Origin Agritech Limited Reports Unaudited Financial Results For Three Months Ended December 31, 2014 and Announces its First United States Patent Application

BEIJING, February 5, 2015 /PRNewswire/ — Origin Agritech Limited (NASDAQ GS: SEED) ("Origin", or the "Company"), a technology-focused supplier of crop seeds in China, today announced unaudited financial results for the first quarter ended December 31, 2014. Origin prepares its financial statements in accordance with generally accepted accounting principles (GAAP) of the United States.

BIOTECHNOLOGY PROGRESS

During the first quarter of fiscal year 2015, we submitted a patent application to the United States Patent and Trademark Office for our glyphosate-resistant technologies. In addition, we have also applied for a patent in Brazil for similar biotechnologies. The patent applications are listed below. We believe these patents will strengthen further our leading position in the genetically modified seed technologies in China and will allow us to expand our biotechnology position in the international seed market.

Patent/Patent
Application number

Patent/Patent application title

Date
applied

Country

14/391,948

SYNTHETIC GLYPHOSATE-RESISTANT
GENE AND USE THEREOF

Oct 10, 2014

US

1120140255296

GENE DE RESISTENCIA AO GLIFOSATO
SINTETICO E USO DO MESMO

Oct 13, 2014

Brazil

FINANCIAL RESULTS OVERVIEW

During the first quarter of fiscal year 2015, the Company generated revenues of RMB15.6 million (US$2.5 million), compared with revenues of RMB20.4 million in the three months ended December 31, 2013. The revenues of this quarter largely represented the sales from canola seeds and the decrease was mainly due to increasing competition in the canola seed business and our short supply of a main canola seed product.

Deferred revenues were RMB329.0 million (US$53.8 million) as of December 31, 2014, compared with RMB312.6 million as of December 31, 2013. 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 offers to its customers. It is expected that the majority of these deferred revenues will be recorded on the income statement in the third to fourth fiscal quarters.

Gross profit for the three months ended December 31, 2014 was RMB7.8 million (US$1.3 million), compared with RMB10.1 million in the same period of the prior year.

Total operating expenses for the first quarter ended December 31, 2014 were RMB30.3 million (US$4.9 million), compared with RMB34.4 million reported for the same period in fiscal year 2014. Selling and marketing expenses were RMB14.2 million (US$2.3 million) for the first quarter of fiscal 2015, compared to RMB16.3 million for the same period last year. General and administrative expenses were RMB8.9 million (US$1.4 million) for the first quarter ended December 31, 2014, down by 16.0% from RMB10.5 million one year ago. The decline was mainly due to the continued implementation of measures to control our expenses. Research and development expenses were RMB11.8 million (US$1.9 million) in the first quarter of fiscal 2015, compared with RMB10.2 million for the same quarter last year, which in part reflects our efforts to expand our intellectual property portfolio.

Operating loss for the first quarter of fiscal 2015 was RMB22.5 million (US$3.7million), compared with operating loss of RMB24.3 million for the same period in fiscal 2014.

Net loss attributable to Origin Agritech Limited for the first quarter of fiscal 2014 was RMB29.5 million (US$4.8 million), or net loss per basic and diluted share of RMB1.30 (US$0.21), compared with net loss of RMB31.0 million, or net loss per basic and diluted share of RMB1.36 in the same period one year ago.

BALANCE SHEET

As of December 31, 2014, cash and cash equivalents were RMB82.3 million (US$13.4 million) and shareholders’ equity was RMB227.8 million (US$37.2 million). The Company had short-term loans of RMB245 million (US$40.0 million) and total long-term borrowing of RMB52.0 million (US$8.5 million). Short-term loans were mainly used for the working capital, while long-term borrowings of bank loans were used for financing the construction of the Xinjiang Origin corn seed production facilities.

Advances from customers were RMB126.2 million (US$20.6 million) as of December 31, 2014. These advances represent cash receipts for orders in the upcoming selling season.

About Origin

Founded in 1997 and headquartered in Zhong-Guan-Cun (ZGC) Life Science Park in Beijing, Origin Agritech Limited (NASDAQ GS: SEED) is China’s leading agricultural biotechnology company, specializing in crop seed breeding and genetic improvement, seed production, processing, distribution, and related technical services. Leading the development of crop seed biotechnologies in China, Origin Agritech’s phytase corn was the first transgenic corn to receive the Bio-Safety Certificate from China’s Ministry of Agriculture. Over the years, Origin has established a robust biotechnology seed pipeline including products with glyphosate tolerance and pest resistance (Bt) traits. Origin operates production centers, processing centers and breeding stations nationwide with sales centers located in key crop-planting regions. Product lines are vertically integrated for corn, rice and canola seeds. For further information, please log on to the Company’s website at: www.originseed.com.cn.

