6-K 1 d696220d6k.htm FORM 6-K

Form 6-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16 under

the Securities Exchange Act of 1934

For the month of March, 2014

Commission File Number 001-35052

Adecoagro S.A.

(Translation of registrant’s name into English)

13-15 Avenue de la Liberté

L-1931 Luxembourg

R.C.S. Luxembourg B 153 681

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F  x            Form 40-F  ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ¨

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes  ¨            No   x

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-             .

AUDITED CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2013 AND 2012 AND

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011

Adecoagro S.A. (the “Company” or “Adecoagro”) is filing this report on Form 6-K for the purpose of providing a copy of the Company’s audited consolidated financial statements as of December 31, 2013 and 2012 and for the years ended December 31, 2013, 2012 and 2011 (the “Consolidated Financial Statements”). This Form 6-K is incorporated by reference into the Company’s Registration Statement on Form F-3 filed on December 6, 2013 (File No. 333-191325) (the “Registration Statement”). The Consolidated Financial Statements are presented in U.S. Dollars and prepared in accordance with International Financial Reporting Standards.

The attachment contains forward-looking statements. The registrant desires to qualify for the “safe-harbor” provisions of the Private Securities Litigation Reform Act of 1995, and consequently is hereby filing cautionary statements identifying important factors that could cause the registrant’s actual results to differ materially from those set forth in the attachment.

The registrant’s forward-looking statements are based on the registrant’s current expectations, assumptions, estimates and projections about the registrant and its industry. These forward-looking statements can be identified by words or phrases such as “anticipate,” “believe,” “continue,” “estimate,” “expect,” “intend,” “is/are likely to,” “may,” “plan,” “should,” “would,” or other similar expressions.

The forward-looking statements included in the attached relate to, among others: (i) the registrant’s business prospects and future results of operations; (ii) weather and other natural phenomena; (iii) developments in, or changes to, the laws, regulations and governmental policies governing the registrant’s business, including limitations on ownership of farmland by foreign entities in certain jurisdictions in which the registrant operate, environmental laws and regulations; (iv) the implementation of the registrant’s business strategy, including its development of the Ivinhema mill and other current projects; (v) the registrant’s plans relating to acquisitions, joint ventures, strategic alliances or divestitures; (vi) the implementation of the registrant’s financing strategy and capital expenditure plan; (vii) the maintenance of the registrant’s relationships with customers; (viii) the competitive nature of the industries in which the registrant operates; (ix) the cost and availability of financing; (x) future demand for the commodities the registrant produces; (xi) international prices for commodities; (xii) the condition of the registrant’s land holdings; (xiii) the development of the logistics and infrastructure for transportation of the registrant’s products in the countries where it operates; (xiv) the performance of the South American and world economies; and (xv) the relative value of the Brazilian Real, the Argentine Peso, and the Uruguayan Peso compared to other currencies; as well as other risks included in the registrant’s other filings and submissions with the United States Securities and Exchange Commission.

These forward-looking statements involve various risks and uncertainties. Although the registrant believes that its expectations expressed in these forward-looking statements are reasonable, its expectations may turn out to be incorrect. The registrant’s actual results could be materially different from its expectations. In light of the risks and uncertainties described above, the estimates and forward-looking statements discussed in the attached might not occur, and the registrant’s future results and its performance may differ materially from those expressed in these forward-looking statements due to, inclusive, but not limited to, the factors mentioned above. Because of these uncertainties, you should not make any investment decision based on these estimates and forward-looking statements.

The forward-looking statements made in the attached relate only to events or information as of the date on which the statements are made in the attached. The registrant undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date on which the statements are made or to reflect the occurrence of unanticipated events.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Adecoagro S.A.
By		/s/ Carlos A. Boero Hughes
Name:		Carlos A. Boero Hughes
Title:		Chief Financial Officer and
		Chief Accounting Officer

Date: March 20, 2014

Adecoagro S.A.

Consolidated Financial Statements as of December 31,

2013 and 2012 and for the years ended December 31,

2013, 2012 and 2011

Report of Independent Registered Public Accounting Firm

To the Shareholders of

Adecoagro S.A.

We have audited the accompanying consolidated statements of financial position of Adecoagro S.A. and its subsidiaries as of December 31, 2013 and 2012, and the related consolidated statements of income and comprehensive income, of changes in shareholders’ equity and of cash flows for each of the three years in the period ended December 31, 2013. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Adecoagro S.A. and its subsidiaries at December 31, 2013 and 2012, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2013, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Buenos Aires, Argentina

March 13, 2014

PRICE WATERHOUSE & CO. S.R.L.

by

/s/ Marcelo de Nicola

(Partner)

Marcelo de Nicola

Legal information

Denomination: Adecoagro S.A.

Legal address: 13-15 Avenue de la Liberté, L-1931, 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

Capital stock: 122,381,815 common shares (of which 639,691 are treasury shares)

Majority shareholder: Quantum Partners LP

Legal address: 1300 Thames St. 5^th FL, Baltimore MD 21231-3495, United States of America

Parent company activity: Investing

Capital stock: 25,910,004 common shares

F - 3

Adecoagro S.A.

Consolidated Statements of Financial Position

as of December 31, 2013 and 2012

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

		Note		2013				2012
ASSETS
Non-Current Assets
Property, plant and equipment, net		6			790,520				880,897
Investment property		7			10,147				15,542
Intangible assets, net		8			27,341				32,880
Biological assets		9			225,203				224,966
Investments in joint ventures		10			3,179				2,613
Financial assets		16			—				11,878
Deferred income tax assets		22			48,368				35,391
Trade and other receivables, net		13			53,252				44,030
Other assets					707				1,398
Total Non-Current Assets					1,158,717				1,249,595
Current Assets
Biological assets		9			66,941				73,170
Inventories		14			108,389				95,321
Trade and other receivables, net		13			141,180				135,848
Derivative financial instruments		12			4,102				5,212
Cash and cash equivalents		15			232,147				218,809
Total Current Assets					552,759				528,360
TOTAL ASSETS					1,711,476				1,777,955
SHAREHOLDERS EQUITY
Capital and reserves attributable to equity holders of the parent
Share capital		17			183,573				183,331
Share premium		17			939,072				940,332
Cumulative translation adjustment					(311,807	)			(182,929	)
Equity-settled compensation					17,352				17,952
Cash flow hedge					(15,782	)			—
Other reserves					(161	)			(349	)
Treasury shares					(961	)			(6	)
Retained earnings					43,018				67,647
Equity attributable to equity holders of the parent					854,304				1,025,978
Non controlling interest		17			45				65
TOTAL SHAREHOLDERS EQUITY					854,349				1,026,043
LIABILITIES
Non-Current Liabilities
Trade and other payables		20			2,951				4,575
Borrowings		21			512,164				354,249
Deferred income tax liabilities		22			57,623				75,389
Payroll and social liabilities		23			1,458				1,512
Provisions for other liabilities		24			2,293				1,892
Total Non-Current Liabilities					576,489				437,617
Current Liabilities
Trade and other payables		20			92,965				99,685
Current income tax liabilities					310				187
Payroll and social liabilities		23			26,139				22,948
Borrowings		21			147,967				184,884
Derivative financial instruments		12			12,600				5,751
Provisions for other liabilities		24			657				840
Total Current Liabilities					280,638				314,295
TOTAL LIABILITIES					857,127				751,912
TOTAL SHAREHOLDERS EQUITY AND LIABILITIES					1,711,476				1,777,955

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

F - 4

Adecoagro S.A.

Consolidated Statements of Income

for the years ended December 31, 2013, 2012 and 2011

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

		Note		2013				2012				2011
Sales of manufactured products and services rendered		25			425,307				379,526				365,857
Cost of manufactured products sold and services rendered		26			(272,261	)			(263,978	)			(237,404	)
Gross Profit from Manufacturing Activities					153,046				115,548				128,453
Sales of agricultural produce and biological assets		25			219,317				225,174				182,227
Cost of agricultural produce sold and direct agricultural selling expenses		26			(219,317	)			(225,174	)			(182,227	)
Initial recognition and changes in fair value of biological assets and agricultural produce					(39,123	)			16,643				86,811
Changes in net realizable value of agricultural produce after harvest					12,875				16,004				10,523
(Loss) / Gross Profit from Agricultural Activities					(26,248	)			32,647				97,334
Margin on Manufacturing and Agricultural Activities Before Operating Expenses					126,798				148,195				225,787
General and administrative expenses		26			(53,352	)			(57,691	)			(65,142	)
Selling expenses		26			(68,069	)			(58,602	)			(59,404	)
Other operating income, net		28			49,650				31,097				24,581
Share of loss of joint venture		11			(219	)			—				—
Profit from Operations Before Financing and Taxation					54,808				62,999				125,822
Finance income		29			7,234				11,538				9,132
Finance costs		29			(98,916	)			(66,654	)			(62,341	)
Financial results, net		29			(91,682	)			(55,116	)			(53,209	)
(Loss) / Profit Before Income Tax					(36,874	)			7,883				72,613
Income tax benefit / (expense)		22			9,277				5,436				(14,662	)
(Loss) / Profit for the Year from Continuing Operations					(27,597	)			13,319				57,951
Profit / (Loss) for the Year from discontinued operations					1,767				(4,040	)			(1,034	)
(Loss) / Profit for the Year					(25,830	)			9,279				56,917
Attributable to:
Equity holders of the parent					(25,828	)			9,397				56,018
Non controlling interest					(2	)			(118	)			899
(Loss) / Earnings per share from continuing and discontinued operations attributable to the equity holders of the parent during the year:
Basic earnings per share		30
From continuing operations					(0.226	)			0.111				0.488
From discontinued operations					0.014				(0.034	)			(0.009	)
Diluted earnings per share		30
From continuing operations					(0.226	)			0.111				0.484
From discontinued operations					0.014				(0.034	)			(0.009	)

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

F - 5

Adecoagro S.A.

Consolidated Statements of Comprehensive Income

for the years ended December 31, 2013, 2012 and 2011

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

		2013				2012				2011
(Loss) / Profit for the year			(25,830	)			9,279				56,917
Other comprehensive income:
- Items that may be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations			(129,575	)			(80,755	)			(112,071	)
Cash flow hedge			(15,787	)			—				—
Other comprehensive (loss) for the year			(145,362	)			(80,755	)			(112,071	)
Total comprehensive (loss) for the year			(171,192	)			(71,476	)			(55,154	)
Attributable to:
Equity holders of the parent			(171,172	)			(70,792	)			(54,592	)
Non controlling interest			(20	)			(684	)			(562	)
Total comprehensive income attributable to owners of the parent arising from:
Continuing operations			(172,939	)			(66,701	)			(53,574	)
Discontinued operations			1,767				(4,091	)			(1,018	)

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

F - 6

Adecoagro S.A.

Consolidated Statements of Changes in Shareholders’ Equity

for the years ended December 31, 2013, 2012 and 2011

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

		Attributable to equity holders of the parent
		Share Capital (Note 17)				Share Premium (Note 17)				Cumulative Translation Adjustment				Equity-settled Compensation				Other reserves				Treasury shares (Note 18)				Retained Earnings				Subtotal				Non Controlling Interest				Total Shareholders’ Equity
Balance at January 1, 2011			120,000				563,343				11,273				13,659				—				—				257				708,532				14,570				723,102
Profit for the year			—				—				—				—				—				—				56,018				56,018				899				56,917
Other comprehensive income:
- Items that may be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations			—				—				(110,610	)			—				—				—				—				(110,610	)			(1,461	)			(112,071	)
Total comprehensive loss for the year			—				—				(110,610	)			—				—				—				56,018				(54,592	)			(562	)			(55,154	)
Net proceeds from IPO and Private placement (Note 17)			60,104				362,926				—				—				—				—				—				423,030				—				423,030
Employee share options (Note 18):
- Value of employee services			—				—				—				874				—				—				—				874				14				888
- Exercised			55				271				—				(110	)			—				—				—				216				(2	)			214
- Forfeited			—				—				—				(1,122	)			—				—				1,122				—				—				—
Restricted shares (Note 18):
- Issued			641				—				—				—				(632	)			—				—				9				(9	)			—
- Value of employee services			—				—				—				2,751				—				—				—				2,751				38				2,789
- Vested			—				746				—				(838	)			102				—				—				10				(10	)			—
- Forfeited			—				—				—				—				4				(4	)			—				—				—				—
Acquisition of non controlling interest (Note 17)			—				(1,281	)			135				92				—				—				100				(954	)			954				—
Balance at December 31, 2011			180,800				926,005				(99,202	)			15,306				(526	)			(4	)			57,497				1,079,876				14,993				1,094,869

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

F - 7

Adecoagro S.A.

Consolidated Statements of Changes in Shareholders’ Equity

for the years ended December 31, 2013, 2012 and 2011

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

		Attributable to equity holders of the parent
		Share Capital (Note 17)				Share Premium (Note 17)				Cumulative Translation Adjustment				Equity-settled Compensation				Other reserves				Treasury shares (Note 18)				Retained Earnings				Subtotal				Non Controlling Interest				Total Shareholders’ Equity
Balance at December 31, 2011			180,800				926,005				(99,202	)			15,306				(526	)			(4	)			57,497				1,079,876				14,993				1,094,869
Profit for the year			—				—				—				—				—				—				9,397				9,397				(118	)			9,279
Other comprehensive income:
- Items that may be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations			—				—				(80,189	)			—				—				—				—				(80,189	)			(566	)			(80,755	)
Total comprehensive loss for the year			—				—				(80,189	)			—				—				—				9,397				(70,792	)			(684	)			(71,476	)
Employee share options (Note 18):
- Value of employee services			—				—				—				265				—				—				—				265				2				267
- Exercised			49				263				—				(93	)			—				—				—				219				(2	)			217
- Forfeited			—				—				—				(82	)			—				—				82				—				—				—
Restricted shares (Note 18):
- Value of employee services			—				—				—				3,847				—				—				—				3,847				24				3,871
- Vested			—				1,347				—				(1,516	)			181				—				—				12				(12	)			—
- Forfeited			—				—				—				—				2				(2	)			—				—				—				—
Acquisition of non controlling interest (Note 17)			2,482				12,717				(1,845	)			225				(6	)			—				671				14,244				(14,244	)			—
Disposal of subsidiary (Nota 16)			—				—				(1,693	)			—				—				—				—				(1,693	)			(12	)			(1,705	)
Balance at December 31, 2012			183,331				940,332				(182,929	)			17,952				(349	)			(6	)			67,647				1,025,978				65				1,026,043

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

F - 8

Adecoagro S.A.

Consolidated Statements of Changes in Shareholders’ Equity

for the years ended December 31, 2013, 2012 and 2011

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

		Attributable to equity holders of the parent
		Share Capital (Note 17)				Share Premium (Note 17)				Cumulative Translation Adjustment				Equity-settled Compensation				Cash flow hedge				Other reserves				Treasury shares (Note 18)				Retained Earnings				Subtotal				Non Controlling Interest				Total Shareholders’ Equity
Balance at December 31, 2012			183,331				940,332				(182,929	)			17,952				—				(349	)			(6	)			67,647				1,025,978				65				1,026,043
Loss for the year			—				—				—				—				—				—				—				(25,828	)			(25,828	)			(2	)			(25,830	)
Other comprehensive income:
- Items that may be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations			—				—				(129,562	)			—				—				—				—				—				(129,562	)			(13	)			(129,575	)
Cash flow hedge (1)			—				—				—				—				(15,782	)			—				—				—				(15,782	)			(5	)			(15,787	)
Total comprehensive loss for the year			—				—				(129,562	)			—				(15,782	)			—				—				(25,828	)			(171,172	)			(20	)			(171,192	)
Employee share options (Note 18):
- Value of employee services			—				—				—				61				—				—				—				—				61				—				61
- Exercised			—				126				—				(52	)			—				—				26				—				100				—				100
- Forfeited			—				—				—				(1,199	)			—				—				—				1,199				—				—				—
Restricted shares (Note 18):
- Value of employee services			—				—				—				3,742				—				—				—				—				3,742				—				3,742
- Vested			242				2,721				—				(3,152	)			—				179				10				—				—				—				—
- Forfeited			—				—				—				—				—				9				(9	)			—				—				—				—
Purchase of own shares (Note 17)			—				(4,107	)			—				—				—				—				(982	)			—				(5,089	)			—				(5,089	)
Disposal of interest in joint ventures (Note 11)			—				—				684				—				—				—				—				—				684				—				684
Balance at December 31, 2013			183,573				939,072				(311,807	)			17,352				(15,782	)			(161	)			(961	)			43,018				854,304				45				854,349

(1) Net of US$ 8,347 of income tax.

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

F - 9

Adecoagro S.A.

Consolidated Statements of Cash Flows

for the years ended December 31, 2013, 2012 and 2011

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

		Note		2013				2012				2011
Cash flows from operating activities:
(Loss) / Profit for the year					(25,830	)			9,279				56,917
Adjustments for:
Income tax (benefit) / expense		22			(9,277	)			(5,436	)			14,662
Depreciation		6			68,934				54,117				33,847
Amortization		8			468				351				337
Gain from disposal of farmlands and other assets		28			(26,434	)			—				(8,832	)
Gain from the disposal of other property items		28 28			(670	)			(882	)			(394	)
Gain from the sale of subsidiaries		28			(1,967	)			(27,513	)			—
Equity settled share-based compensation granted		27			3,803				4,138				3,677
Loss / gain from derivative financial instruments and forwards		28,29			(266	)			6,304				(12,084	)
Interest and other financial expense, net		29			45,192				18,948				33,006
Initial recognition and changes in fair value of non harvested biological assets (unrealized)		5			53,456				13,335				(17,136	)
Changes in net realizable value of agricultural produce after harvest (unrealized)		5			292				(2,024	)			(1,816	)
Provision and allowances					768				(2,020	)			(3,147	)
Share of loss from joint venture		10			(219	)			—				—
Foreign exchange losses, net		29			21,087				24,801				12,683
Cash flow hedge – transfer from equity		29			2,560				—				—
Discontinued operations		11			(1,767	)			4,040				1,034
Subtotal					130,130				97,438				112,754
Changes in operating assets and liabilities:
Increase in trade and other receivables					(35,464	)			(39,163	)			(15,850	)
Increase in inventories					(27,624	)			(3,794	)			(49,776	)
(Increase) / decrease in biological assets					(347	)			(5,830	)			6,745
Increase / (Decrease) in other assets					690				10				(1,382	)
Increase / (Decrease) in derivative financial instruments					8,123				(1,467	)			(248	)
Increase in trade and other payables					23,718				15,309				19,855
Increase in payroll and social security liabilities					3,504				5,784				1,785
(Decrease) / Increase in provisions for other liabilities					(233	)			132				(641	)
Net cash generated from operating activities before interest and taxes paid					102,497				68,419				73,242
Income tax paid					(417	)			(596	)			(16,656	)
Net cash generated from operating activities					102,080				67,823				56,586

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

F - 10

Adecoagro S.A.

Consolidated Statements of Cash Flows (Continued)

for the years ended December 31, 2013, 2012 and 2011

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

		Note		2013				2012				2011
Cash flows from investing activities:
Acquisition of subsidiaries, net of cash acquired		32			—				—				(11,617	)
Purchases of property, plant and equipment		6			(128,726	)			(218,770	)			(90,422	)
Purchases of intangible assets		8			(1,376	)			(359	)			(195	)
Purchase of cattle and planting cost of non current biological assets					(96,487	)			(82,612	)			(63,074	)
Interest received		29			6,882				11,249				8,019
Proceeds from sale of property, plant and equipment					2,594				851				2,611
Proceeds from sale of farmland and other assets		16			31,052				15,703				20,532
Proceeds from disposal of subsidiaries		16			12,078				10,208				—
Investment in joint ventures		16			(4,164	)			—				—
Payment of seller financing arising on subsidiaries acquired					(1,555	)			(33,485	)			(6,347	)
Proceeds from sales of financial assets		16			13,066				—				—
Discontinued operations		11			5,100				(3,000	)			—
Net cash used in investing activities					(161,536	)			(300,215	)			(140,493	)
Cash flows from financing activities:
Net proceeds from IPO and Private placement		17			—				—				421,778
Proceeds from equity settled shared-based compensation exercised					99				218				214
Proceeds from long-term borrowings		21			322,763				230,601				34,980
Payments of long-term borrowings		21			(113,750	)			(79,781	)			(82,244	)
Interest paid					(45,972	)			(34,587	)			(33,481	)
Net (decrease) / increase in short-term borrowings		21			(53,367	)			17,057				19,545
Purchase of own shares		17			(5,102	)			—				—
Net cash generated from financing activities					104,671				133,508				360,792
Net increase / (decrease) in cash and cash equivalents					45,215				(98,884	)			276,885
Cash and cash equivalents at beginning of year					218,809				330,546				70,269
Effect of exchange rate changes on cash and cash equivalents					(31,877	)			(12,853	)			(16,608	)
Cash and cash equivalents at end of year					232,147				218,809				330,546

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

F - 11

Adecoagro S.A.

Notes to the Consolidated 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 five reportable segments, which are described in detail in Note 5 to these consolidated 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 consolidated financial statements have been approved for issue by the Board of Directors on March 13, 2014.

2. Summary of significant accounting policies

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

2.1. Basis of preparation and presentation

The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) of the International Accounting Standards Board (IASB) and the Interpretations of the International Financial Reporting Interpretations Committee (IFRIC). All IFRS issued by the IASB, effective at the time of preparing these consolidated financial statements have been applied.

The consolidated financial statements have been prepared under the historical cost convention as modified by financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss and biological assets and agricultural produce at the point of harvest measured at fair value.

The preparation of consolidated financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 4.

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

F - 12

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

2.1. Basis of preparation and presentation (continued)

(a) Standards, amendments and interpretations to existing standards effective and adopted by the Group in 2013

The following standards, amendments and interpretations to existing standards have been published and were mandatory for the Group as of January 1, 2013:

In May 2011, the IASB issued IFRS 10 “Consolidated Financial Statements”. It replaces the consolidation requirements in SIC 12 “Consolidation—Special Purpose Entities” and IAS 27 “Consolidated and Separate Financial Statements” and is effective for annual periods beginning on or after January 1, 2013. IFRS 10 builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent company. The standard provides additional guidance to assist in the determination of control where this is difficult to assess. The standard did not have a material impact on the presentation of the Group’s results of operations, financial position or cash flows.

In May 2011, the IASB issued IFRS 11 “Joint Arrangements” which provides for a more realistic reflection of joint arrangements by focusing on the rights and obligations of the arrangement, rather than its legal form (as is currently the case). The standard addresses inconsistencies in the reporting of joint arrangements by requiring a single method to account for interests in jointly controlled entities. IFRS 11 is effective for annual periods beginning on or after January 1, 2013. The standard did not have a material impact on the Group given that its joint arrangement would be classified as a joint venture under IFRS 11 and continue to be measured applying equity accounting.

In May 2011, the IASB issued IFRS 12 “Disclosure of Interests in Other Entities”. IFRS 12 is a new and comprehensive standard on disclosure requirements for all forms of interests in other entities, including subsidiaries, joint arrangements, associates and unconsolidated structured entities. IFRS 12 is effective for annual periods beginning on or after January 1, 2013. Earlier application is permitted. The standard increased the amount of disclosures required about subsidiaries, associates and joint arrangements (See Note 10).

In June 2012, the IASB issued amendments to IFRS 10, IFRS 11 and IFRS 12. The amendments explain that the ‘date of initial application’ in IFRS 10 means ‘the beginning of the annual reporting period in which IFRS 10 is applied for the first time’. Consequently, an entity is not required to make adjustments to the previous accounting for its involvement with entities if the consolidation conclusion reached at the date of initial application is the same when applying IAS 27 and SIC 12 and when applying IFRS 10. The IASB has also amended IFRS 11 and IFRS 12 to provide similar relief from the presentation or adjustment of comparative information for periods prior to the immediately preceding period. The amendments shall be applied for annual periods beginning on or after January 1, 2013. The amendments did not have a material impact on the Group’s results of operations, financial position or cash flows.

