BEIJING--(BUSINESS WIRE)--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, 2011. 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 2011, the Company generated revenues of RMB1.09 million (US$0.17 million), a decrease of 32.31% from RMB 1.60 million (US$0.24 million) generated in the three months ended March 31, 2010. The small amount of revenues this quarter is generated as 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. 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 loss for the three months ended March 31, 2011 was RMB7.04 million (US$1.07 million) compared to RMB5.94 (US$0.87 million) in the same period of the prior year.
Total net operating expenses for the three months ended March 31, 2011 were RMB31.99 million (US$4.88 million) compared with RMB31.41 million (US$4.60 million) reported for the same period in 2010. Selling and marketing expenses were RMB7.71 million (US$1.18 million) for the second quarter of 2011, representing a decrease of 15.28% from RMB9.10 million (US$1.33 million) for the same period of the last year. General and administrative (“G&A”) expenses of RMB16.78 million (US$2.56 million) for the second quarter ended March 31, 2011, increased 13.17% from RMB14.83 million (US$2.17 million) for the three months ended March 31, 2010. Research and development (“R&D”) expenses increased by 30.8% to RMB9.80 million (US$1.49 million) for the three months ended March 31, 2011 from RMB7.49 million (US$1.10 million) for the same quarter last year. The increase in G&A expenses was in part due to the increase in non-cash charges this quarter, such as depreciation charges and fees related to stock option expense, as other major expenses within the G&A expenses category remained relatively flat. Meanwhile R&D expenses increased in line with our corporate goals of expansion of our biotechnology competencies in-house.
Operating loss for the second quarter of 2011 amounted to RMB39.02 million (US$5.95 million) compared with an operating loss of RMB37.36 million (US$5.47 million) for the same period in 2010.
Net loss for the second quarter of 2011 was RMB35.13 million (US$5.36 million), or RMB -1.36 (US$-0.21) per diluted share, as compared to a net loss of RMB30.98 million (US$4.54 million), or RMB -1.23 (US$-0.18) per diluted share in the same period one year ago.
BALANCE SHEET
Origin’s balance sheet at March 31, 2011 included cash and cash equivalents of RMB230.68 million (US$35.19 million), and shareholders' equity of RMB221.89 million (US$33.84 million). Short term borrowings decreased from RMB 216.90 million (US$ 31.77 million) at March 31, 2010 to RMB 20.00 million (US$ 3.05 million ) at March 31, 2011.
Deferred revenue was RMB443.56 million (US$ 67.65 million) at March 31, 2011 as compared to RMB464.31 million (US$ 68.02 million) at the same period-end date as of last year. This represents our orders received and shipped already for products this upcoming selling season.
The Company received advances from customers of RMB301.10 million (US$45.92 million) at March 31, 2011 period as compared to RMB270.41 million (US$39.61 million) at the quarter ended March 31, 2010. This represents our cash receipts for future orders.
FISCAL 2011 GUIDANCE
Based on its current outlook, and existing and anticipated business conditions, Origin reiterates the revenue guidance for FY 2011 in the range of RMB 600 million to RMB 650 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) |
|||||||||
| Three Months ended March 31, | |||||||||
| 2010 | 2011 | ||||||||
| RMB | US$ | RMB | US$ | ||||||
| Revenues | 1,603 | 235 | 1,085 | 165 | |||||
| Cost of revenues | (7,546) | (1,105) | (8,124) | (1,239) | |||||
| Gross loss | (5,943) | (870) | (7,039) | (1,074) | |||||
| Operating expenses, net | |||||||||
| Selling and marketing | (9,098) | (1,333) | (7,708) | (1,176) | |||||
| General and administrative | (14,826) | (2,172) | (16,778) | (2,559) | |||||
| Research and development | (7,490) | (1,097) | (9,797) | (1,494) | |||||
| Other income, net | - | - | 2,298 | 350 | |||||
| Total operating expenses, net | (31,414) | (4,602) | (31,985) | (4,879) | |||||
| Loss from operations | (37,357) | (5,472) | (39,024) | (5,953) | |||||
| Interest expense | (2,947) | (432) | (290) | (44) | |||||
| Share of net income of equity investments | 485 | 71 | (492) | (75) | |||||
| Interest income | 332 | 49 | 197 | 30 | |||||
| Other income, net | 7 | 1 | - | - | |||||
| Loss before income taxes | (39,480) | (5,783) | (39,609) | (6,042) | |||||
| Income tax credit (expense) | |||||||||
| Current | (66) | (10) | (2,521) | (385) | |||||
| Deferred | 8,564 | 1,254 | 7,001 | 1,068 | |||||
| Income tax expense | 8,498 | 1,244 | 4,480 | 683 | |||||