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 reasons.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(In thousands, except share data)

Three Months ended December 31,

2013

2014

RMB

RMB

USD

Revenues

20,368

15,590

2,542

Cost of revenues

(10,317)

(7,788)

(1,270)

Gross profit

10,051

7,802

1,272

Operating expenses:

Selling and marketing

(16,269)

(14,183)

(2,313)

General and administrative

(10,547)

(8,862)

(1,445)

Research and development

(10,185)

(11,775)

(1,920)

Other operating income, net

2,604

4,553

742

Total operating expenses

(34,397)

(30,267)

(4,936)

Loss from operations

(24,346)

(22,465)

(3,664)


Interest expense

(4,177)

(4,574)

(746)

Share of net loss of equity investment

(279)

Interest income

258

26

4

Loss before income taxes

(28,544)

(27,013)

(4,406)

Income tax expense

Current

(1,203)

(196)

Deferred

Income tax expense

(1,203)

(196)


Net loss

(28,544)

(28,216)

(4,602)

Less: Net income attributable to the non-controlling interests

2,485

1,287

210

Net loss attributable to Origin Agritech Limited

(31,028)

(29,503)

(4,812)


Other comprehensive loss

Net loss

(28,544)

(28,216)

(4,602)

Foreign currency translation difference

572

401

65

Comprehensive loss

(27,972)

(27,815)

(4,537)

Less: Comprehensive income attributable to non-controlling interests

2,485

1,287

210

Comprehensive loss attributable to Origin Agritech Limited

(30,457)

(29,102)

(4,747)

Net loss attributable to Origin Agritech Limited per share – basic

(1.36)

(1.30)

(0.21)

Net loss attributable to Origin Agritech Limited per share – diluted

(1.36)

(1.30)

(0.21)

Shares used in calculating basic and diluted net loss per share

22,743,853

22,738,541

22,738,541

UNAUDITED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

12/31/2013

9/30/2014

12/31/2014

12/31/2014

RMB

RMB

RMB

US$

ASSETS

Current Assets

Cash and cash equivalents

146,075

46,268

82,250

13,442

Restricted cash

15,670

14,350

2,345

Accounts receivable

2,835

1,021

2,965

484

Due from related parties

3,200

2,698

5,200

850

Advances to suppliers

9,751

17,751

10,625

1,736

Advances to growers

9,243

20,759

1,903

311

Inventories

733,102

516,368

636,787

104,067

Income tax recoverable

1,163

48

48

8

Other current assets

5,873

4,368

4,323

707

Total current assets

911,242

624,951

758,451

123,950

Restricted cash

14,350

Land use rights, net

35,101

31,799

32,130

5,251

Plant and equipment, net

353,300

338,526

334,899

54,731

Equity investments

24,615

18,721

23,721

3,877

Goodwill

11,973

11,973

11,973

1,957

Acquired intangible assets, net

22,139

34,891

33,882

5,537

Other assets

9,609

4,009

3,502

572

Total assets

1,382,329

1,064,870

1,198,558

195,875

LIABILITIES AND EQUITY

Current liabilities

Short-term borrowings

267,194

225,000

245,000

40,039

Current portion of long-term borrowings

16,500

33,805

32,488

5,309

Accounts payable

15,499

4,525

15,514

2,535

Due to growers

99,362

17,943

57,862

9,456

Due to related parties

6,216

11,711

11,469

1,874

Advances from customers

221,584

324,645

126,201

20,625

Deferred revenues

312,561

19,029

328,975

53,763

Income tax payable

39,060

1,203

197

Other payables and accrued expenses

48,370

67,953

58,926

9,630

Total current liabilities

1,026,346

704,611

877,638

143,428

Long-term borrowings

42,523

31,023

19,523

3,191

Other long-term liability

22,573

19,649

18,689

3,054

Total liabilities

1,091,442

755,283

915,850

149,673

Commitments and contingencies

Shareholders’ equity:

Preferred stock (no par value; 1,000,000 shares authorized, none
issued)

Common stock (no par value; 60,000,000 shares authorized,

24,016,163, 24,016,163 and 24,016,163 shares issued as of December 31, 2013, September 30, 2014 and December 31, 2014;

22,738,541, 22,738,541 and 22,738,541 shares outstanding as of

December 31, 2013, September 30, 2014 and December 31, 2014)

Additional paid-in capital

399,947

400,888

401,824

65,668

Accumulated deficit

(124,501)

(103,000)

(132,503)

(21,654)

Treasury stock at cost (1,277,622, 1,277,622 and 1,277,622 shares as of December 31, 2013, September 30, 2014 and December 31, 2014)

(37,429)

(37,445)

(37,445)

(6,119)

Accumulated other comprehensive loss

(3,818)

(4,446)

(4,045)

(661)

Total Origin Agritech Limited shareholders’ equity

234,199

255,997

227,831

37,234

Non-controlling interests

56,688

53,590

54,877

8,968

Total equity

290,887

309,587

282,708

46,202

Total liabilities and equity

1,382,329

1,064,870

1,198,558

195,875

CONTACT:
Kay Liu
Investor Relations
ke.liu@originseed.com.cn
+86 10 5890-7536

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