Adecoagro S.A.

Condensed Consolidated Interim Financial Statements as of March 31, 2019 and for the three-month periods ended March 31, 2019 and 2018

Legal information

Denomination: Adecoagro S.A.

Legal address:Vertigo Naos Building, 6, Rue Eugène Ruppert, L-2453, Luxembourg

Company activity:Agricultural and agro-industrial

Date of registration: June 11, 2010

Expiration of company charter: No term defined

Number of register (RCS Luxembourg): B153.681

Issued Capital Stock:: 122,381,815 common shares

Outstanding Capital Stock: 116,555,699 common shares

Treasury Shares: 5,826,116

F - 1

Adecoagro S.A.

Condensed Consolidated Interim Statements of Income for the three periods ended March 31, 2019 and 2018

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

Note

March 31,

March 31,

2019

2018 (*)

(unaudited)

Sales of goods and services rendered

4

159,815

155,567

Cost of goods sold and services rendered

5

(123,938)

(120,948)

Initial recognition and changes in fair value of biological assets and agricultural

15

23,168

16,081

produce

Changes in net realizable value of agricultural produce after harvest

1,356

(691)

Margin on manufacturing and agricultural activities before operating expenses

60,401

50,009

General and administrative expenses

6

(13,461)

(15,172)

Selling expenses

6

(20,372)

(16,326)

Other operating (loss) / income, net

8

(2,431)

22,088

Profit from operations before financing and taxation

24,137

40,599

Finance income

9

2,933

3,006

Finance costs

9

(44,374)

(28,217)

Other financial results - Net gain of inflation effects on the monetary items

9

17,786

-

Financial results, net

9

(23,655)

(25,211)

Profit before income tax

482

15,388

Income tax (expense)

10

(2,717)

(4,492)

(Loss)/Profit for the period

(2,235)

10,896

Attributable to:

Equity holders of the parent

(3,153)

9,265

Non-controlling interest

918

1,631

(Loss)/Earnings per share attributable to the equity holders of the parent

during the period:

Basic

(0.027)

0.079

Diluted

(0.027)

0.078

  1. Prior period have been recast to reflect the Company's change in accounting policy for investment properties as described in Note 29.

The accompanying notes are an integral part of these condensed consolidated interim financial statements

F- 3

Adecoagro S.A.

Condensed Consolidated Interim Statements of Comprehensive Income

for the three periods ended March 31, 2019 and 2018

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

March 31,

March 31,

2019

2018 (*)

(unaudited)

Profit / (Loss) for the period

(2,235)

10,896

Other comprehensive income / (loss):

Items that may be reclassified subsequently to profit or loss:

Exchange differences on translating foreign operations

(22,481)

(6,998)

Cash flow hedge, net of tax (Note 2)

(5,614)

(3,620)

Items that will not be reclassified to profit or loss:

Revaluation surplus net of tax

17,237

-

Other comprehensive loss for the period

(10,858)

(10,618)

Total comprehensive (loss) / income for the period

(13,093)

278

Attributable to:

Equity holders of the parent

(13,949)

(881)

Non-controlling interest

856

1,159

  1. Prior period have been recast to reflect the Company's change in accounting policy for investment properties as described in Note 29.

The accompanying notes are an integral part of these condensed consolidated interim financial statements

F- 4

Adecoagro S.A.

Condensed Consolidated Interim Statements of Financial Position

as of March 31, 2019 and December 31, 2018

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

March 31,

December 31,

Note

2019

2018

(unaudited)

ASSETS

Non-Current Assets

Property, plant and equipment

11

1,586,758

1,480,439

Right of use assets

12

206,001

-

Investment property

13

40,725

40,725

Intangible assets

14

33,075

27,909

Biological assets

15

12,503

11,270

Deferred income tax assets

10

17,054

16,191

Trade and other receivables, net

17

48,956

38,820

Other assets

1,144

1,184

Total Non-Current Assets

1,946,216

1,616,538

Current Assets

Biological assets

15

99,234

94,117

Inventories

18

130,089

128,102

Trade and other receivables, net

17

133,255

158,686

Derivative financial instruments

16

5,372

6,286

Other assets

6

8

Cash and cash equivalents

19

156,889

273,635

Total Current Assets

524,845

660,834

TOTALASSETS

2,471,061

2,277,372

SHAREHOLDERS EQUITY

Capital and reserves attributable to equity holders of the parent

Share capital

20

183,573

183,573

Share premium

20

900,503

900,503

Cumulative translation adjustment

(675,824)

(666,037)

Equity-settled compensation

17,178

16,191

Cash flow hedge

(62,498)

(56,884)

Other reserves

38,964

32,380

Treasury shares

(8,741)

(8,741)

Revaluation surplus

383,200

383,889

Reserve from the sale of non-controlling interests in subsidiaries

41,574

41,574

Retained earnings

232,745

237,188

Equity attributable to equity holders of the parent

1,050,674

1,063,636

Non-controlling interest

45,365

44,509

TOTAL SHAREHOLDERS EQUITY

1,096,039

1,108,145

LIABILITIES

Non-Current Liabilities

Trade and other payables

22

3,430

211

Borrowings

23

710,658

718,484

Lease liabilities

24

143,375

-

Deferred income tax liabilities

10

175,647

168,171

Payroll and social security liabilities

25

1,347

1,219

Provisions for other liabilities

26

3,131

3,296

Total Non-Current Liabilities

1,037,588

891,381

Current Liabilities

Trade and other payables

22

98,004

106,226

Current income tax liabilities

1,704

1,398

Payroll and social security liabilities

25

26,251

25,978

Borrowings

23

175,299

143,632

Lease liabilities

24

34,884

-

Derivative financial instruments

16

1,006

283

Provisions for other liabilities

26

286

329

Total Current Liabilities

337,434

277,846

TOTAL LIABILITIES

1,375,022

1,169,227

TOTAL SHAREHOLDERS EQUITY AND LIABILITIES

2,471,061

2,277,372

The accompanying notes are an integral part of these condensed consolidated interim financial statements

F- 5

Adecoagro S.A.

Condensed Consolidated Interim Statements of Changes in Shareholders' Equity for the three-month periods ended March 31, 2019 and 2018 (continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

Attributable to equity holders of the parent

Reserve from

Cumulative

the sale of

Non-

Total

Share Capital

Share

Equity-settled

Cash flow

Treasury

non-

Retained

Translation

Subtotal

Controlling

Shareholders'

(Note 19)

Premium

Compensation

hedge

shares

controlling

Earnings

Adjustment

Interest

Equity

interests in

subsidiaries

Balance at January 1, 2018

183,573

908,934

(552,604)

17,852

(24,691)

(6,967)

41,574

106,209

673,880

9,139

683,019

Profit for the period

-

-

-

-

-

-

-

9,265

9,265

1,631

10,896

Other comprehensive income:

- Items that may be reclassified subsequently to profit or loss:

Exchange differences on translating foreign operations

-

-

(6,526)

-

-

-

-

-

(6,526)

(472)

(6,998)

Cash flow hedge (*)

-

-

-

-

(3,620)

-

-

-

(3,620)

-

(3,620)

Other comprehensive income for the period

-

-

(6,526)

-

(3,620)

-

-

-

(10,146)

(472)

(10,618)

Total comprehensive income for the period

-

-

(6,526)

-

(3,620)

-

-

9,265

(881)

1,159

278

Employee share options (Note 21)

- Exercised/ Forfeited

-

-

-

(12)

-

-

-

12

-

-

-

Restricted shares (Note 21):

- Value of employee services

-

-

-

1,345

-

-

-

-

1,345

-

1,345

- Vested

-

-

-

-

-

-

-

-

-

-

-

-Purchase of own shares (Note 20)

-

(11,398)

-

-

-

(2,094)

-

-

(13,492)

-

(13,492)

Balance at March 31, 2018 (unaudited) (**)

183,573

897,536

(559,130)

19,185

(28,311)

(9,061)

41,574

115,486

660,852

10,298

671,150

(*) Net of 1,294 of Income Tax.

(**) 2018 information has been recast to reflect the Company's change in accounting policy for investment properties as described in Note 29.

The accompanying notes are an integral part of these condensed consolidated interim financial statements

F- 6

Adecoagro S.A.

Condensed Consolidated Interim Statements of Changes in Shareholders' Equity for the three-month periods ended March 31, 2019 and 2018 (continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

Attributable to equity holders of the parent

Reserve

Cumulative

Cash

from the

Non-

Total

Share Capital

Share

Equity-settled

Other

Treasury

Revaluation

sale of non-

Retained

Subtotal

Translation

flow

Controlling

Shareholder

(Note 19)

Premium

Adjustment

Compensation

hedge

reserves

shares

surplus (**)

controlling

Earnings

Interest

s' Equity

interests in

subsidiaries

Balance at January 1, 2019

183,573

900,503

(666,037)

16,191

(56,884)

32,380

(8,741)

383,889

41,574

237,188

1,063,636

44,509

1,108,145

Loss for the period

-

-

-

-

-

-

-

-

(3,153)

(3,153)

918

(2,235)

Other comprehensive loss:

- Items that may be reclassified subsequently to profit or loss:

Exchange differences on translating foreign operations

-

-

(9,787)

-

-

-

-

(11,310)

-

-

(21,097)

(1,384)

(22,481)

Cash flow hedge (*)

-

-

-

-

(5,614)

-

-

-

-

-

(5,614)

-

(5,614)

- Items that will not be reclassified to profit or loss:

Revaluation surplus

-

-

-

-

-

-

-

15,915

-

-

15,915

1,322

17,237

Reserve of the revaluation surplus derived from the disposals

-

-

-

-

-

-

-

(5,294)

-

5,294

-

-

-

of assets

Other comprehensive income for the period

-

-

(9,787)

-

(5,614)

-

-

(689)

-

5,294

(10,796)

(62)

(10,858)

Total comprehensive income for the period

-

-

(9,787)

-

(5,614)

-

-

(689)

-

2,141

(13,949)

856

(13,093)

Reserves for the benefit of government grants (1)

-

-

-

-

-

6,584

-

-

-

(6,584)

-

-

-

Restricted shares (Note 21):

- Value of employee services

-

-

-

987

-

-

-

-

-

-

987

-

987

Balance at March 31, 2019 (unaudited)

183,573

900,503

(675,824)

17,178

(62,498)

38,964

(8,741)

383,200

41,574

232,745

1,050,674

45,365

1,096,039

  1. Net of 1,579 of Income tax. (**) Net of 5,741 of Income tax.
    (1) Correspond to the presumed credit of ICMS (Imposto sobre Circulação de Mercadorias e Prestação de Serviços) over the sale values in our Sugar, ethanol and energy business).

The accompanying notes are an integral part of these condensed consolidated interim financial statements

F- 7

Adecoagro S.A.

