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Devgen NV - Business Update

Published: Thursday, November 08, 2012
Last Updated: Thursday, November 08, 2012
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Company has issued its three-month financial results.

Devgen nv has issued a business update and its three-month financial results for the period ending 30 September 2012.

Business highlights - Q3 2012

• On 21 September 2012, Syngenta has announced its intention to launch a public voluntary offer to acquire all outstanding shares and warrants of Devgen at a price of € 16.00 in cash per share. The intended bid represents a total consideration for the company of around € 403 million.

Devgen’s board of directors unanimously supports the offer. The board will provide its formal response to the proposed takeover bid in a memorandum that will be included in the bid prospectus. For full details of the bid, Devgen refers to the prospectus document that will be publicly available after approval by the FSMA.

• During the reported period, Devgen made progress with the implementation of its strategy:
- The development of Devgen’s program to create the next generation of hybrid rice remained on track, with seed production research and performance trials continuing as planned.
- In India, the third quarter showed exceptionally high sales of Devgen’s hybrid pearl millet seeds following the late arrival of the Monsoon rains and farmers buying their seeds closer to the actual rain period. Devgen’s novel hybrid sorghum seed adapted to the Rabi season in India also performed strongly and well in line with expectations.
- In the Philippines, preparations were made to launch Frontline Matibay™, a robust hybrid rice seed suited for the wet and dry season. This seed is characterized by long, slender grains and early maturity. It is now being sold for use in the coming dry season.
- In Indonesia, Devgen and the government owned seed company SHS obtained registration of a third top performing rice hybrid, DG 5 SHS, a seed particularly well adapted to the tropical climate. Both companies already sell two premium hybrid rice seeds that have established a good track record with the Indonesian farmer.

Financial highlights - Q3 2012
• Seed revenues increased 60% to € 2.3 million compared to € 1.4 million in Q3 2011.
• Research and development income decreased to € 0.5 million in Q3 from € 3.2 million in the same period last year, following the completion of the agreement with Monsanto Company in October 2011.
• As a result of lower R&D income, overall revenues fell to € 2.8 million compared to € 4.6 million last year.
• EBITDA for the reported three months amounted to € -3.6 million compared to € -1.5 million over the same period last year.
• Devgen ended the third quarter with a strong cash position of € 54.1 million (including € 5.6 million restricted cash), compared to € 33.9 million at the end of June 2012. This increase stems from the receipt of the upfront payment by Syngenta of € 22 million as agreed in the recent license and research partnership for RNAi-based sprayable insect control solutions.

Thierry Bogaert, CEO of Devgen, said: “Devgen's next generation hybrid rice seeds in India and the Philippines again delivered excellent trial results in the 2012 rainy season. Our long-term investment in a bottom up redesign of hybrid rice to deliver higher yield and quality is clearly paying off.”

Outlook full year 2012
• Devgen expects to end the year with an increase in revenues from sales of seeds resulting from its own production and technology (rice, sorghum, pearl millet and sunflower), with a significant growth of sales of hybrid rice and sorghum seeds.
• Research and development service revenues are expected to decline as previously communicated. Devgen will start to recognize revenue from the Syngenta partnership when the joint development activities start in April 2013.
• The cash position at year end is expected to be largely sufficient to finance the development of Devgen for several years.

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