EX-99.1 2 tm2021011d1_ex99-1.htm EXHIBIT 99.1

Exhibit 99.1

 

 

 

BIOCERES CROP SOLUTIONS CORP.
Unaudited interim condensed consolidated financial
statements as of March 31, 2020, June 30, 2019 and for
the nine-month periods ended March 31, 2020 and 2019      

 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

INDEX

 

Unaudited interim condensed consolidated financial statements as of March 31, 2020, June 30, 2019 and for the nine-month periods ended March 31, 2020 and 2019.  

 

Unaudited interim condensed consolidated statements of financial position as of March 31, 2020 and June 30, 2019 F-3
   
Unaudited interim condensed consolidated statements of comprehensive income for the three-month and nine-month periods ended March 31, 2020 and 2019 F-5
   
Unaudited interim condensed consolidated statements of changes in equity for the nine-month periods ended March 31, 2020 and 2019 F-6
   
Unaudited interim condensed consolidated statements of cash flows for the nine-month periods ended March 31, 2020 and 2019 F-8
   
Notes to the unaudited interim condensed consolidated financial statements F-10

 

F-2

 

 

BIOCERES CROP SOLUTIONS CORP.

 

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

 

As of March 31, 2020 and June 30, 2019

(Amounts in US Dollars)

 

   Notes   03/31/2020   06/30/2019 
ASSETS               
CURRENT ASSETS               
Cash and cash equivalents   5.1    48,178,287    3,450,873 
Other financial assets   5.2    6,082,099    4,683,508 
Trade receivables   5.3    64,534,544    59,236,377 
Other receivables   5.4    4,215,182    1,981,829 
Income and minimum presumed income taxes recoverable        100,654    1,263,795 
Inventories   5.5    28,458,362    27,322,003 
Biological assets   5.6    714,053    270,579 
Total current assets        152,283,181    98,208,964 
                
NON-CURRENT ASSETS               
Other financial assets   5.2    334,894    376,413 
Other receivables   5.4    2,170,393    1,560,310 
Income and minimum presumed income taxes recoverable        6,133    1,184 
Deferred tax assets        2,339,009    3,743,709 
Investments in joint ventures and associates   11    24,289,191    25,321,028 
Property, plant and equipment   5.7    41,688,300    43,834,548 
Intangible assets   5.8    35,241,208    39,616,426 
Goodwill   5.9    26,503,798    29,804,715 
Right-of-use leased asset   17    752,727    - 
Total non-current assets        133,325,653    144,258,333 
Total assets        285,608,834    242,467,297 

 

The accompanying Notes are an integral part of these unaudited interim condensed consolidated financial statements. Related parties’ balances and transactions are disclosed in Note 14.

 

F-3

 

 

BIOCERES CROP SOLUTIONS CORP.

 

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

 

As of March 31, 2020 and June 30, 2019

(Amounts in US Dollars)

 

  Notes   03/31/2020   06/30/2019 
LIABILITIES            
CURRENT LIABILITIES               
Trade and other payables   5.10    51,888,345    40,578,494 
Borrowings   5.11    67,689,128    66,477,209 
Employee benefits and social security   5.12    3,706,538    5,357,218 
Deferred revenue and advances from customers   5.13    1,607,645    1,074,463 
Income and minimum presumed income taxes payable        12,735    142,028 
Government grants        694    2,110 
Financed payment - Acquisition of business   5.14    -    2,826,611 
Lease liability   17    576,595    - 
Total current liabilities        125,481,680    116,458,133 
                
NON-CURRENT LIABILITIES               
Trade and other payables   5.10    452,654    452,654 
Borrowings   5.11    79,999,657    37,079,521 
Employee benefits and social security   5.12    334,081    - 
Government grants        3,941    8,098 
Due to joint ventures and associates   11    1,833,690    1,970,903 
Deferred tax liabilities        16,905,768    21,101,871 
Provisions   5.15    291,727    439,740 
Private warrants   5.16    1,141,817    2,861,511 
Lease liability   17    316,857    - 
Total non-current liabilities        101,280,192    63,914,298 
Total liabilities        226,761,872    180,372,431 
                
EQUITY               
Equity attributable to owners of the parent        44,981,021    47,301,863 
Non-controlling interests        13,865,941    14,793,003 
Total equity        58,846,962    62,094,866 
                
Total equity and liabilities        285,608,834    242,467,297 

 

The accompanying Notes are an integral part of these unaudited interim condensed consolidated financial statements. Related parties’ balances and transactions are disclosed in Note 14.

 

F-4

 

 

BIOCERES CROP SOLUTIONS CORP.

 

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 

For the three-month and nine-month periods ended March 31, 2020 and 2019

(Amounts in US Dollars)

 

       Three-month period ended   Nine-month period ended 
   Notes   03/31/2020   03/31/2019   03/31/2020   03/31/2019 
Revenues   6.1    25,716,706    18,682,627    124,219,073    110,741,133 
Government grants        747    714    24,983    13,674 
Initial recognition and changes in the fair value of biological assets        (45,041)   -    674,302    - 
Total        25,672,412    18,683,341    124,918,358    110,754,807 
              -           
Cost of sales   6.2    (14,920,088)   (10,996,272)   (68,227,890)   (58,648,951)
Research and development expenses   6.3    (1,264,314)   (995,804)   (3,391,666)   (2,089,961)
Selling, general and administrative expenses   6.4    (8,688,711)   (8,886,313)   (27,871,030)   (25,548,400)
Share of profit or loss of joint ventures and associates   11    (132,080)   (506,207)   1,166,425    306,386 
Other income or expenses, net        (22,098)   272,737    (203,664)   (25,825)
Operating profit (loss)        645,121    (2,428,518)   26,390,533    24,748,056 
                          
Financial results   6.5    (4,584,952)   (21,855,343)   (24,453,628)   (36,414,615)
Profit (loss) before income tax        (3,939,831)   (24,283,861)   1,936,905    (11,666,559)
                          
Income tax   7    366,382    1,605,093    (838,273)   (3,445,656)
Profit (loss) for the period        (3,573,449)   (22,678,768)   1,098,632    (15,112,215)
                          
Other comprehensive (loss) / income        (56,919)   (3,075,367)   (7,623,444)   (5,587,090)
Items that may be subsequently reclassified to profit and loss        5,345    (2,101,011)   (10,303,738)   (5,093,375)
Exchange differences on translation of foreign operations from joint ventures        25,649    (914,910)   (2,662,603)   (2,728,261)
Exchange differences on translation of foreign operations        (20,304)   (1,186,101)   (7,641,135)   (2,365,114)
Items that will not be subsequently reclassified to loss and profit        (62,264)   (974,356)   2,680,294    (493,715)
Revaluation of property, plant and equipment, net of tax, of JV and associates 1        (4,148)   (145,989)   351,554    155,246 
Revaluation of property, plant and equipment, net of tax 2        (58,116)   (828,367)   2,328,740    (648,961)
Total comprehensive loss        (3,630,368)   (25,754,135)   (6,524,812)   (20,699,305)
                          
Income (loss) for the period attributable to:                         
Equity holders of the parent        (3,120,733)   (21,474,709)   1,143,771    (17,245,703)
Non-controlling interests        (452,716)   (1,204,059)   (45,139)   2,133,488 
         (3,573,449)   (22,678,768)   1,098,632    (15,112,215)
Total comprehensive (loss) / income attributable to:                         
Equity holders of the parent        (3,170,432)   (23,643,501)   (5,597,750)   (21,384,923)
Non-controlling interests        (459,936)   (2,110,634)   (927,062)   685,618 
         (3,630,368)   (25,754,135)   (6,524,812)   (20,699,305)
Profit (loss) per share                         
Basic and dilutive income (loss) attributable to ordinary equity holders of the parent (3)   8    (0.09)   (0.72)   0.03    (0.60)

 

(1) The tax effect of the revaluation of property, plant and equipment of JV and associates was $117,185 and $51,749 for the nine-month periods ended March 31, 2020 and 2019, respectively.

 

(2) The tax effect of the revaluation of property, plant and equipment was $776,247 and $ (891,342) for the nine-month periods ended March 31, 2020 and 2019, respectively.

 

(3) For the nine-month periods ended March 31,2020 and 2019, diluted EPS was the same as basic EPS. See Note 8.

 

The accompanying Notes are an integral part of these unaudited interim condensed consolidated financial statements. Related parties’ balances and transactions are disclosed in Note 14.

 

F-5

 

 

BIOCERES CROP SOLUTIONS CORP.

 

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the nine-month periods ended March 31, 2020 and 2019

 

(Amounts in US Dollars)

 

 Attributable to the equity holders of the parent         
Description  Issued capital   Share
premium		   Stock options
and share
based
incentives		   Convertible
instruments		   Retained
deficit		   Foreign
currency
translation
reserve		   Revaluation of
PP&E and
effect of tax
rate change		    Equity /
(deficit)
attributable to
owners of the
parent		    

Non-
controlling
Interests

   Total equity 
06/30/2019   3,613    96,486,865    -    -    (21,972,287)   (31,479,583)   4,263,255    47,301,863    14,793,003    62,094,866 
Share-based incentives   -    -    2,573,927    -    -    -    -    2,573,927    -    2,573,927 
Convertible notes   -    -    -    702,981    -    -    -    702,981    -    702,981 
Profit (loss) for the period   -    -    -    -    1,143,771    -    -    1,143,771    (45,139)   1,098,632 
Other comprehensive (loss) / income   -    -    -    -    -    (8,885,756)   2,144,235    (6,741,521)   (881,923)   (7,623,444)
03/31/2020   3,613    96,486,865    2,573,927    702,981    (20,828,516)   (40,365,339)   6,407,490    44,981,021    13,865,941    58,846,962 

 

The accompanying Notes are an integral part of these unaudited interim condensed consolidated financial statements. Related parties’ balances and transactions are disclosed in Note 14.

 

F-6

 

 

BIOCERES CROP SOLUTIONS CORP.

 

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the nine-month periods ended March 31, 2020 and 2019

 

(Amounts in US Dollars)

 

   Attributable to the equity holders of the parent         
Description   Issued capital   Share premium   Stock options
and share
based
incentives		   Retained deficit   Foreign
currency
translation
reserve		   Revaluation of
PP&E and
effect of tax
rate change		   Equity /
(deficit)
attributable to
owners of the
parent		   Non-
controlling
Interests		   Total equity 
06/30/2018   2,810    68,023,449    102,827    (26,149,583)   (36,612,070)   8,346,051    13,713,484    19,420,172    33,133,656 
Adjustment of opening balance for the application of IAS 29   -    -    -    22,546,341    -    (2,986,317)   19,560,024    7,797,295    27,357,319 
Parent company investment   -    (14,558,347)   -    -    -    -    (14,558,347)   -    (14,558,347)
Stock options   -    -    71,231    -    -    -    71,231    -    71,231 
Reverse recapitalization   329    21,721,148    -    -    -    -    21,721,477    -    21,721,477 
Private warrants   -    (3,432,723)   -    -    -    -    (3,432,723)   -    (3,432,723)
Shares issued - Rizobacter call option   474    21,439,652    -    -    -    -    21,440,126    (14,302,975)   7,137,151 
Profit (loss) of the period   -    -    -    (17,245,703)   -    -    (17,245,703)   2,133,488    (15,112,215)
Other comprehensive loss   -    -    -    -    (3,725,468)   (413,752)   (4,139,220)   (1,447,870)   (5,587,090)
03/31/2019   3,613    93,193,179    174,058    (20,848,945)   (40,337,538)   4,945,982    37,130,349    13,600,110    50,730,459 

 

The accompanying Notes are an integral part of these unaudited interim condensed consolidated financial statements. Related parties’ balances and transactions are disclosed in Note 14.

