BEIJING, Jan. 8, 2014 /PRNewswire/ -- Origin Agritech Limited (NASDAQ: SEED) ("Origin" or the "Company"), a technology-focused supplier of crop seeds in China, today announced unaudited financial results for the fiscal year ended September 30, 2013. These unaudited year end results reflect the Company's consolidated financial statements during the period from October 1, 2012 to September 30, 2013. Origin prepares its consolidated financial statements in accordance with generally accepted accounting principles (GAAP) of the United States.
UNAUDITED FINANCIAL RESULTS OVERVIEW
Fiscal year 2013 was the first year after the corporate-wide restructuring program carried out during fiscal year 2012, and as a result the Company's financial performance has turned around significantly despite headwinds we faced in the seed industry and the impact of unfavorable weather in the Northeastern China region. Operating profit for fiscal year 2013 was RMB18.16 million (US$2.92 million), representing a significant turnaround from the operating loss of RMB3.47 million for fiscal year 2012. The turnaround of the operating profit was despite the fact that revenues declined 13% from RMB 552.11 million in the fiscal year 2012 to RMB481.69 million (US$77.30 million) in the fiscal year 2013.
Year-over-Year Comparison of Operating Performance
2013 (RMB million) | 2012 (RMB million) | Year-over-Year Change | |
Revenues | 481.69 | 552.11 | (13%) |
Gross Profit | 166.61 | 164.33 | 1% |
Operating Expense | 148.45 | 167.80 | (12%) |
Operating Profit (loss) | 18.16 | (3.47) | n/a |
Revenue decline was mainly due to the discontinued cotton and agricultural chemical businesses and lower sales for the Company's corn and rice seed businesses. Excluding the cotton and agricultural chemical businesses, revenues decreased by 8% from RMB 524.80 million to RMB 481.69 million (US$77.30 million), mainly due to a 5% lower of sales volume and 3% price decline. Increasing competition in the seed markets and unfavorable weather for our Northeast operations were among the headwinds we faced during fiscal year 2013. Industry competition increased as the inventory in the seed market in China has reached historically high levels before the 2013 planting season.
Overall Analysis
Total revenues for the fiscal year ended September 30, 2013 were RMB481.69 million (US$77.30 million), a decrease of 13% from RMB552.11 million during the fiscal year ended September 30, 2012. Overall, the year-over-year decrease in revenues was mainly due to the divestment of the cotton and pesticide businesses, and the drop in sales volume of corn and rice as a result of increasing competition in the crop seed market and unfavorable weather for our Northeast operations in fiscal year 2013.
Corn seed products remained our strongest product line, accounting for 80% of our overall sales. Total revenues from corn seeds were RMB387.60 million (US$62.20 million) in fiscal year 2013, compared with RMB416.73 million in the fiscal year ended September 2012. Revenues from rice product line for the year ended September 30, 2013 decreased by approximately 18% to RMB72.71 million (US$11.66 million) from RMB88.14 million in the fiscal year ended September 30, 2012. Sales of canola seeds increased by 9% to RMB21.77 million (US$3.49 million) in fiscal year 2013 compared to RMB19.94 million in fiscal year 2012. With the divestment of the cotton and pesticide businesses in fiscal year 2012, the revenue from those businesses was nil for the fiscal year 2013 from RMB27.09 million in the year ended September 2012.
Operating expenses for the fiscal year ended September 30, 2013 were RMB148.45 million (US$ 23.82 million), representing a decrease of 12% from RMB167.80 million in the fiscal year 2012, which was mainly because our expense control efforts helped to lower the operating expenses despite the increase in higher doubtful receivables allowance and shipping expenses.
Operating income for the fiscal year ended September 30, 2013 was RMB18.16 million (US$2.92 million), compared to the operating loss of RMB3.47 million for the fiscal year ended September 30, 2012. The increase in operating results was mainly due to our improvement in gross profit and expenses control effort.
Net income for the fiscal year ended September 30, 2013 was RMB7.49 million (US$1.21 million), representing a significant improvement from the net loss of RMB1.43 million for the fiscal year ended September 30, 2012. The year-over-year improvement was mainly due to the improvement in operating performance of the core businesses and rigorous expense management.