Condensed Consolidated Interim Statements of Cash Flows for the three-month periods ended March 31, 2019 and 2018

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

Note

March 31,

March 31,

2019

2018 (*)

(unaudited)

Cash flows from operating activities:

(Loss)/Profit for the period

(2,235)

10,896

Adjustments for:

Income tax expense

10

2,717

4,492

Depreciation

11

25,978

24,228

Amortization

14

328

265

Depreciation of right of use assets

12

10,411

-

Gain from the sale of farmland and other assets

27

(1,472)

-

Gain from disposal of other property items

(362)

(120)

Acquisition of subsidiaries

(149)

-

Net gain from the Fair value adjustment of Investment properties

13

(1,280)

(3,152)

Equity settled share-based compensation granted

7, 21

1,378

1,345

Loss / (gain) from derivative financial instruments

8, 9

3,047

(16,572)

Interest and other expense, net

9

13,121

11,225

Initial recognition and changes in fair value of non harvested biological assets

(25,695)

(9,296)

(unrealized)

Changes in net realizable value of agricultural produce after harvest (unrealized)

515

(910)

Provision and allowances

-

29

Net gain of inflation effects on the monetary items

9

(17,786)

-

Foreign exchange losses, net

9

20,196

9,348

Cash flow hedge - transfer from equity

9

7,601

2,101

Subtotal

36,313

33,879

Changes in operating assets and liabilities:

(Increase) in trade and other receivables

(7,989)

(32,399)

(Increase) in inventories

(2,552)

(17,801)

Decrease in biological assets

18,527

9,332

Decrease in other assets

3

6

(Increase) / Decrease in derivative financial instruments

(1,946)

12,579

(Decrease) in trade and other payables

(10,875)

(13,699)

Increase in payroll and social security liabilities

1,211

3,690

(Decrease) in provisions for other liabilities

(174)

(221)

Net cash generated from (used in) operating activities before taxes paid

32,518

(4,634)

Income tax paid

(124)

(131)

Net cash generated from operating activities

(a)

32,394

(4,765)

The accompanying notes are an integral part of these condensed consolidated interim financial statements

F- 8

Adecoagro S.A.

Condensed Consolidated Interim Statements of Cash Flows

for the three-month periods ended March 31, 2019 and 2018 (continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

Note

March 31,

March 31,

2019

2018 (*)

(unaudited)

Cash flows from investing activities:

Acquisition of a business, net of cash and cash equivalents acquired

684

-

Purchases of property, plant and equipment

11

(119,157)

(62,418)

Purchases of cattle and non current biological assets

(1,463)

(1,464)

Purchases of intangible assets

14

(6,645)

(456)

Interest received

9

2,129

2,463

Proceeds from sale of property, plant and equipment

332

508

Proceeds from sale of farmlands and other assets

27

5,833

-

Net cash used in investing activities

(b)

(118,287)

(61,367)

Cash flows from financing activities:

Proceeds from long-term borrowings

8,016

8,728

Payments of long-term borrowings

(32,067)

(6,074)

Proceeds from short-term borrowings

76,114

39,335

Payment of short-term borrowings

(37,529)

(23,934)

Proceeds / (Payments) of derivatives financial instruments

557

(190)

Lease payments

(14,320)

-

Interest paid

(22,640)

(21,035)

Purchase of own shares

-

(13,492)

Dividends paid to non-controlling interest

-

(1,195)

Net cash used in financing activities

(c)

(21,869)

(17,857)

Net decrease in cash and cash equivalents

(d)

(107,762)

(83,989)

Cash and cash equivalents at beginning of period

19

273,635

269,195

Effect of exchange rate changes and inflation on cash and cash equivalents

(8,984)

(1,431)

Cash and cash equivalents at end of period

19

156,889

183,775

  1. Prior period have been recast to reflect the Company's change in accounting policy for investment properties as described in Note 29.
  1. Includes 9,074 of the combine effect of IAS 29 and IAS 21 of the Argentine subsidiaries.
  2. Includes 2,608 of the combine effect of IAS 29 and IAS 21 of the Argentine subsidiaries.
  3. Includes (1,621) of the combine effect of IAS 29 and IAS 21 of the Argentine subsidiaries.
  4. Includes (10,062) of the combine effect of IAS 29 and IAS 21 of the Argentine subsidiaries.

Other Non-cash investing and financing for the transactions disclosed in other notes are the seller financing of Subsidiaries in Note 27.

The accompanying notes are an integral part of these condensed consolidated interim financial statements

F- 9

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

1. General information

Adecoagro S.A. (the "Company" or "Adecoagro") is the Group's ultimate parent company and is a société anonyme (stock corporation) organized under the laws of the Grand Duchy of Luxembourg. Adecoagro is a holding company primarily engaged through its operating subsidiaries in agricultural and agro-industrial activities. The Company and its operating subsidiaries are collectively referred to hereinafter as the "Group". These activities are carried out through three major lines of business, namely, Farming; Sugar, Ethanol and Energy and Land Transformation. Farming is further comprised of three reportable segments, which are described in detail in Note 3 to these condensed consolidated interim financial statements.

Adecoagro is a public company listed in the New York Stock Exchange as a foreign registered company under the symbol of AGRO.

These condensed consolidated interim financial statements have been approved for issue by the Board of Directors on May 20, 2019.

2. Financial risk management

Risk management principles and processes

The Group is exposed to several risks arising from financial instruments including price risk, exchange rate risk, interest rate risk, liquidity risk and credit risk. A thorough explanation of the Group´s risks and the Group´s approach to the identification, assessment and mitigation of risks is included in Note 2 to the annual financial statements. There have been no changes to the Group ´s exposure and risk management principles and processes since December 31, 2018 and refers readers to the annual financial statements for information.

However, the Group considers that the following tables below provide useful information to understand the Group´s interim resultsforthethreemonthperiodendedMarch 31,2019.Thesedisclosuresdonotappearinanyparticularorderofpotentialmateriality or probability of occurrence.

  • Exchange rate risk

ThefollowingtablesshowtheGroup'snetmonetarypositionbrokendownbyvariouscurrenciesforeachfunctionalcurrency in which the Group operates at March 31, 2019. All amounts are shown in US dollars.

March 31, 2019

(unaudited)

Functional currency

Net monetary position (Liability)/ Asset

Argentine

Brazilian

Uruguayan

US Dollar

Total

Peso

Reais

Peso

Argentine Peso

(29,925)

-

-

(534)

(30,459)

Brazilian Reais

-

4,425

-

-

4,425

US Dollar

(286,361)

(488,695)

21,771

53,341

(699,944)

Uruguayan Peso

-

-

(269)

-

(269)

Total

(316,286)

(484,270)

21,502

52,807

(726,247)

The Group's analysis shown on the tables below is carried out based on the exposure of each functional currency subsidiary againsttheUSdollar.TheGroupestimatedthat,otherfactorsbeingconstant,a10%appreciationoftheUSdollaragainsttherespective functional currencies for the period ended March 31, 2019 would have increased the Group's Loss before income tax for the period. A10%depreciationoftheUSdollaragainstthefunctionalcurrencieswouldhaveanequalandoppositeeffectontheincomestatement. A portion of this effect would be recognized as other comprehensive income since a portion of the Company's borrowings was used

The accompanying notes are an integral part of these condensed consolidated interim financial statements

F- 10

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

2. Financial risk management (continued)

ascashflowhedgeoftheforeignexchangerateriskofaportionofitshighlyprobablefuturesalesinUSdollars(seeHedgeAccounting - Cash Flow Hedge below for details).

March 31, 2019

(unaudited)

Functional currency

Net monetary position

Argentine

Brazilian

Uruguayan

US Dollar

Total

Peso

Reais

Peso

US Dollar

(28,636)

(48,870)

2,177

-

(75,329)

(Decrease) or increase in Profit before income tax

(28,636)

(48,870)

2,177

-

(75,329)

Hedge Accounting - Cash flow hedge

Effective July 1, 2013, the Group formally documented and designated cash flow hedging relationships to hedge the foreign exchange rate risk of a portion of its highly probable future sales in US dollars using a portion of its borrowings denominated in US dollars, currency forwards and foreign currency floating-to-fixed interest rate swaps.

The Group expects that the cash flows will occur and affect profit or loss between 2019 and 2024.

For the period ended March 31, 2019, a loss before income tax of US$ 15,425 was recognized in other comprehensive income and a loss of US$ 8,232 was reclassified from equity to profit or loss within "Financial results, net".

  • Interest rate risk

The following table shows a breakdown of the Group's fixed-rate and floating-rate borrowings per currency denomination and functional currency of the subsidiary issuing the loans at March 31, 2019 (all amounts are shown in US dollars):

March 31, 2019

(unaudited)

Functional currency

Rate per currency denomination

Argentine

Brazilian

Uruguayan

US

Total

Peso

Reais

Peso

Dollar

Fixed rate:

Argentine Peso

10,818

-

-

-

10,818

Brazilian Reais

-

58,648

-

-

58,648

US Dollar

78,156

83,554

9,996

496,980

668,686

Subtotal Fixed-rate borrowings

88,974

142,202

9,996

496,980

738,152

Variable rate:

Brazilian Reais

-

25,950

-

-

25,950

US Dollar

114,457

7,398

-

-

121,855

Subtotal Variable-rate borrowings

114,457

33,348

-

-

147,805

Total borrowings as per analysis

203,431

175,550

9,996

496,980

885,957

The accompanying notes are an integral part of these condensed consolidated interim financial statements

F- 11

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

2. Financial risk management (continued)

At March 31, 2019, if interest rates on floating-rate borrowings had been 1% higher (or lower) with all other variables held constant, Profit before income tax for the period would decrease as follows:

March 31, 2019

(unaudited)

Functional currency

Rate per currency denomination

Argentine

Brazilian

Total

Peso

Reais

Variable rate:

Brazilian Reais

-

(260)

(260)

US Dollar

(1,145)

(74)

(1219)

Decrease in profit before income tax

(1,145)

(334)

(1,479)

Credit risk

As of March 31, 2019, six banks accounted for more than 82% of the total cash deposited (J.P. Morgan, HSBC, Banco do Brasil, Banco Safra, Banco Santander, Banco Bradesco).

  • Derivative financial instruments

The following table shows the outstanding positions for each type of derivative contract as of March 31, 2019:

Futures / Options

Type of

March 31, 2019

Quantities

Notional

Market

Profit / (Loss)

(thousands)

Value Asset/

derivative contract

amount

(*)

(**)

(Liability)

(unaudited)

(unaudited)

Futures:

Sale

Corn

20

2,152

(698)

(586)

Soybean

86

28,260

1,116

715

Wheat

15

2,825

305

305

Sugar

206,512

66,179

3,471

(1,211)

Options:

Buy call

Corn

(13)

353

95

(258)

Total

206,620

99,769

4,289

(1,035)

  1. Included in line "Gain / (Loss) from commodity derivative financial instruments" Note 8. (**) All quantities expressed in tons except otherwise indicated.

Commodity future contract fair values are computed with reference to quoted market prices on future exchanges.

The accompanying notes are an integral part of these condensed consolidated interim financial statements

F- 12

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

2. Financial risk management (continued)

Other derivative financial instruments

As of March 31, 2019, the Group has floating-to-fixed interest rate swap, foreign currency fixed-to-floating interest rate swap and foreign currency floating-to fixed interest rate swap agreements, which were also outstanding as of December 31, 2018.

During the period ended March 31, 2019 and 2018, the Group entered into several currency forward contracts with Brazilian banks in order to hedge the fluctuation of the Brazilian Reais against US Dollar for a total notional amount of US$ 2.1 million and US$ 14.8 million, respectively. Those contracts entered in 2019 had maturity dates April 2019. The outstanding contracts resulted in the recognition of a loss of US$ 0.01 million in the period ended March 31, 2019.

During the period ended on March 31, 2019 and 2018, the Group entered into several currency forward contracts in order tohedgethefluctuationoftheUSDollaragainstEuroforatotalnotionalamountofUS$4.5millionandUS$11.0million,respectively. ThecurrencyforwardcontractsmaturitydatearebetweenMarchandJune2019,andMayandJune2018,respectively.Theoutstanding contracts resulted in the recognition of a gain of US$ 0.08 million and US$ 0.04 million, respectively.

Gain and losses on currency forward contracts are included within "Financial results, net" in the statement of income.