 

F-7

 

 

BIOCERES CROP SOLUTIONS CORP.

 

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the nine-month periods ended March 31, 2020 and 2019

 

(Amounts in US Dollars)

 

 

   Notes   03/31/2020   03/31/2019 
OPERATING ACTIVITIES               
Profit (loss) for the period        1,098,632    (15,112,215)
                
Adjustments to reconcile profit to net cash flows               
Income tax        838,273    3,445,656 
Finance results        24,453,628    36,414,615 
Depreciation of property, plant and equipment   5.7    1,537,055    1,782,683 
Amortization of intangible assets   5.8    1,653,693    1,495,522 
Depreciation of leased assets   17    464,234    - 
Transaction expenses        -    4,479,913 
Share-based incentive and stock options        2,573,927    71,231 
Share of profit or loss of joint ventures and associates   11    (1,166,425)   (306,386)
Loss of control of subsidiaries        -    (10,591)
Provisions for contingencies        (8,144)   - 
Allowance for impairment of trade debtors        1,073,843    147,766 
Allowance for obsolescence        572,686    269,979 
Initial recognition and changes in the fair value of biological assets        (674,302)   - 
Gain or loss on sale of equipment and intangible assets        173,529    (185,398)
                
Working capital adjustments               
Trade receivables        (6,057,714)   23,686,390 
Other receivables        (4,325,426)   3,304,829 
Income and minimum presumed income taxes        619,128    (27,675)
Inventories        (3,242,541)   (3,874,382)
Trade and other payables        7,476,632    (24,166,251)
Employee benefits and social security        (1,840,950)   (859,356)
Deferred revenue and advances from customers        320,836    (103,091)
Government grants        (5,573)   (22,194)
Inflation effects on working capital adjustments        (14,191,466)   (13,021,924)
Net cash flows generated by operating activities        11,343,555    17,409,121 

 

The accompanying Notes are an integral part of these unaudited interim condensed consolidated financial statements. Related parties’ balances and transactions are disclosed in Note 14.

 

F-8

 

 

BIOCERES CROP SOLUTIONS CORP. 

 

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the nine-month periods ended March 31, 2020 and 2019

 

(Amounts in US Dollars)

 

   Notes   03/31/2020   03/31/2019 
INVESTMENT ACTIVITIES               
Proceeds from sale of property, plant and equipment        37,638    257,606 
Investment in joint ventures and associates and associates   11    -    (124,124)
Net loans granted to shareholders and other related parties        -    206,388 
Purchase of property, plant and equipment   5.7    (1,361,785)   (1,800,540)
Capitalized development expenditures   5.8    (935,092)   (53,407)
Purchase of intangible assets   5.8    (115,753)   (126,391)
Net cash flows used in investing activities        (2,374,992)   (1,640,468)
                
FINANCING ACTIVITIES               
Proceeds from borrowings        106,588,289    13,269,453 
Repayment of borrowings and interest payments        (68,360,216)   (33,005,813)
(Decrease) increase in bank overdraft and other short-term borrowings        (4,237,199)   6,878,784 
Other financial proceeds or payments, net        887,505    (828,372)
Reverse capitalization        -    1,083,928 
Leased assets payments        (433,947)   - 
Net cash flows generated by (used in) financing activities        34,444,432    (12,602,020)
                
Net increase in cash and cash equivalents        43,412,995    3,166,633 
                
Inflation effects on cash and cash equivalents        (318,734)   (596,246)
                
Cash and cash equivalents as of beginning of the period   5.1    3,450,873    2,215,103 
Effect of exchange rate changes on cash and equivalents        1,633,153    1,353,847 
Cash and cash equivalents as of the end of the period   5.1    48,178,287    6,139,337 

 

The accompanying Notes are an integral part of these unaudited interim condensed consolidated financial statements. Related parties’ balances and transactions are disclosed in Note 14.

 

F-9

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

(Amounts in US Dollars, except otherwise indicated)

 

Index

1.

General information
2. Accounting standards and basis of preparation
2.1. Statement of compliance with IFRS as issued by IASB
2.2. Authorization for the issue of the unaudited interim condensed consolidated financial Statements
2.3. Basis of measurement
2.4. Functional currency and presentation currency
2.5. Changes in accounting policies
2.6. Changes in accounting estimates and judgements
3. New standards, amendments and interpretations issued by the IASB
4.    Seasonality
5.    Information about components of unaudited interim condensed consolidated statements of financial position

5.1.

 Cash and cash equivalents
5.2. Other financial assets
5.3.   Trade receivables
5.4.   Other receivables
5.5.   Inventories
5.6   Biological assets
5.7. Property, plant and equipment
5.8. Intangible assets
5.9.   Goodwill

5.10.

 Trade and other payables
5.11. Borrowings
5.12. Employee benefits and social security
5.13. Deferred revenue and advances from customers
5.14. Financed payment - Acquisition of business
5.15. Provisions
5.16. Private warrants
6.      Information about components of unaudited interim condensed consolidated statement of comprehensive income
6.1.   Revenues
6.2. Cost of sales
6.3. R&D classified by nature
6.4. Expenses classified by nature and function
6.5. Finance results

 

F-10

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

(Amounts in US Dollars, except otherwise indicated)

 

7.   Taxation
8.     Earnings per share
9.     Information about unaudited interim condensed consolidated components of equity
9.1. Parent company investment
9.2.   Share capital
9.3.   Shares summary
9.4. Non-controlling interest
10.    Cash flow information
11.   Joint ventures and associates
12. Segment information
13.   Financial instruments- risk management
14.   Shareholders’ and other related parties’ balances and transactions

15.

Key management personnel compensation
16. Share-based payments
17. Leases
18. Contingencies, commitments, and restrictions on the distribution of profits
19. Impact of COVID-19

20.

Events occurring after the reporting period

 

F-11

 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in US Dollars, except otherwise indicated)

 

1.GENERAL INFORMATION

 

Bioceres Crop Solutions Corp. (“the Company”), together with its subsidiaries (“the Group”) is a fully- integrated provider of crop productivity technologies designed to enable the transition of agriculture towards carbon neutrality. The Group has a unique biotech platform with high-impact, patented technologies for seeds and microbial agricultural inputs, as well as next-generation crop nutrition and protection solutions.

 

The Group’s headquarters and primary operations are based in Argentina, which is its key end-market, although Bioceres is a global company with an extensive geographic footprint. The Group’s agricultural inputs are marketed across more than 25 countries, including Brazil, Paraguay, India, United States, Uruguay, Colombia, France and South Africa.

 

2.ACCOUNTING STANDARDS AND BASIS OF PREPARATION

 

2.1.    Statement of compliance with IFRS as issued by IASB

 

These unaudited interim condensed consolidated financial statements for the nine-month period ended March 31, 2020 have been prepared in accordance with Accounting Standard IAS 34 Interim Financial Reporting.

 

These unaudited interim condensed consolidated financial statements do not include all notes of the type normally included in an annual financial statement. Accordingly, these unaudited interim condensed consolidated financial statements are to be read in conjunction with the Consolidated financial statements as of June 30, 2019.

 

2.2.    Authorization for the issue of the unaudited interim condensed consolidated financial statements

 

These unaudited interim condensed consolidated financial statements of the Group as of March 31, 2020, June 30, 2019 and for the nine-month periods ended March 31, 2020 and 2019 have been authorized by the Board of Directors of Bioceres Crop Solutions Corp. on May 27, 2020.

 

2.3.    Basis of measurement

 

The unaudited interim condensed consolidated financial statements of the Group have been prepared using:

 

·       Going Concern Basis of Accounting, considering the conclusion of the assessment made by the Group’s Management about the ability of the Group and its subsidiaries to continue as a going concern, in accordance with the requirements of paragraph 25 of IAS 1, “Presentation of Financial Statements”.

 

·       Accrual Basis of Accounting (except for cash flows information). Under this basis of accounting, the effects of transactions and other events are recognized as they occur, even when there are no cash flows.

 

2.4.    Functional currency and presentation currency

 

a)    Functional currency

 

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic market in which the entity operates (i.e., “the functional currency”).

 

IAS 29 “Financial reporting in hyperinflationary economies” requires that the financial statements of an entity whose functional currency is the currency of a hyperinflationary economy, whether these are based on the historical cost method or the current cost method, be stated in terms of the measuring unit current at the closing date of the reporting period. For such purpose, the inflation produced since the acquisition date or the revaluation date, as applicable, must be computed in non-monetary items. The standard details a series of factors to be considered for concluding whether an economy is hyperinflationary, including, but not limited to, a cumulative inflation rate over a three-year period that approaches or exceeds 100%. Inflation accumulated in three years, as of June 30, 2018, was over 100%. It was for this reason that, in accordance with IAS 29, the Argentine economy had to be considered as hyperinflationary since July 1, 2018. Consequently, the Group has applied IAS 29 to these financial statements.

 

F-12

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in US Dollars, except otherwise indicated)

 

In an inflationary period, any entity that maintains an excess of monetary assets over monetary liabilities, will lose purchasing power, and any entity that maintains an excess of monetary liabilities over monetary assets, will gain purchasing power, provided that such items are not subject to an adjustment mechanism.

 

Briefly, the restatement mechanism of IAS 29 establishes that monetary assets and liabilities will not be restated because they are already expressed in a current unit of measurement at the end of the reporting period. Assets and liabilities subject to adjustments based on specific agreements, will be adjusted according to those agreements. Non-monetary items measured at their current values ​​at the end of the reporting period, such as the net realizable value or others, do not need to be restated. The remaining non-monetary assets and liabilities will be restated according to a general price index. The loss or gain for the net monetary position will be included in the net result of the reporting period, revealing this information in a separate line item.

 

The inflation adjustment to the initial balances was calculated by means of a conversion factor derived from the Argentine price indexes published by the National Institute of Statistics.

 

The index as of March 31,2019 and June 30, 2018 were 205.9571 and 144.8053, respectively.

 

The index as of March 31,2020 and June 30, 2019 were 305.5515 and 225.5370, respectively.

 

The comparative figures in these unaudited interim condensed consolidated financial statements presented in a stable currency are not adjusted for subsequent changes in the price levels or exchange rates.

 

b)    Presentation currency

 

The unaudited interim condensed consolidated financial statements of the Group are presented in US Dollars, which is the presentation currency.

 

c)    Foreign currency

 

Transactions entered into by Group entities in a currency other than their functional currency are recorded at the relevant exchange rates as of the date upon which such transactions occur. Foreign currency monetary assets and liabilities are translated at the prevailing exchanges rates as of the final day of each reporting period. Exchange differences arising from the retranslation of unsettled monetary assets and liabilities are recognized immediately in profit or loss, except for foreign currency borrowings qualifying as a hedge of a net investment in a foreign operation for which exchange differences are recognized in other comprehensive income and accumulated in the foreign exchange reserve along with the exchange differences arising from the retranslation of the foreign operation. Upon the disposal of a foreign operation, the cumulative exchange differences recognized in the foreign exchange reserve relating to such operation up to the date of disposal are transferred to the consolidated statement of profit or loss and other comprehensive income as part of the gain or loss recognized upon such disposal.

