EX-99.1 2 v438886_ex99-1.htm EXHIBIT 99.1

Exhibit 99.1

Origin Agritech Limited Reports Unaudited Financial Results For Three Months

Ended March 31, 2016

BEIJING--/PRNewswire/-- May 5, 2016--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

song.xu@originseed.com.cn

+86 10 5890-7556

Investor Relations

ir@originseed.com.cn

+86 10 5890-7506