EX-99.1 2 tm2031671d1_ex99-1.htm EXHIBIT 99.1

Exhibit 99.1

 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

Consolidated financial statements as of and for the years

ended June 30, 2020, 2019 and 2018.  

 

 

 

INDEX

 

Consolidated financial statements as of and for the years ended June 30, 2020, 2019 and 2018.        

 

Report of independent registered public accounting firm F-3
   
Consolidated statements of financial position as of June 30, 2020, 2019 and 2018 F-4
   
Consolidated statements of comprehensive income for the years ended June 30, 2020, 2019 and 2018 F-6
   
Consolidated statements of changes in equity for the years ended June 30, 2020, 2019 and 2018 F-8
   
Consolidated statements of cash flows for the years ended June 30, 2020, 2019 and 2018 F-9
   
Notes to the consolidated financial statements F-11

 

F-2

 

 

BIOCERES CROP SOLUTIONS CORP.

 

Report of independent registered public accounting firm

 

To the board of directors and shareholders of Bioceres Crop Solutions Corp.

 

Opinion on the Financial Statements

 

We have audited the accompanying consolidated statements of financial position of Bioceres Crop Solutions Corp and its subsidiaries (the “Company”) as of June 30, 2020, 2019 and 2018, and the related consolidated statements of comprehensive income, of change in equity and of cash flow for each of the three years in the period ended June 30, 2020, including the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2020, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2020, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

 

Basis for Opinion

 

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

/s/Price Waterhouse & Co. S.R.L.

 

/s/Gabriel Marcelo Perrone  
Gabriel Marcelo Perrone  
Partner  

 

Rosario, Argentina
September 28, 2020

 

We have served as the Company’s auditor since 2018.

 

F-3

 

 

BIOCERES CROP SOLUTIONS CORP.

 

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

As of June 30, 2020, 2019 and 2018

(Amounts in US$)

 

 

   Notes   06/30/2020   06/30/2019   06/30/2018 
ASSETS                    
CURRENT ASSETS                    
Cash and cash equivalents   6.1    27,159,421    3,450,873    2,215,103 
Other financial assets   6.2    28,799,833    4,683,508    4,550,847 
Trade receivables   6.3    73,546,633    59,236,377    52,888,427 
Other receivables   6.4    4,770,672    1,981,829    4,240,205 
Income and minimum presumed income taxes recoverable   8    112,220    1,263,795    2,082,269 
Inventories   6.5    29,338,548    27,322,003    19,366,001 
Biological assets   6.6    965,728    270,579    - 
Total current assets        164,693,055    98,208,964    85,342,852 
                     
NON-CURRENT ASSETS                    
Other financial assets   6.2    322,703    376,413    243,358 
Other receivables   6.4    1,703,573    1,560,310    4,979,507 
Income and minimum presumed income taxes recoverable   8    6,029    1,184    126,653 
Deferred tax assets   8    2,693,195    3,743,709    5,601,821 
Investments in joint ventures and associates   12    24,652,792    25,321,028    19,072,055 
Property, plant and equipment   6.7    41,515,106    43,834,548    40,177,146 
Intangible assets   6.8    35,333,464    39,616,426    26,657,345 
Goodwill   6.9    25,526,855    29,804,715    14,438,027 
Right of use asset   15    1,114,597    -    - 
Total non-current assets        132,868,314    144,258,333    111,295,912 
Total assets        297,561,369    242,467,297    196,638,764 

 

The accompanying Notes are an integral part of these Consolidated financial statements. Related parties balances and transactions are disclosed in Note 16.

 

F-4

 

 

BIOCERES CROP SOLUTIONS CORP.

 

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

As of June 30, 2020, 2019 and 2018

(Amounts in US$)

 

 

LIABILITIES  Notes   06/30/2020   06/30/2019   06/30/2018 
CURRENT LIABILITIES                    
Trade and other payables   6.1    57,289,862    40,578,494    27,708,830 
Borrowings   6.11    63,721,735    66,477,209    65,308,928 
Employee benefits and social security   6.12    4,510,592    5,357,218    4,411,713 
Deferred revenue and advances from customers   6.13    2,865,437    1,074,463    1,007,301 
Income and minimum presumed income taxes payable   8    1,556,715    142,028    2,569 
Government grants   6.14    1,270    2,110    17,695 
Financed payment - Acquisition of business   6.16    -    2,826,611    20,223,590 
Lease liabilities   15    665,098    -    - 
Total current liabilities        130,610,709    116,458,133    118,680,626 
                     
NON-CURRENT LIABILITIES                    
Trade and other payables   6.1    452,654    452,654    - 
Borrowings   6.11    41,226,610    37,079,521    25,708,205 
Employee benefits and social security   6.12    534,038    -    - 
Government grants   6.14    2,335    8,098    15,532 
Joint ventures and associates   12    1,548,829    1,970,903    2,012,298 
Deferred tax liabilities   8    16,858,125    21,101,871    13,591,942 
Provisions   6.15    417,396    439,740    845,486 
Financed payment - Acquisition of business   6.16    -    -    2,651,019 
Private warrants   6.17    1,686,643    2,861,511    - 
Convertible notes   6.18    43,029,834    -    - 
Lease liabilities   15    444,714    -    - 
Total non-current liabilities        106,201,178    63,914,298    44,824,482 
Total liabilities        236,811,887    180,372,431    163,505,108 
                     
EQUITY                    
Equity attributable to owners of the parent        46,179,395    47,301,863    13,713,484 
Non-controlling interests        14,570,087    14,793,003    19,420,172 
Total equity        60,749,482    62,094,866    33,133,656 
Total equity and liabilities        297,561,369    242,467,297    196,638,764 

 

The accompanying Notes are an integral part of these Consolidated financial statements. Related parties balances and transactions are disclosed in Note 16.

 

F-5

 

 

BIOCERES CROP SOLUTIONS CORP.

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the year ended June 30, 2020, 2019 and 2018

(Amounts in US$)

 

 

   Notes   06/30/2020   06/30/2019   06/30/2018 
Revenues from contracts with customers   7.1    172,350,699    160,308,979    133,491,118 
Government grants        24,732    16,372    51,586 
Initial recognition and changes in the fair value of biological assets        716,741    279,945    - 
Total        173,092,172    160,605,296    133,542,704 
                     
Cost of sales   7.2    (93,575,588)   (86,964,881)   (77,094,551)
Research and development expenses   7.3    (4,195,270)   (3,689,391)   (3,950,100)
Selling, general and administrative expenses   7.4    (38,345,028)   (39,243,800)   (35,263,688)
Share of profit or loss of joint ventures and associates   12    2,477,193    1,012,486    (2,136,801)
Other income or expenses, net        (307,499)   365,900    613,389 
Operating profit        39,145,980    32,085,610    15,710,953 
                     
Financial cost   7.5    (20,880,526)   (24,361,733)   (17,188,653)
Other financial results   7.5    (11,822,116)   (17,096,484)   (23,762,063)
Profit (loss) before income tax        6,443,338    (9,372,607)   (25,239,763)
                     
Income tax   8    (2,206,710)   (6,986,284)   10,928,517 
Profit (loss) for the year        4,236,628    (16,358,891)   (14,311,246)
Profit (loss) per share                    
Basic profit (loss) attributable to ordinary equity holders of the parent (1)   9    0.0930    (0.6027)   (0.3929)
Diluted profit attributable to ordinary equity holders of the parent   9    0.0922    (0.6027)   (0.3929)
Weighted average number of shares                    
Basic (1)   9    36,120,447    30,478,390    28,098,117 
Diluted   9    36,416,988    30,478,390    28,098,117 

 

(1) For the years ended June 30, 2019 and 2018 diluted EPS was the same as basic EPS as the effect of potential ordinary shares would be antidilutive.

 

The accompanying Notes are an integral part of these consolidated financial statements. Related parties balances and transactions are disclosed in Note 16.

 

F-6

 

 

BIOCERES CROP SOLUTIONS CORP.

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the year ended June 30,2020, 2019 and 2018

(Amounts in US$)

 

 

Profit (loss) for the year   4,236,628    (16,358,891)   (14,311,246)
                
Other comprehensive (loss) / income   (9,682,116)   3,904,365    (31,833,554)
Items that may be subsequently reclassified to profit and loss   (13,603,205)   5,251,488    (43,710,972)
Exchange differences on translation of foreign operations from joint ventures   (3,494,761)   11,337    (13,865,192)
Exchange differences on translation of foreign operations   (10,108,444)   5,240,151    (29,845,780)
Items that will not be subsequently reclassified to loss and profit   3,921,089    (1,347,123)   11,877,418 
Revaluation of property, plant and equipment, net of tax, of Joint ventures and associates (2)   521,406    94,009    1,679,818 
Revaluation of property, plant and equipment, net of tax (3)   3,399,683    (1,441,132)   8,381,618 
Tax rate change over revaluation of property, plant and equipment   -    -    1,815,982 
Total comprehensive loss   (5,445,488)   (12,454,526)   (46,144,800)
                
Income (loss) for the year attributable to:               
Equity holders of the parent   3,359,175    (18,369,045)   (11,039,533)
Non-controlling interests   877,453    2,010,154    (3,271,713)
    4,236,628    (16,358,891)   (14,311,246)
Total comprehensive loss attributable to:               
Equity holders of the parent   (5,222,572)   (14,333,037)   (33,927,072)
Non-controlling interests   (222,916)   1,878,511    (12,217,728)
    (5,445,488)   (12,454,526)   (46,144,800)

 

(2)The tax effect of the revaluation of property, plant and equipment of joint ventures and associates was $223,460, $47,005 and $839,909 for the years ended June 30, 2020, 2019 and 2018, respectively.

 

(3)The tax effect of the revaluation of property, plant and equipment was $1,133,230, $(480,378) and $4,513,179 for the years ended June 30, 2020, 2019 and 2018, respectively.

 

The accompanying Notes are an integral part of these Consolidated financial statements. Related parties balances and transactions are disclosed in Note 16.

 

F-7

 

 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the years ended June 30, 2020, 2019 and 2018

(Amounts in US$)

 

    Attributable to the equity holders of the parent       
Description   Issued
capital (*)		  Share
premium		  Stock
options
and share
based
incentives		  Convertible
instruments		  Cost of
own
shares
held		  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 
06/30/2017    2,810   56,254,519   72,822   -   -   (15,110,050)  (6,598,080)  1,219,600   35,841,621   41,397,445   77,239,066 
Parent company investment    -   2,009,385   -   -   -   -   -   -   2,009,385   -   2,009,385 
Purchase of preferred stocks to non-controlling interest    -   9,759,545   -   -   -   -   -   -   9,759,545   (9,759,545)  - 
Stock options and share based incentives    -   -   30,005   -   -   -   -   -   30,005   -   30,005 
Loss for the year    -   -   -   -   -   (11,039,533)  -   -   (11,039,533)  (3,271,713)  (14,311,246)
Other comprehensive income or loss    -   -   -   -   -   -   (30,013,990)  7,126,451   (22,887,539)  (8,946,015)  (31,833,554)
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 (Note 10.2)    -   (14,558,347)  -   -   -   -   -   -   (14,558,347)  -   (14,558,347)
Reverse Stock Options    -   -   (102,827)  -   -   -   -   -   (102,827)  -   (102,827)
Reverse recapitalization (Note 10.3)    329   21,905,853   -   -   -   -   -   -   21,906,182   -   21,906,182 
Private warrants (Note 6.17)    -   (3,432,723)  -   -   -   -   -   -   (3,432,723)  -   (3,432,723)
Shares issued - Rizobacter call option (Note 10.4)    474   21,439,652   -   -   -   -   -   -   21,440,126   (14,302,975)  7,137,151 
Contribution Semya (Note 4.6)    -   3,108,981   -   -   -   -   -   -   3,108,981   -   3,108,981 
Profit/ (loss) of the year    -   -   -   -   -   (18,369,045)  -   -   (18,369,045)  2,010,154   (16,358,891)
Other comprehensive income/ (loss)    -   -   -   -   -   -   5,132,487   (1,096,479)  4,036,008   (131,643)  3,904,365 
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 
Stock options and share based incentives    -   -   3,428,029   -   -   -   -   -   3,428,029   -   3,428,029 
Convertible notes (Note 6.18)    -   -   -   702,981   -   -   -   -   702,981   -   702,981 
Purchase of own shares    -   -   -   -   (30,906)  -   -   -   (30,906)  -   (30,906)
Profit for the year    -   -   -   -   -   3,359,175   -   -   3,359,175   877,453   4,236,628 
Other comprehensive (loss) / income    -   -   -   -   -   -   (11,718,618)  3,136,871   (8,581,747)  (1,100,369)  (9,682,116)
06/30/2020    3,613   96,486,865   3,428,029   702,981   (30,906)  (18,613,112)  (43,198,201)  7,400,126   46,179,395   14,570,087   60,749,482 

 

(*) Of the total shares, 5,100 shares ($ 0.0001 per value) are held by the Company.
The accompanying Notes are an integral part of these consolidated financial statements. Related parties balances and transactions are disclosed in Note 16.

 

 F-8 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended June 30, 2020, 2019 and 2018

(Amounts in US$)

 

 

   Notes   06/30/2020   06/30/2019   06/30/2018 
OPERATING ACTIVITIES                   
Profit (loss) for the year       4,236,628    (16,358,891)   (14,311,246)
                    
Adjustments to reconcile profit to net cash flows                   
Income tax       2,206,710    6,986,284    (10,928,517)
Finance results       32,702,642    41,458,217    40,950,716 
Depreciation of property, plant and equipment  6.7    2,010,136    2,450,256    2,230,881 
Amortization of intangible assets  6.8    2,149,534    2,376,919    2,141,476 
Depreciation of leased assets  15    566,818    -    2,257,378 
Transaction expenses       -    4,535,247    - 
Share-based incentive and stock options       3,428,029    (102,827)   30,005 
Share of profit or loss of joint ventures and associates  12    (2,477,193)   (1,012,486)   2,136,801 
Loss of control of subsidiaries       -    (10,591)   - 
Provisions for contingencies       200,525    (246,832)   46,103 
Allowance for impairment of trade debtors       1,499,298    686,985    1,259,127 
Allowance for obsolescence       977,817    564,873    661,804 
Initial recognition and changes in the fair value of biological assets       (716,741)   (279,945)   - 
Gain or loss on sale of equipment and intangible assets       297,289    91,762    4,834 
                    
Working capital adjustments                   
Trade receivables       (23,022,695)   41,488,052    17,316,880 
Other receivables       (4,827,495)   5,769,598    513,162 
Income and minimum presumed income taxes       1,236,970    2,778,165    (126,806)
Inventories       (5,265,246)   (8,637,166)   10,355,422 
Trade and other payables       8,469,848    (33,700,485)   (35,288,368)
Employee benefits and social security       (474,220)   931,546    (543,917)
Deferred revenue and advances from customers       864,905    66,170    (162,473)
Income and minimum presumed income taxes payable       -    (1,705,481)   (71,076)
Government grants       (6,603)   (23,019)   (85,318)
Interest collected       1,027,132    -    - 
Inflation effects on working capital adjustments       (13,663,552)   (18,411,538)   - 
Net cash flows generated by operating activities       11,420,536    29,694,813    18,386,868 

 

The accompanying Notes are an integral part of these consolidated financial statements. Related parties balances and transactions are disclosed in Note 16.

 

 F-9 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended June 30, 2020, 2019 and 2018

(Amounts in US$)

 

 

   Notes   06/30/2020   06/30/2019   06/30/2018 
INVESTMENT ACTIVITIES                   
Proceeds from sale of property, plant and equipment       51,151    317,953    109,711 
Investment in joint ventures and associates  12    -    (129,340)   - 
Net loans granted to shareholders and other related parties       -    -    (2,621,647)
Investment in financial assets       (17,761,224)   -    - 
Purchase of property, plant and equipment  6.7    (1,646,697)   (2,044,102)   (2,791,794)
Capitalized development expenditures  6.8    (1,263,730)   (682,530)   (2,301,425)
Purchase of intangible assets  6.8    (1,591,749)   (722,833)   (614,529)
Net cash flows used in investing activities       (22,212,249)   (3,260,852)   (8,219,684)
                    
FINANCING ACTIVITIES                   
Proceeds from borrowings and convertible notes       135,348,502    88,693,632    27,745,013 
Repayment of borrowings, financed payments and interest payments       (101,317,621)   (111,084,915)   (37,624,531)
(Decrease) increase in bank overdrafts and other short-term borrowings       (2,331,974)   (4,968,813)   1,208,830 
Other financial proceeds or payments, net       2,298,360    (854,731)   (1,787,117)
Reverse capitalization       -    1,268,633    - 
Purchase of own shares       (30,906)   -    - 
Leased assets payments       (433,947)   -    - 
Net cash flows generated by (used in) financing activities       33,532,414    (26,946,194)   (10,457,805)
                    
Net increase in cash and cash equivalents       22,740,701    (512,233)   (290,621)
                    
Inflation effects on cash and cash equivalents       (552,459)   1,681,113    - 
                    
Cash and cash equivalents as of beginning of the year  6.1    3,450,873    2,215,103    1,679,478 
Effect of exchange rate changes on cash and equivalents       1,520,306    66,890    826,246 
Cash and cash equivalents as of the end of the year  6.1    27,159,421    3,450,873    2,215,103 

 

The accompanying Notes are an integral part of these Consolidated financial statements. Related parties balances and transactions are disclosed in Note 16.

 

 F-10 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, 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 Consolidated financial statements  
2.3. Basis of measurement  
2.4. Functional currency and presentation currency  
2.5. Subsidiaries  
3. New standards, amendments and interpretations issued by the IASB  
3.1. New standards and interpretations adopted by the Group  
3.2. New standards and interpretations not yet adopted by the Group  
4. Summary of significant accounting policies  
4.1. Cash and cash equivalents  
4.2. Financial assets  
4.3. Inventories  
4.4. Biological Assets  
4.5. Business combinations  
4.6. Business combinations under common control  
4.7. Impairment of non-financial assets (excluding inventories and deferred tax assets)  
4.8. Joint arrangements  
4.9. Property, plant and equipment  
4.10. Leased assets  
4.11. Intangible assets  
4.12. Financial liabilities  
4.13. Warrants  
4.14. Convertible Notes  
4.15. Employee benefits  
4.16. Provisions  
4.17. Parent company investment  
4.18. Revenue recognition  
4.19. Government grants  
4.20. Borrowing costs  
4.21. Income tax and minimum presumed income tax  
4.22. Share-based payments  
5. Critical accounting judgments and estimates  
5.1. Critical estimates  
6. Information about components of consolidated statements of financial position  
6.1. Cash and cash equivalents  
6.2. Other financial assets  
6.3. Trade receivables  
6.4. Other receivables  
6.5. Inventories  
6.6. Biological assets  
6.7. Property, plant and equipment  
6.8. Intangible assets  
6.9. Goodwill  

 

 F-11 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

6.10. Trade and other payable  
6.11. Borrowings  
6.12. Employee benefits and social security  
6.13. Deferred revenue and advances from customers  
6.14. Government grants  
6.15. Provisions  
6.16. Financed payment- Acquisition of business  
6.17. Private Warrants  
6.18. Convertible Notes  
6.19. Changes in allowances and provisions  
7. Information about components of consolidated statements of comprehensive income  
7.1. Revenue from contracts with customers  
7.2. Cost of sales  
7.3. R&D classified by nature  
7.4. Expenses classified by nature and function  
7.5. Finance results  
8. Income tax and minimum presumed income tax  
9. Earning per share  
10. Information about consolidated components of equity  
10.1. Capital issued  
10.2. Parent company investment  
10.3. Reverse recapitalization  
10.4. Shares issued - Rizobacter call option  
10.5. Shares summary  
10.6. Non-controlling interest  
11. Cash flow information  
12. Joint ventures  
13. Segment information  
14. Financial instruments- risk management  
14.1. Principal financial instruments  
14.2. Financial instruments by category  
14.3. Financial instruments measured at fair value  
14.4. Financial instruments not measured at fair value  
14.5. General objectives, policies and processes  
15. Leases  
16. Shareholders and other related parties balances and transactions  
17. Key management personnel compensation  
18. Share-based payments  
19. Contingencies, commitments and restrictions on the distribution of profits  
20. Impact of Covid-19  
21. Events occurring after the reporting period  

 

 F-12 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

1.GENERAL INFORMATION

 

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

 

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.

 

Introductory note

 

On March 14, 2019, Union Acquisition Corp. (“Union” or “UAC”), whose name changed to Bioceres Crop Solutions Corp., consummated a merger pursuant to a share exchange agreement, dated as of November 8, 2018 (as amended, the “Exchange Agreement”), by and among UAC and Bioceres, Inc., a company incorporated under the laws of Delaware, which converted into Bioceres LLC pursuant to the Reorganization (as defined below) on February 28, 2019.

 

Prior to the consummation of the merger on March 14, 2019, the following steps took place among Bioceres, Inc. and certain of its affiliates (collectively the “Reorganization”). On February 13, 2019, Bioceres, Inc. formed a new subsidiary, BCS Holding Inc. (“BCS Holding”), and contributed all of its crop business net assets to BCS Holding in exchange for 100% of the equity interests in BCS Holding. On February 28, 2019, Bioceres, Inc. converted into Bioceres LLC, and on March 1, 2019, Bioceres S.A., a company organized under the laws of Argentina and our ultimate parent company (the “Parent”) contributed all of its equity interest in Bioceres Semillas S.A. (“Bioceres Semillas”) to Bioceres LLC in exchange for additional equity interests in Bioceres LLC. In addition, concurrently with the consummation of the business combination on March 14, 2019, the Rizobacter Call Option (as defined below) was exercised, pursuant to which the total indirect ownership of BCS Holding in Rizobacter increased to 80.00% of all outstanding stock of Rizobacter. On October 22, 2018, Parent, RASA Holding LLC, a Delaware limited liability company and a wholly owned subsidiary of Bioceres, Inc., now a wholly-owned subsidiary of BCS Holding (“RASA Holding”), and certain Rizobacter’s sellers (the “Grantors”) entered into an amended and restated option agreement (as may be amended from time to time, the “Rizobacter Call Option Agreement”), pursuant to which the Parent, RASA Holding or any of their nominated affiliates (including BCS Holding and its subsidiaries, collectively the “Beneficiaries”) would have the option (the “Rizobacter Call Option”) to purchase from the Grantors all of their 11,916,000 shares of common stock of Rizobacter Argentina S.A., an Argentine corporation and a subsidiary of RASA Holding (“Rizobacter”), representing 29.99% of all outstanding common stock of Rizobacter. Consideration for the Rizobacter Call Option was in cash and in the form of UAC shares. As a result of the business combination and the other transactions contemplated by the Exchange Agreement, as well as the Reorganization and exercise of the Rizobacter Call Option, Union became the holding company of BCS Holding, its subsidiaries and Bioceres Semillas. Upon the consummation of the merger, Union changed its name to Bioceres Crop Solutions Corp.

 

Unless the context otherwise requires, “we,” “us,” “our,”, “Bioceres”, “BIOX,” and “Bioceres Crop Solutions” will refer to Bioceres Crop Solutions Corp. and its subsidiaries.

 

 F-13 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

2.ACCOUNTING STANDARDS AND BASIS OF PREPARATION

 

2.1.Statement of compliance with IFRS as issued by IASB

 

The Consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by International Accounting Standard Board (“IASB”) following the accounting policies as set forth and summarized in Note 4. All IFRS issued by the IASB, effective at the time of preparing these Consolidated financial statements have been applied.

 

2.2.Authorization for the issue of the Consolidated financial statements

 

These Consolidated financial statements of the Group as of and for the years ended June 30, 2020, 2019 and 2018 have been authorized by the Board of Directors of Bioceres Crop Solutions on September 28, 2020.

 

2.3.Basis of measurement

 

The 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.

 

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.

 

 F-14 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

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 in a separate line item.

 

The inflation adjustment as of June 30, 2020 and 2019 was calculated by means of conversion factor derived from the Argentine price indexes published by the National Institute of Statistics and the year-over-year change in the index was 1.428 and 1.558, respectively.

 

The main procedures for the above-mentioned adjustment are as follows:

 

•Monetary assets and liabilities which are carried at amounts current at the balance sheet date are not restated because they are already expressed in terms of the monetary unit current at the balance sheet date.

 

•Non-monetary assets and liabilities which are not carried at amounts current at the balance sheet date, and components of shareholders' equity are adjusted by applying the relevant conversion factors. (on a monthly basis).

 

•All items in the income statement are restated by applying the relevant conversion factors (on a monthly basis). Bioceres has elected not to segregate the impact of inflation over financial results.

 

•The effect of inflation on the Company’s net monetary position is included in the income statement, in "Other financial results".

 

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

 

Presentation currency

 

The consolidated financial statements of the Group are presented in US$.

 

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 on 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 on 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 profit or loss taking place upon such disposal.

 

2.5.Subsidiaries

 

Where the Group holds a controlling interest in an entity, such entity is classified as a subsidiary. The Group exercises control over such an entity if all three of the following elements are present: (i) the Group has the power to direct or cause the direction of the management and policies of the entity; (ii) the Group is exposed to the variable returns of such entity; and (iii) the Group has power to affect the variability of such returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control.

 

 F-15 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

De-facto control exists in situations where the Group has the practical ability to direct the relevant activities of an entity without holding the majority of the voting rights. In determining whether de facto control exists, the Group considers all relevant facts and circumstances, including:

 

- The relative share of the Group’s voting rights with respect both the size and dispersion of other parties who hold voting rights;

 

- Substantive potential voting rights held by the Group and by other parties;

 

- Other contractual arrangements; and

 

- Historic patterns in voting attendance.