 

2.5.    Changes in accounting policies

 

The accounting policies adopted in the preparation of this unaudited interim condensed consolidated financial statements are consistent with those adopted for the preparation of the Consolidated financial statements as of June 30, 2019.

 

2.6.    Changes in accounting estimates and judgments

 

-  Fair value of Bioceres S.A. shares granted to Rizobacter’s management.

 

F-13

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in US Dollars, except otherwise indicated)

 

For equity-settled share-based payment transactions, the Group measures the goods or services received, and the corresponding increase in equity, directly, at their fair value unless it cannot be estimated reliably. If the Group cannot estimate reliably the fair value of the goods or services received, it measures their value, and the corresponding increase in equity, indirectly, by reference to the fair value of the equity instruments granted. See Note 16.

 

-  Fair value of stock options granted to directors and certain executives of the Group

 

Certain executives and directors of the Group were granted incentives in the form of options to purchase shares of the Company as consideration for their services.

 

The estimate of the fair value of equity-settled share-based payment transactions requires a determination to be made of the most adequate option pricing model to apply depending on the terms and conditions of the arrangement. This estimate also requires a determination of those factors most appropriate to the pricing model, including the expected life of the option and the expected volatility of the share price upon the basis of which hypotheses are made. The Group measures the fair value of these transactions at the grant date by applying the Black-Scholes formula adjusted to consider the possible dilutive effect of the future exercise of the share options granted on their estimated fair value at grant date. The hypotheses used for the estimate of the fair value of these transactions are disclosed in Note 16 and may not necessarily take place in the future.

 

-  Convertible Notes

 

The Convertible Notes were classified as compound instruments, a non-derivative financial instrument that contains both a liability and an equity component. The equity component was measured as the residual amount that results from deducting the fair value of the liability component from the initial carrying amount of the instrument. The fair value of the consideration of the liability component was measured first at the fair value of a similar liability (including any embedded non-equity derivative features, such as an issuer’s call option to redeem the bond early) that does not have any associated equity conversion option. See Note 5.11

 

The Notes will mature on March 6, 2023 unless earlier converted or repurchased. The conversion price of the Notes is $8.00 per share (the “Strike Price”). The Notes are convertible into cash, ordinary shares or a combination of cash and shares at the holders’ option upon maturity or the occurrence of a change of control. At any time prior to maturity, we may elect to convert the Notes into ordinary shares through a mandatory conversion, provided that our free float exceeds $100 million and the share price has traded above the Strike Price for 10 consecutive days.

 

The Group’s policy choice is to consider the instrument meets the ‘fixed for fixed’ condition as the strike price is pre-determined at inception and only varies over time, and it is therefore classified as equity. As regards to the mandatory conversion feature, as it is a contingent settlement provision, the Group decided to measure the liability component at initial recognition, based on its best estimate of the present value of the redemption amount and allocated the residual to the equity component.

 

There were no other significant changes in accounting estimates and judgments with respect to the Consolidated financial statements as of June 30, 2019.

 

3.NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS ISSUED BY THE IASB

 

The following new standards became applicable for the current reporting period and the Group had to change its accounting policies as a result of adopting the following standards:

 

IFRS 16 - Leases

 

IFRS 16 was issued in January 2016. It results in almost all leases being recognized on the balance sheet, as the distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use the leased item) and a financial liability to pay rentals are recognized. The only exceptions are short-term and low-value leases.

 

The new standard is effective for financial years commencing on or after January 1, 2019. See Note 17.

 

IFRIC 23 - Uncertainty over income tax treatments

 

In October 2017, the IASB issued IFRIC 23. When there is uncertainty about income tax treatments, this interpretation addresses: (i) whether uncertain tax treatments should be considered separately or not; (ii) the assumptions made about the analysis of tax treatments by the tax authorities (it should be considered whether the tax authority is likely to accept an uncertain tax treatment assuming that said tax authority will examine such uncertain tax treatment); (iii) how an entity determines fiscal gain (tax loss), tax bases, unused taxes, unused tax credits and tax rates (probability of occurrence analysis); and (iv) how changes in the relevant facts and circumstances are considered.

 

F-14

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in US Dollars, except otherwise indicated)

 

The new standard is effective for financial years beginning on or after January 1, 2019. This standard does not have a material impact on the Group.

 

Amendments to IFRS 9 - Pre-payment features with negative compensation

 

The narrow-scope amendments made to IFRS 9 Financial Instruments in October 2017 enable entities to measure certain pre-payable financial assets with negative compensation at amortized cost. These assets, which include some loan and debt securities, would otherwise have to be measured at fair value through profit or loss. To qualify for amortized cost measurement, the negative compensation must be “reasonable compensation for early termination of the contract” and the asset must be held within a “held to collect” business model.

 

The new standard is effective for financial years beginning on or after January 1, 2019 and early adoption was allowed. These amendments do not have a material impact on the Group.

 

Amendments to IAS 28 - Long-term interests in associates and joint ventures

 

The amendments clarify the accounting for long-term interests in an associate or joint venture, which in substance form a part of the net investment in the associate or joint venture, but to which equity accounting is not applied. Entities must account for such interests under IFRS 9 Financial Instruments before applying the loss allocation and impairment requirements under IAS 28 Investments in Associates and Joint Ventures.

 

The new standard is effective for years beginning on or after January 1, 2019 and early adoption was allowed. These amendments do not have a material impact on the Group.

 

Annual improvements to IFRS standards 2015-2017 cycle

 

The following improvements were finalized in December 2017:

 

IFRS 3 Business Combinations clarified that obtaining control of a business that is a joint operation is a business combination achieved in stages. IFRS 11 Joint Arrangements clarified that the party obtaining joint control of a business that is a joint operation should not remeasure its previously held interest in the joint operation. IAS 12 Disclosure of Interests in Other Entities clarified that the income tax consequences of dividends on financial instruments classified as equity should be recognized according to where the past transactions or events that generated distributable profits were recognized. IAS 23 Borrowing Costs clarified that, if a specific borrowing remains outstanding after the related qualifying asset is ready for its intended use or sale, it becomes part of general borrowings.

 

The new standard is effective for financial years beginning on or after January 1, 2019 and early adoption was allowed. This standard does not have material impact on the Group.

 

Amendments to IAS 19 - Plan amendment, curtailment or settlement

 

The amendments to IAS 19 Employee Benefits clarify the accounting for defined benefit plan amendments, curtailments and settlements. They confirm that entities must (i) calculate the current service cost and net interest for the remainder of the reporting period after a plan amendment, curtailment or settlement by using the updated assumptions from the date of the change; (ii) recognize any reduction in a surplus immediately in profit or loss, either as part of past service cost or as a gain or loss on settlement. In other words, a reduction in a surplus must be recognized in profit or loss even if that surplus was not previously recognized because of the impact of the asset ceiling; and (iii) separately recognize any changes in the asset ceiling through other comprehensive income.

 

The new standard is effective for financial years beginning on or after January 1, 2019 and early adoption was allowed. These amendments do not have a material impact on the Group.

 

Amendments to IAS 1 and IAS 8 - Definition of material

 

The IASB has made amendments to IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors which use a consistent definition of materiality throughout International Financial Reporting Standards and the Conceptual Framework for Financial Reporting, clarify when information is material and incorporate some of the guidance in IAS 1 about immaterial information. In particular, the amendments clarify (i) that the reference to obscuring information addresses situations in which the effect is similar to omitting or misstating that information, and that an entity assesses materiality in the context of the financial statements as a whole, and (ii) the meaning of “primary users of general-purpose financial statements” to whom those financial statements are directed, by defining them as “existing and potential investors, lenders and other creditors” that must rely on general purpose financial statements for much of the financial information they need.

 

F-15

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in US Dollars, except otherwise indicated)

 

The new standard is effective for financial years beginning on or after January 1, 2019 and early adoption was allowed. These amendments do not have a material impact on the Group.

 

Amendments to IFRS 3 - Definition of business

 

The amended definition of a business requires an acquisition to include an input and a substantive process that together significantly contribute to the ability to create outputs. The definition of the term “outputs” is amended to focus on goods and services provided to customers, generating investment income and other income, and it excludes return in the form of lower costs and other economic benefits. The amendments will likely result in more acquisitions being accounted for as asset acquisitions.

 

The new standard is effective for financial years beginning on or after January 1, 2019 and early adoption was allowed. These amendments do not have a material impact on the Group.

 

Amendments to IFRS 10 and IAS 28 – Sale or contribution of assets between an investor and its associate or joint venture.

 

The IASB has made limited scope amendments to IFRS 10 Consolidated financial statements and IAS 28 Investments in associates and joint ventures. The amendments clarify the accounting treatment for sales or contribution of assets between an investor and its associates or joint ventures. They confirm that the accounting treatment depends on whether the non-monetary assets sold or contributed to an associate or joint venture constitute a business (as defined in IFRS 3 Business Combinations).

 

Where the non-monetary assets constitute a business, the investor will recognize the full gain or loss on the sale or contribution of assets. If the assets do not meet the definition of a business, the gain or loss is recognized by the investor only to the extent of the other investor´s is interests in the associate or joint venture. The amendments apply prospectively.

 

Amendments to IAS 1 - Classification of liabilities as current or non-current

 

The amendments aim to promote consistency in applying the requirements by helping companies determine whether, in the statement of financial position, debt and other liabilities with an uncertain settlement date should be classified as current (due or potentially due to be settled within one year) or non-current. The amendments include clarifying the classification requirements for debt a company might settle by converting it into equity.

 

The amendments include (a) specifying that an entity’s right to defer settlement must exist at the end of the reporting period; (b) clarifying that classification is unaffected by management’s intentions or expectations about whether the entity will exercise its right to defer settlement; (c) clarifying how lending conditions affect classification; and (d) clarifying requirements for classifying liabilities an entity will or may settle by issuing its own equity instruments.

 

The amendments clarify, not change, existing requirements, and so are not expected to affect the Group significantly. However, they could result in reclassifying some liabilities from current to non-current, and vice versa.

 

The amendments are effective for financial years beginning on or after January 1, 2022 and early adoption is allowed.

 

F-16

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in US Dollars, except otherwise indicated)

 

4.SEASONALITY

 

The Group revenues fluctuate depending on the timing of orders from our distributors and customers and on prevailing seed market prices, which influence the purchase decisions of growers, the end-users of seed and integrated products, crop protection products and crop nutrition products. Given the cyclicality of crop planting and harvesting and South America’s planting and growing seasons, which vary from year to year, our business is highly seasonal. This results in substantial fluctuations in quarterly sales and profitability. Generally, the Group sales are concentrated in the third and fourth quarters of each calendar year, when demand for seed and integrated products, crop protection products and crop nutrition products increases as growers begin planting their fields. Regarding the seed and integrated products business, the Group contracts with growers and seed suppliers based upon anticipated market demand that we forecast. Generally, in the seed and integrated products business we stock the seed during the harvest season and ship from inventory throughout the year, with the objective of selling most of the inventory from the current year’s harvest before the next year’s, with crop protection and crop nutrition business following a cycle similar to the seed cycle. The impact of seasonality and the resulting fluctuations in quarterly results may be lessened as we achieve our international expansion plans for the seed and integrated products business in geographies with complementary seasons and climates.

