Form 6-K Origin Agritech LTD For: Jan 03

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934

 

FOR THE MONTH OF JANUARY 2017
COMMISSION FILE NUMBER 000-51576

 

ORIGIN AGRITECH LIMITED
(Translation of registrant's name into English)

 

No. 21 Sheng Ming Yuan Road, Changping District, Beijing 102206
(Address of principal executive office)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F x       Form 40-F ¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):        

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):        

 

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

 

Yes ¨    No x

 

If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-________.

  

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

ORIGIN AGRITECH LIMITED
	By:	/s/ William S. Niebur
	Name:	William S. Niebur
	Title:	President, and CEO
Date: January 3, 2017

  

  

EXHIBIT

 

Exhibit Number		Description
99.1		Origin Agritech Ltd. Reports Unaudited Fiscal Year 2016 Financial Results

 

 

 

Exhibit 99.1

 

Origin Agritech Ltd. Reports Unaudited Fiscal Year 2016 Financial Results

 

Significant Progress in FY16 as Origin Continues Transition to a Global Agricultural Technology Provider

FY16 Business Realignment Positions Origin for Exciting Opportunities Ahead

 

DES MOINES, Iowa, January 3, 2017/PRNEWSWIRE/—Origin Agritech Ltd.(NASDAQ: SEED) (“Origin” or the “Company”), an agricultural biotechnology trait and corn seed provider, today announced its unaudited financial results for the fiscal year ended September 30, 2016.

 

“We have delivered a 2016 fiscal year of significant change and milestone achievements that reflect our new strategic operating direction,” said Dr. Bill Niebur, Origin’s Chief Executive Officer. “We have diversified our business model, refreshed our product portfolio and are working to improve our financial position to enable Origin to capitalize on a consolidating global agricultural market environment. Based on China’s 13th Five-Year Plan, we continue to believe that the Chinese government is committed to the commercialization of agricultural biotechnology as part of the larger effort to modernize agriculture.  We have crafted a strategic plan specifically to position Origin as a leader in the global agricultural transformation.”

 

KeyCorporate Developments

 

·

Today, the Company announced a definitive agreement with DuPont Pioneer to gain access to non-GM corn seed products for the U.S., and bring such products into Origin’s North America non-GM/Organic business. This collaboration represents an important step as Origin pursues a full slate of agricultural products, technology and services to meet North America non-GM/Organic market needs.

 

·

In December 2016, Origin announced critical milestone achievements for the agricultural biotechnology research program including:

o

Becoming the first Chinese biotech seed company to export genetically modified corn seeds to the United States at a greenhouse designated by the U.S. Department of Agriculture. U.S. field tests of these seeds, with insect resistance and herbicide tolerance technologies developed in China, are scheduled to begin next summer;

o

Completion of lab and field production trials in China for the above mentioned trait;

o

Submission of relevant data to obtain approval of a Safety Certificate.

 

·

In October 2016, the Company announced the opening of the Des Moines office (Iowa) as Origin’s North American operations center. Establishing a North American presence is a natural outgrowth of the Company’s focus on globalization and enables Origin to contribute to stronger U.S.-China relations in agriculture.

 

·

In September 2016, Origin entered into a definitive agreement to sell its proprietary commercial corn seed production and distribution business and its Beijing headquarters for RMB400 million (approximately USD$60 million). The transaction is subject to customary closing conditions and shareholders’ approval.

 

o

Origin will retain its corn germplasm IP, breeding and biotech research capabilities, which include modern laboratories, extensive field testing networks and off-season winter nursery in Hainan, to expand and pursue germplasm and trait licensing opportunities. The sale of Origin’s proprietary commercial seed business will strengthen the Company’s balance sheet and enable it to focus on biotechnology trait and seed germplasm research, development and licensing.

 

 

·

In April 2016, Origin announced a strategic partnership with DuPont Pioneer to create and commercialize corn biotechnology products in China.

 

Fiscal 2016 Financial Results

 

As the seed industry in China experienced another challenging year, Origin improved its operating efficiency and cost reduction efforts in fiscal year 2016 after excluding restructuring costs, expenses related to the North American expansion, and one-time stock compensation expenses. The Company’s cash flow from operating activities was steady as it managed inventory effectively. Going forward, Origin will maintain its focus on cost and cash flow management to enable strategic investment in R&D and global business development.

 

Total revenues for the fiscal year ended September 30, 2016 were RMB335.3 million (US$50.2 million), a decrease of 11.0% from RMB376.6 million during the fiscal year ended September 30, 2015. The year-over-year decrease in revenues was mainly due to lower sales volume for corn and rice seeds as a result of market oversupply, increasing competition and a reduction in corn acres in the high single digits as measured by percentage. Market share for corn held flat with last year.