3. Segment information

IFRS8"OperatingSegments"requiresanentitytoreportfinancialanddescriptiveinformationaboutitsreportablesegments, which are operating segments or aggregations of operating segments that meet specified criteria. Operating segments are components of an entity about which separate financial information is available that is evaluated regularly by the chief operating decision maker ("CODM") in deciding how to allocate resources and in assessing performance. The CODM evaluates the business based on the differences in the nature of its operations, products and services. The amount reported for each segment item is the measure reported to the CODM for these purposes.

The Group operates in three major lines of business, namely, Farming; Sugar, Ethanol and Energy; and LandTransformation.

  • The Group's'Farming'line of business is further comprised of three reportable segments:

TheGroup's'Crops'Segmentconsistsofplanting,harvesting,saleandprocessinggrains,oilseedsandfibers(including wheat, corn, soybeans, cotton and sunflowers, among others), and to a lesser extent the provision of grain warehousing/ conditioning, handling and drying services to third parties, and the purchase and sale of crops produced by third parties crops. Each underlying crop in the Crops segment does not represent a separate operating segment. Management seeks to maximize the use of the land through the cultivation of one or more type of crops. Types and surface amount of crops cultivated may vary from harvest year to harvest year depending on several factors, some of them out of the Group´s control. Management is focused on the long-term performance of the productive land, and to that extent, the performance is assessed considering the aggregated combination, if any, of crops planted in the land.Asingle manager is responsible for the management of operating activity of all crops rather than for each individual crop. (For disposals and acquisitions see Note 27),

The Group's 'Rice'Segment consists of planting, harvesting, processing and marketing of rice;

The Company's 'Dairy'Segment consists of the production and sale of raw milk and industrialized products, including UHT, cheese and powder milk among others;

The Group's 'All Other Segments'column consists of the aggregation of the remaining non-reportable operating segments, which do not meet the quantitative thresholds for disclosure and for which the Group's management does not consider them to be significance Coffee and Cattle.

  • The Group's'Sugar, Ethanol and Energy'Segment consists of cultivating sugarcane which is processed in owned sugar mills, transformed into ethanol, sugar and electricity and marketed;
    The accompanying notes are an integral part of these condensed consolidated interim financial statements

F- 13

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

3. Segment information (continued)

  • The Group's'Land Transformation'Segment comprises the (i) identification and acquisition of underdeveloped and undermanaged farmland businesses; and (ii) realization of value through the strategic disposition of assets (generating profits). (For disposals and acquisitions see Note 27).

Total segment assets and liabilities are measured in a manner consistent with that of the consolidated financial statements. These assets and liabilities are allocated based on the operations of the segment and the physical location of the asset.

Effective July 1, 2018, the Group applied IAS 29 "Financial Reporting in Hyperinflationary Economies" ("IAS 29") to its operations in Argentina. IAS 29 "Financial Reporting in Hyperinflationary Economies" requires that the financial statements of entities whose functional currency is that of a hyperinflationary economy be adjusted for the effects of changes in the general price index and be expressed in terms of the current unit of measurement at the closing date of the reporting period ("inflation accounting"). In order to determine whether an economy is classified as hyperinflationary, IAS 29 sets forth a series of factors to be considered, including whether the amount of cumulative inflation nears or exceeds a threshold of 100 %. Accordingly, Argentina has been classified as a hyperinflationary economy under the terms of IAS 29 from July 1, 2018.

According to IAS 29, allArgentine Peso-denominatednon-monetary items in the statement of financial position are adjusted by applying a general price index from the date they were initially recognized to the end of the reporting period. Likewise, all Argentine Peso-denominated items in the statement of income should be expressed in terms of the measuring unit current at the end of the reporting period, consequently, income statement items are adjusted by applying a general price index on a monthly basis from the dates they were initially recognized in the financial statements to the end of the reporting period. This process is called "re- measurement".

Once the re-measurement process is completed, all Argentine Peso denominated accounts are translated into U.S. Dollars, the Group's reporting currency, applying the guidelines in IAS 21 "The Effects of Changes in Foreign Exchange Rates"("IAS 21"). IAS 21 requires that amounts be translated at the closing rate at the date of the most recent statement of financial position. This process is called "translation".

The re-measurement and translation processes are applied on a monthly basis until year-end. Due to this process, the remeasured and translated results of operations for a given month are subject to change until year-end, affecting comparison and analysis.

Following the adoption of IAS 29 to the Argentine operations of the Group, management revised the information reviewed by the CODM. Accordingly, as from July 1, 2018, (commencement of hyper-inflation accounting in Argentina), the information provided to the CODM departs from the application of IAS 29 and IAS 21 re-measurement and translation processes as follows. The segment results of the Argentinean operations for each reporting period were adjusted for inflation and translated into the Group's reporting currency using the reporting period average exchange rate. The translated amounts were not subsequently re-measured and translated in accordance with the IAS 29 and IAS 21 procedures outlined above. From January 1, 2018 through June 30, 2018, the Group's segment results were still based on the IFRS measurement principles adopted until June 30, 2018.

In order to evaluate the economic performance of businesses on a monthly basis, results of operations inArgentina are based on monthly data that have been adjusted for inflation and converted into the average exchange rate of the U.S. Dollar each month. These already converted figures are subsequently not readjusted and reconverted as described above under IAS 29 and IAS 21. It should be noted that this translation methodology for evaluating segment information is the same that the company uses to translate results of operation from its other subsidiaries from other countries that have not been designated hyperinflationary economies because it allows for a more accurate analysis of the economic performance of its business as a whole.

The Group's CODM believes that the exclusion of the re-measurement and translation processes from the segment reporting structure allows for a more useful presentation and facilitates period-to-period comparison and performance analysis.

The accompanying notes are an integral part of these condensed consolidated interim financial statements

F- 14

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

3. Segment information (continued)

The following tables show a reconciliation of each reportable segment for the three-month period ended March 31, 2019, as per the information reviewed by the CODM and the reportable segment measured in accordance with IAS 29 and IAS 21 as per the consolidated financial statements.

Crops

Rice

Dairy

Total

Total as

Total

Total as

Total

Total as

per

per

per

segment

Adjustment

segment

Adjustment

segment

Adjustment

statement

statement

statement

reporting

reporting

reporting

of income

of income

of income

Sales of goods sold and services rendered

34,117

(1,291)

32,826

29,411

(633)

28,778

8,110

(330)

7,780

Cost of goods and services rendered

(35,111)

1,357

(33,754)

(22,510)

259

(22,251)

(7,855)

310

(7,545)

Initial recognition and changes in fair value of

9,900

(335)

9,565

13,844

(868)

12,976

2,742

(120)

2,622

biological assets and agricultural produce

Gain from changes in net realizable value of

1,427

(71)

1,356

-

-

-

-

-

-

agricultural produce after harvest

Margin on Manufacturing and Agricultural

10,333

(340)

9,993

20,745

(1,242)

19,503

2,997

(140)

2,857

Activities Before Operating Expenses

General and administrative expenses

(1,369)

74

(1,295)

(1,807)

104

(1,703)

(918)

57

(861)

Selling expenses

(1,588)

64

(1,524)

(6,830)

340

(6,490)

(483)

28

(455)

Other operating income, net

(2,863)

12

(2,851)

145

(7)

138

144

(6)

138

Profit from Operations Before Financing and

4,513

(190)

4,323

12,253

(805)

11,448

1,740

(61)

1,679

Taxation

Depreciation and amortization

(953)

16

(937)

(1,776)

110

(1,666)

(1,037)

60

(977)

Net gain from Fair value adjustment of

-

-

-

-

-

-

-

-

-

Investment property

All other segments

Corporate

Total

Total

Total as

Total

Total as

Total

Total as

per

per

per

segment

Adjustment

segment

Adjustment

segment

Adjustment

statement

statement

statement

reporting

reporting

reporting

of income

of income

of income

Sales of goods sold and services rendered

425

(29)

396

-

-

-

162,098

(2,283)

159,815

Cost of goods and services rendered

(303)

21

(282)

-

-

-

(125,885)

1,947

(123,938)

Initial recognition and changes in fair value of

222

(26)

196

-

-

-

24,517

(1,349)

23,168

biological assets and agricultural produce

Gain from changes in net realizable value of

-

-

-

-

-

-

1,427

(71)

1,356

agricultural produce after harvest

Margin on Manufacturing and

Agricultural Activities Before Operating

344

(34)

310

-

-

-

62,157

(1,756)

60,401

Expenses

General and administrative expenses

(41)

(29)

(70)

(4,575)

174

(4,401)

(13,841)

380

(13,461)

Selling expenses

(49)

-

(49)

(79)

4

(75)

(20,808)

436

(20,372)

Other operating income, net

1,330

(56)

1,274

(184)

14

(170)

(2,388)

(43)

(2,431)

Profit from Operations Before Financing

1,584

(119)

1,465

(4,838)

192

(4,646)

25,120

(983)

24,137

and Taxation

Depreciation and amortization

(46)

3

(43)

-

-

-

(26,495)

189

(26,306)

Net gain from Fair value adjustment of

1,336

(56)

1,280

-

-

-

1,336

(56)

1,280

Investment property

Sugar, Ethanol and Energy, and Land Transformation segments have not been reconciliated due to the lack of differences.

The accompanying notes are an integral part of these condensed consolidated interim financial statements

F- 15

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

3. Segment information (continued)

Segment analysis for the three-month period ended March 31, 2019 (unaudited)

Farming

Sugar,

Land

Ethanol and

Corporate

Total

All Other

Farming

Crops

Rice

Dairy

Transformation

Energy

Segments

subtotal

Sales of goods and services rendered

34,117

29,411

8,110

425

72,063

90,035

-

-

162,098

Cost of goods sold and services rendered

(35,111)

(22,510)

(7,855)

(303)

(65,779)

(60,106)

-

-

(125,885)

Initial recognition and changes in fair value of biological assets and agricultural produce

9,900

13,844

2,742

222

26,708

(2,191)

-

-

24,517

Changes in net realizable value of agricultural produce after harvest

1,427

-

-

-

1,427

-

-

-

1,427

Margin on manufacturing and agricultural activities before operating expenses

10,333

20,745

2,997

344

34,419

27,738

-

-

62,157

General and administrative expenses

(1,369)

(1,807)

(918)

(41)

(4,135)

(5,131)

-

(4,575)

(13,841)

Selling expenses

(1,588)

(6,830)

(483)

(49)

(8,950)

(11,779)

-

(79)

(20,808)

Other operating income, net

(2,863)

145

144

1,330

(1,244)

(2,314)

1,354

(184)

(2,388)

Profit / (loss) from operations before financing and taxation

4,513

12,253

1,740

1,584

20,090

8,514

1,354

(4,838)

25,120

Depreciation and amortization

(953)

(1,776)

(1,037)

(46)

(3,812)

(22,683)

-

-

(26,495)

Net gain from Fair value adjustment of Investment property

-

-

-

1,336

1,336

-

-

-

1,336

Reverse of revaluation surplus derived from the disposals of assets before taxes

-

-

-

-

-

-

8,022

-

8,022

Initial recognition and changes in fair value of biological assets and agricultural produce

9,368

13,285

214

865

23,732

1,963

-

-

25,695

(unrealized)

Initial recognition and changes in fair value of biological assets and agricultural produce

532

559

2,528

(643)

2,976

(4,154)

-

-

(1,178)

(realized)

Changes in net realizable value of agricultural produce after harvest (unrealized)

(515)

-

-

-

(515)

-

-

-

(515)

Changes in net realizable value of agricultural produce after harvest (realized)