 

5.INFORMATION ABOUT COMPONENTS OF UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

 

5.1.Cash and cash equivalents

 

   03/31/2020   06/30/2019 
Cash at bank and on hand   42,868,115    3,450,873 
US Treasury bills   5,310,172    - 
    48,178,287    3,450,873 

 

5.2.Other financial assets

 

   03/31/2020   06/30/2019 
Current        
Restricted short-term deposit   4,379,814    4,327,275 
Other investments   1,702,285    347,718 
Other marketable securities   -    8,515 
    6,082,099    4,683,508 

 

   03/31/2020   06/30/2019 
Non-current        
Shares of Bioceres S.A.   333,757    374,685 
Other marketable securities   1,137    1,728 
    334,894    376,413 

 

F-17

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in US Dollars, except otherwise indicated)

 

5.3.Trade receivables

 

   03/31/2020   06/30/2019 
Trade debtors   62,599,794    48,910,484 
Allowance for impairment of trade debtors   (3,698,209)   (3,360,224)
Shareholders and other related parties (Note 14)   160,247    467,743 
Allowance for impairment of shareholders and other related parties (Note 14)   (28,129)   (75,596)
Allowance for return of goods   (1,765,477)   (800,606)
Trade debtors - Parent company (Note 14)   69,433    440,268 
Trade debtors - Joint ventures and associates (Note 14)   105,022    2,369 
Discounted and deferred checks   7,091,863    13,651,939 
    64,534,544    59,236,377 

 

5.4.Other receivables

 

   03/31/2020   06/30/2019 
Current        
Taxes   1,967,912    584,641 
Other receivables - Other related parties (Note 14)   2,297    10,971 
Other receivables - Joint ventures and associates (Note 14)   941,058    250,783 
Prepayments to suppliers   824,031    496,001 
Reimbursements over exports   29,072    366,594 
Prepaid expenses and other receivables   187,880    213,597 
Loans receivable   230,000    - 
Miscellaneous   32,932    59,242 
    4,215,182    1,981,829 

 

   03/31/2020   06/30/2019 
Non-current        
Taxes   949,731    681,168 
Reimbursements over exports   1,216,660    878,470 
Miscellaneous   4,002    672 
    2,170,393    1,560,310 

 

5.5.Inventories

 

   03/31/2020   06/30/2019 
Agrochemicals   26,758    22,137 
Seeds and grains   1,286,101    207,519 
Microbiological resale products   13,302,733    13,894,018 
Microbiological products produced   8,525,734    8,370,583 
Goods in transit   398,231    751,737 
Supplies   5,657,117    4,482,827 
Allowance for obsolescence   (738,312)   (406,818)
    28,458,362    27,322,003 

 

F-18

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in US Dollars, except otherwise indicated)

 

5.6.Biological assets

 

   03/31/2020   06/30/2019 
Biological assets   714,053    270,579 
    714,053    270,579 

 

On September 16, 2019, Rizobacter Argentina S.A., a subsidiary of the Company, entered into an agreement with Espartina S.A. (“Espartina”) to share its business of producing grain crops. The joint operation is classified as a joint agreement as established in IFRS 11, while the parties are entitled to the assets and obligations over the related liabilities. Rizobacter Argentina S.A. recognizes as a joint operator, in relation to its participation, assets, liabilities, income and expenses. The production obtained is distributed according to the contributions made by each party. Rizobacter corresponds to 5% and Espartina to 95%. The in-kind contributions made during the period amount to $609,935 (Note 14). Each party decides the means of commercialization and the destination of the grains produced.

 

Under the agreement, Rizobacter provides inputs and money necessary for producing the grains and according to the established participation percentages. For its participation, Espartina contributes all cultivation practices in fields, inputs not provided by Rizobacter, and all administrative expenses related to production.

 

Changes in Biological assets

 

   Soybean   Corn   Wheat   Barley   Total 
Beginning of the period   237,723    32,856    -    -    270,579 
Initial recognition and changes in the fair value of biological assets   152,124    203,849    237,173    81,156    674,302 
Decrease due to harvest / disposals   (250,097)   (197,114)   (216,101)   (65,176)   (728,488)
Cost incurred during the period   321,060    318,868    74,334    21,429    735,691 
Exchange differences   (155,924)   (65,738)   (12,706)   (3,663)   (238,031)
End of the period   304,886    292,721    82,700    33,746    714,053 

 

5.7.Property, plant and equipment

 

Property, plant and equipment as of March 31, 2020 and June 30, 2019 included the following:

 

   03/31/2020   06/30/2019 
Gross carrying amount   54,440,623    57,059,972 
Accumulated depreciation   (12,752,323)   (13,225,424)
Net carrying amount   41,688,300    43,834,548 

 

F-19

 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in US Dollars, except otherwise indicated)

 

1.Net carrying amount for each class of assets is as follows:

 

Class  Net carrying
amount
03/31/2020		   Net carrying
amount
06/30/2019		 
Office equipment   183,315    213,437 
Vehicles   1,203,403    1,785,701 
Equipment and computer software   44,918    123,472 
Fixtures and fittings   3,985,935    4,737,396 
Machinery and equipment   5,737,109    6,336,691 
Land and buildings   29,453,567    29,969,237 
Buildings in progress   1,080,053    668,614 
Total   41,688,300    43,834,548 

 

2.Gross carrying amount as of March 31, 2020 is as follows:

 

   Gross carrying amount 
Class  As of the
beginning of
period		   Additions   Reclassifications   Disposals   Foreign
currency
translation		   Revaluation   As of the
end of
period		 
Office equipment   629,119    22,210    -    -    (71,888)   -    579,441 
Vehicles   3,604,537    192,803    (273,923)   (145,101)   (395,870)   -    2,982,446 
Equipment and computer software   955,657    35,536    (389,243)   -    (113,634)   -    488,316 
Fixtures and fittings   6,438,430    15,598    -    -    (681,634)   -    5,772,394 
Machinery and equipment   10,233,501    518,577    (620,891)   -    (798,355)   -    9,332,832 
Land and buildings   34,530,114    41,211    -    -    (3,667,709)   3,301,525    34,205,141 
Buildings in progress   668,614    535,850    -    -    (124,411)   -    1,080,053 
Total   57,059,972    1,361,785    (1,284,057)   (145,101)   (5,853,501)   3,301,525    54,440,623 

 

 F-20 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in US Dollars, except otherwise indicated)

 

3.Accumulated depreciation as of March 31, 2020 is as follows:

 

   Depreciation 
Class  Accumulated
as of the
beginning of
period		   Disposals /
Reclassifications		   Of the period   Foreign
currency
translation		   Revaluation   Accumulated
as of the end
of period		 
Office equipment   415,682    -    27,090    (46,646)   -    396,126 
Vehicles   1,818,836    (179,663)   326,305    (186,435)   -    1,779,043 
Equipment and computer software   832,185    (316,244)   23,796    (96,339)   -    443,398 
Fixtures and fittings   1,701,034    -    269,508    (184,083)   -    1,786,459 
Machinery and equipment   3,896,810    (289,743)   427,906    (439,250)   -    3,595,723 
Land and buildings   4,560,877    -    462,450    (468,291)   196,538    4,751,574 
Total   13,225,424    (785,650)   1,537,055    (1,421,044)   196,538    12,752,323 

 

4.Gross carrying amount as of March 31, 2019 is as follows:

 

   Gross carrying amount 
Class  As of the
beginning of
period		  Adjustment
of opening
net book
amount for
application
of IAS 29		  Additions  Reclassifications  Disposals  Foreign
currency
translation		  Revaluation  As of the
end of
period		 
Office equipment   243,948   334,496   19,803   -   (7,597)  (27,731)  -   562,919 
Vehicles   1,660,294   1,052,861   929,332   -   (218,390)  175,546   -   3,599,643 
Equipment and computer software   419,638   417,173   17,153   -   (10,518)  (33,302)  -   810,144 
Fixtures and fittings   3,826,665   1,913,979   1,260   192,118   -   (409,237)  -   5,524,785 
Machinery and equipment   5,404,029   3,982,367   81,282   7,011   (37,257)  (298,076)  -   9,139,356 
Land and buildings   33,026,981   1,475,392   236,020   6,255   -   (1,797,522)  (1,687,793)  31,259,333 
Buildings in progress   182,839   78,751   515,690   (205,384)  -   (13,837)  -   558,059 
Total   44,764,394   9,255,019   1,800,540   -   (273,762)  (2,404,159)  (1,687,793)  51,454,239 

 

 F-21 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in US Dollars, except otherwise indicated)

 

5.Accumulated depreciation as of March 31, 2019 is as follows:

 

   Depreciation 
Class  Accumulated
as of the
beginning of
period		   Adjustment of
opening net
book amount
for application
of IAS 29		   Disposals /
Reclassifications		   Of the period   Foreign
currency
translation		   Revaluation   Accumulated
as of the end
of period		 
Office equipment   49,129    309,342    (3,584)   23,990    (15,165)   -    363,712 
Vehicles   560,691    765,972    (175,596)   572,529    (31,984)   -    1,691,612 
Equipment and computer software   207,402    491,761    (753)   46,494    (26,973)   -    717,931 
Fixtures and fittings   318,582    912,661    -    255,836    (60,095)   -    1,426,984 
Machinery and equipment   937,736    2,115,831    (21,621)   454,827    (157,140)   -    3,329,633 
Land and buildings   2,513,708    1,377,613    -    429,007    (204,338)   (147,490)   3,968,500 
Total   4,587,248    5,973,180    (201,554)   1,782,683    (495,695)   (147,490)   11,498,372 

 

The depreciation charge is included in Notes 6.3 and 6.4.

 

Revaluation of property, plant and equipment

 

At a minimum, the Group updates its assessment of the fair value of its land and buildings at the end of each reporting year (after the revaluation policy was adopted), considering the most recent independent valuations and market data. As of March 31, 2020, the Group reviewed these valuations in order to determine the variations between the fair values ​​and their book value, taking into consideration the valuations made in June 2019. Management determined the property, plant and equipment’s value within a range of reasonable fair value estimates. All resulting fair value estimates for land and buildings are classified as Level 3 and are consistent with the methodology disclosed in the annual financial statements.

