• Sales volume of approx. NIS 54.4 M recorded
• Net profit of approx. NIS 1.6 M
• Approx. NIS 15.3 M cash flow
• Cooperation with VCC Group to be reinforced with increase of their holdings to about 90%
• The Company distributed dividends of NIS 10 M in April

Hazera Genetics, which deals in the genetic development and commercialization of vegetable hybrid seeds and seeds for field crops, has published its financial results for the first quarter of 2006.

Sales in the first quarter of the year totaled approximately NIS 54.4 M as compared to approximately NIS 56.9 M in the same quarter of last year, a decrease of approximately 4.4%. Figures included about NIS 42.7 M in sales of vegetable seeds and about NIS 11.7 M in sales of field crop seeds, as compared to approximately NIS 46.5 M and NIS 10.4 M respectively in the equivalent quarter last year. The rate of export sales totaled approximately 74.4% as compared to 74.0% for the equivalent quarter last year.

Cash flow from operating activities rose during the first quarter to about NIS 15.3 M as compared to about NIS 0.9 M for the same period last year. The increase in cash flow derives mainly from a reduction in receivables totaling about NIS 17.8 M (mostly as a result of net collection from customers amounting to approximately NIS 18.5 M), a reduction in inventory in the amount of approximately NIS 4.2 M and results of net profit deducted from reduction in payables amounting to about NIS 9.9 M.

Gross profit in the first quarter of 2006 totaled about NIS 32.3 M as compared to approximately NIS 33.2 M for the same quarter of last year. The vegetable seed sector registered a gross profit of NIS 27.5 M as compared to NIS 29.8 M for the first quarter of 2005, a drop of 7.7%. By contrast, the field crops sector increased by 41% to a gross profit of NIS 4.8 M in the first quarter, as compared to NIS 3.4 M for the first quarter of 2005.

Net profit for the first quarter of this year totaled about NIS 1.6 M, down from about NIS 2.6 M for the same quarter last year.

R&D costs in the first quarter of 2006 were approximately NIS 9.1 M (approximately 16.7% of sales), as compared to NIS 8 M in the first quarter of 2005 (approximately 14% of sales). The rise in net R&D costs stems mainly from an increase in the budget designated for research activities, especially in tomatoes and peppers, which is reflected – among other effects – in a larger workforce.

Rami Dar, CEO of Hazera Genetics, spoke of the increase in cash balance and the company’s sound financial situation, which provides sources of investment in opportunities for business development. Dar also pointed to the increase in the company’s R&D costs and marketing and sales costs as part of an ongoing process of internal growth based on penetrating new markets and launching new products. Dar stated that fluctuations in sales of seeds are influenced by seasonality. Moreover, the composition of the product basket and the different target markets in turn have an impact on sales distribution and business results from one quarter to another. Bearing this in mind, the results for the first three months of 2006, ending March 31st, do not necessarily indicate results that may be expected for the year as a whole. The agreement signed by the company’s shareholders for the acquisition of Seed Growers Ltd.’s holdings by the VCC Group demonstrates the French Group’s faith in the company’s potential and the advantages that will arise from increased collaboration between Hazera and VCC.

The Company offers a range of solutions in the seed sector, from genetic and technological development, breeding of new varieties, production, marketing and sales in Israel and worldwide of vegetable hybrid and field crop seeds. In the primary markets the Company operates through subsidiaries or exclusive distributors, with export accounting for some 80% of produce. The Company’s principal products are tomato seeds, as well as seeds for peppers, onion, melon, watermelon, cucumber, wheat and cotton. Hazera Genetics is considered a world leader for seeds of fresh eating tomatoes and enjoys widespread activity in markets around the Mediterranean Basin, the American continent, Europe, Africa and the Far East.

The Company is controlled by Vilmorin Clause & Cie. (“VCC”), with a share holding of some 54.92%, while the Israeli company Seed Growers Ltd. (“Magdaz”) owns about 37% of shares. VCC is a French corporation that is long-established in the seed industry, with a global annual turnover of some € 500 M. During the first quarter of this year, an agreement was drawn up, under which Magdaz is expected to sell all of its holdings in the Company to VCC at a value of $ 91 M. The sale is subject to approval from Magdaz and VCC, and completion is anticipated no later than July 7th, 2006.

The Company employs approximately 350 workers in Israel and in branches around the world. Head office is located at Brurim, the R&D Division in Kiryat Gat and the Production Plant at Sderot. Hazera Genetics has subsidiaries and representatives in the USA, Spain, Mexico, Turkey and China.