In May 2011, the IASB issued IFRS 13 “Fair Value Measurement” which replaces the fair value measurement guidance currently dispersed across different IFRS standards with a single definition of fair value and extensive application guidance. IFRS 13 provides guidance on how to measure fair value and does not introduce new requirements for when fair value is required or permitted. It also establishes disclosure requirements to provide users of financial statements with more information about fair value measurements. It is effective for annual periods beginning on or after January 1, 2013. The standard increased the amount of disclosures required about fair value measurements.

In June 2011, the IASB issued an amendment to IAS 1 “Presentation of financial statements” which improves the consistency and clarity of the presentation of items of other comprehensive income (“OCI”). The main change is a requirement for entities to group items presented in OCI on the basis of whether they are potentially recyclable to profit or loss subsequently (reclassification adjustments). The amendment to IAS 1 shall be applied for annual periods beginning on or after July 1, 2012. The amendment has impacted the format of the Group’s consolidated statements of comprehensive income.

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

F - 13

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

2.1. Basis of preparation and presentation (continued)

In May 2012, the IASB issued Improvements to IFRSs – a collection of amendments to five IFRSs – as part of its program of annual improvements to its standards. The amendments are effective for annual periods beginning on or after January 1, 2013. These amendments relate to IFRS 1 “First Time Adoption of IFRS”, IAS 1 “Presentation of Financial Statements”, IAS 16 “Property, Plant and Equipment”, IAS 32 “Financial instruments: Presentation” and IAS 34 “Interim Financial Reporting”. The amendments did not have a material impact on the presentation of the Group’s results of operations, financial position or cash flows.

(b) Standards, amendments and interpretations to existing standards that are not yet effective

Below is a description of the standards, amendments and interpretations issued by the IASB to existing standards that have been issued and are mandatory for the Group’s fiscal periods beginning on or after January 1, 2014 or later and which have not been early adopted by the Group:

In November 2009 and October 2010, the IASB issued IFRS 9 “Financial instruments”, which addresses the classification, measurement and recognition of financial assets and financial liabilities. It replaces the parts of IAS 39 “Financial Instruments: Recognition and Measurement” that relate to the classification and measurement of financial instruments. IFRS 9 requires financial assets to be classified into two measurement categories: those measured as at fair value and those measured at amortized cost. The determination is made at initial recognition. The classification depends on the entity’s business model for managing its financial instruments and the contractual cash flow characteristics of the instrument. For financial liabilities, the standard retains most of the IAS 39 requirements. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity’s own credit risk is recorded in other comprehensive income rather than the income statement, unless this creates an accounting mismatch. The Group is currently analyzing the resulting effects on the presentation of the Group’s results of operations, financial position or cash flows. The Group will also consider the impact of the remaining phases of IFRS 9 when completed by the IASB.

In November 2012, the IASB issued amendments to IFRS 10, IFRS 12 and IAS 27 “Separate Financial Statements”. The amendments define an investment entity and introduce an exception to consolidating particular subsidiaries for investment entities. These amendments require an investment entity to measure those subsidiaries at fair value through profit or loss in accordance with IFRS 9 in its consolidated and separate financial statements. They also introduce new disclosure requirements for investment entities. The amendments shall be applied for annual periods beginning on or after January 1, 2014, with earlier application permitted. These amendments will not have an impact on the Group’s presentation of its financial position, results of operations or earnings per share.

In May 2013, the IASB issued an amendment to IAS 36, Impairment of assets, requires additional disclosures about impaired assets, such as information about the recoverable amount if it is based on fair value less costs of disposal, and the discount rates used to measure the fair value less costs of disposal if it is based on a present value technique. The amendment shall be applied for annual periods beginning on or after January 1, 2014, with earlier application permitted. This amendment is not expected to have a material impact on the information to be presented in the financial statements.

In May 2013, the IASB issued IFRIC 21, Levies, sets out the accounting for an obligation to pay a levy that is not income tax. The interpretation addresses what the obligating event is that gives raise to pay a levy and when should a liability be recognized. The amendment shall be applied for annual periods beginning on or after January 1, 2014, with earlier application permitted. This amendment is not expected to have a material impact on the information to be presented in the financial statements.

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

F - 14

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

2.2. Scope of consolidation

The consolidated financial statements include the results of the Company and all of its subsidiaries from the date that control commences to the date that control ceases. They also include the Group’s share of the net income of its jointly-controlled entities on an equity-accounted basis from the point at which joint control commences, to the date that it ceases.

(a) Subsidiaries

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

The Group uses the acquisition method of accounting to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.

The Group recognizes any non-controlling interest in the acquiree on an acquisition-by-acquisition basis either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recorded as goodwill. If the total of consideration transferred, non-controlling interest recognized and previously held interest measured is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognized directly in the income statement as gains on bargain purchases.

Subsidiaries acquired exclusively with a view to resale are accounted for following the short-cut method under IFRS 5. At the acquisition date, the entity being disposed of is valued at fair value less costs to sell, and at each subsequent reporting date, it is remeasured at the lower of the initial carrying amount and the fair value less costs to sell. On the statement of financial position, the entity’s assets and liabilities are classified as held for sale and presented separately from other assets and liabilities. Subsidiaries acquired exclusively with a view to resale are classified as discontinued operations.

Inter-company transactions, balances and unrealized gains on transactions between group companies are eliminated. Unrealized losses are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

(b) Changes in ownership interests in subsidiaries without change of control

Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions – that is, as transactions with the owners in their capacity as owners. The difference between the fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

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

F - 15

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

2.2. Scope of consolidation (continued)

(c) Disposal of subsidiaries

When the Group ceases to have control any retained interest in the entity is re-measured to its fair value at the date when control is lost, with the change in carrying amount recognized in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amount previously recognized in other comprehensive income in respect of that entity is accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognized in other comprehensive income are reclassified to profit or loss.

(d) Joint arrangements

Joint arrangements are arrangements of which the Group and other party or parties have joint control bound by a contractual arrangement. Under IFRS 11, investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and obligations each investor has rather than the legal structure of the joint arrangement. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement. A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement.

The Group has assessed the nature of its joint arrangements and determined them to be joint ventures.

Under the equity method of accounting, interests in joint ventures are initially recognized in the consolidated statement of financial position at cost and adjusted thereafter to recognize the Group’s share of the post-acquisition of profits or losses and movements in other comprehensive income, respectively. When the Group’s share of losses in a joint venture equals or exceeds its interests in the joint ventures (which includes any long-term interests that, in substance, form part of the Group’s net investment in the joint ventures), the Group does not recognize further losses, unless it has incurred obligations or made payments on behalf of the joint ventures.

Unrealized gains on transactions between the Group and its joint ventures are eliminated to the extent of the Group’s interest in the joint ventures. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of the joint ventures have been changed where necessary to ensure consistency with the policies adopted by the Group.

2.3. Segment reporting

According to IFRS 8, operating segments are identified based on the ‘management approach’. This approach stipulates external segment reporting based on the Group’s internal organizational and management structure and on internal financial reporting to the chief operating decision maker. The Management Committee of the Group is responsible for measuring and steering the business success of the segments and is considered the chief operating decision maker within the meaning of IFRS 8.

2.4. Foreign currency translation

(a) Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in US dollars, which is the Group’s presentation currency.

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

F - 16

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

2.4. Foreign currency translation (continued)

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the statement of income.

Foreign exchange gains and losses are presented in the statement of income within “Finance income” or “Finance cost”, as appropriate.

(c) Group companies

The results and financial position of all the Group entities (none of which has the currency of a hyper-inflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

• assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position;

• income and expenses for each statement of income are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and

• all resulting exchange differences are recognized as a separate component of equity.

When a foreign operation is partially disposed of or sold, exchange differences that were recorded in equity are recognized in the statement of income as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

2.5. Property, plant and equipment

Property, plant and equipment is recorded at cost, less accumulated depreciation and impairment losses, if any. Historical cost comprises the purchase price and any costs directly attributable to the acquisition.

Where individual components of an item of property, plant and equipment have different useful lives, they are accounted for as separate items, which are depreciated separately.

Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to the statement of income when they are incurred.

Farmland is not depreciated. Depreciation on other assets is calculated using the straight-line method, to allocate their cost to their residual values over their estimated useful lives, as follows:

Farmland improvements			5-25 years
Buildings and facilities			20 years
Furniture and fittings			10 years
Computer equipment			3-5 years
Machinery and equipment			4-10 years
Vehicles			4-5 years

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

F - 17

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

2.5. Property, plant and equipment (continued)

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each statement of financial position date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (see Note 2.10).

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognized within “Other operating income, net” in the statement of income.

2.6. Investment property

Investment property consists of farmland held to earn rentals or for capital appreciation and not used in production or for administrative purposes or for sale in the ordinary course of business. Investment property is measured at cost less accumulated depreciation and any impairment losses if any. Rental income from investment property “lease act under an operating lease” is recognized in the income statement on a straight line basis over the lease term.

If an investment property becomes owner-occupied, it is reclassified as property, plant and equipment at the commencement of owner occupation. An item of owner-occupied property is reclassified to investment property when its use has changed and owner-occupation ceases.

Transfers in and out of the respective categories as described above do not change the carrying amount of the properties transferred, and they do not change the cost of the properties for measurement or disclosure purposes.

2.7. Leases

The Group classifies its leases at the inception as finance or operating leases. Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases and charged to the statements of income in a straight-line basis over the period of the lease. Finance leases are capitalized at the lease’s inception at the lower of the fair value of the leased property and the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included as “Borrowings” in the statement of financial position. The interest element of the finance cost is charged to the statement of income 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 property, plant and equipment acquired under finance leases is depreciated over the shorter of the asset’s useful life and the lease term.

2.8. Goodwill

Goodwill represents future economic benefits arising from assets that are not capable of being individually identified and separately recognized by the Group on an acquisition. Goodwill is computed as the excess of the consideration over the fair value of the Group’s share of net assets of the acquired subsidiary undertaking at the acquisition date and is allocated to those cash generating units expected to benefit from the acquisition for the purpose of impairment testing. Goodwill arising on the acquisition of subsidiaries is included within “Intangible assets” on the statement of financial position, whilst goodwill arising on the acquisition on joint ventures forms part of the carrying amount of the investments and tested for impairment as part of the overall balance.

Goodwill arising on the acquisition of foreign entities is treated as an asset of the foreign entity denominated in the local currency and translated at the closing rate.

Goodwill is not amortized but tested for impairment on an annual basis, or more frequently if there is an indication of impairment. Gains and losses on the disposal of a Group entity include any goodwill relating to the entity sold (see Note 2.10).

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

F - 18

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

2.9. Other intangible assets

Other intangible assets that are acquired by the Group, which have finite useful lives, are measured at cost less accumulated amortization and impairment losses, if any. These intangible assets comprise trademarks and computer software and are amortized in the statement of income on a straight-line basis over their estimated useful lives estimated to be 10 to 20 years and 3 to 5 years, respectively.

2.10. Impairment of assets

Goodwill

For the purpose of impairment testing, assets are grouped at the lowest levels for which there are separately identifiable cash flows, known as cash-generating units. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. Impairment losses recognized for goodwill cannot be reversed in a subsequent period. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted (see Note 4 (b) for details).

Property, plant and equipment and finite lived intangible assets

At each statement of financial position date, the Group reviews the carrying amounts of its property, plant and equipment and finite lived intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent, if any, of the impairment loss. Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount. An impairment loss is recognized immediately in the statement of income.

Where an impairment loss subsequently reverses, the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, not to exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized immediately in the statement of income.

2.11. Biological assets

Biological assets comprise growing crops (mainly corn, wheat, soybeans, sunflower and rice), sugarcane, coffee and livestock (growing herd and cattle for dairy production).

The Group distinguishes between consumable and bearer biological assets, and between mature and immature biological assets. “Consumable” biological assets are those assets that may be harvested as agriculture produce or sold as biological assets, for example livestock intended for dairy production. “Bearer” biological assets are those assets capable of producing more than one harvest, for example sugarcane or livestock from which raw milk is produced. “Mature” biological assets are those that have attained harvestable specifications (for consumable biological assets) or are able to sustain regular harvests (for bearer biological assets). “Immature” biological assets are those assets other than mature biological assets.

The Group presents long-term biological assets (sugarcane and coffee plantations) as non-current assets based on their nature, as capable of sustaining regular harvests in the long-term.

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

F - 19

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

2.11. Biological assets (continued)

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

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

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

Where there is an active market for a biological asset or agricultural produce, quoted market prices in the most relevant market are used as a basis to determine the fair value. Otherwise, when there is no active market or market-determined prices are not available, fair value of biological assets is determined through the use of valuation techniques.

Therefore, the fair value of biological assets is generally derived from the expected discounted cash flows of the related agricultural produce. The fair value of our agricultural produce at the point of harvest is generally derived from market determined prices. A general description of the determination of fair values based on the Company’s business segments follow:

• Growing crops:

Growing crops, for which biological transformation is not significant, are measured at cost, which approximates fair value. Expenditure on growing crops includes land preparation expenses and other direct expenses incurred during the sowing period including labor, seedlings, agrochemicals and fertilizers among others.

Otherwise, biological assets are measured at fair value less estimated point-of-sale costs at initial recognition and at any subsequent period. Point-of-sale costs include all costs that would be necessary to sell the assets. Gains and losses arising from such measurements are included in the statement of income in the period in which they arise under the line item “Initial recognition and changes in fair value of biological assets and agricultural produce”.

The fair value of growing crops excluding sugarcane and coffee is measured based on a formula, which takes into consideration the estimated crop yields, estimated market prices and costs, and discount rates. Yields are determined based on several factors including location of farmland, environmental conditions and other restrictions and growth at the time of measurement. Yields are multiplied by sown hectares to determine the estimated tons of crops to be obtained. The tons are then multiplied by a net cash flow determined at the future crop prices less the direct costs to be incurred. This amount is discounted at a discount rate, which reflects current market assessments of the assets involved and the time value of money.

• Growing herd and cattle:

Livestock are measured at fair value less estimated point-of-sale costs, with any changes therein recognized in the statement of income, on initial recognition as well as subsequently at each reporting period. Gains and losses arising from animal growth and changes in livestock numbers are included in the statement of income in the period in which they arise, under the line item “Initial recognition and changes in fair value of biological assets and agricultural produce”. The fair value of livestock is determined based on the actual selling prices less estimated point-of-sale costs in the markets where the Group operates.

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

F - 20

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

2.11. Biological assets (continued)

• Coffee:

The coffee trees are accounted for as plantations and are generally felled after their optimum economic age for use has expired, generally 18 years.

Coffee trees, for which biological growth is not significant, are valued at cost, which approximates fair value. Expenditure on coffee trees planting includes land preparation expenses and other direct expenses incurred during the sowing period including labor, seedlings, agrochemicals and fertilizers among others.

Coffee trees, which have attained significant biological growth are valued at fair value through a discounted cash flow model. Revenues are based on estimated yearly coffee production volumes and the price is calculated as the average of daily prices for coffee future contracts (Coffee ICE-NY contracts) for a six months period. Projected costs include maintenance, pruning, land leasing, harvesting and coffee treatment. These estimates are discounted at an appropriate discount rate.

• Sugarcane:

The fair value of sugarcane depends on the variety, location and maturity of the plantation. The sugarcanes are accounted for as plantations and are felled after their optimum economic age for use has expired, generally five years.

Sugarcane, for which biological growth is not significant, is valued at cost, which approximates fair value. Expenditure on sugarcane consists mainly of land preparation expenses and other direct expenses incurred during the sowing period including labor, seedlings, agrochemicals and fertilizers among others. When it has attained significant biological growth, it is measured at fair value through a discounted cash flow model. Revenues are based on estimated yearly production volume (which will be destined to sugar, ethanol, energy and raw cane production) and the price is calculated as the average of daily prices for sugar future contracts (Sugar #11 ICE-NY contracts) for a six months period. Projected costs include maintenance, land leasing, harvesting and transportation. These estimates are discounted at an appropriate discount rate

2.12. Inventories

Inventories comprise of raw materials, finished goods (including harvested agricultural produce and manufactured goods) and others.

Harvested agricultural produce (except for rice and milk) are perpetually measured at net realizable value until the point of sale because there is an active market in the produce, there is a negligible risk that the produce will not be sold and there is a well-established practice in the industry carrying the inventories at net realizable value. Changes in net realizable value are recognized in the statement of income in the period in which they arise under the line item “Changes in net realizable value of agricultural produce after harvest”.

All other inventories (including rice and milk) are measured at the lower of cost and net realizable value. Cost is determined using the weighted average method.

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

F - 21

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

2.13. Financial assets

Financial assets are classified in the following categories: at fair value through profit or loss and loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

(a) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short-term. Derivatives are also categorized as held for trading unless they are designated as hedges. Financial assets are classified as current if realization within 12 months is expected. Otherwise, they are classified as non-current. For all years presented, the Group’s financial assets at fair value through profit or loss comprise mainly derivative financial instruments.

(b) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the date of the statement of financial position. Loans and receivables comprise “trade and other receivables” and “cash and cash equivalents” in the statement of financial position.

(c) Recognition and measurement

Regular purchases and sales of financial assets are recognized on the trade-date – the date on which the Group commits to purchase or sell the asset. Financial assets not carried at fair value through profit or loss are initially recognized at fair value plus transaction costs. Financial assets carried at fair value through profit or loss are initially recognized at fair value and transaction costs are expensed in the statement of income. Financial assets are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are subsequently carried at amortized cost using the effective interest method.

Gains or losses arising from changes in the fair value of the “financial assets at fair value through profit or loss” category are presented in the statement of income within “Other operating income, net” in the period in which they arise. Dividend income from financial assets at fair value through profit or loss is recognized in the statement of income as part of “Other operating income, net” when the Group’s right to receive payments is established.

If the market for a financial asset is not active (and for unlisted securities), the Group establishes fair value by using valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, and option pricing models, making maximum use of market inputs and relying as little as possible on entity-specific inputs.

The Group assesses at each statement of financial position date whether there is objective evidence that a financial asset or a group of financial assets is impaired. Impairment testing of trade receivables is described in Note 2.15.

(d) Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously.

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

F - 22

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

2.14. Derivative financial instruments and hedging activities

Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. Commodity future contract fair values are computed with reference to quoted market prices on future exchanges markets. The fair values of commodity options are calculated using year-end market rates together with common option pricing models. The fair value of interest rate swaps has been calculated using a discounted cash flow analysis.

The Group manages exposures to financial and commodity risks using hedging instruments that provide the appropriate economic outcome. The principal hedging instruments used may include commodity future contracts, put and call options, foreign exchange forward contracts and interest rate swaps. The Group does not use derivative financial instruments for speculative purposes.

The Group’s policy is to apply hedge accounting to hedging relationships where it is both permissible under IAS 39, practical to do so and its application reduces volatility, but transactions that may be effective hedges in economic terms may not always qualify for hedge accounting under IAS 39. Any derivatives that the Group holds to hedge these exposures are classified as “held for trading” and are shown in a separate line on the face of the statement of financial position. The method of recognizing gains or losses on derivatives depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. Gains and losses on commodity derivatives are classified within “Other operating income, net”. Gains and losses on interest rate and foreign exchange rate derivatives are classified within ‘Financial results, net’. The Group designates certain derivatives as hedges of the foreign currency risk associated with highly probable forecast transactions (cash flow hedge).

The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the instruments that are used in hedging transactions are highly effective in offsetting changes in fair value or cash flows of hedged items.

Cash flow hedge

The effective portion of the gain or loss on the instruments that are designated and qualify as cash flow hedges is recognized in other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in the statement of income within “Finance income” or “Finance cost”, as appropriate.

Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss. The gain or loss relating to the effective portion is recognized in the statement of income within “Finance income” or “Finance cost”, as appropriate.

When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognized when the forecast transaction is ultimately recognized in the statement of income. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the statement of income within “Finance income” or “Finance cost”, as appropriate.

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

F - 23

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

2.15. Trade receivables

Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less allowance for trade receivables. An allowance for trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganization, and default or delinquency in payments are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognized in the statement of income within selling expense. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against selling expenses in the statement of income.

2.16. Cash and cash equivalents

Cash and cash equivalents includes cash in hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less. In the statements of cash flows, interest paid is presented within financing cash flows and interest received is presented within investing activities.

2.17. Trade payables

Trade payables are initially recognized at fair value and subsequently measured at amortized cost using the effective interest method.

2.18. Borrowings

Borrowings are initially recognized at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortized cost using the effective interest method. Borrowing costs are capitalized during the period of time that is required to complete and prepare the asset for its intended use.

2.19. Provisions

Provisions are recognized when (i) the Group has a present legal or constructive obligation as a result of past events; (ii) it is probable that an outflow of resources will be required to settle the obligation; and (iii) a reliable estimate of the amount of the obligation can be made. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation.

2.20. Onerous contracts

The Group enters into contracts, which require the Group to sell commodities in accordance with the Group’s expected sales. These contracts do not qualify as derivatives. These contracts are not recognized until at least one of the parties has performed under the agreement. However, when the contracts are onerous, the Group recognizes the present obligation under the contracts as a provision included within “Provision and other liabilities” in the statement of financial position. Losses under these onerous contracts are recognized within “Other operating income, net” in the statement of income.

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

F - 24

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

2.21. Current and deferred income tax

The Group’s tax benefit or expense for each year comprises the charge for current tax payable and deferred taxation attributable to the Group’s operating subsidiaries. Tax is recognized in the statement of income, except to the extent that it relates to items recognized directly in equity. In this case, the tax is also recognized in equity.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the date of the statement of financial position in the countries where the Group’s subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is recognized, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the date of the statement of financial position and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.

Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

The Group is able to control the timing of dividends from its subsidiaries and hence does not expect to remit overseas earnings in the foreseeable future in a way that would result in a charge to taxable profit. Hence deferred tax is recognized in respect of the retained earnings of overseas subsidiaries only to the extent that, at the date of the statement of financial position, dividends have been accrued as receivable or a binding agreement to distribute past earnings in future has been entered into by the subsidiary.

2.22. Revenue recognition

The Group’s primary activities comprise agricultural and agro-industrial activities.

The Group’s agricultural activities comprise growing and selling agricultural produce. In accordance with IAS 41 “Agriculture”, cattle are measured at fair value with changes therein recognized in the statement of income as they arise. Agricultural produce is measured at net realizable value with changes therein recognized in the statement of income as they arise. Therefore, sales of agricultural produce and cattle generally do not generate any separate gains or losses in the statement of income. See Notes 2.11 and 2.12 for additional details.

The Group’s agro-industrial activities comprise the selling of manufactured products (i.e. industrialized rice, milk-related products, coffee, ethanol, sugar, energy, among others). Sales of manufacturing products are measured at the fair value of the consideration received or receivable, net of returns and allowances, trade and other discounts, net of sales taxes, as applicable. Revenue is recognized when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, and there is no continuing management involvement with the goods. Transfers of risks and rewards vary depending on the individual terms of the contract of sale. For export shipments, transfer occurs upon loading of the goods onto the relevant carrier.

The Group also provides certain agricultural-related services such as grain warehousing/conditioning and other services, e.g. handling and drying services. Revenue from services is recognized as services are provided.

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

F - 25

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

2.22. Revenue recognition (continued)

The Group leases owned farmland property to third parties under operating lease agreements. The leased assets are included within investment property on the Group’s statement of financial position. Rental income is recognized on a straight-line basis over the period of the lease.

The Group is a party to a 10-year power agreement for the sale of electricity. The delivery period starts in May and ends in November of each year. The Group is also a party to a 15-year power agreement which delivery period starts in April and ends in November of each year. Prices under both agreements are adjusted annually for inflation. Revenue related to the sale of electricity under these two agreements is recorded based upon output delivered.

