September 30, 2010
  June 30, 2011
   
RMB RMB RMB US$
ASSETS
Current assets
Cash and cash equivalents 307,208 299,672 219,989 33,993
Accounts receivable, less allowance for doubtful amounts of RMB842 as of June 30, 2010, September 30, 2010 and June 30, 2011 9,797 10,048 8,592 1,328
Due from related parties 8,284 5,107 105 16
Advances to suppliers 10,274 3,986 5,215 806
Advances to growers 32,261 40,691 34,293 5,299
Inventories 260,020 283,174 434,114 67,080
Income tax recoverable 1,725 2,745 2,745 424
Other current assets 38,391   18,838 12,692 1,964
 
Total current assets 667,960 664,261 717,745 110,910
Land use rights, net 20,873 20,907 20,531 3,172
Plant and equipment, net 153,569 161,681 166,599 25,743
Equity investments 18,266 22,505 24,666 3,811
Goodwill 17,304 16,665 16,665 2,575
Acquired intangible assets, net 36,848 35,344 32,165 4,970
Deferred income tax assets 5,720 9,766 16,324 2,522
Other assets 7,890   3,882 29,763 4,599
 
Total assets 928,430   935,011 1,024,458 158,302
 
LIABILITIES AND EQUITY
Current liabilities
Short-term borrowings 136,900 85,900 20,000 3,090
Accounts payable 24,919 8,960 14,198 2,194
Due to growers 1,496 42,186 10,951 1,692
Due to related parties 11,249 7,926 14,830 2,292
Advances from customers 275,397 348,797 290,783 44,932
Deferred revenues 42,119 23,111 287,164 44,373
Income tax payable 54,217 44,075 45,486 7,029
Other payables and accrued expenses 25,756   35,656 29,056 4,490
 
Total current liabilities 572,053 596,611 712,468 110,092
 
Other long-term liabilities 8,460   9,426 6,133 948
 
Total liabilities 580,513 606,037 718,601 111,040
 
Shareholders’ equity:
Preferred stock (no par value; 1,000,000 shares authorized, none issued) - - - -
Common stock (no par value; 60,000,000 shares authorized, 23,013,692, 23,292,412 and 23,313,970 shares issued and outstanding as of June 30, 2010, September 30, 2010 and June 30, 2011 respectively) - - - -
Additional paid-in capital 382,185 387,052 391,101 60,433
Retained deficits (62,042) (76,454) (116,041) (17,931)
Treasury stock at cost (498,851 shares) (29,377) (29,377) (29,377) (4,539)
Accumulated other comprehensive loss (10,098)   (9,336) (7,387) (1,141)
Total Origin Agritech Limited shareholders' equity 280,668 271,885 238,296 36,822
Non-controlling interests 67,249 57,089 67,561 10,440
 
Total equity 347,917   328,974 305,857 47,262
 
Total liabilities and equity 928,430   935,011 1,024,458 158,302

Copyright Business Wire 2010

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