 

The subsidiaries of the Group, all of which have been included in the Consolidated financial statements of the Group, are as follows:

 

      Country of
incorporation
and principal
place of		     % Equity interest 
Name  Principal activities  business  Ref  06/30/2020   06/30/2019   06/30/2018 
Bioceres Crops S.A.  Research and development and Corporate activities  Argentina  a   100.00%   100.00%   50.00%
Bioceres Semillas S.A.  Production and commercialization of seeds  Argentina  b   100.00%   100.00%   86,39%
BCS Holding LLC  Investment in subsidiaries  United States  b   100.00%   100.00%   - 
RASA Holding, LLC  Investment in subsidiaries  United States  -   100.00%   100.00%   100.00%
Rizobacter Argentina S.A.  Microbiology Business  Argentina  b   80.00%   80.00%   60.00%
Rizobacter do Brasil Ltda.  Selling of agricultural inputs  Brazil  c   79.99%   79.99%   59.99%
Rizobacter del Paraguay S.A.  Selling of agricultural inputs  Paraguay  c   79.92%   79.92%   59.94%
Rizobacter Uruguay  Selling of agricultural inputs  Uruguay  c   80.00%   80.00%   60.00%
Rizobacter South Africa  Selling of agricultural inputs  South Africa  c   76.00%   76.00%   57.00%
Comer. Agrop. Rizobacter de Bolivia S.A.  Selling of agricultural inputs  Bolivia  c   79.96%   79.96%   59.97%
Rizobacter USA, LLC  Selling of agricultural inputs  United States  c   80.00%   80.00%   60.00%
Rizobacter India Private Ltd.  Selling of agricultural inputs  India  c   80.00%   80.00%   59.99%
Rizobacter Colombia SAS  Selling of agricultural inputs  Colombia  c   80.00%   80.00%   60.00%
Rizobacter France SAS  Selling of agricultural inputs  France  c   80.00%   80.00%   60.00%
Indrasa Biotecnología S.A.  Research and development  Argentina  c d   25.20%   25.20%   31.50%

 

The Group holds a majority share of the voting rights in all its subsidiaries.

 

 F-16 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

a)  In June 2019, Bioceres Crop Solutions signed a share purchase agreement with Bioceres S.A. for the 50% of the ownership in Bioceres Crops S.A. See Note 4.6.

 

b)  See the Reorganization described in Note 1.

 

c)  Indirect interests held through Rizobacter. The indirect equity interest participation included in this table was the 80% of the direct equity interest participation that Rizobacter owns in each entity.

 

d)  In September 2018, the participation of Rizobacter S.A. in Indrasa Biotecnología S.A. decreased from 52.50% to 35%, therefore the Group lost the control over this subsidiary.

 

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

 

3.1.New standards and interpretations adopted by the Group

 

The new standards and interpretations that become applicable for the current reporting year and adopted by the Group are:

 

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 this 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. See Note 15.

 

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.

 

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.

 

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 interest 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.

 

 F-17 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

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.

 

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.

 

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.

 

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.

 

These amendments do not have a material impact on the Group.

 

 F-18 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

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 constitutes 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.

 

3.2.New standards and interpretations not yet adopted by the Group

 

IFRS 17 Insurance Contracts

 

IFRS 17 was issued in May 2017 as replacement for IFRS 4 Insurance Contracts. It requires a current measurement model where estimates are re-measured in each reporting period. Contracts are measured using the building blocks of i) discounted probability-weighted cash flows, ii) an explicit risk adjustment, and (iii) a contractual service margin (CSM) representing the unearned profit of the contract which is recognized as revenue over the coverage period.

 

The standard allows a choice between recognizing changes in discount rates either in the statement of profit or loss or directly in other comprehensive income. The choice is likely to reflect how insurers account for their financial assets under IFRS 9.

 

An optional, simplified premium allocation approach is permitted for the liability for the remaining coverage for short duration contracts, which are often written by non-life insurers.

 

There is a modification of the general measurement model called the ‘variable fee approach’ for certain contracts written by life insurers where policyholders share in the returns from underlying items. When applying the variable fee approach, the entity’s share of the fair value changes of the underlying items is included in the CSM. The results of insurers using this model are therefore likely to be less volatile than under the general model.

 

The new rules will affect the financial statements and key performance indicators of all entities that issue insurance contracts or investment contracts with discretionary participation features.

 

The new rule is effective for financial years beginning on or after January 1, 2021 but was extended to January 1, 2023.

 

These amendments are not expected to have material impact on the Group.

 

Amendments to IFRS 16 - Covid-19-related Rent Concessions

 

As a result of the COVID-19 pandemic, rent concessions have been granted to lessees. Such concessions might take a variety of forms, including payment holidays and deferral of lease payments. In May 2020, the IASB made an amendment to IFRS 16 Leases which provides lessees with an option to treat qualifying rent concessions in the same way as they would if they were not lease modifications. In many cases, this will result in accounting for the concessions as variable lease payments in the period in which they are granted.

 

 F-19 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

Entities applying the practical expedients must disclose this fact, whether the expedient has been applied to all qualifying rent concessions or, if not, information about the nature of the contracts to which it has been applied, as well as the amount recognized in profit or loss arising from the rent concessions.

 

The amendments are effective for financial years beginning on or after January 1, 2020.

 

These amendments are not expected to have material impact on the Group.

 

Amendments to IAS 16 - Property, Plant and Equipment: Proceeds before intended use

 

The amendment to IAS 16 Property, Plant and Equipment (PP&E) prohibits an entity from deducting from the cost of an item of PP&E any proceeds received from selling items produced while the entity is preparing the asset for its intended use. It also clarifies that an entity is ‘testing whether the asset is functioning properly’ when it assesses the technical and physical performance of the asset. The financial performance of the asset is not relevant to this assessment.

 

Entities must disclose separately the amounts of proceeds and costs relating to items produced that are not an output of the entity’s ordinary activities.

 

The amendments are effective for annual periods beginning on or after 1 January 2022.

 

These amendments are not expected to have material impact on the Group.

 

Amendments to IFRS 3 - Reference to the Conceptual Framework

 

Minor amendments were made to IFRS 3 Business Combinations to update the references to the Conceptual Framework for Financial Reporting and add an exception for the recognition of liabilities and contingent liabilities within the scope of IAS 37 Provisions, Contingent Liabilities and Contingent Assets and Interpretation 21 Levies. The amendments also confirm that contingent assets should not be recognized at the acquisition date.

 

The amendments are effective for financial years beginning on or after January 1, 2022.

 

These amendments are not expected to have material impact on the Group.

 

Amendments to IAS 37 - Onerous Contracts – Cost of Fulfilling a Contract

 

The amendment to IAS 37 clarifies that the direct costs of fulfilling a contract include both the incremental costs of fulfilling the contract and an allocation of other costs directly related to fulfilling contracts. Before recognizing a separate provision for an onerous contract, the entity recognizes any impairment loss that has occurred on assets used in fulfilling the contract.

 

The amendments are effective for financial years beginning on or after January 1, 2022.

 

These amendments are not expected to have material impact on the Group.

 

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.

 

 F-20 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

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.

 

These amendments are not expected to have material impact on the Group.

 

Annual Improvements to IFRS Standards 2018–2020

 

The following improvements were finalized in May 2020:

 

• IFRS 9 Financial Instruments – clarifies which fees should be included in the 10% test for derecognition of financial liabilities.

 

• IFRS 16 Leases – amendment of illustrative example 13 to remove the illustration of payments from the lessor relating to leasehold improvements, to remove any confusion about the treatment of lease incentives.

 

• IFRS 1 First-time Adoption of International Financial Reporting Standards – allows entities that have measured their assets and liabilities at carrying amounts recorded in their parent’s books to also measure any cumulative translation differences using the amounts reported by the parent. This amendment will also apply to associates and joint ventures that have taken the same IFRS 1 exemption.

 

• IAS 41 Agriculture – removal of the requirement for entities to exclude cash flows for taxation when measuring fair value under IAS 41. This amendment is intended to align with the requirement in the standard to discount cash flows on a post-tax basis.

 

The new standard is effective for financial years beginning on or after January 1, 2022.

 

These amendments are not expected to have 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 constitutes 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 interests in the associate or joint venture. The amendments apply prospectively.

 

The effective date of these amendments is not determined.

 

 F-21 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

These amendments are not expected to have material impact on the Group.

 

4.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

4.1.Cash and cash equivalents

 

For the purposes of the statements of financial position and statements of cash flows, cash and cash equivalents include cash on hand and in banks and short-term highly liquid investments. Investments can be readily convertible to known amounts of cash and they are subject to insignificant risk of changes in value. In the consolidated statements of financial position, bank overdrafts are included in borrowings within current liabilities.

 

4.2.Financial assets

 

The Group measures its financial assets at initial recognition at fair value.

 

The Group classifies its financial assets as financial assets measured at amortized cost (using the effective interest method) on the basis of both:

 

-The Group’s business model for managing the financial assets; and

 

-The contractual cash flows characteristics of the financial asset.

 

The Group has not irrevocably designated a financial asset as measured at fair value through profit or loss to eliminate or significantly reduce a measurement or recognition inconsistency.

 

Financial assets at fair value through profit or loss are measured at fair value through profit and loss due to the business model used in their negotiation and/or the contractual characteristics of their cash flows.

 

The Group does not apply hedge accounting.

 

Estimates

 

The Group makes estimates of uncollectability of its recorded receivables. Management analyzes trade account receivables in accordance with conventional criteria, adjusting the amount through a charge of an allowance for bad debts upon recognition of the inability of third parties to afford their financial obligations to the Group. Management specifically analyzes the accounts receivable, the historical bad debts, solvency of customers, current economic trends and the changes to the payment conditions of customers to assess the adequate allowance for bad debts.

 

Offsetting of financial assets with financial liabilities

 

Financial assets and liabilities are offset and presented for their net amount in the statements of financial position only when the Group has the right, legally enforceable, to compensate the recognized amounts and has the intention to liquidate for the net amount or to settle the asset and cancel the liability simultaneously.

 

4.3.Inventories

 

Inventories are recognized at cost initially and subsequently at the lower of cost and net realizable value. Cost comprises all costs of purchase and conversion as well as other costs incurred in bringing the inventories to their present location and condition.

 

Weighted average cost is used to determine the cost of ordinarily interchangeable items.

 

 F-22 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

Estimates

 

The Group assesses the recoverability of inventories considering their sale price, whether the inventories are damaged and whether they have become obsolete in whole or in part.

 

Net realizable value is the sale price estimated to be attained in the ordinary course of business, less costs of completion and other selling expenses.

 

The Group sets up an allowance for obsolescence or slow-moving inventories in relation to finished and in-process products. The allowance for obsolescence or slow-moving inventories is recognized for finished products and in-process products based on an analysis by Management of the aging of inventory stocks.

 

4.4.Biological Assets

 

Within current assets, growing crops are included as biological assets, from the moment of sowing until the moment of harvest (approximately 5 to 7 months depending on the crop). At harvest time the Biological assets are transformed into agricultural products, including seed varieties for resale, and incorporated into the inventory.

 

Costs are capitalized as biological assets if, and only if, (a) it is probable that future economic benefits will flow to the entity, and (b) the cost can be measured reliably. The Group capitalizes costs such as: planting, harvesting, weeding, seedlings, irrigation, agrochemicals, fertilizers and a systematic allocation of fixed and variable production overheads that are directly attributable to the management of biological assets, among others.

 

Biological assets, both at initial recognition and at each subsequent reporting date, are measured at fair value less costs to sell, except where fair value cannot be reliably measured. Cost approximates fair value when little biological transformation has taken place since the costs were originally incurred or the impact of biological transformation on price is not expected to be material.

 

Gains and losses that arise from measuring biological assets at fair value less costs to sell and measuring agricultural produce at the point of harvest at fair value less costs to sell are recognized in the statement of income in the period in which they arise in the line item “Initial recognition and changes in fair value of biological assets”.

 

From the harvest time, agricultural products are valued at net realizable value because there is a market asset and the risk of non-sale is non-significant.

 

Generally, the estimation of the fair value of biological assets is based on models or inputs that are not observable in the market and the use of unobservable inputs is significant to the overall valuation of the assets. Unobservable inputs are determined based on the best information available. Key assumptions include future market prices, estimated yields at the point of harvest, estimated production cycle, future cash flows, future costs of harvesting and other costs, and estimated discount rate.

 

Market prices are generally determined by reference to observable data in the principal market for the agricultural produce. Harvesting costs and other costs are estimated based on historical and statistical data. Yields are estimated based on several factors, including the location of the farmland and soil type, environmental conditions, infrastructure and other restrictions and growth at the time of measurement. Yields are subject to a high degree of uncertainty and may be affected by several factors out of the Group’s control including but not limited to extreme or unusual weather conditions, plagues and other crop diseases, among other factors.

 

 F-23 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

4.5.Business combinations

 

The Group applies the acquisition method to account for business combinations. The acquisition cost is measured as the aggregate of the consideration transferred for the acquisition of a subsidiary, which is measured at fair value at the acquisition date, and the amount of any non-controlling interest in such subsidiary. The Group recognizes any non-controlling interest in a subsidiary at the non-controlling interest’s proportionate share of the recognized amounts of subsidiary’s identifiable net assets. The acquisition related costs are expensed as incurred.

 

Any contingent consideration to be transferred by the Group is recognized at fair value at the acquisition date. The contingent consideration is classified as an asset or liability that is a financial instrument under IFRS 9 is measured at fair value through profit or loss.

 

Goodwill is initially measured at cost, which is the excess of the aggregate of the consideration transferred and the amount of the non-controlling interest and any previous interest carried over the net identifiable assets acquired, and liabilities assumed.

 

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For impairment testing, goodwill acquired in a business combination is, as of the acquisition date, allocated to each of the cash-generating units of the Group that is expected to benefit from the synergies of the combination, without considering whether other assets or liabilities of the subsidiary are allocated to those units.

 

Any impairment in the carrying value is recognized in the consolidated statement of comprehensive income. In the case of acquisitions in stages, prior to the write-off of the previously held equity interest in the subsidiary, said interest is re-measured at fair value as of the date of acquisition of control over the subsidiary. The result of the re-measurement at fair value is recognized in profit or loss.

 

When a seller in a business combination has contractually agreed to indemnify the Group for the result of a contingency or uncertainty related to the entirety or a portion of an asset or liability, the Group recognizes an indemnification asset. The indemnification asset is measured on the same basis as the indemnification item. At the end of each period, the Group measures the indemnification assets recognized at the acquisition date on the same basis as the indemnified liability, subject to any contractual limitation on the amount and, for an indemnification asset that is not periodically measured at fair value, based on Management’s assessment of the recoverability of the indemnification asset. The Group derecognizes the indemnification asset when it collects or sells it, or when it loses the right over it.

 

4.6.Business combination under common control

 

Common control of business combination is excluded from the scope of IFRS 3. There is no other specific guidance on this topic elsewhere in IFRS. Therefore, management needs to use judgement to develop an accounting policy that provides relevant and reliable information in accordance with IAS 8. Management accounting police choice for business combination under common control is “Predecessor value method”. A Predecessor value method involves accounting for the assets and liabilities of the acquired business using existing carrying values. Differences between the carrying value and the amount payable should be accounted as an equity contribution.

 

Bioceres Crops S.A. combination

 

Bioceres Crops S.A. (“Bioceres Crops”, previously Semya S.A.) was a company owned 50% by Bioceres S.A. and 50% by Rizobacter Argentina S.A. It was created as a new proposal for the research, development and commercialization of biological products with high technological value: Bioceres Crops' strength consists in the joint and integrated development of biotechnological events, germplasm, biofertilizers and biopesticides to achieve a true synergy in seed treatment. These technologies will increase crop productivity, reduce environmental impact and increase efficiency in the use of resources. Bioceres Crops’ R&D was being developed by Rizobacter and Bioceres who signed, jointly, a Service Agreement in December 2014.

 

 F-24 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

When Group Bioceres acquired control over Rizobacter, it also acquired control over Bioceres Crops. As required by paragraph 42 of IFRS 3, the Group re-measured the fair value of its previous equity interest in Bioceres Crops at the acquisition date. The determination of fair value of Bioceres Crops at the acquisition date is based on the application of a future cash flow present value technique. The main assumptions considered in determining fair value relate to the applicable discount rate and to the projections of revenue from the launch of seed treatment packs. As a result, Ecoseed integrated products have been recorded as intangibles assets. The purpose of those projects is to develop high value-added biological products for the treatment of soybean and wheat seeds, and generate biotechnological, germplasm and bio-inoculants synergies.

 

In June 2019, Bioceres Crop Solutions signed a share purchase agreement (SPA) with Bioceres S.A. for the 50% of ownership in Bioceres Crops. Concurrently the SPA, Bioceres assigned to Bioceres Crop Solutions the R&D service agreement signed mentioned before. Consideration of the SPA will be in installments equivalent to the 50% of the royalties that Bioceres Crops Solutions will accrue from Bioceres Crops, up to a total amount of US$ 670,000.

 

4.7.Impairment of non-financial assets (excluding inventories and deferred tax assets)

 

Impairment tests on goodwill and intangible assets not yet available for use are undertaken annually at the end of the reporting period. Other non-financial assets are subject to impairment tests whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Where the carrying value of an asset exceeds its recoverable amount (i.e. the higher of value in use and fair value less costs to sell), the asset is written down accordingly.

 

Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the smallest group of assets to which it belongs for which there are separately identifiable cash flows (its Cash Generating Unit or CGU). Goodwill is allocated on initial recognition to each of the Group's CGUs that are expected to benefit from a business combination that gives rise to the goodwill.

 

Impairment charges are included in profit or loss, except to the extent they reverse gains previously recognized in other comprehensive income. An impairment loss recognized for goodwill is not reversed.

 

Estimate

 

Impairment testing of goodwill and intangible assets not yet available for use requires the use of significant assumptions for the estimation of future cash flows and the determination of discount rates. The significant assumptions and the determination of discount rates for the impairment testing of goodwill are further explained in Note 6.9.

 

4.8.Joint arrangements

 

An associate is an entity over which the Group exerts significant influence. Significant influence is the power to participate in financial and operating policy decision-making at such entity, but it does not involve control or joint control over those policies.

 

The Group is a party to a joint arrangement when there is a contractual arrangement that confers joint control over the relevant activities of the arrangement to the Group and at least one other party. Joint control is assessed under the same principles as control over subsidiaries.

 

 F-25 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

The Group classifies its interests in joint arrangements as either:

 

- Joint ventures: where the group has rights to only the net assets of the joint arrangement.

 

- Joint operations: where the group has both the rights to the assets and obligations for the liabilities of the joint arrangement.

 

In assessing the classification of interests in joint arrangements, the Group considers:

 

- The structure of the joint arrangement;

 

- The legal form of joint arrangements structured through a separate vehicle;

 

- The contractual terms of the joint arrangement agreement; and

 

- Any other facts and circumstances (including any other contractual arrangements).

 

The Group accounts for its interests in joint ventures using the equity method, where the Group’s share of post-acquisition profits and losses and other comprehensive income is recognized in the Consolidated statement of profit and loss and other comprehensive income.

 

Losses in excess of the Group’s investment in the joint venture are recognized only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the joint venture.

 

Profits and losses arising on transactions between the Group and its joint ventures are recognized only to the extent of unrelated investors’ interests in the joint venture. The Group’s share in a joint venture’s profits and losses resulting from a transaction is eliminated against the carrying amount of investment in the joint venture through the line “share of profit (or loss) of joint ventures” in the Consolidated statements of profit or loss and other comprehensive income.

 

Any premium paid for an investment in a joint venture above the fair value of the Group’s share of the identifiable assets, liabilities and contingent liabilities acquired is capitalized and included in the carrying amount of the investment in the joint venture. Where there is objective evidence that the investment in a joint venture has been impaired, the carrying amount of the investment is tested for impairment in the same way as other non-financial assets.

 

When the Group loses significant influence in an associate or joint control over a joint venture, it measures and recognizes any investment held at fair value. Any difference between the carrying amount of the associate or joint venture when losing significant influence or joint control and the fair value of the held investment and sale revenue are recognized in profit or loss.

 

The Group accounts for its interests in joint operations by recognizing its share of assets, liabilities, revenues and expenses in accordance with its contractually conferred rights and obligations.

 

For all joint arrangements structured in separate vehicles the Group must assess the substance of the joint arrangement in determining whether it is classified as a joint venture or joint operation. This assessment requires the Group to consider whether it has rights to the joint arrangement’s net assets (in which case it is classified as a joint venture), or rights to and obligations for specific assets, liabilities, expenses, and revenues (in which case it is classified as a joint operation).

 

Upon consideration of the factors mentioned above, the Group has determined that all of its joint arrangements except the operation with Espartina S.A. (see below) are structured through separate vehicles only give it rights to the net assets and are therefore classified as joint ventures (Note 12).

 

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. See Note 6.6.

 

 F-26 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

Estimates

 

There is considerable uncertainty regarding Management’s estimates of the Group’s ability to recover the carrying amounts of the investments in joint ventures, since such estimates depend on the joint ventures’ ability to generate sufficient funds to complete the development projects, the future outcome of the project deregulation process and the amounts and timing of the cash flows from projects, among other future events.

 

Management assesses whether there are impairment indicators and, if any, it performs a recoverability analysis.

 

Management estimates of the recoverability of these investments represent the best estimate based on available evidence, the existing facts and circumstances, using reasonable and provable assumptions in the cash flow projections.

 

Therefore, the consolidated financial statements do not include adjustments that would be required if the Group were unable to recover the carrying amount of the above-mentioned assets by generating sufficient economic benefits in the future.

 

When the Group acquired control of Rizobacter, it also acquired the joint control of Synertech. Therefore, the investment in Synertech was added at the time of initial recognition of the acquisition at fair value. The determination of the fair value of Synertech at the acquisition date is based on the application of a future cash flow present value technique. The main assumptions considered in determining fair value relate to the applicable discount rate and to the projections of higher revenue from sales of micro-granulated fertilizers.

 

4.9.Property, plant and equipment

 

Property, plant and equipment items are initially recognized at cost. In addition to the purchase price, cost also includes costs directly attributable to such property, plant and equipment items. There are no unavoidable costs with respect to dismantling and removing items. The cost of property, plant and equipment items acquired in a business combination is their fair value at the acquisition date.

 

Depreciation is calculated using the straight-line method to allocate the property, plant or equipment items’ cost or revalued amounts, net of their residual values, over their estimated useful lives or, in the case of leasehold improvements and certain leased plant and equipment, the shorter lease term as follows:

 

Research instruments: 3 to 10 years

 

Office equipment: 5 to 10 years

 

Vehicles: 5 years

 

Computer equipment and software: 3 years

 

Fixture and fittings: 10 years

 

Machinery and equipment: 5 to 10 years

 

Buildings: 50 years

 

 F-27 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

Useful lives and depreciation methods are reviewed every year as required by IAS 16.

 

Assets under items Land and Buildings, are accounted for at fair value arising from the last revaluation performed, applying the revaluation model indicated by IAS 16. This policy was adopted by the Group since the six-month transition period ended June 30, 2017.

 

Revaluations are performed on a regular basis, when there are signs that the book value differs significantly from that to be determined using the fair value at the end of the reporting year.

 

To obtain fair values, the existence of an active market is considered for the assets in their current status. For those assets for which an active market in their current status exists, the fair values were determined based on their market values. For the remaining cases, the market values of comparable new assets are analyzed, applying a discount based on the status and wear of each asset and considering the characteristics of each of the revalued assets (for example, improvements made, maintenance status, level of productivity, use, etc.

 

Estimates

 

The Group carries certain classes of property, plant and equipment under the revaluation model under IAS 16. The revaluation model requires that the Group carry property, plant and equipment at revalued amounts, being fair value at the date of revaluation less any subsequent accumulated depreciation and any subsequent accumulated impairment losses. IAS 16 requires that the Group carry out these revaluations with sufficient regularity so that the carrying amounts of its property, plant and equipment do not differ materially from that which would be determined using fair value at the end of a reporting period. The determination of fair value at the date of revaluation requires judgments, estimates and assumptions based on market conditions prevailing at the time of any such revaluation. Changes to any of the Group’s judgments, estimates or assumptions or to the market conditions subsequent to a revaluation will result in changes to the fair value of property, plant and equipment.

 

The Group prepares the corresponding revaluations on a regular basis taking into account the work of independent appraisers. The Group uses different valuation techniques depending on the class of property being valued. Generally, the Group determines the fair value of its industrial buildings and warehouses based on a depreciated replacement cost approach. The Group determines the fair value of its land based on active market prices adjusted, if necessary, for differences in the nature, location or condition of the specific asset. If this information is not available, the Group may use alternative valuation methods, such as recent prices in less active markets.

 

Property valuation is a significant area of estimation uncertainty. Fair values are prepared regularly by Management, taking into account independent valuations. The determination of fair value for the different classes of property, plant and equipment is sensitive to the selection of various significant assumptions and estimates. Changes in those significant assumptions and estimates could materially affect the determination of the revalued amounts of property, plant and equipment. The Group utilizes historical experience, market information and other internal information to determine and/or review the appropriate revalued amounts.

 

The following are the most significant assumptions used in the preparation of the revalued amounts for its classes of property, plant and equipment:

 

a)  Land: The Group generally uses the market price of a square meter of land for the same or similar location as the most significant assumption to determine the revalued amount. The Group typically uses comparable land sales in the same location to assess appropriateness of the value of its land. A 10% increase or decrease in the market price of land could have a significant impact on the revalued amount of its land.

