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Origin Agritech Limited Reports Third Quarter Financial Results for Three Months Ended June 30, 2010

BEIJING--(BUSINESS WIRE)--August 30, 2010--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, 2010. 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 2010, the Company generated revenues of RMB 462.23 million (US.07 million), a decrease of 3.13% from RMB 477.17 million (US.84 million) generated in the three months ended June 30, 2009.

Gross profit for the three-months ended June 30, 2010 was RMB190.90 million (US.11 million) compared to RMB151.56 million (US.18 million) in the same period of the prior year. Gross margin for the quarter increased from 31.76% in the same period of prior year to 41.30% for the three months ended June 30, 2010. This is an increase of 9.54% over the three months ended June 30, 2009 as a result of increased pricing in corn seed this quarter. Corn comprises the vast majority of our recognized revenues in this current quarter and a significant portion of the rice seed sales will be recognized later this year.

 
 

 

Total operating expenses for the three-months ended June 30, 2010 were RMB37.54 million (US.53 million) compared with RMB32.61 million (US.77 million) reported for the same period in 2009. Selling and marketing expenses were RMB9.40 million (US.38 million) for the third quarter of 2010, representing a decrease of 22.23% from RMB 12.08 million (US.77 million) for the same period of the last year, as a result of lower spending this quarter in large part due to lower transportation costs. General and administrative expenses of RMB17.56 million (US.59 million) for the third quarter ended June 30, 2010, increased 23.22% from RMB14.25 million (US.09million) for the three months ended June 30, 2009 as a result of higher seasonal salary expense along with Origin’s charitable donations. Research and development expenses increased to RMB10.59 million (US.60million) for the three-months ended June 30, 2010 from RMB6.28 million (US.92million) for the same quarter last year, with an increase of 68.73% due to higher salary, generic scientific research expenses, and variant transfer fees for the quarter. This is part of our plan to continue ramp up of research and development spend.

Operating profit for the third quarter of 2010 amounted to RMB153.36million (US.58 million) compared with an operating profit of RMB118.95 million (US.41 million) for the same period in 2009.

Net income attributable to Origin Agritech Limited for the third quarter of 2010 was RMB105.16 million (US.49million), or RMB 4.52 (US.67) per diluted share, as compared to a net income attributable to Origin Agritech Limited of RMB74.97 million (US.98million), or RMB3.26 (US.48)per diluted share in the same period one year ago.

BALANCE SHEET

Origin's balance sheet at June 30, 2010 included cash and cash equivalents of RMB307.21 million (US.24 million), and total equity of RMB347.92 million (US.23 million).

Deferred revenue was RMB42.12million (US.20 million) at June 30, 2010 as compared to RMB53.69million (US$ 7.86 million) at the same period end last year.

The Company received advances from customers of RMB275.40 million (US.55 million) at June 30, 2010 as compared to RMB163.48 million (US.93 million) at June 30, 2009.

FISCAL 2010 GUIDANCE

Based on its current outlook, and existing and anticipated business conditions, Origin believes the revenue guidance for FY 2010 to be in the range of RMB 580 million to RMB 600 million.

 
 

 

CONFERENCE CALL INFORMATION

The Company will host a teleconference on August 31, 2010, at 8:00 AM EDT / 8:00 PM 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. A replay of the teleconference will be available at +1-877-660-6853 or internationally at +1-201-612-7415 with pass code number 286 with conference ID #: 355580.

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 June 30,
          2009   2009   2010   2010
          RMB   US$   RMB   US$
          (unaudited)   (unaudited)   (unaudited)   (unaudited)
Revenues         477,169   69,844   462,230   68,066
Cost of revenues         (325,611)   (47,660)   (271,328)   (39,955)
Gross profit         151,558   22,184   190,902   28,111
Operating expenses:                      
Selling and marketing         (12,080)   (1,768)   (9,395)   (1,383)
General and administrative         (14,251)   (2,086)   (17,560)   (2,586)
Research and development         (6,275)   (918)   (10,588)   (1,559)
Total operating expenses         (32,606)   (4,772)   (37,543)   (5,528)
Profit from operations         118,952   17,412   153,359   22,583
Interest expense         (3,146)   (460)   (2,444)   (360)
Share of earnings/(loss) in                      
equity investee companies         4,266   624   (2,449)   (361)
Interest income         810   119   1,212   178
Other income         (299)   (44)   1,097   162
Gain from disposal of equity                      
investment         -   -   15,559   2,291
                       
Profit before income taxes and                      
non-controlling interests         120,583   17,651   166,334   24,493

Income tax expense

                     
Current         (6,232)   (912)   (15,181)   (2,235)
Deferred         (21,331)   (3,122)   (19,996)   (2,945)
Income tax expense         (27,563)   (4,034)   (35,177)   (5,180)
Net income         93,020   13,617   131,157   19,313
Less: Net income attributable to                      
the non-controlling interest         (18,047)   (2,642)   (25,997)   (3,828)
Net income attributable to                      
Origin Agritech Limited         74,973   10,975   105,160   15,485
Net income per share – basic         3.26   0.48   4.57   0.67
Net income per share – diluted         3.26   0.48   4.52   0.67
Shares used in calculating basic                      
net income per share         23,013,692   23,013,692   23,013,692   23,013,692
Shares used in calculating                      
diluted net income per share         23,013,692   23,013,692   23,256,539   23,256,539
 
 

 
                       

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

                       
          September 30, 2009   June 30, 2010
                       
          RMB   US$   RMB   US$
              (unaudited)   (unaudited)   (unaudited)
Assets                      
Current assets:                      
Cash and cash equivalents         121,255   17,756   307,208   45,238
Restricted bank deposits         500   73        
Accounts receivable, net         5,692   834   9,797   1,443
Due from related parties         7,004   1,026   8,284   1,220
Advances to suppliers         1,937   284   10,274   1,513
Advances to growers         24,681   3,614   32,261   4,751
Inventories         341,770   50,047   260,020   38,289
Income tax recoverable         1,725   253   1,725   254
Prepaid expenses and other current                      
assets         8,725   1,277   38,391   5,652
Total current assets         513,289   75,164   667,960   98,360
                       
Land use rights, net         20,496   3,001   20,873   3,074
Plant and equipment, net         152,962   22,399   153,569   22,614
Equity investments         65,453   9,585   18,266   2,690
Goodwill         16,665   2,440   17,304   2,548
Acquired intangible assets, net         36,648   5,367   36,848