Vilmorin & Cie - Annual report 2017-2018

PRESENTATION of Vilmorin & Cie 1 ANNUAL REPORT Vilmorin & Cie 38 2017-2018 1.6. Strategy and perspectives 1.6.1. Strong, permanent investment in research 1.6.1.1. Research, the key to performance As the main source of value creation, research ensures tomorrow’s growth and is at the heart of business development challenges. Its mission is to find new varieties as quickly as possible to meet the needs of the different players in the sector, and must therefore: improve the plant’s agronomic qualities (yield, resistance to diseases and insects, adaptation to different climates and territories, drought tolerance, etc.) for farmers and growers, integrate the technical and logistical constraints of industrialists and distributors (standardization of calibration, appearance and texture of food products, preservation, earliness, price, etc.), improve the taste, convenience and nutritional qualities of the products depending on the cultural specificities of consumers, while anticipating evolutions in consumption practices. By developing new seed varieties in as short a time as possible, with high added value, and that are perfectly suited to the requirements of its customers, Vilmorin & Cie’s research offers decisive commercial advantages, making it possible to win new market shares and achieve organic growth higher than that of the market. 1.6.1.2. The means to succeed A comprehensive internal research organization As a result of the expertise of its research teams, both in conventional breeding* and plant biotechnology*, and its worldwide locations, Vilmorin & Cie is able to create new varieties with differentiating advantages, and strengthen its competitiveness through innovation. In 2017-2018, more than 1,900 staff contributed to the research process. This represents 29% of the headcount, spread out over more than 100 research centers throughout the world, working on upstream research and conventional breeding* in vegetable seeds and field seeds, to meet market needs. In terms of organization, Vilmorin & Cie’s research combines cross- company resources and sites that are as close as possible to its target markets. Each Business Unit runs its own plant breeding programs, ensuring that customer requirements are taken into account with regard to the product innovation process. Their activity is coordinated by a Divisional Research Department ensuring that technological resources are pooled, and genetic databases are circulated between the Business Units, with faster integration of any work concerning the development of new technologies. It is also responsible for managing major partnerships. In the Field Seeds division, Research Departments have also been set up for each of the strategic crops, and for each of the major areas of biotechnology*. The Group’s Scientific Affairs and Innovation Department focuses, with complementarity, on certain strategic projects, prospective science, technology and regulations, and the pooling of support in expertise. One of the key topics at the moment concerns the evolution of precision farming. (1) Data calculated from the sale of seeds for activities intended for professional markets and integrating 50% of AgReliant’s business (North America. Field Seeds). (2) Research investment corresponds to gross research expenditure before any recording of research costs as fixed assets and tax relief for research. Key indicators for research 2017-2018 16.2% of sales invested in research (1) – including about 86% devoted to conventional research, and 14% devoted to biotechnology* 241 million euros of investment in research in absolute value, balanced in its spread between Vegetable Seeds and Field Seeds Almost 310 million euros invested globally, i.e. including funding in the form of partnerships More than 300 new varieties created and marketed Proportion of sales from proprietary* Vegetable Seeds* varieties: more than 95% Proportion of sales from proprietary* Field Seeds varieties: more than 50% Sales of seeds Research investment  (2) Research investment/sales of seeds 194 1,328 13 - 14 15 - 16 (1) 1,482 225 14 - 15 (1) 1,380 211 16 - 17 (1) 1,576 240 17 - 18 (1) 1,494 241 Evolution of investment in research (in millions of euros and as a % of sales) 15.2% 16.2% 15.3% 14.6% 15.2%