EX-99.1 2 t1701462_ex99-1.htm EXHIBIT 99.1

Exhibit 99.1

Adecoagro S.A.

Condensed Consolidated Interim Financial Statements as of March 31, 2017 and for the three-month periods ended March 31, 2017 and 2016

Legal information

Denomination: Adecoagro S.A.

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

Company activity: Agricultural and agro-industrial

Date of registration: June 11, 2010

Expiration of company charter: No term defined

Number of register (RCS Luxembourg): B153.681

Capital stock: 122,381,815 common shares (of which 1,352,397 are treasury shares)

F - 2

Adecoagro S.A.

Condensed Consolidated Interim Statements of Income

for the three-month periods ended March 31, 2017 and 2016

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

	Note	March 31, 2017		March 31, 2016
		(unaudited)
Sales of goods and services rendered	4	166,091		121,484
Cost of goods sold and services rendered	5	(139,362)		(99,023)
Initial recognition and changes in fair value of biological assets and agricultural produce	14	17,365		25,833
Changes in net realizable value of agricultural produce after harvest		(227)		2,659
Margin on Manufacturing and Agricultural Activities Before Operating Expenses		43,867		50,953
General and administrative expenses	6	(14,017)		(10,304)
Selling expenses	6	(16,014)		(11,036)
Other operating income, net	8	13,272		58
Profit from Operations Before Financing and Taxation		27,108		29,671
Finance income	9	2,112		4,145
Finance costs	9	(19,442)		(28,713)
Financial results, net	9	(17,330)		(24,568)
Profit Before Income Tax		9,778		5,103
Income tax expense	10	(3,811)		(2,351)
Profit for the Period		5,967		2,752
Attributable to:
Equity holders of the parent		4,991		1,600
Non-controlling interest		976		1,152
Earnings per share attributable to the equity holders of the parent during the period:
Basic		0.04		0.01
Diluted		0.04		0.01

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

F - 3

Adecoagro S.A.

Condensed Consolidated Interim Statements of Comprehensive Income

for the three-month periods ended March 31, 2017 and 2016

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

		March 31, 2017		March 31, 2016
		(unaudited)
Profit for the period		5,967		2,752
Other comprehensive income:
Exchange differences on translating foreign operations		14,717		14,556
Cash flow hedge, net of tax (Note 2)		11,392		25,854
Other comprehensive earnings for the period		26,109		40,410
Total comprehensive earnings for the period		32,076		43,162
Attributable to:
Equity holders of the parent		30,885		42,857
Non-controlling interest		1,191		305

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

F - 4

Adecoagro S.A.

Condensed Consolidated Interim Statements of Financial Position

as of March 31, 2017 and December 31, 2016

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

		March 31,		December 31,
	Note	2017		2016
		(unaudited)
ASSETS
Non-Current Assets
Property, plant and equipment	11	872,816		802,608
Investment property	12	2,752		2,666
Intangible assets	13	17,640		17,252
Biological assets	14	8,939		8,516
Deferred income tax assets	10	32,247		38,586
Trade and other receivables	16	20,279		17,412
Other assets		572		566
Total Non-Current Assets		955,245		887,606
Current Assets
Biological assets	14	138,943		136,888
Inventories	17	118,431		111,754
Trade and other receivables	16	179,975		157,528
Derivative financial instruments	15	12,546		3,398
Other assets		46		24
Cash and cash equivalents	18	231,321		158,568
Total Current Assets		681,262		568,160
TOTAL ASSETS		1,636,507		1,455,766
SHAREHOLDERS EQUITY
Capital and reserves attributable to equity holders of the parent
Share capital	19	183,573		183,573
Share premium	19	936,191		937,250
Cumulative translation adjustment		(512,862)		(527,364)
Equity-settled compensation		18,647		17,218
Cash flow hedge		(25,907)		(37,299)
Treasury shares		(2,030)		(1,859)
Reserve from the sale of non-controlling interests in subsidiaries		41,574		41,574
Retained earnings		55,989		50,998
Equity attributable to equity holders of the parent		695,175		664,091
Non-controlling interest		7,109		7,582
TOTAL SHAREHOLDERS EQUITY		702,284		671,673
LIABILITIES
Non-Current Liabilities
Trade and other payables	21	1,442		1,427
Borrowings	22	565,607		430,304
Deferred income tax liabilities	10	17,207		14,689
Payroll and social security liabilities	23	1,371		1,235
Derivatives financial instruments	15	978		662
Provisions for other liabilities		3,648		3,299
Total Non-Current Liabilities		590,253		451,616
Current Liabilities
Trade and other payables	21	74,975		92,158
Current income tax liabilities		2,164		1,387
Payroll and social security liabilities	23	31,378		26,844
Borrowings	22	230,213		205,092
Derivative financial instruments	15	4,707		6,406
Provisions for other liabilities		533		590
Total Current Liabilities		343,970		332,477
TOTAL LIABILITIES		934,223		784,093
TOTAL SHAREHOLDERS EQUITY AND LIABILITIES		1,636,507		1,455,766