 

 F-28 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

b)  Industrial buildings and warehouses: The Group generally determines the construction cost of a new asset and then the Group adjusts it for normal wear and tear. Construction prices may include, but are not limited to, construction materials, labor costs, installation and assembly costs, site preparation, professional fees and applicable taxes. Construction costs may differ significantly from year to year and are subject to macroeconomic changes in the economy where the Group operates, such as the impact of inflation and foreign exchange rates. The construction cost of its industrial buildings and warehouses is determined on a US dollar per constructed square meter basis, while the construction cost of its mills, facilities and grain storage facilities is determined by reference to their total capacity measured in tons milled or stored, respectively. A 5% increase or decrease in the construction costs relating to such assets could have a significant impact on their revalued amounts. A 5% variation in the estimate of normal wear and tear could also have a significant impact on their revalued amounts.

 

Increases in the carrying amounts arising on revaluation of land and buildings are recognized, net of tax, in other comprehensive income and accumulated in reserves in shareholders’ equity. To the extent that the increase reverses a decrease previously recognized in profit or loss, the increase is first recognized in profit or loss. Decreases that reverse previous increases of the same asset are first recognized in other comprehensive income to the extent of the remaining surplus attributable to the asset; all other decreases are charged to profit or loss.

 

4.10.Leased assets

 

Until June 30, 2019 the Group classified its leases at the inception as finance or operating leases. Leases were classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases were classified as operating leases and charged to the statements of income in a straight-line basis over the period of the lease. Finance leases were capitalized at the lease’s inception at the lower of the fair value of the leased property and the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, were included as “Borrowings”.

 

As of the effectiveness of IFRS 16, the Group began applying it 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.

 

On adoption of IFRS 16, the Group recognized lease liabilities in relation to leases which had previously been classified as ‘operating leases’ under the principles of IAS 17 Leases.

 

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.

 

4.11.Intangible assets

 

a)Externally acquired intangible assets

 

Externally acquired intangible assets are initially recognized at cost and subsequently amortized on a straight-line basis over their useful economic lives.

 

Intangible assets acquired from third parties have an estimated useful life as follows (in years):

 

Software: 3 years

 

 F-29 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

Trademarks and patents: 5 years

 

Certification ISO Standards: 3 years

 

Useful lives and amortization methods are reviewed every year as required by IAS 38.

 

b)Internally generated intangible assets (development costs)

 

Expenditure on internally developed products is capitalized if it can be demonstrated that:

 

-It is technically feasible to develop the product for it to be sold;

 

-Adequate resources are available to complete the development;

 

-There is an intention to complete and sell the product;

 

-The Group is able to sell the product;

 

-Sale of the product will generate future economic benefits; and

 

-Expenditure on the project can be measured reliably.

 

Development expenditure not satisfying the above criteria and expenditure on the research phase of internal projects are recognized in the consolidated statement of profit or loss and other comprehensive income as incurred (Note 7.3).

 

Capitalized development costs are amortized using the straight-line method over the periods the Group expects to benefit from selling the products developed (Note 6.8).

 

Useful lives and amortization methods are reviewed every year as required by IAS 38.

 

The research and development process can be divided into several discrete steps or phases, which generally begin with discovery, validation and development and end with regulatory approval and commercial launch. The process for developing seed traits is relatively similar for both GM and non-GM traits. However, the two differ significantly in later phases of development. For example, obtaining regulatory approval for GM seeds is a far more comprehensive and lengthy process than for non-GM seeds. Although breeding programs and industrial biotechnology solutions may have shorter or simpler phases than those described below, the Group has used the industry consensus for seed-trait development phases to characterize its technology portfolios, which is generally divided into the following six phases:

 

i) Discovery: The first phase in the technology development process is the discovery or identification of candidate genes or genetic systems, metabolites, or microorganisms potentially capable of enhancing specified plant characteristics or enabling an agro-industrial biotech solution.

 

ii) Proof of concept: Upon successful validation of the technologies in model systems (in vitro or in vivo), promising technologies graduate from discovery and are advanced to the proof of concept phase. The goal of this phase is to validate a technology within the targeted organism before moving forward with technology escalation activities or extensive field validation.

 

iii) Early development: In this phase, field tests commenced in the proof of concept phase are expanded to evaluate various permutations of a technology in multiple geographies and growing cycles, as well as other characteristics in order to optimize the technology’s performance in the targeted organisms. The goal of the early development phase is to identify the best mode of use of a technology to define its performance concept.

 

 F-30 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated) 

 

 

iv) Advanced development and deregulation: In this phase, extensive field tests are used to demonstrate the effectiveness of the technology for its intended purpose. In the case of GM traits, the process of obtaining regulatory approvals from government authorities is also initiated during this phase, and tests are performed to evaluate the potential environmental impact of modified plants. For solutions involving microbial fermentation, industrial-scale runs are conducted.

 

v) Pre-launch: This phase involves finalizing the regulatory approval process and preparing for the launch and commercialization of the technology. The range of activities in this phase includes seed increases, pre-commercial production, and product and solution testing with selected customers. Usually, a more detailed marketing strategy and preparation of marketing materials occur during this phase.

 

vi) Product launch: In general, this phase, which is the last milestone of the research and development process, is carried out by the Group, the joint ventures and/or the Group’s technology licensees. When technology is commercialized through the joint ventures or technology licensees, a successful product launch will trigger royalty payments to the Group, which are generally calculated as a percentage of the net sales realized by the technology and captured upon commercialization.

 

Demonstrability of technical feasibility generally occurs when the project reaches the “advanced development and deregulation” phase because at this stage success is considered to be probable.

 

c)            Intangible assets acquired in a business combination

 

Intangible assets acquired in a business combination and recognized separately from goodwill are initially recognized at acquisition date fair value (which is considered as their cost). After initial recognition, those assets are measured at cost less accumulated amortization and accumulated impairment losses in the same manner as intangible assets acquired separately.

 

-      Product registration: In accordance with regulations set by certain regulatory agencies such as the National Agri-Food Safety and Quality Service (SENASA), Rizobacter has been required to register products with regulatory authorities to be able to sell them both in the domestic and international markets (jointly referred to as "Product Registration"). Some of the registered products have been developed by third parties.

 

-      Brand: Rizobacter offers a wide variety of proprietary and third-party products, which are commercialized under the Rizobacter brand name. This intangible has been designated with an indefinite useful life.

 

-      Customer loyalty: Rizobacter sales to distributors of agrochemicals and to special accounts, mainly large retailers and wholesalers, whether inside or outside the Argentine territory are included. They are recognized at their fair value at the date of acquisition and are subsequently amortized on a straight-line based on the timing of projected cash flows of the clients over their estimated useful lives.

 

Intangible assets acquired in a business combination have an estimated useful life as follows (in years):

 

Product registration: 5 years

 

Customer loyalty: 26 years

 

Estimates

 

The Group acquired certain intangible assets from Rizobacter in a business combination. To value those intangible assets, valuation techniques generally accepted in the market were applied, based mainly on the revenue approach (such as excess earnings, relief from royalty, and with or without), considering the characteristics of the assets to be valued and available information to estimate their acquisition date fair value. Application of these valuation techniques requires the use of several assumptions related to future cash flows and the discount rate.

 

 F-31 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

4.12.            Financial liabilities

 

The Group measures its financial liabilities at initial recognition at fair value.

 

The Group classifies all its financial liabilities as financial liabilities measured at amortized cost (using the effective interest rate method), except for the following liabilities that are measured at fair value: (a) Private warrants do not reach the fixed-for-fixed’ condition and were classified as a financial liability and valued at its fair value applying a simulation model of the share price trajectory under the hypothesis of geometric Brownian motion. See note 6.17.

 

In the case of the private warrants designated as a whole at fair value through profit or loss, the amount of the change in fair value is recognized as a financial result.

 

The Group does not apply hedge accounting.

 

Estimates

 

The Group has designated private warrants as a whole at fair value. Management of the Group periodically evaluates the appropriate valuation techniques and data used in the fair value measurement and estimation of changes in fair value derived from changes in the inputs. In estimating the fair value of those financial liabilities, the Group uses observable market inputs as far as possible.

 

Information about the valuation techniques and significant assumptions used is detailed in Note 14.

 

4.13.            Warrants

 

As part of the merger, the Group incorporated 11,500,000 public warrants (“Public warrants”), 12,700,000 private warrants (5,200,000 “Founder warrants” and 7,500,000 “Bioceres warrants”) that Union issued to Bioceres LLC in exchange of its Bioceres Inc Crop Business and its equity interest in Bioceres Semillas.

 

The warrants are an equity instrument only if (a) the instrument includes no contractual obligation to deliver cash or another financial asset to another entity and (b) if the instrument will or may be settled in the issuer's own equity instruments, it is either a non-derivative that includes no contractual obligation for the issuer to deliver a variable number of its own equity instruments or a derivative that will be settled only by the issuer exchanging a fixed amount of cash or another financial asset for a fixed number of its own equity instruments (“fixed-for-fixed’ condition”).

 

Public warrants were classified as an equity instrument as they comply with the ‘fixed-for-fixed’ condition. Founder warrants and Bioceres warrants (as a group, the “Private warrants”) instead were classified as financial liabilities (see Note 6.17).

 

Estimates

 

The estimate of the fair value of Private warrants requires a determination of which factors are 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 instruments by applying a simulation model of the share price trajectory under the hypothesis of Brownian Motion. The hypotheses used for the estimate of the fair value of these instruments are disclosed in Note 6.17.

 

 F-32 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

4.14.            Convertibles 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.

 

The Group’s policy choice is to consider if 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 (see Note 6.18), 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.

 

4.15.            Employee benefits

 

Employee benefits are expected to be settled wholly within 12 months after the end of the reporting period and are presented as current liabilities.

 

The accounting policies related to incentive payments based on the stock options are detailed in Note 4.22.

 

4.16.            Provisions

 

The Group has recognized provisions for liabilities of uncertain timing or amount. The provision is measured at the best estimate of the expenditure required to settle the obligation at the end of the reporting period, discounted at a pre-tax rate reflecting current market assessments of the time value of money and risks specific to the liability.

 

4.17.            Parent company investment

 

The Group has recognized the contribution made by Bioceres S.A./Bioceres LLC into the combined entity as Parent company investment. See note 10.2.

 

The Group’s ordinary shares are classified as equity instruments, except for the puttable shares which are compound financial instruments. Puttable shares are segregated into separate components of equity instruments and puttable instruments, the latter of which is classified as a financial liability in accordance with IAS 32.

 

The shares classified as equity instruments are measured at nominal value.

 

4.18.            Revenue recognition

 

Revenue is measured at fair value of consideration received or receivable.

 

Revenue from ordinary activities from contracts with customers is recognized and measured based on a five-step model, namely:

 

• Identification of the contract with the client. A contract is an agreement between two or more parties, which creates rights and obligations for the parties involved.

 

 F-33 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

• Identification of performance obligations, issuing as such a commitment arising from the contract to transfer a good or service.

 

• Determination of the price of the transaction, in reference to the consideration for satisfying each performance obligation.

 

• Assignment of the transaction price between each of the performance obligations identified, based on the methods described in the standard.

 

• Revenue recognition when the performance obligations identified in contracts with customers are met, at any given time or over a period of time.

 

a)Sale of goods

 

Revenue from the sale of goods is recognized when all the following conditions have been satisfied:

 

(i) the Group has transferred to the buyer the significant risks and rewards of ownership of the goods;

 

(ii) the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;

 

(iii) the amount of revenue can be measured reliably;

 

(iv) it is probable that the economic benefits associated with the transaction will flow to the Group; and

 

(v) the costs incurred or to be incurred in respect of the transaction can be measured reliably.

 

In the case of sales made with where delivery is delayed at the buyer's request but the buyer assumes ownership and accepts the invoice, revenue is recognized when the buyer assumes ownership, provided that:

 

-      It must be probable that delivery will take place;

 

-      The goods must be on hand, identified and be ready for delivery to the buyer at the time the sale is recognized

 

-      The buyer must specifically acknowledge the deferred delivery instructions; and

 

-      The usual payment terms must apply.

 

No revenue is recognized when there is only an intention to purchase or produce the goods in time for delivery.

 

b)Rendering of services

 

When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue associated with the transaction is recognized by reference to the stage of completion of the transaction at the end of the reporting period. The outcome of a transaction can be estimated reliably when all the following conditions are satisfied:

 

(i) the amount of revenue can be measured reliably;

 

(ii) it is probable that the economic benefits associated with the transaction will flow to the entity;

 

 F-34 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated) 

 

 

(iii) the stage of completion of the transaction at the end of the reporting period can be measured reliably; and

 

(iv) the costs incurred for the transaction and the costs to complete the transaction can be measured reliably.

 

When the outcome of the transaction involving the rendering of services cannot be estimated reliably, revenue is recognized only to the extent of the expenses recognized that are recoverable.

 

The stage of completion for research and development services is generally determined on the basis of internal records of execution of the performed tasks of the respective work plan.

 

For practical purposes, when services are performed by an indeterminate number of acts over a specified period of time, revenue is recognized on a straight-line basis over the specified period unless there is evidence that some other method better represents the stage of completion.

 

When a specific act is much more significant than any other acts, the recognition of revenue is postponed until the significant act is executed.

 

c)Licenses and royalties

 

Licenses and royalties are recognized when it is probable that the economic benefits associated with the transaction will flow to the Group; and the amount of revenue can be measured reliably.

 

Fees and royalties paid for the use of the Group’s assets are normally recognized in accordance with the substance of the agreement.

 

When a licensee has the right to use certain technology for a specified period of time, revenue is recognized on a straight-line basis over the life of the agreement.

 

An assignment of rights for a fixed fee or non-refundable guarantee under a non-cancellable contract which permits the licensee to exploit those rights freely and the licensor has no remaining obligations to perform is, in substance, a sale. In such cases, revenue is recognized at the time of sale.

 

In some cases, whether or not a license fee or royalty will be received is contingent on the occurrence of a future event. In such cases, revenue is recognized only when it is probable that the fee or royalty will be received, which is normally when the event has occurred.

 

4.19.            Government grants

 

Government grants are recognized where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognized as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, it is recognized as income in equal amounts over the expected useful life of the related asset. Management elected this accounting policy because the Group determined it better shows the financial effect of government grants in the Consolidated financial statements.

 

When the Group receives grants of non-monetary assets, the asset and the grant are recorded at nominal amounts and released to profit or loss over the expected useful life of the asset.

 

The difference between the money obtained under government loans at subsidized rates and the carrying amount of those loans is treated as a government grant, in accordance with IAS 20.

 

 F-35 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

4.20.            Borrowing costs

 

Borrowing costs, either generic or specific, attributable to the acquisition, construction or production of assets that necessarily take a substantial period of time to get ready for their intended use or sale (qualifying assets) are included in the cost of the assets until the moment that they are substantially ready for use or sale. Income earned on the temporary investments of funds generated in specific borrowings still pending use in the qualifying assets, are deducted from the total of financing costs potentially eligible for capitalization.

 

All other loan costs are recognized under financial costs, through profit and loss.

 

4.21.            Income tax and minimum presumed income tax

 

Deferred tax assets and liabilities are recognized where the carrying amount of an asset or liability in the Consolidated statement of financial position differs from its tax base, except for differences arising on:

 

-      The initial recognition of goodwill;

 

-      The initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting or taxable profit; and

 

Investments in subsidiaries and jointly controlled entities where the Group is able to control the timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future.

 

Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the difference can be utilized.

 

The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the end of the reporting period and are expected to apply when the deferred tax liabilities / (assets) are settled / (recovered).

 

Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either:

 

-      The same taxable entity within the Group, or

 

-      Different entities within the Group which intend either to settle current tax assets and liabilities on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be settled or recovered.

 

4.22.            Share-based payments

 

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

 

The cost of these share-based transactions is determined based on their fair value at the date upon which such incentives are granted using a valuation model that is appropriate in the circumstances.

 

This cost is recognized as an expense together with an increase in equity throughout the period in which the service or performance conditions are satisfied (i.e., the vesting period). The accumulated expense recorded in connection with these transactions at the end of each year until the vesting date reflects the time elapsed between the vesting period and Management’s best estimate of the number of equity instruments that will vest. The charge to income/loss for the period represents the variation in the accumulated expense recorded between the beginning and the end of the year.

 

 F-36 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

Non-market related service and performance conditions are not taken into account when determining the grant date fair value of the equity instruments, but the probability that the conditions are fulfilled is assessed as part of Management’s best estimate of the number of equity instruments that will vest. Market-related performance conditions are reflected in the grant date fair value. Any other conditions related to equity-settled share-based payment transactions but without a service requirement are considered as non-vesting conditions. Non-vesting conditions are reflected in the fair value of the equity instruments and are charged to income/loss immediately unless there are service and/or performance conditions as well.

 

No amount is recognized for transactions that will not vest because non-market related performance conditions and/or service conditions were not satisfied. When transactions include market-related conditions or non-vesting conditions, the transactions are considered to be vested, irrespective of whether a market-related condition or the non-vesting condition is satisfied, provided that all the other performance and/or service conditions are met.

 

When the terms and conditions of an equity-settled share-based payment transaction are modified, the minimum expense recognized is the grant date fair value, unmodified, provided that the original terms have been complied with. An additional expense, measured at the date of modification, is recognized for any modification that increases the total fair value of the share-based payment transaction, or is otherwise beneficial to the employee.

 

When the transaction is settled by the Bioceres Crop Solutions or by the counterparty, any remainder of the fair value is charged to income immediately.

 

The dilutive effect of current options is considered in the calculation of the diluted earnings per share.

 

Estimates

 

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 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, as established in paragraph B41 of IFRS 2. The hypotheses used for the estimate of the fair value of these transactions are disclosed in Note 18 and will not necessarily take place in the future.

 

5.            CRITICAL ACCOUNTING JUDGMENTS AND ESTIMATES

 

The Group makes certain estimates and assumptions regarding the future. Estimates and judgments are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are listed below.

 

 F-37 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

5.1.            Critical estimates

 

-Estimate of the trade receivables impairment provision (Note 4.2).
-Estimate of the inventory obsolescence allowance (Note 4.3).
-Capitalization and impairment testing of development costs (Notes 4.7 and 6.8).
-Impairment of goodwill (Notes 4.7 and 6.9).
-Recoverability of investments in joint ventures (Note 4.8)
-Fair value of land and buildings (Note 4.9).
-Identification and fair value of identifiable intangible assets arising in a business combination (Note 4.11 y 6.8).
-Share-based payments (Notes 4.22 and 18).
-Recognition and recoverability of deferred tax assets and credit for minimum presumed income tax (Note 4.21 and Note 8).
-Fair value of Warrants (Note 6.17).
-Classification of the Convertible Note as compound instruments and determination of fair value of the liability component from the initial carrying amount (Note 6.18).

 

6.INFORMATION ABOUT COMPONENTS OF CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

 

6.1.Cash and cash equivalents

 

   06/30/2020   06/30/2019   06/30/2018 
Cash at bank and on hand   4,813,012    3,450,873    2,215,103 
Mutual funds   22,346,409    -    - 
    27,159,421    3,450,873    2,215,103 

 

6.2.Other financial assets

 

   06/30/2020   06/30/2019   06/30/2018 
Current               
Restricted short-term deposit   4,390,458    4,327,275    4,538,321 
US Treasury bills   7,768,410    -    - 
Other investments   16,640,965    347,718    - 
Other marketable securities   -    8,515    12,526 
    28,799,833    4,683,508    4,550,847 

 

    06/30/2020     06/30/2019     06/30/2018  
Non-current               
Shares of Bioceres S.A.   321,705    374,685    240,920 
Other marketable securities   998    1,728    2,438 
    322,703    376,413    243,358 

 

Variations in the allowance for uncollectible trade receivables are reported in Note 6.19. The book value is reasonably approximate to the fair value given its short-term nature.

 

 F-38 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

6.3.Trade receivables

 

   06/30/2020   06/30/2019   06/30/2018 
Trade debtors   53,047,035    48,910,484    44,641,053 
Allowance for impairment of trade debtors   (3,886,832)   (3,360,224)   (3,212,170)
Shareholders and other related parties (Note 16)   1,090,004    467,743    571,216 
Allowance for impairment of shareholders and other related parties (Note 16)   (768)   (75,596)   (23,126)
Allowance for credit notes to be issued   (2,285,197)   (800,606)   (1,517,361)
Trade debtors - Parent company (Note 16)   -    440,268    361,606 
Trade debtors - Joint ventures and associates (Note 16)   120,992    2,369    209,039 
Discounted and deferred checks   25,461,399    13,651,939    11,858,170 
    73,546,633    59,236,377    52,888,427 

 

The book value is reasonably approximate to the fair value given its short-term nature.

 

6.4.Other receivables

 

   06/30/2020   06/30/2019   06/30/2018 
Current               
Taxes   2,205,342    584,641    664,926 
Other receivables - Other related parties (Note 16)   2,102    10,971    119,677 
Other receivables - Parents companies and related parties to Parents (Note 16)   102,069    -    103,251 
Other receivables - Joint ventures and associates (Note 16)   1,562,340    250,783    1,962,459 
Prepayments to suppliers   379,914    496,001    516,742 
Prepayments to suppliers - Shareholders and other related parties (Note 16)   81,737    -    - 
Reimbursements over exports   29,077    366,594    362,815 
Prepaid expenses and other receivables   128,650    213,597    - 
Loans receivable   230,000    -    1,360 
Miscellaneous   49,441    59,242    508,975 
    4,770,672    1,981,829    4,240,205 
                
     06/30/2020      06/30/2019      06/30/2018  
Non-current               
Taxes   328,701    681,168    295,924 
Reimbursements over exports   1,293,958    878,470    346,575 
Other receivables - Joint ventures and associates (Note 16)   -    -    4,337,008 
Miscellaneous   80,914    672    - 
    1,703,573    1,560,310    4,979,507 

 

The book value is reasonably approximate to the fair value given its short-term nature.

 

 F-39 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

6.5.Inventories

 

   06/30/2020   06/30/2019   06/30/2018 
Agrochemicals   356,489    22,137    94,486 
Seeds and grains   1,300,998    207,519    514,000 
Microbiological resale products   13,486,668    13,894,018    8,389,191 
Microbiological products produced   8,079,553    8,370,583    6,383,263 
Goods in transit   1,292,239    751,737    776,869 
Supplies   5,930,471    4,482,827    3,978,934 
Allowance for obsolescence   (1,107,870)   (406,818)   (770,742)
    29,338,548    27,322,003    19,366,001 

 

The roll-forward of allowance for obsolescence is in Note 6.19. Inventories recognized as an expense during the years ended June 30, 2020, 2019 and 2018 amounted to $86,179,252, $80,424,450 and $77,797,414, respectively. Those expenses were included in cost of sales.

 

6.6.Biological assets

 

   06/30/2020   06/30/2019   06/30/2018 
Biological assets   965,728    270,579    - 
    965,728    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 year amount to $ 476,292 (Note 16). 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.

 

Additionaly, Bioceres Semillas S.A., a subsidiary of the Company, has crops for wheat seeds production. The crops are valued at it cost with approximates fair value because little biological transformation has taken place since the costs were originally incurred. Changes in Biological assets:

 

   Soybean   Corn   Wheat   Barley   Total 
Beginning of the year   237,723    32,856    -    -    270,579 
Initial recognition and changes in the fair value of biological assets   198,932    252,056    202,543    63,210    716,741 
Decrease due to harvest / disposals   (447,132)   (252,372)   (227,303)   (59,626)   (986,433)
Cost incurred during the year   284,951    314,950    596,799    38,033    1,234,733 
Exchange differences   (169,373)   (75,736)   (17,216)   (7,567)   (269,892)
Year ended June 30, 2020   105,101    271,754    554,823    34,050    965,728 

 

 F-40 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

   Soybean   Corn   Wheat   Barley   Total 
Beginning of the year   -    -    -    -    - 
Initial recognition and changes in the fair value of biological assets   241,707    38,238    -    -    279,945 
Decrease due to harvest / disposals   (288,791)   (45,687)   -    -    (334,478)
Cost incurred during the year   339,088    47,986    -    -    387,074 
Exchange differences   (54,281)   (7,681)   -    -    (61,962)
Year ended June 30,2019   237,723    32,856    -    -    270,579 

 

As mentioned in Note 4.4., the estimation of the fair value of biological assets is based on models or inputs that are not observable in the market, and the use of unobservable inputs is significant to the overall valuation of the assets. Various factors influence the availability of observable inputs, including, but not limited to, the type of asset and its location, climate changes and the technology used, among others.

 

Unobservable inputs are determined based on the best information available, for example, by reference to historical information regarding past practices and results, statistical and agronomical information and other analytical techniques. Changes in the assumptions underlying such subjective inputs can materially affect the fair value estimate and impact our results of operations and financial condition.

 

In contrast to biological assets whose fair value is generally determined using the DCF method, we typically determine the fair value of our agricultural produce at the point of harvest using market prices.

 

Market prices used in the discounted cash flow model are determined by reference to observable data in the relevant market. Harvesting costs and other commercialization costs are estimated based on historical and statistical data. Yields are estimated by our agronomic engineers based on several factors, including the location of the farms, crop type, environmental conditions, infrastructure and other restrictions and growth at the time of measurement.

 

As of June 30, 2020, the impact of a 20% increase (decrease) in estimated yields, with all other variables held constant, would result in an increase (decrease) in the fair value of our planting of $0.19 million.