Net income per share was RMB 0.32 or US$ 0.05 for the fiscal year 2013, compared with net loss of RMB(0.06) in fiscal year 2012.
Statement of Cash Flow
As of September 30, 2012 and 2013, we had approximately RMB152.79 million and RMB131.98 million (US$21.47 million), respectively, in cash and cash equivalents. Total borrowings as of September 30, 2012 and 2013 were RMB74.00 million and RMB286.32 million (US$46.57 million), respectively. During fiscal year 2013, Net cash used in operating activities was RMB146.11 million (US$23.78 million), down from cash inflow of RMB82.71 million for the fiscal year ended September 30, 2012, as the inventory balance increased significantly year-over-year.
Net cash used in investing activities was RMB68.28 million (US$11.11 million) for the fiscal year ended September 30, 2013 compared with RMB143.38 million for the fiscal year ended September 30, 2012. Net cash provided by financing activities was RMB191.69 million (US$31.18 million) for the fiscal year ended September 30, 2013 compared with RMB83.40 million for the fiscal year ended September 30, 2012. The increase in borrowing was mainly related to the bank loans for settlement of seed purchases and for financing the construction of a new corn seed processing plant in Xinjiang.
Research and Development Activities
Origin was built on its strong R&D platform, and we strongly believe a commitment to R&D is essential to the growth of the Company. During fiscal year 2013, we continued to make significant progress both in our conventional hybrid crop seed development programs and biotechnology R&D activities. Our R&D investment of RMB42.16 million represented 8.75% of our total revenue in fiscal year 2013.
Key developments for Origin's GM corn seeds:
Phytase: Four commercial hybrids with phytase traits have completed the variety production test and are pending the variety approval from the Chinese government.
Glyphosate Tolerance: One GM glyphosate tolerance event (the unique DNA recombination event that took place in one plant cell) passed Phase 4 – Production Test and is waiting for the Phase 5 Safety Certificate. Two more glyphosate tolerance events are being submitted for Phase 3 - Environment Release Test. In addition, more than one thousand events are undergoing Phase 1 - Laboratory Research;
Bacillus Thuringiensis (Bt): Two insect tolerant events are going through Phase 2 - Intermediate Test. Over two hundred events are undergoing Phase 1 - Laboratory Research;
Glyphosate + Bacillus Thuringiensis (Bt): Three events of the Company's glyphosate and insect tolerant traits have advanced into Phase 3 – Environment Release Test. More than 4,500 events of the stacked traits (inserting more than one gene in a seed via biotechnology) are being screened in Phase 1 - Laboratory Research.
Hybrid Corn Seed Development Program:
In addition to GM crop seeds, Origin has a large R&D program developing conventional hybrid crop seeds. In China, new hybrid seed varieties need to go through an official approval process prior to sales. This approval process typically involves three to four years of registration trials and normally proceeds according to the following sequential steps:
Pre-Registration -- Registration Trial 1 -- Registration Trial 2 -- Field Demo -- Approval
Each step leading up to Approval takes approximately one year unless it needs to be repeated. In some localities Registration Trial 2 and Field Demo are treated as one and the same step.
During fiscal year 2013, we have more than 45 tests going through different stages of the approval process. As the results of multiyear testing, we received registration approval for seven of our new varieties.
Outlook
With the industry inventory for seeds, especially corn seed, at historically high levels, we expect the market to continue with increasing competition in fiscal year 2014. However, we will continue our disciplined management approach and deepen our restructuring effort in different levels to improve our operational efficiency. We expect our earnings performance to improve again and revenue growth to turnaround in the FY2014.
Conference Call Information
The Company will host a teleconference on January 8, 2014, at 8:00 a.m. ET / 9:00 p.m. Beijing time to discuss the fiscal year 2013 results. To participate in the call, please dial +1-877-870-4263 in North America, or +1-412-317-0790 internationally, approximately 5 minutes prior to the scheduled start time.