2.23. Farmlands sales

The Group’s strategy is to profit from land appreciation value generated through the transformation of its productive capabilities. Therefore, the Group may seek to realize value from the sale of farmland assets and businesses.

Farmland sales are not recognized until (i) the sale is completed, (ii) the Group has determined that it is probable the buyer will pay, (iii) the amount of revenue can be measured reliably, and (iv) the Group has transferred to the buyer the risk of ownership, and does not have a continuing involvement. Gains from “farmland sales” are included in the statement of income under the line item “Other operating income, net”.

2.24. Assets held for sale and discontinued operations

When the Group intends to dispose of, or classify as held for sale, a business component that represents a separate major line of business or geographical area of operations, or a subsidiary acquired exclusively with a view to resale, it classifies such operations as discontinued. The post tax profit or loss of the discontinued operations is shown as a single amount on the face of the statement of income, separate from the other results of the Group. Assets and liabilities classified as held for sale are measured at the lower of carrying value and fair value less costs to sell.

Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered through a disposal rather than through continuing use. This condition is regarded as met only when management is committed to the sale (disposal), the sale (disposal) is highly probable and expected to be completed within one year from classification and the asset is available for immediate sale (disposal) in its present condition. The statements of income for the comparative periods are represented to show the discontinued operations separate from the continuing operations.

2.25. Earnings per share

Basic earnings per share is calculated by dividing the net income for the period attributable to equity holders of the parent by the weighted average number of ordinary shares outstanding during the year. Diluted net earnings per share is computed by dividing the net income for the period by the weighted average number of ordinary shares outstanding, and when dilutive, adjusted for the effect of all potentially dilutive shares, including share options, on an as-if converted basis.

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

F - 26

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

2.26. Equity-settled share-based payments

The Group issues equity settled share-based payments to certain directors, senior management and employees. Options under the awards are measured at fair value at the date of grant. Management measures the fair value using the valuation technique that they consider to be the most appropriate to value each class of award. Methods used may include Black-Scholes calculations or other models as appropriate. The valuations take into account factors such as non-transferability, exercise restrictions and behavioral considerations. An expense is recognized to spread the fair value of each award over the vesting period on a straight-line basis, after allowing for an estimate of the awards that will eventually vest. The estimate of the level of vesting is reviewed at least annually, with any impact on the cumulative charge being recognized immediately.

2.27. Research and development

Research phase expenditure is expensed as incurred. Development expenditure is capitalized as an internally generated intangible asset only if it meets strict criteria, relating in particular to technical feasibility and generation of future economic benefits. Research expenses have been immaterial to date. The Group has not capitalized any development expenses to date.

3. Financial risk management

Risk management principles and processes

The Group’s activities are exposed to a variety of financial risks. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize the Group’s capital costs by using suitable means of financing and to manage and control the Group’s financial risks effectively. The Group uses financial instruments to hedge certain risk exposures.

The Group’s approach to the identification, assessment and mitigation of risk is carried out by a Risk and Commercial Committee, which focuses on timely and appropriate management of risk. This Risk and Commercial Committee has overall accountability for the identification and management of risk across the Group.

The principal financial risks arising from financial instruments are raw material price risk, end-product price risk, exchange rate risk, interest rate risk, liquidity risk and credit risk. This section provides a description of the principal risks and uncertainties that could have a material adverse effect on the Group’s strategy, performance, results of operations and financial condition. The principal risks and uncertainties facing the business, set out below, do not appear in any particular order of potential materiality or probability of occurrence.

• Exchange rate risk

The Group’s cash flows, statement of income and statement of financial position are presented in US dollars and may be affected by fluctuations in exchange rates. Currency risks as defined by IFRS 7 arise on account of monetary assets and liabilities being denominated in a currency that is not the functional currency.

A significant majority of the Group’s business activities is conducted in the respective functional currencies of the subsidiaries (primarily the Brazilian Reais and the Argentine Peso). However, it transacts in currencies other than the respective functional currencies of the subsidiaries. To date, transactions denominated in currencies other than the respective functional currencies are denominated in US dollars. There are monetary balances held by the Group companies at each year-end that are denominated in US dollars (non-functional currency).

The Group’s net financial position exposure to the US dollar is managed on a case-by-case basis, partly by hedging certain expected cash flows with foreign exchange derivative contracts.

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

F - 27

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

3. Financial risk management (continued)

The following tables show the Group’s net monetary position broken down by various currencies for each functional currency in which the Group operates for all the years presented. All amounts are shown in US dollars.

		2013
		Functional currency
Net monetary position (Liability)/ Asset		Argentine Peso				Brazilian Reais				Uruguayan Peso				US Dollar				Total
Argentine Peso			(45,397	)			—				—				—				(45,397	)
Brazilian Reais			—				(297,547	)			—				—				(297,547	)
US Dollar			(71,582	)			(159,503	)			27,759				110,533				(92,793	)
Uruguayan Peso			—				—				(971	)			—				(971	)
Total			(116,979	)			(457,050	)			26,788				110,533				(436,708	)

		2012
		Functional currency
Net monetary position (Liability)/ Asset		Argentine Peso				Brazilian Reais				Uruguayan Peso				US Dollar				Total
Argentine Peso			(38,035	)			—				—				—				(38,035	)
Brazilian Reais			—				(256,484	)			—				—				(256,484	)
US Dollar			(131,754	)			(85,902	)			18,031				157,479				(42,146	)
Uruguayan Peso			—				—				(287	)			—				(287	)
Total			(169,789	)			(342,386	)			17,744				157,479				(336,952	)

The Group’s analysis shown on the tables below is carried out based on the exposure of each functional currency subsidiary against the US dollar. The Group estimated that, other factors being constant, a 10% appreciation of the US dollar against the respective functional currencies for the years ended December 31, 2013, and 2012 would have increased the Group’s Loss Before Income Tax for the year. A 10% depreciation of the US dollar against the functional currencies would have an equal and opposite effect on the income statement. A portion of this effect would be recognized as other comprehensive income since a portion of the Company’s borrowings was used as cash flow hedge of the foreign exchange rate risk of a portion of its highly probable future sales in US dollars (see Hedge Accounting—Cash Flow Hedge below for details).

		2013
		Functional currency
Net monetary position		Argentine Peso				Brazilian Reais				Uruguayan Peso				US Dollar				Total
Argentine Peso			n/a				—				—				—				—
Brazilian Reais			—				n/a				—				—				—
US Dollar			(7,158	)			(15,951	)			2,776				—				(20,333	)
Uruguayan Peso			—				—				n/a				—				—
(Decrease) Increase in Profit Before Income Tax			(7,158	)			(15,951	)			2,776				—				(20,333	)

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

F - 28

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

3. Financial risk management (continued)

		2012
		Functional currency
Net monetary position		Argentine Peso				Brazilian Reais				Uruguayan Peso				US Dollar				Total
Argentine Peso			n/a				—				—				—				—
Brazilian Reais			—				n/a				—				—				—
US Dollar			(13,175	)			(8,590	)			1,803				n/a				(19,962	)
Uruguayan Peso			—				—				n/a				—				—
(Decrease) Increase in Profit Before Income Tax			(13,175	)			(8,590	)			1,803				—				(19,962	)

The tables above only consider the effect of a hypothetical appreciation / depreciation of the US dollars on our net financial position. A hypothetical appreciation / depreciation of the US dollar against the functional currencies of the Company’s subsidiaries has historically had a positive / negative effect, respectively, on the fair value of the Company’s biological assets and the end prices of the Company’s agriculture produce, both of which are generally linked to the US dollar.

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.

Principal amounts of long-term borrowings (non-derivative financial instruments) and notional values of foreign currency forward contracts (derivative financial instruments) were designated as hedging instruments. These instruments are exposed to Brazilian Reais/ US dollar foreign currency risks related to the operations in Brazil and to Argentine Peso/ US dollar foreign currency risks related to the operations in Argentina. Approximately 23.6 % of projected sales qualify as highly probable forecast transactions for hedge accounting purposes and were designated as hedged items.

The Group has prepared formal documentation in order to support the designation above, including an explanation of how the designation of the hedging relationship is aligned with the Group’s Risk Management Policy objective and strategy, identification of the hedging instrument, the hedged transactions, the nature of the risk being hedged and an analysis which demonstrates that the hedge is expected to be highly effective. The Group reassesses the prospective and retrospective effectiveness of the hedge on an ongoing basis comparing the foreign currency component of the carrying amount of the hedging instruments and of the highly probable future sales.

Cash flow hedge accounting permits that gains and losses arising from the effect of changes in foreign currency exchange rates on derivative and non-derivative hedging instruments not be immediately recognized in profit or loss, but be reclassified from equity to profit or loss in the same periods during which the future sales occur, thus allowing for a more appropriate presentation of the results for the period reflecting the strategy in the Group’s Risk Management Policy.

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

F - 29

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

3. Financial risk management (continued)

The Company expects that the cash flows will occur and affect profit or loss between 2014 and 2020.

For the year ended December 31, 2013, a total amount before income tax of US$ 26,694 was recognized in other comprehensive income and an amount of US$ (2,560) loss was reclassified from equity to profit or loss within “Financial results, net”.

• Raw material price risk

Inflation in the costs of raw materials and goods and services from industry suppliers and manufacturers presents risks to project economics. A significant portion of the Group’s cost structure includes the cost of raw materials primarily seeds, fertilizers and agrochemicals, among others. Prices for these raw materials may vary significantly.

• End-product price risk

Prices for commodities products have historically been cyclical, reflecting overall economic conditions and changes in capacity within the industry, which affect the profitability of entities engaged in the agribusiness industry. The Group’s commercial team combines different actions to minimize price risk. A percentage of crops are to be sold during and post harvest period. The Group manages minimum and maximum prices for each commodity as well as gross margin per each crop as to decide when and how to sell. End-product price risks are hedged if economically viable and possible by entering into forward contracts with major trading houses or by using derivative financial instruments, consisting mainly of crops, sugar and coffee future contracts, but also includes occasionally put and call options. A movement in end-product futures prices would result in a change in the fair value of the end product hedging contracts. These fair value changes, after taxes, are recorded in the statement of income.

Contract positions are designed to ensure that the Group would receive a defined minimum price for certain quantities of its production. The counterparties to these instruments generally are major financial institutions. In entering into these contracts, the Group has assumed the risk that might arise from the possible inability of counterparties to meet the terms of their contracts. The Group does not expect any material losses as a result of counterparty defaults. The Group is also obliged to pay margin deposits and premiums for these instruments. These estimates represent only the sensitivity of the financial instruments to market risk and not the Group exposure to end product price risks as a whole, since the crops and cattle products sales are not financial instruments within the scope of IFRS 7 disclosure requirements.

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

F - 30

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

3. Financial risk management (continued)

• Liquidity risk

The Group is exposed to liquidity risks, including risks associated with refinancing borrowings as they mature, the risk that borrowing facilities are not available to meet cash requirements and the risk that financial assets cannot readily be converted to cash without loss of value. Failure to manage financing risks could have a material impact on the Group’s cash flow and statement of financial position.

Prudent liquidity risk management includes managing the profile of debt maturities and funding sources close oversight of cash flows projections, maintaining sufficient cash, and ensuring the availability of funding from an adequate amount of committed credit facilities and the ability to close out market positions. The Group’s ability to fund its existing and prospective debt requirements is managed by maintaining diversified funding sources with adequate available funding lines from high quality lenders; and reaching to have long-term financial facilities.

As of December 31, 2013, cash and cash equivalent of the Group totaled U$S 232.1 million, which could be used for managing liquidity risk.

The tables below analyzes the Group’s non-derivative financial liabilities and derivative financial liabilities into relevant maturity groupings based on the remaining period at the statement of financial position to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows and as a result they do not reconcile to the amounts disclosed on the statement of financial position except for short-term payables when discounting is not applied.

At 31 December 2013		Less than 1 year				Between 1 and 2 years				Between 2 and 5 years				Over 5 Years				Total
Trade and other payables			86,962				587				2,091				268				89,908
Borrowings (excluding finance lease liabilities)			190,244				176,826				296,639				111,536				775,245
Finance leases			405				248				163				—				816
Derivative financial instruments			12,600				—				—				—				12,600
Total			290,211				177,661				298,893				111,804				878,569
At 31 December 2012		Less than 1 year				Between 1 and 2 years				Between 2 and 5 years				Over 5 Years				Total
Trade and other payables			67,119				1,757				26,814				1,280				96,970
Borrowings (excluding finance lease liabilities)			208,590				118,623				227,861				53,861				608,935
Finance leases			517				432				341				—				1,290
Derivative financial instruments			5,751				—				—				—				5,751
Total			281,977				120,812				255,016				55,141				712,946

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

F - 31

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

3. Financial risk management (continued)

• Interest rate risk

The Group’s financing costs may be significantly affected by interest rate volatility. Borrowings under the Group’s interest rate management policy may be fixed or floating rate. The Group maintains adequate committed borrowing facilities and holds most of its financial assets primarily in short-term, highly liquid investments that are readily convertible to known amounts of cash.

The Group’s interest rate risk arises from long-term borrowings. Borrowings issued at floating rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. The interest rate profile of the Group’s borrowings is set out in Note 21.

The Group occasionally manages its cash flow interest rate risk exposure by using floating-to-fixed interest rate swaps. Such interest rate swaps have the economic effect of converting borrowings from floating rates to fixed rates.

The following tables show a breakdown of the Group’s fixed-rate and floating-rate borrowings per currency denomination and functional currency of the subsidiary issuing the loans (excluding finance leases). These analyses are performed after giving effect to interest rate swaps.

The analysis for the year ended December 31, 2013 is as follows (all amounts are shown in US dollars):

		2013
		Functional currency
Rate per currency denomination		Argentine Peso				Brazilian Reais				Uruguayan Peso				Total
Fixed rate:
Argentine Peso			30,426				—				—				30,426
Brazilian Reais			—				184,958				—				184,958
US Dollar			35,279				15,424				15				50,718
Uruguayan Peso			—				—				—				—
Subtotal Fixed-rate borrowings			65,705				200,382				15				266,102
Variable rate:
Brazilian Reais			—				187,071				—				187,071
US Dollar			38,351				167,868				—				206,219
Subtotal Variable-rate borrowings			38,351				354,939				—				393,290
Total borrowings as per analysis			104,056				555,321				15				659,392
Finance leases			710				29				—				739
Total borrowings as per statement of financial position			104,766				555,350				15				660,131

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

F - 32

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

3. Financial risk management (continued)

The analysis for the year ended December 31, 2012 is as follows (all amounts are shown in US dollars):

		2012
		Functional currency
Rate per currency denomination		Argentine Peso				Brazilian Reais				Uruguayan Peso				Total
Fixed rate:
Argentine Peso			18,039				—				—				18,039
Brazilian Reais			—				119,340				—				119,340
US Dollar			70,221				—				501				70,722
Uruguayan Peso			—				—				44				44
Subtotal Fixed-rate borrowings			88,260				119,340				545				208,145
Variable rate:
Brazilian Reais			—				197,171				—				197,171
US Dollar			52,112				80,584				—				132,696
Subtotal Variable-rate borrowings			52,112				277,755				—				329,867
Total borrowings as per analysis			140,372				397,095				545				538,012
Finance leases			1,046				75				—				1,121
Total borrowings as per statement of financial position			141,418				397,170				545				539,133

For the years ended December 31, 2013 and 2012, if interest rates on floating-rate borrowings had been 1% higher with all other variables held constant, the Group’s (Loss) / Profit Before Income Tax for the years would have (increased) / decreased as shown below. A 1% decrease in interest rates would have an equal and opposite effect on the income statement.

		2013
		Functional currency
Rate per currency denomination		Argentine Peso				Brazilian Reais				Uruguayan Peso				Total
Variable rate:
Brazilian Reais			—				(1,871	)			—				(1,871	)
US Dollar			(384	)			(1,679	)			—				(2,063	)
Total effects on Profit Before Income Tax			(384	)			(3,550	)			—				(3,934	)

		2012
		Functional currency
Rate per currency denomination		Argentine Peso				Brazilian Reais				Uruguayan Peso				Total
Variable rate:
Brazilian Reais			—				(1,972	)			—				(1,972	)
US Dollar			(521	)			(806	)			—				(1,327	)
Total effects on Profit Before Income Tax			(521	)			(2,778	)			—				(3,299	)

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

F - 33

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

3. Financial risk management (continued)

The sensitivity analysis has been determined assuming that the change in interest rates had occurred at the date of the statement of financial position and had been applied to the exposure to interest rate risk for financial instruments in existence at that date. The 100 basis point increase or decrease represents management’s assessment of a reasonable possible change in those interest rates, which have the most impact on the Group, specifically the United States and Brazilian rates over the period until the next annual statement of financial position date.

• Credit risk

The Group’s exposures to credit risk takes the form of a loss that would be recognized if counterparties failed to, or were unable to, meet their payment obligations. These risks may arise in certain agreements in relation to amounts owed for physical product sales, the use of derivative instruments, and the investment of surplus cash balances. The Group is also exposed to political and economic risk events, which may cause non-payment of foreign currency obligations to the Group. The current credit crisis could also lead to the failure of companies in the sector, potentially including customers, partners, contractors and suppliers.

The Group is subject to credit risk arising from outstanding receivables, cash and cash equivalents and deposits with banks and financial institutions, and from the use of derivative financial instruments. The Group’s policy is to manage credit exposure to trading counterparties within defined trading limits. All of the Group’s significant counterparties are assigned internal credit limits.

The Group sells manufactured products, agricultural products and offers services to a large base of customers. Type and class of customers may differ depending on the Group’s business segments. For the years ended December 31, 2013 and 2012, more than 78% and 55% of the Group’s sales of crops were sold to 35 and 11 well-known customers (both multinational or local) with good credit history with the Group. In the Sugar, Ethanol and Energy segment, sales of ethanol were concentrated in 21 and 10 customers, which represented 94% and 89% of total sales of ethanol for the years ended December 31, 2013 and 2012, respectively. Approximately 83% and 79% of the Group’s sales of sugar were concentrated in 6 and 5 well-known traders for the years ended December 31, 2013 and 2012, respectively. The remaining 17% and 21%, which mainly relates to “crystal sugar”, were dispersed among several customers. In 2013 and 2012, energy sales are 95% and 100% concentrated in 4 and 3 major customers. In the dairy segment, 55% and 43% of the sales were concentrated in 4 and 1 well-known customers.

No credit limits were exceeded during the reporting periods and management does not expect any losses from non-performance by these counterparties. If any of the Group’s customers are independently rated, these ratings are used. Otherwise, if there is no independent rating, the Group assesses the credit quality of the customer taking into account its financial position, past experience and other factors (see Note 13 for details). The Group may seek cash collateral, letter of credit or parent company guarantees, as considered appropriate. Sales to customers are primarily made by credit with customary payment terms. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the statement of financial position after deducting any impairment allowance. The Group’s exposure of credit risk arising from trade receivables is set out in Note 13.

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

F - 34

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

3. Financial risk management (continued)

The Group is exposed to counterparty credit risk on cash and cash equivalent balances. The Group holds cash on deposit with a number of financial institutions. The Group manages its credit risk exposure by limiting individual deposits to clearly defined limits. The Group only deposits with high quality banks and financial institutions. The maximum exposure to credit risk is represented by the carrying amount of cash and cash equivalents in the statement of financial position. As of December 31, 2013 and 2012, the total amount of cash and cash equivalents mainly comprise cash in banks and short-term bank deposits. The Group is authorized to transact with banks rated “BBB+” or higher. As of December 31, 2013 and 2012, 7 and 8 banks (primarily HSBC, Rabobank, Banco do Brasil, Votorantim, Itau, Citibank, and ABC Brasil) accounted for more than 85% of the total cash deposited. The remaining amount of cash and cash equivalents relates to cash in hand. Additionally, during the year ended December 31, 2013, the Group invested in fixed-term bank deposits with mainly four banks (Banco do Brasil, Itau, Votorantim and ABC Brasil) and also entered into derivative contracts (currency forward). The Group does not have investment in securities or other financial instruments for which risk may have increased due to the financial credit crisis. The Group’s exposure of credit risk arising from cash and cash equivalents is set out in Note 15.

The Group’s primary objective for holding derivative financial instruments is to manage currency exchange rate risk, interest rate risk and commodity price risk. The Group generally enters into derivative transactions with high-credit-quality counterparties and, by policy, limits the amount of credit exposure to any one counterparty based on an analysis of that counterparty’s relative credit standing. The amounts subject to credit risk related to derivative instruments are generally limited to the amounts, if any, by which counterparty’s obligations exceed the obligations with that counterparty.

Similarly, transactions involving derivative financial instruments are with counterparties with high credit ratings (see Note 12 for details). The Group arranged interest rate swaps with Rabobank, BGT Pactual, HSBC and Votorantim in Brazil and Rabobank in Argentina. The Group also entered into crop commodity futures traded in the established trading markets of Argentina and Brazil through well-rated brokers. Management does not expect any counterparty to fail to meet its obligations.

• Capital risk management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, it may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio. This ratio is calculated as total debt (including current and non-current borrowings as shown in the consolidated statement of financial position, if applicable) divided by total capital. Total capital is calculated as equity, as shown in the consolidated statement of financial position, plus total debt. During the year ended December 31, 2013, the strategy was to maintain the gearing ratio within 0.18 to 0.50, as follows:

		2013				2012
Total Debt			660,131				539,133
Total Equity			854,349				1,026,043
Total Capital			1,514,480				1,565,176
Gearing Ratio			0.44				0.34

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

F - 35

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

3. Financial risk management (continued)

• Derivative financial instruments

As part of its business operations, the Group uses a variety of derivative financial instruments to manage its exposure to the financial risks discussed above. The primary objective for holding derivative financial instruments is to manage currency exchange rate risk, interest rate risk and commodity price risk. As part of this strategy, the Group may enter into (i) interest rate derivatives to manage the composition of floating and fixed rate debt; (ii) currency derivatives to manage the currency composition of its cash and cash equivalents; and (iii) crop future contracts and put and call options to manage its exposure to price volatility stemming from its integrated crop production activities. The Group’s policy is not to use derivatives for speculative purposes.

Derivative financial instruments involve, to a varying degree, elements of market and credit risk not recognized in the financial statements. The market risk associated with these instruments resulting from price movements is expected to offset the market risk of the underlying transactions, assets and liabilities, being hedged. The counterparties to the agreements relating to the Group’s contracts generally are large institutions with credit ratings equal to or higher than BBB+. The Group continually monitors the credit rating of such counterparties and seeks to limit its financial exposure to any one financial institution. While the contract or notional amounts of derivative financial instruments provide one measure of the volume of these transactions, they do not represent the amount of the Group’s exposure to credit risk. The amounts potentially subject to credit risk (arising from the possible inability of counterparties to meet the terms of their contracts) are generally limited to the amounts, if any, by which the counterparties’ obligations under the contracts exceed the Group’s obligations to the counterparties.

The following tables show the outstanding positions for each type of derivative contract as of the date of each statement of financial position:

• Futures/ options

As of December 31, 2013:

		2013
Type of derivative contract		Quantities (thousands) (**)				Notional amount				Fair Value Asset/ (Liability)				(Loss)/Gain (*)
Futures:
Sale
Corn			19				3,054				22				22
Soybean			74				26,092				310				310
Wheat			89				15,883				859				859
Sugar			138				53,518				2,187				2,187
OTC:
Soybean			14				6,400				190				190
Options:
Buy put
Soybean			38				348				534				186
Sell call
Soybean			1				(7	)			(7	)			—
Sell put
Soybean			51				(160	)			(190	)			(30	)
Total			424				105,128				3,905				3,724

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

F - 36

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

3. Financial risk management (continued)

As of December 31, 2012:

Type of derivative contract		2012
		Quantities (thousands) (**)				Notional amount				Fair Value Asset/ (Liability)				(Loss)/Gain (*)
Futures:
Sale
Corn			99				24,472				1,082				1,082
Soybean			30				10,161				363				363
Wheat			3				484				(153	)			(153	)
Sugar			197				89,281				2,423				2,266
Ethanol (thousands m3)			8				4,723				(40	)			(40	)
Coffee			1				764				63				63
OTC:
Sugar			24				7,671				1,151				1,028
Options:
Buy put
Sugar			24				1,476				725				(43	)
Sell call
Corn			2				17				(30	)			(13	)
Sugar			21				1,393				(916	)			(317	)
Total			409				140,442				4,668				4,236

(*) Included in the line item “Gain from commodity derivative financial instruments” of Note 28.