 

5.8.Intangible assets

 

Intangible assets as of March 31, 2020 and June 30, 2019 included the following:

 

   03/31/2020   06/30/2019 
Gross carrying amount   42,443,570    45,848,737 
Accumulated amortization   (7,202,362)   (6,232,311)
Net carrying amount   35,241,208    39,616,426 

 

 F-22 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in US Dollars, except otherwise indicated)

 

1.Net carrying amount of each class of intangible assets is as follows:

 

Class  Net carrying
amount
03/31/2020		   Net carrying
amount
06/30/2019		 
Seed and integrated products          
Soybean HB4   7,015,862    6,120,336 
Ecoseed integrated products   2,382,680    2,627,946 
Crop nutrition          
Microbiological products   1,466,667    2,208,117 
Other intangible assets          
Trademarks and patents   6,756,932    8,063,648 
Software   704,536    994,723 
Customer loyalty   16,914,531    19,601,656 
Total   35,241,208    39,616,426 

 

2.Gross carrying amount as of March 31, 2020 is as follows:

 

  Gross carrying amount 
Class  As of the
beginning of
period		   Additions   Disposals   Foreign
currency
translation		   As of the end
of period		 
Seed and integrated products                         
Soybean HB4   6,120,336    895,526    -    -    7,015,862 
Ecoseed integrated products   2,627,946    39,566    -    (284,832)   2,382,680 
Crop nutrition                         
Microbiological products   3,267,200    -    (145,415)   (367,061)   2,754,724 
Other intangible assets                         
Trademarks and patents   9,810,822    -    -    (1,063,362)   8,747,460 
Software   2,149,340    115,753    -    (224,591)   2,040,502 
Customer loyalty   21,873,093    -    -    (2,370,751)   19,502,342 
Total   45,848,737    1,050,845    (145,415)   (4,310,597)   42,443,570 

 

 F-23 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in US Dollars, except otherwise indicated)

 

3.Accumulated amortization as of March 31, 2020 is as follows:

 

   Amortization 
Class  Accumulated
as of
beginning of
period		   Of the period   Disposals   Foreign
currency
translation		   Accumulated
as of the end
of period		 
Crop nutrition                         
Microbiological products   1,059,083    360,886    (17,135)   (114,777)   1,288,057 
Other intangible assets                         
Trademarks and patents   1,747,174    432,723    -    (189,369)   1,990,528 
Software   1,154,617    297,516    -    (116,167)   1,335,966 
Customer loyalty   2,271,437    562,568    -    (246,194)   2,587,811 
Total   6,232,311    1,653,693    (17,135)   (666,507)   7,202,362 

 

4.Gross carrying amount as of March 31, 2019 is as follows:

 

   Gross carrying amount 
Class  As of the
beginning of
period		   Adjustment
of opening
net book
amount for
application
of IAS 29		   Additions   Disposals   Foreign
currency
translation		   As of the
end of
period		 
Seed and integrated products                              
Soybean HB4   4,927,853    -    509,953    -    -    5,437,806 
Crop nutrition                              
Microbiological products   2,505,864    841,753    53,407    -    (177,104)   3,223,920 
Other intangible assets                              
Trademarks and patents   6,278,706    2,986,739    -    -    (490,084)   8,775,361 
Software   1,444,603    438,703    126,391    (36,144)   (99,607)   1,873,946 
Customer loyalty   13,998,289    6,658,894    -    -    (1,092,638)   19,564,545 
Total   29,155,315    10,926,089    689,751    (36,144)   (1,859,433)   38,875,578 

 

5.Accumulated amortization as of March 31, 2019 is as follows:

 

   Amortization 
Class  Accumulated
as of
beginning of
period		   Adjustment
of opening
net book
amount for
application
of IAS 29		   Disposals   Of the period   Foreign
currency
translation		   Accumulated
as of the end
of period		 
Crop nutrition                              
Microbiological products   383,380    202,791    -    229,538    (31,002)   784,707 
Other intangible assets                              
Trademarks and patents   704,024    334,919    -    434,103    (54,975)   1,418,071 
Software   495,293    227,264    (36,144)   267,519    (38,172)   915,760 
Customer loyalty   915,273    435,389    -    564,362    (71,442)   1,843,582 
Total   2,497,970    1,200,363    (36,144)   1,495,522    (195,591)   4,962,120 

 

 F-24 

 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in US Dollars, except otherwise indicated)

 

The amortization charge is included in Notes 6.3 and 6.4.

 

5.9.Goodwill

 

The variations in goodwill that occurred during the period correspond to the result of inflation adjustment and conversion to presentation currency. There were not any indicators of goodwill impairment.

 

Carrying amount of goodwill as of March 31, 2020 and June 30, 2019 is as follows:

 

     03/31/2020      06/30/2019  
Rizobacter   20,868,844    23,484,761 
Semya   5,634,954    6,319,954 
    26,503,798    29,804,715 

 

5.10.Trade and other payables

 

   03/31/2020   06/30/2019 
Current        
Trade creditors   35,133,311    30,489,072 
Shareholders and other related parties (Note 14)   466,990    1,796,932 
Trade creditors - Parent company (Note 14)   1,244,676    1,568,036 
Trade creditors - Joint ventures and associates (Note 14)   13,074,520    4,805,149 
Taxes   1,780,963    1,475,410 
Consideration payment Semya acquisition (Note 14)   122,950    122,950 
Miscellaneous   64,935    320,945 
    51,888,345    40,578,494 
Non-Current          
Consideration payment Semya acquisition (Note 14)   452,654    452,654 
    452,654    452,654 

 

5.11.Borrowings
  
   03/31/2020   06/30/2019 
Current        
Bank overdrafts   316,898    - 
Bank borrowings   48,115,312    46,467,308 
Corporate bonds   13,012,802    8,416,768 
Discount checks   1,253,206    5,807,303 
Net loans payables-Parents companies and related parties to Parents (Note 14)   4,990,910    5,399,883 
Finance lease   -    385,947 
    67,689,128    66,477,209 
Non-current          
Subordinated loan   14,083,946    - 
Bank borrowings   4,841,322    16,239,743 
Corporate bonds   7,350,231    8,018,884 
Convertible note   41,724,158    - 
Net loans payables-Parents companies and related parties to Parents (Note 14)   12,000,000    12,358,024 
Finance lease   -    462,870 
    79,999,657    37,079,521 

 

F-25

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in US Dollars, except otherwise indicated)

 

The carrying value of some borrowings as of March 31, 2020 measured at amortized cost differs from the fair value of these borrowings. The following measures of fair values are based on discounted cash flows (Level 3), due to the use of unobservable inputs, including own credit risk.

 

   03/31/2020   06/30/2019 
   Amortized cost   Fair value   Amortized cost   Fair value 
Current                    
Bank borrowings   48,115,312    47,825,230    46,467,308    46,857,879 
Discount checks   1,253,206    1,193,926    5,807,303    5,230,123 
Corporate Bonds   13,012,802    11,767,157    8,416,768    7,632,806 
                     
Non-current                    
Bank borrowings   4,841,322    4,544,300    16,239,743    14,274.55 
Corporate Bonds   7,350,231    6,601,791    8,018,884    6,972,332 

 

The Group has met the capital and interest installments whose maturity was effective in the nine-month period ended March 31, 2020.

 

Subordinated loan

 

On October 15, 2019, the Group entered into a loan agreement with Arvesa Corp. and Bioceres LLC, its controlling shareholder, as lenders. The facility is for an amount of up to $20 million, of which $15 million has been drawdown as of the date of this report. Drawdown capital and capitalized interest are due after 24 months of the date of the loan agreement. Cash interest will be paid quarterly at a 15% rate. The portion of the loan funded by Arvesa is guaranteed by Bioceres S.A. and Bioceres LLC.

 

Net loans payables-Parents companies and related parties to Parents

 

As of June 30, 2019 financial assets (other receivables from the controlling entities (“Parents”) and related parties to Parents) and liabilities (loans payable to Parents companies) were offset and the net amount was reported in the Statement of Financial Position where the Company currently had a right to offset the recognized amounts, and there was an intention to settle on a net basis or realize the asset and settle the liability simultaneously.

 

The following table presents the recognized financial instruments that were offset:

 

Parents companies and related parties to Parents  Gross amounts   Gross amounts set
off in the Statement
of Financial Position		   Net amounts
presented in the
Statement of
Financial Position		 
Current other receivables   15,827,847    (15,827,847)   - 
Total current assets   15,827,847    (15,827,847)   - 
Current borrowings   (21,227,730)   15,827,847    (5,399,883)
Total current liabilities   (21,227,730)   15,827,847    (5,399,883)
Non-current borrowings   (12,358,024)   -    (12,358,024)
Total non-current liabilities   (12,358,024)   -    (12,358,024)

 

Corporate bonds

 

On March 31, 2015 the Shareholders' Meeting of Rizobacter approved the establishment of a global program of corporate bonds (“CB”) in the Argentine principal market (“the Program”) for the issue of one or more series of simple CB through a public offering and for their future listing on stock exchanges and other markets, up to a revolving outstanding amount of $40,000,000 or the equivalent in other currencies, or a lower amount to be determined by the Board of Directors, with a maximum term of five years. On October 7, 2019, the Shareholders' Meeting of Rizobacter approved an extension up to July 16, 2025.

 

F-26

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in US Dollars, except otherwise indicated)

 

On February 14, 2020, the Group completed an offering of $7.6 million under Series II of its corporate bonds due 2021 and in two tranches:

 

Series II  Class A  Class B
Amount of the issue:  $3,338,830  $4,281,581
Annual nominal rate:  10.5%  9.5%
Maturity:  August 19, 2021  February 19, 2021
Amortization:  Bullet  Bullet
Payment of services:  Quarterly  Quarterly

 

Convertible Notes

 

On March 6, 2020, we issued $42.5 million Convertible Notes in a private placement. The Notes will mature on March 6, 2023 unless earlier converted or repurchased. The conversion price of the Notes is $8.00 per share (the “Strike Price”). The Notes are convertible into cash, ordinary shares or a combination of cash and shares at the holders’ option upon maturity or the occurrence of a change of control. At any time prior to maturity, we may elect to convert the Notes into ordinary shares through a mandatory conversion, provided that our free float exceeds $100 million and the share price has traded above the Strike Price for 10 consecutive days.

 

The Notes are guaranteed by cash flows from Rizobacter’s Brazilian subsidiary and secured by a pledge on Rizobacter’s Argentine subsidiary shares, among others’ guarantees (see Note 18). The Convertible Notes accrue interest payable semi-annually beginning on June 15, 2020 at a rate of 11.5% per year payable in cash or in kind at our option. Payments in kind will be capitalized by adding such interest to the outstanding principal amount of the Notes on each corresponding interest payment date.

 

At inception, the fair value of the liability component of the Convertible Notes was measured using a discount rate of 12.66%.

 

5.12.Employee benefits and social security

 

   03/31/2020   06/30/2019 
Current        
Salaries, accrued incentives, vacations and social security   2,032,643    3,044,965 
Key management personnel (Note 14)   1,673,895    2,312,253 
    3,706,538    5,357,218 
           
Non-current          
Key management personnel (Note 14)   334,081    - 
    334,081    - 

 

5.13.Deferred revenue and advances from customers

 

    03/31/2020     06/30/2019  
Advances from customers   1,607,645    1,074,463 
    1,607,645    1,074,463 

 

F-27

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in US Dollars, except otherwise indicated)

 

5.14.Financed payment- Acquisition of business

 

    03/31/2020    06/30/2019 
Financed payment to sellers   -    2,826,611 
    -    2,826,611 

 

5.15.Provisions

 

     03/31/2020      06/30/2019  
Provisions for contingencies   291,727    439,740 
    291,727    439,740 

 

Reimbursements related to the provisions are not expected.

 

5.16.Private warrants

 

   03/31/2020   06/30/2019 
Private warrants   1,141,817    2,861,511 
    1,141,817    2,861,511 

 

As of June 30, 2019, the fair value of the private warrants using a share price of $5.30 and risk-free rate of 1.7631%, decreased to $2.8 million and the Group recognized a financial gain of $0.6 million.

