Vilmorin & Cie - Annual report 2017-2018

5 ANNUAL REPORT Vilmorin & Cie 205 2017-2018 4- Further information 4.1 - Limagrain intra-group services Intra-group services are invoiced by Groupe Limagrain Holding to the subsidiaries of Vilmorin & Cie and to the subsidiaries of Limagrain on a proportional basis of budgeted expenses. The amount invoiced came to 11.3 million euros. In order to invoice intra-group services, the nature of the services provided are accounted for using four keys: an “activity” key (revenue from ordinary activities and margin on cost of sales), an “information systems” key (number of licenses), a “research” key (research and development costs), a “human resources” key (payroll). 4.2 - Vilmorin & Cie intra-group services In the same way, Vilmorin & Cie invoices intra-group services to all its subsidiaries and to the subsidiaries of Limagrain according to the same criteria as the Limagrain intra-group services mentioned above. The total invoiced came to 53.2 million euros. 4.3 - Allocation of the seed research program costs Moreover, Vilmorin & Cie also invoices for services of a scientific nature for the seed companies in the Vilmorin & Cie group (Field Seeds and Vegetable Seeds divisions) that work on the professional market. The aggregate amount invoiced to the subsidiaries came to 17.7 million euros. The criteria applied homogeneously throughout Vilmorin & Cie to calculate these allocations for services of a scientific nature take into account research and development costs. 4.4 - Cash flowagreements and pooling of exchange risks Companies have signed agreements with Vilmorin & Cie in order to optimize the management of their cash flow under conditions that provide lenders with a financial margin of 0.20% over the average monthly EONIA rate. Moreover, Vilmorin & Cie centralizes its foreign currency risk hedges for its subsidiaries. The main currencies hedged are the US dollar, the GB pound, the yen and the Australian dollar (cf. Note 30 paragraph 2.1). 4.5 - Other operations Other operations correspond to current commercial transactions made on the basis of market prices. Note 33: Potential liabilities As they run their businesses, Vilmorin & Cie’s operating companies are exposed to claims on the products they have sold, and such claims are generally covered by their insurance policies. Note 34: Events occurring after the closing of the accounts The main operations occurring after the closing of the accounts were as follows: Full take-over of the company AdvanSeed (Denmark) In July 2018, through its subsidiary Vilmorin SA, Vilmorin & Cie completed the full take-over of the company AdvanSeed, whose head office is located in Odense, Denmark. AdvanSeed specializes in the breeding, production and distribution of hybrid spinach and leafy vegetable seeds. Reorganization of the Seed Co group In August 2018, the company Seed Co Limited, a subsidiary of Vilmorin & Cie, reorganized its business activities. As a result of this operation, Vilmorin & Cie directly holds 29% of the company Seed Co International, previously a 100% subsidiary of Seed Co Limited. This reorganization resulted in: - the distribution in kind of 71% of Seed Co International securities to the shareholders of Seed Co Limited, - a capital stock increase of Seed Co International, totally subscribed to by Vilmorin & Cie, - the separate listing of the company Seed Co International on the stock markets of Botswana and Zimbabwe. Litigation with Arcadia Biosciences On September 5, 2018, Vilmorin & Cie was called by Arcadia Biosciences to appear before the New-York state court for failure to respect confidentiality agreements signed in 2009. The origin of this litigation lies in another litigation arising in September 2017 between Arista Cereal Technologies (a sister company of Vilmorin & Cie) and Arcadia Biosciences before the United States Patent and Trademark Office (USPTO) as part of legal proceedings against Arista’s patent of one of their technologies (high-fiber wheat). On August 14, 2018, the U.S. Patent Office ruled in favor of Arista and rejected the claims of Arcadia Biosciences concerning Arista’s patent. The above-described proceedings have not led to any provision being made, since the group is not in a position to assess the financial risk at this initial stage. 5.1. Consolidated Financial Statements Financial INFORMATION