Vilmorin & Cie - Annual report 2017-2018

PRESENTATION of Vilmorin & Cie 1 ANNUAL REPORT Vilmorin & Cie 30 2017-2018 (spring, summer and subtropical), two counter-season sites, and a wheat breeding* station. Vilmorin & Cie is pursuing its local research programs and several varieties are being introduced onto the market. As a result of this work, Hengji Limagrain Seeds' business grew strongly during the fiscal year, with sales growth mainly in northern China in the temperate corn segment. Africa In Africa, Vilmorin & Cie develops its field seeds activities through the Business Unit Limagrain Africa, whose business was once again considerably affected during the course of fiscal year 2017- 2018 by persistent drought in South Africa. Vilmorin & Cie began its activity on the African corn market in January 2013, with the acquisition of Link Seed (South Africa). In order to pursue its strategic implantation on the continent, in 2013-2014, Vilmorin & Cie purchased a minority stake in the capital stock of the African company Seed Co, and held 29.45% of the company’s capital stock at the end of June 2018. Listed on the Zimbabwe Stock Exchange since 1996, Seed Co is the largest seed company in Africa, with strong presence on the white corn market for human consumption. On March 31, 2018, Seed Co closed a high-quality fiscal year 2017-2018 that exceeded the objectives initially set, despite the decline in its sales (129 million USD (1) , or -4.4%) related to a sharp increase at the end of the previous financial year. Vilmorin & Cie and Seed Co are continuing to build up their partnership which was begun in fiscal year 2013-2014, helping Vilmorin & Cie to gain access to new markets with high potential. After creating a joint venture dedicated to vegetable seeds during the course of fiscal year 2016-2017, Vilmorin & Cie is continuing to accompany Seed Co in its development projects. At the end of August 2018 (2) , Seed Co decided to reorganize its activities through a partial demerger resulting in a separate listing of its holding structure Seed Co International (SCIL), based in Botswana, which groups all its international activities (apart from Zimbabwe); the objective is to ensure its continuous expansion over the continent, particularly through access to new financial resources. Consequently, Vilmorin & Cie participated in the reserved capital stock increase of Seed Co International, which is now listed on the Stock Exchanges of Gaborone (Botswana) and Harare (Zimbabwe). Vilmorin & Cie, now the main shareholder of Seed Co International, is working closely with Seed Co, through a shareholders’ agreement, in the definition of the strategic ambitions of the new structure and in their implementation. Through this operation, Vilmorin & Cie is demonstrating its desire to significantly accelerate its expansion in Africa. In addition, the creation of a dedicated entity in West Africa is planned, in partnership with Seed Co, to specifically address this part of the continent, on the white corn segment but also on the yellow corn segment, which is experiencing strong growth in West Africa. 1.4.2.4. Wheat seeds in North America Wheat is the most widely cultivated crop in the world, and so for Vilmorin & Cie it is a strategic crop which must be approached on a worldwide basis. Beyond Europe, where it is the market leader, Vilmorin & Cie is gradually moving out into new territories. Today, the Company is operating in the main wheat production zones in the world: the United States, Canada, Australia (through its minority stake of almost 33% in Australian Grain Technologies (3) , the Australian leader for breeding*, developing and distributing cereals), Argentina and Brazil. The Business Unit Limagrain Cereal Seeds, based in Fort Collins (Colorado. United States), is the development platform for North American activities. This operation combines scientific cooperation with certain American universities, a portfolio of diversified genetic resources* and adapted to local climate conditions, and a sales network covering the main American production areas. The local team, comprising wheat experts who are highly mobilized to develop this market that remains undervalued today, is a key factor for future success. Performances and highlights in 2017-2018 In spite of a market environment that remains difficult, leading farmers to widely adopt farm seeds, wheat acreage rose this past year in the United States (+4 %. Source: USDA 2018) , after recording decreases for several consecutive years. In this context, the Business Unit Limagrain Cereal Seeds achieved a strong increase in sales on June 30, 2018 (4.6 million euros), i.e. +61.6% on a like-for-like basis compared with June 30, 2017). Growth, which particularly concerns the Pacific North West area, relies on a quality product offer. The level of business nevertheless remains modest on the group scale. (1) Annual data at 100%. (2) The decision was approved at Seed Co’s Annual General Meeting, which was held on August 9, 2018. (3) Over fiscal year 2017-2018, Australian Grain Technologies posted sales of 24 million euros. On July 1, 2017, Australian Grain Technologies joined the Business Unit Limagrain Asia-Pacific. 1.4. Activities