Origin Agritech Limited Reports Unaudited Financial Results For Three Months Ended March 31, 2016
BEIJING, May 5, 2016 /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 second quarter ended March 31, 2016. Origin prepares its financial statements in accordance with generally accepted accounting principles (GAAP) of the United States.
Highlights for the Second Fiscal Quarter Ended March 31, 2016
Corporate Strategies
The Company and DuPont Pioneer, the advanced seed and genetics business of DuPont (NYSE: DD) jointly announced a commercial licensing agreement to develop new seed technologies for Chinese farmers on April 4, 2016. This combined effort will contribute to the modernization of China's agriculture system and improved food security, which the government has set as priorities.
Key Financial Results
|
(in thousands RMB) |
Q2 FY2016 |
Q2 FY2015 |
% of change |
||||||
|
Segment net revenue: |
|||||||||
|
Seed production & distribution |
2,541 |
3,838 |
(33.8) |
% | |||||
|
Biotech & Product Development |
211 |
- |
100.0 |
% | |||||
|
Segment total net revenues |
2,752 |
3,838 |
(28.3) |
% | |||||
Financial Results for the Second Fiscal Quarter Ended March 31, 2016
During the second quarter of fiscal year 2016, the Company generated revenues of RMB2.8 million (US$0.4 million) compared with RMB3.8 million for the three months ended March 31, 2015. Revenues of seed production & distribution generated this quarter were mainly from scrap sales, while revenues of Biotech & Product Development represented the conversion and testing fees from DuPont Pioneer. The majority of Origin's revenues are recorded in the third and fourth fiscal quarters as a result of our revenue recognition policy.
Deferred revenues were RMB418.8 million (US$64.8 million) as of March 31, 2016, compared with RMB423.1 million on March 31, 2015. 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 2016 was RMB5.6 million (US$0.9 million) compared with a gross loss of RMB1.7 million in the second quarter of fiscal 2015. Negative gross margin was a result of scrap sales of some rice seed products during this quarter.
Total operating expenses for the second quarter ended March 31, 2016, were RMB24.9 million (US$3.8 million), up 25% from RMB19.8 million for the same period in fiscal 2015. The increase was mainly due to increased inventory shipping costs. Specifically, selling and marketing expenses were RMB8.4 million (US$1.3 million) for the second quarter of fiscal 2016, an increase of 35% from RMB6.2 million for the same period last year. General and administrative expenses were RMB9.9 million (US$1.5 million) for the second quarter ended March 31, 2016, which was consistent with RMB9.2 million for the same period last year. Research and development expenses were RMB8.8 million (US$1.4 million) in the second quarter of fiscal 2016, compared with RMB8.9 million for the same period last year, also consistent with the same period last year.
Operating loss for the second quarter of fiscal 2016 amounted to RMB30.4 million (US$4.7 million) compared with an operating loss of RMB21.5 million for the same period in fiscal 2015. The increased operating loss was mainly due to handling of the scrap rice seed products at lower price and increased inventory shipping costs.
Net loss attributable to the Company for the second quarter of fiscal 2016 was RMB28.1 million (US$4.4 million), or net loss per basic and diluted share of RMB1.23 (US$0.19), compared to a net loss of RMB25.9 million, or net loss per basic and diluted share of RMB1.14 in the same period one year ago.
BALANCE SHEET
As of March 31, 2016, cash and cash equivalents were RMB40.2 million (US$6.2 million) and shareholders' equity attributable to the Company was RMB184.0 million (US$28.5 million).
The Company had short-term borrowings of RMB220.0 million (US$34.0 million) and long-term borrowing of RMB53.7 million (US$8.3 million). The total borrowings decreased by 8.1% from the total borrowings of RMB 297.7 million for the same period last year. Short-term borrowings were mainly for working capital, while long-term borrowing was mainly used in relation with the corn seed production facilities in Xinjiang Origin and the Company's working capital.
Advances from customers were RMB62.8 million (US$9.7 million) as of March 31, 2016. These advances represent cash receipts for orders in the upcoming selling season.
Management and Board Changes
The Board of Directors of Origin announced Dr. William S. Niebur as the company's new President, CEO and Director. Dr. Gengchen Han will retain his position as Chairman of the Board, effective April 25, 2016.
Yasheng Yang and James Kang resigned their position as directors, effective April 25, 2016.
