Devgen issued Half Year Report 2012

Devgen nv, the agro-biotech company that shapes the field of hybrid rice in India and Southeast Asia and innovates in crop protection technologies, provided a business update and its financial results for the first half of 2012.

 

Devgen and Syngenta signed a six-year agreement to develop and commercialize sprayable RNAi-based crop protection products. The new agreement generates committed funding for Devgen of more than € 50 million, including an upfront payment of € 22 million.

 

The development of the next generation hybrid rice continued to progress with seed production research and agronomic performance trials ongoing in India and the Philippines.

 

Devgen’s core activities in hybrid rice seed showed excellent performance (+37% in sales) in H1 2012. This solid growth is driven both by existing and newly marketed hybrid seeds with higher production efficiency for the company and farmers.

 

Sorghum seed sales performed well during H1, while lower pearl millet seed sales are expected to be mostly compensated for in Q3 as farmers are buying their seeds when the Monsoon rains arrive.

 

Cotton seed sales declined due to general market conditions, but with limited impact on the bottom line as the company only generates a distribution margin without any inventory risk.

 

Devgen obtained regulatory approval of its nematicide Devguard® in South Africa for use on potatoes.

 

 

Total revenues amounted to € 12.3 million compared to € 17.9 million in H1 2011, largely attributable to a lower research and development income given the completion of the Monsanto agreement and revenues from the Syngenta contract not yet recognized.

 

Due to an improvement in product mix Devgen’s seed business delivered a 25% increase in gross profit of € 3.4 million in H1 2012 compared to € 2.7 million in H1 2011.

 

As a result of the lower R&D income the company recorded an operational loss of € 5.5 million, compared to an operational profit of € 0.2 million in H1 2011.

 

Devgen expects a growth of turnover in hybrid rice seed sales for the full year 2012. Revenues from its cotton distribution activities will be lower than last year.

 

As 2012 is an intermediary period between the completion of the Monsanto Company agreement and revenue recognition from the Syngenta contract, there will be substantially less research and development service revenues this year.

 

Also due to the receipt of € 22 million, the cash position at year end is expected to be largely sufficient to finance the further development of Devgen for several years.