 

6.7.Property, plant and equipment

 

Property, plant and equipment as of June 30, 2020, 2019 and 2018, included the following:

 

   06/30/2020   06/30/2019   06/30/2018 
Gross carrying amount   54,527,392    57,059,972    44,764,394 
Accumulated depreciation   (13,012,286)   (13,225,424)   (4,587,248)
Net carrying amount   41,515,106    43,834,548    40,177,146 

 

 F-41 

 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

As of and for the years ended June 30, 2020, 2019 and 2018 

(Amounts in US$, except otherwise indicated) 

 

 

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

 

Class  Net carrying
amount
06/30/2020		   Net carrying
amount
06/30/2019		   Net carrying
amount
06/30/2018		 
Office equipment   188,280    213,437    194,819 
Vehicles   1,149,455    1,785,701    1,099,603 
Equipment and computer software   32,448    123,472    212,236 
Fixtures and fittings   3,679,075    4,737,396    3,508,083 
Machinery and equipment   5,449,233    6,336,691    4,466,293 
Land and buildings   29,746,076    29,969,237    30,513,273 
Buildings in progress   1,270,539    668,614    182,839 
Total   41,515,106    43,834,548    40,177,146 

 

2.Gross carrying amount as of June 30, 2020 is as follows:

 

  Gross carrying amount 
Class  As of the
beginning of
year		   Additions   Reclassifications   Disposals   Foreign
currency
translation		   Revaluation   As of the
end of year		 
Office equipment   629,119    42,658    -    -    (91,895)   -    579,882 
Vehicles   3,604,537    248,800    (264,069)   (139,369)   (472,357)   -    2,977,542 
Equipment and computer software   955,657    27,961    (375,242)   -    (142,697)   -    465,679 
Fixtures and fittings   6,438,430    14,985    20,801    -    (993,785)   -    5,480,431 
Machinery and equipment   10,233,501    556,693    (598,561)   -    (1,136,932)   -    9,054,701 
Land and buildings   34,530,114    3,261    36,487    -    (4,772,065)   4,900,821    34,698,618 
Buildings in progress   668,614    752,339    (57,288)   -    (93,126)   -    1,270,539 
Total   57,059,972    1,646,697    (1,237,872)   (139,369)   (7,702,857)   4,900,821    54,527,392 

 

 Reclassifications corresponds to transfers to Leased Assets from finance leases assets.
   
3.Accumulated depreciation as of June 30, 2020 is as follows:

 

  Depreciation 
Class  Accumulated
as of the
beginning of
year		   Disposals /
Reclassifications		   Of the year   Foreign
currency translation		   Revaluation   Accumulated
as of the end
of year		 
Office equipment   415,682    -    35,879    (59,959)   -    391,602 
Vehicles   1,818,836    (173,482)   426,623    (243,890)   -    1,828,087 
Equipment and computer software   832,185    (307,816)   28,170    (119,308)   -    433,231 
Fixtures and fittings   1,701,034    -    338,092    (237,770)   -    1,801,356 
Machinery and equipment   3,896,810    (279,322)   553,399    (565,419)   -    3,605,468 
Land and buildings   4,560,877    -    627,973    (604,216)   367,908    4,952,542 
Total   13,225,424    (760,620)   2,010,136    (1,830,562)   367,908    13,012,286 

 

F-42

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

As of and for the years ended June 30, 2020, 2019 and 2018 

(Amounts in US$, except otherwise indicated)

 

 

4.Gross carrying amount as of June 30, 2019 is as follows:

 

  Gross carrying amount 
Class  As of the
beginning of
year		   Adjustment
of opening
net book
amount for
application
of IAS 29		   Additions   Transfers   Disposals   Foreign
currency
translation		   Revaluation   As of the
end of year		 
Office equipment   243,948    333,904    30,621    -    (8,493)   29,139    -    629,119 
Vehicles   1,660,294    1,054,631    1,093,749    -    (297,269)   93,132    -    3,604,537 
Equipment and computer software   419,638    416,274    75,152    -    (1,685)   46,278    -    955,657 
Fixtures and fittings   3,826,665    1,909,115    7,518    213,333    -    481,799    -    6,438,430 
Machinery and equipment   5,404,029    3,976,720    98,034    7,863    (31,407)   778,262    -    10,233,501 
Land and buildings   33,026,981    1,438,728    125,930    -    -    1,994,906    (2,056,431)   34,530,114 
Buildings in progress   182,839    75,405    613,098    (221,196)   -    18,468    -    668,614 
Total   44,764,394    9,204,777    2,044,102    -    (338,854)   3,441,984    (2,056,431)   57,059,972 

 

5.Accumulated depreciation as of June 30, 2019 is as follows:

 

  Depreciation 
Class  Accumulated
as of the
beginning of
year		   Adjustments
of opening
net book
amount for
application
of IAS 29		   Disposals   Of the year   Foreign
currency
translation		   Revaluation   Accumulated
as of the end of
year		 
Office equipment   49,129    309,339    (4,007)   39,997    21,224    -    415,682 
Vehicles   560,691    750,195    (205,618)   621,974    91,594    -    1,818,836 
Equipment and computer software   207,402    486,143    (769)   99,350    40,059    -    832,185 
Fixtures and fittings   318,582    912,404    -    397,989    72,059    -    1,701,034 
Machinery and equipment   937,736    2,121,816    (16,807)   673,784    180,281    -    3,896,810 
Land and buildings   2,513,708    1,343,500    -    617,162    221,428    (134,921)   4,560,877 
Total   4,587,248    5,923,397    (227,201)   2,450,256    626,645    (134,921)   13,225,424 

 

F-43

 

 

BIOCERES CROP SOLUTIONS CORP. 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

As of and for the years ended June 30, 2020, 2019 and 2018 

(Amounts in US$, except otherwise indicated)

 

 

6.Gross carrying amount as of June 30, 2018 is as follows:

 

  Gross carrying amount 
Class  As of the
beginning of
year		   Additions   Transfers   Disposals   Foreign
currency
translation		   Revaluation   As of the end
of year		 
Office equipment   252,220    119,623    -    -    (127,895)   -    243,948 
Vehicles   2,223,102    388,856    -    (131,746)   (819,918)   -    1,660,294 
Equipment and computer software   426,529    189,094    47,744    (14,726)   (229,003)   -    419,638 
Fixtures and fittings   4,665,074    6,178    1,646,914    (1,632)   (2,489,869)   -    3,826,665 
Machinery and equipment   9,152,269    197,840    -    (23,010)   (3,923,070)   -    5,404,029 
Land and buildings   30,931,226    26,017    651,662    -    (13,146,785)   14,564,861    33,026,981 
Buildings in progress   870,469    1,864,186    (2,346,320)   -    (205,496)   -    182,839 
Total   48,520,889    2,791,794    -    (171,114)   (20,942,036)   14,564,861    44,764,394 

 

7.Accumulated depreciation as of June 30, 2018 is as follows:

 

  Depreciation 
Class  Accumulated
as of the
beginning of
year		   Disposals   Of the year   Foreign
currency
translation		   Revaluation   Accumulated
as of the end
of year		 
Office equipment   31,522    -    41,740    (24,133)   -    49,129 
Vehicles   373,215    (42,928)   434,632    (204,228)   -    560,691 
Equipment and computer software   118,169    (13,641)   195,386    (92,512)   -    207,402 
Fixtures and fittings   204,171    -    286,024    (171,613)   -    318,582 
Machinery and equipment   746,828    -    741,508    (550,600)   -    937,736 
Land and buildings   828,109    -    531,591    (516,056)   1,670,064    2,513,708 
Total   2,302,014    (56,569)   2,230,881    (1,559,142)   1,670,064    4,587,248 

 

The depreciation charge is included in Notes 7.3 and 7.4. The Group has no commitments to purchase property, plant and equipment items.

 

A detail of restricted assets is provided in Note 19.

 

Revaluation of property, plant and equipment

 

At a minimum, the Group updates their assessment of the fair value of its land and buildings at the end of each reporting year (after the revaluation policy was adopted), taking into account the most recent independent valuations and market data. Valuations were performed at June 30, 2020. Management determined the property, plant and equipment’s value within a range of reasonable fair value estimates.

 

F-44

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

As of and for the years ended June 30, 2020, 2019 and 2018 

(Amounts in US$, except otherwise indicated)

 

 

All resulting fair value estimates for properties are included in level 3.

 

The following are the carrying amounts that would have been recognized if land and building were stated at cost.

 

   Value at cost 
Class of property  06/30/2020   06/30/2019   06/30/2018 
Land and buildings   12,549,876    14,330,892    18,244,100 

 

6.8.Intangible assets

 

Intangible assets as of June 30, 2020, 2019 and 2018 included the following:

 

   06/30/2020   06/30/2019   06/30/2018 
Gross carrying amount   42,832,837    45,848,737    29,155,315 
Accumulated amortization   (7,499,373)   (6,232,311)   (2,497,970)
Net carrying amount   35,333,464    39,616,426    26,657,345 

 

Seed and integrated products

 

The Group’s seed and integrated product activities concentrate primarily on the development and commercialization of seeds and technologies and products that increase yield per hectare, with a focus on providing seed and integrated crop protection and crop nutrition technologies designed to control weeds, insects or diseases, enhance quality traits of the seeds produced and improve nutritional value and other benefits. The Group has sought to develop integrated products that combine three distinct and complementary components, seed traits, germplasms and seed treatments in order to deliver a superior agronomic experience to customers.

 

The Group’s technologies which are capitalized based on an advanced stage of development (phase 4 or higher), are set forth in the table below:

 

Crop Technologies R&D Phase Entity
Germplasm Protection Yield
Soybean MG III-VIII (1) GT (2) HB4 Advanced Develop. BCS Holding
Wheat Spring / GluT (2) HB4 Advanced Develop. Trigall Genetics (3) (Note 12)
Winter

 

Notes:

 

(1)            Soybean germplasms are categorized by maturity groups (MG) from III to VIII. Non-dormant germplasms are alfalfa elite breeding materials without winter dormancy. A. cruentus germplasms are amaranth varieties of the A. cruentus species.

 

(2)            GT means glyphosate tolerance. GluT means glufosinate tolerance. Genuity is the glyphosate tolerance technology developed by Monsanto and Forage Genetics International for alfalfa. ALS means ALS-inhibitor herbicide tolerance.

 

F-45

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

As of and for the years ended June 30, 2020, 2019 and 2018 

(Amounts in US$, except otherwise indicated)

 

 

(3)            Included in Trigall`s financial statements. Reflected in the Consolidated financial statements through the equity method investment.

 

The soybean HB4 technology was approved by the Argentine Ministry of Agriculture, Livestock and Fishing on October 6, 2015, under Resolution N° 397/15.

 

In the case of HB4 wheat, although favorable opinions have already been obtained from both CONABIA and of SENASA, Bioceres is awaiting the decision of the National Directorate of Agricultural Markets, which analyzes the commercial impact of being the first country in the world to release wheat of these characteristics.

 

The U.S. FDA completed its full review of the safety evaluation for HB4 soybeans, clearing it for use in human food and animal food on August 10, 2017. Bioceres Crop received USDA approval of HB4 Drought Tolerant Soybeans in August 2019.

 

Interaction with the regulatory authorities of China continues because the commercialization of the product in Argentina is subject to approval in that country. Specifically, in May 2019, all additional consultations made by the Ministry of Agriculture of the Republic of China (MOA) were answered.

 

Other intangible assets identified in the business combination under common control with Semya (See note 4.6) include the following:

 

-Soybean Ecoseed Pack: This project promotes the development of biological products with high added value for soybean seed treatments. The development of these products integrates biotechnological, germplasm and bio inoculants synergistically.

 

-Wheat Ecoseed Pack: This project promotes the development of biological products with high added value for wheat seeds treatments. The development of these products integrates biotechnological, germplasm and bio inoculants synergistically.

 

-Bio Fungicides: The final objective of the project is to generate biological products with high added value for the treatment of seeds, focusing on the ability to bio control diseases in wheat and soybeans crops.

 

Crop nutrition

 

The Group’s crop nutrition activities include the development of and investment in microbiological products that have been incorporated as part of the integration of Rizobacter into the Group, including the following microbiological assets incorporated as intangible assets measured at fair value:

 

-      TOP Technologies: TOP (Osmo Protection Technology) promotes high metabolic and physiological performance of bacteria and ensures bacterial survival and concentration in seeds and packages, reducing the impact of fungicides and insecticides on bacteria and substantially improving inoculants performance and their incidence in crop yields.

 

-      Signum Technologies: Signum bio-inductor generates molecular signals which activate bacterial and plant metabolic processes earlier, thus maximizing the development of leguminous plants. Furthermore, it stimulates the interaction with different soil beneficial microorganisms that provide additional advantages to inoculation, activates mechanisms of resistance to abiotic stress factors (low temperatures, droughts and soil acidity), and induces defensive responses during interactions with harmful microorganisms.

 

-      LLI Technologies: This technology marks a turning point in inoculation. The time of disposal to maintain living bacteria on seeds is, a prerequisite for effective nodulation. Ready-to-use (RTU) seed allows growers to reduce costs, simplify the sowing operation, minimize the risks normally associated with on-farm treatments, and achieve the precise positioning of bacteria through the inoculant. This treatment provides for a higher number of healthier plants with outstanding root development to reach the soybean crop’s full yield potential.

 

F-46

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

As of and for the years ended June 30, 2020, 2019 and 2018 

(Amounts in US$, except otherwise indicated)

 

 

Other intangible assets

 

Other intangible assets identified in the business combination with Rizobacter:

 

-      Product registration: In accordance with regulations set by certain regulatory agencies such as the National Agri-Food Safety and Quality Service (SENASA), Rizobacter has been required to register products with regulatory authorities to be able to sell them both in the domestic and international markets (jointly referred to as "Product Registration"). Some of the registered products have been developed by third parties.

 

-      Brand: Rizobacter offers a wide variety of proprietary and third-party products, which are commercialized under the Rizobacter brand name. This intangible has been designated with an indefinite useful life.

 

-      Customer loyalty: Rizobacter’s sales to distributors of agrochemicals and to special accounts, mainly large retailers and wholesalers, whether inside or outside the Argentine territory are included. They are recognized at their fair value at the date of acquisition and are subsequently amortized on a straight-line based on the timing of projected cash flows of the clients over their estimated useful lives.

 

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

 

Class  Net carrying
amount
06/30/2020		   Net carrying
amount
06/30/2019		   Net carrying
amount
06/30/2018		 
Seed and integrated products               
Soybean HB4   7,345,923    6,120,336    4,927,853 
Ecoseed integrated products   2,296,955    2,627,946    - 
Crop nutrition               
Microbiological products   2,503,631    2,208,117    2,122,484 
Other intangible assets               
Trademarks and patents   6,374,782    8,063,648    5,574,682 
Software   686,965    994,723    949,310 
Customer loyalty   16,125,208    19,601,656    13,083,016 
Total   35,333,464    39,616,426    26,657,345 

 

F-47

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

As of and for the years ended June 30, 2020, 2019 and 2018 

(Amounts in US$, except otherwise indicated)

 

 

1.Gross carrying amount as of June 30, 2020 is as follows:

 

  Gross carrying amount 
Class  As of the
beginning of
year		   Additions   Disposals   Foreign
currency
translation		   As of the end
of year		 
Seed and integrated products                         
Soybean HB4   6,120,336    1,225,587    -    -    7,345,923 
Ecoseed integrated products   2,627,946    38,143    -    (369,134)   2,296,955 
Crop nutrition                         
Microbiological products   3,267,200    1,358,315    (286,496)   (471,426)   3,867,593 
Other intangible assets                         
Trademarks and patents   9,810,822    -    -    (1,378,076)   8,432,746 
Software   2,149,340    233,434    -    (293,845)   2,088,929 
Customer loyalty   21,873,093    -    -    (3,072,402)   18,800,691 
Total   45,848,737    2,855,479    (286,496)   (5,584,883)   42,832,837 

 

2.Accumulated amortization as of June 30, 2020 is as follows:

 

  Amortization 
Class  Accumulated
as of
beginning of
year		   Of the period   Disposals   Foreign
currency translation		   Accumulated
as of the end
of year		 
Crop nutrition                         
Microbiological products   1,059,083    471,135    (17,495)   (148,761)   1,363,962 
Other intangible assets                         
Trademarks and patents   1,747,174    556,206    -    (245,416)   2,057,964 
Software   1,154,617    399,090    -    (151,743)   1,401,964 
Customer loyalty   2,271,437    723,103    -    (319,057)   2,675,483 
Total   6,232,311    2,149,534    (17,495)   (864,977)   7,499,373 

 

F-48

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

As of and for the years ended June 30, 2020, 2019 and 2018 

(Amounts in US$, except otherwise indicated)

 

 

3.Gross carrying amount as of June 30, 2019 is as follows:

 

  Gross carrying amount 
Class  As of the
beginning
of year		   Adjustment
of opening
net book
amount for
application of
IAS 29		   Additions   Disposals   Foreign
currency
translation		   As of the
end of year		 
Seed and integrated products                              
Soybean HB4   4,927,853    -    1,192,483    -    -    6,120,336 
Ecoseed integrated products   -    -    2,627,946    -    -    2,627,946 
Crop nutrition                              
Microbiology products   2,505,864    841,753    41,485    (318,949)   197,047    3,267,200 
Other intangible assets                              
Trademarks and patents   6,278,706    2,986,739    -    -    545,377    9,810,822 
Software   1,444,603    438,703    200,600    (40,359)   105,793    2,149,340 
Customer loyalty   13,998,289    6,658,894    -    -    1,215,910    21,873,093 
Total   29,155,315    10,926,089    4,062,514    (359,308)   2,064,127    45,848,737 

 

4.Accumulated amortization as of June 30, 2019 is as follows:

 

   Amortization 
Class  Accumulated
as of
beginning of
year		   Adjustment
of opening
net book
amount for
application of
IAS 29		   Disposals   Of the year   Foreign
currency
translation		   Accumulated
as of the
end of year		 
Crop nutrition                              
Microbiology products   383,380    202,791    (20,887)   459,287    34,512    1,059,083 
Other intangible assets                              
Trademarks and patents   704,024    334,919    -    647,101    61,130    1,747,174 
Software   495,293    227,264    (40,359)   429,258    43,161    1,154,617 
Customer loyalty   915,273    435,389    -    841,273    79,502    2,271,437 
Total   2,497,970    1,200,363    (61,246)   2,376,919    218,305    6,232,311 

 

F-49

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

As of and for the years ended June 30, 2020, 2019 and 2018 

(Amounts in US$, except otherwise indicated)

 

 

5.Gross carrying amount as of June 30, 2018 is as follows:

 

   Gross carrying amount 
Class  As of the
beginning of
year		   Additions   Disposals   Foreign
currency
translation		   As of the end
of year		 
Seed and integrated products                         
Soybean HB4   3,111,253    1,816,600    -    -    4,927,853 
Crop nutrition                         
Microbiological products   3,782,238    484,825    -    (1,761,199)   2,505,864 
Other intangible assets                         
Trademarks and patents   10,906,317    -    -    (4,627,611)   6,278,706 
Software   1,787,925    614,529    -    (957,851)   1,444,603 
Customer loyalty   24,315,484    -    -    (10,317,195)   13,998,289 
Total   43,903,217    2,915,954    -    (17,663,856)   29,155,315 

 

6.Accumulated amortization as of June 30, 2018 is as follows:

 

   Amortization 
Class  Accumulated
as of
beginning of
year		   Disposals   Of the year   Foreign
currency
translation		   Accumulated
as of the end
of year		 
Crop nutrition                         
Microbiological products   290,969    -    321,887    (229,476)   383,380 
Other intangible assets                         
Trademarks and patents   503,553    -    617,478    (417,007)   704,024 
Software   395,156    -    399,311    (299,174)   495,293 
Customer loyalty   654,648    -    802,800    (542,175)   915,273 
Total   1,844,326    -    2,141,476    (1,487,832)   2,497,970 

 

The depreciation charge is included in Notes 7.3 and 7.4.

 

There are no intangibles assets whose use has been restricted or which have been delivered as a guarantee. The Group has not assumed any commitments to acquire new intangibles.

 

Estimates

 

There is an inherent material uncertainty related to Management’s estimation of the ability of the Group to recover the carrying amounts of internally generated intangible assets related to biotechnology projects because it is dependent upon Group`s ability to raise sufficient funds to complete the projects development, the future outcome of the regulatory process, and the timing and amount of the future cash flows generated by the projects, among other future events.

 

Management’s estimations about the demonstrability of the recognition criteria for these assets and the subsequent recoverability represent the best estimate that can be made based on all the available evidence, existing facts and circumstances and using reasonable and supportable assumptions in cash flow projections. Therefore, the Consolidated financial statements do not include any adjustments that would result if the Group were unable to recover the carrying amount of the above-mentioned assets through the generation of enough future economic benefits.

 

F-50

 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

6.9.Goodwill

 

The Group is required to test whether goodwill has suffered any impairment on an annual basis. The recoverable amount is determined based on value in use calculations. The use of this method requires the estimation of future cash flows and the determination of a discount rate in order to calculate the present value of the cash flows.

 

After the business combinations that occurred in 2016, goodwill has been generated for Rizobacter CGU. This CGU is composed of all revenues collected through Rizobacter from the production and sale of proprietary and third-party products, both in the domestic and international markets. Additionally, Rizobacter generates revenue from the formulation, fragmentation and resale of third-party products.

 

Among the main groups of products are i) microbiological products (bio-inductors/inoculants, biological fertilizers and bio-controllers); ii) crop and seed protection (treatments, adjuvants, baits, stored grains and seed treatment); and iii) crop nutrition (fertilizers). Packs are generally a combination of a microbiological product (bio-inductors/inoculants) with a crop and seed protection product (treatments).

 

Also, after the share purchase agreement (SPA) between Bioceres S.A. and Bioceres Crops Solutions Corp for the 50 % of ownership in Semya (see note 4.6.), the Group recognized as goodwill the expected revenues from the commercialization of intensive R&D products of Semya that previously were allocated on the equity participation.

 

The variations in goodwill occurred during the years / period consolidated correspond to translation differences. There have been no goodwill impairment indicators.

 

Carrying amount of goodwill as of June 30, 2020, 2019 and 2018 is as follows:

 

    06/30/2020   06/30/2019   06/30/2018 
Rizobacter    20,094,633    23,484,761    14,438,027 
Semya    5,432,222    6,319,954    - 
     25,526,855    29,804,715    14,438,027 

 

The Rizobacter brand intangible with an indefinite useful life has been allocated to the Rizobacter CGU.

 

Management has made the estimates considering the cash flow projections projected by the management of Rizobacter and third-party valuation reports on the assets, intangible assets and liabilities assumed. The key assumptions utilized are the following:

 

Key assumption Management’s approach
Discount rate The discount rate used ranges was 15.55%.

The weighted average cost of capital ("WACC") rate has been estimated based on the market capital structure. For the cost of debt, the indebtedness cost of the CGU was used.

For the cost of equity, the discount rate is estimated based on the Capital Asset Pricing Model (CAPM).

The value assigned is consistent with external sources of information.
   

 

 F-51 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

Key assumption Management’s approach
Budgeted market share of joint ventures and other customers

The projected revenue from the products and services of the CGU has been estimated by Rizobacter´s management based on market penetration data for comparable products and technologies and on future expectations of foreseen economic and market conditions.  

 

The value assigned is consistent with external sources of information.

 

Budgeted product prices  

The prices estimated in the revenue projections are based on current and projected market prices for the products and services of the CGU  

 

The value assigned is consistent with external sources of information.

 

Growth rate used to extrapolate future cash flow projections to terminal period

The growth rate used to extrapolate the future cash flow projections to terminal period is 2%.  

 

The value assigned is consistent with external sources of information.

   

 

Management believes that any reasonably possible change in any of these key assumptions would not cause the aggregate carrying amount of the CGU to exceed its recoverable amount.

 

6.10.Trade and other payable

 

   06/30/2020   06/30/2019   06/30/2018 
Current               
Trade creditors   37,139,351    30,489,072    22,222,872 
Shareholders and other related parties (Note 16)   1,031,710    1,796,932    365,994 
Trade creditors - Parent company (Note 16)   2,210,308    1,568,036    - 
Trade creditors - Joint ventures and associates (Note 16)   14,409,853    4,805,149    3,493,113 
Taxes   2,163,552    1,475,410    35,391 
Consideration payment Semya acquisition (Note 16)   122,950    122,950    - 
Miscellaneous   212,138    320,945    1,591,460 
    57,289,862    40,578,494    27,708,830 
                
                
     06/30/2020      06/30/2019      06/30/2018  
Non-current               
Consideration payment Semya acquisition (Note 16)   452,654    452,654    - 
    452,654    452,654    - 

 

The book value is reasonably approximate to the fair value given its short-term nature.

 

 F-52 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

6.11.Borrowings

 

   06/30/2020   06/30/2019   06/30/2018 
Current               
Bank overdrafts   73,362    -    532,912 
Bank borrowings   47,646,912    52,274,611    54,304,759 
Corporate bonds   12,611,940    8,416,768    3,262,924 
BAF Loans   -    -    5,112,222 
Net loans payables-Parents companies and related parties to Parents (Note 16)   3,389,521    5,399,883    1,816,084 
Finance lease   -    385,947    280,027 
    63,721,735    66,477,209    65,308,928 
Non-current               
Subordinated loan   10,364,045    -    - 
Bank borrowings   3,497,671    16,239,743    25,253,940 
Corporate bonds   18,364,894    8,018,884    - 
Net loans payables-Parents companies and related parties to Parents (Note 16)   9,000,000    12,358,024    - 
Finance lease   -    462,870    454,265 
    41,226,610    37,079,521    25,708,205 

 

The carrying value of some borrowings as of June 30, 2020, 2019 and 2018 are measured at amortized cost differ from their fair value. The following fair values measured are based on discounted cash flows (Level 3) due to the use of unobservable inputs, including own credit risk.