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.
|
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | ||||||||||||
|
(In thousands, except share data) | ||||||||||||
|
Three Months ended March 31, | ||||||||||||
|
2015 |
2016 | |||||||||||
|
RMB |
RMB |
USD | ||||||||||
|
Revenues |
3,838 |
2,752 |
426 | |||||||||
|
Cost of revenues |
(5,501) |
(8,308) |
(1,286) | |||||||||
|
Gross loss |
(1,663) |
(5,556) |
(860) | |||||||||
|
Operating expenses: |
||||||||||||
|
Selling and marketing |
(6,217) |
(8,388) |
(1,298) | |||||||||
|
General and administrative |
(9,190) |
(9,948) |
(1,540)) | |||||||||
|
Research and development |
(8,868) |
(8,752) |
(1,355) | |||||||||
|
Other operating income, net |
4,467 |
2,228 |
346 | |||||||||
|
Total operating expenses |
(19,808) |
(24,860) |
(3,847) | |||||||||
|
Loss from operations |
(21,471) |
(30,416) |
(4,707) | |||||||||
|
Interest expense |
(5,571) |
(3,462) |
(536) | |||||||||
|
Interest income |
582 |
60 |
9 | |||||||||
|
Loss before income tax expense |
(26,460) |
(33,818) |
(5,234) | |||||||||
|
Income tax expense |
||||||||||||
|
Current |
(31) |
(45) |
(7) | |||||||||
|
Deferred |
- |
- |
- | |||||||||
|
Income tax expense |
(31) |
(45) |
(7) | |||||||||
|
Net loss |
(26,491) |
(33,863) |
(5,241) | |||||||||
|
Less: Net loss attributable to the non-controlling interests |
(575) |
(5,756) |
(891) | |||||||||
|
Net loss attributable to Origin Agritech Limited |
(25,916) |
(28,107) |
(4,350) | |||||||||
|
Other comprehensive loss |
||||||||||||
|
Net loss |
(26,491) |
(33,863) |
(5,241) | |||||||||
|
Foreign currency translation difference |
(483) |
433 |
67 | |||||||||
|
Comprehensive loss |
(26,974) |
(33,430) |
(5,174) | |||||||||
|
Less: Comprehensive loss attributable to non-controlling interests |
(575) |
(5,756) |
(891) | |||||||||
|
Comprehensive loss attributable to Origin Agritech Limited |
(26,399) |
(27,674) |
(4,283) | |||||||||
|
Net loss attributable to Origin Agritech Limited per share - basic |
(1.14) |
(1.23) |
(0.19) | |||||||||
|
Net loss attributable to Origin Agritech Limited per share - diluted |
(1.14) |
(1.23) |
(0.19) | |||||||||
|
Shares used in calculating basic and diluted net loss per share |
22,738,541 |
22,843,541 |
22,843,541 | |||||||||
|
UNAUDITED CONSOLIDATED BALANCE SHEETS | ||||||||
|
(In thousands, except share data) | ||||||||
|
3/31/2015 |
9/30/2015 |
3/31/2016 |
3/31/2016 | |||||
|
RMB |
RMB |
RMB |
US$ | |||||
|
ASSETS |
||||||||
|
Current Assets |
||||||||
|
Cash and cash equivalents |
37,302 |
66,025 |
40,247 |
6,229 | ||||
|
Restricted cash |
- |
- |
20,280 |
3,139 | ||||
|
Accounts receivable |
6,243 |
2,051 |
5,599 |
867 | ||||
|
Due from related parties |
8,200 |
- |
2,280 |
353 | ||||
|
Advances to suppliers |
13,207 |
10,484 |
13,775 |
2,132 | ||||
|
Advances to growers |
1,777 |
20,796 |
4,873 |
754 | ||||
|
Inventories |
645,591 |
439,562 |
559,955 |
86,664 | ||||
|
Income tax recoverable |
48 |
48 |
48 |
7 | ||||
|
Other current assets |
5,870 |
4,793 |
4,784 |
740 | ||||
|
Total current assets |
718,238 |
543,759 |
651,841 |
100,885 | ||||
|
Restricted cash |
20,000 |
20,280 |
- |
- | ||||
|
Land use rights, net |
31,921 |
31,722 |
31,120 |
4,816 | ||||
|
Plant and equipment, net |
330,706 |
324,905 |
316,962 |
49,056 | ||||
|
Equity investments |
23,721 |
18,721 |
18,721 |
2,897 | ||||
|
Goodwill |
11,973 |
11,973 |
11,973 |
1,853 | ||||
|
Acquired intangible assets, net |
36,066 |
31,390 |
29,998 |
4,643 | ||||
