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Devgen reports progress for its business activities in line with plan

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Zwijnaarde, Belgium
May 16, 2008

Devgen NV (Euronext Brussels: DEVG), a public agricultural biotech and seed company, today reports on progress made in implementing its agro strategy during the first quarter of 2008 and on key financials for this period.

Update on business activities

The increasing interest in the worldwide need for rice, grain and edible oil strengthens Devgen in its belief in a positive strategic outlook for the traits and seed industry. Apart from an expected increase in productivity for these crops, there is also a need for higher yielding seed varieties to meet the demand.

Devgen is successfully implementing its biotech and seed strategy. Since the acquisition of its hybrid rice and other hybrid seed business activities in November in India, Devgen's India management team was completed. Bipin Solanki was appointed as CEO of Devgen Seeds and Crop Technology pvt ltd. In addition, a sales manager and a marketing manager, both bringing broad experience, have been appointed.
Hybrid rice breeding activities in India and Kenya have been integrated to accelerate the development of new rice hybrid seed varieties for the Indian and Southeast Asian market.
Devgen successfully completed the field production season for hybrid rice, sorghum and pearl millet hybrid seeds for the 2008 sales season. In March a custom built seed processing plant with additional warehousing capacity became operational. Devgen is now shipping 21 hybrid seed products into the market across India under the Frontline and Mahalaxmi brands.
The sales team has been strengthened in key territories and took a promising start for the 2008 Kharif season. Devgen maintains its guidance for targeted sales of EUR 5 to 6 million in 2008. The company is preparing for aggressive sales growth with its current product portfolio and through market introduction of new superior sorghum, pearl millet, rice and sunflower hybrids in 2009. The quality of these new hybrids will be widely demonstrated to farmers and distributors across the key markets during the coming Kharif season through demonstration trials.

In line with the previously announced strategic development plan, Devgen finalized the trials for the compilation of the first registration dossiers of its candidate nematicide product in key geographies being the USA and Southern Europe. Target date for the completion of the dossier compilation for the key geographies is set by year end. The nematicide management team was further strengthened with experts recruited out of the agrochemical industry, to increase Devgen's capabilities with regard to product support and market launch.

The process for focussing on the agro activities of the company is ongoing. Further news will be announced in due course.


Key financials 31.3.2008
 
€ 000 31.03.08 31.03.07
Revenue 1,107 2,095
EBITDA -5,796 -2,436
Loss from operations -6,436 -2,702
Net loss -6,172 - 2,539
Cash and cash equivalents[1] 40.736 51,053

[1] Including restricted cash for an amount of EUR 5,082 ('000),

Revenues amount up to EUR 1,107 ('000) compared to EUR 2,183 ('000) for the first quarter of 2007. Revenues are down due to lower income out of collaborative research. Sales of seeds for the first quarter amount to EUR 70 ('000). Sales of seeds will mainly be realised in Q2 and Q3.

EBITDA amounts to EUR -5,796 ('000) compared to EUR -2,436 ('000) for the first quarter of 2007. EBITDA is impacted by lower revenues (EUR -988 '(000)) and higher costs (EUR +2,373 ('000)). R&D expenditure amounted to EUR 4,849 ('000) compared to EUR 3,639 ('000) during the same quarter last year, representing an increase of EUR 1,210 ('000) in line with guidance given with regard to accelerated investments in the nematicide program in 2008 and acceleration of the breeding activities to bring new hybrid seeds to market. Other costs including cost of goods sold, marketing and distribution expenses and G&A, for both India and Belgium, amounted to EUR 2.055 ('000) compared to EUR 838 ('000) over the same period last year (Belgium only).

Loss from operations amounts to EUR -6,436 ('000) compared to EUR -2,702 ('000) for the same period last year due to lower revenue and higher costs as explained above. Net loss amounts to EUR -6,172 ('000) compared to EUR -2,539 ('000) for the same quarter last year.

Cash and cash equivalents1 at the end of the first quarter amounted to EUR 40,736 ('000) compared to EUR 43,863 ('000) at the end of 2007. Net decrease in cash and cash equivalents during the first quarter amounts to EUR 3,180 ('000) of which EUR 3,201 ('000) is relating to cash used in operating activities.

About Devgen

Devgen is a public agricultural biotech and seed company focused on developing and commercializing:

• biotech traits and hybrid seeds to meet the growing needs for high yielding, high quality hybrid rice, sorghum, millet and sunflower of the Indian and other south-east Asian markets;
• a novel generation of biotech products to protect a wide spectrum of crops from damage incurred from pests; to render crops more tolerant against stress factors such as drought and salty soils and to decrease the need for fertilizer use by optimizing nitrogen uptake;
• a new generation of agro-chemical products to protect crops from damage inflicted by plant parasitic nematodes.

Devgen's biopharmaceutical division develops a new class of preclinical drug candidates, based on novel therapeutic concepts, for treatment of a range of inflammatory and metabolic disease (diabetes, obesity) and arrhythmia.

Incorporated in 1997, Devgen has offices in Ghent (Belgium), Singapore, Hyderabad (India), and Delaware (US) and employs more than 180 people worldwide. Devgen is listed on Euronext Brussels (ticker: DEVG) since June 2005. For more information on Devgen, please visit the company's web site: www.devgen.com.

 

 

 

 

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