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

F - 5

Adecoagro S.A.

Condensed Consolidated Interim Statements of Changes in Shareholders’ Equity

for the three-month periods ended March 31, 2017 and 2016 (continued)

(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 19)	Share Premium	Cumulative Translation Adjustment	Equity-settled Compensation	Cash flow hedge	Treasury shares	Reserve from the sale of non- controlling interests in subsidiaries	Retained Earnings	Subtotal	Non- Controlling Interest	Total Shareholders’ Equity
Balance at January 1, 2016		183,573	937,674	(568,316)	16,631	(137,911)	(1,936)	41,574	48,795	520,084	7,335	527,419
Profit for the period		-	-	-	-	-	-	-	1,600	1,600	1.152	2,752
Other comprehensive income:
-  Items that may be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations		-	-	15,402	-	-	-	-	-	15,402	(846)	14,556
Cash flow hedge (*)		-	-	-	-	25,855	-	-	-	25,855	(1)	25,854
Other comprehensive income for the period		-	-	15,402	-	25,855	-	-	-	41,257	(847)	40,410
Total comprehensive income for the period		-	-	15,402	-	25,855	-	-	1,600	42,857	305	43,162
Employee share options (Note 20)
- Exercised		-	181	-	(58)	-	29	-	-	152	-	152
Restricted shares (Note 20):
- Value of employee services		-	-	-	1,195	-	-	-	-	1,195	-	1,195
Balance at March 31, 2016 (unaudited)		183,573	937,855	(552,914)	17,768	(112,056)	(1,907)	41,574	50,395	564,288	7,640	571,928

(*) Net of 13,288 of Income Tax.

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

F - 6

Adecoagro S.A.

Condensed Consolidated Interim Statements of Changes in Shareholders’ Equity

for the three-month periods ended March 31, 2017 and 2016 (continued)

(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 19)	Share Premium	Cumulative Translation Adjustment	Equity-settled Compensation	Cash flow hedge	Treasury shares	Reserve from the sale of non- controlling interests in subsidiaries	Retained Earnings	Subtotal	Non- Controlling Interest	Total Shareholders’ Equity
Balance at January 1, 2017		183,573	937,250	(527,364)	17,218	(37,299)	(1,859)	41,574	50,998	664,091	7,582	671,673
Profit for the period		-	-	-	-	-	-	-	4,991	4,991	976	5,967
Other comprehensive income:
-  Items that may be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations		-	-	14,502	-	-	-	-	-	14,502	215	14,717
Cash flow hedge (*)		-	-	-	-	11,392	-	-	-	11,392	-	11,392
Other comprehensive income for the period		-	-	14,502	-	11,392	-	-	-	25,894	215	26,109
Total comprehensive income for the period		-	-	14,502	-	11,392	-	-	4,991	30,885	1,191	32,076
Restricted shares (Note 20):
- Value of employee services		-	-	-	1,429	-	-	-	-	1,429	-	1,429
- Purchase of own shares		-	(1,059)	-	-	-	(171)	-	-	(1,230)	-	(1,230)
- Dividends		-	-	-	-	-	-	-	-	-	(1,664)	(1,664)
Balance at March 31, 2017 (unaudited)		183,573	936,191	(512,862)	18,647	(25,907)	(2,030)	41,574	55,989	695,175	7,109	702,284

(*) Net of 5,920 of Income Tax.

