Zwijnaarde, Belgium
March 11, 2010

Regulated information

Strategic highlights

Throughout 2009 the global outlook for agricultural business remained positive. Heat and drought spells have highlighted the global challenge of sustainable food production. The food crisis of 2008 has enhanced political and corporate interest in innovation in agriculture and has resulted in a re-appreciation of agriculture and of the seed business in particular.

In India, the erratic and weak monsoon season of 2009 has had significant impact on the economy and on the trade of food grains. Seeds delivering increased yields under both normal and stress conditions are now globally recognized as key drivers to meet the needs of society for feeding its growing population and to bring prosperity to farmers.

During 2009, Devgen continued to implement its agro-biotech business plan to become a leading biotech-seed player in 4 important crops (rice, sorghum, pearl millet and sunflower) and a licensor of crop protection technology in other crops:

• Devgen strengthened and expanded its direct market access for its seed products in India, Indonesia and the Philippines.
• In India, the company achieved substantial revenue growth, expanded its staff and infrastructure and extended its product portfolio in all 4 core crops.
• In the Philippines, Devgen initiated research, production, marketing and sales and launched its first hybrid rice product for the tropical market.
• In Indonesia, key business relationships for production and distribution were established and two hybrids were successfully registered.
• The company increased its advanced breeding efforts, research staff and infrastructure to further strengthen its pipeline and product portfolio in hybrid pearl millet, rice, sorghum and sunflower seeds.
• The company continued to expand its pipeline of biotech and non-biotech traits focused on a-biotic and biotic stress resistance.
• Devgen and Monsanto updated their research and technology agreement, against a payment of EUR 20 million to Devgen.
• Monsanto Company recently announced that it had moved a corn rootworm trait based on RNAi technology from phase 1 to phase 2 in its pipeline.

In 2009, governments and regulators continued to restrict the use of certain hazardous chemicals to control nematode pests on vegetables, fruits and row crops. Anticipating on this trend, Devgen scientists have developed a nematicide product with a superior environmental and worker exposure profile compared to other nematicides, and which is equally efficacious in controlling nematode pests. This product moved in 2009 to commercialization in Turkey and first sales of Devguard® were realized.
In the US, commercialization of a different formulation, under the brand name Enclosure®, is targeted for 2010. Regulatory approvals in other countries were pursued as planned.

Devgen significantly strengthened its cash position during 2009:

• 14.7 million euro raised in capital
• 20 million euro payment in fees from Monsanto Company.

Business highlights

Nematicide Business

• Devgen's nematicide was approved in Turkey for use on tomatoes, cucumbers, peppers and eggplant. The product was launched under the brand name Devguard® and is distributed by Devgen's partner in Turkey, Dogal A.S.
• The product is well received by farmers, especially because of its environmental safety profile and its short pre-harvest interval which enables growers to extend the treatment period without affecting export of their products into zones with strict residue level controls.
• Devgen's nematicide was approved in the US for use on peanuts and is targeted for launch under the brand name Enclosure® in the first half of 2010.
• Additional development is in progress to expand into other crop opportunities.
• The approval procedures in other countries are further pursued with the first ones expected in 2010-2011.

Seed business

Despite the impact of adverse weather on agriculture in India, Devgen's hybrid seed business grew by close to 50 %, the strongest growth noted in the industry:

• Sales value of hybrid rice seeds more than doubled and put Devgen in the number 3 position in the Indian hybrid rice market. Devgen's hybrid rice is well received by farmers because of its high yield, drought tolerance and good grain taste when consumed.
• Sales of sunflower hybrid seeds increased by 19%, supported by the launch of a new product, Frontline SH 491, which combines short maturation time and high yield. Devgen is now also a top-3 player in this market segment in India.
• Devgen regained its leadership position in India for sorghum hybrids, thanks to 60% growth in Sales value. Devgen launched new products which are superior over its own sorghum hybrid which is already market leader. Devgen also made a strong entry into the sorghum fodder market.
• In pearl millet Devgen gained market share and increased sales by 50%. Mahalaxmi DB 5000, a new product targeted for the hot and dry regions of India, was launched and should support future growth.
• Availability of good farmland for seed production is crucial in a growing business. For next production season, Devgen has secured access to considerably more area and with more geographically spread to mitigate environmental crop production risks.
• A new seed processing plant was built and became operational. It doubles Devgen's seed processing capacity.
• A dedicated smaller plant for processing parental seed, together with cold storage facilities was built and provides secure high quality parental seed management and processing.
• New laboratory infrastructure for Quality Control and R&D will be commissioned shortly.

In 2009 Devgen established operations in the Philippines:

• A legal entity was incorporated with head office in Manila.
• A research station was set up to focus on the development of tropical hybrids. A production team was put in place and initiated test production on multiple locations. A first product is available for the dry season sales and field locations were secured for the first large scale production during the current dry season.
• A distribution partnership was set up with Leads Agri, a leading supplier of agrochemical products in the Philippines with nationwide presence.
• The first rice hybrid, named Masuwerte®, bred for the Philippine market was launched. Masuwerte® is a high yielding, long grain rice with good aroma.

In Indonesia, Devgen is preparing to sell hybrid rice as of 2010:

• 2 rice hybrids that were extensively tested over the past 2 years, obtained variety registration. Sales should start in early 2010.
• Devgen deepened its relationship with PT (Persero) Sang Hyang Seri (SHS) through the creation of a Hybrid Rice Strategic Business Unit for hybrid rice seed production. The companies are further building on their cooperation for R&D and distribution of rice hybrids in Indonesia.

Technology

• Devgen's global breeding team, operating in Belgium, India, Kenya and the Philippines has made important progress to deliver new products in the short, medium and long term. Several new hybrids are targeted to be launched in 2010.
• The development of Devgen's proprietary biotech crop protection technology continues. Monsanto Company recently announced that it had moved a corn rootworm trait similar to such RNAi technology from phase 1 to phase 2 in their pipeline.
• Devgen and Monsanto Company modified the scope of their research and technology agreement signed in 2007. Monsanto Company now has broader rights to Devgen technology. In exchange, Devgen received EUR 20 million in cash.
• In rice, Devgen advanced a portfolio of biotech and non-biotech traits to protect plants against biotic and abiotic stress. These hybrids are expected to fuel the Devgen pipeline in hybrid rice and are targeted to deliver increased yield and prosperity to the Asian farmer.
• Devgen renewed its agrochemical compound discovery agreement with Sumitomo Chemical Company, a Japan based company with which Devgen has been collaborating under multiple agreements since 2001.

Business objectives 2010:

• Devgen's goal is to further grow and entrench its position as an innovating provider of hybrid seeds in India and hybrid rice seed in S.E. Asia. This can be achieved by increasing market access for its existing products and by launching new high value products.
• Seed production and seed sales are highly influenced by weather conditions. Based on the March 1st production update, Devgen anticipates substantial revenue growth of its seed business. Devgen management will provide a guidance update in mid-May, after completing the harvest of this year's seed production. A second update will be given after the onset of the monsoon season.
• In the Philippines, the company plans to ramp-up sales of hybrid rice seed.
• In Indonesia, Devgen aims to strengthen the organization and launch its product successfully.
• Several new products will be launched in 2010 and others evaluated for possible launch in 2011.
• The company targets to bring its first biotech traits for rice from research to the development stage in India.
• Simultaneously new non-biotech hybrids are intended to be advanced towards commercialization.
• Devgen plans to launch its nematicide in peanuts in the United States, while progressing the path to product registration in Europe.

Full financial report

Website: http://www.devgen.com

Published: March 11, 2010