Chief Executive Officer’s Statement to Shareholders
This letter accompanies the filing of our Form 6-K for the second quarter of fiscal year 2026, covering the six-month period ended December 31, 2025. I would like to take this opportunity to speak candidly about our current position, the challenges we are facing, and the strategic actions we are undertaking to strengthen Bioceres for the future.
Focus on Our Continuing Business
Our financial performance during the first half of fiscal 2026 reflects a complex and demanding operating environment. The agricultural sector in Argentina, which represents a core market for Bioceres, has experienced persistent pressure due to declining commodity prices and tightening credit availability. These factors have directly impacted farmer profitability and liquidity, which in turn has affected demand patterns across the industry.
Despite these macroeconomic headwinds, our team has remained focused on maintaining our competitive position and supporting our customers. We have worked diligently to preserve market share across our principal product categories, including crop protection, crop nutrition, and our seed and integrated solutions portfolio. These segments continue to represent the backbone of our business and reflect the strength of our science-based, technology-driven approach.
Encouragingly, our consolidated gross margin for the year-to-date period stands at 40%, in line with the previous fiscal year. In a challenging environment, maintaining this level of margin performance underscores the resilience of our portfolio and the value proposition we offer to growers. It also reflects the operational discipline applied across our organization as we align our cost structure with current market realities.
Looking ahead, our priorities for the remainder of the fiscal year are well defined. We are focused on improving operational efficiency, enhancing cash flow generation, and maintaining strict discipline in working capital management. These actions are essential to navigating the current environment and positioning the Company for long-term stability.
In addition, our Board of Directors has tasked management with developing a comprehensive three-year financial plan for the continuing business, excluding the Pro Farm assets. This plan will emphasize profitability improvement, stronger cash generation, and a more resilient capital structure. We are committed to providing transparency and will update shareholders as this plan evolves.
The Pro Farm Foreclosure: Context and Response
A significant development during the period relates to the foreclosure process involving the Pro Farm collateral assets. As disclosed in our financial statements, a foreclosure auction was conducted on January 20, 2026. The winning bid, submitted by the noteholders, amounted to $15 million.
This figure stands in stark contrast to the carrying value of the assets, which was approximately $194 million. As a result, the Company has recognized an impairment loss of $179 million under IFRS 5 in the current reporting period.
We want to be clear in our communication: we do not believe that the foreclosure process was conducted under commercially reasonable conditions. Accordingly, we are actively pursuing all available legal avenues, including counterclaims, to protect the interests of the Company and its shareholders. We have reserved all rights in this matter and will continue to act decisively.
At this stage, the foreclosure process has not been fully finalized. We remain engaged in discussions with the noteholders regarding a transition agreement. Additionally, the final residual debt position following the $15 million consideration has yet to be determined. We will provide updates as further clarity emerges.
It is important to note that the Pro Farm assets, which primarily relate to operations in the United States and Europe, have been classified as discontinued operations in our financial statements. The continuing Bioceres business—centered on our Argentine operations and core technology platforms—remains active and continues to serve our customers.
Financial Position and Engagement with Lenders
Our financial disclosures indicate that there is substantial doubt regarding the Company’s ability to continue as a going concern, even after taking into account management’s current plans. We acknowledge this assessment openly. It reflects the real challenges associated with our current capital structure and the broader financing environment.
Addressing this situation is a top priority. We are actively engaged in discussions with financial institutions in Argentina to refinance existing obligations and secure additional liquidity. These conversations are focused on rebuilding confidence in our business and establishing a more sustainable financial foundation.
In parallel, we are evaluating a range of strategic options, including potential asset disposals and the pursuit of new long-term financing arrangements. These measures are intended to strengthen our balance sheet and provide the flexibility needed to execute our strategy.
A positive development occurred in February 2026, when Rizobacter Argentina S.A. successfully refinanced its Series VIII Class B corporate bonds. This transaction extended the maturity profile of the debt and demonstrated continued access to the local capital markets. While this is only one step, it is an encouraging sign of support from financial stakeholders.
We recognize that these initiatives must be supported by a credible and well-structured financial plan. Management is currently developing a detailed roadmap to address our capital requirements. This plan will be presented to the Board for review and approval, with implementation expected as we approach the end of the fiscal year.
Strengthening Governance and Board Oversight
Strong governance is essential, particularly during periods of uncertainty. During the second quarter of fiscal 2026, we strengthened our Board with the addition of two new independent, non-executive directors. Their experience and perspectives will contribute to enhanced oversight and more robust decision-making.
The Board is actively engaged in guiding the Company through its current challenges. Its focus includes ensuring accountability, maintaining transparency, and supporting management in executing the strategic and financial initiatives outlined above.
We are also evaluating additional governance enhancements aimed at further strengthening our oversight framework. Any such developments will be communicated to shareholders in due course.
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