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 BALANCE SHEETS (In thousands, except number of share and per share data)
| ||||||
September 30, | ||||||
2012 | 2013 | 2013 | ||||
RMB | RMB | US$ | ||||
ASSETS | ||||||
Current Assets | ||||||
Cash and cash equivalents | 152,789 | 131,978 | 21,467 | |||
Accounts receivable, less allowance for doubtful amounts of RMB6,752 | 7,065 | 1,949 | 317 | |||
Due from related parties | 2,082 | 3,400 | 553 | |||
Advances to suppliers | 7,802 | 9,768 | 1,589 | |||
Advances to growers | 88,194 | 58,473 | 9,511 | |||
Inventories | 282,544 | 470,811 | 76,580 | |||
Income tax recoverable | 2,159 | 1,163 | 189 | |||
Other current assets | 16,407 | 7,000 | 1,139 | |||
Total current assets | 559,042 | 684,542 | 111,345 | |||
Restricted cash | - | 14,350 | 2,334 | |||
Land use rights, net | 32,318 | 33,205 | 5,401 | |||
Plant and equipment, net | 317,085 | 354,735 | 57,699 | |||
Equity investments | 22,433 | 24,894 | 4,049 | |||
Goodwill | 11,973 | 11,973 | 1,947 | |||
Acquired intangible assets, net | 25,585 | 23,117 | 3,760 | |||
Deferred income tax assets | 1,755 | - | - | |||
Other assets | 5,246 | 11,256 | 1,831 | |||
Total assets | 975,437 | 1,158,072 | 188,366 | |||
LIABILITIES AND EQUITY | ||||||
Current liabilities | ||||||
Short-term borrowings | 35,000 | 205,000 | 33,344 | |||
Current portion of long-term borrowings | 4,000 | 16,500 | 2,684 | |||
Accounts payable | 5,031 | 4,590 | 747 | |||
Due to growers | 4,304 | 37,875 | 6,161 | |||
Due to related parties | 2,769 | 1,530 | 249 | |||
Advances from customers | 435,044 | 371,571 | 60,438 | |||
Deferred revenues | 23,243 | 22,069 | 3,590 | |||
Income tax payable | 39,060 | 39,060 | 6,353 | |||
Other payables and accrued expenses | 56,744 | 53,783 | 8,748 | |||
Total current liabilities | 605,195 | 751,978 | 122,314 | |||
Long-term borrowings | 35,000 | 64,819 | 10,543 | |||
Other long-term liability | 21,810 | 21,030 | 3,420 | |||
Total liabilities | 662,005 | 837,827 | 136,277 | |||
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, | ||||||
23,382,812 and 22,905,926 shares issued and outstanding | ||||||
as of September 30, 2012 and 2013, respectively) | - | - | - | |||
Additional paid-in capital | 397,671 | 399,564 | 64,991 | |||
Accumulated deficit | (100,967) | (93,473) | (15,204) | |||
Treasury stock at cost (498,851 and 1,110,237shares as of September | (29,377) | (35,659) | (5,800) | |||
Accumulated other comprehensive loss | (6,280) | (4,390) | (714) | |||
Total Origin Agritech Limited shareholders' equity | 261,047 | 266,042 | 43,273 | |||
Non-controlling interests | 52,385 | 54,203 | 8,816 | |||
Total equity | 313,432 | 320,245 | 52,089 | |||
Total liabilities and equity | 975,437 | 1,158,072 | 188,366 | |||
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (In thousands, except number of share and per share data)
| |||||||||
Year ended September 30, | |||||||||
2011 | 2012 | 2013 | 2013 | ||||||
RMB | RMB | RMB | US$ | ||||||
Revenues | 567,434 | 552,111 | 481,694 | 77,297 | |||||
Cost of revenues | (371,591) | (387,783) | (315,082) | (50,561) | |||||
Gross profit | 195,843 | 164,328 | 166,612 | 26,736 | |||||
Operating expenses | |||||||||
Selling and marketing | (56,831) | (56,437) | (55,375) | (8,886) | |||||
General and administrative | (86,748) | (77,585) | (66,153) | (10,615) | |||||
