Beijing, China
May 8, 2014
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 second quarter ended March 31, 2014. Origin prepares its financial statements in accordance with generally accepted accounting principles (GAAP) of the United States.
FINANCIAL RESULTS OVERVIEW
During the second quarter of fiscal year 2014, the Company generated revenues of RMB4.7 million (US$0.8 million) compared with RMB27.5 million for the three months ended March 31, 2013. Revenues generated this quarter were mainly a result of scrap sales. The revenues reported for the second quarter a year ago were mainly generated from corn seed toll production businesses, contract businesses where Origin produced and processed corn seeds for the other seed companies. As a reminder, the majority of Origin's revenues are recorded in the fiscal third and fourth quarters as a result of our revenue recognition policy.
Deferred revenues were RMB426.8 million (US$69.4 million) as of March 31, 2014 compared with RMB461.1 million on March 31, 2013. Deferred revenues declined year-over-year mainly due to lower shipping volume from the rice business as the result of market exit of one of our rice products. 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 loss for the second quarter of fiscal 2014 was RMB2.4 million (US$0.4 million) compared with a gross profit of RMB6.7 million in the second quarter of fiscal 2013. Negative gross margin was a result of scrap sales of some corn and rice seed products during this quarter.
Total operating expenses for the second quarter ended March 31, 2014 were RMB36.8 million (US$6.0 million), up from RMB30.3 million for the same period in fiscal 2013. The increase was mainly due to the increasing marketing activities, offset by expense control of other operating activities. Specifically, selling and marketing expenses were RMB17.1 million (US$2.8 million) for the second quarter of fiscal 2014, an increase of 93% from RMB8.8 million for the same period last year due to increasing marketing expenses. General and administrative expenses were RMB10.8 million (US$1.8 million) for the second quarter ended March 31, 2014, down 19% from RMB13.3 million one year ago. This cost decline was mainly due to continued expense control measures. Research and development expenses was RMB8.9 million (US$1.5 million) in the second quarter of fiscal 2014, which was consistent with RMB9.3 million for the same period last year.
Operating loss for the second quarter of 2014 amounted to RMB39.1 million (US$6.4 million) compared with an operating loss of RMB23.5 million for the same period in fiscal 2013.
Net loss for the second quarter of fiscal 2014 was RMB44.3 million (US$7.2 million), or net loss per basic and diluted share of RMB1.95 (US$0.32), compared to a net loss of RMB27.8 million, or net loss per basic and diluted share of RMB1.19 in the same period one year ago.
BALANCE SHEET
As of March 31, 2014, cash and cash equivalents were RMB70.2 million (US$11.4 million) and shareholders' equity attributable to the Company was RMB189.5 million (US$30.8 million). The Company had short-term borrowings of RMB277.3 million (US$45.1 million) and long-term borrowing of RMB59 million (US$9.6 million). Short-term borrowings were mainly for working capital, while long-term borrowing was used for the Xinjiang Origin corn seed production facilities.
Advances from customers were RMB180.6 million (US$29.4 million) as of March 31, 2014. These advances represent cash receipts for orders in the upcoming selling season.
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