| Net loss | (30,982) | (4,539) | (35,129) | (5,359) | |||||
| Less: Net loss attributable to non-controlling interests | (2,781) | (407) | (3,404) | (519) | |||||
| Net loss attributable to Origin Agritech Limited | (28,201) | (4,132) | (31,725) | (4,840) | |||||
| Other comprehensive loss | |||||||||
| Net loss | (30,982) | (4,539) | (35,129) | (5,359) | |||||
| Foreign currency translation difference | 16 | 2 | 559 | 72 | |||||
| Comprehensive loss | (30,966) | (4,537) | (34,570) | (5,287) | |||||
| Less: Comprehensive loss attributable to non-controlling interests | (2,781) | (407) | (3,404) | (519) | |||||
|
Comprehensive loss attributable to Origin Agritech Limited
|
(28,185) | (4,130) | (31,166) | (4,768) | |||||
| Net loss attributable to Origin Agritech Limited per share – basic | (1.23) | (0.18) | (1.36) | (0.21) | |||||
| Net loss attributable to Origin Agritech Limited per share – diluted | (1.23) | (0.18) | (1.36) | (0.21) | |||||
| Shares used in calculating basic net loss per share | 23,013,692 | 23,013,692 | 23,313,970 | 23,313,970 | |||||
| Shares used in calculating diluted net loss per share | 23,013,692 | 23,013,692 | 23,313,970 | 23,313,970 | |||||
| UNAUDITED CONSOLIDATED BALANCE SHEETS | |||||||||
|
(In thousands, except share data) |
|||||||||
| March 31, | September | ||||||||
| 2010 | 30, 2010 | March 31, 2011 | |||||||
| RMB | RMB | RMB | US$ | ||||||
| ASSETS | |||||||||
| Current assets | |||||||||
| Cash and cash equivalents | 392,131 | 299,672 | 230,684 | 35,185 | |||||
|
Accounts receivable, less allowance for doubtful amounts of RMB842 as of March 31, 2010, September 30, 2010 and March 31, 2011 |
9,256 | 10,048 | 12,793 | 1,951 | |||||
| Due from related parties | 5,524 | 5,107 | 167 | 25 | |||||
| Advances to suppliers | 10,383 | 3,986 | 6,265 | 956 | |||||
| Advances to growers | 6,772 | 40,691 | 10,257 | 1,564 | |||||
| Inventories | 492,833 | 283,174 | 569,639 | 86,883 | |||||
| Income tax recoverable | 1,725 | 2,745 | 2,745 | 419 | |||||
| Other current assets | 9,422 | 18,838 | 15,831 | 2,414 | |||||
| Total current assets | 928,046 | 664,261 | 848,381 | 129,397 | |||||
| Land use rights, net | 20,254 | 20,907 | 20,656 | 3,151 | |||||
| Plant and equipment, net | 151,508 | 161,681 | 169,230 | 25,811 | |||||
| Equity investments | 66,356 | 22,505 | 24,035 | 3,666 | |||||
| Goodwill | 16,665 | 16,665 | 16,665 | 2,542 | |||||
| Acquired intangible assets, net | 37,590 | 35,344 | 33,581 | 5,122 | |||||
| Deferred income tax assets | 25,716 | 9,766 | 20,079 | 3,062 | |||||
| Other assets | 3,853 | 3,882 | 10,741 | 1,638 | |||||
| Total assets | 1,249,988 | 935,011 | 1,143,368 | 174,389 | |||||
| LIABILITIES AND EQUITY | |||||||||
| Current liabilities | |||||||||
| Short-term borrowings | 216,900 | 85,900 | 20,000 | 3,050 | |||||
| Accounts payable | 23,232 | 8,960 | 14,828 | 2,262 | |||||
| Due to growers | 598 | 42,186 | 6,644 | 1,013 | |||||
| Due to related parties | 8,902 | 7,926 | 4,308 | 657 | |||||
| Advances from customers | 270,413 | 348,797 | 301,096 | 45,924 | |||||
| Deferred revenues | 464,309 | 23,111 | 443,560 | 67,653 | |||||
| Income tax payable | 39,076 | 44,075 | 44,075 | 6,722 | |||||
| Other payables and accrued expenses | 27,053 | 35,656 | 30,395 | 4,636 | |||||
| Total current liabilities | 1,050,483 | 596,611 | 864,906 | 131,917 | |||||
| Other long-term liabilities | 400 | 9,426 | 6,247 | 953 | |||||
| Total liabilities | 1,050,883 | 606,037 | 871,153 | 132,870 | |||||
| Commitments and contingencies | |||||||||
| UNAUDITED CONSOLIDATED BALANCE SHEETS - Continued | |||||||||
|
(In thousands, except share data) |
|||||||||
| March 31, | September | ||||||||
| 2010 | 30, 2010 | March 31, 2011 | |||||||
| RMB | RMB | RMB | US$ | ||||||
| Shareholders’ equity | |||||||||
|
Preferred stock (no par value; 1,000,000 shares authorized, none issued) |
- | - | - | - | |||||
|
Common stock (no par value; 60,000,000 shares authorized, 23,779,768, 23,292,412 and 23,357,612 shares issued and outstanding as of March 31, 2010, September 30, 2010 and March 31, 2011 respectively |
- | - | - | - | |||||
| Additional paid-in capital | 382,205 | 387,052 | 389,331 | 59,382 | |||||
| Retained earnings (deficit) | (180,633) | (76,454) | (129,966) | (19,823) | |||||
| Treasury stock at cost (498,851 shares) | (29,377) | (29,377) | (29,377) | (4,481) | |||||
| Accumulated other comprehensive loss | (10,380) | (9,336) | (8,099) | (1,235) | |||||
| Total Origin Agritech Limited shareholders’ equity | 161,815 | 271,885 | 221,889 | 33,843 | |||||
| Non-controlling interests | 37,290 | 57,089 | 50,326 | 7,676 | |||||
| Total equity | 199,105 | 328,974 | 272,215 | 41,519 | |||||
| Total liabilities and equity | 1,249,988 | 935,011 | 1,143,368 | 174,389 | |||||