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Origin Agritech Limited Reports Unaudited Third Quarter Financial Results For Three Months Ended June 30, 2012

BEIJING, Aug. 7, 2012 - 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 third quarter ended June 30, 2012. 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 2012, revenues increased by 10.1% year-over-year to RMB269.3 million (US.7 million) from RMB244.7 million one year ago. Higher revenues this quarter were mainly due to earlier sales settlement with the distributors for the 2012 selling season.

Deferred revenues were RMB257.3 million (US.7 million) as of June 30, 2012 compared with RMB287.2 million on June 30, 2011. Deferred revenues mainly reflect the value of Origin's crop seeds after a) 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. The year-over-year decrease in deferred revenues was mainly due to more revenue is recognized in the current period of this year. Deferred revenues as of June 30, 2012 also included a total of RMB24.9 million (US.9 million) of subsidies received from various levels of the Chinese government.

The sum of recognized revenues for the first nine months ended June 30, 2012 and deferred revenues as of June 30, 2012 were RMB568.3 million (US.0 million), compared with RMB550.1 million for the same period last year. Excluding the deferred government subsidies, Changchun Origin and the divestiture of Jilin Changrong, the sum of revenues for the first nine months ended June 30, 2012 and deferred revenues as of June 30, 2012 increased by 20.6% year-over-year to RMB493.4 million (US.2 million) from RMB409.1 million as of June 30, 2011. This year-over-year increase in recognized and deferred revenues was mainly due to an increase in corn seed shipping volume during the 2012 planting season. The table below lists the deferred revenues and recognized revenues with and without the contribution from Jilin Changrong and Changchun Origin, and government subsidies.

Year-to-date Revenues and Deferred Revenues, in thousands of RMB


As of June 30, 2011

As of June 30, 2012

Year-over-Year Change

Deferred revenues
excluding deferred
government subsidies

(1)

287,164

232,446


9-Month Revenues

(2)

262,966

310,986


(1)+(2)

550,130

543,432

-1.2%





Deferred revenues excluding
Jilin Changrong, Changchun
Origin and deferred
government subsidies

(3)

287,164

232,446


9-Month Revenues

(4)

121,982

260,955


(3)+(4)

409,146

493,401

20.6%

 

Notes: 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.

Gross profit for the third quarter of fiscal 2012 was RMB54.2 million (US.6 million) compared to RMB85.8 million in the third quarter of fiscal 2011.

Total net operating expenses for the three months ended June 30, 2012 decreased to RMB30.2 million (US.8 million) from RMB51.9 million during the same period in fiscal 2011. Lower operating expenses during the third quarter of fiscal 2012 were mainly due to a decrease in costs previously associated with Jilin Changrong, which are no longer applicable after the divestiture. Specifically, selling and marketing expenses were RMB10.3 million (US.6 million) for the third quarter of fiscal 2012, compared with RMB12.6 million for the same period last year. General and administrative ("G&A") expenses decreased by 45.9% year-over-year to RMB12.9 million (US.0 million) from RMB23.8 million for the third quarter of fiscal 2011. Research and development ("R&D") expenses were RMB8.2 million (US.3 million) for the three months ended June 30, 2012, compared with RMB15.5 million during the same period last year.

Income from operations for the third quarter of fiscal 2012 amounted to RMB24.1 million (US.8 million) compared with income from operations of RMB33.9 million for the same period in fiscal 2011.

Net income attributable to Origin for the third quarter of fiscal 2012 was RMB25.4 million (US.0 million), or RMB1.09 (US.17) per share - both basic and diluted, compared with a net income of RMB13.9 million, or RMB0.60 per share - both basic and diluted during the same period one year ago.

BALANCE SHEET

As of June 30, 2012, cash and cash equivalents were RMB194.2 million (US.7 million), and shareholders' equity was RMB217.4 million (US.4 million). Short-term borrowings were RMB39.0 million (US.2 million). Long-term borrowings were RMB30.0 million (US.7 million), representing bank borrowings to finance the construction of the seed conditioning plant in Xinjiang.

Advances from customers were RMB365.8 million (US.8 million) as of June 30, 2012 compared with RMB290.8 million a year ago. These advances represent cash receipts for future orders.