1,942

-

-

-

1,942

-

-

-

1,942

Farmlands and farmland improvements, net

539,061

169,954

2,297

22,866

734,178

50,771

-

-

784,949

Machinery, equipment, building and facilities, and other fixed assets, net

33,716

27,034

65,864

506

127,120

360,245

-

-

487,365

Bearer plants, net

447

-

-

-

447

246,227

-

-

246,674

Work in progress

9,808

7,271

21,361

17

38,457

29,313

-

-

67,770

Right of use asset

2,323

598

839

-

3,760

202,241

-

-

206,001

Investment property

-

-

-

40,725

40,725

-

-

-

40,725

Goodwill

9,166

4,012

-

1,429

14,607

5,603

-

-

20,210

Biological assets

37,845

713

11,110

4,386

54,054

57,683

-

-

111,737

Finished goods

24,002

7,378

1,940

-

33,320

19,651

-

-

52,971

Raw materials, Stocks held by third parties and others

11,052

37,122

5,472

87

53,733

23,385

-

-

77,118

Total segment assets

667,420

254,082

108,883

70,016

1,100,401

995,119

-

-

2,095,520

Borrowings

119,522

85,693

3,587

4,625

213,427

582,490

-

90,040

885,957

Lease liabilities

2,917

578

887

-

4,382

173,877

-

-

178,259

Total segment liabilities

122,439

86,271

4,474

4,625

217,809

756,367

-

90,040

1,064,216

The accompanying notes are an integral part of these condensed consolidated interim financial statements

F- 16

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

3. Segment information (continued)

Segment analysis for the three-month period ended March 31, 2018 (*) (unaudited)

Farming

Sugar,

Land

Ethanol and

Corporate

Total

Crops

Rice

Dairy

All Other

Farming

Transformation

Energy

Segments

subtotal

Sales of goods and services rendered

33,701

15,348

8,263

344

57,656

97,911

-

-

155,567

Cost of goods sold and services rendered

(33,996)

(16,457)

(8,040)

(220)

(58,713)

(62,235)

-

-

(120,948)

Initial recognition and changes in fair value of biological assets and agricultural produce

17,894

10,622

2,250

(185)

30,581

(14,500)

-

-

16,081

Changes in net realizable value of agricultural produce after harvest

(691)

-

-

-

(691)

-

-

-

(691)

Margin on manufacturing and agricultural activities before operating expenses

16,908

9,513

2,473

(61)

28,833

21,176

-

-

50,009

General and administrative expenses

(905)

(1,310)

(391)

(40)

(2,646)

(7,651)

-

(4,875)

(15,172)

Selling expenses

(1,401)

(2,593)

(60)

(43)

(4,097)

(12,219)

-

(10)

(16,326)

Other operating (loss)/income, net

(5,214)

135

(22)

3,150

(1,951)

24,033

-

6

22,088

Profit / (loss) from operations before financing and taxation

9,388

5,745

2,000

3,006

20,139

25,339

-

(4,879)

40,599

Depreciation and amortization

(461)

(1,038)

(304)

(41)

(1,844)

(22,649)

-

-

(24,493)

Net gain from Fair value adjustment of Investment property

-

-

-

3,152

3,152

-

-

-

3,152

Initial recognition and changes in fair value of biological assets and agricultural produce

13,818

10,622

67

108

24,615

(15,319)

-

-

9,296

(unrealized)

Initial recognition and changes in fair value of biological assets and agricultural produce

4,076

-

2,183

(293)

5,966

819

-

-

6,785

(realized)

Changes in net realizable value of agricultural produce after harvest (unrealized)

910

-

-

-

910

-

-

-

910

Changes in net realizable value of agricultural produce after harvest (realized)

(1,601)

-

-

-

(1,601)

-

-

-

(1,601)

As of December 31, 2018:

Farmlands and farmland improvements, net

547,842

173,481

727

22,891

744,941

51,567

-

-

796,508

Machinery, equipment, building and facilities, and other fixed assets, net

5,049

23,135

32,821

459

61,464

338,607

-

-

400,071

Bearer plants, net

427

-

-

-

427

232,529

-

-

232,956

Work in progress

8,690

5,214

14,317

18

28,239

22,665

-

-

50,904

Investment property

-

-

-

40,725

40,725

-

-

-

40,725

Goodwill

9,463

4,142

-

2,110

15,715

5,635

-

-

21,350

Biological assets

27,347

17,173

10,298

3,094

57,912

47,475

-

-

105,387

Finished goods

29,144

9,507

1,170

-

39,821

39,937

-

-

79,758

Raw materials, Stocks held by third parties and others

15,834

7,394

2,217

121

25,566

22,778

-

-

48,344

Total segment assets

643,796

240,046

61,550

69,418

1,014,810

761,193

-

-

1,776,003

Borrowings

111,692

58,999

543

4,860

176,094

600,810

-

85,212

862,116

Total segment liabilities

111,692

58,999

543

4,860

176,094

600,810

-

85,212

862,116

(*) Prior period have been recast to reflect the Company's change in accounting policy for investment properties as described in Note 29.

The accompanying notes are an integral part of these condensed consolidated interim financial statements

F- 17

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

4.

Sales

March 31,

March 31,

2019

2018

(unaudited)

Sales of manufactured products and services rendered:

Ethanol

69,817

73,788

Sugar (*)

10,774

19,553

Soybean oil and meal

1,062

2,991

Rice (*)

27,903

14,513

Energy (*)

9,187

4,532

Powder milk

3,249

429

Operating leases

123

177

Services

797

245

Others

2,097

2,532

125,009

118,760

Sales of agricultural produce and biological assets:

Soybean

3,215

8,725

Cattle for dairy production

663

725

Corn (*)

19,609

13,631

Milk

4,043

7,314

Wheat (*)

5,913

4,435

Sunflower

530

710

Barley

688

1,090

Seeds

40

62

Others

105

115

34,806

36,807

Total sales

159,815

155,567

  1. Includes sales of corn, rice, sugar, mhw of energy and wheat produced by third parties for an amount of US$ 12.6 million, US$
    1.6 million, US$ 7.7 million, US$ 0.6 and US$ 0.14 million respectively.

Commitments to sell commodities at a future date

The Group entered into contracts to sell non-financial instruments, mainly, sugar, soybean and corn through sales forward contracts. Those contracts are held for purposes of delivery the non-financial instrument in accordance with the Group's expected sales. Accordingly, as the own use exception criteria are met, those contracts are not recorded as derivatives.

The notional amount of these contracts is US$80 million as of March 31, 2019 (March 31, 2018: US$ 89 million) comprised primarily of 15,751 tons of sugar (US$ 4.4 million), 13,856 m³ of ethanol (US$ 7.6 million), 662,484 mhw of energy (U$S 42.7 million), 36,487 tons of soybean (US$ 8.8 million), 94,846 tons of corn (US$ 14.5 million), 8,436 tons of wheat (US$ 1.8 million) and other products (US$ 0.3 million) which expire between April 2019 and December 2019.

The accompanying notes are an integral part of these condensed consolidated interim financial statements

F- 18

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

5. Cost of goods sold and services rendered

As of March 31, 2019 :

March 31, 2019

All other

Sugar,

Crops

Rice

Dairy

Ethanol and

Total

segments

Energy

Finished goods at the beginning of 2019 (Note 18)

29,144

9,507

1,170

-

39,937

79,758

Cost of production of manufactured products

1,780

18,232

3,908

-

37,977

61,897

Purchases

14,035

2,483

134

-

8,000

24,652

Agricultural produce

13,107

-

4,425

282

-

17,814

Transfer to raw material

(3,907)

-

-

-

-

(3,907)

Direct agricultural selling expenses

2,680

-

-

-

-

2,680

Tax recoveries (i)

-

-

-

-

(6,469)

(6,469)

Changes in net realizable value of agricultural produce

1,356

-

-

-

-

1,356

after harvest

Finished goods as of March 31, 2019 (Note 18)

(24,002)

(7,378)

(1,940)

-

(19,651)

(52,971)

Exchange differences

(439)

(593)

(152)

-

312

(872)

Cost of goods sold and services rendered, and direct

33,754

22,251

7,545

282

60,106

123,938

agricultural selling expenses period

(i): Correspond to the presumed credit of ICMS (Imposto sobre Circulação de Mercadorias e Prestação de Serviços) over the sale values.

As of March 31, 2018:

March 31, 2018

Crops

Rice

Dairy

All other

Sugar,

Total

Ethanol and

segments

Energy

Finished goods at the beginning of 2018

21,146

8,476

-

-

32,266

61,888

Cost of production of manufactured products (Note

1,657

18,030

172

49

47,337

67,245

6)

Purchases

10,586

542

-

-

10,743

21,871

Agricultural produce

27,065

-

7,868

171

-

35,104

Transfer to raw material

(4,942)

-

-

-

-

(4,942)

Direct agricultural selling expenses

4,167

-

-

-

-

4,167

Tax recoveries (i)

-

-

-

-

(7,998)

(7,998)

Changes in net realizable value of agricultural

(691)

-

-

-

-

(691)

produce after harvest

Finished goods as of March 31, 2018

(21,938)

(9,907)

-

-

(20,585)

(52,430)

Exchange differences

(3,054)

(684)

-

-

472

(3,266)

Cost of goods sold and services rendered, and

33,996

16,457

8,040

220

62,235

120,948

direct agricultural selling expenses period

(i): Correspond to the presumed credit of ICMS (Imposto sobre Circulação de Mercadorias e Prestação de Serviços) over the sale values.

The accompanying notes are an integral part of these condensed consolidated interim financial statements

F- 19

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

6. Expenses by nature

The following table provides the additional disclosure required on the nature of expenses and their relationship to the function within the Group:

Expenses by nature for the period ended March 31, 2019:

Cost of production of manufactured products (Note 5)

General and

Selling

Sugar,

All other

Administrative

Total

Crops

Rice

Dairy

Ethanol and

Total

Expenses

segments

Expenses

Energy

Salaries, social security expenses and employee benefits

46

1,467

19

-

4,608

6,140

6,287

1,715

14,142

Raw materials and consumables

19

2,265

36

-

2,682

5,002

-

-

5,002

Depreciation and amortization

484

471

214

-

12,023

13,192

2,711

191

16,094

Depreciation of right-of-use assets

-

-

47

-

1,394

1,441

644

3

2,088

Fuel, lubricants and others

-

27

79

-

3,671

3,777

191

63

4,031

Maintenance and repairs

9

287

-

-

2,413

2,709

324

131

3,164

Freights

41

4,154

140

-

247

4,582

-

3,223

7,805

Export taxes / selling taxes

-

-

-

-

-

-

-

10,439

10,439

Export expenses

-

-

-

-

-

-

-

1,134

1,134

Contractors and services

198

79

173

-

1,419

1,869

-

-

1,869

Energy transmission

-

-

-

-

-

-

-

854

854

Energy power

25

473

-

-

325

823

59

22

904

Professional fees

4

10

-

-

62

76

1,740

80

1,896

Other taxes

-

31

-

-

263

294

238

10

542

Contingencies

-

-

-

-

-

-

198

-

198

Lease expense and similar arrangements

-

62

-

-

-

62

274

13

349

Third parties raw materials

-

747

36

-

216

999

-

-

999

Tax recoveries

-

-

-

-

(1,816)

(1,816)

-

-

(1,816)

Others

30

264

16

-

127

437

795

2,494

3,726

Subtotal

856

10,337

760

-

27,634

39,587

13,461

20,372

73,420

Own agricultural produce consumed

924

7,895

3,148

-

10,343

22,310

-

-

22,310

Total

1,780

18,232

3,908

-

37,977

61,897

13,461

20,372

95,730

The accompanying notes are an integral part of these condensed consolidated interim financial statements