 

Corn seed accounted for 91% of overall sales. Total revenues from corn seeds were RMB306.4 million (US$45.9 million) in fiscal year 2016, compared with RMB331.3 million in fiscal year 2015. Revenues from the rice product line for the year ended September 30, 2016 decreased to RMB19.7 million (US$3.0 million) from RMB29.2 million in the fiscal year 2015. Sales of canola seeds decreased to RMB8.7 million (US$1.3 million) in fiscal year 2016,compared to RMB15.7 million in fiscal year 2015. Due to continued decline of rice and canola seed sales and increased competition, the Company is phasing out of these product lines in 2017.

 

Revenues of Biotech & Product Development, related to conversion and testing fees from international partners, for the year ended September 30, 2016 increased to RMB0.5 million (US$0.1 million) from RMB0.3 million in fiscal year 2015.

 

Operating expenses for the fiscal year ended September 30, 2016 were RMB137.3 million (US$20.6 million), representing an increase of 23.5% from RMB111.2 million in the fiscal year 2015, mainly due to restructuring costs, start-up expenses related to expansion of operations in North America and a one-time stock compensation expense. Excluding these items, total operating expenses increased marginally by 2% to RMB113.2 million(US$17.0 million). Selling and marketing expenses for the fiscal year ended September 30, 2016 decreased 4.8% year-over-year to RMB38.1 million(US$5.7 million), mainly due to a decrease in headcountas Company’s sales through e-commerce increased in 2016.

 

Operating loss for the fiscal year ended September 30, 2016 was RMB61.3 million (US$9.2 million), compared with operating income of RMB1.3 million in fiscal year 2015.

 

Net loss attributable to Origin for the fiscal year ended September 30, 2016 was RMB65.6 million (US$9.8 million), compared to a net loss of RMB13.8 million for the fiscal year ended September 30, 2015.

 

 

Net loss per share was RMB2.87 (US$0.43) for the fiscal year 2016, compared with net loss per share of RMB0.61 in fiscal year 2015.

 

As of September 30, 2016 and 2015, the Company had approximately RMB54.5 million (US$8.2 million) and RMB66.0 million, respectively, in cash and cash equivalents. Total borrowings as of September 30, 2016 and 2015 were RMB237.1 million (US$35.5 million) and RMB285.0 million, respectively. During fiscal year 2016, net cash provided by operating activities was RMB47.9 million (US$7.2 million), compared with RMB52.2 million for the fiscal year ended September 30, 2015. Net cash used in investing activities was RMB6.5 million (US$1.0 million) for the fiscal year ended September 30, 2016, compared with RMB20.4 million for the fiscal year ended September 30, 2015. Net cash used in financing activities was RMB48.8 million (US$7.3 million) for the fiscal year ended September 30,2016, compared with RMB9.5 million for the fiscal year ended September 30, 2015.

 

Conference Call Information

 

The Company will host a teleconference on January 3, 2017, at 8:30 a.m. ET / 9:30 p.m. Beijing time to discuss the results. To participate in the call, please dial the following numbers approximately 5 minutes prior to the scheduled start time.

 

US Toll Free:	1-888-346-8982
International Toll:	1-412-902-4272
Mainland China Toll Free:	4001-201203
Hong Kong Toll Free:	800-905945

 

A replay of the call will be available shortly after the conference call through January 10, 2016. The dial-in numbers for the replay are:

 

US Toll Free:	1-877-344-7529
International Toll:	1-412-317-0088
Replay Access Code:	10098247

 

A live and archived webcast of the conference call will be available through the Company's investor relations website at http://originseed.investorroom.com/.

 

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, 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.

 

Media Contact: Jeff Patch

Office: (515) 226-0818

Email: [email protected]

 

Investor Contact: Bill Zima

Phone: (203) 682-8233

Email: [email protected]

 

 

UNAUDITED CONSOLIDATED BALANCE SHEETS

(In thousands, except number of share and per share data)

 

