Zwijnaarde, Belgium - November 20, 2009 - Devgen nv (Euronext Brussels; DEVG) issues today a business and financial update for the third quarter 2009.
Operational highlights Q3 2009
Regulatory approval and market launch of Devgen’s nematicide in Turkey
Devgen received regulatory approval for its nematicide product Devguard® in Turkey for use in four of the most important vegetable crops under protective cover: tomato, cucumbers, eggplants and peppers. Dogal A.S., Devgen’s Turkish partner, sells this product today to growers of these high value crops. Sales are supported by a nationwide advertising and marketing campaign. Field trials have indicated that the use of Devguard® integrates well with established grower practices. Devguard® has been approved with a short pre-harvest interval. This is key differentiator versus other products in the market.
Further progress in Indonesia
Devgen has strengthened its collaboration with PT (Persero) Sang Hyang Seri through the creation of a Hybrid Rice Strategic Business Unit for hybrid rice seed production. Indonesia is South East Asia’s largest rice growing country with approximately 12 million ha under rice cultivation. Furthermore Devgen and PT (Persero) Sang Hyang Seri obtained regulatory approval for the distribution of two hybrid rice varieties DG 1 SHS and DG 2 SHS in Indonesia allowing to prepare for market launch in the near future.
Devgen ready to launch its proprietary hybrid rice in the Philippines
Devgen further established its organization in the Philippines. Next to the further strengthening of its research stations in Mindanao, production was started in the southern part of the country. Demo trials were organized during the past season and first production was completed. Devgen anticipates launching its first hybrid rice seed for the Philippine market through its distribution partner Leads Agri. This tropical hybrid rice variety was specifically bred for the Philippine market, taking into account local agricultural practices and requirements.
Continued strong growth in India
With strong sunflower sales during Q3 and lower impact of sales returns total revenues were up 55% compared to the same quarter last year. Devgen confirms its ambition to be a top 4 player in hybrid rice, to regain the number one position in premium hybrid sorghum and to be the number 3 hybrid sunflower seed provider in India by the end of 2009. Total sales of hybrid seeds for the year are expected to amount to EUR 9 million.
Devgen strengthens cash position
On October 1st Devgen raised EUR 14.7 million through a private placement with the issuance of 1,753,339 new shares (+9.8%). The proceeds of the offering will be used to grow Devgen’s seeds and crop technology business in line with its business plan, in particular to accelerate the growth of its premium hybrid rice seed business and the introduction of its biotech traits in rice on the Indian subcontinent and in South-East Asia. Devgen foresees to end the year with a cash and cash equivalents totaling EUR 42 million.
Financial highlights Q3 2009
Total revenue for Q3 2009 amounts to EUR 5,886 (‘000) as compared to EUR 2,453 (‘000) for Q3 2008. The 140% increase in revenues is due to higher sales of hybrid seeds in India as indicated above, first sales of nematicides in Turkey (launch campaign) but also to higher research income. Income from sales of goods amounts to EUR 2,771 (‘000) as compared to EUR 1,745 (‘000) in the same quarter of last year. Income from R&D cooperation increased to EUR 3,115 (‘000) from EUR 708 (‘000) over the same quarter last year. Revenue recognition with respect to the new research and technology agreements are responsible for this significant increase. On a YTD-basis revenues increased to EUR 14,504 (‘000) from EUR 8,299 (‘000) over the first 3 quarters last year with R&D income amounting to EUR 6,055 (‘000) and sales of goods amounting to EUR 8,449 '(000) representing an increase of respectively 146% and 45%.
EBITDA for the third quarter 2009 amounts to EUR 877 (‘000) as compared to EUR -3,006 (‘000) for Q3 2008. EBITDA has considerably improved due to higher revenues, better gross margin and lower R&D expenditure. EBITDA YTD amounts to EUR -2,738 (‘000) compared to EUR -9, 799 (‘000) for the same period last year.
Cash and cash equivalents at the end Q3 2009 amount to EUR 33,266 (‘000) as compared to EUR 24,218 (‘000) at the end of 2008. This amount excludes the cash raised on October 1, 2009.
Outlook 2009
- Overall revenue expectation for 2009 is now set at EUR 18 million, with product sales remaining in line with previous guidance given set at EUR 9 million and R&D revenue for a total of EUR 9 million.
- R&D expenditure (excl. depreciation) for 2009 is expected to amount to EUR 8 million.
- Cash burn for the year, including planned investments and loan repayments, is set at approximately EUR 18 million. Taking in account cash inflows with respect to new research and technology agreements and the capital increase cash at year end is expected to amount to EUR 42 million.
About Devgen nv
Devgen’s mission is to enable farmers to sustainably grow more food on less land, with less water, agrochemicals and labour.
Devgen uses advanced biotechnology and molecular breeding technology to make high yielding seeds and crop protection solutions with a superior environmental profile.
Devgen brings this technology to the market in the world’s major food and feed crops through two complementary strategies:
- Licensing Devgen technology for use in corn, cotton and soy and selected other crops in exchange for R&D funding, and milestone and royalty payments.
- Producing and selling its premium hybrid seeds in major field crops such as rice, sunflower, sorghum, and pearl millet, in the Indian subcontinent and South-East Asia.
In its Crop Protection unit, Devgen developed and has taken to market a novel nematicide, an agro-chemical product that protects crops from damage by parasitic nematodes.
Incorporated in 1997, Devgen has offices in Ghent (Belgium), Singapore, Hyderabad (India) and Delaware (US) and employs more than 200 people.