(**) All quantities expressed in tons except otherwise indicated.

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

• Floating-to-fixed interest rate swaps

Commencing in May 2012, the Group then entered into a US$ 60 million floating-to-fixed interest rate forward swap expiring November 15, 2016 expecting to hedge against the variability of the cash flows of the new IDB Tranche B facility (see Note 21). The redefined facility comprises a five-year US$ 60 million loan bearing interest at 180-day LIBOR plus 4.45% per annum (fixed interest rate: 5.70%).

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

F - 37

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

3. Financial risk management (continued)

The Group did not apply hedge accounting to any of these agreements. As of December 31, 2013 and 2012, the Group recorded a liability of US$ 0.60 million and US$ 0.22 million, respectively, the estimated fair value of the outstanding swaps at those dates.

• Foreign currency fixed-to-floating interest rate swap

In August and September 2012 the Group’s subsidiary in Brazil, Adecoagro Vale do Ivinhema entered into a interest rate swap operation with Deutsche Bank in an aggregate amount of US$ 30 million (US$ 15 million per month). In those operations Adecoagro Vale do Ivinhema receives exchange variation plus 4.37% per year, and pays CDI (an interbank floating interest rate in Reais) plus 2% per year, and at the same time convert the currency interest payment into Reais at a fixed exchange rate. The Group did not apply hedge accounting to this instrument. This swap expired on June 2013.

• Foreign currency floating-to-fixed interest rate swap

In June 2012 the Group’s subsidiary in Brazil, Adecoagro Vale do Ivinhema entered into a Reais 230 million syndicated loan with Rabobank International Brasil, BGT Pactual, HSBC and Votorantim. The loan bears interest at a variable rate of CDI plus 3.60% per annum. At same moment and with same banks, the Company entered into a swap operation, which intention is to effectively convert the principal amount and interest rate denominated in Reais, to a principal amount an interest rate denominated in US$, plus a fixed rate of 7.70% per annum. The swap expires according to the due dates of the loan, until December 2015. As of December 31, 2013 and 2012, the Group recorded a liability of US$ 10.06 and US$ 0.33 million representing the estimated fair value of the swap as of that date.

• Currency forward

During the years ended December 31, 2013, 2012 and 2011, the Group entered into several currency forward contracts with Brazilian banks in order to hedge the fluctuation of the Brazilian Reais against the US Dollar for a total aggregate amount of US$ 12.5 million, US$ 56.9 million, and US$ 58.5 million, respectively. The currency forward contract entered in 2013 and outstanding as of December 31, 2013 has maturity date in June 2014, while those entered in 2012 had maturity dates ranging between June 2013 and December 2013, and those entered in 2011 had maturity dates ranging between February 2012 and December 2012. The outstanding contracts resulted in a recognition of a loss of US$ 3.1 million in 2013 and of a gain of US$ 0.8 million in 2012 and a loss of US$ 8.5 million in 2011. Gains and losses on currency forward contracts are included within “Financial results, net” in the statement of income.

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

F - 38

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

4. Critical accounting estimates and judgments

Critical accounting policies are those that are most important to the portrayal of the Group’s financial condition, results of operations and cash flows, and require management to make difficult, subjective or complex judgments and estimates about matters that are inherently uncertain. Management bases its estimates on historical experience and other assumptions that it believes are reasonable. The Group’s critical accounting policies are discussed below.

Actual results could differ from estimates used in employing the critical accounting policies and these could have a material impact on the Group’s results of operations. The Group also has other policies that are considered key accounting policies, such as the policy for revenue recognition. However, these other policies, which are discussed in the notes to the Group’s financial statements, do not meet the definition of critical accounting estimates, because they do not generally require estimates to be made or judgments that are difficult or subjective.

(a) Business combinations – purchase price allocation

Accounting for business combinations requires the allocation of the Group’s purchase price to the various assets and liabilities of the acquired business at their respective fair values. The Group uses all available information to make these fair value determinations, and for major acquisitions, may hire an independent appraisal firm to assist in making fair value estimates. In some instances, assumptions with respect to the timing and amount of future revenues and expenses associated with an asset might have to be used in determining its fair value. Actual timing and amount of net cash flows from revenues and expenses related to that asset over time may differ materially from those initial estimates, and if the timing is delayed significantly or if the net cash flows decline significantly, the asset could become impaired.

(b) Impairment testing

At the date of each statement of financial position, the Group reviews the carrying amounts of its property, plant and equipment and finite lived intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent, if any, of the impairment loss. Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. The Group’s property, plant and equipment items generally do not generate independent cash flows.

Goodwill on acquisition is initially measured at cost (see Note 2.8). As of the acquisition date, any goodwill acquired is allocated to the cash-generating unit (‘CGU’) expected to benefit from the business combination.

Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is tested for impairment annually as of September of each year, or more frequently if events or changes in circumstances indicate that the carrying amount may be impaired. The impairment review requires management to undertake certain judgments, including estimating the recoverable value of the CGU to which the goodwill relates, based on either fair value less costs-to-sell or the value-in-use, as appropriate, in order to reach a conclusion on whether it deems the goodwill is impaired or not.

For purposes of the impairment testing, each CGU represents the smallest identifiable group of assets that generate cash inflows that are largely independent of the cash inflows from other assets or group of assets.

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

F - 39

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

4. Critical accounting estimates and judgments (continued)

Farmland businesses may be used for different activities that may generate independent cash flows. When farmland businesses are used for single activities (i.e. crops), these are considered as one CGU. Generally, each separate farmland business within Argentina and Uruguay are treated as single CGUs. Otherwise, when farmland businesses are used for more than one segment activity (i.e. crops and cattle or rental income), the farmland is further subdivided into two or more CGUs, as appropriate, for purposes of impairment testing. For its properties in Brazil, management identified a farmland together with its related mill as separate CGUs.

Management reviewed the carrying amounts of its property, plant and equipment and finite lived intangible assets as of December 31, 2013 to determine whether there was any indication of potential impairment. Management concluded that no impairment testing for property, plant and equipment and finite lived intangible assets was necessary as of year-end. As regards the mandatory impairment testing of goodwill, management tested all CGUs with allocated goodwill in Argentina, Uruguay and Brazil as of September 30, 2013 and determined that none of the CGUs were impaired as of that date. There were no events or changes in circumstances, which would warrant an impairment testing of goodwill as of December 31, 2013.

CGUs tested based on a fair-value-less-costs-to-sell model at September 30, 2013 and 2012:

Based on the criteria described above, management identified a total amount of forty-one CGUs as of September 30, 2013 and forty-three CGUs as of September 30, 2012 for purposes of the impairment testing.

As of September 30, 2013, the Group identified 10 CGUs in Argentina and Uruguay (2012: 10 CGUs) to be tested based on this model (all CGUs with allocated goodwill). Estimating the fair value less costs-to-sell is based on the best information available, and refers to the amount at which the CGU could be bought or sold in a current transaction between willing parties. In calculating the fair value less costs-to-sell, management may be assisted by the work of external advisors. When using this model, the Group applies the “sales comparison approach” as its method of valuing most properties. This method relies on results of sales of similar agricultural properties to estimate the value of the CGU. This approach is based on the theory that the fair value of a property is directly related to the selling prices of similar properties.

Fair values are determined by extensive analysis, which includes current and potential soil productivity of the land (the ability to produce crops and maintain livestock) projected margins derived from soil use, rental value obtained for soil use, if applicable, and other factors such as climate and location. Farmland ratings are established by considering such factors as soil texture and quality, yields, topography, drainage and rain levels. Farmland may contain farm outbuildings. A farm outbuilding is any improvement or structure that is used for farming operations. Outbuildings are valued based on their size, age and design.

Based on the factors described above, each farm property is assigned different soil classifications for the purposes of establishing a value. Soil classifications quantify the factors that contribute to the agricultural capability of the soil. Soil classifications range from the most productive to the least productive.

The first step to establishing an assessment for a farm property is a sales investigation that identifies the valid farm sales in the area where the farm is located.

A price per hectare is assigned for each soil class within each farm property. This price per hectare is determined based on the quantitative and qualitative analysis mainly described above.

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

F - 40

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

4. Critical accounting estimates and judgments (continued)

The results are then tested against actual sales, if any, and current market conditions to ensure the values produced are accurate, consistent and fair.

The following table shows only the 10 CGUs (2012: 10 CGUs) where goodwill was allocated at each period end and the corresponding amount of goodwill allocated to each one:

CGU / Operating segment / Country		September 30, 2013				September 30, 2012
La Carolina / Crops / Argentina			30				149
La Carolina / Cattle / Argentina			111				24
El Orden / Crops / Argentina			109				182
El Orden / Cattle / Argentina			63				30
La Guarida / Crops / Argentina			1,677				2,179
La Guarida / Cattle / Argentina			265				216
Los Guayacanes / Crops / Argentina			1,349				1,664
Doña Marina / Rice / Argentina			4,765				5,877
Huelen / Crops / Argentina			5,339				6,585
El Colorado / Crops / Argentina			2,694				3,323
Closing net book value of goodwill allocated to CGUs tested (Note 8)			16,402				20,229
Closing net book value of PPE items and other assets allocated to CGUs tested			80,385				99,413
Total assets allocated to CGUs tested			96,787				119,642

Based on the testing above, the Group determined that none of the CGUs, with allocated goodwill, were impaired at September 30, 2013 and 2012.

CGUs tested based on a value-in-use model at September 30, 2013 and 2012:

Based on the criteria described above, management identified a total amount of forty-one CGUs as of September 30, 2013 and forty-three CGUs as of September 30, 2012 for purposes of the impairment testing.

As of September 30, 2013, the Group identified 3 CGUs (2012: 3 CGUs) in Brazil to be tested base on this model (all CGUs with allocated goodwill). In performing the value-in-use calculation, the Group applied pre-tax rates to discount the future pre-tax cash flows. In each case, these key assumptions have been made by management reflecting past experience and are consistent with relevant external sources of information, such as appropriate market data. In calculating value-in-use, management may be assisted by the work of external advisors.

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

F - 41

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

4. Critical accounting estimates and judgments (continued)

The key assumptions used by management in the value-in-use calculations which are considered to be most sensitive to the calculation are:

Key Assumptions		September 30, 2013		September 30, 2012
Financial projections		Covers 4 years for UMA		Covers 4 years for UMA
		Covers 8 years for AVI		Covers 8 years for AVI
Yield average growth rates		0-3%		0-3%
Future pricing increases		3% per annum		3% per annum
Future cost increases		3% per annum		3% per annum
Discount rates		7.65%		9.16%
Perpetuity growth rate		4.5%		4.5%

Discount rates are based on the risk-free rate for U.S. government bonds, adjusted for a risk premium to reflect the increased risk of investing in South America and Brazil in particular. The risk premium adjustment is assessed for factors specific to the respective CGUs and reflects the countries that the CGUs operate in.

The following table shows only the 3 CGUs where goodwill was allocated at each period end and the corresponding amount of goodwill allocated to each one:

CGU/ Operating segment		September 30, 2013				September 30, 2012
AVI / Sugar, Ethanol and Energy			7,121				7,820
UMA / Sugar, Ethanol and Energy			2,671				2,933
UMA (f.k.a. Alfenas Café Ltda) / Coffee			1,017				1,099
Closing net book value of goodwill allocated to CGUs tested (Note 8)			10,809				11,852
Closing net book value of PPE items and other assets allocated to CGUs tested			559,332				517,052
Total assets allocated to 3 CGUs tested			570,141				528,904

Based on the testing above, the Group determined that none of the CGUs, with allocated goodwill, were impaired at September 30, 2013 and 2012.

Management views these assumptions as conservative and does not believe that any reasonable change in the assumptions would cause the carrying value of these CGU’s to exceed the recoverable amount.

(c) Biological assets

The nature of the Group’s biological assets and the basis of determination of their fair value are explained under Note 2.11. The discounted cash flow model requires the input of highly subjective assumptions including observable and unobservable data. Generally the estimation of the fair value of biological assets is based on models or inputs that are not observable in the market and the use of unobservable inputs is significant to the overall valuation of the assets. Unobservable inputs are determined based on the best information available, for example by reference to historical information of past practices and results, statistical and agronomical information, and other analytical techniques. Key assumptions include future market prices, estimated yields at the point of harvest, estimated production cycle, future cash flows, future costs of harvesting and other costs, and estimated discount rate. ,

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

F - 42

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

4. Critical accounting estimates and judgments (continued)

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

The key assumptions discussed above are highly sensitive. Reasonable shifts in assumptions including but not limited to increases or decreases in prices, costs and discount factors used would result in a significant increase or decrease to the fair value of biological assets. In addition, cash flows are projected over a number of years and based on estimated production. Estimates of production in themselves are dependent on various assumptions, in addition to those described above, including but not limited to several factors such as location, environmental conditions and other restrictions. Changes in these estimates could materially impact on estimated production, and could therefore affect estimates of future cash flows used in the assessment of fair value.

(d) Fair value of derivatives and other financial instruments

Fair values of derivative financial instruments are computed with reference to quoted market prices on trade exchanges, when available. The fair values of commodity options are calculated using year-end market rates together with common option pricing models. The fair value of interest rate swaps has been calculated using a discounted cash flow analysis.

(e) Income taxes

The Group is subject to income taxes in numerous jurisdictions. Significant judgement is required in determining the worldwide provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain. The Group recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made.

Deferred tax assets are reviewed each reporting date and reduced to the extent that it is no longer probable that sufficient taxable income will be available to allow all or part of the asset to be settled. Deferred tax assets and liabilities are not discounted. In assessing the recoverability of deferred tax assets, management considers whether it is probable that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. (see Note 22 for details).

(f) Allowance for trade receivables

Management maintains an allowance for trade receivables to account for estimated losses resulting from the inability of customers to make required payments. When evaluating the adequacy of an allowance for trade receivables, management bases its estimates on the aging of accounts receivable balances and historical write-off experience, customer credit worthiness and changes in customer payment terms. If the financial condition of customers were to deteriorate, actual write-offs might be higher than expected.

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

F - 43

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

5. Segment information

IFRS 8 “Operating Segments” requires an entity to report financial and descriptive information about its reportable segments, 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 Land Transformation.

• The Group’s ‘Farming’ is further comprised of five reportable segments:

• The Group’s ‘Crops’ Segment consists of planting, harvesting and sale of grains, oilseeds and fibers (including wheat, corn, soybeans, cotton and sunflowers, among others), and to a lesser extent the provision of grain warehousing/conditioning and handling and drying services to third parties. 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. A single manager is responsible for the management of operating activity of all crops rather than for each individual crop.

• The Group’s ‘Rice’ Segment consists of planting, harvesting, processing and marketing of rice;

• The Group’s ‘Dairy’ Segment consists of the production and sale of raw milk,

• The Group’s ‘Coffee’ Segment consists of cultivating coffee beans and marketing own and third party’s coffee production;

• The Group’s ‘Cattle’ Segment consists mainly in the lease of cattle grazing land (not suitable for crop production) to an international meat processor;

• 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 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).

The measurement principles for the Group’s segment reporting structure are based on the IFRS principles adopted in the consolidated financial statements. Revenue generated and goods and services exchanged between segments are calculated on the basis of market prices.

The following table presents information with respect to the Group’s reportable segments. Certain other activities of a holding function nature not allocable to the segments are disclosed in the column ‘Corporate’.

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

F - 44

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

5. Segment information (continued)

Segment analysis for the year ended December 31, 2013

		Farming																								Sugar, Ethanol and Energy				Land Transformation				Corporate				Total
		Crops				Rice				Dairy				Coffee				Cattle				Farming subtotal
Sales of manufactured products and services rendered			510				104,576				—				—				3,237				108,323				316,984				—				—				425,307
Cost of manufactured products sold and services rendered			—				(84,654	)			—				—				(89	)			(84,743	)			(187,518	)			—				—				(272,261	)
Gross Profit from Manufacturing Activities			510				19,922				—				—				3,148				23,580				129,466				—				—				153,046
Sales of agricultural produce and biological assets			184,607				2,517				30,661				439				616				218,840				477				—				—				219,317
Cost of agricultural produce sold and direct agricultural selling expenses			(184,607	)			(2,517	)			(30,661	)			(439	)			(616	)			(218,840	)			(477	)			—				—				(219,317	)
Initial recognition and changes in fair value of biological assets and agricultural produce			24,356				8,339				7,761				(8,332	)			(267	)			31,857				(70,980	)			—				—				(39,123	)
Changes in net realizable value of agricultural produce after harvest			12,607				—				—				121				—				12,728				147				—				—				12,875
Gross Profit / (loss) from Agricultural Activities			36,963				8,339				7,761				(8,211	)			(267	)			44,585				(70,833	)			—				—				(26,248	)
Margin on Manufacturing and Agricultural Activities Before Operating Expenses			37,473				28,261				7,761				(8,211	)			2,881				68,165				58,633				—				—				126,798
General and administrative expenses			(4,101	)			(4,424	)			(1,087	)			(1,119	)			—				(10,731	)			(19,434	)			—				(23,187	)			(53,352	)
Selling expenses			(6,236	)			(16,104	)			(454	)			(422	)			(75	)			(23,291	)			(44,571	)			—				(207	)			(68,069	)
Other operating income, net			7,632				438				494				(291	)			(1	)			8,272				13,290				28,172				(84	)			49,650
Share of loss of joint ventures			(219	)			—				—				—				—				(219	)			—				—				—				(219	)
Profit / (loss) from Operations Before Financing and Taxation			34,549				8,171				6,714				(10,043	)			2,805				42,196				7,918				28,172				(23,478	)			54,808
Profit from discontinued operations			—				—				1,767				—				—				1,767				—				—				—				1,767
Depreciation and amortization			(2,171	)			(4,731	)			(1,086	)			(375	)			(89	)			(8,452	)			(59,980	)			—				—				(68,432	)
Initial recognition and changes in fair value of biological assets (unrealized)			894				2,211				(234	)			(8,121	)			—				(5,250	)			(47,341	)			—				—				(52,591	)
Initial recognition and changes in fair value of agricultural produce (unrealized)			3,956				669				—				(211	)			—				4,414				(5,279	)			—				—				(865	)
Initial recognition and changes in fair value of biological assets and agricultural produce (realized)			19,506				5,459				7,995				—				(267	)			32,693				(18,360	)			—				—				14,333
Changes in net realizable value of agricultural produce after harvest (unrealized)			(292	)			—				—				—				—				(292	)			—				—				—				(292	)
Changes in net realizable value of agricultural produce after harvest (realized)			12,899				—				—				121				—				13,020				147				—				—				13,167
Property, plant and equipment, net			157,664				55,411				20,097				8,293				2,040				243,505				547,015				—				—				790,520
Investment property			—				—				—				—				10,147				10,147				—				—				—				10,147
Goodwill			9,956				4,233				—				978				389				15,556				9,313				—				—				24,869
Biological assets			35,982				30,596				9,450				1,944				396				78,368				213,776				—				—				292,144
Investment in joint ventures			3,179				—				—				—				—				3,179				—				—				—				3,179
Inventories			27,240				10,128				1,563				213				—				39,144				69,245				—				—				108,389
Total segment assets			234,021				100,368				31,110				11,428				12,972				389,899				839,349				—				—				1,229,248
Borrowings			68,886				41,906				10,477				—				—				121,269				538,862				—				—				660,131
Total segment liabilities			68,886				41,906				10,477				—				—				121,269				538,862				—				—				660,131

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

F - 45

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

5. Segment information (continued)

Segment analysis for the year ended December 31, 2012

		Farming																								Sugar, Ethanol and Energy				Land Transformation				Corporate				Total
		Crops				Rice				Dairy				Coffee				Cattle				Farming subtotal
Sales of manufactured products and services rendered			589				92,438				—				—				4,390				97,417				282,109				—				—				379,526
Cost of manufactured products sold and services rendered			—				(78,617	)			—				—				(230	)			(78,847	)			(185,131	)			—				—				(263,978	)
Gross Profit from Manufacturing Activities			589				13,821				—				—				4,160				18,570				96,978				—				—				115,548
Sales of agricultural produce and biological assets			195,617				1,466				18,868				8,363				637				224,951				223				—				—				225,174
Cost of agricultural produce sold and direct agricultural selling expenses			(195,617	)			(1,466	)			(18,868	)			(8,363	)			(637	)			(224,951	)			(223	)			—				—				(225,174	)
Initial recognition and changes in fair value of biological assets and agricultural produce			35,471				6,463				2,060				(4,196	)			(131	)			39,667				(23,024	)			—				—				16,643
Changes in net realizable value of agricultural produce after harvest			15,850				—				—				154				—				16,004				—				—				—				16,004
Gross Profit / (loss) from Agricultural Activities			51,321				6,463				2,060				(4,042	)			(131	)			55,671				(23,024	)			—				—				32,647
Margin on Manufacturing and Agricultural Activities Before Operating Expenses			51,910				20,284				2,060				(4,042	)			4,029				74,241				73,954				—				—				148,195
General and administrative expenses			(4,436	)			(4,072	)			(906	)			(1,082	)			(23	)			(10,519	)			(22,239	)			—				(24,933	)			(57,691	)
Selling expenses			(5,904	)			(16,157	)			(319	)			(304	)			(60	)			(22,744	)			(35,690	)			—				(168	)			(58,602	)
Other operating income, net			(9,330	)			1,065				22				2,387				(16	)			(5,872	)			9,797				27,513				(341	)			31,097
Profit / (loss) from Operations Before Financing and Taxation			32,240				1,120				857				(3,041	)			3,930				35,106				25,822				27,513				(25,442	)			62,999
Loss from discontinued operations			—				—				(4,040	)			—				—				(4,040	)			—				—				—				(4,040	)
Depreciation and amortization			(2,073	)			(3,823	)			(896	)			(587	)			(189	)			(7,568	)			(46,900	)			—				—				(54,468	)
Initial recognition and changes in fair value of biological assets (unrealized)			6,169				4,352				115				(2,615	)			—				8,021				(24,783	)			—				—				(16,762	)
Initial recognition and changes in fair value of agricultural produce (unrealized)			4,803				—				—				(1,581	)			—				3,222				205				—				—				3,427
Initial recognition and changes in fair value of biological assets and agricultural produce (realized)			24,499				2,111				1,945				—				(131	)			28,424				1,554				—				—				29,978
Changes in net realizable value of agricultural produce after harvest (unrealized)			877				—				—				1,147				—				2,024				—				—				—				2,024
Changes in net realizable value of agricultural produce after harvest (realized)			14,973				—				—				(993	)			—				13,980				—				—				—				13,980
Property, plant and equipment, net			200,223				68,527				22,047				21,081				11,065				322,943				557,954				—				—				880,897
Investment property			—				—				—				—				15,542				15,542				—				—				—				15,542
Goodwill			13,201				5,613				—				1,093				516				20,423				10,677				—				—				31,100
Biological assets			42,091				30,836				12,149				16,211				979				102,266				195,870				—				—				298,136
Investment in joint ventures			—				—				2,613				—				—				2,613				—				—				—				2,613
Financial assets			11,878				—				—				—				—				11,878				—				—				—				11,878
Inventories			29,731				12,411				2,376				2,562				—				47,080				48,241				—				—				95,321
Total segment assets			297,124				117,387				39,185				40,947				28,102				522,745				812,742				—				—				1,335,487
Borrowings			79,820				56,567				14,142				8,686				—				159,215				379,918				—				—				539,133
Total segment liabilities			79,820				56,567				14,142				8,686				—				159,215				379,918				—				—				539,133

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

F - 46

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

5. Segment information (continued)

Segment analysis for the year ended December 31, 2011

		Farming																								Sugar, Ethanol and Energy				Land Transformation				Corporate				Total
		Crops				Rice				Dairy				Coffee				Cattle				Farming subtotal
Sales of manufactured products and services rendered			557				82,523				—				713				4,746				88,539				277,318				—				—				365,857
Cost of manufactured products sold and services rendered			—				(68,721	)			—				(629	)			(408	)			(69,758	)			(167,646	)			—				—				(237,404	)
Gross Profit from Manufacturing Activities			557				13,802				—				84				4,338				18,781				109,672				—				—				128,453
Sales of agricultural produce and biological assets			147,389				721				19,697				13,457				963				182,227				—				—				—				182,227
Cost of agricultural produce sold and direct agricultural selling expenses			(147,389	)			(721	)			(19,697	)			(13,457	)			(963	)			(182,227	)			—				—				—				(182,227	)
Initial recognition and changes in fair value of biological assets and agricultural produce			38,014				10,139				6,939				(697	)			468				54,863				31,948				—				—				86,811
Gain from changes in net realizable value of agricultural produce after harvest			10,953				—				—				(430	)			—				10,523				—				—				—				10,523
Gross Profit / (loss) from Agricultural Activities			48,967				10,139				6,939				(1,127	)			468				65,386				31,948				—				—				97,334
Margin on Manufacturing and Agricultural Activities Before Operating Expenses			49,524				23,941				6,939				(1,043	)			4,806				84,167				141,620				—				—				225,787
General and administrative expenses			(8,003	)			(6,278	)			(1,173	)			(1,153	)			(269	)			(16,876	)			(21,082	)			—				(27,184	)			(65,142	)
Selling expenses			(2,270	)			(14,488	)			(401	)			(463	)			(74	)			(17,696	)			(41,708	)			—				—				(59,404	)
Other operating income, net			1,843				372				(2	)			2,020				(3	)			4,230				11,220				8,832				299				24,581
Profit / (loss) from Operations Before Financing and Taxation			41,094				3,547				5,363				(639	)			4,460				53,825				90,050				8,832				(26,885	)			125,822
Loss from discontinued operations			—				—				(1,034	)			—				—				(1,034	)			—				—				—				(1,034	)
Depreciation and amortization			(1,469	)			(3,105	)			(600	)			(530	)			(226	)			(5,930	)			(28,254	)			—				—				(34,184	)
Initial recognition and changes in fair value of biological assets (unrealized)			—				—				1,503				(1,394	)			—				109				8,797				—				—				8,906
Initial recognition and changes in fair value of agricultural produce (unrealized)			1,474				2,234				—				697				—				4,405				3,825				—				—				8,230
Initial recognition and changes in fair value of biological assets and agricultural produce (realized)			36,540				7,905				5,436				—				468				50,349				19,326				—				—				69,675
Gain from changes in net realizable value of agricultural produce after harvest (unrealized)			1,944				—				—				(128	)			—				1,816				—				—				—				1,816
Gain from changes in net realizable value of agricultural produce after harvest (realized)			9,009				—				—				(302	)			—				8,707				—				—				—				8,707

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

F - 47

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

5. Segment information (continued)

Total segment assets are measured in a manner consistent with that of the consolidated financial statements. These assets are allocated based on the operations of the segment and the physical location of the asset. The Group’s investment in CHS S.A. is allocated to the ‘Crops’ segment. Therefore, the Group’s share of profit or loss after income taxes and its carrying amount are reported in this segment.