		September 30,
		2015				2016				2016
		RMB				RMB				US$
ASSETS
Current Assets
Cash and cash equivalents			66,025				54,509				8,163
Restricted cash			-				21,181				3,172
Accounts receivable, less allowance for doubtful amounts of RMB4,845and RMB5,087 as of September 30, 2015 and 2016, respectively			2,051				491				74
Advances to suppliers			10,484				7,363				1,103
Advances to growers			20,796				21,672				3,245
Inventories			439,562				368,086				55,121
Income tax recoverable			48				48				7
Other current assets			4,793				4,753				711
Total current assets			543,759				478,103				71,596
Restricted cash			20,280				-				-
Land use rights, net			31,722				30,740				4,603
Plant and equipment, net			324,905				313,749				46,984
Long-term investments			18,721				18,721				2,803
Goodwill			11,973				11,973				1,793
Acquired intangible assets, net			31,390				24,930				3,733
Other assets			3,079				2,410				362
Total assets			985,829				880,626				131,874
LIABILITIES AND EQUITY
Current liabilities
Short-term borrowings			220,000				190,000				28,453
Current portion of long-term borrowings			24,000				27,057				4,052
Accounts payable			4,389				4,374				655
Due to growers			17,337				19,926				2,984
Due to related parties			42,284				103,905				15,560
Advances from customers			264,547				208,844				31,274
Deferred revenues			11,248				7,008				1,049
Income tax payable			37				-				-
Other payables and accrued expenses			50,298				53,388				7,995
Total current liabilities			634,140				614,502				92,022
Long-term borrowings			40,972				20,000				2,995
Other long-term liability			19,939				27,507				4,119
Total liabilities			695,051				662,009				99,136
Shareholders’ equity:
Preferred stock (no par value; 1,000,000 shares authorized, none issued)			-				-				-
Common stock (no par value; 60,000,000 shares authorized, 24,091,163 and 24,151,163 shares issued as of September 30, 2015 and 2016; 22,813,541 and 22,873,541 shares outstanding as of September 30, 2015 and 2016, respectively)			-				-				-
Additional paid-in capital			402,500				411,296				61,591
Accumulated deficit			(116,808	)			(182,386	)			(27,312	)
Treasury stock at cost (1,277,622 and 1,277,622 shares as of September 30, 2015 and 2016, respectively)			(37,445	)			(37,445	)			(5,607	)
Accumulated other comprehensive loss			(7,053	)			(11,177	)			(1,674	)
Total Origin Agritech Limited shareholders’ equity			241,194				180,288				26,998
Non-controlling interests			49,584				38,329				5,740
Total equity			290,778				218,617				32,738
Total liabilities and equity			985,829				880,626				131,874

 

 

 

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(In thousands, except number of share and per share data)

 

		Year ended September 30,
		2014				2015				2016				2016
		RMB				RMB				RMB				US$
Revenues, including sales to a related party of RMB nil, RMB40,586 and RMB102,234 for the years ended September 30, 2014, 2015 and 2016, respectively			415,177				376,553				335,251				50,204
Cost of revenues			(301,148	)			(264,039	)			(259,253	)			(38,823	)
Gross profit			114,029				112,514				75,998				11,381
Operating expenses
Selling and marketing			(58,972	)			(39,987	)			(38,079	)			(5,702	)
General and administrative			(46,428	)			(40,684	)			(62,159	)			(9,308	)
Research and development			(40,377	)			(48,741	)			(44,032	)			(6,594	)
Other income, net			7,269				18,238				6,964				1,042
Total operating expenses, net			(138,508	)			(111,174	)			(137,306	)			(20,562	)
Income(loss) from operations			(24,479	)			1,340				(61,308	)			(9,181	)
Interest expense			(19,743	)			(18,634	)			(14,251	)			(2,134	)
Share of net loss of equity investments			(776	)			-				-				-
Loss on disposal of an equity method investment			(1,498	)			-				-				-
Loss on disposal of a subsidiary			(2,623	)			-				-				-
Interest income			596				775				162				24
Loss before income taxes			(48,523	)			(16,519	)			(75,397	)			(11,291	)
Income tax (expense)benefits
Current			(677	)			(1,295	)			(1,436	)			(215	)
Deferred			-				-				-				-
Reversal of contingent tax liability			39,060				-				-				-
Income tax (expense) benefits			38,383				(1,295	)			(1,436	)			(215	)
Net loss			(10,140	)			(17,814	)			(76,833	)			(11,506	)
Less: Net loss attributable to non-controlling interests			(613	)			(4,006	)			(11,255	)			(1,686	)
Net loss attributable to Origin Agritech Limited			(9,527	)			(13,808	)			(65,578	)			(9,820	)
Other comprehensive loss
Net loss			(10,140	)			(17,814	)			(76,833	)			(11,506	)
Foreign currency translation difference			(56	)			(2,607	)			(4,124	)			(617	)
Comprehensive loss			(10,196	)			(20,421	)			(80,957	)			(12,123	)
Less: Comprehensive loss attributable to non-controlling interests			(613	)			(4,006	)			(11,255	)			(1,685	)
Comprehensive loss attributable to Origin Agritech Limited			(9,583	)			(16,415	)			(69,702	)			(10,438	)
Net loss attributable to Origin Agritech Limited per share - basic			(0.42	)			(0.61	)			(2.87	)			(0.43	)
Net loss attributable to Origin Agritech Limited per share - diluted			(0.42	)			(0.61	)			(2.87	)			(0.43	)
Shares used in calculating basic netloss per share			22,743,853				22,794,791				22,858,541				22,858,541
Shares used in calculating diluted net loss per share			22,743,853				22,794,791				22,858,541				22,858,541