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

F - 7

Adecoagro S.A.

Condensed Consolidated Interim Statements of Cash Flows

for the three-month periods ended March 31, 2017 and 2016

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

	Note	March 31, 2017		March 31, 2016
		(unaudited)
Cash flows from operating activities:
Profit for the period		5,967		2,752
Adjustments for:
Income tax expense	10	3,811		2,351
Depreciation	11	17,458		13,429
Amortization	13	191		113
Loss / (gain) from disposal of other property items	8	557		(134)
Equity settled share-based compensation granted	7, 20	1,429		1,195
(Gain) from derivative financial instruments	8, 9	(14,571)		(922)
Interest and other expense, net	9	12,024		8,787
Initial recognition and changes in fair value of non harvested biological assets (unrealized)		(5,843)		(20,174)
Changes in net realizable value of agricultural produce after harvest (unrealized)		174		704
Provision and allowances		68		1,722
Foreign exchange gains, net	9	3,684		9,862
Cash flow hedge – transfer from equity	9	(666)		4,975
Subtotal		24,283		24,660
Changes in operating assets and liabilities:
(Increase) in trade and other receivables		(20,864)		(28,654)
(Decrease)/Increase in inventories		2,276		(15,072)
Decrease in biological assets		2,616		17,742
(Increase) in other assets		(17)		(51)
Decrease /(increase) in derivative financial instruments		8,066		(4,426)
(Decrease) / increase in trade and other payables		(28,522)		9,437
Increase in payroll and social security liabilities		3,860		2,303
Increase in provisions for other liabilities		111		514
Net cash generated in operating activities before interest and taxes paid		(8,191)		6,453
Income tax paid		(278)		(66)
Net cash generated from operating activities		(8,469)		6,387

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

F - 8

Adecoagro S.A.

Condensed Consolidated Interim Statements of Cash Flows

for the three-month periods ended March 31, 2017 and 2016 (continued)

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

	Note	March 31, 2017		March 31, 2016
		(unaudited)
Cash flows from investing activities:
Purchases of property, plant and equipment		(58,535)		(29,919)
Purchases of intangible assets	13	(101)		(667)
Interest received	9	1,422		2,796
Proceeds from sale of property, plant and equipment		222		153
Net cash used in investing activities		(56,992)		(27,637)
Cash flows from financing activities:
Proceeds from equity settled share-based compensation exercise		-		152
Proceeds from long-term borrowings		149,801		40,167
Payments of long-term borrowings		(45,567)		(27,200)
Proceeds from short-term borrowings		52,604		50,526
Payment of short-term borrowings		(2,021)		(11,541)
Payment of derivatives financial instruments		(2,704)		-
Interest paid		(10,046)		(8,765)
Purchase of own shares		(1,230)		-
Dividends paid to non-controlling interest	25	(659)		-
Net cash generated from financing activities		140,178		43,339
Net decrease in cash and cash equivalents		74,717		22,089
Cash and cash equivalents at beginning of period		158,568		198,894
Effect of exchange rate changes on cash and cash equivalents		(1,964)		2,705
Cash and cash equivalents at end of period		231,321		223,688

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

F - 9

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements (continued)

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

1. General information

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

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

These condensed consolidated interim financial statements have been approved for issue by the Board of Directors on May 12, 2017.

