China-based GM seed producer Origin Agritech's fiscal Q1 net loss swings to 34.5M yuan compared with loss of 21.8M yuan last year; revenue up 57% to 26.9M yuan on sales of higher margin canola seed products
Andrew Rogers
BEIJING
,
February 23, 2012
(press release)
–
Gross Profit increases 26.3% from RMB 8.6 million to RMB 10.9 million
Origin Agritech Limited ("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$58.2 million) as of December 31, 2010. This represents our cash receipts for products to be ordered this upcoming selling season. About Origin Founded in 1997 and headquartered in Beijing, Origin Agritech Limited is China's leading, vertically-integrated agricultural biotechnology company specializing in research, development and production to supply the growing populations of China. Origin develops, grows, processes, and markets high quality, hybrid crop seeds to farmers throughout China and parts of Southeast Asia via a network of approximately 3,800 first-level distributors and 65,000 second-level distributors and retailers, and possesses a pipeline of genetically modified seed products including glyphosate resistant corn and Bt Corn. The first genetically modified corn seed product for China, Phytase corn, was approved in November 2009 of which Origin possesses exclusive rights.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(In thousands, except share data)
Three Months ended December 31,
2010 2011
RMB US$ 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 equity 2,022 305 664 105
investment
Interest income 495 75 628 99
Loss before income taxes and (28,429) (4,293) (33,407) (5,282)
noncontrolling interests
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) (3,359) (507) 934 148
attributable to the
noncontrolling
interests
---------- --- ---------- --- ---------- ----------
Net loss attributable to (21,787) (3,290) (34,493) (5,454)
Origin Agritech Limited
---------- --- ---------- --- ---------- --- ---------- ---
Other comprehensive
income (loss)
Net loss (25,146) (3,797) (33,559) (5,306)
Foreign currency translation 678 86 492 78
difference
Comprehensive loss (24,468) (3,711) (33,067) (5,229)
---------- --- ---------- --- ---------- --- ---------- ---
Less: Comprehensive income (3,359) (507) 934 148
(loss) attributable to
noncontrolling
interests
---------- --- ---------- --- ---------- ----------
Comprehensive loss (21,109) (3,204) (34,001) (5,376)
attributable to Origin
Agritech
Limited
========== === ========== === ========== === ========== ===
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 calculating 23,292,412 23,292,412 23,382,812 23,382,812
basic net loss per share
========== === ========== === ========== === ========== ===
Shares used in calculating 23,292,412 23,292,412 23,382,812 23,382,812
diluted net loss per share
========== === ========== === ========== === ========== ===
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 cash 184,032 129,942 192,003 30,472
equivalents
Accounts 12,659 6,616 8,654 1,373
receivable
Due from related 7 5,183 207 33
parties
Advances to 19,005 12,418 11,132 1,767
suppliers
Advances to 16,780 78,623 6,646 1,055
growers
Inventories 528,515 210,826 552,998 87,763
Income tax 2,745 2,155 2,155 342
recoverable
Other current 14,230 65,055 13,597 2,158
assets
--------- -------- --------- --------
Total current 777,973 510,818 787,382 124,963
assets
Land use rights, 20,784 33,094 32,914 5,224
net
Plant and 166,516 190,094 202,571 32,150
equipment, net
Equity investments 24,527 20,503 21,167 3,359
Goodwill 16,665 11,973 11,973 1,900
Acquired 33,600 29,232 27,642 4,387
intangible assets,
net
Deferred income 13,077 3,028 3,028 481
tax assets
Other assets 3,510 19,640 45,109 7,159
========= ======== ========= ========
Total assets 1,056,652 818,382 1,131,786 179,623
Liabilities and
equity
Current liabilities:
Short-term 20,000 20,000 105,000 16,664
borrowings
Accounts payable 26,307 5,740 21,645 3,435
Due to growers 12,270 7,947 10,170 1,614
Due to related 8,840 1,728 6,826 1,083
parties
Advances from 385,654 397,933 377,234 59,870
customers
Deferred revenues 211,072 19,812 270,060 42,861
Income tax 42,275 39,060 39,059 6,199
payable
Other payables 37,895 40,351 47,985 7,616
and accrued
expenses
--------- -------- --------- --------
Total current 744,313 532,571 877,979 139,342
liabilities
Other long-term 6,409 - - -
liabilities
========= ======== ========= ========
Total liabilities 750,722 532,571 877,979 139,342
Shareholders'
equity:
Preferred stock - - - -
(no par value;
1,000,000 shares
authorized,
none
issued)
Common stock (no - - - -
par value;
60,000,000 shares
authorized,
23,292,412,
23,382,812
and
23,382,812 shares
issued and
outstanding as of
December
31,
2010, September
30, 2011 and
December 31, 2011
respectively)
Additional paid-in 388,478 394,344 395,402 62,753
capital
Retained deficit (98,241) (99,533) (134,025) (21,271)
Treasury stock at (29,377) (29,377) (29,377) (4,662)
cost (498,851
shares)
Accumulated (8,659) (6,397) (5,905) (937)
other
comprehensive
loss
252,201 259,037 226,095 35,883
Total Origin
Agritech Limited
shareholders'
equity
53,729 26,774 27,712 4,398
Noncontrolling
interests
--------- -------- --------- --------
Total equity 305,930 285,811 253,807 40,281
========= ======== ========= ========
Total liabilities and 1,056,652 818,382 1,131,786 179,62
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