 

   06/30/2020   06/30/2019   06/30/2018 
   Amortized cost   Fair value   Amortized cost   Fair value   Amortized cost   Fair value 
Current                              
Bank borrowings   47,646,912    44,578,784    52,274,611    52,088,002    54,304,759    51,842,735 
Corporate Bonds   12,611,940    11,997,981    8,416,768    7,632,806    3,262,924    3,126,570 
                               
Non-current                              
Bank borrowings   3,497,671    3,072,395    16,239,743    14,274.55    25,253,940    20,610,018 
Corporate Bonds   18,364,894    16,135,876    8,018,884    6,972,332    -    - 

 

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 andsettle the liability simultaneously.

 

As of June 30, 2020, there were no offsets of financial assets and liabilities of the Parents.

 

 F-53 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

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

 

a) Issuance of public corporate bonds (principal market)

 

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 public offering, 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.

 

Series II: On February 14, 2020, under the framework of law N° 23.576 and complementary obligations for corporate bonds, the Group completed an offering of US$7.6 million under Series II of its corporate bonds due 2021 and in two tranches:

 

Series II- Class A (US$)

 

Amount of the Issue: $3,338,830

 

Date of Issue and Subscription: February 19, 2020

 

Applicable rate: 10.5% annual nominal rate

 

Maturity: August 19, 2021

 

Initial Exchange rate: AR$ 61.24 /US$

 

Amortization: The principal will be amortized in one instalment as from the eighteenth month following the Date of Issue. The first instalment will be equal to 100% of the principal amount issued.

 

Date of Payment of Services: Interest will be paid on a quarterly basis at a fixed annual nominal rate of 10.5%. If any service payment date is not a business day, payment will be made on the immediately subsequent business day without any interest accruing on this payment in respect to the days that elapse from the date of payment to the actual payment date.

 

On May 19, 2020, the interest service payment No. 1 of the Series II- Class A bond was made.

 

Series II- Class B (US$)

 

Amount of the Issue: $4,281,581

 

Date of Issue and Subscription: February 19, 2020

 

 F-54 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

Applicable rate: 9.5% annual nominal rate

 

Maturity: February 19, 2021

 

Initial Exchange rate: AR$ 61.24 /US$

 

Amortization: The principal will be amortized in one instalment as from the twelfth month following the Date of Issue. The first instalment will be equal to 100% of the principal amount issued.

 

Date of Payment of Services: Interest will be paid on a quarterly basis at a fixed annual nominal rate of 9,5%. If any service payment date is not a business day, payment will be made on the immediately subsequent business day without any interest accruing on this payment in respect to the days that elapse from the date of payment to the actual payment date

 

On May 19, 2020, the interest service payment No. 1 of the Series II- Class B bond was made.

 

Series III: On June 18, 2020, under the framework of law N° 23.576 and complementary obligations for corporate bonds, the Group completed an offering of $15 million under Series III of its corporate bonds due 2021 with the following conditions:

 

Series III- US$

 

Amount of the Issue: $15,000,000.

 

Date of Issue and Subscription: June 18, 2020

 

Applicable rate: 4.73 % annual nominal rate

 

Maturity: December 18, 2021

 

Initial Exchange rate: AR$ 69.24 /US$

 

Amortization: The principal will be amortized in one instalment on the maturity date.

 

Date of Payment of Services: Interest will be paid on a quarterly basis at a fixed annual nominal rate of 4.73 %. If any service payment date is not a business day, payment will be made on the immediately subsequent business day without any interest accruing on this payment in respect to the days that elapse from the date of payment to the actual payment date.

 

As of June 30, 2020, none of the interest services or capital has due.

 

b) Issuance of private corporate bonds

 

On April 4, 2019, the Group issued class I of guaranteed negotiable obligations, not convertible into shares, within the framework of Law No. 23,576 of Negotiable and Complementary Obligations, for a total nominal value of $16 million due on April 5, 2021, which were placed privately on April 5, 2019, as detailed below:

 

Series I (US$) - Inversiones Odisea

 

Holder: Inversiones Odisea (company duly constituted in and in accordance with the laws of the Republic of Chile).

 

Amount of the Issue: $13,000,000

 F-55 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

Date of Issue and Subscription: April 5, 2019

 

Applicable rate (initial): 10.55% annual nominal rate

 

Maturity: April 5, 2021

 

Amortization: The principal will be amortized in four semiannual instalments as from the sixth month following the Date of Issue. The four instalments will be identical, each representing 25% of the principal amount issued.

 

Date of Payment of Services: Interest will be paid on a semiannual basis at a fixed annual nominal rate. If the payment date is not a business day, the services will be paid the next business day immediately, without interest being accrued on said payment for the days elapsed from said service payment date until the effective payment date.

 

As of June 30, 2020, the capital owned in Series I US$ is $6.5 million.

 

Series II (US$)-Compass Latam High Yield

 

Holder: Compass Latam High Yield (investment fund administered by Compass Group Chile S.A.).

 

Amount of the Issue: $3,000,000

 

Date of Issue and Subscription: April 5, 2019

 

Applicable rate (initial): 10.55% annual nominal rate

 

Maturity: April 5, 2021

 

Amortization: The principal will be amortized in four semiannual instalments as from the sixth month following the Date of Issue. The four instalments will be identical, each representing 25% of the principal amount issued.

 

Date of Payment of Services: Interest will be paid on a semiannual basis at a fixed annual nominal rate. If the payment date is not a business day, the services will be paid the next business day immediately, without interest being accrued on said payment for the days elapsed from said service payment date until the effective payment date.

 

As of June 30, 2020, the capital owned in Series II US$ is $1,5 million.

 

Private corporates bonds are guaranteed by: a) a mortgage on real estates assets owned by the Company, for $16 million and b) pledge on the shares that represent 10% of the holding of Rasa Holding LLC in the share capital of Rizobacter Argentina S.A.

 

Under the terms of the Private corporates’ bonds, Rizobacter is required to comply with the following financial ratios:

 

a)Net Debt to EBITDA ratio must be less than 3x.

 

b)EBITDA to interest ratio must be more than 2x for the years 2019, 2020 and 2021.

 

c)Liabilities to assets ratio less than (i) 0.825x for 2019, (ii) 0.8x for 2020 and 2021.

 

 F-56 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

As of June 30, 2020, our subsidiary Rizobacter did not comply with the liabilities to assets ratio mentioned above. However, Rizobacter got a waiver for the holders on June 30, 2020. Covenant compliance is required to be measured annually.

 

Syndicated loan

 

In 2017, Rizobacter consummated a $45 million syndicated loan with Banco de Galicia y Buenos Aires S.A. as administrator, together with Banco Santander Río S.A., Banco BBVA Francés S.A., Banco Ciudad de Buenos Aires, Banco Provincia de Córdoba S.A., Banco Hipotecario S.A. and Banco Mariva S.A. acting as lenders. This loan was funded in two disbursements, the first of which was made on March 15, 2017 for the amount of $22,000,000, and the second of which was made on April 25, 2017 for the amount of $23,000,000.

 

Amount: $45,000,000

 

Amortization: 13 quarterly instalments as from the twelfth month following the date of issue.

 

Applicable rate: 6.50%

 

Collaterals: Cash and short-term bank deposits collaterals and Bioceres guarantees.

 

Covenants:      Under the terms of the syndicated loan, Rizobacter is required to comply with the following financial ratios:

 

a)Net Debt to EBITDA ratio must be less than 3x,

 

b)EBITDA to interest ratio must be more than (i) 1.2x for 2017, (ii) 1.5x for 2018 and (iii) 2x for the years 2019 and 2020, and

 

c)Liabilities to assets ratio less than (i) 0.85x for 2017, (ii) 0.825x for 2018 and (iii) 0.8x for 2019 and 2020.

 

As of June 30, 2020, our subsidiary Rizobacter did not comply with the liabilities to assets ratio mentioned above. However, Rizobacter got a waiver for the year ended June 30, 2020 from the majority of the banks. The terms of the debts established that if Rizobacter obtains consents from more than 50% of the lenders, the debt is not considered in default. Covenant compliance is required to be measured annually.

 

As of June 30, 2020, the capital owned of the Syndicated loan amounted to $10.4 million.

 

6.12.Employee benefits and social security

 

   06/30/2020   06/30/2019   06/30/2018 
Salaries, accrued incentives, vacations and social security   2,960,542    3,044,965    2,855,678 
Key management personnel (Note 16)   1,550,050    2,312,253    1,556,035 
    4,510,592    5,357,218    4,411,713 
                
Non-current               
Key management personnel (Note 16)   534,038    -    - 
    534,038    -    - 

 

The book value is reasonably approximate to the fair value given its short-term nature.

 

 F-57 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

6.13.Deferred revenue and advances from customers

 

   06/30/2020   06/30/2019   06/30/2018 
Advances from customers   2,865,437    1,074,463    1,007,301 
    2,865,437    1,074,463    1,007,301 

 

The book value is reasonably approximate to the fair value given its short-term nature.

 

6.14.Government grants

 

   06/30/2020   06/30/2019   06/30/2018 
Current   1,270    2,110    17,695 
Non-current   2,335    8,098    15,532 
Total   3,605    10,208    33,227 

 

   06/30/2020   06/30/2019   06/30/2018 
At of the beginning of the year   10,208    33,227    118,545 
Adjustment of opening net book amount for application of IAS 29   -    (27,794)   - 
Received during the year   32,073    31,785    103,382 
Currency conversion difference   (13,944)   (10,638)   (137,114)
Released to the statement of profit or loss   (24,732)   (16,372)   (51,586)
At the end of year   3,605    10,208    33,227 

 

The Group receives government grants to fund research and development projects, some of which are related to the acquisition of property, plant and equipment while others are related to payment for certain expenses like salaries or inputs. Grants are generally implemented through direct payments to the supplier, delivery of cash or loans at subsidized rates. There are neither unfulfilled conditions nor other contingencies attaching to government grants or government assistance.

 

6.15.Provisions

 

   06/30/2020   06/30/2019   06/30/2018 
Provisions for contingencies   417,396    439,740    845,486 
    417,396    439,740    845,486 

 

The Group has recorded a provision for probable administrative, judicial and out-of-court proceedings that could arise in the ordinary course of business, based on a prudent criterion according to its professional advisors and on Management’s assessment of the best estimate of the amount of possible claims. These potential claims are not likely to have a material impact on the results of the Group’s operations, its cash flow or financial position.

 

 F-58 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

Management considers that the objective evidence is not enough to determine the date of the eventual cash outflow due to a lack of experience in any similar cases. However, the provision was classified under current or non-current liabilities, applying the best prudent criterion based on Management’s estimates.

 

There are no expected reimbursements related to the provisions.

 

The roll forward of the provision is in Note 6.19.

 

In order to assess the need for provisions and disclosures in its consolidated financial statements, Management considers the following factors: (i) nature of the claim and potential level of damages in the jurisdiction in which the claim has been brought; (ii) the progress of the eventual case; (iii) the opinions or views of tax and legal advisers; (iv) experience in similar cases; and (v) any decision of the Group`s management as to how it will respond to the eventual claim.

 

6.16.Financed payment – Acquisition of business

 

   06/30/2020   06/30/2019   06/30/2018 
Purchase option   -    -    14,605,469 
Financed payment to sellers   -    2,826,611    5,618,121 
    -    2,826,611    20,223,590 
Non-current               
Financed payment to sellers   -    -    2,651,019 
    -    -    2,651,019 

 

On March 14, 2019, immediately following the closing of the merger, the Rizobacter Call Option was exercised, pursuant to which the total indirect ownership of BCS Holding in Rizobacter increased to 80.00% of all outstanding stock of Rizobacter. The consideration for the Rizobacter Call Option was $1,265,000 in cash and in 4,736,736 shares of Union. Union shares constituting the in-kind consideration were issued in reliance on an applicable exemption from the registration requirements of the Securities Act.

 

Regards the cancelation of the $14.9 million mentioned above, net of prepayment of $1,265,000, we issued 1,334,047 shares which were valued at $5.35 (mark to market). Difference between the fair value of shares issued and the cancelled debt generated a finance gain of $6,582,849 (Note 7.5).

 

6.17.Private warrants

 

   06/30/2020   06/30/2019   06/30/2018 
Private warrants   1,686,643    2,861,511    - 
    1,686,643    2,861,511    - 

 

Founders warrants: simultaneously with the consummation of the initial public offering (“IPO”), Union consummated the private placement of 5,200,000 private warrants. This issuance was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act. Those warrants were purchased by certain of Union initial shareholders. Founders warrants are identical to the warrants included in the units sold in the IPO (Public warrants) having a strike price of $11.50, exercisable in a 5-years period but could be exercised on a cashless basis (each warrant will be converted for the shares that result from the difference between the warrant price and the market value of the shares divided by the market value of the shares). Founder warrants were part of the net assets incorporated in the reverse recapitalization, which were recorded as a reduction of the equity amounting to $1,843,175.

 

 F-59 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

Bioceres warrants: Union issued to Bioceres LLC in exchange of its Bioceres Inc Crop Business and its equity interest in Bioceres Semillas: (i) 2,500,000 warrants with an strike price of $11.50, that will vest if and when the price of the ordinary shares trades above $15.00 for any twenty (20) trading days within any thirty (30) trading-day period; (ii) 2,500,000 warrants with an strike price of $15.00, which will vest upon issuance; and (iii) 2,500,000 warrants with an strike price of $18.00, which will vest upon issuance. Those warrants could be exercised during a 5-year period on a cashless basis (each warrant will be converted for the shares that result from the difference between the warrant price and the market value of the shares divided by the market value of the shares as set forth in the warrant agreement). Bioceres warrants were initially accounted as an equity transaction (distribution to shareholders in accordance to IAS 32), which were recorded as a reduction of equity amounting to $1,589,548. Subsequent changes in the liability are booked in financial results.

 

Private warrants do not reach the fixed-for-fixed’ condition mentioned in the subsection b) of the Note 2.9. Therefore, they were classified as a financial liability and valued at its fair value applying a simulation model of the share price trajectory under the hypothesis of geometric Brownian motion.

 

At inception, the fair value of Private warrants using a volatility of 32% (implied volatility of Public warrants), share price of $5.35 and risk-free rate of 2.43%, was $3.4 million. As of June 30, 2019, their fair value using a share price of $5.30 and risk-free rate of 1.7631%, decrease to $2.8 million and the Group recognized a finance gain of $0.6 million. As of June 30, 2020, their fair value using a share price of $6.06 and risk-free rate of 0.29%, decrease to $1.7 million and the Group recognized a finance gain of $1.2 million. See note 21.

 

6.18.Convertible Notes

 

On March 6, 2020, Bioceres Crop Solutions Crop. 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.

 

Under the terms of the Convertible Notes, the Group is required to comply with the following financial ratios:

 

a)Net Debt to EBITDA ratio must be less than i) 3.5x for 2020 and 2021, (ii) 3.25x for 2022 and (iii) 3x for 2023, and

 

b)EBITDA to interest ratio must be more than 2x

 

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

 

 F-60 

 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

   06/30/2020   06/30/2019   06/30/2018 
Convertible notes   43,029,834    -    - 
    43,029,834    -    - 

 

The carrying value of Convertible notes as of June 30, 2020 measured at amortized cost does not differ significantly from their fair value.

 

6.19.Changes in allowances and provisions

 

Item  06/30/2019   Additions   Uses and
reversals		   Currency
conversion
difference		   06/30/2020 
DEDUCTED FROM ASSETS                         
                          
Allowance for impairment of trade debtors   (3,360,224)   (1,520,928)   2,115    992,205    (3,886,832)
Allowance for impairment of related parties   (75,596)   (879)   45,516    30,191    (768)
Allowance for obsolescence   (406,818)   (984,207)   6,390    276,765    (1,107,870)
                          
Total deducted from assets   (3,842,638)   (2,506,014)   54,021    1,299,161    (4,995,470)
                          
INCLUDED IN LIABILITIES                         
                          
Provisions for contingencies   (439,740)   (208,377)   7,852    222,869    (417,396)
                          
Total included in liabilities   (439,740)   (208,377)   7,852    222,869    (417,396)
                          
Total   (4,282,378)   (2,714,391)   61,873    1,522,030    (5,412,866)

 

Item  06/30/2018   Additions   Uses and
reversals		   IAS 29   Currency
conversion
difference		   06/30/2019 
DEDUCTED FROM ASSETS                              
                               
Allowance for impairment of trade debtors   (3,212,170)   (654,991)   87,916    1,220,652    (801,631)   (3,360,224)
Allowance for impairment of related parties   (23,126)   (80,913)   12,408    17,396    (1,361)   (75,596)
Allowance for obsolescence   (770,742)   (736,372)   615,467    273,252    211,577    (406,818)
                               
Total deducted from assets   (4,006,038)   (1,472,276)   715,791    1,511,300    (591,415)   (3,842,638)
                               
INCLUDED IN LIABILITIES                              
                               
Provisions for contingencies   (845,486)   (74,109)   320,941    353,257    (194,343)   (439,740)
                               
Total included in liabilities   (845,486)   (74,109)   320,941    353,257    (194,343)   (439,740)
                               
Total   (4,851,524)   (1,546,385)   1,036,732    1,864,557    (785,758)   (4,282,378)

 

F-61

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

Item  06/30/2017   Additions   Uses and
reversals		   Currency
conversion
difference		   06/30/2018 
DEDUCTED FROM ASSETS                         
                          
Allowance for impairment of trade debtors   (2,873,688)   (1,362,720)   76,329    947,909    (3,212,170)
Allowance for impairment of related parties   (205,960)   -    27,264    155,570    (23,126)
Allowance for obsolescence   (707,105)   (822,135)   160,331    598,167    (770,742)
                          
Total deducted from assets   (3,786,753)   (2,184,855)   263,924    1,701,646    (4,006,038)
                          
INCLUDED IN LIABILITIES                         
                          
Provisions for contingencies   (1,415,290)   (84,411)   38,308    615,907    (845,486)
                          
Total included in liabilities   (1,415,290)   (84,411)   38,308    615,907    (845,486)
                          
Total   (5,202,043)   (2,269,266)   302,232    2,317,553    (4,851,524)

 

7.INFORMATION ABOUT COMPONENTS OF CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 

7.1.Revenue from contracts with customers

 

   06/30/2020   06/30/2019   06/30/2018 
Sale of goods and services   170,574,909    159,198,516    133,048,429 
Royalties   1,775,790    1,110,463    442,689 
    172,350,699    160,308,979    133,491,118 

 

Transactions of sales of goods and services with joint ventures and with shareholders and other related parties are reported in Note 16.

 

7.2.Cost of sales

 

Item  06/30/2020   06/30/2019   06/30/2018 
Inventories as of the beginning of the year   27,322,003    19,366,001    31,338,034 
Adjustment of opening net book amount for the application of IAS 29   -    4,273,416    - 
Purchases of the year   88,195,797    88,380,452    65,825,381 
Production costs   10,998,165    11,558,513    14,002,049 
Foreign currency translation   (3,601,829)   (9,291,498)   (14,704,912)
Subtotal   122,914,136    114,286,884    96,460,552 
Inventories as of the end of the year   (29,338,548)   (27,322,003)   (19,366,001)
Cost of sales   93,575,588    86,964,881    77,094,551 

 

F-62

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

7.3.R&D classified by nature

 

Item  Research and
development
expenses
06/30/2020		   Research and
development
expenses
06/30/2019		   Research and
development
expenses
06/30/2018		 
Amortization of intangible assets   1,027,340    1,106,390    943,488 
Import and export expenses   17,303    16,360    21,640 
Depreciation of property, plant and equipment   97,171    220,849    223,515 
Employee benefits and social securities   787,931    541,025    1,435,028 
Maintenance   59,219    56,395    86,112 
Energy and fuel   52,614    52,919    78,570 
Supplies and materials   871,930    1,175,184    844,372 
Mobility and travel   70,138    48,308    87,628 
Share-based incentives   -    -    30,005 
Professional fees and outsourced services   94,286    69,110    121,914 
Professional fees related parties   821,809    378,273    - 
Office supplies   9,801    3,796    17,932 
Information technology expenses   -    -    8,851 
Insurance   5,353    8,593    22,006 
Depreciation of leased assets   7,079    -    - 
Impairment of R&D projects   269,001    -    - 
Miscellaneous   4,295    12,189    29,039 
Total   4,195,270    3,689,391    3,950,100 

 

F-63

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

7.4.Expenses classified by nature and function

 

Item  Production
costs		   Selling, general
and administrative
expenses		   Total
06/30/2020		 
Amortization of intangible assets   -    1,122,194    1,122,194 
Analysis and storage   46,620    23,851    70,471 
Commissions and royalties   1,268,670    553,518    1,822,188 
Import and export expenses   190,226    1,321,256    1,511,482 
Depreciation of property, plant and equipment   1,170,624    742,341    1,912,965 
Depreciation of leased assets   248,948    317,870    566,818 
Impairment of receivables   -    1,499,298    1,499,298 
Freight and haulage   541,019    3,458,525    3,999,544 
Employee benefits and social securities   4,744,240    12,505,277    17,249,517 
Maintenance   400,162    530,758    930,920 
Energy and fuel   397,253    111,141    508,394 
Supplies and materials   321,962    260,126    582,088 
Mobility and travel   12,980    1,358,857    1,371,837 
Publicity and advertising   -    1,718,572    1,718,572 
Contingencies   -    200,525    200,525 
Share-based incentives   -    3,428,029    3,428,029 
Professional fees and outsourced services   575,566    2,752,852    3,328,418 
Professional fees related parties   -    32,816    32,816 
Office supplies   2,093    356,906    358,999 
Insurance   64,019    295,206    359,225 
Information technology expenses   -    917,230    917,230 
Obsolescence   977,817    -    977,817 
Taxes   28,724    4,656,318    4,685,042 
Miscellaneous   7,242    181,562    188,804 
Total   10,998,165    38,345,028    49,343,193 

 

F-64

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

Item  Production
costs		   Selling,
general and
administrative
expenses		   Total
06/30/2019		 
Amortization intangible assets   -    1,270,529    1,270,529 
Analysis and storage   5,811    905    6,716 
Commissions and royalties   751,972    489,301    1,241,273 
Bank expenses and commissions   -    30,784    30,784 
Import and export expenses   95,111    1,396,636    1,491,747 
Depreciation of property, plant and equipment   1,164,810    1,064,597    2,229,407 
Impairment of receivables   -    686,985    686,985 
Freight and haulage   1,433,867    2,662,715    4,096,582 
Employee benefits and social securities   5,313,211    12,969,653    18,282,864 
Maintenance   501,699    532,648    1,034,347 
Energy and fuel   568,848    195,449    764,297 
Supplies and materials   275,378    214,513    489,891 
Mobility and travel   12,097    1,306,067    1,318,164 
Publicity and advertising   -    1,709,552    1,709,552 
Contingencies   -    67,417    67,417 
Professional fees and outsourced services   681,790    7,346,607    8,028,397 
Professional fees related parties   -    401,005    401,005 
Office supplies   31,394    352,167    383,561 
Insurance   105,302    802,352    907,654 
Information technology expenses   -    709,539    709,539 
Obsolescence   564,873    -    564,873 
Taxes   37,388    4,821,136    4,858,524 
Miscellaneous   14,962    213,243    228,205 
Total   11,558,513    39,243,800    50,802,313 

 

F-65

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

Item  Production
costs		   Selling, general
and
administrative
expenses		   Total
06/30/2018		 
Amortization intangible assets   -    1,197,988    1,197,988 
Analysis and storage   1,225,756    225,462    1,451,218 
Commissions and royalties   552,906    671,180    1,224,086 
Bank expenses and commissions   -    51,471    51,471 
Import and export expenses   131,558    725,479    857,037 
Depreciation of property, plant and equipment   1,208,699    798,667    2,007,366 
Impairment of receivables   -    1,259,127    1,259,127 
Freight and haulage   664,984    2,251,297    2,916,281 
Employee benefits and social securities   7,582,440    14,265,650    21,848,090 
Maintenance   597,497    408,960    1,006,457 
Energy and fuel   419,716    610,376    1,030,092 
Supplies and materials   169,674    1,577    171,251 
Mobility and travel   48,068    1,373,119    1,421,187 
Publicity and advertising   -    2,239,505    2,239,505 
Contingencies   -    84,411    84,411 
Telephone and communications   -    630    630 
Professional fees and outsourced services   195    2,058,787    2,058,982 
Professional fees related parties   -    759,149    759,149 
Office supplies   17,790    549,359    567,149 
Insurance   118,610    611,129    729,739 
Information technology expenses   19,057    601,955    621,012 
Obsolescence   661,804    -    661,804 
Taxes   105,104    4,019,515    4,124,619 
Miscellaneous   478,191    498,895    977,086 
Total   14,002,049    35,263,688    49,265,737 

 

F-66

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

7.5.Finance results

  

Financial costs  06/30/2020   06/30/2019   06/30/2018 
Interests with the Parents   (1,861,774)   (1,386,288)   (118,266)
Interests   (17,535,324)   (21,397,153)   (15,442,312)
Financial commissions   (1,483,428)   (1,578,292)   (1,628,075)
    (20,880,526)   (24,361,733)   (17,188,653)
Other financial results               
Exchange differences generated by assets   30,194,601    48,355,784    25,710,957 
Exchange differences generated by liabilities   (50,815,215)   (66,200,973)   (49,540,369)
Changes in fair value of financial assets or liabilities and other financial results   (418,186)   406,310    67,349 
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   9,216,684    14,653,335    - 
    (11,822,116)   (17,096,484)   (23,762,063)

 

Profit from translation effects on Argentine Peso denominated loans held by Rizobacter Argentina S.A. accounted in Other comprehensive income or loss amounted to $3.6 million, $1.2 million, and $3.9 million in the years ended June 30, 2020, 2019 and 2018, respectively.