Total reportable segments’ assets are reconciled to total assets as per the statement of financial position as follows:

		2013				2012
Total reportable assets as per Segment Information			1,229,248				1,335,487
Intangible assets (excluding goodwill)			2,472				1,780
Deferred income tax assets			48,368				35,391
Trade and other receivables			194,432				179,878
Other assets			707				1,398
Derivative financial instruments			4,102				5,212
Cash and cash equivalents			232,147				218,809
Total assets as per the Statement of Financial Position			1,711,476				1,777,955

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

Total reportable segments’ liabilities are reconciled to total liabilities as per the statement of financial position as follows:

		2013				2012
Total reportable liabilities as per Segment Information			660,131				539,133
Trade and other payables			95,916				104,260
Deferred income tax liabilities			57,623				75,389
Payroll and social liabilities			27,597				24,460
Provisions for other liabilities			2,950				2,732
Current income tax liabilities			310				187
Derivative financial instruments			12,600				5,751
Total liabilities as per the Statement of Financial Position			857,127				751,912

Non-current assets and net revenue and fair value gains and losses are shown by geographic region. These are the regions in which the Group is active: Argentina, Brazil and Uruguay. Non-current assets are allocated to the regions according to the location of the assets in question. Non-current assets encompass intangible assets; property, plant and equipment; investments accounted for using the equity method as well as other non-current assets. Net revenue and fair value gains and losses are allocated according to the location of the respective operations.

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

F - 48

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

5. Segment information (continued)

As of and for the year ended December 31, 2013:

		Argentina				Brazil				Uruguay				Total
Property, plant and equipment			206,852				573,675				9,993				790,520
Investment property			10,147				—				—				10,147
Intangible assets			1,725				747				—				2,472
Goodwill			14,579				10,290				—				24,869
Investment in joint ventures			3,179				—				—				3,179
Non-current portion of biological assets			9,483				215,720				—				225,203
Initial recognition and changes in fair value of biological assets and agricultural produce			33,640				(76,511	)			3,748				(39,123	)
(Loss) Gain from changes in net realizable value of agricultural produce after harvest			12,850				(40	)			65				12,875
Sales of manufactured products sold and services rendered			108,281				312,607				4,419				425,307
Sales of agricultural produce and biological assets			190,391				16,459				12,467				219,317

As of and for the year ended December 31, 2012:

		Argentina				Brazil				Uruguay				Total
Property, plant and equipment			272,730				597,284				10,883				880,897
Investment property			15,542				—				—				15,542
Intangible assets			1,187				593				—				1,780
Goodwill			19,329				11,771				—				31,100
Investment in joint ventures			2,613				—				—				2,613
Non-current portion of biological assets			12,885				212,081				—				224,966
Initial recognition and changes in fair value of biological assets and agricultural produce			39,475				(25,002	)			2,170				16,643
Gain from changes in net realizable value of agricultural produce after harvest			16,190				(31	)			(155	)			16,004
Sales of manufactured products sold and services rendered			96,945				282,536				45				379,526
Sales of agricultural produce and biological assets			178,990				31,956				14,228				225,174

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

F - 49

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

5. Segment information (continued)

As of and for the year ended December 31, 2011:

		Argentina				Brazil				Uruguay				Total
Initial recognition and changes in fair value of biological assets and agricultural produce			47,196				37,617				1,998				86,811
Gain from changes in net realizable value of agricultural produce after harvest			10,539				651				(667	)			10,523
Sales of manufactured products sold and services rendered			86,606				279,251				—				365,857
Sales of agricultural produce and biological assets			143,505				29,864				8,858				182,227

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

F - 50

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

6. Property, plant and equipment

Changes in the Group’s property, plant and equipment in 2013 and 2012 were as follows:

		Farmlands				Farmland improvements				Buildings and facilities				Machinery, equipment, furniture and fittings				Computer equipment				Vehicles				Work in progress				Total
At January 1, 2012
Cost			313,685				4,068				190,704				319,661				3,355				3,122				84,556				919,151
Accumulated depreciation			—				(3,138	)			(37,087	)			(115,220	)			(1,881	)			(2,129	)			—				(159,455	)
Net book amount			313,685				930				153,617				204,441				1,474				993				84,556				759,696
Year ended December 31, 2012
Opening net book amount			313,685				930				153,617				204,441				1,474				993				84,556				759,696
Exchange differences			(34,911	)			2				(13,800	)			(17,418	)			(123	)			(254	)			(9,348	)			(75,852	)
Additions			—				29				756				35,840				862				1,585				208,507				247,579
Acquisition of subsidiary (Note 32)			—				—				—				—				—				—				—				—
Transfers from investment property (Note 7)			9,625				—				—				—				—				—				—				9,625
Transfers			—				9,287				24,528				26,634				27				—				(60,476	)			—
Disposals			—				—				(85	)			(806	)			(6	)			(26	)			—				(923	)
Disposals of subsidiaries			(4,118	)			—				(30	)			(1	)			—				—				—				(4,149	)
Reclassification to non-income tax credits (*)			—				—				(188	)			(774	)			—				—				—				(962	)
Depreciation (Note 26)			—				(1,731	)			(15,912	)			(35,275	)			(641	)			(558	)			—				(54,117	)
Closing net book amount			284,281				8,517				148,886				212,641				1,593				1,740				223,239				880,897

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

F - 51

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

6. Property, plant and equipment (continued)

		Farmlands				Farmland improvements				Buildings and facilities				Machinery, equipment, furniture and fittings				Computer equipment				Vehicles				Work in progress				Total
At December 31, 2012
Cost			284,281				13,386				201,885				363,136				4,115				4,427				223,239				1,094,469
Accumulated depreciation			—				(4,869	)			(52,999	)			(150,495	)			(2,522	)			(2,687	)			—				(213,572	)
Net book amount			284,281				8,517				148,886				212,641				1,593				1,740				223,239				880,897
Year ended December 31, 2013
Opening net book amount			284,281				8,517				148,886				212,641				1,593				1,740				223,239				880,897
Exchange differences			(59,531	)			(1,826	)			(22,513	)			(25,973	)			(179	)			(365	)			(30,042	)			(140,429	)
Additions			—				194				9,896				46,621				1,387				326				72,055				130,479
Acquisition of subsidiary (Note 32)			—				—				—				—				—				—				—				—
Transfers from investment property (Note 7)			1,664				—				—				—				—				—				—				1,664
Transfers			(12	)			4,012				87,049				116,565				67				(8	)			(207,673	)			—
Disposals			(7,638	)			(20	)			(615	)			(2,156	)			(16	)			(35	)			—				(10,480	)
Disposals of subsidiaries			(1,921	)			—				(373	)			—				—				—				—				(2,294	)
Reclassification to non-income tax credits (*)			—				—				(837	)			454				—				—				—				(383	)
Depreciation (Note 26)			—				(2,025	)			(15,031	)			(50,242	)			(1,162	)			(474	)			—				(68,934	)
Closing net book amount			216,843				8,852				206,462				297,910				1,690				1,184				57,579				790,520
At December 31, 2013
Cost			216,843				15,746				274,492				498,647				5,374				4,345				57,579				1,073,026
Accumulated depreciation			—				(6,894	)			(68,030	)			(200,737	)			(3,684	)			(3,161	)			—				(282,506	)
Net book amount			216,843				8,852				206,462				297,910				1,690				1,184				57,579				790,520

(*) Brazilian federal tax law allows entities to take a percentage of the total cost of the assets purchased as a tax credit. As of December 31, 2013, ICMS tax credits were reclassified to trade and other receivables.

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

F - 52

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

6. Property, plant and equipment (continued)

An amount of US$ 61,109; US$ 47,935 and US$ 28,407 of depreciation charges are included in “Cost of manufactured products sold and services rendered” for the years ended December 31, 2013, 2012 and 2011, respectively. An amount of US$ 6,352; US$ 5,557 and US$ 4,424 of depreciation charges are included in “General and administrative expenses” for the years ended December 31, 2013, 2012 and 2011, respectively. An amount of US$ 503, US$ 625 and US$ 1,016 of depreciation charges are included in “Selling expenses” for the years ended December 31, 2013, 2012 and 2011, respectively. An amount of US$ 970, US$ nil and US$ 906 of depreciation charges were not charged to the statement of income and were capitalized in “Inventories” for the years ended December 31, 2013, 2012 and 2011, respectively.

During the year ended December 31, 2013, borrowing costs of US$ 10,074 (2012: US$ 17,506) were capitalized as components of the cost of acquisition or construction for 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$ 488,674 as of December 31, 2013 (2012: US$ 305,032).

Where assets are financed by leasing agreements and substantially all the risks and rewards of ownership are substantially transferred to the Group (“finance leases”) the assets are treated as if they had been purchased outright and the corresponding liability to the leasing company is included as an obligation under finance leases. Depreciation on assets held under finance leases is charged to the income statement on the same basis as owned assets. Leasing payments are treated as consisting of capital and interest elements and the interest is charged to the statement of income as a financing charge. Assets under finance leases comprise vehicles, machinery and equipment. All other leases are treated as operating leases and the relevant annual rentals are charged to the statement of income as incurred (see Note 31).

7. Investment property

Changes in the Group’s investment property in 2013 and 2012 were as follows:

		2013				2012
Beginning of the year			15,542				27,883
Transfers (i)			(1,664	)			(9,625	)
Exchange difference			(3,731	)			(2,716	)
End of the year			10,147				15,542
Cost			10,147				15,542
Accumulated depreciation			—				—
Net book amount			10,147				15,542

The following amounts have been recognized in the statement of income in the line “Sales of manufactured products and services rendered”:

		2013				2012				2011
Rental income			3,446				4,735				4,980

(i) Transferred to property, plant and equipment in 2013 and 2012. Relates to finalization of contracts with third parties.

As of December 31, 2013, the fair value (level 3) of investment property was US$ 58 million (2012: US$ 67 million).

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

F - 53

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

8. Intangible assets

Changes in the Group’s intangible assets in 2013 and 2012 were as follows:

		Goodwill				Trademarks				Software				Others				Total
At January 1, 2012
Cost			34,886				2,667				818				—				38,371
Accumulated amortization			—				(1,075	)			(541	)			—				(1,616	)
Net book amount			34,886				1,592				277				—				36,755
Year ended December 31, 2012
Opening net book amount			34,886				1,592				277				—				36,755
Exchange differences			(3,786	)			(65	)			(32	)			—				(3,883	)
Additions			—				—				276				83				359
Amortization charge (i) (Note 26)			—				(171	)			(180	)			—				(351	)
Closing net book amount			31,100				1,356				341				83				32,880
At December 31, 2012
Cost			31,100				2,602				1,062				83				34,847
Accumulated amortization			—				(1,246	)			(721	)			—				(1,967	)
Net book amount			31,100				1,356				341				83				32,880
Year ended December 31, 2013
Opening net book amount			31,100				1,356				341				83				32,880
Exchange differences			(6,231	)			(76	)			(129	)			(11	)			(6,447	)
Additions			—				—				1,319				57				1,376
Amortization charge (i) (Note 26)			—				(151	)			(188	)			(129	)			(468	)
Closing net book amount			24,869				1,129				1,343				—				27,341
At December 31, 2013
Cost			24,869				2,526				2,252				129				29,776
Accumulated amortization			—				(1,397	)			(909	)			(129	)			(2,435	)
Net book amount			24,869				1,129				1,343				—				27,341

(i) An amount of US$ 188 and US$ 180 of amortization charges are included in “General and administrative expenses” for the years ended December 31, 2013 and 2012, respectively. An amount of US$ 280 and US$ 171 of amortization charges are included in “Selling expenses” for the years ended December 31, 2013 and 2012, respectively. There were no impairment charges for any of the years presented (see Note 4 (b)).

9. Biological assets

Changes in the Group’s biological assets in 2013 and 2012 were as follows:

		2013				2012
Beginning of the year			298,136				239,600
Increase due to purchases			729				1,678
Initial recognition and changes in fair value of biological assets (i)			(39,123	)			16,643
Decrease due to harvest			(325,032	)			(317,645	)
Decrease due to disposals			(39,490	)			(20,908	)
Costs incurred during the year			441,881				395,339
Exchange differences			(44,957	)			(16,571	)
End of the year year			292,144				298,136

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

F - 54

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

9. Biological assets (continued)

(i) Biological asset with a production cycle of more than one year (that is, sugarcane, coffee, dairy and cattle) generated “Initial recognition and changes in fair value of biological assets” amounting to US$ (71,818) for the year ended December 31, 2013 (2021: US$ (25,291); 2011: US$ 38,658). In 2013, an amount of US$ (29,781) (2012: US$ (21,984); 2011: US$ 101,671) was attributable to price changes, and an amount of US$ (42,037) (2012: US$ (3,307); 2011: US$ (63,013)) was attributable to physical changes.

Biological assets in 2013 and 2012 were as follows:

		2013				2012
Non-current
Cattle for dairy production (i)			9,450				12,149
Other cattle (ii)			33				736
Sown land – coffee (iii)			1,944				16,211
Sown land – sugarcane (iii)			213,776				195,870
			225,203				224,966
Current
Other cattle (iv)			363				243
Sown land – crops (ii)			35,982				42,091
Sown land – rice (ii)			30,596				30,836
			66,941				73,170
Total biological assets			292,144				298,136

(i) Classified as bearer and mature biological assets.

(ii) Classified as consumable and immature biological assets.

(iii) Classified as bearer and immature biological assets.

(iv) As of December 31, 2013, and amount of US$ 363 (2012: 243) was classified as consumable and mature biological assets, and an amount of US$ 215,720 (2012: nil) was classified as consumable and immature biological assets.

The fair value less estimated point of sale costs of agricultural produce at the point of harvest amounted to US$ 169,614 for the year ended December 31, 2013 (2012: US$ 304,221; 2011: US$ 325,843).

A drought occurred during December 2011 affecting some of farms in Argentina and Uruguay. As a result, the expected yield consider in the Biological Asset model was reduced generating a negative impact in “Initial recognition and changes in fair value of biological assets and agricultural produce” of US$ 4.5 million as of December 31, 2011.

The following table presents the Group´s biological assets that are measured at fair value al December 31, 2013:

		2013
		Level 1				Level 2				Level 3				Total
Cattle for dairy production			—				9,450				—				9,450
Other cattle			—				396				—				396
Sown land – coffee			—				—				1,944				1,944
Sown land – sugarcane			—				—				213,776				213,776
Sown land – crops			—				—				35,982				35,982
Sown land – rice			—				—				30,596				30,596

There were no transfers between any levels during the year.

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

F - 55

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

9. Biological assets (continued)

The movement in the fair value of the assets within level 3 of the hierarchy is as follows:

		Sown land – coffee				Sown land – sugarcane				Sown land – crops				Sown land – rice
Beginning of the year			16,211				196,083				41,876				30,836
Initial recognition and changes in fair value of biological assets (i)			(8,331	)			(70,982	)			24,357				8,339
Decrease due to harvest			—				(154,187	)			(122,313	)			(48,532	)
Decrease due to disposals			(8,213	)			—				—				—
Costs incurred during the year			2,586				273,375				98,355				44,457
Exchange differences			(309	)			(30,513	)			(6,293	)			(4,504	)
End of the year year			1,944				213,776				35,982				30,596

(i) Change in unrealized gains or losses for the year included in profit or loss for assets held at the end of the reporting period, under “Initial recognition and changes in fair value of biological assets” amounted to US$ 53,222 loss (see Note 5).

The following significant unobservable inputs were used to measure the Group´s biological assets:

Description		Valuation technique(s)		Unobservable inputs		Range of unobservable inputs		Relationship of unobservable inputs to fair value
Sown land – coffee		Discounted cash flows		Coffee yield – tonnes per hectare; Production Costs – US$ per hectare.		-Coffee yield: 1.8-3.0 tn/ha -Production Costs: 6,000-8,000 USS/ha		The higher the coffee yield, the higher the fair value. The higher the costs per hectare, the lower the fair value.
Sown land – sugarcane		Discounted cash flows		Sugarcane yield – tonnes per hectare; Sugarcane TRS (kg of sugar per ton of cane) Production Costs – US$ per hectare. (Include maintenance, harvest and leasing costs)		-Sugarcane yield: 60-90 tn/ha -Sugarcane TRS: 120-147 kg of sugar/ton of cane -Maintenance costs: 402-603 US$/ha -Harvest costs: 10.2-15.4 US$/ton of cane -Leasing costs: 11.5-17.3 tn/ha		The higher the sugarcane yield, the higher the fair value. The higher the maintenance, harvest and leasing costs per hectare, the lower the fair value. The higher the TRS of sugarcane, the higher the fair value.
Sown land – crops		Discounted cash flows		Crops yield – tonnes per hectare; Commercial Costs – usd per hectare; Production Costs – US$ per hectare.		-Crops yield: 2.12-2.83 tn/ha for Wheat, 4.81-6.46 tn/ha for Corn, 1.91-2.49 tn/ha for Soybean and 1.74-2.37 for Sunflower -Commercial Costs: 66-111 US$/ha for Wheat, 179-297 US$/ha for Corn, 77-124 US$/ha for Soybean and 65-108 US$/ha for Sunflower -Production Costs: 281-357 US$/ha for Wheat, 410-478 US$/ha for Corn, 285-331 US$/ha for Soybean and 279-341 US$/ha for Sunflower		The higher the crops yield, the higher the fair value. The higher the commercial and direct costs per hectare, the lower the fair value.
Sown land – rice		Discounted cash flows		Rice yield – tonnes per hectare; Commercial Costs – usd per hectare; Production Costs – US$ per hectare.		-Rice yield: 5.07-6.82 tn/ha -Commercial Costs: 6-10 US$/ha -Production Costs: 705-1,158 US$/ha		The higher the rice yield, the higher the fair value. The higher the commercial and direct costs per hectare, the lower the fair value.

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

F - 56

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

9. Biological assets (continued)

As of December 31, 2013, the impact of a reasonable 10% increase (decrease) in estimated costs, with all other variables held constant, would result in a decrease (increase) in the fair value of our plantations less cost to sell of US$ 49.1 million for sugarcane, US$ 3.0 million for coffee, US$ 1.6 million for crops and US$ 3.2 million for rice.

As of December 31, 2013, the impact of a reasonable 5% increase (decrease) in estimated yields, with all other variables held constant, would result in an increase (decrease) in the fair value of our plantations less cost to sell of US$ 25.7 million for sugarcane and US$ 1.4 million for coffee. As of December 31, 2013, the impact of a reasonable 20% increase (decrease) in estimated yields, with all other variables held constant, would result in an increase (decrease) in the fair value of our plantations less cost to sell of US$ 3.6 million for crops and US$ 8.2 million for rice.

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

F - 57

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

10. Investments in joint ventures

The table below lists the Group’s investment in joint ventures for the years ended December 31, 2013, 2012 and 2011:

						% of ownership interest held
Name of the entity		Country of incorporation and operation				December 31, 2013				December 31, 2012				December 31, 2011
La Lacteo S.A.			Argentina				—				50	%			50	%
CHS AGRO S.A. (i)			Argentina				50	%			—				—

(i) On February 26, 2013, the Group formed CHS AGRO, a joint venture with CHS Inc. CHS Inc. a leading farmer-owned energy, grains and foods company based in the United States. The Group holds 50% interest in CHS AGRO. CHS AGRO will build a sunflower processing facility located in the city of Pehuajo, Province of Buenos Aires, Argentina. The facility will process black oil and confectionary sunflower into specialty products such as in-shell seeds and oil seeds, which will be entirely exported to markets in Europe and the Middle East. The joint venture will grow confectionary sunflower on leased farms, while black oil sunflower will be originated from third parties. The Group and CHS Inc have made capital contribution of approximately US$ 4 million each during 2013 for the construction of the facility.

During 2013, the Group acquired the remaining 50% interest in its joint venture La Lacteo and subsequently sold its 100% interest (see Note 11).

		2013				2012
At the beginning of the year			2,613				4,299
Share of loss			(1,349	)			(2,761	)
Exchange differences			(887	)			(646	)
Capital contribution			4,172				3,000
Disposal of investment (Note 11)			(1,370	)			—
Impairment charge (*)			—				(1,279	)
At the end of the year			3,179				2,613

(*) Impairment loss recognized due to the continuous operating losses in La Lacteo.