 

As of March 31, 2020, the fair value of the private warrants using a share price of $4.90 and risk-free rate of 0.38%, decreased to $1.14 million and the Group recognized a financial gain of $1.72 million.

 

 

6.INFORMATION ABOUT COMPONENTS OF UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

6.1.Revenues

 

   03/31/2020   03/31/2019 
Sale of goods and services   122,690,160    109,760,036 
Royalties   1,528,913    981,097 
    124,219,073    110,741,133 

 

Transactions of sales of goods and services with joint ventures, shareholders and other related parties are reported in Note 14.

 

F-28

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in US Dollars, except otherwise indicated)

 

6.2.Cost of sales

 

Item  03/31/2020   03/31/2019 
Inventories as of the beginning of the period   27,322,003    19,366,001 
Adjustment of opening net book amount for the application of IAS 29   -    4,273,416 
Purchases of the period   63,190,137    52,844,099 
Production costs   8,735,618    7,359,699 
Foreign currency translation   (2,561,506)   (1,954,190)
Subtotal   96,686,252    81,889,025 
Inventories as of the end of the period   (28,458,362)   (23,240,074)
Cost of sales   68,227,890    58,648,951 

 

6.3.R&D classified by nature

 

Item  Research and development expenses 03/31/2020   Research and development expenses 03/31/2019 
Amortization of intangible assets   793,609    663,666 
Import and export expenses   15,175    13,473 
Depreciation of property, plant and equipment   73,945    237,888 
Employee benefits and social securities   687,069    409,283 
Maintenance   47,256    45,745 
Energy and fuel   43,816    41,116 
Supplies and materials   652,805    403,945 
Mobility and travel   61,768    28,228 
Share-based incentives   -    71,231 
Professional fees and outsourced services   38,826    163,089 
Professional fees related parties   958,854    - 
Office supplies   10,061    1,565 
Insurance   3,573    5,842 
Miscellaneous   4,909    4,890 
Total   3,391,666    2,089,961 

 

   03/31/2020   03/31/2019 
R&D Capitalized (Note 5.8)   935,092    563,360 
R&D profit and loss   3,391,666    2,089,961 
Total   4,326,758    2,653,321 
% of total revenue   3.48%   2.40%

 

F-29

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in US Dollars, except otherwise indicated)

 

6.4.Expenses classified by nature and function

 

Item  Production
costs		   Selling, general and administrative expenses   Total
03/31/2020		 
Amortization of intangible assets   -    860,084    860,084 
Analysis and storage   26,620    6,993    33,613 
Commissions and royalties   1,165,951    424,279    1,590,230 
Import and export expenses   125,178    682,616    807,794 
Depreciation of property, plant and equipment   894,459    568,651    1,463,110 
Depreciation of leased assets   302,141    162,093    464,234 
Impairment of receivables   -    1,073,843    1,073,843 
Freight and haulage   531,784    2,293,995    2,825,779 
Employee benefits and social securities   3,521,616    9,629,273    13,150,889 
Maintenance   307,417    307,015    614,432 
Energy and fuel   341,244    91,280    432,524 
Supplies and materials   238,801    193,350    432,151 
Mobility and travel   17,047    1,362,112    1,379,159 
Publicity and advertising   -    1,568,316    1,568,316 
Contingencies   -    (8,144)   (8,144)
Stock options-based incentives   -    2,573,927    2,573,927 
Professional fees and outsourced services   557,689    1,514,155    2,071,844 
Professional fees related parties   -    40,985    40,985 
Office supplies   46,678    274,241    320,919 
Insurance   61,103    160,070    221,173 
Information technology expenses   -    673,066    673,066 
Obsolescence   572,686    -    572,686 
Taxes   20,292    3,304,529    3,324,821 
Miscellaneous   4,912    114,301    119,213 
Total   8,735,618    27,871,030    36,606,648 

 

F-30

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in US Dollars, except otherwise indicated)

 

Item  Production
costs		   Selling, general and administrative expenses   Total
03/31/2019		 
Amortization of intangible assets   -    831,856    831,856 
Commissions and royalties   657,036    319,719    976,755 
Import and export expenses   48,759    490,896    539,655 
Depreciation of property, plant and equipment   837,278    707,517    1,544,795 
Impairment of receivables   -    147,766    147,766 
Freight and haulage   826,712    1,741,533    2,568,245 
Employee benefits and social securities   3,486,082    7,691,606    11,177,688 
Maintenance   332,103    375,590    707,693 
Energy and fuel   326,000    133,723    459,723 
Supplies and materials   212,798    190,866    403,664 
Mobility and travel   7,217    902,167    909,384 
Publicity and advertising   -    1,262,455    1,262,455 
Professional fees and outsourced services   239,861    6,070,099    6,309,960 
Professional fees related parties   -    302,307    302,307 
Office supplies   25,008    279,956    304,964 
Insurance   62,060    318,060    380,120 
Information technology expenses   -    411,577    411,577 
Obsolescence   269,979    -    269,979 
Taxes   22,158    3,152,762    3,174,920 
Miscellaneous   6,648    217,945    224,593 
Total   7,359,699    25,548,400    32,908,099 

 

6.5.Finance results

 

   03/31/2020   03/31/2019 
Financial costs        
Interests with the Parents   (2,268,743)   (1,329,088)
Interests   (12,791,281)   (15,074,829)
Financial commissions   (1,086,191)   (1,040,796)
    (16,146,215)   (17,444,713)
Other financial results          
Exchange differences generated by assets   26,900,937    38,175,264 
Exchange differences generated by liabilities   (44,476,376)   (54,146,976)
Changes in fair value of financial assets or liabilities and other financial results   1,722,701    291,634 
Gain from cancellation of purchase option   -    6,582,849 
Share-based payment cost of listing shares   -    (20,893,789)
Net gain of inflation effect on monetary items   7,545,325    11,021,116 
    (8,307,413)   (18,969,902)
           
Total net financial results   (24,453,628)   (36,414,615)

 

F-31

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in US Dollars, except otherwise indicated)

 

7.TAXATION

 

Tax reform in Argentina

 

On December 29, 2017, the Government promulgated Law 27,430 - Income Tax. This law changed the tax rates for Argentine companies and gradually reduced these from 35% to 30% for fiscal periods beginning on January 1, 2018 until December 31, 2019, and 25% for fiscal periods beginning on or after January 1, 2020 (inclusive).

 

Additionally, Law No. 27,430, as amended by Law No. 27,468, provided that, for fiscal years beginning on or after January 1, 2018, an inflation adjustment shall be applied in any fiscal year in which the rate of inflation, accumulated in the thirty-six months prior to the end of the fiscal year being settled, exceeds 100%. With respect to the first, second and third fiscal years from its effective date, this procedure shall be applicable in the event that the accumulated variation of inflation, calculated from the beginning of the first fiscal year until the closing of each fiscal year, exceeds 55%, 30% and 15%, respectively. The positive or negative inflation adjustment, corresponding to the first, second and third fiscal years, should be imputed one-third in the fiscal period for which the adjustment is calculated and the remaining two-thirds, in equal parts, in the next two fiscal periods.

 

In December 2019, the Government promulgated Law 27,541. It provided that the tax rate reduction established by Law 27,430 be suspended until the fiscal years beginning on or after January 1, 2021. Thus, the tax rate of 30% was maintained. Law 27,541 also provided that, for the first and second financial years starting on or after 1 January 2019, one-sixth of the inflation adjustment will be computed in the fiscal year of the adjustment calculation and the remaining five-sixths in equal parts in the five tax periods immediately following.

 

Given that inflation is expected to exceed 30% in 2020, the Group has determined the income tax considering the application of the inflation adjustment.

Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.

 

   03/31/2020   03/31/2019 
Current tax expense   (2,551,082)   (740,070)
Deferred tax   1,712,809    (2,705,586)
Total   (838,273)   (3,445,656)

 

The gross movement on the deferred income tax account is as follows:

 

   03/31/2020   03/31/2019 
Beginning of the period deferred tax   (17,358,162)   (7,990,121)
Income tax provision   1,712,809    (2,705,587)
Charge to OCI   (776,247)   216,320 
Conversion difference   1,854,841    (3,922,627)
Total net deferred tax   (14,566,759)   (14,402,015)

 

F-32 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in US Dollars, except otherwise indicated)

 

The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the consolidated entities as follows:

 

   03/31/2020   03/31/2019 
Earning / (loss) before income tax-rate 0%   5,081,044    (21,904,138)
(Loss) / Earning before income tax-rate 21%   (2,780,111)   1,061,811 
(Loss) / Earning before income tax-rate 30%   (364,028)   9,175,768 
Income tax charge by applying tax rate to loss before tax:   693,032    (2,975,711)
Share of profit or loss of subsidies, joint ventures and associates   (363,784)   531,709 
Stock options charge   (239,312)   21,035 
Rate change adjustment   (135,612)   43,264 
Non-deductible expenses and untaxed gains   (74,246)   (221,094)
Representation expenses   (84,367)   (122,997)
Foreign investment coverage   478,444    248,974 
Tax-Loss Carry forward   (59,064)   - 
Result of inflation effect on monetary items and other finance results   (1,053,364)   (970,836)
Income tax   (838,273)   (3,445,656)

 

8.EARNINGS PER SHARE (EPS)

 

The numerators and denominators used in the calculation of basic EPS and diluted EPS are presented below:

 

   03/31/2020   03/31/2019 
Numerator          
Profit (loss) for the period (basic EPS)   1,143,771    (17,245,703)
Profit (loss) for the period (diluted EPS)   1,143,771    (17,245,703)
Denominator          
Weighted average number of shares (basic EPS)   36,120,517    28,597,680 
Weighted average number of shares (diluted EPS)   36,120,517    28,597,680 
           
Basic and diluted loss attributable to ordinary equity holders of the parent   0.032    (0.603)

 

The 27,116,174 shares issued to Bioceres LLC in exchange for its Bioceres Inc Crop Business and its equity interest in Bioceres Semillas, together with the 119,443 shared issued to exercise the Bioceres Semillas’ tag along and the 862,500 shares received by Bioceres LLC from the original founders of Union Acquisition Corp., were considered retrospectively in the EPS calculations. The denominators used in the EPS calculation assume those events have occurred at the beginning of the earliest period presented.

 

Diluted earnings per share is calculated by adjusting the weighted average number of shares outstanding to assume conversion of all dilutive potential shares. The Group has three categories of dilutive potential shares, warrants, share-based incentives, and Convertible Notes.

 

Warrants outstanding were not included in the diluted EPS calculations for the nine-month periods ended March 31, 2020 and 2019 because the average market price of ordinary shares during the periods did not exceed the exercise price of the warrants.

 

F-33 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in US Dollars, except otherwise indicated)

 

Convertible Notes outstanding were not included in the diluted EPS calculations for the nine-month period ended March 31, 2020 because its interest (net of tax and other changes in income or expense) per ordinary share obtainable on conversion exceeds basic earnings per share.