Research and development | (44,771) | (37,629) | (42,162) | (6,766) | |||||
Other income, net | 5,120 | 3,852 | 15,241 | 2,446 | |||||
Total operating expenses, net | (183,230) | (167,799) | (148,449) | (23,821) | |||||
Income(loss) from operations | 12,613 | (3,471) | 18,163 | 2,915 | |||||
Interest expense | (1,469) | (4,029) | (11,326) | (1,818) | |||||
Share of net income of equity investments | 1,616 | 4,030 | 5,161 | 828 | |||||
Loss on liquidation of a subsidiary | (13,582) | - | - | - | |||||
Interest income | 1,771 | 2,547 | 1,776 | 285 | |||||
Income (loss) before income taxes | 949 | (923) | 13,774 | 2,210 | |||||
Income tax expense | |||||||||
Current | (6,991) | (589) | (2,707) | (434) | |||||
Deferred | (6,739) | (1,273) | (1,755) | (282) | |||||
Income tax expense | (13,730) | (1,862) | (4,462) | (716) | |||||
Net income (loss) | (12,781) | (2,785) | 9,312 | 1,494 | |||||
Less: Net income (loss) attributable to | 10,298 | (1,351) | 1,818 | 292 | |||||
Net income (loss) attributable to Origin | (23,079) | (1,434) | 7,494 | 1,202 | |||||
Other comprehensive income (loss) | |||||||||
Net income (loss) | (12,781) | (2,785) | 9,312 | 1,494 | |||||
Foreign currency translation difference | 2,939 | 117 | 1,890 | 303 | |||||
Comprehensive income (loss) | (9,842) | (2,668) | 11,202 | 1,797 | |||||
Less: Comprehensive income (loss) | 10,298 | (1,351) | 1,818 | 292 | |||||
Comprehensive income (loss) | (20,140) | (1,317) | 9,384 | 1,505 | |||||
Net income (loss) attributable to Origin Agritech | (1.00) | (0.06) | 0.32 | 0.05 | |||||
Net income (loss) attributable to Origin Agritech | (1.00) | (0.06) | 0.32 | 0.05 | |||||
Shares used in calculating basic net income | 23,351,615 | 23,382,812 | 23,259,127 | 23,259,127 | |||||
Shares used in calculating diluted net income | 23,351,615 | 23,382,812 | 23,278,443 | 23,278,443 | |||||
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) | |||||||||
Year ended September 30, | |||||||||
2011 | 2012 | 2013 | 2013 | ||||||
RMB | RMB | RMB | US$ | ||||||
Operating activities: | |||||||||
Net income (loss) | (23,079) | (1,434) | 7,494 | 1,202 | |||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||
Depreciation and amortization | 23,307 | 19,541 | 28,164 | 4,581 | |||||
Loss (gain) on disposal of plant and equipment | 6,252 | 1,401 | (4,505) | (733) | |||||
Gain on disposal of a land use right | - | (825) | - | - | |||||
Gain on disposal of an equity investment | (1) | - | - | - | |||||
Loss on disposal of Kunfeng's assets | - | 1,814 | - | - | |||||
Loss on liquidation of a subsidiary | 13,583 | - | - | - | |||||
Impairment on receivables | 1,872 | 4,038 | 5,358 | 872 | |||||
Inventory write down | 12,978 | 27,453 | 38,561 | 6,272 | |||||
Deferred income tax assets | 6,739 | 1,273 | 1,755 | 282 | |||||
Non-controlling interests | 10,298 | (1,351) | 1,818 | 292 | |||||
Share-based compensation expense | 4,638 | 3,327 | 1,893 | 308 | |||||
Share of net income of equity investments | (1,616) | (4,030) | (5,161) | (828) | |||||
Changes in operating assets and liabilities: | |||||||||
Accounts receivable, net | 1,560 | (4,486) | (242) | (39) | |||||
Due from related parties | (76) | 3,101 | (1,318) | (214) | |||||
Advances to growers | (37,932) | (9,571) | 29,721 | 4,834 | |||||
Advances to suppliers | (8,432) | 4,616 | (27) | (4) | |||||
Inventories | 15,175 | (102,230) | (226,828) | (36,895) | |||||