The following amounts represent the Group’s share of the assets (including goodwill) and liabilities, and income and expenses of the joint ventures:

		2013				2012
Assets:
Non-current assets			7,608				4,185
Current assets			4,079				5,672
			11,687				9,857
Liabilities:
Non-current liabilities			5,863				659
Current liabilities			2,645				6,585
			8,508				7,244
Net assets of joint venture			3,179				2,613

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

F - 58

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

10. Investments in joint ventures (continued)

		2013				2012				2011
Income			9,236				1,616				2,040
Expenses			(10,556	)			(4,377	)			(3,074	)
Loss after income tax (i)			(1,320	)			(2,761	)			(1,034	)

(i) For the year ended December 31, 2013 an amount of US$ (1,101) was presented within “Profit/(loss) for the year from discontinued operations” (2012: US$ (4,040) ; 2011: US$ (1,034)). See Note 11.

The shares in these joint ventures are not publicly traded, so they have not listed market price available.

There are no contingent liabilities relating to the group’s interest in the joint ventures, and no contingent liabilities of the ventures themselves.

According to the laws of certain of the countries in which the Group operates, 5% of the profit of the year is separated to constitute legal reserves until they reach legal capped amounts (20% of total capital). These legal reserves are not available for dividend distribution and can only be released to absorb losses. The Group’s joint ventures have not reached the legal capped amounts.

11. Net assets held for sale and discontinued operations

On June 6, 2013, the Group acquired the remaining 50% interest in its joint venture La Lacteo S.A. (“La Lacteo”) for US$ 1, and collected US$ 5.1 million associated with the acquisition.

The acquisition of the remaining 50% in La Lacteo was done exclusively with the view to resale and met the definition of discontinued operation. The Group elected to account for the acquisition applying the short-cut method under IFRS 5. As of the transaction date, it was determined that the fair value less costs to sell of La Lacteo was not significant. The Group’s previously held interest in La Lacteo was remeasured to fair value and the cumulative exchange differences recognized in equity were reclassified to the income statement. At the acquisition date La Lacteo was valued at fair value less costs to sell.

On July 31, 2013, the Group sold its 100% interest in La Lacteo for Argentine Pesos 1. In addition, the Milk Supply Offer Agreement between La Lacteo and Adeco Agropecuaria S.A. (a Group subsidiary) was terminated without penalties.

The net effects of the described transactions resulted in a gain of US$ 2.9 million, recorded in the statement of income within “Profit / (Loss) of the year from discontinued operations”.

12. Financial instruments by category

The following tables show the carrying amounts of financial assets and financial liabilities by category of financial instrument and reconciliation to the corresponding line item in the statements of financial position, as appropriate. Since the line items “Trade and other receivables, net” and “Trade and other payables” contain both financial instruments and non-financial assets or liabilities (such as other tax receivables or advance payments for services to be received in the future), the reconciliation is shown in the columns headed “Non-financial assets” and “Non-financial liabilities.”

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

F - 59

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

12. Financial instruments by category (continued)

		Loans and receivables				Assets at fair value through profit or loss				Available for sale assets				Subtotal financial assets				Non-financial assets				Total
December 31, 2013
Assets as per statement of financial position
Trade and other receivables			89,682				—				—				89,682				104,750				194,432
Derivative financial instruments			—				4,102				—				4,102				—				4,102
Cash and cash equivalents			232,147				—				—				232,147				—				232,147
Total			321,829				4,102				—				325,931				104,750				430,681

		Liabilities at fair value through profit or loss				Other financial liabilities at amortized cost				Subtotal financial liabilities				Non-financial liabilities				Total
Liabilities as per statement of financial position
Trade and other payables			4,819				85,089				89,908				6,008				95,916
Borrowings (excluding finance lease liabilities)(i)			15				659,377				659,392				—				659,392
Finance leases			—				739				739				—				739
Derivative financial instruments			12,600				—				12,600				—				12,600
Total			17,434				745,205				762,639				6,008				768,647

(i) 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 (see Note 3).

		Loans and receivables				Assets at fair value through profit or loss				Available for sale assets				Subtotal financial assets				Non-financial assets				Total
December 31, 2012
Assets as per statement of financial position
Trade and other receivables			68,833				—				—				68,833				111,045				179,878
Equity investment in Santa Regina			—				—				11,878				11,878				—				11,878
Derivative financial instruments			—				5,212				—				5,212				—				5,212
Cash and cash equivalents			218,809				—				—				218,809				—				218,809
Total			287,642				5,212				11,878				304,732				111,045				415,777

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

F - 60

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

12. Financial instruments by category (continued)

		Liabilities at fair value through profit or loss				Other financial liabilities at amortized cost				Subtotal financial liabilities				Non-financial liabilities				Total
Liabilities as per statement of financial position
Trade and other payables			—				96,800				96,800				7,460				104,260
Borrowings (excluding finance lease liabilities)			—				538,012				538,012				—				538,012
Finance leases			—				1,121				1,121				—				1,121
Derivative financial instruments			5,751				—				5,751				—				5,751
Total			5,751				635,933				641,684				7,460				649,144

Liabilities carried at amortized cost also included liabilities under finance leases where the Group is the lessee and which therefore have to be measured in accordance with IAS 17. The categories disclosed are determined by reference to IAS 39. Finance leases are excluded from the scope of IFRS 7. Therefore, finance leases have been shown separately.

Because of the short maturities of most trade accounts receivable and payable, other receivables and liabilities, and cash and cash equivalents, their carrying amounts at the closing date do not differ significantly from their respective fair values. The fair value of long-term borrowings is disclosed in Note 21.

Income, expense, gains and losses on financial instruments can be assigned to the following categories:

		Loans and receivables				Assets/liabilities at fair value through profit or loss				Other financial liabilities at amortized cost				Total
December 31, 2013
Interest income (i)			6,882				—				—				6,882
Interest expense (i)			(32,162	)			—				(17,087	)			(49,249	)
Foreign exchange gains/ (losses) (ii)			12,550				—				(33,637	)			(21,087	)
Gain from derivative financial instruments(iii)			—				558				—				558
Net result			(12,730	)			558				(50,724	)			(62,896	)

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

F - 61

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

12. Financial instruments by category (continued)

		Loans and receivables				Assets/liabilities at fair value through profit or loss				Other financial liabilities at amortized cost				Total
December 31, 2012
Interest income (i)			11,249				—				—				11,249
Interest expense (i)			—				—				(27,672	)			(27,672	)
Foreign exchange gains/ (losses) (ii)			(15,915	)			—				(10,165	)			(26,080	)
Gain from derivative financial instruments(iii)			—				(4,002	)			—				(4,002	)
Net result			(4,666	)			(4,002	)			(37,837	)			(46,505	)

		Loans and receivables				Assets/liabilities at fair value through profit or loss				Other financial liabilities at amortized cost				Total
December 31, 2011
Interest income (i)			8,019				—				—				8,019
Interest expense (i)			—				—				(34,017	)			(34,017	)
Foreign exchange gains/ (losses) (ii)			9,899				1,405				(23,987	)			(12,683	)
Loss from derivative financial instruments(iii)			—				17,417				—				17,417
Net result			17,918				18,822				(58,004	)			(21,264	)

(i) Included in “Financial results, net” in the statement of income.

(ii) Included in “Financial results, net” in the statement of income.

(iii) Included in “Other operating income, net” and “Financial results, net” in the statement of income.

Determining fair values

IFRS 13 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. All financial instruments recognized at fair value are allocated to one of the valuation hierarchy levels of IFRS 13. This valuation hierarchy provides for three levels. The allocation reflects which of the fair values derive from transactions in the market and where valuation is based on models because market transactions are lacking. The level in the fair value hierarchy within which the fair value measurement is categorized in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety.

As of December 31, 2013 and 2012, the financial instruments recognized at fair value on the statement of financial position comprise derivative financial instruments.

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

F - 62

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

12. Financial instruments by category (continued)

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.

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-currency interest-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 years presented.

The following tables present the Group’s financial assets and financial liabilities that are measured at fair value as of December 31, 2013 and 2012 and their allocation to the fair value hierarchy:

		2013
		Level 1				Level 2				Level 3				Total
Assets
Derivative financial instruments			3,912				190				—				4,102
Total assets			3,912				190				—				4,102
Liabilities
Derivative financial instruments			(425	)			(12,175	)			—				(12,600	)
Total liabilities			(425	)			(12,175	)			—				(12,600	)
		2012
		Level 1				Level 2				Level 3				Total
Assets
Derivative financial instruments			5,212				—				—				5,212
Equity investment in Santa Regina			—				11,878				—				11,878
Total assets			5,212				11,878				—				17,090
Liabilities
Derivative financial instruments			(361	)			(5,390	)			—				(5,751	)
Total liabilities			(361	)			(5,390	)			—				(5,751	)

There were no transfers within level 1 and 2 during the years ended December 31, 2013 and 2012.

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

F - 63

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

12. Financial instruments by category (continued)

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 Method		Parameters		Pricing Model		Level				Total
Futures		Quoted price		—		—			1				3,150
Options		Quoted price		—		—			1				337
Options/ OTC		Quoted price		—		Black & Scholes			2				190
Foreign-currency interest-rate swaps		Theoretical price		Swap curve; Money market interest-rate curve; Foreign-exchange curve.		Present value method			2
Interest-rate swaps		Theoretical price		Swap curve; Money market interest-rate curve		Present value method			2				(12,175	)
													(8,498	)

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

F - 64

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

13. Trade and other receivables, net

		2013				2012
Non current
Trade receivables			4,676				—
Receivables from related parties (Note 34)			—				2,253
Trade receivables – net			4,676				2,253
Advances to suppliers			10,658				12,850
Income tax credits			7,058				4,594
Non-income tax credits (i)			13,941				16,528
Judicial deposits			2,706				2,570
Receivable from disposal of subsidiary (Note 16)			9,202				2,094
Cash collateral			451				2,049
Other receivables			4,560				1,092
Non current portion			53,252				44,030
Current
Trade receivables			46,326				41,067
Receivables from related parties (Note 34)			—				144
Less: Allowance for trade receivables			(545	)			(588	)
Trade receivables – net			45,781				40,623
Prepaid expenses			7,786				12,766
Advances to suppliers			16,088				11,213
Income tax credits			5,519				4,256
Non-income tax credits (i)			43,700				48,838
Cash collateral			6,554				296
Receivable from disposal of farmland (Note 16)			—				3,018
Receivable from disposal of subsidiaries (Note 16)			6,174				9,395
Other receivables			9,578				5,443
Subtotal			95,399				95,225
Current portion			141,180				135,848
Total trade and other receivables, net			194,432				179,878

(i) Includes US$ 383 reclassified from property, plant and equipment.

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 accompanying notes are an integral part of these consolidated financial statements.

F - 65

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

13. Trade and other receivables, net (continued)

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

		2013				2012
Currency
US Dollar			30,054				50,184
Argentine Peso			50,512				50,422
Uruguayan Peso			520				565
Brazilian Reais			113,346				78,707
			194,432				179,878

As of December 31, 2013 trade receivables of US$ 14,319 (2012: US$ 2,662) were past due but not impaired. The ageing analysis of these receivables is as follows:

		2013				2012
Up to 3 months			13,432				2,408
3 to 6 months			827				46
Over 6 months			60				208
			14,319				2,662

The Group recognizes an allowance for trade receivables when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables.

Delinquency in payments is an indicator that a receivable may be impaired. However, management considers all available evidence in determining when a receivable is impaired. Generally, trade receivables, which are more than 180 days past due are fully provided for. However, certain receivables 180+ days overdue are not provided for based on a case-by-case analysis of credit quality analysis. Furthermore, receivables, which are not 180+ days overdue, may be provided for if specific analysis indicates a potential impairment.

Movements on the Group’s allowance for trade receivables are as follows:

		2013				2012
At January 1			588				1,622
Charge of the year			591				272
Unused amounts reversed			(255	)			(21	)
Used during the year			(220	)			(1,086	)
Exchange differences			(159	)			(199	)
At December 31			545				588

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. The Group holds mortgages as collateral for the sale of Agrícola Ganadera San José S.R.L.

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

F - 66

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

13. Trade and other receivables, net (continued)

As of December 31, 2013, approximately 51% (2012: 81%) of the outstanding unimpaired trade receivables (neither past due nor impaired) relate to sales to 9 well-known multinational companies with good credit quality standing, including but not limited to Compersucar Trading A.V.V., Ipiranga Produtos de Petroleo S.A., Camara de Comercializacao de Energia Electrica CCEE, Petrobras Distribuidora S.A., Glencore Grain B. V., Louis Dreyfus Commodities Suisse S.A., among others. Most of these entities or their parent companies are externally credit-rated. The Group reviews these external ratings from credit agencies.

The remaining percentage as of December 31, 2013 and 2012 of the outstanding unimpaired trade receivables (neither past due nor impaired) relate to sales to a dispersed large quantity of customers for which external credit ratings may not be available. However, the total base of customers without an external credit rating is relatively stable.

New customers with less than six months of history with the Group are closely monitored. The Group has not experienced credit problems with these new customers to date. The majority of the customers for which an external credit rating is not available are existing customers with more than six months of history with the Group and with no defaults in the past. A minor percentage of customers may have experienced some non-significant defaults in the past but fully recovered.

14. Inventories

		2013				2012
Raw materials			37,859				36,607
Finished goods.			67,689				56,508
Stocks held by third parties			2,824				2,195
Others			17				11
			108,389				95,321

The cost of inventories recognized as expense and included in “Cost of manufactured products sold and services rendered” amounted to US$ 272,261 for the year ended December 31, 2013 (2012: US$ 263,978 and 2011: US$ 226,413). The cost of inventories recognized as expense and included in “Cost of agricultural produce sold and direct agricultural selling expenses” amounted to US$ 159,936 for the year ended December 31, 2013 (2012: US$ 174,602 and 2011: US$ 148,177).

15. Cash and cash equivalents

		2013				2012
Cash at bank and on hand			165,362				137,980
Short-term bank deposits			66,785				80,829
			232,147				218,809

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

F - 67

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

16. Disposals

Year ended December 31, 2011

On November 30, 2011 the Group completed the sale of “La Alegría”, a 2,438 hectare farm located in General Villegas, province of Buenos Aires, Argentina, for a total consideration of US$13.7 million collected in full as of year-end. This transaction resulted in a gain of US$ 8.8 million included within “Other operating income, net”.

Year ended December 31, 2012

On June 29, 2012, the Group sold its 100% interest in Agricola Ganadera San Jose S.A., a subsidiary whose main assets comprised of farmland, at a consideration of US$ 9.3 million. The sale price was collected US$ 5 million in cash and the remaining amount will be collected in two equal installments plus interest in June 2013 and 2014. This transaction resulted in a gain of US$ 8 million recorded in other operating income in the statement of income.

On December 27, 2012, the Group disposed of a 51% interest out of the 100% interest held in Santa Regina Agropecuaria S.A. at a consideration of US$ 12.4 million. The main asset of the subsidiary is the Santa Regina farm located in General Villegas, Province of Buenos Aires, Argentina. The Group granted an option to the buyer to acquire the remaining 49% interest on or before June 2014 at US$ 13.1 million. The Group entered into a lease contract with the buyer to use the land for the next two crop years as from May 2013. The sale price was collected US$ 5.2 million in cash and the remaining amount will be collected in two installments plus interest, US$ 1 million in June 2013 and US$ 6.2 million in December 2013. The Group evaluated the effect of potential voting rights arising from the option and concluded that the interest retained in Santa Regina represents an available for sale financial asset under IAS 39.

The transaction generated a gain for the sale of US$ 9 million. In addition, since the Group ceased to have control over the subsidiary, the retained 49% interest was remeasured to its fair value and a gain of US$ 10.4 million was recognized in the statement of income under “Other operating income, net”.

Year ended December 31, 2013

In December 2013, the Group completed the sale of “San Agustín”, a 5,066 hectare farm located in the province of Corrientes, Argentina, for a total consideration of US$17.5 million collected in full as of year-end. This transaction resulted in a gain of US$ 15 million included within “Other operating income, net”.

In October 2013, the Group completed the sale of the San Martin farm for a total price of US$ 8.0 million, equivalent to US$ 2,294 per hectare which was collected in full as of year-end. San Martin is a 3,502 hectare farm located in the province of Corrientes, Argentina. The farm was used for cattle grazing activities and is a subdivision of the Ita Caabo farm acquired by the Group in 2007. This transaction resulted in a gain of US$ 6.5 million included within “Other operating income, net”.

In May 2013, the Group completed the sale of the Mimoso farm (through the sale of the Brazilian subsidiary Fazenda Mimoso Ltda.) and Lagoa do Oeste farm located in Luis Eduardo Magalhaes, Bahia, Brazil. The farms have a total area of 3,834 hectares of which 904 hectares are planted with coffee trees. In addition, the Group entered into an agreement whereby the buyer will operate and make use of 728 hectares of existing coffee trees in Adecoagro’s Rio de Janeiro farm during an 8-year period. Pursuant to the terms of the agreement, we will retain property to these coffee trees, which will still have an estimate useful life of 10 years upon the expiration of the agreement. The total consideration of this operation was a nominal amount of Brazilian Reais 49 million (US$ 24 million), from which Brazilian Reais 12,371 (US$ 6 million) were collected as of December 31, 2013. The remaining amount will be collected in three equal installments in 2014, 2015 and 2016. This transaction resulted in a gain of US$ 5.7 million recorded in other operating income in the statement of income.

In June 2013, the Group completed the sale of the remaining 49% interest in Santa Regina S.A., a company whose main underlying asset is the Santa Regina farm. This transaction resulted in a gain of US$ 1.2 million recorded in other operating income in the statement of income.

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

F - 68

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

17. Shareholders’ contributions

The share capital of the Group is represented by common shares with a nominal value of US$ 1.5 per share and one vote each.

		Number of shares				Share capital and share premium
At 1 January 2011			120,000				683,343
At January 24, 2011, after reverse stock split (1)			80,000				683,343
Issue of shares on January 28, 2011 (2)			40,069				423,030
Employee share options exercised (Note 18)			37				326
Restricted shares issued (Note 18)			427				641
Restricted shares vested (Note 18)			—				746
Non controlling interest acquired through exchange of Shares (4)			—				(1,281	)
At 31 December 2011			120,533				1,106,805
Employee share options exercised (Note 18)			32				312
Restricted shares vested (Note 18)			—				1,347
Non controlling interest acquired through exchange of Shares (4)			1,655				15,199
At 31 December 2012			122,220				1,123,663
Employee share options exercised (Note 18)			—				126
Restricted shares and units vested (Note 18)			162				2,963
Non controlling interest acquired through exchange of Shares (4)			—				—
Purchase of own shares			—				(4,107	)
At 31 December 2013			122,382				1,122,645

(1) The Extraordinary General Meeting of Adecoagro’s shareholders held on January 24, 2011 approved a reverse stock split of Adecoagro’s common shares, changing the nominal value of Adecoagro’s common shares from US$ 1 to US$ 1,5. Therefore, Adecoagro reduced total shares outstanding as of that date from 119,999,997 shares to 79,999,985 shares.

(2) On January 28, 2011 the Company successfully completed an initial public offering (IPO) of its shares in the New York Stock Exchange. The Company issued 28,405,925 shares, at a price of US$ 11 per share. In addition, on February 11, 2011, the Company issued 4,285,714 shares, at a price of US$ 11 per share, as a consequence of the over-alloment option exercised by the underwriters of the initial public offering, raising an overall amount of approximately US$ 359 million.

On January 28, 2011, Adecoagro’s also issued and sold to Al Gharrafa Investment Company 7,377,598 common shares at a purchase price per share of US$ 10.65, which is equal to the price per common share paid by the underwriters acting in the initial public offering of the Company. This transaction was conditioned upon, and closed immediately after, the closing of the initial public offering of the Company. Consequently the Company raised US$ 79 million.

The Company used these funds to finance part of the construction costs of Ivinhema (sugar and ethanol mill in Brazil) and for potential investments in the acquisition of farmland and capital expenditures required in the expansion of the farming business.

Related transaction costs totaling US$ 15 million net of tax have been netted off with the deemed proceeds, on the Share premium issued.

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

F - 69

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

17. Shareholders’ contributions (continued)

During 2011, the Company agreed to contribute the full proceed from the IPO to International Farmland Holdings LP, increasing its interest to 98.64%.

(3) As a consequence of new contributions made in International Farmland Holdings LP fully attributable to the Group, non controlling interest was reduced from 2% to 1.36%.

(4) During 2012, the Company issued 1,654,752 shares to certain limited partners of International Farmland Holdings LP (“IFH”) in exchange for their residual interest, totaling 1.36% interest in IFH. After this exchange, the Company holds 100% of IFH interest.

Share Repurchase Program

On September 24, 2013, the Board of Directors of the Company has authorized a share repurchase program for up to 5% of its outstanding shares. The repurchase program has commenced on September 24, 2013 and will be reviewed by the Board of Directors after a 12-month period: repurchases of shares under the program will be made from time to time 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. 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 December 31, 2013, the Company repurchased 654,454 shares under this program, of which 17,162 have been applied to some exercise of the Company’s stock option plan.

18. Equity-settled share-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 granted 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 to senior and medium management and key employees of the Group’s subsidiaries.

(a) Option Schemes

The Group recognized aggregate compensation expense of US$ 0.1 million for the year ended December 31, 2013 (2012: US$ 0.2 million; 2011: US$ 0.9 million) related to the options granted under the Option Schemes.

The fair value of the options under the Option Schemes was measured at the date of grant using the Black-Scholes valuation technique. This valuation model takes into account factors such as non transferability, expected volatility, exercise restrictions and behavioral considerations.

Key grant-date fair value and other assumptions under the Option Schemes are detailed below:

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

F - 70

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

18. Equity-settled unit-based payments (continued)

Grant Date		Jan 2009				Nov 2009				Jan 2010				Jan 2010				Jun 2010				Sep 2010				Sep 2010
Expected volatility			21	%			22	%			22	%			22	%			22	%			22	%			22	%
Expected life			6.50				6.50				6.5				6.5				6.5				6.5				6.5
Risk free rate			1,85	%			2,31	%			2.34	%			2.34	%			1.79	%			1.41	%			1.41	%
Expected dividend yield			0	%			0	%			0	%			0	%			0	%			0	%			0	%
Fair value per option		$	3.52			$	3.78			$	3.62			$	3.38			$	3.17			$	3.05			$	3.28
Possibility of ceasing employment before vesting			0.02	%			0.21	%			0.21	%			0.21	%			0.38	%			0.43	%			0.43	%
Exercise price		$	13.40			$	13.40			$	12.82			$	13.40			$	13.40			$	13.40			$	12.82

Since the Group’s shares were not publicly traded at the time the options were granted, expected volatility was determined by calculating the historical volatility of share prices of comparable entities in representative stock markets. The expected life used in the model was adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioral considerations. On January 28, 2011 the Company completed its initial public offering in the New York Stock Exchange (see Note 17).

Details of each plan are as follow:

The Adecoagro/ IFH 2004 Stock Incentive Option Plan

This scheme was effectively established in 2004 and is administered by the Compensation Committee of the Company. Options under the Adecoagro/ IFH 2004 Stock Incentive Option Plan vest over a 3-year period from the date of grant at 33% on each anniversary of the grant date. Options are exercisable over a ten-year period. The exercise price of the options is determined by the Compensation Committee but under no circumstances the price may be less than 100% of the fair market value of the shares at the date of grant. For this scheme, there are no performance requirements for the exercising of options, except that a participant’s employment with the Group must not have been terminate prior to the date of exercise of the relevant option. If the participant ceases to be employee for cause any unvested option shall automatically expired and shall not be exercisable. In addition, if the participant ceases to be an employee for reason of death, any portion of the share option held by he or she that has vested on that date may be exercised by his or her legal representative for the period of one year. Finally if the participant ceases to be an employee for any reason other than cause or death any portion of any vested option held may be exercisable for a period of three months.