|
Other assets |
2,838 |
3,079 |
2,477 |
383 | ||||
|
Total assets |
1,175,463 |
985,829 |
1,063,092 |
164,533 | ||||
|
LIABILITIES AND EQUITY |
||||||||
|
Current liabilities |
||||||||
|
Short-term borrowings |
225,000 |
220,000 |
220,000 |
34,049 | ||||
|
Current portion of long-term borrowings |
25,500 |
24,000 |
32,657 |
5,055 | ||||
|
Accounts payable |
7,933 |
4,389 |
7,670 |
1,187 | ||||
|
Due to growers |
6,659 |
17,337 |
6,099 |
944 | ||||
|
Due to related parties |
11,475 |
42,284 |
11,550 |
1,788 | ||||
|
Advances from customers |
100,052 |
264,547 |
62,761 |
9,713 | ||||
|
Deferred revenues |
423,067 |
11,248 |
418,816 |
64,820 | ||||
|
Income tax payable |
- |
37 |
45 |
7 | ||||
|
Other payables and accrued expenses |
54,347 |
50,298 |
34,830 |
5,391 | ||||
|
Total current liabilities |
854,033 |
634,140 |
794,428 |
122,954 | ||||
|
Long-term borrowings |
47,172 |
40,972 |
21,000 |
3,250 | ||||
|
Other long-term liability |
18,322 |
19,939 |
19,270 |
2,982 | ||||
|
Total liabilities |
919,527 |
695,051 |
834,698 |
129,186 | ||||
|
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, 24,091,163 and 24,151,163 shares issued as of March 31, 2015, September 30, 2015 and March 31, 2016, respectively; |
||||||||
|
22,738,541, 22,813,541 and 22,873,541 shares outstanding as of |
||||||||
|
March 31, 2015, September 30, 2015 and March 31, 2016, respectively) |
||||||||
|
Additional paid-in capital |
402,026 |
402,500 |
403,422 |
62,438 | ||||
|
Accumulated deficit |
(158,419) |
(116,808) |
(173,689) |
(26,882) | ||||
|
Treasury stock at cost (1,277,622, 1,277,672 and 1,277,622 shares |
(37,445) |
(37,445) |
(37,445) |
(5,795) | ||||
|
as of March 31, 2015, September 30, 2015 and March 31, 2016, respectively) |
||||||||
|
Accumulated other comprehensive loss |
(4,528) |
(7,053) |
(8,294) |
(1,286) | ||||
|
Total Origin Agritech Limited shareholders' equity |
201,634 |
241,194 |
183,994 |
28,475 | ||||
|
Non-controlling interests |
54,302 |
49,584 |
44,400 |
6,872 | ||||
|
Total equity |
255,936 |
290,778 |
228,394 |
35,347 | ||||
|
Total liabilities and equity |
1,175,463 |
985,829 |
1,063,092 |
164,533 | ||||
|
UNAUDITED SEGMENT INFORMATION | ||||||||||||
|
Contributions of the major activities and profitability information of the Company's reportable segments for the three months ended March 31, 2015 and 2016 are as follows: | ||||||||||||
|
(In thousands) |
Three Months ended March 31, | |||||||||||
|
2015 |
2016 | |||||||||||
|
RMB |
RMB |
US$ | ||||||||||
|
Segment net revenues |
||||||||||||
|
Seed Production &Distribution |
3,838 |
2,541 |
393 | |||||||||
|
Biotech &Product Development |
- |
211 |
33 | |||||||||
|
Segment total net revenues |
3,838 |
2,752 |
426 | |||||||||
|
Inter-segment sales eliminations |
- |
- |
- | |||||||||
|
Reconciliation to consolidated revenues |
3,838 |
2,752 |
426 | |||||||||
|
Segment operating loss |
||||||||||||
|
Seed Production &Distribution |
14,665 |
20,895 |
3,234 | |||||||||
|
Biotech &Product Development |
5,234 |
6,266 |
970 | |||||||||
|
Total segment operating loss |
19,899 |
27,161 |
4,204 | |||||||||
|
Unallocated corporate operating expenses, net |
1,572 |
3,255 |
503 | |||||||||
|
Reconciliation to consolidated loss from operations |
21,471 |
30,416 |
4,707 | |||||||||
CONTACT:
Song Xu [email protected] +86 10 5890-7556
Investor Relations [email protected] +86 10 5890-7506
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SOURCE Origin Agritech Limited