Income tax recoverable | 590 | (4) | 996 | 162 | |||||
Other current assets | 4 | 48,648 | 9,574 | 1,557 | |||||
Other assets | (3,010) | 14,394 | 3,135 | 510 | |||||
Accounts payable | (3,220) | (709) | (441) | (72) | |||||
Due to growers | (34,239) | (3,643) | 33,571 | 5,460 | |||||
Due to related parties | 984 | 1,041 | (1,239) | (202) | |||||
Advances from customers | 49,136 | 37,111 | (63,473) | (10,324) | |||||
Deferred revenues | (3,299) | 3,431 | (1,174) | (191) | |||||
Income tax payable | 4,113 | - | - | - | |||||
Other long-term liabilities | (7,003) | 21,810 | (780) | (127) | |||||
Other payables and accrued expenses | 8,135 | 17,997 | (2,961) | (482) | |||||
Net cash provided by operating activities | 37,457 | 82,713 | (146,109) | (23,779) | |||||
Investing activities: | |||||||||
Dividends received | 2,467 | 2,100 | 2,700 | 439 | |||||
Purchase of plant and equipment | (56,332) | (104,214) | (63,282) | (10,293) | |||||
Liquidation of a subsidiary | (67,980) | - | - | - | |||||
Additional capital injection to an equity investment | (600) | - | - | - | |||||
Proceeds from disposal of land use right | - | 1,140 | - | - | |||||
Proceeds from disposal of plant and equipment | - | 5,495 | 7,875 | 1,281 | |||||
Deposits for purchase of acquired technology and land use rights | (1,280) | - | (5,781) | (940) | |||||
Deposits for purchase of plant and equipment | (11,468) | (43,874) | (5,470) | (890) | |||||
Purchase of land use rights | - | (431) | (1,829) | (298) | |||||
Purchase of intangible assets | (19,197) | (3,599) | (2,492) | (405) | |||||
Net cash provided by (used in) investing activities | (154,390) | (143,383) | (68,279) | (11,106) | |||||
Financing activities: | |||||||||
Restricted cash | - | - | (14,350) | (2,334) | |||||
Proceeds from short-term borrowings | 20,000 | 105,000 | 274,000 | 44,567 | |||||
Repayment of short-term borrowings | (85,900) | (90,000) | (99,000) | (16,103) | |||||
Proceeds from long-term borrowings | - | 39,000 | 37,319 | 6,070 | |||||
Repurchase of common stock | - | - | (6,282) | (1,022) | |||||
Capital injection from a non-controlling shareholder | 19,600 | 29,400 | - | - | |||||
Dividends paid to non-controlling shareholders | (12,090) | - | - | - | |||||
Proceeds from exercise of share options | 2,654 | - | - | - | |||||
Net cash (used in) provided by financing activities | (55,736) | 83,400 | 191,687 | 31,178 | |||||
Net increase (decrease) in cash and cash equivalents | (172,669) | 22,730 | (22,701) | (3,707) | |||||
Cash and cash equivalents, beginning of year | 299,672 | 129,942 | 152,789 | 24,852 | |||||
Effect of exchange rate changes on cash and cash equivalents | 2,939 | 117 | 1,890 | 322 | |||||
Cash and cash equivalents, end of year | 129,942 | 152,789 | 131,978 | 21,467 | |||||
Supplemental disclosures of cash flow information: | |||||||||
Income taxes paid | 6,990 | 589 | 2,707 | 440 | |||||
Interest paid | 1,469 | 4,029 | 11,326 | 1,842 | |||||
Supplemental disclosure of non-cash investing activities: | |||||||||
Disposal of assets in lieu of payment for liabilities | - | 1,814 | - | - | |||||
Other current assets to be received from liquidation of a subsidiary | 45,236 | - | - | - | |||||
CONTACT:
Origin Agritech Limited
Dr. James Chen
Chief Financial Officer
james.chen@originseed.com.cn
or
Kay Liu
Investor Relations
ke.liu@originseed.com.cn
+86-138-1193-7764
SOURCE Origin Agritech Limited