 

In December 2019, stock options were granted for certain executives and directors of the Group. See Note 16. These share options are treated as contingently issuable shares because their issue is contingent upon satisfying specified conditions in addition to the passage of time. The stock options were not included in the diluted EPS calculation for the nine-month periods ended March 31,2020 because the average market price of ordinary shares during the periods was lower than the assumed proceeds per option.

 

There are neither ordinary shares transactions nor potential ordinary shares transactions that have occurred after March 31, 2020 that would have significantly changed the number of ordinary shares or potential ordinary shares outstanding at the end of the reporting period.

 

9.INFORMATION ABOUT UNAUDITED INTERIM CONDENSED CONSOLIDATED COMPONENTS OF EQUITY

 

9.1.  Parent company investment

 

The Group has recognized the contribution of assets and (liabilities) made by the shareholders, until the merger was consummated, as a share premium decrease as follows:

 

   03/31/2020   03/31/2019 
Capital contributions   -    294,041 
Intangible contributed   -    623,022 
Incorporation of financial debt (*)   -    (15,475,410)
    -    (14,558,347)

 

(*) Financial debt assumed by the Group in connection with Rizobacter acquisition

 

9.2.    Share capital

 

The 27,116,174 shares issued to Bioceres LLC in exchange for its Bioceres Inc Crop Business and its equity interest in Bioceres Semillas, together with the 119,443 shares issued to exercise the Bioceres Semillas’ tag-along and the 862,500 shares received by Bioceres LLC from the original founders of Union Acquisition Corp, were considered retrospectively in issued capital based on the assumption of those events having occurred at the beginning of the earliest period presented.

 

9.3.    Shares summary

 

As of the date of this financial statement, we had (i) 100,000,000 ordinary shares ($0.0001 par value) authorized, (ii) 36,120,517 ordinary shares issued and outstanding, (iii) 1,000,000 preference shares ($0.0001 par value) authorized, (iv) no preference shares issued and outstanding, (v) 12,700,000 private placement warrants outstanding (5,200,000 of which were issued in connection with Union Acquisition Corp.’s IPO and 7,500,000 of which were issued in connection with the merger) classified as liability (Note 5.16), (vi) 11,500,000 public warrants outstanding, (vii) $42.5 million principal amount of Convertible Notes, and (viii) 1,200,000 stock options granted under share option agreements. Public warrants were classified as equity and its consideration was included in the “Share Premium” column.

 

Convertibles Notes were classified as compound instruments, a non-derivative financial instrument that contains both a liability and an equity component. The equity consideration was included in the “Convertible instruments” column.

 

Holders of the ordinary shares are entitled to one vote for each ordinary share.

 

F-34 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in US Dollars, except otherwise indicated)

 

9.4.    Non-controlling interests

 

 

There were no dividends paid to non-controlling interest in the periods ended March 31, 2020 and 2019.

 

10.CASH FLOW INFORMATION

 

Significant non-cash transactions related to investment and financing activities are as follows:

 

   03/31/2020   03/31/2019 
Investment activities          
Investment in kind in other related parties (Note 14)   609,935    463,511 
Non-monetary contributions in joint ventures (Note 11)   250,000    94,355 
    859,935    557,866 

 

   03/31/2020   03/31/2019 
Financing activities          
Purchase option paid by a parent loan   -    (1,265,000)
Parent company investment   -    (14,558,347)
Capitalization of financial debt   -    13,720,000 
Private warrants   -    (3,432,723)
Reverse recapitalization   -    (256,240)
    -    (5,792,310)

 

11.JOINT VENTURES AND ASSOCIATES

 

   03/31/2020   06/30/2019 
Liabilities          
Trigall Genetics S.A.   1,833,690    1,970,903 
    1,833,690    1,970,903 

 

   03/31/2020   06/30/2019 
Assets          
Synertech Industrias S.A.   24,238,530    25,297,376 
Indrasa Biotecnología S.A.   50,661    23,652 
    24,289,191    25,321,028 

 

F-35 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in US Dollars, except otherwise indicated)

 

Changes in joint ventures investments

 

   03/31/2020   03/31/2019 
As of the beginning of the period   23,350,125    17,059,757 
Adjustment of opening net book amount for the application of IAS 29   -    8,328,794 
Monetary contributions   -    124,124 
Non-monetary contributions   250,000    94,355 
Parent company investment   -    294,041 
Loss of control of Indrasa Biotecnología S.A.   -    10,591 
Revaluation of property, plant and equipment   351,554    155,246 
Foreign currency translation   (2,662,603)   (2,728,261)
Share of profit or loss   1,166,425    306,386 
As of the end of the period   22,455,501    23,645,033 

 

Share of profit or loss of joint ventures and associates:

 

   03/31/2020   03/31/2019 
Trigall Genetics S.A.   (113,359)   (27,739)
Semya S.A.   -    (35,248)
Synertech Industrias S.A.   1,251,545    358,795 
Indrasa Biotecnología S.A.   28,239    10,578 
    1,166,425    306,386 

 

12.SEGMENT INFORMATION

 

The following tables present information with respect to the Group´s reporting segments:

 

Period ended March 31, 2020  Seed and integrated products   Crop
protection		   Crop
nutrition		   Consolidated 
Revenues                    
Sale of goods and services   21,876,064    67,309,123    33,504,973    122,690,160 
Royalties   1,528,913    -    -    1,528,913 
Others                    
Government grants   24,983    -    -    24,983 
Initial recognition and changes in the fair value of biological assets   39,283    393,920    241,099    674,302 
Total   23,469,243    67,703,043    33,746,072    124,918,358 
                     
Cost of sales   (9,548,911)   (39,279,487)   (19,399,492)   (68,227,890)
Gross margin per segment   13,920,332    28,423,556    14,346,580    56,690,468 
% of Segment Revenue   59%   42%   43%   45%

 

F-36 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in US Dollars, except otherwise indicated)

 

Period ended March 31, 2019  Seed and integrated products   Crop
protection		   Crop
nutrition		   Consolidated 
Revenues                    
Sale of goods and services   19,773,115    59,589,614    30,397,307    109,760,036 
Royalties   981,097    -    -    981,097 
Others                    
Government grants   13,674    -    -    13,674 
Total   20,767,886    59,589,614    30,397,307    110,754,807 
                     
Cost of sales   (7,209,266)   (35,049,400)   (16,390,285)   (58,648,951)
Gross margin per segment   13,558,620    24,540,214    14,007,022    52,105,856 
% of Segment Revenue   65%   41%   46%   47%

 

13.     FINANCIAL INSTRUMENTS – RISK MANAGEMENT

 

The following tables show additional information required under IFRS 7 on the financial assets and liabilities recorded as of March 31, 2020 and June 30, 2019.

 

   Amortized cost   Mandatorily measured at fair
value through profit or loss		 
Financial asset  03/31/2020   06/30/2019   03/31/2020   06/30/2019 
Cash and cash equivalents   42,868,115    3,450,873    5,310,172    - 
Other financial assets   4,714,708    4,703,688    1,702,285    356,233 
Trade receivables   64,534,544    59,236,377    -    - 
Other receivables (*)   2,456,021    1,566,732    -    - 
Total   114,573,388    68,957,670    7,012,457    356,233 

 

(*) Advances expenses and tax balances are not included.

 

   Amortized cost   Mandatorily measured at fair
value through profit or loss		 
Financial liability  03/31/2020   06/30/2019   03/31/2020   06/30/2019 
Trade Payables and other payables   52,340,999    41,031,148    -    - 
Borrowings   147,688,785    103,556,730    -    - 
Employee benefits and social security   4,040,619    5,357,218    -    - 
Financed payment - Acquisition of business   -    2,826,611    -    - 
Warrants   -    -    1,141,817    2,861,511 
Total   204,070,403    152,771,707    1,141,817    2,861,511 

 

F-37 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in US Dollars, except otherwise indicated)

 

Financial instruments measured at fair value

 

Measurement at fair value at 03/31/2020  Level 1   Level 2   Level 3 
Financial assets at fair value               
Other financial assets   1,702,285    -    - 
US Treasury bills   5,310,172    -    - 
                
Financial liabilities valued at fair value               
Private warrants   -    -    1,141,817 

 

Measurement at fair value at 06/30/2019  Level 1   Level 2   Level 3 
Financial assets at fair value               
Other financial assets   356,233    -    - 
                
Financial liabilities valued at fair value               
Private warrants   -    -    2,861,511 

 

Estimation of fair value

 

The fair value of marketable securities and US Treasury Bills is calculated using the market approach using quoted prices in active markets for identical assets. The quoted market price used for financial assets held by the Group is the current bid price. These instruments are included in Level 1.

 

The Group’s financial liabilities, which were not traded in an active market were determined using valuation techniques that maximize the use of available market information, and thus rely as little as possible on specific estimates of the entity. If all significant inputs required to fair value an instrument are observable, the instruments are included in Level 2.

 

If one or more of the significant inputs is not based on observable market data, the instruments are included in Level 3.

 

The model and inputs used to value the Private warrants at fair value are referenced in Note 5.16. The sensitivity analysis was based on a 5% change in the volatility of the instrument. The change in isolation would have increased / decreased the amount of the financial liability by $0.9 million and $0.6 million if the volatility were 36.3 % or 26.3%, respectively.

 

The Group’s policy is to recognize transfers between different categories of the fair value hierarchy at the time they occur or when there are changes in the circumstances that cause the transfer.

 

There were no transfers between levels of the fair value hierarchy. There were no changes in economic or business circumstances affecting fair value.

 

F-38 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in US Dollars, except otherwise indicated)

 

Financial instruments not measured at fair value

 

The financial instruments not measured at fair value include cash and cash equivalents, trade accounts receivable, other accounts receivable, certain other financial assets, trade payables and other payables, borrowings, employee benefits and social security and financed payments.

 

The carrying value of financial instruments not measured at fair value does not differ significantly from their fair value, except for borrowings (Note 5.11).

 

14.     SHAREHOLDERS AND OTHER RELATED PARTIES BALANCES AND TRANSACTIONS

 

During the periods ended March 31, 2020 and March 31, 2019 the transactions between the Group and related parties, and the related balances owed by and to them, are as follows:

      Amount of the transactions
of the period ended		 
Party  Transaction type  03/31/2020   03/31/2019 
Joint ventures and associates  Sales and services   4,859,825    2,730,610 
Joint ventures and associates  Purchases of goods and services   (16,487,731)   (11,765,781)
Joint ventures and associates  Equity contributions   250,000    218,479 
Joint ventures and associates  Net loans granted / (cancelled)   -    (6,410,011)
Key management personnel  Salaries, social security benefits and other benefits   (4,915,673)   (2,111,023)
Key management personnel  Loans granted   -    536,668 
Key management personnel  Interest gain   34,730    5,882 
Shareholders and other related parties  Sales of goods and services   331,217    593,726 
Shareholders and other related parties  Purchases of goods and services   (1,387,677)   (547,671)
Shareholders and other related parties  Net loans granted/(cancelled)   -    (198,895)
Shareholders and other related parties  Interest gain   -    90,188 
Shareholders and other related parties  In-kind contributions (Note 5.6)   609,935    463,511 
Parent company  Interest gain/(lost)   560,440    (1,386,288)
Parent company  Purchases of goods and services   (95)   (49,132)
Parent company  Equity contributions   -    (14,558,347)
Total      (16,145,029)   (32,388,084)

 

      Amounts receivable from
related parties		 
Party  Transaction type  03/31/2020   06/30/2019 
Parent company  Trade debtors   69,433    440,268 
Shareholders and other related parties  Trade receivables   160,247    467,743 
Shareholders and other related parties  Allowance for impairment   (28,129)   (75,596)
Other receivables - Other related parties  Other receivables   2,297    10,971 
Joint ventures and associates  Trade debtors   105,022    2,369 
Joint ventures and associates  Other receivables   941,058    250,783 
Total      1,249,928    1,096,538 

 

F-39 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in US Dollars, except otherwise indicated)

 

      Amounts payable to
related parties		 
Party  Transaction type  03/31/2020   06/30/2019 
Parent company  Trade creditors   (1,244,676)   (1,568,036)
Parents companies and related parties to Parents  Net loans payables   (16,990,910)   (17,757,907)
Parent company  Consideration payment Semya acquisition   (575,604)   (575,604)
Key management personnel  Salaries, social security benefits and other benefits   (2,007,976)   (2,312,253)
Shareholders and other related parties  Trade and other payables   (466,990)   (1,796,932)
Joint ventures and associates  Trade and other payables   (13,074,520)   (4,805,149)
Total      (34,360,676)   (28,815,881)

 

15.     KEY MANAGEMENT PERSONNEL COMPENSATION

 

The compensation of directors and other members of key management, including social security contributions and other benefits, was as follows for the period ended March 31, 2020 and 2019.