Movements in the number of equity-settled options outstanding and their related weighted average exercise prices under the Adecoagro/ IFH 2004 Stock Incentive Option Plan are as follows:

		2013								2012								2011
		Average exercise price per share				Options (thousands)				Average exercise price per Share				Options (thousands)				Average exercise price per share				Options (thousands)
At January 1			6.68				2,100				6.68				2,134				6.74				2,401
Forfeited			8.62				(21	)			8.62				(2	)			7.31				(230	)
Exercised			5.83				(17	)			6.71				(32	)			5.83				(37	)
At December 31			6.67				2,062				6.68				2,100				6.68				2,134

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

F - 71

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

18. Equity-settled unit-based payments (continued)

Options outstanding at year end under the Adecoagro/ IFH 2004 Incentive Option Plan have the following expiry date and exercise prices:

		Exercise price per share
						Shares (in thousands)
Expiry date:						2013				2012				2011
May 1, 2014			5.83				674				674				674
May 1, 2015			5.83				553				553				556
May 1, 2016			5.83				156				173				192
February 16, 2016			7.11				110				110				110
October 1, 2016			8,62				569				590				602

The Adecoagro/ IFH 2007/ 2008 Equity Incentive Plan

This scheme was effectively established in late 2007 and is administered by the Compensation Committee of the Company. Options under the Adecoagro/ IFH 2007/2008 Equity Incentive Plan vest over a 4-year period from the date of grant at 25% on each anniversary of the grant date. Options are exercisable over a ten-year period. The exercise price of the options is determined by the Compensation Committee but under no circumstances the price may be less than 100% of the fair market value of the shares at the date of grant. For this scheme, there are no performance requirements for the exercising of options, except that a participant’s employment with the Group must not have been terminated prior to the date of exercise of the relevant option. If the participant ceases to be employee for cause any unvested option shall automatically expired and shall not be exercisable. In addition, if the participant ceases to be an employee for reason of death, any portion of the share option held by he or she that has vested on that date may be exercised by his or her legal representative for the period of one year. Finally if the participant ceases to be an employee for any reason other than cause or death any portion of any vested option held may be exercisable for a period of three months.

Movements in the number of equity-settled options outstanding and their related weighted average exercise prices under the Adecoagro/ IFH 2007/2008 Equity Incentive Plan are as follows:

		2013								2012								2011
		Average exercise price per share				Options (thousands)				Average exercise price per share				Options (thousands)				Average exercise price per share				Options (thousands)
At January 1			13.06				2,013				13.06				2,038				13.06				2,228
Granted			—				—				—				—				—				—
Forfeited			13.01				(262	)			13.06				(24	)			12.89				(190	)
At December 31			13.07				1,751				13.06				2,013				13.06				2,038

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

F - 72

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

18. Equity-settled unit-based payments (continued)

Options outstanding at year-end under the Adecoagro/ IFH 2007/2008 Equity Incentive Plan have the following expiry date and exercise prices:

		Exercise price per share
						Shares (in thousands)
Expiry date:						2013				2012				2011
Dec 1, 2017			12.82				963				1,138				1,149
Jan 30, 2019			13.40				608				687				687
Nov 1, 2019			13.40				8				8				18
Jan 30, 2020			12.82				26				28				32
Jan 30, 2020			13.40				65				71				71
Jun 30, 2020			13.40				22				22				22
Sep 1, 2020			13.40				44				44				44
Sep 1, 2020			12.82				15				15				15

The following table shows the exercisable shares at year end under both the Adecoagro/ IFH 2004 Incentive Option Plan and the Adecoagro/ IFH 2007/ 2008 Equity Incentive Plan:

		Exercisable shares in thousands
2013			3,769
2012			3,849
2011			3,681

During 2013, 17,162 options were exercised under the 2004 Incentive Option Plan. Accordingly, the Group issued and registered these shares with a nominal value of US$ 1.5.

(b) Restricted Share and Restricted Stock Unit Plan

The Restricted Share and Restricted Stock Unit Plan was effectively established in 2010 and amended in November 2011 is administered by the Compensation Committee of the Company. Restricted shares under the Restricted Share or Restricted Stock Units Plan vest over a 3-year period from the date of grant at 33% on each anniversary of the grant date. Participants are entitled to receive one common share of the Company for each restricted share or restricted unit issued. For the Restricted Share Plan there are no performance requirements for the delivery of common shares, except that a participant’s employment with the Group must not have been terminated prior to the relevant vesting date. If the participant ceases to be an employee for any reason, any unvested restricted share shall not be converted into common shares and the participant shall cease for all purposes to be a shareholder with respect to such shares.

On July 18, 2011, the Group issued and registered 427,293 restricted shares with a nominal value of US$ 1.5, which were granted under the Restricted Share Plan. While the restricted shares are not vested, they are recognized in “Other reserves”. Once they are vested, the reserve is reversed and a share premium is recognized.

During 2013, 120,811 (2012: 120,811) restricted shares were vested.

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

F - 73

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

18. Equity-settled unit-based payments (continued)

At December 31, 2013, the Group recognized compensation expense US$ 3.7 million related to the restricted shares granted under the Restricted Share Plan (2012: US$ 3.8 million).

The restricted shares under the Restricted Share Plan were measured at fair value at the date of grant.

Key grant-date fair value and other assumptions under the Restricted Share Plan are detailed below:

Grant Date		Apr 1, 2011				Apr 1, 2011				May 13, 2011				Apr 1, 2012				May 15, 2012				Apr 1, 2013				May 15, 2013
Fair value			12.69				12.69				12.36				9.81				9.33				8.08				7.48
Possibility of ceasing employment before vesting			1.42	%			1.86	%			0	%			3	%			0	%			5	%			0	%

Movements in the number of restricted shares outstanding under the Restricted Share Plan are as follows:

		Restricted shares (thousands)				Restricted stock units (thousands)				Restricted shares (thousands)				Restricted stock units (thousands)
		2013				2013				2012				2012
At January 1			234				515				356				—
Granted (1)			—				362				—				515
Forfeited			(6	)			(10	)			(2	)			—
Vested			(119	)			(169	)			(121	)			—
At December 31			110				699				234				515

(1) Approved by the Board of Directors of March 19, 2013 and the Shareholders Meeting of April 17, 2013.

During 2013 5,827 restricted shares became forfeited and were returned to the Group. These restricted shares are held by the Group as treasury shares and presented within “Treasury shares” in the statement of changes in shareholders’ equity.

19. Legal and other reserves

According to the laws of certain of the countries in which the Group operates, a portion of the profit of the year (5%) is separated to constitute legal reserves until they reach legal capped amounts. These legal reserves are not available for dividend distribution and can only be released to absorb losses. The legal limit of these reserves has not been met.

In addition, from time to time, the subsidiaries of the Group may separate portions of their profits of the year to constitute voluntary reserves according to company law and practice. These voluntary reserves may be released for dividend distribution.

Legal and other reserves amount to US$ 38,549 as of December 31, 2013 (2012: US$ 37,654) and are included within the balance of retained earnings in the statement of changes in shareholders’ equity.

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

F - 74

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

19. Legal and other reserves (continued)

The Company may make distributions in the form of dividends or otherwise to the extent that it has distributable retained earnings or available distributable reserves (including share premium) that result from the Stand Alone Financial Statements prepared in accordance with Luxembourg GAAP. No distributable retained earning result from the Stand Alone Financial Statements of the Company as of December 31, 2013, but the Company has distributable reserves in excess of US$ 914,135.

20. Trade and other payables

		2013				2012
Non-current
Payable from acquisition of property, plant and equipment (i)			2,605				3,126
Taxes payable			—				37
Other payables			346				432
Escrows arising on business combinations (Note 32)			—				980
			2,951				4,575
Current
Trade payables			84,009				88,123
Advances from customers			2,900				4,529
Amounts due to related parties (Note 34)			1,069				562
Taxes payable			3,108				2,894
Escrows arising on business combinations (Note 32)			1,030				1,508
Other payables			849				2,069
			92,965				99,685
Total trade and other payables			95,916				104,260

(i) These trades payable are mainly collateralized by property, plant and equipment of the Group.

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 amounts, as the impact of discounting is not significant.

21. Borrowings

		2013				2012
Non-current
Bank borrowings			511,753				353,540
Obligations under finance leases			411				709
			512,164				354,249
Current
Bank overdrafts			5,750				111
Bank borrowings			141,889				184,361
Obligations under finance leases			328				412
			147,967				184,884
Total borrowings			660,131				539,133

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

F - 75

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

21. Borrowings (continued)

As of December 31, 2013, total bank borrowings include collateralized liabilities of US$ 625,533 (2012: US$ 346,469). These loans are mainly collateralized by property, plant and equipment, sugarcane plantations, sugar export contracts and shares of certain subsidiaries of the Group.

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:

		2013				2012
Fixed rate:
Less than 1 year			56,932				60,049
Between 1 and 2 years			38,393				19,066
Between 2 and 3 years			37,762				24,364
Between 3 and 4 years			29,467				21,760
Between 4 and 5 years			27,803				20,870
More than 5 years			75,745				62,036
			266,102				208,145
Variable rate:
Less than 1 year			90,707				124,423
Between 1 and 2 years			107,392				71,978
Between 2 and 3 years			100,949				73,684
Between 3 and 4 years			54,212				45,969
Between 4 and 5 years			12,586				11,100
More than 5 years			27,444				2,713
			393,290				329,867
			659,392				538,012

Borrowings incurred by the Group’s subsidiaries in Brazil are repayable at various dates between January 2014 and September 2023 and bear either fixed interest rates ranging from 2.50% to 13.47% per annum or variable rates based on LIBOR or other specific base-rates plus spreads ranging from 4.72% to 14.11% per annum. At December 31, 2013 LIBOR (six months) was 0.28% (2012: 0. 51%).

Borrowings incurred by the Group´s subsidiaries in Argentina are repayable at various dates between January 2014 and November 2019 and bear either fixed interest rates ranging from 5.70% and 7.00% per annum.

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

F - 76

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

21. Borrowings (continued)

Brazilian Subsidiaries

The main loans of the Group’s Brazilian Subsidiaries are:

Bank

Grant Date

Nominal amount (In millions)

Capital Outstanding as of December 31 2013

Maturity date

Annual Interest Rate

Millions of Reais

Millions of equivalent Dollars

Rabobank / Itaú BBA / Santander / Itaú Unibanco / Bradesco / HSBC (Finem ANG) (1)

March 2008

R$     151

81.4

34.7

April 2018

Partially Long-Term Interest Rate (TJLP), as disclosed by the Brazilian Central Bank + 4.05% and partially Interest Rate Resolution 635/87 (average BNDES external funding rate) + 3.67%

Banco Do Brasil

July 2010

R$       70

57.6

24.6

July 2020

10% with 15% of bonus performance

BTG Pactual / HSBC / Votorantim / Rabobank (2)

May 2012

R$.    230

153.3

65.4

May 2015

CDI + 3.6%

Bradesco

May 2012

US$  11.7

—

11.7

May 2016

7.20%

Banco Do Brasil (3)

October 2012

R$     130

130.0

55.5

October 2022

2.94% per annum with 15% of bonus performance

Itau BBA

December 2012

R$    45.9

44.4

19.0

December 2022

2.50%

Itau BBA (4)

March 2013

R$       75

75.0

32.0

March 2019

CDI + 3.2%

ING / ABN /Bladex Loan (5)

July 2013

US$     70

—

70.0

October 2016

LIBOR 6M plus 4.5%

Rabobank / Bradesco / HSBC / PGGM / Hinduja Bank (6)

September 2013

US$     90

—

90.0

September 2017

LIBOR 3M plus 4.75%

Banco do Brasil / Itaul BBA Finem Loan (7)

September 2013

R$     273

138.1

58.9

January 23

5.69

BNDES Finem Loan (8)

November 2013

R$     215

60.0

25.6

January 23

3.34%

(1) Collateralized by (i) a first degree mortgage of the Takuare farm; (ii) a pledge on the capital stock (“quotas”) of Adecoagro Brasil Participações S/A; and (iii) liens over the Angélica mill and equipment, all of which are property of Adecoagro Vale do Ivinhema.

(2) Collateralized by (i) a first-degree mortgage of the Conquista, Alto Alegre, Dom Fabrício, Nossa Senhora Aparecida, Água Branca farms, (ii) pledge of sugarcane and (iii) sales contracts.

(3) Collateralized by (i) a second degree mortgage of the Sapalio farm and (ii) liens over the Ivinhema mill and equipment, all of which are property of Adecoagro Vale do Ivinhema.

(4) Collateralized by power sales contract

(5) Collateralized by (i) pledge of sugarcane and (ii) sales contracts.

(6) Collateralized by (i) pledge of sugarcane and (ii) sales contracts.

(7) Collateralized by (i) a first degree mortgage of the Carmen (Santa Agua) farm, (ii) a second degree mortgage of the Takuare farm, (iii) liens over the Ivinhema mill and equipment.

(8) Collateralized by (i) liens over the Ivinhema mill and equipment, all of which are property of Adecoagro Vale do Ivinhema and (ii) power sales contracts.

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

F - 77

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

21. Borrowings (continued)

The abovementioned loans have to comply with financial covenants. The financial covenants are measured considering the statutory financial statements of the Brazilian Subsidiaries. The covenants to comply with are defined as follows and detailed in the table below:

Interest Coverage = (Adjusted EBITDA)/(Net Financial Expenses)

Solvency = Equity/(Total Assets)

Net Bank Debt/Adjusted EBITDA = (Bank Debt-Cash)/(Adjusted EBITDA)

Debt Service Coverage = (Adjusted EBITDA)/(Payment of long term debt-Net Financial Expenses- dividends)

Bank

Ratio

2014

2015

2016

2017 and on

Rabobank / Itaú BBA / Santander / Itaú Unibanco / Bradesco / HSBC (Finem ANG)

Interest Coverage

[>]2

[>]2

[>]2

[>]2

Solvency

[>]40%

[>]40%

[>]40%

[>]40%

Net Bank Debt /EBITDA

[<]4.5

[<]4.5

[<]4.0

[<]3.5

Banco Do Brasil

Debt service coverage

[>]1.2

[>]1.2

[>]1.2

[>]1.2

BTG Pactual / HSBC / Votorantim / Rabobank

Interest Coverage

[>]2

Solvency

[>]40%

Net Bank Debt /EBITDA

[<]6

Bradesco

Net Debt /Sugarcane Milled Tons

[<]80

[<]80

Net Debt/Equity

[<]80%

[<]80%

Banco Do Brasil (1)

Debt service coverage

[>]1.2

[>]1.2

[>]1.2

[>]1.2

Itau BBA

Net Bank Debt / EBITDA

[<]4.5

[<]4.5

[<]4.0

[<]3.5 /[<] 3.0

Itau BBA (2)

Net Bank Debt / EBITDA

[<]4.5

[<]4.5

[<]4.0

[<]3.5 /[<] 3.0

ING / ABN /Bladex

Interest Coverage

[>]2

[>]2

Solvency

[>]40%

[>]40%

Net Bank Debt / EBITDA

[<]5.0

[<]4.0

Rabobank / Bradesco / HSBC / PGGM / Hinduja Bank (3)

Interest Coverage

[>]2

[>]2

[>]2

Solvency

[>]40%

[>]40%

[>]40%

Net Bank Debt / EBITDA

[<]5.0

[<]4.5

[<]4.5

Banco do Brasil / Itau BBA Finem Loan

Debt Service Coverage

[>]1.2

[>]1.2

[>]1.2

[>]1.2

Net Bank Debt / EBITDA

[<]4.5

[<]4.5

[<]4.0

[<]3.5 /[<] 3.0

BNDES Finem Loan (4)

Solvency

[>]40%

[>]40%

[>]40%

[>]40%

Net Bank Debt / EBITDA

[<]4.5

[<]4.5

[<]4.0

[<]3.5 /[<] 3.0

During 2013 and 2012 the Group was in compliance with all financial covenants.

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

F - 78

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

21. Borrowings (continued)

Argentinian Subsidiaries

• IDB Facility

The amended IDB Facility is divided into a seven-year US$ 31 million tranche (“Tranche A”) and a five-year US$ 49 million tranche (“Tranche B”) with a final maturity in November 2018 and 2016, respectively. Tranche A bore interest at fixed rate of 6.11% per annum. Tranche B bears interest at 180-day LIBOR plus 4.45% per annum. The Group entered into a floating to fix interest rate forward swap, fixing LIBOR at 1.25%, effective May 2012.

Payment of principal plus interest of both tranches are made on a bi-annual basis. The IDB Facility is collateralized by property, plant and equipment with a net book value of US$ 24.765 million, by a mortgage over (i) Carmen and La Rosa farms which are property of Adeco Agropecuaria S.A.; and (ii) El Meridiano farm which is the property of Pilagá S.A.

Defaults by either Adeco Agropecuaria S.A. or Pilagá S.A. on any indebtedness with an aggregate principal amount over US$ 3.0 million can result in acceleration of the full outstanding loan amount due to the IDB. The IDB Facility also contains certain customary financial covenants and restrictions which require us to meet pre-defined financial ratios, among other restrictions, as well as restrictions on the payment of dividends. The financial covenants are measured in accordance with generally accepted accounting principles in Argentina. Adeco Agropecuaria S.A. and Pilagá S.A. are required to meet the following financial ratios (measured on a combined basis):

2013

2014

2015

2016

2017

2018

Total Debt (>; in million) (i)

160,000

160,000

160,000

160,000

160,000

160,000

Current Ratio (>) (ii)

1.15x

1.20x

1.20x

1.20x

1.20x

1.20x

Interest Coverage Ratio (>) (ii)

2.20x

2.25x

2.30x

2.40x

2.50x

2.60x

Liabilities to Equity (<) (ii)

1.40x

1.40x

1.40x

1.40x

1.40x

1.40x

(i) Measured on a quarterly basis.

(ii) Measured on yearly basis

In addition, the IDB Facility contains a change of control provision requiring acceleration of amounts due under the facility.

During 2013 and 2012 the Group was in compliance with all financial covenants.

The carrying amounts of the Group’s borrowings are denominated in the following currencies (expressed in US dollars):

		2013				2012
Currency
US Dollar			257,283				203,881
Brazilian Reais			372,058				316,586
Argentine Peso			30,775				18,622
Uruguayan Peso			15				44
			660,131				539,133

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

F - 79

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

21. Borrowings (continued)

Obligations under finance leases

Lease liabilities are effectively secured as the rights to the leased asset revert to the lessor in the event of default.

Gross finance lease liabilities – minimum lease payments:

		2013				2012
Not later than one year			328				417
Later than one year and not later than five years			411				713
			739				1,130
Future finance charges on finance leases			—				(9	)
Present value of finance lease liabilities			739				1,121

The present value of finance lease liabilities is as follows:

		2013				2012
Not later than one year			328				412
Later than one year and not later than five years			411				709
			739				1,121

Under the terms of the lease agreements, no contingent rents are payable. The interest rate inherent in these finance leases is fixed at the contract date for all of the lease term. The average interest rate on finance lease payables at December 31, 2013 was 13.23% (2012: 9.86%).

22. Taxation

Adecoagro is subject to the applicable general tax regulations in Luxembourg.

The Group’s income tax has been calculated on the estimated assessable taxable profit for the year at the rates prevailing in the respective foreign tax jurisdictions. The subsidiaries of the Group are required to calculate their income taxes on a separate basis according to the rules and regulations of the jurisdictions where they operate. Therefore, the Group is not legally permitted to compensate subsidiaries’ losses against subsidiaries’ income. The details of the provision for the Group’s consolidated income tax are as follows:

		2013				2012				2011
Current income tax			(979	)			(1,377	)			(13,520	)
Deferred income tax			10,256				6,813				(1,142	)
Income tax benefit (expense)			9,277				5,436				(14,662	)

The statutory tax rate in the countries where the Group operates for all of the years presented are:

Tax Jurisdiction		Income Tax Rate
Argentina			35	%
Brazil			34	%
Uruguay			25	%

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

F - 80

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

22. Taxation (continued)

In September 2013, Argentina enacted a law that amends its income tax law. The law includes a new 10% withholding tax on dividend distributions made by Argentine companies to individuals and foreign beneficiaries. As of December 31, 2013, the Company did not record any liability on retain earnings at their Argentine subsidiaries due to its dividend policy which defines that the Company intends to retain any future earnings to finance operations and the expansion of their business and does not intend to distribute or pay any cash dividends on our common shares in the foreseeable future.

Deferred tax assets and liabilities of the Group as of December 31, 2013 and 2012, without taking into consideration the offsetting of balances within the same tax jurisdiction, will be recovered or settled as follows:

		2013				2012
Deferred income tax asset to be recovered after more than 12 months			75,668				11,463
Deferred income tax asset to be recovered within 12 months			17,692				65,095
Deferred income tax assets			93,360				76,558
Deferred income tax liability to be settled after more than 12 months			97,509				79,896
Deferred income tax liability to be settled within 12 months			5,106				36,659
Deferred income tax liability			102,615				116,555
Deferred income tax liabilities, net			9,255				39,997

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

		2013				2012				2011
Beginning of year			39,997				55,908				44,032
Exchange differences			(12,259	)			(8,741	)			(4,282	)
Acquisition of subsidiary			—				—				15,016
Disposal of subsidiary (Note 16)			(201	)			(357	)			—
Tax charge relating to cash flow hedge (i)			(8,026	)			—				—
Income tax (expense) / benefit			(10,256	)			(6,813	)			1,142
End of year			9,255				39,997				55,908

(i) Relates to the gain or loss before income tax of cash flow hedge recognized in other comprehensive income amounting to US$ 6,167 for the year ended December 31, 2013.

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

F - 81

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

22. Taxation (continued)

The movement in the deferred income tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the same tax jurisdiction, is as follows:

Deferred income tax liabilities		Property, plant and equipment				Biological assets				Others				Total
At January 1, 2011			81,594				28,792				1,109				111,495
Charged/(credited) to the statement of income			6,943				(8,189	)			(764	)			(2,010	)
Acquisition of subsidiary			15,016				—				—				15,016
Exchange differences			(7,502	)			(4,117	)			1,138				(10,481	)
At December 31, 2011			96,051				16,486				1,483				114,020
(Credited)/charged to the statement of income			(601	)			3,951				13,277				16, 627
Acquisition of subsidiary			(357	)			—				—				(357	)
Exchange differences			(11,684	)			(1,644	)			(407	)			(13,735	)
At December 31, 2012			83,409				18,793				14,353				116,555
(Credited) /charged to the statement of income			12,590				(4,394	)			2,864				11,060
Disposal of subsidiary			(622	)			—				—				(622	)
Exchange differences			(18,339	)			(3,247	)			(2,792	)			(24,378	)
At December 31, 2013			77,038				11,152				14,425				102,615

Deferred income tax assets		Provisions				Tax loss carryforwards				Equity-settled share-based compensation				Biological Assets				Others				Total
At January 1, 2011			3,308				36,711				4,842				17,893				4,709				67,463
Charged/(credited) to the statement of income			2,364				7,455				1,117				(15,357	)			1,269				(3,152	)
Exchange differences			(604	)			(3,521	)			—				503				(2,577	)			(6,199	)
At December 31, 2011			5,068				40,645				5,959				3,039				3,401				58,112
Charged/(credited) to the statement of income			1,033				21,652				757				(302	)			300				23,440
Exchange differences			(530	)			(3,880	)			—				(236	)			(348	)			(4,994	)
At December 31, 2012			5,571				58,417				6,716				2,501				3,353				76,558
Charged/(credited) to the statement of income			1,161				13,200				(299	)			2,922				4,332				21,316
Disposal of subsidiary			—				(421	)			—				—				—				(421	)
Tax charge relating to cash flow hedge			—				8,026				—				—				—				8,026
Exchange differences			(905	)			(9,602	)			—				(549	)			(1,063	)			(12,119	)
At December 31, 2013			5,827				69,620				6,417				4,874				6,622				93,360

Tax loss carry forwards in Argentina and Uruguay generally expire within 5 years. Tax loss carry forwards in Brazil do not expire. However, in Brazil, the taxable profit for each year can only be reduced by tax losses up to a maximum of 30%.