 

8.INCOME TAX AND MINIMUM PRESUMED INCOME TAX

 

Tax reform in Argentina

 

On December 29, 2017, the Government promulgated Law 27430 - Income Tax. This law has introduced several changes regarding income tax; its key components are as follows:

 

Income tax rate: The income tax rates for Argentine companies will be gradually reduced from 35% to 30% for fiscal periods beginning from January 1, 2018 until December 31, 2019, and 25% for fiscal periods beginning on or after January 1, 2020, inclusive.

 

Tax on dividends: A tax is introduced on dividends or profits distributed, among others, by Argentine companies or permanent establishments with the following considerations: (i) dividends derived from the profits generated during fiscal years beginning on January 1, 2018 and until December 31, 2019 will be subject to a 7% withholding; and (ii) dividends arising from gains obtained for years beginning on or after January 1, 2020, will be subject to a 13% withholding tax.

 

Dividends arising from benefits obtained up to the year prior to that commenced on or after January 1, 2018 will continue to be subject, for all beneficiaries of the same, to the 35% withholding on the amount that exceeds taxable distributable taxable profits (transition period of the equalization tax).

 

Optional tax revaluation: The regulation establishes that, at the option of the Companies, the tax revaluation of certain assets located in the country and that are affected to the generation of taxable profits may be carried out. The special tax on the amount of the revaluation depends on the nature of the asset, being 8% for buildings that does not have the character of inventories for sale, 15% for the buildings that have the character of inventories for sale, and 10 % for the rest of the assets. Once the option for a certain property, plant or equipment is exercised, all other property, plant and equipment in the same category must be revalued. This tax is not deductible from income tax, and tax result that originated through the revaluation is not subject to it. The Company did not use the optional tax revaluation.

 

F-67

 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

Adjustment of deductions: Acquisitions or investments made in fiscal years beginning on or after January 1, 2018 will be adjusted on the basis of the percentage variations of the Internal Wholesale Price Index (IPIM) provided by the National Institute of Statistics and Census (INDEC), situation that will increase the deductible amortization and its computable cost in case of sale.

 

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

 

The balances of income tax and minimum presumed income tax recoverable and payable are as follows:

 

   06/30/2020   06/30/2019   06/30/2018 
Current assets               
Income tax   112,220    1,263,795    2,082,269 
    112,220    1,263,795    2,082,269 
Non-current assets               
Income tax   2,653    -    - 
Minimum presumed income tax   3,376    1,184    126,653 
    6,029    1,184    126,653 

 

   06/30/2020   06/30/2019   06/30/2018 
Liabilities               
Income tax   1,556,715    142,028    2,569 
    1,556,715    142,028    2,569 

 

The roll forward of deferred tax assets and liabilities as of June 30, 2020, 2019 and 2018 is as follows:

 

Deferred tax assets  06/30/2020   06/30/2019   06/30/2018 
Tax Loss-Carry Forward   2,362,657    2,663,813    3,638,269 
Changes in fair value of financial assets or liabilities   41,183    32,062    35,944 
Trade receivables   1,068,054    374,425    462,756 
Allowances   -    -    370,930 
Inventories   -    -    710,391 
Intangible assets   -    -    15,098 
Royalties   245,140    -    - 
Right-of-use leased asset   5,424    -    - 
Government grants   -    2,649    9,360 
Others   813,294    670,760    359,073 
Total deferred tax assets   4,535,752    3,743,709    5,601,821 

 

F-68

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

Deferred tax liabilities   06/30/2020    06/30/2019    06/30/2018 
Intangible assets   (6,839,112)   (9,458,239)   (5,071,808)
Property, plant and equipment depreciation   (9,365,882)   (9,618,648)   (8,497,756)
Borrowings   (7,930)   (13,170)   (19,372)
Contingencies   -    -    (2,709)
Inflation tax adjustment   (2,032,078)   (1,706,092)   - 
Allowances   (209,490)   (152,159)   - 
Inventories   (237,258)   (153,563)   - 
Government grants   (3,939)   -    - 
Others   (4,993)   -    (297)
Total deferred tax liabilities   (18,700,682)   (21,101,871)   (13,591,942)
                
Net deferred tax   (14,164,930)   (17,358,162)   (7,990,121)

 

The roll forward of deferred tax assets and liabilities as of June 30, 2020, 2019 and 2018 are as follows:

 

Deferred tax assets  Balance
06/30/2019		   Income
tax
provision		   Transfer
from
deferred
tax
liabilities		   Charge
to OCI		   Conversion
difference		   Balance
06/30/2020		 
Tax Loss-Carry Forward   2,663,813    (133,346)   -    -    (167,810)   2,362,657 
Changes in fair value of financial assets or liabilities   32,062    20,222    -    -    (11,101)   41,183 
Trade receivables   374,425    764,707    -    -    (71,078)   1,068,054 
Goverment grants   2,649    (6,216)   3,939    -    (372)   - 
Royalties   -    245,140    -    -    -    245,140 
Right-of-use leased asset   -    5,676    -    -    (252)   5,424 
Others   670,760    263,407    -    -    (120,873)   813,294 
Total deferred tax assets   3,743,709    1,159,590    3,939    -    (371,486)   4,535,752 

 

Deferred tax liabilities  Balance
06/30/2019		   Income
tax
provision		   Transfer
from
deferred
tax
assets		   Charge to
OCI		   Conversion
difference		   Balance
06/30/2020		 
Intangible assets   (9,458,239)   1,469,311    -    -    1,149,816    (6,839,112)
Property, plant and equipment depreciation   (9,618,648)   45,028    -    (1,133,228)   1,340,966    (9,365,882)
Borrowings   (13,170)   3,548    -    -    1,692    (7,930)
Inflation tax adjustment   (1,706,092)   (589,811)   -    -    263,825    (2,032,078)
Allowances   (152,159)   (84,515)   -    -    27,184    (209,490)
Inventories   (153,563)   (110,152)   -    -    26,457    (237,258)
Goverment grants   -    -    (3,939)   -    -    (3,939)
Others   -    (4,993)   -    -    -    (4,993)
Total deferred tax liabilities   (21,101,871)   728,416    (3,939)   (1,133,228)   2,809,940    (18,700,682)
                               
Net deferred tax   (17,358,162)   1,888,006    -    (1,133,228)   2,438,454    (14,164,930)

 

F-69

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

Deferred tax assets  Balance
  06/30/2018		   Acquisition
of control
of Semya
S.A.		   Income
tax
provision		   Transfer
from
deferred
tax
liabilities		   Charge
to OCI		   Conversion
difference		   Balance
06/30/2019		 
Tax Loss-Carry Forward   3,638,269    113,289    (1,306,198)   -    -    218,453    2,663,813 
Changes in fair value of financial assets or liabilities   35,944    25,868    (33,200)   -    -    3,450    32,062 
Trade receivables   462,756    -    (114,765)   -    -    26,434    374,425 
Allowances   370,930    -    (555,679)   152,159    -    32,590    - 
Inventories   710,391    -    (119,316)   153,563    -    (744,638)   - 
Intangible assets   15,098    (482,387)   (22,467)   476,174    -    13,582    - 
Goverment grants   9,360    -    (7,262)   -    -    551    2,649 
Others   359,073    -    290,552    -    -    21,135    670,760 
Total deferred tax assets   5,601,821    (343,230)   (1,868,335)   781,896    -    (428,443)   3,743,709 

 

Deferred tax liabilities  Balance
  06/30/2018		   Adquisition
of control
of Semya
S.A.		   Income
tax
provision		   Transfer
from
deferred
tax
assets		   Charge
to OCI		   Conversion
difference		   Balance
06/30/2019		 
Intangible assets   (5,071,808)   -    (937,962)   (476,174)   -    (2,972,295)   (9,458,239)
Property, plant and equipment depreciation   (8,497,756)   -    (335,077)   -    576,453    (1,362,268)   (9,618,648)
Borrowings   (19,372)   -    7,342    -    -    (1,140)   (13,170)
Contingencies   (2,709)   -    2,869    -    -    (160)   - 
Inflation tax adjustment   -    -    (1,706,092)   -    -    -    (1,706,092)
Allowances   -    -    -    (152,159)   -    -    (152,159)
Inventories   -    -    -    (153,563)   -    -    (153,563)
Others   (297)   -    314    -    -    (17)   - 
Total deferred tax liabilities   (13,591,942)   -    (2,968,606)   (781,896)   576,453    (4,335,880)   (21,101,871)
                                    
Net deferred tax   (7,990,121)   (343,230)   (4,836,941)   -    576,453    (4,764,323)   (17,358,162)

 

Deferred tax assets  Balance
  06/30/2017		   Income tax
provision		   Transfer
from
deferred tax
liabilities		   Charge
to OCI		   Conversion
difference		   Balance
06/30/2018		 
Tax Loss-Carry Forward   1,059,746    3,631,690    -    -    (1,053,167)   3,638,269 
Changes in fair value of financial assets or liabilities   96,394    (27,872)   -    -    (32,578)   35,944 
Trade receivables   829,095    (16,762)   -    -    (349,577)   462,756 
Allowances   805,375    (143,397)   -    -    (291,048)   370,930 
Inventories   367,682    (767,844)   -    -    1,110,553    710,391 
Intangible assets   38,241    (11,570)   -    -    (11,573)   15,098 
Contingencies   13,612    -    (13,612)   -    -    - 
Goverment grants   41,616    (21,647)   -    -    (10,609)   9,360 
Others   120,340    319,514    12,464    -    (93,245)   359,073 
Total deferred tax assets   3,372,101    2,962,112    (1,148)   -    (731,244)   5,601,821 

 

F-70

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

Deferred tax liabilities  Balance
06/30/2017		   Income
tax
provision		   Transfer
from
deferred
tax assets		   Charge to
OCI		   Conversion
difference		   Balance
06/30/2018		 
Intangible assets   (12,633,408)   (1,114,442)   -    -    8,676,042    (5,071,808)
Property, plant and equipment depreciation   (12,923,320)   2,811,852    -    (4,507,311)   6,121,023    (8,497,756)
Borrowings   (39,257)   3,720    -    -    16,165    (19,372)
Contingencies   -    (15,442)   13,612    -    (879)   (2,709)
Others   (15,942)   24,617    (12,464)   -    3,492    (297)
Total deferred tax liabilities   (25,611,927)   1,710,305    1,148    (4,507,311)   14,815,843    (13,591,942)
                               
Net deferred tax   (22,239,826)   4,672,417    -    (4,507,311)   14,084,599    (7,990,121)

 

The following table provides a reconciliation of the statutory tax rate to the effective tax rate. As the operations of the Group’s Argentine subsidiaries are the most significant source of profit or loss before tax, the following reconciliation has been prepared using the Argentine statutory tax rate:

 

   06/30/2020   06/30/2019   06/30/2018 
Loss before income tax-rate 0%   (205,022)   (21,669,882)   - 
Earning before income tax-rate 21%   828,074    1,264    - 
Earning (loss) before income tax-rate 30%   5,820,286    12,296,011    (3,618,756)
Loss before income tax-rate 35%   -    -    (21,621,007)
Income tax (charge) benefit by applying tax rate to loss before tax:   (1,919,981)   (3,689,069)   8,652,979 
Share of profit or loss of joint ventures and associates   847,512    (44,721)   (1,448,925)
Stock options charge   (239,312)   78,681    (8,898)
Rate change adjustment   (144,660)   (54,735)   3,768,518 
Non-deductible expenses and untaxed gains   (84,128)   (254,201)   (792,321)
Representation expenses   (36,691)   (136,614)   (204,897)
Foreign investment coverage   551,968    233,634    - 
Tax provision adjustments   307,944    -    - 
Result per inflation effect on monetary items and other finance results   (1,489,362)   (3,119,259)   962,061 
Income tax   (2,206,710)   (6,986,284)   10,928,517 

 

The Group did not recognize deferred income tax liabilities of $1,052,022, $44,721 and $1,448,925, as of June 30, 2020, 2019 and 2018, respectively, related to their investments in foreign subsidiaries, associates and joint ventures. In addition, the withholdings and/or similar taxes paid at source may be creditable against the Group’s potential final tax liabilityPrincipal statutory taxes rates in the countries where the Group operates for all of the years presented are:

 

       Income tax rate     
Tax jurisdiction  2020   2019   2018 
Argentina   30%   30%   30% - 35% 
Cayman Island   0%   0%   - 
United State of America   21%   21%   - 

 

F-71

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

   30/6/2020   30/6/2019   30/6/2018 
Current tax expense   (4,094,716)   (2,149,343)   6,256,100 
Deferred tax   1,888,006    (4,836,941)   4,672,417 
Total   (2,206,710)   (6,986,284)   10,928,517 

 

The charge for income tax charged directly to profit or loss and the amount and expiry date of carry forward tax losses as of June 30, 2020 are as follows:

 

Fiscal year  Tax-Loss Carry forward   Tax-Loss Carry forward   Prescription  Tax jurisdiction
2016   309,073    87,177   2021  Argentina
2017   691,923    189,802   2022  Argentina
2018   245,741    63,185   2023  Argentina
2019   266,974    80,092   2024  Argentina
2019   4,258,576    894,301   2039  United State of America
2020   1,501,773    450,530   2025  Argentina
2020   2,845,570    597,570   2040  United State of America
Total   10,119,630    2,362,657       

 

The amount of tax losses for the fiscal year ended on June 30, 2020 is an estimate of the amount to be presented in the tax return.

 

The amount and expiry date of unused tax credits of Argentina minimum presumed income tax as of June 30, 2020 is as follows:

 

Fiscal year   Amount   Prescription 
 2014    644    2024 
 2015    1,363    2025 
 2016    1,369    2026 
 Total    3,376      

 

Estimates

 

There is an inherent material uncertainty related to Management’s estimation of the ability of the Group to use the deferred tax assets (both carryforward of unused tax losses and deductible temporary differences) and the credit of minimum presumed income tax because their future utilization depends on the generation of enough future taxable income by the entities within the Group during the periods in which those temporary differences are deductible or when the unused tax losses can be used.

 

Based on the projections of future taxable income for the periods in which the deferred tax assets are deductible, the Group’s management estimates that, except for the part of deferred tax asset that were unrecognized, it is probable that the entities within the Group can utilize those deferred tax assets, which depends, among other factors, on the success of the current projects of agricultural biotechnology, the future market price of commodities and the market share of the entities within the Group.

 

The estimates of Management about the demonstrability of the recognition criteria for these deferred tax assets and their subsequent recoverability represent the best estimate that can be made based on all the available evidence, existing facts and circumstances and the use of reasonable and supportable assumptions in the projections of future taxable income. Therefore, the Consolidated financial statements do not include adjustments that could result if the entities within the Group would not be able to recover the deferred tax assets through the generation of enough future taxable income.

 

F-72

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

9.            EARNING PER SHARE

 

   06/30/2020   06/30/2019   06/30/2018 
Numerator               
Profit (loss) for the year (basic EPS)   3,359,175    (18,369,045)   (11,039,533)
Profit (loss) for the year (diluted EPS)   3,359,175    (18,369,045)   (11,039,533)
Denominator               
Weighted average number of shares (basic EPS)   36,120,447    30,478,390    28,098,117 
Weighted average number of shares (diluted EPS)   36,416,988    30,478,390    28,098,117 
                
Basic gain attributable to ordinary equity holders of the parent   0.0930    (0.6027)   (0.3929)
Diluted gain attributable to ordinary equity holders of the parent   0.0922    (0.6027)   (0.3929)

 

For the years ended June 30, 2019 and 2018 diluted EPS was the same as basic EPS as the effect of potential ordinary shares would be antidilutive.

 

The 27,116,174 shares issued to Bioceres LLC on March 14, 2019, 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 years ended June 30, 2020, 2019 and 2018 because the average market price of ordinary shares during the periods did not exceed the exercise price of the warrants. However, on August 24, 2020, the Company completed an offer to exchange any and all of its 24,200,000 outstanding warrants and consistently issued 2,601,954 shares in exchange for the warrants tendered. See Note 21.

 

Convertible Notes outstanding were not included in the diluted EPS calculations for the year ended June 30, 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.

 

The stock options were included in the diluted EPS calculation for the year ended June 30, 2020 only for the tranches in which the average market price of ordinary shares during the periods was higher than the assumed proceeds per option. See Note 18.

 

The number of shares awarded under the bonus in kind were included in the diluted EPS calcutation for the year ended June 30,2020 as if they have been granted at the beginning of the year when the plan was already in effect.

 

There are neither ordinary shares transactions nor potential ordinary shares transactions that have occurred after June 30, 2020 that would have significantly changed the number of ordinary shares or potential ordinary shares outstanding at the end of the reporting period.

 

F-73

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

10.INFORMATION ABOUT COMPONENTS OF EQUITY

 

10.1.            Capital issued

 

The 27,116,174 shares issued to Bioceres LLC in exchange of 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, were considered retrospectively in issued capital based on the assumption of those events have occurred at the beginning of the earliest period presented.

 

10.2.            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:

 

   06/30/2020   06/30/2019   06/30/2018 
Capital contributions   -    294,041    1,572,235 
Intangible contributed   -    623,022    2,105,616 
Preferred shares contributed   -    -    3,331,534 
Incorporation of financial debt (*)   -    (15,475,410)   (5,000,000)
    -    (14,558,347)   2,009,385 

 

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

 

10.3.            Reverse recapitalization

 

As mentioned in Note 1, the merger was reflected as a reverse recapitalization (capital transaction) equivalent to the issuance of shares by the private company (Bioceres) for the net monetary assets of the public shell company (Union). The difference in the fair value of equity instruments retained by UAC’s former shareholders (shares and public warrants) over the value of the net monetary assets incorporated represents a service for listing the shares and it should be accounted as a shared based payment in accordance to IFRS 2. The cost of the service was recognized as an expense in the line “Share based payment cost of listing shares” for an amount of $20.9 million.

 

In December 2017, Union issued an aggregate of 2,875,000 ordinary shares (“Founder shares”) pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act. 862,500 of those Founder shares were transferred to Bioceres LLC as an additional consideration payable in the merger.

 

On March 2, 2018, Union consummated an IPO of 11,500,000 units. Each unit consisted in one ordinary share, one right exchangeable for one-tenth of one ordinary share, and one redeemable warrant exercisable for one ordinary share at a price of $11.50 per share (Public warrants).

 

On February 27, 2019, Union held an Extraordinary General Meeting of Shareholders, whereby holders voted in favor of the merger with Bioceres and converted 11,500,000 rights into 1,150,000 Union shares. In connection with this vote, the holders of 11,376,836 ordinary shares of UAC exercised their right to redeem their shares and collected a total amount of $117,005,196. Net process from the trust account was incorporated to the Group for a total amount of $1,083,840.

 

The fair value of the shares retained by UAC former shareholders was calculated based on the UAC share price as of the day of the transaction ($5.35).

 

F-74

 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

10.4.            Shares issued - Rizobacter Call Option

 

Immediately following the merger, the Rizobacter Call Option was exercised. For the tranche of 9.99% (that was previously accounted as financial liability) consideration of the payment was in $1,265,000 in cash and in the form of UAC shares, pursuant to which 1,334,047 ordinary shares were issued. The difference between the fair value of the consideration paid and the financial liability was recognized in financial results as “Gain for cancellation of purchase option”.

 

For the tranche of an additional 20%, consideration of the payment was in the form of UAC shares, pursuant to which 3,402,688 ordinary shares were issued. The adjustment in the non-controlling interest was recorded as an equity transaction. After the Rizobacter Call Option was exercised, the total indirect ownership of BCS Holding in Rizobacter increased to 80.00% of all outstanding stock of Rizobacter.

 

10.5.            Share capital summary

 

As of June 30, 2019, 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.

 

See Note 21 in consideration of the warrants outstanding and the Offer described therein made by the Company and the corresponding shares issued in exchange for the warrants tendered.

 

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

 

10.6.            Convertible Notes

 

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. See Note 4.14

 

10.7.            Non-controlling interests

 

The subsidiary whose non-controlling interest is significant as of June 30, 2020, 2019 and 2018 is:

 

Rizobacter Argentina

 

Name  Country  06/30/2020   06/30/2019   06/30/2018 
Rizobacter Argentina S.A.  Argentina   20%   20%   40%

 

Below is a detail of the summarized financial information of Rizobacter, prepared in accordance with IFRS, and modified due to fair value adjustments at the acquisition date and differences in accounting policies. The information is presented prior to eliminations between that subsidiary and other Group companies.

 

F-75

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

Summary financial statements:  06/30/2020   06/30/2019   06/30/2018 
Current assets   148,256,827    115,546,951    86,461,071 
Non-current assets   49,843,457    47,418,450    48,295,110 
Total assets   198,100,284    162,965,401    134,756,181 
                
Current liabilities   129,838,941    100,590,919    88,270,487 
Non-current liabilities   32,935,399    34,788,705    29,598,319 
Total liabilities   162,774,340    135,379,624    117,868,806 
                
Equity attributable to controlling interest   35,324,227    27,584,666    16,824,251 
Equity attributable to non-controlling interest   1,717    1,111    63,124 
Total equity   35,325,944    27,585,777    16,887,375 
                
Total liabilities and equity   198,100,284    162,965,401    134,756,181 

 

Summary statements of comprehensive income or loss  06/30/2020   06/30/2019   06/30/2018 
Revenues   162,404,866    156,741,933    129,798,271 
Initial recognition and changes in the fair value of biological assets   716,741    -    - 
Cost of sales   (86,533,561)   (85,287,771)   (71,699,144)
Gross margin   76,588,046    71,454,162    58,099,127 
                
Research and development expenses   (2,689,468)   (2,367,727)   (2,902,235)
Selling, general and administrative expenses   (36,103,289)   (31,316,843)   (31,219,784)
Share of profit or loss of joint ventures and associates   1,960,549    1,071,297    (1,683,949)
Other income   (380,871)   286,626    524,672 
Operating profit   39,374,967    39,127,515    22,817,831 
                
Financial results   (30,014,131)   (24,650,359)   (37,989,573)
Profit (loss) before taxes   9,360,836    14,477,156    (15,171,742)
                
Income tax (expense) benefit   (3,830,106)   (7,729,300)   3,275,077 
Result for the year   5,530,730    6,747,856    (11,896,665)
                
Exchange differences on translation of foreign operations   1,281,974    17,197    (8,266,718)
Revaluation of property, plant and equipment, net of tax   3,921,091    (1,347,124)   14,079,875 
Total comprehensive result   10,733,795    5,417,929    (6,083,508)

 

There were no dividends paid to Rizobacter non-controlling interest (NCI) in the years ended June 30, 2020, 2019 and 2018.

 

F-76

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

11.CASH FLOW INFORMATION

 

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

 

   06/30/2020   06/30/2019   06/30/2018 
Investment activities               
Settlement of liability with loan to joint venture (1)   -    6,964,101    - 
Investment in kind in other related parties (Note 16)   476,292    463,511    - 
Non-monetary contributions in joint ventures (Note 12)   250,000    94,355    679,510 
    726,292    7,521,967    679,510 

 

    06/30/2020    06/30/2019    06/30/2018 
Financing activities               
Purchase option paid by a parent loan   -    (1,265,000)   - 
Parent company investment   -    (14,558,347)   2,009,385 
Transfer of preferred stocks   -    -    9,759,545 
Capitalization of financial debt   -    13,720,000    - 
Reverse recapitalization   -    (3,688,963)   - 
Net assets incorporated of Semya (2)   -    7,369,168    - 
Acquisition of control of Semya   -    (3,684,585)   - 
    -    (2,107,727)   11,768,930 

 

(1) Offset of trade receivables and other payables with Synertech.

 

(2) As a result of the Share purchase agreement between Bioceres Crop Solutions and Bioceres S.A. (see Note 4.6), the Group incorporated the following assets and liabilities:

 

Balance sheet as of May 31, 2019  Total 
Current assets   67,924 
Non-current assets     
Tax credits   253,655 
Intangibles   2,147,199 
Goodwill   5,836,268 
Total assets   8,305,047 
      
Current liabilities     
Trade payables   273,442 
Borrowings   114,568 
Non-current liabilities     
Deferred tax   547,868 
Total liabilities   935,878 
      
Total equity   7,369,169 

 

F-77

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

Disclosure of changes in liabilities arising from financing activities:

 

   Financing activities 
   Borrowings   Financed payment - Acquisition of business   Convertible notes   Total 
As of June 30, 2019   103,556,730    2,826,611    -    106,383,341 
Proceeds   93,273,502    -    42,075,000    135,348,502 
Decrease bank overdraft and other short-term borrowings   (2,331,974)   -    -    (2,331,974)
Payments   (76,846,934)   (2,937,500)        (79,784,434)
Interest payment   (21,533,187)   -    -    (21,533,187)
Exchange differences, currency translation differences and other financial results   8,830,208    110,889    954,834    9,895,931 
As of June 30, 2020   104,948,345    -    43,029,834    147,978,179 

 

12.JOINT VENTURES

 

In September 2018, the participation of Rizobacter S.A. in Indrasa Biotecnología S.A. decreased from 52.50% to 35%, therefore the Group lost the control over this subsidiary.