 

   03/31/2020   03/31/2019 
Salaries, social security and other benefits   2,341,746    2,111,023 
Share-based incentives   2,573,927    - 
Total   4,915,673    2,111,023 

 

16.     SHARE-BASED PAYMENTS

 

Incentive payments based on Parent shares

 

On August 7, 2019, pursuant to the listing of Bioceres Crop Solutions Corp. on the New York Stock Exchange, the Board of Directors of Bioceres S.A., approved the cancellation of the stock grant incentive plan of Bioceres S.A. for Rizobacter Senior Management. On the same date, the Board of Directors of Bioceres S.A. approved the issuance of 36,000 ordinary shares to each of the members of the Rizobacter Senior Management team.

 

The shares issued by Bioceres S.A. were valued at measurement date at $5.53 per share as described in Note 2.6.

 

Incentive payments based on options

 

In December 2019, purchase options were granted with respect to ordinary shares for certain executives and directors of the Group.

a) Share option plan

 

This plan granted 1,200,000 stock options with an exercise price of $4.55. They are vested when the beneficiaries have served a period of service since the grant date until each vesting period described below. The beneficiaries must remain in the Company or subsidiary as of the date of exercising the option to exercise it. The stock options expire on October 31, 2029.

 

F-40 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in US Dollars, except otherwise indicated)

 

Options can be exercised for a period of up to three years, with 1/3 vesting every 12 months, and on a cashless basis at their volume weighted average price (“VWAP”) of the ordinary shares during a twenty-day period to the date of exercise.

 

The fair value of the stock options at the grant date was estimated using the "Black-Scholes" model considering the terms and conditions under which the options on shares were granted and adjusted to consider the possible dilutive effect of the future exercise of options.

 

Factor  Incentive option plan 
Weighted average fair value of shares  $5.42 
Exercise price  $4.55 
Weighted average expected volatility (*)   29.69%
Dividend rate   0%
Weighted average risk-free interest rate   1.66%
Weighted average expected life   9.89 years 
Weighted average fair value of stock options at measurement date  $2.47 

 

(*) Implied volatility of Public warrants

 

There are no market-related performance conditions or non-vesting conditions that should be considered for determining the fair value of options.

 

The Group estimates that 100% of the share options will be exercised, taking into account historical patterns of executives maintaining their jobs and the probability of the exercising the options. This estimate is reviewed at the end of each annual or interim period.

 

The following table shows the weighted average amount and exercise price and the movements of the stock options of executives and directors of the Group during the nine-month periods ended March 31, 2020 and 2019.

 

   03/31/2020   03/31/2019 
   Number of options   Exercise price   Number of options   Exercise price 
At the beginning  -   -   -   - 
Granted during the period   1,200,000   $4.55    -    - 
Annulled during the period   -    -    -    - 
Exercised during the period   -    -    -    - 
Expired during the period   -    -    -    - 
Effective at period   1,200,000   $4.55    -    - 

 

The charge of the plan recognized during the period was $1.5 million.

 

b) Bonus in kind

 

This plan is an annual in-kind incentive awarded in ordinary shares up to an equivalent of $580,000 to certain executives. The approved incentive based on shares is subject to the fulfillment of individual objectives and / or economic objectives. As of March 31, 2020, the objectives have not been met and the Group expects they will not be achieved.

 

c) Bonus in performance

 

This plan is an in-kind incentive awarded in ordinary shares up to an equivalent of 530,000 shares or 1,060,00 shares, depending on achieving 100% or 200%, respectively, of the objectives. It contains a performance target that is related to the market price of the Company’s shares. Market-based performance conditions were included in the grant-date fair value measurement.

 

F-41 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in US Dollars, except otherwise indicated)

 

The fair value of the shares at the grant date was estimated using the "Black-Scholes" model, considering the terms and conditions under which the bonus in performance were granted.

 

Factor  Bonus in performance 
Number of shares to be granted   530,000    1,060,000 
Stock price at the grant date  $6.18   $6.18 
Price target  $10.5   $21.5 
Weighted average expected volatility   24.78%   24.78%
Dividend rate   0%   0%
Weighted average risk-free interest rate   1.52%   1.52%
Weighted average expected life   2.63 years    2.63 years 
Weighted average fair value of stock at measurement date  $0.479   $0.005 

 

The charge of the plan recognized during the period was $0.3 million

 

17.     LEASES

 

As mentioned in Note 3, the Group began applying IFRS 16 and recognized the cumulative initial effect as an adjustment to the opening equity at the date of initial application. The comparative information was not restated. The Group recognized a right-of-use asset and a lease liability.

 

The right-of-use asset was initially measured at the amount of the lease liability plus initial direct costs incurred, adjusted by pre-payments made in relation to the lease. The right-of-use asset was measured at cost less accumulated depreciation and accumulated impairment.

 

The lease liability was initially measured at the present value of the lease payments payable over the lease term, discounted at the rate implicit in the lease if it can be readily determined. If that rate cannot be readily determined, the Group uses its incremental borrowing rate.

 

In applying IFRS 16 for the first time, the Group has used the following practical expedients permitted by the standard: (i) the use of a single discount rate to a portfolio of leases with reasonably similar characteristics, (ii) reliance on previous assessments on whether leases are onerous, (iii) the accounting for operating leases with a remaining lease term of less than 12 months, as at July 1, 2019, as short-term leases, (iv) the exclusion of initial direct costs for the measurement of the right-of-use asset at the date of initial application, and (v) the use of hindsight in determining the lease term, where the contract contains options to extend or terminate the lease. The information about the right-of-use and liabilities related with lease assets, is as follows:

 

Lease liability  2019 
Operating lease commitments as at June 30,2019   782,791 
Discounted using the lessees´ incremental borrowing rate at the date of initial application   674,360 
Add: finance lease liabilities recognized as at June 30,2019   848,817 
Lease liability recognized as of July 1, 2019   1,523,177 
      
Lease Liabilities     
Non-current   664,980 
Current   858,197 
Total   1,523,177 

 

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BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in US Dollars, except otherwise indicated)

 

Right-of-use leased asset  03/31/2020 
Cost     
Book value at the beginning of the period   - 
Additions for initial application of IFRS 16   1,523,177 
Additions of the period   386,740 
Book value at the end of the period   1,909,917 
      
Depreciation     
Accumulated depreciation at the beginning of the period   759,045 
Exchange differences   (66,089)
Depreciation of the period   464,234 
Accumulated depreciation at the end of the period   1,157,190 
Total   752,727 

 

Lease liability  03/31/2020 
Book value at the beginning of the period   - 
Additions for initial application of IFRS 16   1,523,177 
Additions of the period   543,426 
Interest expenses, exchange differences and inflation effects   (739,204)
Payments of the period   (433,947)
Total   893,452 

 

Lease Liabilities  03/31/2020 
Non-current   316,857 
Current   576,595 
Total   893,452 

 

The recognized right-of-use assets relate to the following types of assets:

 

   03/31/2020   7/1/2019 
Machinery and equipment   620,891    413,321 
Vehicles   273,923    384,438 
Equipment and computer software   389,243    390,125 
Land and buildings   625,860    335,293 
    1,909,917    1,523,177 

 

The discounted lease payments were measured using an incremental borrowing rate of 7.74 %.

 

18.     CONTINGENCIES, COMMITMENTS AND RESTRICTIONS ON THE DISTRIBUTION OF PROFITS

 

In order to guarantee the obligations assumed on the Syndicated loan (incorporated in Bank borrowings in Note 5.11), Rizobacter signed and granted a pledge of a fixed term certificate constituted on September 11, 2017 and extended on December 9, 2019 for $4.4 million, disclosed as “Restricted short-term deposit” in “Other financials assets” (Note 5.2).

 

The Convertibles Notes referenced in Note 5.11 are guaranteed by (i) BCS Holding, RASA Holding, Bioceres Semillas S.A., Rizobacter USA LLC and Rizobacter do Brasil LTD; (ii) a Share Pledge Agreement over the 41.3% of the shares held by RASA Holding in the capital stock of Rizobacter; (iii) an Intercompany Loan Pledge Agreement; (iv) Rizobacter do Brazil Fiduciary Assignment Agreement; and (v) Rizobacter do Brazil Account Pledge Agreement.

 

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BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in US Dollars, except otherwise indicated)

 

Furthermore, during the fiscal year, Rizobacter had taken loans secured by checks from customers for $1 million and by US Treasury bills for $5.1 million.

 

There were no other significant changes to the contingencies, commitments and restrictions on the distribution of profits from the disclosure made in the Consolidated financial statement as of June 30, 2019.

 

19.     IMPACT OF COVID-19

 

In December 2019, a novel strain of coronavirus (“COVID-19”) was reported in Wuhan, China. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, reaching over 465,000 confirmed cases in 200 countries and territories by late March. COVID-19 has disrupted business activities in Argentina and worldwide. The Argentine government has issued a stay-home order from March 20 to June 7, 2020, restricting free circulation of people in public areas and ordering most businesses to close, with certain exemptions. The Group’s operations, which involve agricultural production and commercialization activities, have been exempted from the order. Consequently, our financial condition, liquidity position and results of operations have not been materially impacted as we have been allowed to continue with our operations.

 

The final scope of the Coronavirus outbreak and its impact on the country's and global economy are unknown, with governments being able to take stricter measures, which are not predictable in this instance. It cannot be reasonably quantified to what extent the Coronavirus will affect the Company's business and the results of its operations in the future if this situation is prolonged. The Board of Directors and senior management are closely monitoring the situation and taking all necessary measures at their disposal to protect human life and the Group’s operations and financial condition.

 

20.     EVENTS OCCURRING AFTER THE REPORTING PERIOD

 

Subsequent to March 31, 2020, there have been no situations or circumstances that may require significant adjustments or further disclosure in these Unaudited interim condensed consolidated financial statements that were not mentioned above.

 

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