 

 

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

		Year ended September 30,
		2014				2015				2016				2016
		RMB				RMB				RMB				US$
Operating activities:
Net loss attributable to Origin Agritech Limited			(9,527	)			(13,808	)			(65,578	)			(9,820	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization			28,524				30,547				31,222				4,675
Loss on disposal of plant and equipment			943				152				257				38
Loss on disposal of a subsidiary			2,623				-				-				-
Loss on disposal of an equity method investment			1,498				-				-				-
Allowance for doubtful account			15				-				242				36
Provision for inventories			21,984				10,965				20,502				3,070
Non-controlling interests			(613	)			(4,006	)			(11,255	)			(1,685	)
Share-based compensation expense			1,324				1,612				8,796				1,317
Share of net loss of equity method investments			776				-				-				-
Changes in operating assets and liabilities:
Accounts receivable			914				(1,030	)			1,318				197
Due from related parties			702				2,698				-				-
Advances to growers			37,714				(37	)			(876	)			(131	)
Advances to suppliers			(7,983	)			7,267				3,121				467
Inventories			(67,541	)			65,841				50,974				7,633
Income tax recoverable			1,114				-				-				-
Other current assets			1,824				(425	)			40				6
Other assets			7,247				930				436				65
Accounts payable			(65	)			(136	)			(15	)			(2	)
Due to growers			(19,933	)			(606	)			2,589				388
Due to related parties			10,181				30,573				58,291				8,730
Advances from customers			(46,926	)			(60,098	)			(55,703	)			(8,342	)
Income tax payable			(39,060	)			37				(37	)			(6	)
Deferred revenues			(3,040	)			(7,781	)			(4,240	)			(635	)
Other long-term liabilities			(1,380	)			290				7,568				1,134
Other payables and accrued expenses			(6,954	)			(10,796	)			253				39
Net cash provided by (used in) operating activities			(85,639	)			52,189				47,905				7,174

 

 

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued

(In thousands)

 

		Year ended September 30,
		2014				2015				2016				2016
		RMB				RMB				RMB				US$
Investing activities:
Proceeds from disposal of equity investment			900				-				-				-
Dividends received			3,000				-				-				-
Proceeds from disposal of a subsidiary, net of cash disposed			11,980				-				-				-
Deposits from disposal of commercial seed business			-				-				10,000				1,497
Purchase of plant and equipment			(10,502	)			(14,747	)			(15,714	)			(2,353	)
Proceeds from disposal of plant and equipment			6,174				172				483				72
Purchase of land use rights			(673	)			(900	)			-				-
Purchase of intangible assets			(11,440	)			(4,884	)			(1,250	)			(187	)
Net cash used in investing activities			(561	)			(20,359	)			(6,481	)			(971	)
Financing activities:
Restricted cash			(1,320	)			(4,610	)			(901	)			(135	)
Proceeds from short-term borrowings			305,000				235,000				195,000				29,201
Repayment of short-term borrowings			(285,000	)			(240,000	)			(225,000	)			(33,694	)
Proceeds from long-term borrowings			-				33,949				6,085				911
Repayment of long-term borrowings			(16,500	)			(33,805	)			(24,000	)			(3,593	)
Repurchase of common stock			(1,786	)			-				-				-
Net cash provided by (used in) financing activities			394				(9,466	)			(48,816	)			(7,310	)
Net increase (decrease) in cash and cash equivalents			(85,806	)			22,364				(7,392	)			(1,107	)
Cash and cash equivalents, beginning of year			131,978				46,268				66,025				9,888
Effect of exchange rate changes on cash and cash equivalents			96				(2,607	)			(4,124	)			(618	)
Cash and cash equivalents, end of year			46,268				66,025				54,509				8,163
Supplemental disclosures of cash flow information:
Refund of income taxes			586				-				-				-
Income taxes paid			148				1,258				1,436				215
Interest paid, net of interest capitalized			19,743				18,649				14,251				2,134
Supplemental disclosure of non-cash investing activities:
Proceeds from disposal of equity investment			900				-				-				-

 

 

 

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