 

In June 2019, Bioceres Crop Solutions signed a share purchase agreement with Bioceres S.A. for the 50% of the ownership in Semya. See Note 4.6.

 

Investments in joint ventures and affiliates:

 

Assets  06/30/2020   06/30/2019   06/30/2018 
Semya S.A.  (1)   -    -    2,972,239 
Synertech Industrias S.A.   24,619,773    25,297,376    16,099,816 
Indrasa Biotecnología S.A.   33,019    23,652    - 
    24,652,792    25,321,028    19,072,055 

 

Liabilities  06/30/2020   06/30/2019   06/30/2018 
Trigall Genetics S.A.   1,548,829    1,970,903    2,012,298 
    1,548,829    1,970,903    2,012,298 

 

(1) As a result of the share purchase agreement with Bioceres S.A., Semya is a consolidated subsidiary as of June 30, 2019. (See Note 4.6).

 

F-78

 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

Changes in joint ventures investments and affiliates:

 

   06/30/2020   06/30/2019   06/30/2018 
As of the beginning of the year   23,350,125    17,059,757    30,580,943 
Adjustment of opening net book amount for the application of IAS 29   -    8,328,794    - 
Monetary contributions   -    129,340    - 
Non-monetary contributions   250,000    94,355    679,510 
Parent company investment   -    294,041    121,479 
Loss of control of Indrasa Biotecnología S.A.   -    10,591    - 
Acquisicion of control of Semya S.A.   -    (3,684,585)   - 
Revaluation of property, plant and equipment   521,406    94,009    1,679,818 
Foreign currency translation   (3,494,761)   11,337    (13,865,192)
Share of profit or loss   2,477,193    1,012,486    (2,136,801)
As of the end of the year   23,103,963    23,350,125    17,059,757 

 

Share of profit or loss of joint ventures and affiliates:

 

   06/30/2020   06/30/2019   06/30/2018 
Trigall Genetics S.A.   171,502    (2,647)   (606,491)
Semya S.A.   -    (22,895)   (55,872)
Synertech Industrias S.A.   2,294,332    1,034,818    (1,474,438)
Indrasa Biotecnología S.A.   11,359    3,210    - 
    2,477,193    1,012,486    (2,136,801)

 

Summarized financial information prepared in accordance with International Financial Reporting Standards (“IFRS”) in relation to the joint ventures is presented below:

 

Summarized balance sheet  Trigall  Genetics (i)   Semya (ii) 
   06/30/2020   06/30/2019   06/30/2018   06/30/2020(a)   06/30/2019(a)   06/30/2018 
Current assets                              
Cash and cash equivalents   1,331    13,114    44,937    46,206    489    183 
Other current assets   1,024,793    323,265    66,077    1,580    77,074    14 
Total current assets   1,026,124    336,379    111,014    47,786    77,563    197 
Non-current assets                              
Intangible assets   11,776,705    10,214,575    8,681,400    540,056    583,936    217,809 
Property, plant and equipment   -    -    -    1,262    -    - 
Other non- current assets   -    -    -    755,056    362,181    448,942 
Total non-current assets   11,776,705    10,214,575    8,681,400    1,296,374    946,117    666,751 
Current liabilities                              
Financial liabilities   -    9,476,272    7,878,036    197,699    127,074    448,309 
Other current liabilities   869,700    1,016,083    1,030,015    954,180    898,623    275,341 
Total current liabilities   869,700    10,492,355    8,908,051    1,151,879    1,025,697    723,650 
Non-current liabilities                              
Financial liabilities   10,831,048    -    -    -    -    - 
Other non- current liabilities   831,685    460,268    295,575    -    42,323    - 
Total non-current liabilities   11,662,733    460,268    295,575    -    42,323    - 
Net assets   270,396    (401,669)   (411,212)   192,281    (44,340)   (56,701)

 

F-79

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

Summarized balance sheet  Synertech (iii)   Indrasa S.A. (iv) 
   06/30/2020   06/30/2019   06/30/2018   06/30/2020   06/30/2019   06/30/2018 
Current assets                              
Cash and cash equivalents   18,251    40,634    39,133    53,708    16,296    28,180 
Other current assets   17,983,868    5,709,650    7,182,862    66,150    93,654    45,837 
Total current assets   18,002,119    5,750,284    7,221,995    119,858    109,950    74,017 
Non-current assets                              
Property, plant and equipment   14,168,459    15,046,903    8,344,900    13,876    18,387    15,243 
Other non- current assets   -    -    1,328,521    -    -    - 
Total non-current assets   14,168,459    15,046,903    9,673,421    13,876    18,387    15,243 
Current liabilities                              
Financial liabilities   5,484,866    921,703    705,856    -    -    - 
Other current liabilities   4,719,276    4,595,906    6,750,220    39,395    60,760    42,166 
Total current liabilities   10,204,142    5,517,609    7,456,076    39,395    60,760    42,166 
Non-current liabilities                              
Financial liabilities   2,783,951    -    1,080,247    -    -    - 
Other non- current liabilities   2,554,905    3,974,975    4,801,887    -    -    - 
Total non-current liabilities   5,338,856    3,974,975    5,882,134    -    -    - 
Net assets   16,627,580    11,304,603    3,557,206    94,339    67,577    47,094 

 

Summarized statements of comprehensive income  Trigall Genetics (i)   Semya (ii) 
   06/30/2020   06/30/2019   06/30/2018   06/30/2020(a)   06/30/2019(a)   06/30/2018 
Revenue   799,625    367,646    104,037    -    -    - 
Finance income   79,442    54,003    14,053    355,979    29,275    - 
Finance expense   (1,863)   (16,145)   (12,213)   (570,528)   (5,661)   (209,966)
Depreciation and amortization   -    -    -    631    -    - 
Profit (loss) of the year   172,670    (33,195)   (194,432)   (1,048,375)   (218,627)   (354,151)
Other comprehensive income   -    -    -    -    -    (37,036)
Total comprehensive income (loss)   172,670    (33,195)   (194,432)   (1,048,375)   (218,627)   (391,187)

 

Summarized statements of comprehensive income  Synertech (iii)   Indrasa S.A. (iv) 
   06/30/2020   06/30/2019   06/30/2018   06/30/2020   06/30/2019   06/30/2018 
Revenue   21,501,725    18,305,953    6,611,384    364,180    452,555    232,290 
Finance income   3,805,655    2,434,610    1,758,129    -    1,813    756 
Finance expense   (6,666,508)   (6,193,963)   (5,831,182)   (28,443)   (3,001)   (2,516)
Depreciation and amortization   (1,076,699)   (1,074,552)   (653,766)   (2,226)   (3,653)   - 
Profit (loss) of the year   5,099,852    2,278,859    (1,991,754)   32,453    6,548    7,483 
Other comprehensive income   1,042,811    334,403    -    -    -    - 
Total comprehensive income (loss)   6,142,663    2,613,262    (1,991,754)   32,453    6,548    7,483 

  

(a) As of June 30, 2020, and 2019, Semya is a subsidiary of the Group and is included in the Group’s consolidated financial statements. See Note 4.6.

 

F-80

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

(i) Trigall Genetics S.A.

 

This joint venture was formed in December 2013 with Florimond Desprez (a company from France with an internationally recognized track record in wheat breeding) through Bioceres Inc. Equity interest is equally shared between both participants.

 

Trigall is a separately structured vehicle incorporated and operating in Uruguay. The primary activity of Trigall is being engaged in the development and deregulation of conventional and GM wheat varieties in Latin America, which is in line with the Group’s core business.

 

This joint arrangement provides for each of the joint venture partners to exclusively license its trait and germplasm technologies to Trigall for use in wheat. The Group granted an exclusive, sub licensable license to Trigall for certain of Group`s technologies, including HB4, for use in wheat.

 

Both the Group and Florimond Desprez have agreed to make loans to Trigall in accordance with each party`s ownership interest in the joint venture to provide it funds needed for its operation and growth.

 

The first products in Trigall`s pipeline are conventional wheat varieties that will be sold through Bioceres Semillas, as well as through other Trigall licensees. The first Group`s GM product is HB4, which is now in the advanced development and deregulation phase. Trigall is currently seeking to add other market channel partners in the region.

 

The contractual arrangement provides the Group with only the rights to the net assets of the joint arrangement. The rights to the assets and obligation for liabilities of the joint arrangement rest primarily with Trigall. Under IFRS 11 this joint arrangement is classified as a joint venture and has been included in the Consolidated financial statements using the equity method. The shares of Trigall are not quoted.

 

There are no significant restrictions on the ability of the joint venture to transfer funds to the Group in the form of cash dividends, or to repay loans or advances made by the Group, except for the obligation to establish a legal reserve for 5% of the profit for the year until reaching 20% of the capital

 

(ii) Semya

 

This joint venture was launched in 2012 and formed as a separate vehicle in August 2014 with Rizobacter and Bioceres S.A. Equity interest is equally shared between both participants.

 

The primary activity of Semya is being engaged in the development and deregulation of second generation agricultural biological products, in particular, seed treatments tailored for particular soil environments, which is in line with the Group’s core business.

 

The joint venture agreement provides for each party to render the services required to advance a mutually agreed work plan and which each party agrees to fund in proportion to its equity interest.

 

Under the services agreements, both Bioceres S.A. and Rizobacter agree to provide to Semya the licenses required for product development and commercialization, while results obtained in the provision of the services are owned by Semya. It creates customized seed treatments based on soil conditions on a given agricultural environment and on specific trait-germplasm combinations.

 

As mentioned in Note 4.6, in June 2019, Bioceres Crop Solutions signed a share purchase agreement with Bioceres S.A. to acquire the remaining 50% interest in Semya.

 

(iii) Synertech

 

Synertech has been included in the Group Bioceres after the acquisition of the majority interest in Rizobacter. This joint venture has arisen from the association between Synertech and De Sangosse, which jointly opened a new fertilizer manufacturing plant in Pergamino, Argentina, on June 28, 2017. Both parties' equity interest is 50%.

 

F-81

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

Construction and start-up of the new plant required an investment of more than $30 million, and was conceived for research, production and commercialization of the Microstar PZ® microgranulated fertilizer, its byproducts and other possible developments in the agricultural fertilization area to supply both the domestic and export markets, such as Brazil, Paraguay, Bolivia, Uruguay, Chile, Central America and North America, among others, accompanying the exponential growth of Rizobacter in the world markets with a strong international insertion.

 

The contractual agreement sets forth that the Group only has rights over the net assets under the joint arrangement. The rights over the assets and obligations for the liabilities assumed under the joint arrangement primarily remain with Synertech. Under IFRS 11, this joint arrangement is classified as a joint venture and has been equity-accounted in the Consolidated financial statements. Synertech shares are not listed for trading in a public offering.

 

There are no significant restrictions on the joint venture's ability to transfer funds to the Group as cash dividends, or to repay loans or advances made by the Group, except for the obligation to set up a legal reserve for 5% of the profit for the fiscal year until 20% of capital is reached.

 

(iv) Indrasa S.A.

 

This company was formed to develop customized solutions, high technology and R&D projects for the creation of innovative products, applying techniques of microbiology, biotechnology, nanotechnology and agronomy.

 

As mentioned before, Rizobacter used to have the 52.913% of the participation. At the end of the period ended September 30, 2018, the participation decreased to 35%, therefore the Group lost the control over this subsidiary.

 

(v) Verdeca LLC

 

This joint venture was formed in February 2012 with Arcadia (a USA based company that develops agricultural biotechnologies) through Bioceres Inc. Equity interest is equally shared between both participants.

 

Verdeca LLC is a separately structured vehicle incorporated and operating in USA. The primary activity of Verdeca is the development and deregulation of soybean traits with second generation technology, which is in line with the Group’s core business.

 

This joint arrangement provides for each of the joint venture partners to license its trait technologies to Verdeca for use in soybeans. The Group will grant an exclusive, worldwide, sub licensable license to Verdeca for its technologies, including HB4, for use in soybeans. Both partners also will grant Verdeca a right of first offer to obtain a license to the intellectual property rights that are owned, licensed to, or acquired by the Group or Arcadia, as applicable, in the future and that are reasonably necessary or useful with respect to soybean traits.

 

The first product in Verdeca pipeline is the Group`s HB4 trait, a drought and salinity tolerance trait that is in the advanced development phase. Verdeca`s pipeline also includes Arcadia`s nutrient use efficiency and water use efficiency technologies, which are combined in a two-trait stack that will be further stacked with HB4. Verdeca has successfully negotiated favorable market access in South America and is growing its partnerships in USA, India and China.

 

The contractual arrangement provides the Group with only the rights to the net assets of the joint arrangement. The rights to the assets and obligation for liabilities of the joint arrangement rest primarily with Verdeca. Under IFRS 11 this joint arrangement is classified as a joint venture and has been included in the Consolidated financial statements using the equity method. The shares of Verdeca are not quoted.

 

F-82

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

There are no significant restrictions on the ability of the joint venture to transfer funds to the Group in the form of cash dividends, or to repay loans or advances made by the Group.

 

As of June 30, 2020, and until the date of issue of these consolidated financial statements, the license mentioned above had not been formalized. Therefore, at those dates, Verdeca has not recorded any assets, liabilities, or results because it does not have control over those technologies.

 

13.SEGMENT INFORMATION

 

The Group is organized into three main operating segments:

 

-     Seed and integrated products

 

The seed and integrated products segment focuses mainly on the development and commercialization of seed technologies and products that increase yield per hectare, with a focus on the provision of seed technologies and integrated crop protection and crop nutrition products designed to control weeds, insects or diseases, to increase their quality characteristics, to improve nutritional value and other benefits. The segment focuses on the commercialization of integrated products that combine three complementary components biotechnological events, germplasm and seed treatments—in order to increase crop productivity and create value for customers. While each component can increase yield independently, through an integrated technology strategy the segment offers biotechnological events, germplasm and treatments for seeds that complement and integrate with each other to generate higher yields in crops.

 

Currently the segment generates revenue from ordinary activities through the sale of seeds, integrated packs, royalties and licenses charged to third parties, among others.

 

-     Crop protection

 

The crop protection segment mainly includes the development, production and marketing of adjuvants, insecticides and fungicides. The adjuvants are used in mixtures to facilitate greater efficiency of the products to be applied (such as fertilizers and agrochemicals). Insecticides and fungicides can significantly reduce disease or insect problems during the germination period.

 

The segment currently generates revenue from ordinary activities through the sale of adjuvants, insecticides, fungicides and baits, among others.

 

-     Crop nutrition

 

The crop nutrition segment focuses mainly on the development, production and commercialization of inoculants that allow the biological fixation of nitrogen in the crops, and of fertilizers including biofertilizers and microgranulated fertilizers that optimize the productivity and yield of the crops.

 

Currently the segment generates income from ordinary activities through the sale of inoculants, bio-inductors, biological fertilizers and microgranulated fertilizers, among others.

 

The measurement principles for the Group’s segment reporting structure are based on the IFRS principles adopted in the Consolidated financial statements. Revenue generated by products and services exchanged between segments and entities within the Group are calculated based on market prices.

 

F-83

 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

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

 

Year ended June 30, 2020  Seed and
integrated
products		   Crop
protection		   Crop
nutrition		   Consolidated 
Revenues from contracts with customers                    
Sale of goods and services   27,626,542    93,799,477    49,148,890    170,574,909 
Royalties   1,775,790    -    -    1,775,790 
Others                    
Government grants   24,732    -    -    24,732 
Initial recognition and changes in the fair value of biological assets   41,755    418,712    256,274    716,741 
Total   29,468,819    94,218,189    49,405,164    173,092,172 
                     
Cost of sales   (11,581,494)   (53,552,327)   (28,441,767)   (93,575,588)
Gross margin per segment   17,887,325    40,665,862    20,963,397    79,516,584 
% of Segment Revenue   61%   43%   42%   46%

 

Year ended June 30, 2019  Seed and
integrated
products		   Crop
protection		   Crop
nutrition		   Consolidated 
Revenues from contracts with customers                    
Sale of goods and services   24,185,292    89,919,460    45,093,764    159,198,516 
Royalties   1,110,463    -    -    1,110,463 
Others                    
Goverment Grants   16,372    -    -    16,372 
Initial recognition and changes in the fair value of biological assets.   -    279,945    -    279,945 
Total   25,312,127    90,199,405    45,093,764    160,605,296 
                     
Cost of sales   (9,783,737)   (53,979,391)   (23,201,753)   (86,964,881)
Gross margin per segment   15,528,390    36,220,014    21,892,011    73,640,415 
%   61%   40%   49%   46%

 

 F-84 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

Year ended June 30, 2018  Seed and
integrated
products		   Crop
protection		   Crop
nutrition		   Consolidated 
Revenues from contracts with customers                    
Sale of goods and services   26,308,432    77,655,672    29,084,325    133,048,429 
Royalties   442,689    -    -    442,689 
Others                    
Goverment Grants   51,586    -    -    51,586 
Total   26,802,707    77,655,672    29,084,325    133,542,704 
                     
Cost of sales   (13,413,758)   (49,453,167)   (14,227,626)   (77,094,551)
Gross margin per segment   13,388,949    28,202,505    14,856,699    56,448,153 
%   50%   36%   51%   42%

 

Revenue by similar group of products or services

 

   06/30/2020   06/30/2019   06/30/2018 
Seed and integrated products   29,402,332    25,295,755    26,751,121 
Seeds, royalties& licenses   5,210,616    3,846,991    3,771,579 
Packs   24,191,716    21,448,764    22,979,542 
                
Crop protection   93,799,477    89,919,460    77,655,672 
Adjuvants   45,372,840    41,854,730    39,931,915 
Insecticides& fungicides   15,227,357    12,655,985    14,087,260 
Other   33,199,280    35,408,745    23,636,497 
                
Crop nutrition   49,148,890    45,093,764    29,084,325 
Inoculants   16,718,571    18,644,673    14,352,761 
Fertilizers   32,430,319    26,449,091    14,731,564 
                
Total revenues   172,350,699    160,308,979    133,491,118 

 

 F-85 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

Geographical information

 

   06/30/2020   06/30/2019   06/30/2018 
Argentina   130,918,908    124,011,642    106,077,922 
Austria   1,085,908    899,045    470,849 
Bolivia   2,982,953    2,494,216    2,090,758 
Brazil   21,188,655    17,338,608    9,450,496 
Lebanon   -    (115,927)   376,862 
United States of America   1,515,185    2,562,376    1,395,438 
Italy   188,604    132,206    10,879 
Paraguay   4,428,078    2,506,348    5,584,861 
United Kingdom   123,844    137,044    387,859 
South Africa   1,927,333    3,019,474    3,711,852 
France   911,140    711,522    270,878 
Canada   319,681    -    3,553 
Ukraine   309,956    611,993    344,401 
Uruguay   6,234,956    4,684,854    3,197,974 
Rest of the world   215,498    1,315,578    116,536 
Total revenues   172,350,699    160,308,979    133,491,118 

 

   06/30/2020   06/30/2019   06/30/2018 
Non-current assets               
Argentina   93,682,114    106,056,232    77,860,852 
United States   7,168,376    6,136,461    2,411,673 
Paraguay   714,011    722,914    605,491 
Brazil   685,587    305,477    340,144 
Bolivia   15,588    27,487    39,857 
South Africa   598    7,080    14,423 
India   -    38    78 
Francia   33,556    -    - 
Colombia   22,313    -    - 
Uruguay   53,282    -    - 
Total non current assets   102,375,425    113,255,689    81,272,518 
                
Property, plant and equipment   41,515,106    43,834,548    40,177,146 
Intangible assets   35,333,464    39,616,426    26,657,345 
Goodwill   25,526,855    29,804,715    14,438,027 
Total reportable assets   102,375,425    113,255,689    81,272,518 
Total non reportable assets   195,185,944    129,211,608    115,366,246 
Total assets   297,561,369    242,467,297    196,638,764 

 

 F-86 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

14.FINANCIAL INSTRUMENTS – RISK MANAGEMENT

 

14.1.Principal financial instruments

 

The principal financial instruments used by the Group, from which financial instrument risk arise, are as follows:

 

-     Cash and cash equivalents

-     US Treasuary bills

-     Financial assets at fair value through profit or loss

-     Trade receivables

-     Other receivables

-     Trade and other payables

-     Bank overdrafts

-     Other loans

-     Financed payment for the acquisition of business

-     Convertible notes

-     Warrants

 

The Group is exposed to financial risks: market risk (including currency risk, interest rate risk and fair value risk), credit risk, liquidity risk and capital risk management that arises from its activities and from its use of financial instruments.

 

This Note provides information on the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes regarding the measurement and management of each risk.

 

The Group does not use derivative financial instruments to hedge any of the above risks.

 

14.2.Financial instruments by category

 

The following tables show additional information required under IFRS 7 on the financial assets and liabilities recorded as of June 30, 2020, 2019 and 2018.

 

Financial assets by category

 

   Amortized cost   Mandatorily measured at fair value
through profit or loss		 
Financial asset  06/30/2020   06/30/2019   06/30/2018   06/30/2020   06/30/2019   06/30/2018 
Cash and cash equivalents   4,813,012    3,450,873    2,215,103    22,346,409    -    - 
Other financial assets   4,713,161    4,703,688    4,781,679    24,409,375    356,233    12,526 
Trade receivables   73,546,633    59,236,377    52,888,427    -    -    - 
Other receivables (*)   3,349,901    1,566,732    7,742,120    -    -    - 
Total   86,422,707    68,957,670    67,627,329    46,755,784    356,233    12,526 

 

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

 

 F-87 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

Financial liabilities by category

 

   Amortized cost   Mandatorily measured at fair value through profit or loss 
Financial liability  06/30/2020   06/30/2019   06/30/2018   06/30/2020   06/30/2019   06/30/2018 
Trade and other payables   57,742,516    41,031,148    27,708,830            -    -               - 
Borrowings   104,948,345    103,556,730    91,017,133    -    -    - 
Convertible notes   43,029,834    -    -    -    -    - 
Lease liability   1,109,812    -    -    -    -    - 
Employee benefits and social security   5,044,630    5,357,218    4,411,713    -    -    - 
Financed payment - Acquisition of business   -    2,826,611    22,874,609    -    -    - 
Warrants   -    -    -    1,686,643    2,861,511    - 
Total   211,875,137    152,771,707    146,012,285    1,686,643    2,861,511    - 

 

14.3.Financial instruments measured at fair value

 

Fair value by hierarchy

 

According to the requirements of IFRS 7, the Group classifies each class of financial instrument valued at fair value into three levels, depending on the relevance of the judgment associated to the assumptions used for measuring the fair value.

 

Level 1 comprises financial assets and liabilities with fair values determined by reference to quoted prices (unadjusted) in active markets for identical assets or liabilities;

 

Level 2 comprises inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices);

 

Level 3 comprises financial instruments with inputs for estimating fair value that are not based on observable market data.

 

Measurement at fair value at 06/30/2020  Level 1   Level 2   Level 3 
Financial assets at fair value               
Mutual funds   22,346,409    -    - 
Other investments   16,640,965    -    - 
US Treasury bills   7,768,410    -    - 
                
Financial liabilities valued at fair value               
Private warrants   -    -    1,686,643 

 

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 

 

Measurement at fair value at 06/30/2018  Level 1   Level 2   Level 3 
Financial assets at fair value               
Other financial assets   12,526    -    - 

 

 F-88 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

Changes in financial liabilities valued at fair value level 3 are set below:

 

   06/30/2020 
As of the beginning of the year   2,861,511 
Changes in finance results (1)   (1,174,868)
As of the end of the year   1,686,643 

 

(1) The amount of the change in fair value is recognized in “Changes in fair value of financial assets or liabilities and other financial results”. See Note 7.5.

 

Estimation of fair value

 

The fair value of marketable securities, mutual funds and US Treasury Bills is calculated using the market approach using quoted prices in active markets for identical assets. The quoted marked 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 specific estimates. 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 its fair value is mentioned in Note 4.13. The sensitivity analysis was based on a 5% change in the volatility of instrument. These changes in isolation would have increased or decreased the amount of the financial liability by $1.2 million and $0.9 million if the volatility was 33,5% or 23,5 %, 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.

 

14.4.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, trade payables and other debts, borrowings, financed payments and convertible notes.

 

The carrying value of financial instruments not measured at fair value does not differ significantly from their fair value, except for borrowings (Note 6.11).

 

Management estimates that the carrying value of the financial instruments measured at amortized cost approximates their fair value.

 

14.5.General objectives, policies and processes

 

The Board of Directors has overall responsibility for establishing and monitoring the Group’s risk management objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the function to design and operate processes that ensure the effective implementation of the objectives and policies to the Group’s finance function that periodically reports to the Board of Directors on the evolution of the risk management activities and results. The overall objective of the Board of Directors is to set policies that seek to reduce risk as much as possible without unduly affecting the Group’s competitiveness and flexibility.

 

 F-89 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

The Group’s risk management policy is established to identify and analyze the risks facing the Group, to set appropriate risk limits and controls and to monitor risks and adherence to limits. The risks and methods for managing the risks are reviewed regularly in order to reflect changes in market conditions and the Group’s activities. The Group, through training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all the employees understand their roles and obligations.

 

The Group seeks to use suitable means of financing to minimize the Group’s capital costs and to manage and control the Group’s financial risks effectively. There have been no substantive changes in the Group's exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from previous periods unless otherwise stated in this Note.

 

The Group adopted a code of ethics applicable to its principal executive, financial and accounting officers and all persons performing similar functions.

 

The principal risks and uncertainties facing the business, set out below, do not appear in any particular order of potential materiality or probability of occurrence.