2. Financial risk management

Risk management principles and processes

The Group continues to be exposed to several risks arising from financial instruments including price risk, exchange rate risk, interest rate risk, liquidity risk and credit risk. A thorough explanation of the Group´s risks and the Group´s approach to the identification, assessment and mitigation of risks is included in Note 2 to the annual financial statements. There have been no changes to the Group´s exposure and risk management principles and processes since December 31, 2016 and refers readers to the annual financial statements for information.

However, the Group considers that the following tables below provide useful information to understand the Group´s interim results for the three month period ended March 31, 2017. These disclosures do not appear in any particular order of potential materiality or probability of occurrence.

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

F - 10

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements (continued)

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

2. Financial risk management (continued)

· Exchange rate risk

The following tables show the Group’s net monetary position broken down by various currencies for each functional currency in which the Group operates at March 31, 2017. All amounts are shown in US dollars.

	March 31, 2017
	(unaudited)
	Functional currency
Net monetary position (Liability)/ Asset	Argentine Peso	Brazilian Reais	Uruguayan Peso	US Dollar	Total
Argentine Peso	13,889	-	-	-	13,889
Brazilian Reais	-	(188,708)	-	-	(188,708)
US Dollar	(84,091)	(353,049)	24,319	77,489	(335,332)
Uruguayan Peso	-	-	76	-	76
Total	(70,202)	(541,757)	24,395	77,489	(510,075)

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 period ended March 31, 2017 would have increased the Group’s Profit Before Income Tax for the period. 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).

	March 31, 2017
	(unaudited)
	Functional currency
Net monetary position	Argentine Peso	Brazilian Reais	Uruguayan Peso	US Dollar	Total
US Dollar	(8,409)	(35,305)	2,432	-	(41,282)
(Decrease) or increase in Profit Before Income Tax	(8,409)	(35,305)	2,432	-	(41,282)

Hedge Accounting - Cash Flow Hedge

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

The Group expects that the cash flows will occur and affect profit or loss between 2017 and 2020.

For the period ended March 31, 2017, a total amount before income tax of US$ 17,978 gain was recognized in other comprehensive income and an amount of US$ 666 loss was reclassified from equity to profit or loss within “Financial results, net”.

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

F - 11

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements (continued)

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

2. Financial risk management (continued)

· Interest rate risk

The following table shows a breakdown of the Group’s fixed-rate and floating-rate borrowings per currency denomination and functional currency of the subsidiary issuing the loans (excluding finance leases) at March 31, 2017 (all amounts are shown in US dollars):

	March 31, 2017
	(unaudited)
	Functional currency
Rate per currency denomination	Argentine Peso	Brazilian Reais	Uruguayan Peso	Total
Fixed rate:
Argentine Peso	4,775	-	-	4,775
Brazilian Reais	-	129,723	-	129,723
US Dollar	58,775	39,055	31,084	128,914
Subtotal Fixed-rate borrowings	63,550	168,778	31,084	263,412
Variable rate:
Brazilian Reais	-	67,304	-	67,304
US Dollar	48,856	416,078	-	464,934
Subtotal Variable-rate borrowings	48,856	483,382	-	532,238
Total borrowings as per analysis	112,406	652,160	31,084	795,650
Finance leases	170	-	-	170
Total borrowings at March 31, 2017	112,576	652,160	31,084	795,820

At March 31, 2017, if interest rates on floating-rate borrowings had been 1% higher (or lower) with all other variables held constant, Profit Before Income Tax for the period would decrease as follows:

	March 31, 2017
	(unaudited)
	Functional currency
Rate per currency denomination	Argentine Peso	Brazilian Reais	Uruguayan Peso	Total
Variable rate:
Brazilian Reais	-	(673)	-	(673)
US Dollar	(489)	(4,161)	-	(4,650)
Decrease in Profit Before Income Tax	(489)	(4,834)	-	(5,323)

· Credit risk

As of March 31, 2017, four banks accounted for more than 75% of the total cash deposited (Rabobank, HSBC, JP Morgan and Banco do Brasil).

