Origin Agritech Limited Reports Unaudited First Quarter Financial Results For Three Months Ended December 31, 2011

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, 2011. 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 2012, the Company generated revenues of RMB26.9 million (US$4.3 million), an increase of 57% from RMB17.2 million (US$2.6 million) generated in the three months ended December 31, 2010. The revenues were mainly from the sales of higher margin canola seed products for the three months ended December 31, 2011.

Gross profit for the three-months ended December 31, 2011 was RMB10.9 million (US$1.7 million) compared to RMB8.6 (US$1.3 million) in the same period of the prior year. Gross margins for this quarter were 40% versus 50% for Q1 2011. This decline of gross margins was a result of scrap sales of some corn and rice seed products, pesticide during this quarter.

Total operating expenses for the three-months ended December 31, 2011 were RMB 44.6 million (US$7.1 million) compared with RMB 39.0 million (US$5.9million) reported for the same period in 2010. Selling and marketing expenses were RMB 18.2 million (US$2.9 million) for the first quarter of 2012, an increase of 70.8% from RMB 10.6 million (US$1.6 million) for the same period of the last year. Selling and marketing expense increased year-on-year as certain transportation costs were booked in the first quarter this year while these costs were booked in the second quarter during fiscal year 2011. General and administrative expenses were RMB 19.8 million (US$3.1 million) for the first quarter ended December 31, 2011, decreased by 4.4% from RMB 20.8million (US$3.1 million) for the three months ended December 31, 2010. The research and development expenses decreased to RMB7.7 million (US$1.2 million) this quarter from RMB12.3 million (US$1.9 million) for the same quarter last year as certain R&D projects didn’t happen this quarter. These differences in expense categories are a result of slight changes across a broad variety of smaller sub-categories and represents small variations year over year. On an annual comparison, we still expect operating expenses to be relatively flat annually, across all operating expenses and within each separate category.

Operating loss for the first quarter of fiscal 2012 amounted to RMB 33.8 million (US$5.3million) compared with an operating loss of RMB 30.4 million (US$4.6 million) for the same period in fiscal 2011.

Net loss for the first quarter of fiscal 2012 was RMB34.5 million (US$5.5 million), or RMB 1.48 (US$0.23) per share, as compared to a net loss of RMB 21.8 million (US$3.3 million), or RMB 0.94 (US$0.14) per share in the same period one year ago.

BALANCE SHEET

Origin's balance sheet at December 31, 2011 included cash and cash equivalents of RMB 192 million (US$30.5 million) and shareholders' equity of RMB 226.1 million (US$35.9 million).

Deferred revenue was RMB270.1 million (US$ 42.9 million) for the three-months ended December 31, 2011 as compared to RMB211.1 million (US$31.8 million) for the same period last year. This mainly represents our orders received and shipped already for products this upcoming selling season. Additionally, we received government subsidy amounted to RMB24.9 million (US$ 4.0 million) in December 2011, which was recorded in the balance of deferred revenue as of December 31, 2011.

The Company received Advances from Customers of RMB 377.2 million (US$59.9 million) as of December 31, 2011 period as compared to RMB 385.7 million (US$58.2 million) as of December 31, 2010. This represents our cash receipts for products to be ordered this upcoming selling season.

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 to the Company’s website at: 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. 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)
    Three Months ended December 31,
2010       2011
RMB       US$ RMB       US$
 
Revenues 17,193 2,596 26,931 4,258
Cost of revenues (8,581 )       (1,296 ) (16,058 )       (2,539 )
 
Gross profit 8,612         1,300   10,873         1,719  
 
Operating expenses:
Selling and marketing (10,643 ) (1,607 ) (18,183 ) (2,875 )
General and administrative (20,763 ) (3,135 ) (19,844 ) (3,138 )
Research and development (12,264 ) (1,852 ) (7,724 ) (1,221 )
Other operating income, net 4,648 702 1,121 177
Total operating expenses (39,022 )       (5,892 ) (44,630 )       (7,057 )
 
 
Loss from operations (30,410 )       (4,592 ) (33,757 )       (5,338 )

Interest expense
(536 ) (81 ) (942 ) (149 )

Share of net income of equityinvestment
2,022 305 664 105
Interest income 495 75 628 99
                   
 

Loss before income taxes andnoncontrolling interests
(28,429 ) (4,293 ) (33,407 ) (5,282 )
Income tax expense
Current (28 ) (4 ) (152 ) (24 )
Deferred 3,311         500   -         -  
 
