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Ceres Announces Financial Results For Fiscal Year 2012

Energy crop company Ceres, Inc. (Nasdaq: CERE) today announced financial results for the fiscal fourth quarter and year ended August 31, 2012 and provided an update on its business and product development pipeline.

The company reported that ethanol mills have begun plantings of Ceres’ sweet sorghum hybrids for the 2012-2013 production season in Brazil. Seed sales and deliveries are ongoing and are expected to be completed by mid-December.

“Our goals this season are to expand the base of mills, establish showcase evaluations with innovators in strategic areas, and demonstrate the performance benefits of our new generation of hybrids,” said Richard Hamilton, President and Chief Executive Officer of Ceres. He noted that while the total number of hectares planted this year was impacted by the drought last season, the adoption of sweet sorghum remains a strategic priority for many mills and for the Brazilian government. “We believe that we can demonstrate the full profit potential of our hybrids this season, while at the same time building the broad base of experience that will accelerate widespread adoption and market growth.”

Paul Kuc, Chief Financial Officer, reported that the company’s expenses in the fiscal year ended August 31, 2012 were largely in line with management’s expectations. “We will continue to manage our working capital toward driving growth in the business through the adoption of our sweet sorghum products, and by moving our best traits and products forward for the emerging biomass markets,” said Kuc. “Given the seed industry’s relatively low requirements for capital expenditures, we have the flexibility of when and where we direct our working capital among these promising market opportunities.”

FOURTH QUARTER BUSINESS HIGHLIGHTS

  • The company completed the registration process in Brazil for its new generation of sweet sorghum hybrids, and is currently marketing these products. Last season in Brazil trials of these new hybrids demonstrated large increases in biomass, extractable juice volume and total harvestable sugar compared to commercial products introduced just last year. In product development trials and at the company’s breeding center, where field evaluation plots are irrigated and managed more closely than commercial fields, these hybrids averaged 80 or more metric tons per hectare. Subsequent field evaluations in the Southeast U.S. this summer have confirmed similar results.
  • Ceres reported that it will be working with more mills than last season, including many of the top-30 ethanol producers in Brazil by volume. The mills will focus primarily on the agronomic performance of Ceres’ sweet sorghum hybrids, having already validated the industrial processing of sweet sorghum during the past two seasons. The company expects the total number of hectares planted with its products will be in the thousands of hectares for the 2012-2013 production season, which is lower than it originally anticipated. This is due in part to the effects of the drought last season and the focus among the company’s customer base on the field performance of its new hybrids, which can be determined at a smaller scale.
  • The company’s plant breeding and product development field trials have demonstrated yield gains across all of its energy crops during the 2012 summer season in the northern hemisphere. Among the gains, Ceres’ new generation of switchgrass products – the first hybrids developed for bioenergy – have demonstrated double-digit percentage increases in yield over existing products. Pre-commercial miscanthus hybrids adapted for the warmer south of the U.S. have outperformed the industry standard by a large margin – nearly double the yield in the first year.
  • Ceres announced earlier this month that the U.S. Agency for International Development, or USAID, has expanded its grant to the company to develop traits in rice for Asia. USAID will provide an additional $3.5 million to Ceres over the next four years to extend field trialing and development of the company’s biotech traits and trait stacks in rice. The performance of these traits was successfully validated in experimental lines this fall in India and, subject to regulatory approval, field evaluations of the first commercial hybrids with the Ceres traits could begin as early as mid-2013. The company expects this development work in rice to inform and accelerate its trait development activities in energy crops.
  • The company announced in August that former BP Chief Scientist and U.S. Undersecretary of Energy for Science, Steven E. Koonin, PhD., joined the company's board of directors.

FOURTH QUARTER FINANCIAL RESULTS

Total revenues for the three months ended August 31, 2012 were $1.2 million compared to $1.7 million for three months ended August 31, 2011. Due to the seasonality of seed sales, quarterly revenues are not indicative of full year results.

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