F- 20

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

6. Expenses by nature (continued)

Expenses by nature for the period ended March 31, 2018:

Cost of production of manufactured products (Note 5)

General and

Selling

Sugar,

All other

Administrative

Total

Crops

Rice

Dairy

Total

Expenses

segments

Ethanol

Expenses

and Energy

Salaries, social security expenses and employee benefits

-

2,087

38

49

6,260

8,434

8,961

1,697

19,092

Raw materials and consumables

42

1,286

-

-

1,052

2,380

-

-

2,380

Depreciation and amortization

-

174

69

-

15,317

15,560

1,671

218

17,449

Fuel, lubricants and others

-

51

-

-

4,426

4,477

79

56

4,612

Maintenance and repairs

-

536

13

-

2,255

2,804

358

97

3,259

Freights

-

1,416

9

-

99

1,524

-

3,058

4,582

Export taxes / selling taxes

-

-

-

-

-

-

-

8,042

8,042

Export expenses

-

-

-

-

-

-

-

476

476

Contractors and services

150

191

-

-

1,122

1,463

-

-

1,463

Energy transmission

-

-

-

-

275

275

-

773

1,048

Energy power

-

492

30

-

-

522

68

14

604

Professional fees

-

15

10

-

147

172

1,714

90

1,976

Other taxes

-

17

-

-

286

303

451

2

756

Contingencies

-

-

-

-

-

-

497

-

497

Lease expense and similar arrangements

-

59

-

-

-

59

292

4

355

Third parties raw materials

-

893

-

-

414

1,307

-

-

1,307

Tax recoveries

-

-

-

-

-

-

3

-

3

Others

-

345

3

-

1,045

1,393

1,078

1,799

4,270

Subtotal

192

7,562

172

49

32,698

40,673

15,172

16,326

72,171

Own agricultural produce consumed

1,465

10,468

-

-

14,639

26,572

-

-

26,572

Total

1,657

18,030

172

49

47,337

67,245

15,172

16,326

98,743

The accompanying notes are an integral part of these condensed consolidated interim financial statements

F- 21

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

7. Salaries and social security expenses

March 31,

March 31,

2019

2018

(unaudited)

Wages and salaries

23,640

30,540

Social security costs

8,123

8,191

Equity-settledshare-based compensation

1,378

1,345

33,141

40,076

8.

Other operating income / (loss), net

March 31,

March 31,

2019

2018 (*)

(unaudited)

Gain from disposals of farmland and other assets (Note 27 )

1,472

-

(Loss) / gain from commodity derivative financial instruments

(3,358)

19,790

Net gain from fair value adjustment of Investment property

1,280

3,152

Others

(1,825)

(854)

(2,431)

22,088

  1. Prior period have been recast to reflect the Company's change in accounting policy for investment properties as described in Note 29.

The accompanying notes are an integral part of these condensed consolidated interim financial statements

F- 22

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

9.

Financial results, net

March 31,

March 31,

2019

2018

(unaudited)

Finance income:

- Interest income

2,169

2,463

- Gain from interest rate/foreign exchange rate derivative financial instruments

311

-

- Other income

453

543

Finance income

2,933

3,006

Finance costs:

- Interest expense

(13,517)

(13,630)

- Finance cost related to lease liabilities

(1,923)

-

- Cash flow hedge - transfer from equity

(7,601)

(2,101)

- Foreign exchange losses, net

(20,196)

(9,348)

- Taxes

(761)

(1,050)

- Loss from interest rate/foreign exchange rate derivative financial instruments

-

(1,458)

- Other expenses

(376)

(630)

Finance costs

(44,374)

(28,217)

Other financial results -Net gain of inflation effects on the monetary items

17,786

-

Total financial results, net

(23,655)

(25,211)

The accompanying notes are an integral part of these condensed consolidated interim financial statements

F- 23

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

10. Taxation

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

March 31,

March 31,

2019

2018 (*)

(unaudited)

Current income tax

2,054

(476)

Deferred income tax

(4,771)

(4,016)

Income tax (expense)

(2,717)

(4,492)

During 2017, theArgentine Government introduced changes in the income tax. The income tax enforce is 30% for the years 2018 and 2019, and will be 25% from 2020 onwards. There has been no other changes in the statutory tax rates in the countries where the Group operates since December 31, 2018.

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

March 31,

March 31,

2019

2018 (*)

(unaudited)

Beginning of period (liability) / asset

(151,980)

20,351

Exchange differences

4,820

760

Effect of fair value valuation for farmlands

(5,741)

-

Acquisition of subsidiary (Note 27)

(4,856)

-

Disposal of subsidiary (Note 27)

2,747

-

Tax charge relating to cash flow hedge (i)

1,579

1,294

Others

(391)

-

Income tax benefit/ expense

(4,771)

(4,016)

End of period (liability) / asset

(158,593)

18,389

  1. It relates to the amount reclassified of US$ 8,232 loss and US$ 7,015 loss from equity to profit and loss for the three- month period ended March 31, 2019 and 2018, respectively.

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

The accompanying notes are an integral part of these condensed consolidated interim financial statements

F- 24

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

10. Taxation (continued)

March 31,

March 31,

2019

2018 (*)

(unaudited)

Tax calculated at the tax rates applicable to profits in the respective countries

(1,426)

(5,176)

Non-deductible items

(682)

(253)

Effect of the changes in the statutory income tax rate in Argentina

1,264

(124)

Non-taxable income

2,812

361

Tax losses where no deferred tax asset was recognized

15

82

Utilization of previously unrecognized tax

-

178

Effect of IAS 29 on Argentina´s Shareholder´s equity and deferred income tax.

(5,264)

-

Unused tax losses

(217)

-

Others

781

440

Income tax expense

(2,717)

(4,492)

(*) Prior period have been recast to reflect the Company's change in accounting policy for investment properties as described in Note 29.

The accompanying notes are an integral part of these condensed consolidated interim financial statements

F- 25

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

11. Property, plant and equipment

Changes in the Group's property, plant and equipment for the three-month periods ended March 31, 2019 and 2018 were as follows:

Farmland

Buildings and

Machinery,

Work in

Farmlands

equipment,

Bearer plants

Others

Total

improvements

facilities

furniture and

progress

Fittings

Three-month period ended March

31, 2018

Opening net book amount.

110,743

9,007

192,844

246,080

238,910

4,158

29,635

831,377

Exchange differences

(3,987)

(671)

(2,257)

(5,058)

(1,317)

(176)

1,367

(12,099)

Additions

-

-

5,520

29,910

17,823

913

14,161

68,327

Transfers

-

4

814

2,882

-

-

(3,700)

-

Disposals

-

-

(16)

(597)

-

(11)

-

(624)

Reclassification to non-income tax credits (*)

-

-

(16)

(93)

-

-

(39)

(148)

Depreciation (Note 6)

-

(568)

(3,387)

(11,058)

(8,820)

(395)

-

(24,228)

Closing net book amount

106,756

7,772

193,502

262,066

246,596

4,489

41,424

862,605

At March 31, 2018 (unaudited)

.

Cost

106,756

20,115

314,791

661,559

389,087

16,374

41,424

1,550,106

Accumulated depreciation

-

(12,343)

(121,289)

(399,493)

(142,491)

(11,885)

-

(687,501)

Net book amount

106,756

7,772

193,502

262,066

246,596

4,489

41,424

862,605

Three-month period ended March 31, 2019

Opening net book amount

780,184

16,324

188,622

205,148

232,956

6,301

50,904

1,480,439

Exchange differences

(22,741)

(519)

(1,777)

(2,321)

(1,833)

(168)

(1,121)

(30,480)

Additions

-

-

37,277

42,879

23,321

1,371

24,621

129,469

Revaluation surplus

22,789

-

-

-

-

-

-

22,789

Acquisition of subsidiaries

455

-

17,850

3,462

-

437

-

22,204

Transfers

-

-

825

5,802

-

7

(6,634)

-

Disposals

-

-

-

(300)

-

(7)

-

(307)

Disposal of subsidiaries

(10,770)

-

(571)

(12)

-

-

-

(11,353)

Reclassification to non-income tax credits (*)

-

-

-

(25)

-

-

-

(25)

Depreciation (Note 6)

-

(773)

(4,690)

(12,283)

(7,770)

(462)

-

(25,978)

Closing net book amount

769,917

15,032

237,536

242,350

246,674

7,479

67,770

1,586,758

At March 31, 2019 (unaudited)

Cost

769,917

32,199

398,519

768,463

501,537

23,251

67,770

2,561,656

Accumulated depreciation

-

(17,167)

(160,983)

(526,113)

(254,863)

(15,772)

-

(974,898)

Net book amount

769,917

15,032

237,536

242,350

246,674

7,479

67,770

1,586,758

(*) Brazilian federal tax law allows entities to take a percentage of the total cost of the assets purchased as a tax credit. As of March 31, 2019, ICMS tax credits were reclassified to trade and other receivables.

The accompanying notes are an integral part of these condensed consolidated interim financial statements

F- 26

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements (continued) (All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

11. Property, plant and equipment (continued)

Since September 2018 the Company changes the accounting policy for its Farmlands (See Note 28 - Basis of presentation

  • Changes in accounting policies), adopting the valuation at Fair Value. For all Farmlands with a total valuation of US$ 772 million as of March 31, 2019 , the valuation was determined using sales Comparison Approach prepared by an independent expert. Sale prices of comparable properties are adjusted considering the specific aspects of each property, the most relevant premise being the

price per hectare. (Level 3). The Group estimated that, other factors being constant, a 10% reduction on the Sales price for the period ended March 31, 2019 would have reduced the value of the Farmlands on US$ 77.2 million, which would impact, net of its tax effect on the "Revaluation surplus" item in the statement of Changes in Shareholders' Equity.

Depreciation charges are included in "Cost of production of Biological Assets", "Cost of production of manufactures products", "General and administrative expenses", "Selling expenses" and capitalized in "Property, plant and equipment" for the nine-months period ended March 31, 2019 and 2018.

As of March 31, 2019, borrowing costs of US$ 3,764 (March 31, 2018: US$ 1,481) were capitalized as components of the cost of acquisition or construction of qualifying assets.

Certain of the Group's assets have been pledged as collateral to secure the Group's borrowings and other payables. The net book value of the pledged assets amounts to US$ 344,041 as of March 31, 2019.

12. Right of use assets

Changes in the Group's right of use assets for the three-month periods ended March 31, 2019 were as follows:

Agricultural

Others

Total

partnership

(unaudited)

Three-months period ended March 31, 2019

Adoption of IFRS 16

194,763

10,174

204,937

Exchange differences

(2,923)

(330)

(3,253)

Additions

7,155

7,573

14,728

Depreciation

(8,922)

(1,489)

(10,411)

Closing net book amount

190,073

15,928

206,001

Since January 1,2019, the Company mandatory adopted IFRS 16. (Note 29). Agricultural partnership has an average of 6 years duration.

As of March 31, 2019 included within Right of use assets balances are US$ 539 related to the net book value of assets under finance leases.