Income tax expense 3,283         496   (152 )       (24 )
 
Net loss (25,146 ) (3,797 ) (33,559 ) (5,306 )

Less: Net income (loss)attributable to thenoncontrolling interests
(3,359 )       (507 ) 934         148  
 

Net loss attributable toOrigin Agritech Limited
(21,787 )       (3,290 ) (34,493 )       (5,454 )
 

Other comprehensiveincome (loss)
Net loss (25,146 ) (3,797 ) (33,559 ) (5,306 )

Foreign currency translationdifference
678 86 492 78
Comprehensive loss (24,468 )       (3,711 ) (33,067 )       (5,229 )
 

Less: Comprehensive income(loss) attributable tononcontrolling interests
(3,359 )       (507 ) 934         148  

Comprehensive lossattributable to OriginAgritech Limited
(21,109 )       (3,204 ) (34,001 )       (5,376 )
 
Net loss per share – basic (0.94 )       (0.14 ) (1.48 )       (0.23 )
 
Net loss per share – diluted (0.94 )       (0.14 ) (1.48 )       (0.23 )
 

Shares used in calculatingbasic net loss per share
23,292,412         23,292,412   23,382,812         23,382,812  
 

Shares used in calculatingdiluted net loss per share
23,292,412         23,292,412   23,382,812         23,382,812  
 

UNAUDITED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
      December 31     September 30     December 31
2010         2011         2011       2011
RMB RMB RMB US$
Assets
Current assets:

Cash and cashequivalents
184,032 129,942 192,003 30,472
 

Accountsreceivable
12,659 6,616 8,654 1,373
 

Due from relatedparties
7 5,183 207 33
 

Advances tosuppliers
19,005 12,418 11,132 1,767
 

Advances togrowers
16,780 78,623 6,646 1,055
 
Inventories 528,515 210,826 552,998 87,763
 

Income taxrecoverable
2,745 2,155 2,155 342
 

Other currentassets
14,230 65,055 13,597 2,158
 

Total currentassets
777,973 510,818 787,382 124,963
 

Land use rights,net
20,784 33,094 32,914 5,224
 

Plant andequipment, net
166,516 190,094 202,571 32,150
 
Equity investments 24,527 20,503 21,167 3,359
 
Goodwill 16,665 11,973 11,973 1,900
 

Acquiredintangible assets,net
33,600 29,232 27,642 4,387
 

Deferred incometax assets
13,077 3,028 3,028 481
 
Other assets 3,510 19,640 45,109 7,159
 
Total assets 1,056,652 818,382 1,131,786 179,623
 

Liabilities andequity
 
Current liabilities:
 

Short-termborrowings
20,000 20,000 105,000 16,664
 
Accounts payable 26,307 5,740 21,645 3,435
 
Due to growers 12,270 7,947 10,170 1,614
 

Due to relatedparties
8,840 1,728 6,826 1,083
 

Advances fromcustomers
385,654 397,933 377,234 59,870
 
Deferred revenues 211,072 19,812 270,060 42,861
 

Income taxpayable
42,275 39,060 39,059 6,199
 

Other payablesand accruedexpenses
37,895 40,351 47,985 7,616
 

Total currentliabilities
744,313 532,571 877,979 139,342
 

Other long-termliabilities
6,409 - - -
 
Total liabilities 750,722 532,571 877,979 139,342
 

Shareholders’equity:
 

Preferred stock(no par value;1,000,000 sharesauthorized, noneissued)
- - - -
 

Common stock (nopar value;60,000,000 sharesauthorized,23,292,412,23,382,812 and23,382,812 sharesissued andoutstanding as ofDecember 31,2010, September30, 2011 andDecember 31, 2011 respectively)
- - - -
 

Additional paid-incapital
388,478 394,344 395,402 62,753
 
Retained deficit (98,241) (99,533) (134,025) (21,271)
 

Treasury stock atcost (498,851shares)
(29,377) (29,377) (29,377) (4,662)
 

Accumulatedothercomprehensiveloss
(8,659) (6,397) (5,905) (937)
 

Total OriginAgritech Limitedshareholders'equity
252,201 259,037 226,095 35,883
 

Noncontrollinginterests
53,729 26,774 27,712 4,398
 
Total equity 305,930 285,811 253,807 40,281
 

Total liabilities andequity
1,056,652 818,382 1,131,786 179,623

Copyright Business Wire 2010

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