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

F - 82

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

22. Taxation (continued)

In order to fully realize the deferred tax asset, the Group will need to generate future taxable income in the countries where the tax loss carry forward were incurred. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes that as at December 31, 2013, it is probable that the Group will realize all of the deferred tax assets in Argentina and some portion of the deferred tax assets in Brazil.

As of December 31, 2013, the Group’s tax loss carry forwards and their corresponding jurisdictions are as follows:

Jurisdiction		Tax loss carry forward				Expiration Period
Argentina			55,307			5 years
Uruguay			2,413			5 years
Brazil			152,372			No expiration date

Deferred income tax assets are recognized for tax loss carry-forwards to the extent that the realization of the related tax benefit through future taxable profits is probable. The Group did not recognize deferred income tax assets of US$ 3.8 million in respect of losses amounting to US$ 11.2 that can be carried forward against future taxable income. These losses do not expire.

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:

		2013				2012				2011
Tax calculated at the tax rates applicable to profits in the respective countries			(13,094	)			959				30,947
Non-deductible items			2,398				1,978				2,075
Derecognition / (recognition) of previously recognized (unrecognized) tax losses			3,811				(2,845	)			(14,617	)
Non-taxable income			(2,319	)			(5,744	)			(4,056	)
Others			(73	)			216				313
Income tax (benefit) / expense			(9,277	)			(5,436	)			14,662

23. Payroll and social security liabilities

		2013				2012
Non-current
Social security payable			1,458				1,512
			1,458				1,512
Current
Salaries payable			5,782				4,816
Social security payable			3,849				3,063
Provision for vacations			11,481				9,745
Provision for bonuses			5,027				5,324
			26,139				22,948
Total payroll and social security liabilities			27,597				24,460

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

F - 83

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

24. 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.

The table below shows the movements in the Group’s provisions for other liabilities categorized by type of provision:

		Labor, legal and other claims				Tax and social security				Onerous contracts				Total
At January 1, 2012			2,460				1,669				198				4,327
Additions			2,422				1,911				5,257				9,590
Used during year			(2,001	)			(3,457	)			(5,402	)			(10,860	)
Exchange differences			(247	)			(69	)			(9	)			(325	)
At December 31, 2012			2,634				54				44				2,732
Additions			1,811				62				2,766				4,639
Used during year			(1,123	)			(114	)			(2,683	)			(3,920	)
Exchange differences			(490	)			(2	)			(9	)			(501	)
At December 31, 2013			2,832				—				118				2,950

Analysis of total provisions:

		2013				2012
Non current			2,293				1,892
Current			657				840
			2,950				2,732

The Group is engaged in several legal proceedings, including tax, labor, civil, administrative and other proceedings in Brazil, which qualified as contingent liabilities for an aggregate claimed nominal amount of US$ 19.11 million and US$ 11.1 as of December 31, 2013 and 2012, respectively.

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

F - 84

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

25. Sales

		2013				2012				2011
Sales of manufactured products and services rendered:
Rice			101,906				89,062				82,079
Ethanol			150,382				121,544				116,599
Sugar			133,597				134,766				130,348
Energy			32,463				25,649				24,393
Coffee			—				—				713
Services			2,929				3,575				767
Operating Leases			3,446				4,780				4,980
Others			584				150				5,978
			425,307				379,526				365,857
Sales of agricultural produce and biological assets:
Soybean			68,850				66,721				61,385
Cattle for dairy			2,244				1,634				1,896
Other cattle			616				623				957
Corn			79,277				67,915				42,959
Cotton			6,119				16,489				9,101
Milk			28,417				17,234				17,801
Wheat			20,379				30,611				24,232
Coffee			439				8,363				13,457
Sunflower			8,030				7,887				7,413
Sorghum			146				875				1,237
Barley			1,419				4,220				828
Seeds			2,617				2,294				784
Others			764				308				177
			219,317				225,174				182,227
Total sales			644,624				604,700				548,084

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$ 49.7 million as of December 31, 2013 (2012: US$ 75 million; 2011: US$ 65.9 million) comprised primarily of 20,778 tons of sugar (US$ 7.5 million), 28,800 tons of soybean (U$S 9.6 million), 2,600 tons of cotton (US$ 4.4 million), 19,157 tons of wheat (US$ 5.4 million) and 74,600 tons of corn (US$ 12.5 million) which expire between January 2014 and September 2014.

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

F - 85

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

26. Expenses by nature

The Group presented the statement of income under the function of expense method. Under this method, expenses are classified according to their function as part of the line items “cost of manufactured products sold and services rendered”, “cost of agricultural produce sold and direct agricultural selling expenses”, “general and administrative expenses” and “selling expenses”.

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

		2013				2012				2011
Cost of agricultural produce and biological assets sold			191,213				194,107				168,837
Raw materials and consumables used in manufacturing activities			158,352				159,968				147,339
Services			14,201				18,670				20,437
Salaries and social security expenses (Note 27)			61,019				63,089				57,259
Depreciation and amortization			68,432				54,468				34,184
Taxes (*)			4,836				2,102				2,159
Maintenance and repairs			10,085				10,815				16,032
Freights			37,909				35,470				31,956
Export taxes / selling taxes			34,410				32,683				31,006
Fuel and lubricants			8,603				7,625				8,522
Lease expense and similar arrangements (**)			2,610				3,200				2,592
Others			21,329				23,248				23,854
Total expenses by nature			612,999				605,445				544,177

(*) Excludes export taxes and selling taxes.

(**) Relates to various cancellable operating lease agreements for office and machinery equipment.

For the year ended December 31, 2013, an amount of US$ 272,261 is included as “cost of manufactured products sold and services rendered” (2012: US$ 263,978; 2011: US$ 237,404); an amount of US$ 219,317 is included as “cost of agricultural produce sold and direct agricultural selling expenses” (2012: US$ 225,174; 2011: US$ 182,227); an amount of US$ 53,352 is included in “general and administrative expenses” (2012: US$ 57,691; 2011: US$ 65,142); and an amount of US$ 68,069 is included in “selling expenses” as described above (2012: US$ 58,602; 2011: US$ 59,404).

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

F - 86

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

27. Salaries and social security expenses

		2013				2012				2011
Wages and salaries			42,291				43,519				40,596
Social security costs			14,925				15,432				12,986
Equity-settled share-based compensation			3,803				4,138				3,677
			61,019				63,089				57,259
Number of employees			7,494				7,051				5,560

28. Other operating income, net

		2013				2012				2011
Gain from the sale of subsidiaries (Note 16)			779				27,513				—
Gain from disposal of farmland and other assets (Note 16)			26,434				—				8,832
Gain from commodity derivative financial instruments			19,586				1,821				19,664
Loss from onerous contracts – forwards			(292	)			(2,302	)			(5,333	)
Gain from disposal of other property items			670				882				394
Gain from disposal of financial assets(Note 16)			1,188				—				—
Others			1,285				3,183				1,024
			49,650				31,097				24,581

29. Financial results, net

		2013				2012				2011
Finance income:
- Interest income			6,882				11,249				8,019
- Other income			352				289				1,113
Finance income			7,234				11,538				9,132
Finance costs:
- Interest expense			(49,249	)			(27,672	)			(34,017	)
- Cash flow hedge – transfer from equity			(2,560	)			—				—
- Foreign exchange losses, net			(21,087	)			(26,080	)			(12,683	)
- Taxes			(3,815	)			(4,265	)			(5,273	)
- Loss from interest rate/foreign exchange rate derivative financial instruments			(19,028	)			(5,823	)			(2,247	)
- Other expenses			(3,177	)			(2,814	)			(8,121	)
Finance costs			(98,916	)			(66,654	)			(62,341	)
Total financial results, net			(91,682	)			(55,116	)			(53,209	)

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

F - 87

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

30. Earnings per share

(a) Basic

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Group by the weighted average number of shares in issue during the period excluding ordinary shares held as treasury shares (Note 16).

		2013				2012				2011
(Loss) / Profit from continuing operations attributable to equity holders of the Group			(27,597	)			13,488				57,036
Profit/(Loss) from discontinued operations attributable to equity holders of the Group			1,767				(40,91	)			(1,018	)
Weighted average number of shares in issue (thousands)			122,302				121,365				117,028
Basic (loss) / earnings per share from continuing operations			(0.226	)			0.111				0.488
Basic earnings / (loss) per share from discontinued operations			0.014				(0.034	)			(0.009	)

(b) Diluted

Diluted earnings per share is calculated by adjusting the weighted average number of shares outstanding to assume conversion of all dilutive potential shares. The Group has one category of dilutive potential shares: equity-settled share options. For these instruments, a calculation is done to determine the number of shares that could have been acquired at fair value, based on the monetary value of the subscription rights attached to outstanding share options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the equity-settled share options. As of December 31, 2013, there were 2,431 thousands (2012: 2,528 thousands; 2011: 2,038 thousands) share options outstanding that could potentially have a dilutive impact in the future but were antidilutive for the periods presented.

		2013				2012				2011
(Loss) / Profit from continuing operations attributable to equity holders of the Group			(27,597	)			13,488				57,036
Profit /(Loss) from discontinued operations attributable to equity holders of the Group			1,767				(40,91	)			(1,018	)
Weighted average number of shares in issue (thousands)			122,302				121,365				117,028
Adjustments for:
- Employee share options and restricted units (thousands)			807				1,104				822
Weighted average number of shares for diluted earnings per share (thousands)			123,109				122,469				117,850
Diluted (loss) / earnings per share from continuing operations			(0.226	)			0.111				0.484
Diluted earnings / (loss) per share from discontinued operations			0.014				(0.034	)			(0.009	)

As explained in Note 17, on January 24, 2011 the Extraordinary General Meeting of Adecoagro’s shareholders held on January 24, 2011 approved the reverse split of Adecoagro’s common shares, changing the nominal value of Adecoagro’s common shares from US$ 1 to US$ 1.5. Accordingly, the calculation of basic and diluted earnings per share for all periods presented had been adjusted retrospectively.

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

F - 88

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

31. Disclosure of leases and similar arrangements

The Group as lessee

Operating leases:

The Group leases various offices and machinery under cancellable operating lease agreements. An amount of US$ 1.28 million of lease expense was included in “General and administrative expenses” in the consolidated statement of income for the year ended December 31, 2013 (2012: US$ 1.50 million; 2011: US$ 0.99 million). An amount of US$ 1.27 million of lease expense was included in “Cost of manufactured products sold and services rendered” in the consolidated statement of income for the year ended December 31, 2013 (2012: US$ 1.46 million; 2011: US$ 3.61). An amount of US$ 0.12 million of lease expense was included in “Selling expenses” in the consolidated statement of income for the year ended December 31, 2013 (2012: US$ 0.20 million; 2011: US$ 0.18 million).

The Group leases land for crop cultivation in Argentina. The leases have an average term of a crop year and are renewable at the option of the lessee for additional periods. Under the lease agreements, rent accrues generally at the time of harvest. Rent is payable at several times during the crop year. Lease expense was US$ 17.85 million for the year ended December 31, 2013 (2012: US$ 17.60 million; 2011: US$ 10.52 million). Lease expense is capitalized as part of biological assets, affecting the periodically re-measurement of the biological assets at fair value. Based on this accounting policy, the line item ‘Initial recognition and changes in fair value of biological assets and agricultural produce’ in the consolidated income statement is directly affected by the lease expense that has been capitalized.

The future aggregate minimum lease payments under cancellable operating leases are as follows:

		2013				2012
No later than 1 year			10,313				8,941
Later than 1 year and no later than 5 years			6,090				6,411
Thereafter			—				—
			16,403				15,352

Agriculture “partnerships” (parceria by its exact term in Portuguese):

The Group enters into contracts with landowners to cultivate sugarcane on their land. These contracts have an average term of 5 years.

Under these contracts, the Group makes payments based on the market value of sugarcane per hectare (in tons) used by the Group in each harvest, with the market value based on the price of sugarcane published by CONSECANA and a fixed amount of total recoverable sugar per ton. Lease expense was US$ 150 million for the year ended December 31, 2013 (2012: US$ 30.4 million; 2011: US$ 17.1 million). Lease expense is included in “Initial recognition and changes in fair value of biological assets and agricultural produce” in the statement of income.

Finance leases:

Most of the leased assets carried in the consolidated statement of financial position as part of a finance lease relate to long-term rental and lease agreements for vehicles, machinery and equipment. The net book value of assets under finance leases amounts to US$ 1,046 and US$ 1,531 as of December 31, 2013 and 2012, respectively.

Information on the breakdown of the present value of finance leases and its components is disclosed in Note 21.

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

F - 89

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

31. Disclosure of leases and similar arrangements (continued)

The Group as lessor

Operating leases:

The Group acts as a lessor in connection with an operating lease related to leased farmland. The lease payments received are recognized in profit or loss. The lease has a term of ten years.

The following amounts have been recognized in the statement of income in the line “Sales of manufactured products and services rendered”:

		2013				2012				2011
Rental income			3,446				4,735				4,980

The future minimum rental payments receivable under cancellable leases are as follows:

		2013				2012
No later than 1 year			1,458				3,801
Later than 1 year and no later than 5 years			3,417				15,205
Thereafter			553				7,286
			5,428				26,292

In September 2013, Marfrig Argentina S.A., an Argentine company and a subsidiary of Marfrig Alimentos S.A. (“Marfrig”) notified the Group of their intention to early terminate the lease agreement entered into with the Group on December 2009 for grazing land. The termination of the lease agreement was effective in the fourth quarter of 2013. The Group and Marfrig are currently in negotiations concerning the terms and conditions of the early termination of the lease agreement. The Group has also entered into negotiations with third parties for the lease of the grazing land after the effective date of the termination of the lease agreement.

Finance leases:

The Group does not act as a lessor in connection with finance leases.

32. Business combinations

Acquisitions completed during the year ended December 31, 2011

Acquisition of Compañía Agroforestal Sociedad Anónima (Agroforestal)

On August 18, 2011, the Group acquired 100% of the issued share capital of Agroforestal, an Argentine-based company mainly involved in agricultural and beef cattle industry, for a total consideration of US$ 18.0 million. The acquisition involved an escrow in an amount of US$ 1.5 million, which was retained in escrow by the Group to secure certain obligations of the seller. The escrowed amount is to be released within a three-year period as from the date of acquisition.

In the period from acquisition to December 31, 2011, Agroforestal contributed revenues of US$ 0.5 million and net loss of US$ 0.1 million to the Group’s consolidated results. If Agroforestal had been acquired on January 1, 2011, combined revenues of the Group would have been US$ 4.2 million (unaudited) and Profit Before Income Tax would have been US$ 1.4 million (unaudited) for the year ended December 31, 2011. For purposes of this note the term revenues comprises the line items “sales of manufactured products and services rendered”, “sales of agricultural produce and biological assets”, “initial recognition and changes in fair value of biological assets and agricultural produce” and “changes in net realizable value of agricultural produce after harvest”. These amounts have been calculated using the Group’s accounting policies and by adjusting the results of the subsidiary to reflect the additional depreciation and amortization, as appropriate, that would have been charged assuming the fair value adjustments to net assets acquired had been applied from January 1, 2011, together with its consequential tax effects.

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

F - 90

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

32. Business combinations (continued)

Results, assets and liabilities of Agroforestal as from the acquisition date are included within the ‘Crops’ and ‘Cattle’ segments.

Details of the net assets acquired and goodwill are as follows:

Purchase consideration:
Cash paid			1,350
Present value of seller financing (*)			15,056
Escrow (*)			1,379
Total purchase consideration			17,785
Fair value of net assets acquired			14,049
Goodwill			3,736

(*) Discounted at present value as of the date of acquisition.

The goodwill generated on the acquisition was attributable mainly to the Group’s expected benefits from diversification and expansion into high-yield potential farmland properties.

The assets and liabilities at the date of acquisition are as follows:

		Fair value
Cash and cash equivalents			76
Property, plant and equipment			15,291
Investment property			3,709
Biological assets			1,495
Deferred tax liabilities			(6,858	)
Provisions for other liabilities			(39	)
Other current assets			1,219
Other current liabilities			(844	)
Net assets acquired			14,049

The outflow of cash and cash equivalents on the acquisition can be calculated as follows:

Cash paid			1,350
Cash and cash equivalents in subsidiary acquired .			(76	)
Cash outflow on acquisition			1,274

Acquisition of Simoneta Sociedad Anónima (Simoneta)

On August 19, 2011, the Group acquired 100% of the issued share capital of Simoneta, an Argentine-based company mainly involved in agricultural industry, for a total consideration of US$ 26.4 million. The acquisition also involved contingent consideration to the seller in an amount of US$ 1.0 million, which was retained in escrow by the Group to secure certain obligations of the seller. The escrowed amount is to be released within a three-year period as from the date of acquisition.

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

F - 91

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

32. Business combinations (continued)

In the period from acquisition to December 31, 2011, Simoneta contributed revenues of US$ 1 million and net loss of US$ 0.1 million to the Group’s consolidated results. If Simoneta had been acquired on January 1, 2011, combined revenues of the Group would have been US$ 6 million (unaudited) and Profit Before Income Tax would have been US$ 3 million (unaudited) for the year ended December 31, 2011. For purposes of this note the term revenues comprises the line items “sales of manufactured products and services rendered”, “sales of agricultural produce and biological assets”, “initial recognition and changes in fair value of biological assets and agricultural produce” and “changes in net realizable value of agricultural produce after harvest”. These amounts have been calculated using the Group’s accounting policies and by adjusting the results of the subsidiary to reflect the additional depreciation and amortization, as appropriate, that would have been charged assuming the fair value adjustments to net assets acquired had been applied from January 1, 2011, together with its consequential tax effects. Results, assets and liabilities of Simoneta as from the acquisition date are included within the ‘Crops’ segment.

Details of the net assets acquired and goodwill are as follows:

Purchase consideration:
Cash paid			11,000
Present value of seller financing (*)			14,124
Escrow (*)			923
Total purchase consideration			26,047
Fair value of net assets acquired			18,644
Goodwill			7,403

(*) Discounted at present value as of the date of acquisition.

The goodwill generated on the acquisition was attributable mainly to the Group’s expected benefits from diversification and expansion into high-yield potential farmland properties.

The assets and liabilities at the date of acquisition are as follows:

		Fair value
Cash and cash equivalents			657
Property, plant and equipment			15,701
Investment property			5,961
Deferred tax liabilities			(7,705	)
Provisions for other liabilities			(116	)
Other current and non current assets			5,385
Other current liabilities			(1,239	)
Net assets acquired			18,644

The outflow of cash and cash equivalents on the acquisition can be calculated as follows:

Cash paid			11,000
Cash and cash equivalents in subsidiary acquired			(657	)
Cash outflow on acquisition			10,343

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

F - 92

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

33. Group subsidiaries

The following table details the subsidiaries that comprised the Group as of December 31, 2013 and 2012:

								2013				2012
		Activities				Country of incorporation and operation		Ownership percentage held if not 100%				Ownership percentage held if not 100%
Details of principal subsidiary undertakings:
Operating companies (unless otherwise stated):
Adeco Agropecuaria S.A.			(a	)		Argentina			—				—
Pilagá S.A.			(a	)		Argentina			99.84	%			99.84	%
Cavok S.A.			(a	)		Argentina			—				—
Establecimientos El Orden S.A.			(a	)		Argentina			—				—
Bañado del Salado S.A.			(a	)		Argentina			—				—
Agrícola Ganadera San José S.A.			(a	)		Argentina			(i	)			(i	)
Santa Regina S.A.			(a	)		Argentina			(iii	)			(iii	)
Agro Invest S.A.			(a	)		Argentina			—				—
Forsalta S.A.			(a	)		Argentina			—				—
Dinaluca S.A.			(a	)		Argentina			—				—
Simoneta S.A.			(a	)		Argentina			—				—
Compañía Agroforestal S.M.S.A.			(a	)		Argentina			—				—
Adeco Agropecuaria Brazil S.A.			(b	)		Brazil			—				—
Adecoagro Vale do Ivinhema Ltda.			(b	)		Brazil			—				—
Usina Monte Alegre Ltda.			(b	)		Brazil			—				—
Fazenda Mimoso Ltda.			(c	)		Brazil			(ii	)			—
Kelizer S.A.			(a	)		Uruguay			—				—
Agroglobal S.A. (f.k.a. Adecoagro Uruguay S.A.)			(a	)		Uruguay			—				—
Holdings companies:
Adeco Brazil Participacoes S.A.			—			Brazil			—				—
International Farmland Holdings LP			—			United States			99.99	%			99.99	%
Adecoagro LP			—			United States			—				—
Ladelux S.C.A.			—			Uruguay			—				—
Spain Holding Companies (e)			—			Spain			—				—
Ona Ltd.			—			Malta			—				—
Toba Ltd.			—			Malta			—				—

(a) Mainly crops, rice, cattle and others

(b) Mainly sugarcane, ethanol and energy

(c) Mainly coffee

(d) Mainly dairy

(e) Comprised by: Kadesh España S.L; Leterton España S.L.; Global Calidon SL; Global Mirabilis SL; Global Asterion SL; Global Acasto SL; Global Anceo SL; Global Laertes SL; Global Seward SL.; Global Acamante SL; Global Carelio SL; Global Pindaro SL; Global Pileo SL; Global Hisingen SL; Peak Tezas SL; Peak City SL.

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

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Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

33. Group companies (continued)

(i) In June 2012, the Group completed the sale of Agricula Ganadera San José S.A. (Note 16).

(ii) In May 2013, the Group completed the sale of Fazenda Mimoso Ltda. (Note 16).

(iii) In June 2013, the Group completed the sale of Santa Regina S.A. (Note 16).

The percentage voting right for each principal subsidiary is the same as the percentage of capital stock held. Issued share capital represents only ordinary shares/ quotas, units or their equivalent. There are no preference shares or units issued in any subsidiary undertaking.

According to the laws of certain of the countries in which the Group operates, 5% of the profit of the year is separated to constitute legal reserves until they reach legal capped amounts (20% of total capital). These legal reserves are not available for dividend distribution and can only be released to absorb losses. The Group’s joint ventures have not reached the legal capped amounts.

34. Related-party transactions

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

Related party		Relationship		Description of transaction		Income (loss) included in the statement of income												Balance receivable (payable)/(equity)
						2013				2012				2011				2013				2012
Grupo La Lácteo		Joint venture		Sales of goods			7.432				8,231				16,459				—				—
				Purchases of goods			(25	)			53				—				—				—
				Receivables from related parties (Note 13)			—								—				—				2,253
				Interest income			33				377				—				—				—
Santa Regina Agropecuaria S.A.		Investment		Receivables from related parties			—				—				—				—				144
Mario Jorge de Lemos Vieira/ Cia Agropecuaria Monte Alegre/ Alfenas Agricola Ltda/ Marcelo Weyland Barbosa Vieira/ Paulo Albert Weyland Vieira		(i)		Cost of manufactured products sold and services rendered (ii)			(2.650	)			(4,215	)			(3,136	)			—				—
				Receivables from related parties (Note 13)			—				—				—				—				—
				Payables (Note 20)							—				—				(667	)			(562	)
UMA members		(i)		Tax charge			—				—				—				—				—
Ospraie		(i)		Consent fee (iii)			—				—				(3,000	)			—				—
Directors and senior management		Employment		Compensation selected employess			(7,367	)			(7,367	)			(6,594	)			(17,472	)			(18,072	)
CHS Agro		Joint venture		Purchases of goods			402				—				—				—				—
				Payables (Note 19)			—				—				—				(402	)			—

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

F - 94

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

34. Related-party transactions (continued)

(i) Shareholders of the Company.

(ii) Relates to agriculture partnership agreements (“parceria”).

(iii) One-time cost related to the agreement entered into with Ospraie to waive certain rights following the completion of initial public offering.

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

F - 95