The accompanying notes are an integral part of these condensed consolidated interim financial statements

F- 27

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

13. Investment property

Changes in the Group's investment property for the three-month periods ended March 31, 2019 and 2018 were as

follows:

March 31,

March 31,

2019

2018 (*)

(unaudited)

Beginning of the period

40,725

42,342

Net gain from fair value adjustment (Note 8)

1,280

3,152

Exchange differences

(1,280)

(3,152)

End of the period

40,725

42,342

Cost

40,725

42,342

Net book amount

40,725

42,342

Since September 2018 the Company changes the accounting policy for all Investment properties. (See Note 29 - Basis of presentation-Changesinaccountingpolicies),adoptingthevaluationatFairValue.ForallInvestmentpropertieswithatotalvaluation of US$ 40.7 million as of March 31, 2019 , the valuation was determined using Sales Comparison Approach prepared by an independent expert. Sale prices of comparable properties are adjusted considering the specific aspects of each property, the most relevant premise being the price per hectare. (Level 3). The increase /decrease in the Fair value is recognized in the Statement of income under the line item "Other operating income, net". There were no changes of the valuation techniques during March 31, 2019

and 2018. The Group estimated that, other factors being constant, a 10% reduction on the Sales price for the period ended March 31, 2019 would have reduced the value of the Investment properties on US$ 4.0 million, which would impact the line item "Net gain from fair value adjustment ".

The following amounts have been recognized in the statement of income in the line "Sales of manufactured products and services rendered", and "Other operating income, net", respectively.

March 31,

March 31,

2019

2018

(unaudited)

Rental income

115

170

Net gain from fair value adjustment (Note 8)

1,280

3,152

(*) Prior period have been recast to reflect the Company's change in accounting policy for investment properties as described in Note 29.

The accompanying notes are an integral part of these condensed consolidated interim financial statements

F- 28

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

14. Intangible assets

Changes in the Group's intangible assets in the three-month periods ended March 31, 2019 and 2018 were as follows:

Goodwill

Software

Trademarks

Others

Total

Three-month period ended March 31,

2018

Opening net book amount

12,412

3,851

928

1

17,192

Exchange differences

(410)

(119)

(3)

(1)

(533)

Additions

-

443

-

13

456

Amortization charge (i) (Note 6)

-

(255)

-

(10)

(265)

Closing net book amount

12,002

3,920

925

3

16,850

At March 31, 2018 (unaudited)

Cost

12,002

7,575

2,620

84

22,281

Accumulated amortization

-

(3,655)

(1,695)

(81)

(5,431)

Net book amount

12,002

3,920

925

3

16,850

Three-month period ended March 31,

2019

Opening net book amount

21,350

5,596

886

77

27,909

Exchange differences

(505)

(77)

-

-

(582)

Acquisition of subsidiary

-

204

6,431

10

6,645

Additions

-

66

-

-

66

Disposal

(635)

-

-

-

(635)

Amortization charge (i) (Note 6)

-

(303)

-

(25)

(328)

Closing net book amount

20,210

5,486

7,317

62

33,075

At March 31, 2019 (unaudited)

Cost

20,210

10,357

9,012

1,905

41,484

Accumulated amortization

-

(4,871)

(1,695)

(1,843)

(8,409)

Net book amount

20,210

5,486

7,317

62

33,075

  1. Amortization charges are included in "General and administrative expenses" and "Selling expenses" for the period ended March 31, 2019 and 2018, respectively.

TheGrouptestsannuallywhethergoodwillhassufferedanyimpairment.Thelastimpairmenttestofgoodwillwasperformed as of September 30, 2018.

The accompanying notes are an integral part of these condensed consolidated interim financial statements

F- 29

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

15. Biological assets

Changes in the Group's biological assets in the three-month periods ended March 31, 2019 and 2018 were as follows:

March 31, 2019

Crops (i)

Rice (i)

Dairy

All other

Sugarcan

Total

segments

e (i)

Beginning of the year

27,347

17,173

10,298

3,094

47,475

105,387

Increase due to purchases

-

-

-

210

-

210

Initial recognition and changes in fair value

9,565

12,976

2,622

196

(2,191)

23,168

of biological assets

Decrease due to harvest / disposals

(13,107)

(38,061)

(3,148)

(281)

(11,127)

(65,724)

Decrease due to sales of agricultural

-

-

(4,425)

-

-

(4,425)

produce

Costs incurred during the period

17,100

8,585

6,791

437

24,051

56,964

Exchange differences

(3,060)

40

(1,028)

730

(525)

(3,843)

End of the period (unaudited)

37,845

713

11,110

4,386

57,683

111,737

March 31, 2018

Crops (i)

Rice (i)

Dairy

All other

Sugarcan

Total

segments

e (i)

Beginning of the year

31,745

29,717

9,338

4,016

93,178

167,994

Increase due to purchases

-

-

-

430

-

430

Initial recognition and changes in fair value

17,894

10,622

2,250

(185)

(14,500)

16,081

of biological assets

Decrease due to harvest / disposals

(27,065)

(47,257)

(550)

(172)

(15,434)

(90,478)

Decrease due to sales of agricultural

-

-

(7,318)

-

-

(7,318)

produce

Costs incurred during the period

27,598

13,359

6,717

414

22,042

70,130

Exchange differences

(2,875)

(2,208)

(697)

(303)

(302)

(6,385)

End of the period (unaudited)

47,297

4,233

9,740

4,200

84,984

150,454

  1. Biological assets that are measured at fair value within level 3 of the hierarchy.

The discounted cash flow valuation technique and the significant unobservable inputs used to calculate the fair value of these biological assets are consistent with those of the audited annual financial statements for the year ended December 31, 2018 described in Note 16. Please see Level 3 definition in Note 16.

The accompanying notes are an integral part of these condensed consolidated interim financial statements

F- 30

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

15. Biological assets (continued)

Cost of production as of March 31, 2019:

March 31, 2019

(unaudited)

Crops

Rice

Dairy

All other

Sugar,

Total

Ethanol and

segments

Energy

Salaries, social security expenses and employee benefits

568

1,630

1,044

149

1,971

5,362

Depreciation and amortization

-

-

-

-

764

764

Depreciation of right-of-use assets

-

-

-

-

8,323

8,323

Fertilizers, agrochemicals and seeds

9,338

717

-

-

9,994

20,049

Fuel, lubricants and others

183

206

221

8

595

1,213

Maintenance and repairs

265

459

403

45

290

1,462

Freights

17

78

16

65

-

176

Contractors and services

5,002

4,370

-

-

1,912

11,284

Feeding expenses

-

-

2,869

-

-

2,869

Veterinary expenses

-

-

452

55

-

507

Energy power

16

762

321

3

-

1,102

Professional fees

27

15

26

2

42

112

Other taxes

287

20

2

20

18

347

Lease expense and similar arrangements

1,098

12

-

2

-

1,112

Others

299

316

73

9

142

839

Subtotal

17,100

8,585

5,427

358

24,051

55,521

Own agricultural produce consumed

-

-

1,364

79

-

1,443

Total

17,100

8,585

6,791

437

24,051

56,964

Cost of production as of March 31, 2018:

March 31, 2018

(unaudited)

Crops

Rice

Dairy

All other

Sugar,

Total

Ethanol and

segments

Energy

Salaries, social security expenses and employee benefits

910

2,494

1,012

122

1,931

6,469

Depreciation and amortization

127

-

-

-

432

559

Fertilizers, agrochemicals and seeds

15,612

1,542

-

-

9,366

26,520

Fuel, lubricants and others

290

199

182

21

610

1,302

Maintenance and repairs

298

719

450

47

272

1,786

Freights

56

161

11

18

-

246

Contractors and services

6,264

6,323

-

20

2,248

14,855

Feeding expenses

-

-

2,523

58

-

2,581

Veterinary expenses

-

-

491

37

-

528

Energy power

39

1,603

247

-

-

1,889

Professional fees

51

5

-

-

84

140

Other taxes

385

41

2

31

16

475

Lease expense and similar arrangements

2,872

165

-

-

6,917

9,954

Others

694

107

44

3

166

1,014

Subtotal

27,598

13,359

4,962

357

22,042

68,318

Own agricultural produce consumed

-

-

1,755

57

-

1,812

Total

27,598

13,359

6,717

414

22,042

70,130

The accompanying notes are an integral part of these condensed consolidated interim financial statements

F- 31

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

15. Biological assets (continued)

Biological assets as of March 31, 2019 and December 31, 2018 were as follows:

March 31,

December 31,

2019

2018

(unaudited)

Non-current

Cattle for dairy production

10,901

9,859

Breeding cattle

1,482

1,310

Other cattle

120

101

12,503

11,270

Current

Breeding cattle

2,784

1,683

Other cattle

209

439

Sown land - crops

37,845

27,347

Sown land - rice

713

17,173

Sown land - sugarcane

57,683

47,475

99,234

94,117

Total biological assets

111,737

105,387

16. Financial instruments

As of March 31, 2019, the financial instruments recognized at fair value on the statement of financial position comprise derivative financial instruments.

In the case of Level 1, valuation is based on unadjusted quoted prices in active markets for identical financial assets that the Group can refer to at the date of the statement of financial position. A market is deemed active if transactions take place with sufficient frequency and in sufficient quantity for price information to be available on an ongoing basis. Since a quoted price in an active market is the most reliable indicator of fair value, this should always be used if available. The financial instruments the Group has allocated to this level mainly comprise crop futures and options traded on the stock market. In the case of securities, the Group allocates them to this level when either a stock market price is available or prices are provided by a price quotation on the basis of actual market transactions.

Derivatives not traded on the stock market allocated to Level 2 are valued using models based on observable market data. For this, the Group uses inputs directly or indirectly observable in the market, other than quoted prices. If the financial instrument concerned has a fixed contract period, the inputs used for valuation must be observable for the whole of this period. The financial instruments the Group has allocated to this level mainly comprise interest-rate swaps and foreign-currencyinterest-rate swaps.

In the case of Level 3, the Group uses valuation techniques not based on inputs observable in the market. This is only permissible insofar as no observable market data are available. The inputs used reflect the Group's assumptions regarding the factors, which market players would consider in their pricing. The Group uses the best available information for this, including internal company data. The Group does not have financial instruments allocated to this level for any of the periods presented.

There were no transfer between any levels during the period.

The accompanying notes are an integral part of these condensed consolidated interim financial statements

F- 32

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

16. Financial instruments (continued)

The following tables present the Group's financial assets and financial liabilities that are measured at fair value as of March 31, 2019 and their allocation to the fair value hierarchy:

2019

Level 1

Level 2

Total

Assets

Derivative financial instruments

5,288

84

5,372

Total assets

5,288

84

5,372

Liabilities

Derivative financial instruments

(999)

(7)

(1,006)

Total liabilities

(999)

(7)

(1,006)

When no quoted prices in an active market are available, fair values (particularly with derivatives) are based on recognized valuation methods. The Group uses a range of valuation models for this purpose, details of which may be obtained from the following table:

Class

Pricing

Parameters

Pricing Model

Level

Total

Method

Futures

Quoted price

-

-

1

4,194

Options

Quoted price

-

-

1

95

NDF

Quoted price

Foreign-exchange curve

Present value method

2

77

4,366

The accompanying notes are an integral part of these condensed consolidated interim financial statements

F- 33

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

17.

Trade and other receivables, net

March 31,

December 31,

2019

2018

(unaudited)

Non current

Advances to suppliers

32

2,343

Income tax credits

4,397

4,429

Non-income tax credits (i)

17,740

15,998

Judicial deposits

2,997

2,908

Receivable from disposal of subsidiary

21,708

10,944

Other receivables

2,082

2,198

Non current portion

48,956

38,820

Current

Trade receivables

60,909

60,167

Receivables from related parties (Note 28)

-

8,337

Less: Allowance for trade receivables

(2,262)

(2,503)

Trade receivables - net

58,647

66,001

Prepaid expenses

12,672

9,396

Advance to suppliers

19,574

43,365

Income tax credits

21,561

2,560

Non-income tax credits (i)

12,534

28,232

Receivable from disposal of subsidiary

13

3,709

Cash collateral

122

1,505

Receivables from related parties (Note 28)

-

324

Other receivables

8,132

3,594

Subtotal

74,608

92,685

Current portion

133,255

158,686

Total trade and other receivables, net

182,211

197,506

  1. Includes US$ 25 for thethree-month period ended March 31, 2019 reclassified from property, plant and equipment (for the year ended December 31, 2018: US$ 1,086).