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

F - 12

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements (continued)

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

2. Financial risk management (continued)

· Derivative financial instruments

The following table shows the outstanding positions for each type of derivative contract as of March 31, 2017:

§ Futures / Options

		March 31, 2017
Type of		Quantities (thousands) (**)		Notional		Market		Profit  / (Loss) (*)
derivative contract				amount		Value Asset/ (Liability)
						(unaudited)		(unaudited)
Futures:
Sale
Corn		23		3,835		308		(362)
Soybean		(5)		52		146		385
Wheat		(36)		(5,721)		58		54
Sugar		163,008		66,422		2,194		6,993
Ethanol		900		440		6		47
Options:
Buy put
Sugar		131,293		(7,917)		9,225		2,810
Sell call
Sugar		37,897		4,302		(1,311)		3,238
Sell put
Sugar		24,194		691		(1,112)		(421)
Buy call
Soybean		(4)		78		39		(40)
Total		357,270		62,182		9,553		12,704

(*) Included in line "Gain from commodity derivative financial instruments" Note 8.

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

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

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

F - 13

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements (continued)

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

2. Financial risk management (continued)

§ Other derivative financial instruments

As of March 31, 2017, the Group has floating-to-fixed interest rate swap, foreign currency fixed-to-floating interest rate swap and foreign currency floating-to fixed interest rate swap agreements, which were also outstanding as of December 31, 2016.

During the period ended on March 31 2017, the Group entered into a currency forward contract with Brazilian banks in order to hedge the fluctuation of the Brazilian Reais against US Dollar for a total notional amount of US$ 37.7. These contract finished in February 2017 and resulted in a recognition of US$ 0.02 million loss.

During the period ended March 31, 2016, the Group entered into several currency forward contracts with Brazilian banks in order to hedge the fluctuation of the Brazilian Reais against US Dollar for a total notional amount of US$ 21.5 million. Those contracts entered in 2016 had maturity dates ranging between March 2016 and March 2017. The outstanding contracts resulted in the recognition of a loss of US$ 0.3 million in 2016.

During the period ended on March 31, 2016, the Group entered into several currency forward contracts with Argentinian banks in order to hedge the fluctuation of the Argentinian peso against US Dollar for a total notional amount of US$ 22 million. The currency forward contracts maturity date is June 2016. The outstanding contracts resulted in the recognition of a loss amounting to US$ 0.03 million in 2016.

During the period ended on March 31, 2017 and 2016, the Group entered into several currency forward contracts in order to hedge the fluctuation of the US Dollar against Euro for a total notional amount of US$ 20.3 million and US$ 16.8 million, respectively. The currency forward contracts maturity date are between March and June 2017, and June 2016, respectively. The outstanding contracts resulted in the recognition of a loss of US$0.02 and US$ nil million, respectively.

Gain 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 condensed consolidated interim financial statements.

F - 14

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements (continued)

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

3. 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’ line of business is further comprised of three 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, handling and drying services to third parties, and the purchase and sale of crops produced by third parties crops. Each underlying crop in the Crops segment does not represent a separate operating segment. Management seeks to maximize the use of the land through the cultivation of one or more type of crops. Types and surface amount of crops cultivated may vary from harvest year to harvest year depending on several factors, some of them out of the Group´s control. Management is focused on the long-term performance of the productive land, and to that extent, the performance is assessed considering the aggregated combination, if any, of crops planted in the land. 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 ‘All Other Segments’ column consists of the aggregation of the remaining non-reportable operating segments, which do not meet the quantitative thresholds for disclosure and for which the Group's management does not consider them to be of continuing significance as from January 1, 2014, namely, Coffee and Cattle.

· The Group’s ‘Sugar, Ethanol and Energy’ Segment consists of cultivating sugarcane which is processed in owned sugar mills, transformed into ethanol, sugar and electricity and marketed;

· The 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 interim financial statements.