 

a)Credit risk

 

Credit risk is the risk of financial loss to the Group if a customer or counterparty fails to meet its contractual obligations, which derives mainly from trade and other receivables, as well as from cash and deposits in financial institutions.

 

The credit risk to which the Group is exposed is mainly defined in the Group’s accounts receivable followed by cash and cash equivalents, with the logical importance of being able to satisfy the Group’s needs in the short term.

 

Trade and other receivables

 

Credit risk is the risk of financial loss to the Group if a customer or counterparty fails to meet its contractual obligations, and derives mainly from trade receivables and other receivables generated by services and product sales, as well as from cash and deposits in financial institutions. The Group is also exposed to political and economic risk events, which may cause nonpayment of local and foreign currency obligations to the Group owed by customers, partners, contractors and suppliers.

 

The Group sells seeds and integrated products, crop protection products, crop nutrition products, and other products and services to a diverse base of customers. Customers include multi-national and local agricultural companies, distributors, research and educational institutions and farmers who purchase the Group’s seed products, integrated products, crop protection products and crop nutrition products. Type and class of customers may differ depending on the Group’s business segments.

 

The Group’s finance function determines concentrations of credit risk by periodically monitoring the credit worthiness rating of existing customers and through a monthly review of the trade receivables’ aging analysis. In monitoring the customers’ credit risk, customers are grouped according to their credit characteristics.

 

The Group’s policy is to manage credit exposure to counterparties through a process of credit rating. The Group performs credit evaluations of existing and new customers, and every new customer is examined thoroughly regarding the quality of its credit before offering the customer transaction terms. The examination made by the Group includes outside credit rating information, if available. Additionally, and even if there is no independent outside rating, the Group assesses the credit quality of the customer taking into account its financial position, past experience, bank references and other factors. A credit limit is prescribed for each customer. These limits are examined annually. Customers that do not meet the Group’s criteria for credit quality may do business with the Group on a prepayment basis or by furnishing collateral satisfactory to the Group. The Group may still seek collateral and guarantees as it may consider appropriate regardless the credit profile of any customer.

 

 F-90 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

In monitoring customer credit risk, the customers are grouped according to a characterization of their credit, based on geographical location, industry, aging of receivables, maturity, and existence of past financial difficulties. Customers defined as “high risk” are classified into the restricted customer list and are supervised by management. In a case of a doubtful debt, the Group records a provision for the amount of the debt less the value of the collateral provided and acts to realize the collateral.

 

To cover trade receivables related to Rizobacter, its subsidiaries and Bioceres Semillas, the Group has taken out credit insurance from Grupo Insur SRL, which periodically analyzes its customer portfolio and currently covers 50% of the portfolio.

 

The financial statements contain specific provisions for doubtful debts, which properly reflect, in Management’s estimate, the loss embedded in debts, the collection of which is doubtful. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the statement of financial position after deducting any impairment allowance

 

On that basis, the loss allowance as of June 30, 2020 was determined as follows:

 

June 30, 2020  Current   More
than 15
days past
due		   More
than 30
days past
due		   More
than 60
days past
due		   More
than 90
days past
due		   More
than 120
days past
due		   More
than 180
days past
due		   More
than 365
days past
due		   IAS 29
effect and
Currency
conversion		   Total 
Expected Loss rate   0.25%   0.25%   0.31%   0.25%   0.29%   0.25%   0.25%   100.00%   -      
                                                   
Gross carrying amount-trade receivables   31,867,642    3,117,051    1,782,847    2,159,785    3,527,978    1,161,336    1,272,379    6,158,112    -    51,047,130 
                                                   
Loss allowance   78,756    7,703    5,598    5,338    10,363    2,870    3,144    6,158,112    (2,384,284)   3,887,600 

 

Cash and deposits in banks

 

The Group is exposed to counterparty credit risk on cash and cash equivalent balances. The Group holds cash on deposit with a number of financial institutions. The Group manages its credit risk exposure by limiting individual deposits to clearly defined limits. The Group only deposits with high quality banks and financial institutions.

 

The maximum exposure to credit risk is represented by the carrying amount of cash and cash equivalents in the statement of financial position.

 

b)Liquidity risk

 

Liquidity risk is the risk that the Group will encounter difficulty in meeting its financial obligations when they come due.

 

The Group’s approach to managing its liquidity risk is to manage the profile of debt maturities and funding sources, maintaining sufficient cash, and ensuring the availability of funding from an adequate amount of committed credit facilities. The Group’s ability to fund its existing and prospective debt requirements is managed by maintaining diversified funding sources with adequate committed funding lines from high quality lenders.

 

The liquidity risk of each of the Group entities is managed centrally by the Group’s finance function.

 

 F-91 

 

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

The cash flow forecast is determined at both an entity level and Consolidated level. The forecasts are reviewed by the Board of Directors in advance, enabling the Group’s cash requirements to be anticipated. The Group examines the forecasts of its liquidity requirements in order to ascertain that there is sufficient cash for the operating needs, including the amounts required in order to settle financial liabilities.

 

The following table sets out the contractual maturities of financial liabilities:

 

As of June 30, 2020  Up to 3
months		   3 to 12
months		   Between one
and three
years		   Between
three and
five years		   Subsequent
years		 
Trade and other payables   28,150,681    29,130,428    463,568    -    - 
Borrowings   35,863,852    34,810,916    43,799,397    -    - 
Convertible notes   -    -    43,029,834    -    - 
Leasing liabilities   196,717    625,463    483,725    -    - 
Total   64,211,250    64,566,807    87,776,524    -    - 

 

As of June 30, 2019  Up to 3
months		   3 to 12
months		   Between one
and three
years		   Between
three and
five years		   Subsequent
years		 
Trade and other payables   12,854,579    28,987,009    476,482    -    - 
Borrowings   29,051,271    40,097,864    38,524,384    -    - 
Financed payment - Acquisition of business   -    2,937,500    -    -    - 
Total   41,905,850    72,022,373    39,000,866    -    - 

 

As of June 30, 2018  Up to 3
months		   3 to 12
months		   Between one
and three
years		   Between
three and
five years		   Subsequent
years		 
Trade and other payables   27,352,381    356,449    -    -    - 
Borrowings   26,927,533    39,047,778    27,190,055    -    - 
Financed payment - Acquisition of business   2,937,500    17,922,500    2,937,500    -    - 
Total   57,217,414    57,326,727    30,127,555    -    - 

 

As of June 30, 2020, June 30, 2019 and June 30, 2018 the Group had no exposure to derivative liabilities.

 

c)Currency risk

 

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rate. Currency on foreign exchange risk arises when the Group enters into transactions denominated in a currency other than its functional currency. A significant part of our business activities is conducted in Argentine pesos. However, some of our subsidiaries using the Argentine peso as their functional currency also have significant transactions denominated in U.S. dollars, mainly with respect to sales and financing activities.

 

Our policy is, where possible, to allow the Group entities to settle liabilities denominated in U.S. dollars with the cash generated from their own operations in U.S. dollars. We have liabilities denominated in U.S. dollars in entities utilizing the Argentine peso as functional currency, which expose us to foreign currency exchange risks. Such risks are partially mitigated by our revenues, which are also partly denominated in U.S. dollars (mainly exports) or Argentine pesos but adjusted to reflect changes in U.S. Dollars.

 

F-92

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

We do not use foreign exchange derivatives to hedge our foreign exchange rate exposure. We periodically evaluate the use of derivatives and other financial instruments to hedge our foreign exchange rate exposure, but do not have any exchange rate related financial instruments in place.

 

The table below sets forth our net exposure to currency risk as of June 30, 2020, 2019 and 2018:

 

Net foreign currency position  06/30/2020   06/30/2019   06/30/2018 
Amount expressed in US$   (52,968,976)   (40,513,954)   (28,861,129)

 

Considering only this net currency exposure at June 30, 2020, if an Argentine peso/US dollar revaluation or depreciation in relation to other foreign currencies with the remaining variables remaining constant, would have a positive or a negative impact on comprehensive income as a result of foreign exchange gains or losses.

 

We estimate that a devaluation of the Argentine peso against the U.S. dollar of 20% during the year ended June 30, 2020 would have resulted in a net pre-tax loss of approximately $10.6 million. We estimate that an appreciation of the Argentine peso against the U.S. dollar of 20% during the same period would have resulted in a net pre-tax gain of approximately $10.6 million.

 

Interest rate risk

 

The Group’s financing costs may be affected by interest rate volatility. Borrowings under the Group’s interest rate management policy may be fixed or floating rate. The Group maintains adequate committed borrowing facilities and holds most of its financial assets primarily in cash or checks collected from customers that are readily convertible into known amounts of cash.

 

The Group’s interest rate risk arises from long-term borrowings. Borrowings issued at floating rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. The Group has not entered into derivative contracts to hedge this exposure.

 

The Group’s debt composition, consisting of the loans and the payment financed for the acquisition of Rizobacter, is set out below.

 

   06/30/2020   06/30/2019   06/30/2018 
   Carrying
amount		   Carrying
amount		   Carrying
amount		 
Fixed-rate instruments               
Current financial liabilities   (62,490,975)   (69,126,607)   (82,888,890)
Non-current financial liabilities   (83,800,380)   (37,006,581)   (27,168,905)
                
Variable-rate instruments               
Current financial liabilities   (1,230,760)   (177,213)   (2,643,628)
Non-current financial liabilities   (456,064)   (72,940)   (1,190,319)

 

Holding all other variables constant, including levels of our external indebtedness, at June 30, 2020 a one percentage point increase in floating interest rates would increase interest payable by less than US$ 0.1 million.

 

The Company does not use derivative financial instruments to hedge its interest rate risk exposure.

 

F-93

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

d)Market risk

 

The private warrants classified as financial liability and valued at its fair value expose the Group to market risk derived from fluctuations in the price of shares (Note 6.17.).

 

As of June 30, 2020, their fair value using a share price of $6,06 and risk-free rate of 0.289 %, decreased to $1.7 million and the Group recognized a gain of $1.2 million.

 

The sensitivity analysis was based on a 5% change in the volatility of instrument. These changes in isolation would have increased or decreased the amount of the financial liability by $1.2 million and $0.9 million if the volatility was 33.5% or 23.5%, respectively.

 

e)Capital risk management

 

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern, in order to provide returns for shareholders and benefits for other stakeholders, and to maintain an optimal capital structure to reduce the cost of capital.

 

The Group manages its capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Group may adjust the amount of any dividends it could pay to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt. The current actions that the Group is carrying on for the capital management are detailed in the Note 1.

 

As of June 30, 2020, the subsidiary Rizobacter did not comply with the liabilities to assets ratio covenant related with the syndicated loan and private corporate bonds. However, Rizobacter received a waiver for the year ended June 30, 2020 from creditors. Covenant compliance is required to be measured annualy. The duration of the waiver granted on June 30, 2020 is for one year. (See Note 6.11).

 

15.     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.

 

F-94

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

The information about the right-of-use and liabilities related with lease assets is as follows:

 

Right-of-use leased asset  06/30/2020 
Cost     
Book value at the beginning of the year   - 
Additions for initial application of IFRS 16   1,523,177 
Additions of the year   846,149 
Book value at the end of the year   2,369,326 
      
Depreciation     
Book value at the beginning of the year   - 
Additions for initial application of IFRS 16   759,045 
Exchange differences   (71,134)
Depreciation of the year   566,818 
Accumulated depreciation at the end of the year   1,254,729 
Total   1,114,597 

 

Lease liability  06/30/2020 
Book value at the beginning of the year   - 
Additions for initial application of IFRS 16   1,523,177 
Additions of the year   702,826 
Interest expenses, exchange differences and inflation effects   (551,232)
Payments of the year   (564,959)
Total   1,109,812 

 

Lease Liabilities   06/30/2020 
Non-current   444,714 
Current   665,098 
Total   1,109,812 

 

Lease liabilities  06/30/2020 
Operating lease commitments as at June 30,2019   782,791 
Discounted using the lessee´s incremental borrowing rate of at the date of initial application   674,360 
Add: finance lease liabilities recognized as at June 30,2019   848,817 
Lease liabilities recognized as at 1 July 2019   1,523,177 
      
Lease Liabilities     
Non-current   664,980 
Current   858,197 
Total   1,523,177 

 

   06/30/2020 
Machinery and equipment   598,561 
Vehicles   264,069 
Equipment and computer software   407,546 
Land and buildings   1,099,150 
    2,369,326 

 

(1) The incremental borrowing rate used was 7.74%.

 

F-95

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

16.     SHAREHOLDERS AND OTHER RELATED PARTIES BALANCES AND TRANSACTIONS

 

During the year ended June 30, 2020, 2019 and 2018, 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 year ended 
Party  Transaction type  06/30/2020   06/30/2019   06/30/2018 
Joint ventures and associates  Sales and services   6,139,155    4,913,254    746,867 
Joint ventures and associates  Purchases of goods and services   (21,634,936)   (17,542,637)   (9,809,134)
Joint ventures and associates  Equity contributions   250,000    517,736    800,989 
Joint ventures and associates  Net loans granted / (cancelled)   -    (6,964,101)   2,621,647 
Key management personnel  Salaries, social security benefits and other benefits   (6,501,269)   (3,940,185)   (4,703,519)
Key management personnel  Loans granted   -    599,984    - 
Key management personnel  Interest gain   44,619    20,106    - 
Shareholders and other related parties  Dividends   -    -    (1,450,613)
Shareholders and other related parties  Sales of goods and services   1,871,613    640,095    1,057,325 
Shareholders and other related parties  Purchases of goods and services   (1,881,013)   (1,433,127)   (986,217)
Shareholders and other related parties  Interest gain   -    90,188    294,577 
Shareholders and other related parties  In-kind contributions   476,292    463,511    - 
Parents companies and related parties to Parents  Interest gain/(lost)   (1,861,774)   (1,386,288)   (118,266)
Parent company  Sales of goods and services   -    -    13,505 
Parent company  Purchases of goods and services   (92)   (120,095)   (311,418)
Parent company  Equity contributions   -    (14,558,347)   - 
Total      (23,097,405)   (38,699,906)   (11,844,257)

 

      Amounts receivable from related parties 
Party  Transaction type  06/30/2020   06/30/2019   06/30/2018 
Parent company  Trade debtors   -    440,268    361,606 
Parents companies and related parties to Parents  Other receivables   102,069    -    103,251 
Shareholders and other related parties  Trade receivables   1,090,004    467,743    571,216 
Shareholders and other related parties  Allowance for impairment   (768)   (75,596)   (23,126)
Other receivables - Other related parties  Other receivables   83,839    10,971    119,677 
Joint ventures and associates  Trade debtors   120,992    2,369    209,039 
Joint ventures and associates  Other receivables   1,562,340    250,783    6,299,467 
Total      2,958,476    1,096,538    7,641,130 

 

F-96

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

      Amounts payable to related parties 
Party  Transaction type  06/30/2020   06/30/2019   06/30/2018 
Parent company  Trade creditors   (2,210,308)   (1,568,036)   - 
Parents companies and related parties to Parents  Net loans payables   (12,389,521)   (17,757,907)   (1,816,084)
Parent company  Consideration payment Semya acquisition   (575,604)   (575,604)   - 
Key management personnel  Salaries, social security benefits and other benefits   (2,084,088)   (2,312,253)   (1,556,035)
Shareholders and other related parties  Trade and other payables   (1,031,710)   (1,796,932)   (365,994)
Joint ventures and associates  Trade and other payables   (14,409,853)   (4,805,149)   (3,493,113)
Total      (32,701,084)   (28,815,881)   (7,231,226)

 

17.KEY MANAGEMENT PERSONNEL COMPENSATION

 

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group.

 

The compensation of directors and other members of key management personnel, including social contributions and other benefits, were as follows for the year ended June 30, 2020, 2019 and 2018.

 

   06/30/2020   06/30/2019   06/30/2018 
             
Salaries, social security and other benefits   3,073,240    3,940,185    4,703,519 
Share-based incentives   3,428,029    -    - 
Total   6,501,269    3,940,185    4,703,519 

 

The Company entered into indemnification agreements with each of its directors and executive officers. These agreements generally provide that the relevant director or officer will be indemnified by the Company to the fullest extent permitted by law against liability and against all expenses reasonably incurred or paid by him or her in connection with any claim, action, suit or proceeding which he or she becomes involved as a party or otherwise by virtue of his or her being or having been such a director or officer of the Company and against amounts paid or incurred by him or her in the settlement thereof.

 

The agreements are subject to certain exceptions, including that no indemnification will be provided to any director or officer against any liability to the Group or its shareholder (i) by reason of intentional fraudulent conduct, dishonesty, willful misconduct, or gross negligence on the part of the director or officer; or (ii) by reason of payment made under an insurance policy or any third party that has no recourse against the indemnitee director or officer.

 

The compensation of key executives is determined by the Board of Directors of Bioceres S.A. based on the performance of individuals and market trends.

 

The Group currently does not pay any compensation to any of its non-employee board members.

 

F-97

 

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

18.      SHARE-BASED PAYMENT

 

Incentive payments based on shares

 

On September 8, 2017, the Board of Directors of the Bioceres S.A. approved the granting of 225,000 shares subject to the incentive plan through actions to Rizobacter teams.

 

At the measurement date, the fair value has been determined based on a market price in transactions of the Company's equity with independent third parties.

 

There are no conditions of returns referring to the market or conditions other than those of irrevocability of the concession that must be incorporated in the fair value determination of the shares. Expected dividends have not been included in the fair value determination.

 

The Company estimated that 100% of the shares would be delivered, taking into account historical stays in the employment of executives. This estimate was reviewed at each closing of annual or intermediate period.

 

The approved incentive based on shares was subject to the fulfillment of individual objectives and / or economic, as detailed below:

 

“Rizobacter Senior Management”: (i) 225,000 shares in a 3 to 4 year plan conditioned to the fulfillment of between 70% and 100% of the goals and a duty of permanence in the Group for 12 months following the fulfillment of the annual goals of the stretch correspondent; and (ii) 225,000 shares in a three-year plan conditioned between 70% and 100% of the goals and with a duty of permanence in the Group for 4 years following the moment of irrevocability.

 

Out of this total, the Compensation Committee allocated 360,000 shares individually. Half in three annual installments for the years ended June 30, 2017, 2018 and 2019 and conditioned to the fulfillment of goals. The other half in a three-year stretch, according to the exercises mentioned above and conditioned to the achievement of goals.

 

This plan of actions allows the incorporation, at the option of the beneficiary and in consent with the Group, of a new annual installment due to force majeure events that hinder compliance of the annual goals. In this case, this new annual tranche will be considered for the calculation base of the three-year plan.

 

The beneficiaries of this plan have the option of cash settlement.

 

As of June 30, 2019, the goals of the third and the second annual tranche have not been met.

 

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. For the determination of the fair value, no expected dividends or other characteristics of the equity instrument conceived were considered. The charge of the plan recognized during the year was $0.8 million.

 

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.

 

F-98

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

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.

 

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 years ended June 30, 2020:

 

   06/30/2020   06/30/2019   06/30/202018 
    Number of
options		    Exercise
price		    Number of
options		    Exercise
price		    Number of
options		    Exercise
price		 
At the beginning   -    -    -    -    -    - 
Granted during the year   1,200,000   $4.55    -    -    -    - 
Annulled during the year   -    -    -    -    -    - 
Exercised during the year   -    -    -    -    -    - 
Expired during the year   -    -    -    -    -    - 
Effective at year   1,200,000   $4.55    -    -    -    - 

 

The charge of the plan recognized during the year was $1.9 million.

 

F-99

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

b) Annual compensation - Bonus

 

Bonus in Cash is an annual cash incentive awarded up to an amount that is five times the individual’s monthly salary, which can be increased by $30,000 in value if the recipient decides to receive the base bonus in ordinary shares, to each of the Chief Operating Officer, Sales Director and Marketing Director and Managing Director of Rizobacter S.A. The bonus will be granted upon the meeting by the Company of certain financial and operational objectives. Each year the Board of Directors will define the objectives upon approval of the annual budget.

 

All the beneficiaries decided to receive the base bonus in ordinary shares. The charge of the plan recongnized during the year ended June 30, 2020 was $0.2 million.

 

Bonus in Kind is an annual in-kind incentive awarded in ordinary shares up to an equivalent of $315,000, $165,000 and $100,000 to the Chief Executive Officer (the “CEO”), Chief Financial Officer (the “CFO”) and Chief Technology Officer, respectively, to tie a portion of their compensation to financial and operational objectives. Each year the Board of Directors will define the objectives upon approval of the annual budget.

 

The charge of the plan recognized during the year ended June 30, 2020 was $0.3 million.

 

The number of shares that can be awarded under each bonus will be determined by using a 20-day volume weighted average price (“VWAP”) of the Company’s ordinary shares, starting with the day on which the relevant financial and operational objectives are met by the Company and the bonus is granted.

 

50% of bonus vests immediately if the financial and operational objectives are achieved as of such date, and the remaining 50% vests in the subsequent 12-months, upon meeting of the financial and operational objectives.

 

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.

 

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  $5.42   $5.42 
Exercise Price  $10.5   $21.0 
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 year ended June 30, 2020 was $0.3 million

 

F-100

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

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

 

Pledged and restricted assets at June 30, 2020 are as follows:

 

Detail  Asset value   Type of restriction
IT equipment   33,030   Leasing
Machinery and equipment   368,889   Leasing
Machinery and equipment   135,873   Leasing
Vehicles   124,133   Leasing
Other financial assets   4,390,463   Collateral (a)
Santander Rio   1,155,486   Custody checks (b)
Compass Latam & Odisea   16,022,740   Security Collateral and Mortgage (c)
Allaria Ledesma & Cía.   6,571,120   US Treasury bills (d)
Cohen S.A.   747,939   US Treasury bills (e)
Totals   29,549,673    

 

 

a)Rizobacter entered into a $45 million syndicated loan and signed a guarantee and pledge. On June 8, 2020 Rizobacter granted a pledge of a fixed-term certificate at Banco Galicia for an amount of $4,396,707.

 

b)In April 2020, a loan was made by Santander Rio Bank for a total amount of $0.9 million guaranteed with third-party checks.

 

c)In April 2019, the Group issued Negotiable Obligations worth $16 million guaranteeing compliance with a first-degree mortgage of real estate assets of equal value and a pledge on the shares representing 10% of the holding of Rasa Holding LLC in the capital of Rizobacter Argentina SA

 

d)In order to guarantee the fulfillment of the obligations assumed from the loan signed with Allaria Ledesma & Cia., the subsidiary Rizobacter granted a pledge of American treasury bonds valued of $6,5 million on June 30, 2020.

 

e)In order to guarantee the fulfillment of the obligations assumed from the loan signed with Cohen S.A., the subsidiary Rizobacter granted a pledge of American treasury bonds valued of $0,7 million on June 30, 2020.

 

The Convertibles Notes referenced in Note 6.18 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.

 

The Group has committed in the Convertible Notes, Syndicated Loan and Private Corporate Bonds to the non-distribution of dividends.

 

20.      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 October 11, 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.

 

F-101

 

BIOCERES CROP SOLUTIONS CORP.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

As of and for the years ended June 30, 2020, 2019 and 2018

(Amounts in US$, except otherwise indicated)

 

 

The eventual scope of the Coronavirus outbreak and its impact on the country's and global economy are unknown, with governments being able to implement stricter containment 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.

 

21.      EVENTS OCCURRING AFTER THE REPORTING PERIOD

 

On August 18, 2020, the subsidiary Rizobacter S.A. completed a $17 million public offering of Series IV corporate bonds under its global program of corporate bonds in the Argentine market. The bonds mature in August 2023 and pay an annual nominal interest rate of 0.0%. Rizobacter intends to use the proceeds of the bond issuance to support working capital, extend debt maturities, and reduce financing cost, as well as for general corporate purposes.

 

On August 24, 2020, the Company completed an offer to exchange any and all of its 24,200,000 outstanding warrants, for either 0.12 Ordinary Shares (the "Exchange Shares") or $0.45 in cash per Warrant, without interest (the "Cash Consideration", and together with the Exchange Shares, the "Exchange Consideration"), at the election of the holder (the "Offer"). The Offer was made upon the terms and subject to the conditions set forth in the Company's Tender Offer Statement and Schedule 13E-3 Statement on Schedule TO, originally filed by the Company with the Securities and Exchange Commission (the "SEC") on July 27, 2020, as amended and supplemented, and the related letter of election and transmittal and other offer materials.

 

The Offer provided for a premium to the closing trading price of the Public warrants on July 24, 2020 equal to (a) 321%, in respect of the Cash Consideration, or (b) 482% in respect of the implied value of the Exchange Shares taking into account the closing trading price of the Ordinary Shares on July 24, 2020. The premium offer price allowed for maximum participation of holders in the Offer.

 

Based on information provided by Continental Stock Transfer & Trust Company, the depositary for the Offer, a total of 21,938,774 warrants were validly tendered and not properly withdrawn prior to the expiration of the Offer. The Company accepted for exchange all such Warrants and paid an aggregate amount of approximately $115,062 of the Cash Consideration and issued an aggregate of 2,601,954 Exchange Shares in exchange for the warrants tendered.

 

Following the Offer, the Company redeemed the 2,261,226 warrants that were not validly tendered or exchanged pursuant to the Offer for $0.405 in cash per warrant. The Company paid an aggregate amount of approximately $ 915,796 for these warrants.

 

Subsequent to June 30, 2020, there have been no other situations or circumstances that may require significant adjustments or further disclosure in these consolidated financial statements that were not mentioned above.

 

F-102