The fair values of current trade and other receivables approximate their respective carrying amounts due to their short-term nature. The fair values of non-current trade and other receivables approximate their carrying amount, as the impact of discounting is not significant.

The carrying amounts of the Group's trade and other receivables are denominated in the following currencies (expressed in US dollars):

The accompanying notes are an integral part of these condensed consolidated interim financial statements

F- 34

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements (continued)

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

17. Trade and other receivables, net (continued)

March 31,

December 31,

2019

2018

(unaudited)

Currency

US Dollar

54,577

52,342

Argentine Peso

47,553

42,896

Uruguayan Peso

495

534

Brazilian Reais

79,586

101,734

182,211

197,506

As of March 31, 2019 trade receivables of US$ 5,720 (December 31, 2018: US$ 5,052) were past due but not impaired. The ageing analysis of these receivables indicates that US$ 386 and US$ 318 are over 6 months in March 31, 2019 and December 31, 2018, respectively.

The creation and release of allowance for trade receivables have been included in 'Selling expenses' in the statement of income. Amounts charged to the allowance account are generally written off, when there is no expectation of recovering additional cash.

The other classes within other receivables do not contain impaired assets.

The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above.

18. Inventories

March 31,

December 31,

2019

2018

(unaudited)

Raw materials

76,948

48,140

Finished goods (Note 5) (i)

52,971

79,758

Others

170

204

130,089

128,102

(i): Finished goods of Crops reportable segment are valued at fair value.

19.

Cash and cash equivalents

March 31,

December 31,

2019

2018

(unaudited)

Cash at bank and on hand

105,244

197,544

Short-term bank deposits

51,645

76,091

156,889

273,635

The accompanying notes are an integral part of these condensed consolidated interim financial statements

F- 35

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

20. Shareholder´s contribution

Number of shares

Share capital and

(thousands)

share premium

At January 1, 2018

122,382

1,092,507

Purchase of own shares

-

(11,398)

At March 31, 2018

122,382

1,081,109

At January 1, 2019

122,382

1,084,076

At March 31, 2019

122,382

1,084,076

Share Repurchase Program

On September 12, 2013, the Board of Directors of the Company authorized a share repurchase program for up to 5% of its outstanding shares. The repurchase program has been renewed by the Board of Directors after each 12-month period. On August 14, 2018, the Board of Directors approved the renewal of the Program and extension of the term for an additional twelve-month period ending on September 23, 2019.

Repurchases of shares under the program may be made from time to time (i) in open market transactions in compliance with the trading conditions of Rule 10b-18 under the U.S. Securities Exchange Act of 1934, as amended, and applicable rules and regulations; and (ii) through privately negotiated transactions. The share repurchase program does not require Adecoagro to acquire any specific number or amount of shares and may be modified, suspended, reinstated or terminated at any time in the Company's discretion and without prior notice. The size and the timing of repurchases will depend upon market conditions, applicable legal requirements and other factors.

As of March 31, 2019, the Company repurchased an aggregate of 8,421,549 shares under the program, of which 2,598,423 have been utilized to cover the exercise of the Company's employee stock option plan and restricted stock units plan. During the period ended March 31, 2019 and 2018 the Company repurchased shares for an amount of nill and US$ 13,492, respectively. The outstanding treasury shares as of March 31, 2019 totaled 5,826,116.

21. Equity-settledshare-based payments

The Group has set a "2004 Incentive Option Plan" and a "2007/2008 Equity Incentive Plan" (collectively referred to as "Option Schemes") under which the Group grants equity-settled options to senior managers and selected employees of the Group´s subsidiaries. Additionally, in 2010 the Group has set a "Adecoagro Restricted Share and Restricted Stock Unit Plan" (referred to as "Restricted Share Plan") under which the Group grants restricted shares, or restricted stock units to senior and medium management and key employees of the Group's subsidiaries.

(a) Option Schemes

No expense was accrued for both periods under the Options Schemes.

As of March 31, 2019, nil options (March 31, 2018: nil) were exercised, and nil options (March 31, 2018: 2,575) were forfeited, and 594,879 options were expired (March 31, 2018: nil).

The accompanying notes are an integral part of these condensed consolidated interim financial statements

F- 36

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

21. Equity-settledshare-based payments (Continued)

(b) Restricted Share and Restricted Stock Unit Plan

As of March 31, 2019, the Group recognized compensation expense US$ 1.4 million related to the restricted shares granted under the Restricted Share Plan (March 31, 2018: US$ 1.3 million). For the three-month period ended March 31, 2019, 514 Restricted Stock Units were forfeited (March 31, 2018: 4,906).

22. Trade and other payables

March 31,

December 31,

2019

2018

(unaudited)

Non-current

Payable from acquisition of property, plant and equipment (Note 27)

3,202

-

Other payables

228

211

3,430

211

Current

Trade payables

86,541

94,483

Advances from customers

1,886

3,813

Amounts due to related parties (Note 28)

-

354

Taxes payable

4,900

6,457

Payables from acquisition of property, plant and equipment (Note 27)

4,030

-

Other payables

647

1,119

98,004

106,226

Total trade and other payables

101,434

106,437

The fair values of current trade and other payables approximate their respective carrying amounts due to their short-term nature. The fair values of non-current trade and other payables approximate their carrying amount, as the impact of discounting is not significant.

The accompanying notes are an integral part of these condensed consolidated interim financial statements

F- 37

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

23.

Borrowings

March 31,

December 31,

2019

2018

(unaudited)

Non-current

Senior Notes (*)

496,229

496,118

Bank borrowings (*)

214,429

221,971

Obligations under finance leases

-

395

710,658

718,484

Current

Senior Notes (*)

750

8,250

Bank overdrafts

10,811

2,320

Bank borrowings (*)

163,738

132,862

Obligations under finance leases

-

200

175,299

143,632

Total borrowings

885,957

862,116

(*) The Group was in compliance with the related covenants under the respective loan agreements.

As of March 31, 2019, total bank borrowings include collateralized liabilities of US$ 81,974 (December 31, 2018: US$ 87,738). These loans are mainly collateralized by property, plant and equipment sugarcane plantations, sugar export contracts and shares of certain subsidiaries of the Group.

Notes 2027

On September 21, 2017, the Company issued senior notes (the "Notes") for US$ 500 million, at an annual nominal rate of 6%. The Notes will mature on September 21, 2027. Interest on the Notes are payable semi-annually in arrears on March 21 and September 21 of each year. The total proceeds nets of expenses was US$ 496.5 million.

The Notes are fully and unconditionally guaranteed on a senior unsecured basis by certain of our current and future subsidiaries, currently: Adeco Agropecuaria S.A., Adecoagro Brasil Participações S.A., Adecoagro Vale do Ivinhema S.A., Pilagá S.A. and Usina Monte Alegre Ltda. are the only Subsidiary Guarantors.

The Notes contain customary financial covenants and restrictions which require us to meet pre-defined financial ratios, among other restrictions.

The maturity of the Group's borrowings (excluding obligations under finance leases) and the Group's exposure to fixed and variable interest rates is as follows:

The accompanying notes are an integral part of these condensed consolidated interim financial statements

F- 38

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

23. Borrowings (continued)

March 31,

December 31,

2019

2018

(unaudited)

Fixed rate:

Less than 1 year

124,834

105,708

Between 1 and 2 years

16,197

16,287

Between 2 and 3 years

25,627

25,704

Between 3 and 4 years

39,766

43,507

Between 4 and 5 years

26,135

26,415

More than 5 years

505,593

505,456

738,152

723,077

Variable rate:

Less than 1 year

50,465

37,724

Between 1 and 2 years

21,072

17,278

Between 2 and 3 years

26,332

29,861

Between 3 and 4 years

20,190

22,886

Between 4 and 5 years

17,246

18,251

More than 5 years

12,500

12,444

147,805

138,444

885,957

861,521

The breakdown of the Group´s borrowing by currency is included in Note 2 - Interest rate risk.

The carrying amount of short-term borrowings is approximate its fair value due to the short-term maturity. Long term borrowings subject to variable rate approximate their fair value. The fair value of long-term subject to fix rate do not significant differ from their fair value. The fair value (level 2) of the notes equals US$ 470 million, 94% of the nominal amount.

The accompanying notes are an integral part of these condensed consolidated interim financial statements

F- 39

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

24.

Lease liabilities

March 31,

December 31,

2019

2018

(unaudited)

Lease liabilities

Non-current

143,375

-

Current (*)

34,884

-

178,259

-

(*) Includes US$ 8,321 of Related parties.

The maturity of the Group's lease liabilities is as follows:

March 31,

2019

Less than 1 year Between 1 and 2 years Between 2 and 3 years Between 3 and 4 years Between 4 and 5 years More than 5 years

34,884

8,787

8,693

6,261

5,559

114,075

178,259

25. Payroll and social security liabilities

March 31,

December 31,

2019

2018

(unaudited)

Non-current

Social security payable

1,347

1,219

1,347

1,219

Current

Salaries payable

11,678

8,841

Social security payable

2,597

3,112

Provision for vacations

8,327

9,770

Provision for bonuses

3,649

4,255

26,251

25,978

Total payroll and social security liabilities

27,598

27,197

The accompanying notes are an integral part of these condensed consolidated interim financial statements

F- 40

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

26. Provisions for other liabilities

The Group is subject to several laws, regulations and business practices of the countries where it operates. In the ordinary course of business, the Group is subject to certain contingent liabilities with respect to existing or potential claims, lawsuits and other proceedings, including those involving tax, labor and social security, administrative and civil and other matters. The Group accrues liabilities when it is probable that future costs will be incurred and it can reasonably estimate them. The Group bases its accruals on up-to-date developments, estimates of the outcomes of the matters and legal counsel experience in contesting, litigating and settling matters. As the scope of the liabilities becomes better defined or more information is available, the Group may be required to change its estimates of future costs, which could have a material effect on its results of operations and financial condition or liquidity. There have been no material changes to claimed amounts and current proceedings since December 31, 2018.

The accompanying notes are an integral part of these condensed consolidated interim financial statements

F- 41

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

27. Disposals and acquisitions

Acquisitions

In January 2019, the Company acquired, the remaining 50% of CHS Agro S.A. a joint venture between the Company and CHS Argentina S.A. After this acquisition, we own 100% of CHS Agro S.A. which has since been renamed as Girasoles del Plata S.A. The consideration for this operation was nominal. As a result of this transaction, the Company recognized a gain in the line item Other Operating Income of USD 0.2 million.

Net assets acquired are as follows:

Property, plant and equipment

21,800

Intangible assets, net

41

Inventories

1,866

Trade and other receivables, net

4,492

Deferred income tax liabilities

(4,546)

Trade and other payables

(1,031)

Current income tax liabilities

(5)

Payroll and Social liabilities

(153)

Borrowings

(23,062)

Cash and cash equivalents added as a result of the business combination

747

Total net assets added as a result of business combination

149

Fair value of previously held equity interest

74

Gain for bargain purchase

75

In January 2019, the Company acquired 100% of OlamAlimentos S.A. whose principal asset is a peanuts processing facility located in the Province of Córdoba, (currently Mani del Plata S.A.) from Olam International Ltd.The consideration for this acquisition was USD 10 million to be disbursed in three installments, with the first payment made at closing. This transaction qualifies as a purchase of assets.