Total segment assets and liabilities are measured in a manner consistent with that of the condensed consolidated interim financial statements. These assets and liabilities are allocated based on the operations of the segment and the physical location of the asset. The Group’s investment in the joint venture CHS S.A. is allocated to the ‘Crops’ segment.

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 condensed consolidated interim financial statements.

F - 15

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements (continued)

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

3. Segment information (continued)

Segment analysis for the three-month period ended March 31, 2017 (unaudited)

	Farming										Sugar, Ethanol and Energy		Land Transformation		Corporate		Total
	Crops		Rice		Dairy		All Other Segments		Farming subtotal
Sales of goods and services rendered	25,196		19,260		10,812		171		55,439		110,652		-		-		166,091
Cost of goods sold and services rendered	(25,136)		(17,436)		(10,485)		(56)		(53,113)		(86,249)		-		-		(139,362)
Initial recognition and changes in fair value of biological assets and agricultural produce	11,897		6,022		1,941		184		20,044		(2,679)		-		-		17,365
Changes in net realizable value of agricultural produce after harvest	(227)		-		-		-		(227)		-		-		-		(227)
Margin on Manufacturing and Agricultural Activities Before Operating Expenses	11,730		7,846		2,268		299		22,143		21,724		-		-		43,867
General and administrative expenses	(673)		(1,125)		(239)		(43)		(2,080)		(6,865)		-		(5,072)		(14,017)
Selling expenses	(1,032)		(3,085)		(239)		(4)		(4,360)		(11,606)		-		(48)		(16,014)
Other operating (loss)/income, net	2,160		174		250		(161)		2,423		10,887		-		(38)		13,272
Profit / (loss) from Operations Before Financing and Taxation	12,185		3,810		2,040		91		18,126		14,140		-		(5,158)		27,108
Depreciation and amortization	(335)		(922)		(238)		(30)		(1,525)		(16,124)		-		-		(17,649)
Initial recognition and changes in fair value of biological assets and agricultural produce (unrealized)	9,960		5,673		-		184		15,817		(9,974)		-		-		5,843
Initial recognition and changes in fair value of biological assets and agricultural produce (realized)	1,937		349		1,941		-		4,227		7,295		-		-		11,522
Changes in net realizable value of agricultural produce after harvest (unrealized)	(174)		-		-		-		(174)		-		-		-		(174)
Changes in net realizable value of agricultural produce after harvest (realized)	(53)		-		-		-		(53)		-		-		-		(53)
Farmlands and farmland improvements, net	70,286		19,274		155		5,680		95,395		27,491		-		-		122,886
Machinery, equipment and other fixed assets, net	4,393		16,074		7,558		467		28,492		461,042		-		-		489,534
Bearer plants, net	-		-		-		1,913		1,913		230,448		-		-		232,361
Work in progress	1,193		5,281		2,349		-		8,823		19,212		-		-		28,035
Investment property	-		-		-		2,752		2,752		-		-		-		2,752
Goodwill	3,903		1,794		-		1,218		6,915		6,892		-		-		13,807
Biological assets	52,512		3,701		7,211		3,052		66,476		81,406		-		-		147,882
Inventories	20,789		43,637		3,009		-		67,435		50,996		-		-		118,431
Total segment assets	153,076		89,761		20,282		15,082		278,201		877,487		-		-		1,155,688
Borrowings	78,911		66,905		968		6,056		152,840		642,980		-		-		795,820
Total segment liabilities	78,911		66,905		968		6,056		152,840		642,980		-		-		795,820

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

F - 16

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements (continued)

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

3. Segment information (continued)

Segment analysis for the three-month period ended March 31, 2016 (unaudited)

