Origin Agritech Limited Reports Unaudited Third Quarter Financial Results For Three Months Ended June 30, 2013

BEIJING, Aug. 6, 2013 /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 third quarter ended June 30, 2013. Origin prepares its financial statements in accordance with generally accepted accounting principles (GAAP) of the United States.

FINANCIAL RESULTS OVERVIEW

For the third quarter of fiscal 2013, the Company reported revenues of RMB128.3 million (US$20.8 million) compared with RMB269.3 million for the three months ended June 30, 2012. Lower revenues this quarter were mainly due to later sales settlement in the fourth quarter with the distributors for the 2013 selling season.

Deferred revenues were RMB338.4 million (US$54.8 million) as of June 30, 2013 compared with RMB257.3 million on June 30, 2012. Excluding deferred government subsidies of RMB24.9 million, deferred revenues were RMB232.4 million on June 30, 2012. It is expected that the majority of deferred revenues will be recorded on the income statement in the fiscal fourth quarter of 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 gives to its customers.

The sum of recognized revenues for the first nine months ended June 30, 2013 and deferred revenues as of June 30, 2013 was RMB516.9 million (US$84.7 million) compared with RMB543.4 million (excluding the deferred government subsidy of RMB 24.9 million) for the same period one year ago. This year-over-year decrease was mainly a result of increasing competition in the corn seed market and unfavorable weather for our Northeast operations.

Gross profit for the third quarter of fiscal 2013 was RMB36.9 million (US$6.0 million) compared to RMB54.2 million in the third quarter of fiscal 2012. Gross margin for the third quarter of fiscal 2013 increased to 28.7% from 20.1% for the same period of fiscal 2012. The increase in the gross margin was mainly due to improved cost control adopted since last year.

Total net operating expenses for the three months ended June 30, 2013 were RMB28.4 million (US$4.6 million) compared with RMB30.2 million during the same quarter in fiscal 2012. Specifically, selling and marketing expenses were RMB13.5 million (US$2.2 million) for the third quarter of fiscal 2013 compared with RMB10.3 million a year ago. The increase in expenses was mainly due to higher advertisement expense this quarter. General and administrative expenses were RMB13.6 million (US$2.2 million) compared with RMB12.9 million for the third quarter of fiscal 2012. The increase was mainly due to rising labor cost, partially offset by the cost controls adopted since last year. Research and development expenses increased by 22.2% year-over-year to RMB10.0 million (US$1.6 million) from RMB8.2 million for the third quarter of 2012, mainly due to higher compensation for the research staff and the hiring of additional research personnel.

Income from operations for the third quarter of fiscal 2013 amounted to RMB8.4 million (US$1.4 million) compared with RMB24.1 million for the same quarter in fiscal 2012.

Net income attributable to Origin for the third quarter of fiscal 2013 was RMB6.1 million (US$1.0 million), or RMB0.26 (US$0.04) per basic and diluted share, compared with a net income of RMB25.4 million, or RMB1.1 per basic and diluted share during the same quarter one year ago.

BALANCE SHEET

As of June 30, 2013, cash and cash equivalents were RMB132.0 million (US$21.4 million) and shareholders' equity attributable to the Company was RMB215.5 million (US$34.9 million). The Company had short-term loans of RMB105.4 million (US$17.1 million) and long-term borrowing of RMB58.8 million (US$9.5 million). Short-term loans were mainly for working capital, while long-term borrowing was used for the Xinjiang Origin corn seed production facilities. Advances from customers were RMB337.4 million (US$54.6 million) as of June 30, 2013.

In February 2013, the board of directors approved a share repurchase program for open market and negotiated transactions for a 12 month period in the amount of $5 million, under which 365,332 shares were bought in the NASDAQ market as of June 30, 2013, in compliance with US securities laws.

About Origin

Founded in 1997 and headquartered in the 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, 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 visit the Company's website at: www.originseed.com.cn.

Forward Looking Statement

This press 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, forward-looking statements can be identified by terminologies 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 negation of these terms or other comparable terminologies. 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 the forward-looking statements herein. 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. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

CONTACT:
Origin Agritech Limited
James Chen,
Chief Financial Officer
[email protected]

Grayling
Shiwei Yin, 646-284-9474
[email protected]

SOURCE Origin Agritech Limited