In February 2019, the Company acquired two dairy facilities from SanCor Cooperativas Unidas Limitada ("SanCor"). The first facility is located in Chivilcoy, Province of BuenosAires and processes fluid milk while the second facility is located in Morteros, Province of Cordoba and produces powder milk and cheese. Together with this facilities, we also acquired the brands Las Tres Niñas and Angelita. The total consideration for this operations was US$ 47 million. This transaction qualifies as a purchase of assets.

Disposals

In May 2018, the Group completed the sale of Q45 Negócios Imobiliários Ltda., a wholly owned subsidiary, which main underlying asset is the Rio De Janeiro Farm, for a selling price of US$ 34 million (Reais 120 million), which was fully collected as of the date of these financial statements. This transaction resulted in a gain of US$ 22 million included in "Other operating income" under the line item "Gain from the sale of farmland and other assets".

In June 2018, the Group completed the sale of Q43 Negócios Imobiliários Ltda., a wholly owned subsidiary , which main underlying asset is the Conquista Farm, for a selling price of US$ 18.4 million (Reais 68 million), of which US$ 5.6 million (Reais

21.4 million) has already been collected and the balance will be collected in four annual installments starting in June 2019. This transaction resulted in a gain of US$ 14 million, included in "Other operating income" under the line item "Gain from the sale of farmland and other assets"

The accompanying notes are an integral part of these condensed consolidated interim financial statements

F- 42

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

27. Disposals and acquisitions (continued)

In January 2019, we completed the sale of Q065 Negócios Imobiliários Ltda., a wholly owned subsidiary , which main underlying asset is the Alto Alegre Farm, for a selling price of US$ 16.6 million (Reais 62.5 million), of which US$ 2.2 million (Reais 8.4 million) has already been collected and the balance will be collected in seven annual installments starting in June 2019.

This transaction resulted in a gain before tax of US$ 1.5 million, and also in the reclassification of Revaluation surplus to retained earnings of U$S 8.0 million.

28. Related-party transactions

The following is a summary of the balances and transactions with related parties:

Income / (loss) included in the

Balance receivable / (payable)

Related party

Relationship

Description of

statement of income

transaction

March 31,

March 31,

March 31,

December 31,

2019

2018

2019

2018

(unaudited)

(unaudited)

(unaudited)

Mario Jorge de Lemos

(i)

Receivables (Note

Vieira/ Cia Agropecuaria

17)

-

-

-

324

Monte Alegre/ Alfenas

Agricola Ltda/ Marcelo

Cost of

Weyland Barbosa Vieira/

manufactured

Paulo Albert Weyland

products sold and

Vieira

services rendered

56

90

-

-

Payables (Note

-

(160)

22)

Leases liabilities

-

-

(8,321)

-

(Note 24)

Girasoles del Plata S.A.

Joint venture

Services

-

18

-

-

(ii)

Sales of goods

-

44

-

-

Payables (Note

-

-

-

(194)

22)

Interest income

-

78

-

-

Receivables (Note

-

-

-

8,337

17) (iii)

Directors and senior

Employment

Compensation

management

selected

(1,779)

(981)

(17,353)

(16,353)

employees

  1. Shareholder of the Company.
  2. Since February 2019, Girasoles del Plata S.A. (formerly CHS Agro S.A.) is fully part of the Group.

The accompanying notes are an integral part of these condensed consolidated interim financial statements

F- 43

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

29. Basis of preparation and presentation

The information presented in the accompanying condensed consolidated interim financial statements ("interim financial statements") as of March 31, 2019 and for the three-month periods ended March 31, 2019 and 2018 is unaudited and in the opinion of management reflect all adjustments necessary to present fairly the financial position of the Group as of March 31, 2019, results of operations and cash flows for the three-month periods ended March 31, 2019 and 2018. All such adjustments are of a normal recurring nature. In preparing these accompanying interim financial statements, management has made certain estimates and assumptions that affect reported amounts in the financial statements and disclosures of contingencies. Actual results may differ from those estimates. The results for interim periods are not necessarily indicative of annual results.

These interim financial statements have been prepared in accordance with IAS 34, 'Interim financial reporting' and they should be read in conjunction with the annual financial statements for the year ended December 31, 2018, which have been prepared in accordance with IFRSs.

A complete list of standards, amendments and interpretations to existing standards published but not yet effective for the Group is described in Note 2.1 to the annual financial statements.

The accounting policies adopted in the preparation of the interim financial statements are consistent with those followed in the preparation of the Group's annual consolidated financial statements for the year ended December 31, 2018 except for the changes in connection with the implementation of IFRS 16 - Leases, explained in Note 24 of these Consolidated Condensed Interim Financial Statements.

Description of accounting policies changed during the period.

Revaluation model for investment property

During the period ended September 30, 2018, the Company adopted the revaluation model for its investment property. The higher valuation resulted in the condensed consolidated statement of income for the three-month period ended March 31, 2018, as follows:

March 31,

Increase/

March 31,

2018

(Decrease)

2018 (recast)

Other operating income

18,936

3,152

22,088

Profit before income tax

12,236

3,152

15,388

Income tax expense

(3,704)

(788)

(4,492)

Profit for the period

8,532

2,364

10,896

Basic earnings per share

0.059

0.020

0.079

Diluted earnings per share

0.058

0.020

0.078

Leases

For fiscal years beginning on January 1st 2019 and onward it is mandatory the adoption of IFRS 16 - Leases.We disclose herein the new accounting policies that have been applied from January 1, 2019, where they are different to those applied in prior periods.

IFRS 16 was adopted following the simplified approach, without restating comparative. The reclassifications and the adjustments arising from the new lease accounting rules are directly recognized in the opening balance sheet on January 1, 2019.

The Company has adopted IFRS 16 Leases from January 1, 2019, but has not restated comparatives for previous reporting period as permitted under the specific transition provisions in the Standard.

The accompanying notes are an integral part of these condensed consolidated interim financial statements

F- 44

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

29. Basis of preparation and presentation (continued)

On adoption of IFRS 16, the Company recognized lease liabilities in relation to leases which had previously been classified as 'operating leases' under the principles of IAS 17 Leases. In the previous year, the Company only recognize lease liabilities in relation to leases that were classified as "Finance leases" under IAS 17 Leases. For the initial recognition, these liabilities were measured at the present value of the remaining lease payments, discounted using the lessee's incremental borrowing rate as of January 1, 2019.

The adoption of IFRS 16 Leases from January 1, 2019, resulted in changes in accounting policies and adjustments to the amounts recognized in the financial statements.

Short term leases are recognized on a straight line basis as an expense in the income statement.

Right-of-use assets

The total of the right-of-use assets are included under such type in the Statement of Financial Position:

Right of use

Lease liabilities

Closing balance as of December 31, 2018

-

-

Initial recognition

204,937

(204,937)

Reclassifications from Trade and other receivables, net

-

26,794

Opening balance as of January 1, 2019

204,937

(178,143)

The impact of the adoption of IFRS 16 did not have effect in retained earnings at January 1, 2019.

According with the adoption of IFRS 16, the new accounting policy for leases is as follows;

Leases are recognized as a right-of-use asset and corresponding liability at the date of which the leased asset is available for use by the group. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis.

In determining the lease term, the Company considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated).

Short term leases are recognized on a straight line basis as an expense in the income statement.

Accounting as lessee

The Company recognizes a right-of-use asset and a lease liability at the commencement date of each lease contract that grants the right to control the use of an identified asset during a period of time. The commencement date is the date in which the lessor makes an underlying asset available for use by the lessee.

The Company applied exemptions for leases with a duration lower than 12 months, with a value lower than thirty thousand dollars and/or with clauses related to variable payments. These leases have been considered as short-term leases and, accordingly, no right-of-use asset or lease liability have been recognized.

The weighted average lessee's incremental borrowing rate applied to lease liabilities recognised in the statement of financial osition at the date of initial application was 7.04%.

The accompanying notes are an integral part of these condensed consolidated interim financial statements

F- 45

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

29. Basis of preparation and presentation (continued)

  • At initial recognition, the right-of-use asset is measured considering:

  • The value of the initial measurement of the lease liability;
  • Any lease payments made at or before the commencement date, less any lease incentives; and
  • Any initial direct costs incurred by the lessee; and

After initial recognition, the right-of-use assets are measured at cost, less any accumulated depreciation and/or impairment losses, and adjusted for any re-measurement of the lease liability.

Depreciation of the right-of-use asset is calculated using the straight-line method over the estimated duration of the lease

contract.

The lease liability is initially measured at the present value of the lease payments that are not paid at such date, including the following concepts:

  • Variable lease payments that depend on an index or rate, initially measured using the index or rate as of the commencement date;
  • Amounts expected to be payable by the lessee under residual value guarantees;
  • The exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and
  • Payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease;
  • Fixed payments, less any lease incentives receivable;
  • Variable lease payments that depend on an index or rate, initially measured using the index or rate as of the commencement date;
  • Amounts expected to be payable by the lessee under residual value guarantees;
  • The exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and
  • Payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.

After the commencement date, the Company measures the lease liability by:

  • Increasing the carrying amount to reflect interest on the lease liability;
  • Reducing the carrying amount to reflect lease payments made; and
  • Re-measuringthe carrying amount to reflect any reassessment or lease modifications.

The above mentioned inputs for the valuation of the right of use assets and lease liabilities including the determination of the contracts within the scope of the standard, the contract term ant interest rat used in the discounted cash flow involved a high degree of management´s estimations.

Early adoption of IFRS 3 Amendment

The IASB has issued narrow-scope amendments to IFRS 3,'Business combinations', to improve the definition of a business.

The amended definition emphasizes that the output of a business is to provide goods and services to customers, whereas the previous definition focused on returns in the form of dividends, lower costs or other economic benefits to investors and others.

The accompanying notes are an integral part of these condensed consolidated interim financial statements

F- 46

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements

(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)

29. Basis of preparation and presentation (continued)

Entities are required to apply the amendments to transactions for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 January 2020. The Company applied this amendment form the period beginning on 1 January 2019.

Seasonality of operations

The Group's business activities are inherently seasonal. The Group generally harvest and sell its grains (corn, soybean, rice and sunflower) between February and August, with the exception of wheat, which is harvested from December to January. Cotton is a unique in that while it is typically harvested from June to August, it requires processing which takes about two to three months to complete. Sales in our Dairy business segment tend to be more stable. However, milk production is generally higher during the fourth quarter, when the weather is more suitable for production. Although our Sugar, Ethanol and Electricity cluster is currently operating under a "non-stop" or "continuous" harvest and without stopping during traditional off-season, the rest of the sector in Brazil is still primarily operating with large off-season periods from December/January to March/April. The result of large off-season periods is fluctuations in our sugar and ethanol sales and in our inventories, usually peaking in December to take advantage of higher prices during the traditional off-season period (i.e., January through April). As a result of the above factors, there may be significant variations in our financial results from one quarter to another. In addition, our quarterly results may vary as a result of the effects of fluctuations in commodities prices, production yields and costs on the determination of initial recognition and changes in fair value of biological assets and agricultural produce.

30. Critical accounting estimates and judgments

The Group's critical accounting policies are also consistent with those of the audited annual financial statements for the year ended December 31, 2018 described in Note 33.

The accompanying notes are an integral part of these condensed consolidated interim financial statements

F- 47

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Adecoagro SA published this content on 21 May 2019 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 21 May 2019 21:32:08 UTC