	Farming										Sugar, Ethanol and Energy		Land Transformation		Corporate		Total
	Crops		Rice		Dairy		All Other Segments		Farming subtotal
Sales of goods and services rendered	21,949		20,549		5,169		266		47,933		73,551		-		-		121,484
Cost of goods sold and services rendered	(21,805)		(18,414)		(5,153)		(32)		(45,404)		(53,619)		-		-		(99,023)
Initial recognition and changes in fair value of biological assets and agricultural produce	16,040		8,479		434		66		25,019		814		-		-		25,833
Changes in net realizable value of agricultural produce after harvest	2,659		-		-		-		2,659		-		-		-		2,659
Margin on Manufacturing and Agricultural Activities Before Operating Expenses	18,843		10,614		450		300		30,207		20,746		-		-		50,953
General and administrative expenses	(575)		(626)		(256)		(58)		(1,515)		(3,666)		-		(5,123)		(10,304)
Selling expenses	(793)		(2,164)		(101)		(11)		(3,069)		(7,942)		-		(25)		(11,036)
Other operating (loss)/income, net	(823)		198		31		1		(593)		582		-		69		58
Profit / (loss) from Operations Before Financing and Taxation	16,652		8,022		124		232		25,030		9,720		-		(5,079)		29,671
Depreciation and amortization	(323)		(555)		(243)		(53)		(1,174)		(12,368)		-		-		(13,542)
Initial recognition and changes in fair value of biological assets and agricultural produce (unrealized)	14,772		8,479		-		-		23,251		(3,077)		-		-		20,174
Initial recognition and changes in fair value of biological assets and agricultural produce (realized)	1,268		-		434		66		1,768		3,891		-		-		5,659
Changes in net realizable value of agricultural produce after harvest (unrealized)	(704)		-		-		-		(704)		-		-		-		(704)
Changes in net realizable value of agricultural produce after harvest (realized)	3,363		-		-		-		3,363		-		-		-		3,363
Farmlands and farmland improvements, net	68,224		18,868		168		5,504		92,764		26,734		-		-		119,498
Machinery, equipment and other fixed assets, net	3,892		14,949		7,449		467		26,757		418,543		-		-		445,300
Bearer plants, net	-		-		-		1,860		1,860		214,309		-		-		216,169
Work in progress	1,100		3,274		2,727		-		7,101		14,540		-		-		21,641
Investment property	-		-		-		2,666		2,666		-		-		-		2,666
Goodwill	3,782		1,737		-		1,186		6,705		6,700		-		-		13,405
Biological assets	28,189		25,575		6,827		2,433		63,024		82,380		-		-		145,404
Inventories	29,562		12,102		2,060		-		43,724		68,030				-		111,754
Total segment assets	134,749		76,505		19,231		14,116		244,601		831,236		-		-		1,075,837
Borrowings	43,878		47,156		616		10,449		102,099		533,297		-		-		635,396
Total segment liabilities	43,878		47,156		616		10,449		102,099		533,297		-		-		635,396

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

F - 17

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements (continued)

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

4. Sales

		March 31, 2017		March 31, 2016
		(unaudited)
Sales of manufactured products and services rendered:
Ethanol (*)		57,279		42,625
Sugar (*)		46,970		28,233
Rice (*)		19,055		20,393
Energy		6,384		2,657
Powder milk		2,660		-
Operating leases		175		271
Services		411		428
Others		280		514
		133,214		95,121
Sales of agricultural produce and biological assets:
Soybean (*)		5,362		6,208
Cattle for dairy production		735		706
Corn (*)		9,414		7,217
Cotton (*)		-		835
Milk		7,181		4,301
Wheat		8,376		3,388
Sunflower		422		3,104
Barley		1,324		602
Others (*)		63		2
		32,877		26,363
Total sales		166,091		121,484

(*) Includes sales of corn, rice, powder milk, sugar, wheat, sunflower and others produced by third parties for an amount of US$ 7.3 million; US$ 0.7 million; US$ 2.7 million; US$ 14.0 million; US$ 4.7 million; US$ 0.2 million and US$ 0.5 million respectively.

Commitments to sell commodities at a future date

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

The notional amount of these contracts is US$ 108 million as of March 31, 2017 (March 31, 2016: US$ 163.6 million) comprised primarily of 151.045 tons of sugar (US$ 61,9), 12.051 m³ of ethanol (US$ 1.9 million), 401.274 mhw of energy (U$S 26.1 million) , 12.956 tons of soybean (U$S 6.3 million), 55.421 tons of corn (US$ 8.3 million), and 6.436 tons of wheat (US$ 1 million) which expire between April 2017 and December 2017.

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

F - 18

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements (continued)

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

5. Cost of goods sold and services rendered

As of March 31, 2017:

	March 31, 2017
	Crops		Rice		Dairy		All other segments		Sugar, Ethanol and Energy		Total
Finished goods at the beginning of 2017 (Note 17)	13,117		5,473		-		-		49,601		68,191
Cost of production of manufactured products (Note 6)	77		16,992		-		56		50,946		68,071
Purchases	11,861		972		2,569		-		19,936		35,338
Agricultural produce	12,881		-		7,916		-		-		20,797
Transfer to raw material	(2,157)		-		-		-		-		(2,157)
Direct agricultural selling expenses	2,965		-		-		-		-		2,965
Tax recoveries (i)	-		-		-		-		(5,320)		(5,320)
Changes in net realizable value of agricultural produce after harvest	(227)		-		-		-		-		(227)
Finished goods at the end of March 31, 2017 (Note 17)	(13,808)		(6,153)		-		-		(30,428)		(50,389)
Exchange differences	427		152		-		-		1,514		2,093
Cost of goods sold and services rendered, and direct agricultural selling expenses	25,136		17,436		10,485		56		86,249		139,362

(i): Correspond to the presumed credit of ICMS over the sale values.

As of March 31, 2016:

	March 31, 2016
	Crops		Rice		Dairy		All other segments		Sugar, Ethanol and Energy		Total
Finished goods at the beginning of 2016	16,034		6,904		55		-		24,631		47,624
Cost of production of manufactured products (Note 6)	43		13,042		-		32		33,028		46,145
Purchases	3,111		5,312		145		-		10,356		18,924
Agricultural produce	17,615		-		5,007		-		-		22,622
Transfer to raw material	(1,838)		-		-		-		-		(1,838)
Direct agricultural selling expenses	2,184		-		-		-		-		2,184
Tax recoveries (i)	-		-		-		-		(4,850)		(4,850)
Changes in net realizable value of agricultural produce after harvest	2,659		-		-		-		-		2,659
Finished goods at the end of March 31, 2016	(16,143)		(6,034)		(46)		-		(11,146)		(33,369)
Exchange differences	(1,860)		(810)		(8)		-		1,600		(1,078)
Cost of goods sold and services rendered, and direct agricultural selling expenses	21,805		18,414		5,153		32		53,619		99,023

(i): Correspond to the presumed credit of ICMS over the sale values.

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

F - 19

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements (continued)

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

6. Expenses by nature

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

Expenses by nature for the year ended March 31, 2017:

		Cost of production of manufactured products (Note 5)												General and Administrative Expenses		Selling Expenses		Total
		Crops		Rice		Dairy		All other segments		Sugar, Ethanol and Energy		Total
Salaries, social security expenses and employee benefits		-		2,081		-		54		5,298		7,433		8,329		1,512		17,274
Raw materials and consumables		77		1,182		-		-		1,179		2,438		-		-		2,438
Depreciation and amortization		-		204		-		2		12,680		12,886		1,447		181		14,514
Fuel, lubricants and others		-		34		-		-		4,770		4,804		155		38		4,997
Maintenance and repairs		-		387		-		-		2,205		2,592		286		143		3,021
Freights		-		1,739		-		-		15		1,754		-		4,033		5,787
Export taxes / selling taxes		-		-		-		-		-		-		-		6,872		6,872
Export expenses		-		-		-		-		-		-		-		690		690
Contractors and services		-		-		-		-		1,137		1,137		-		-		1,137
Energy transmission		-		-		-		-		-		-		-		789		789
Energy power		-		420		-		-		54		474		45		10		529
Professional fees		-		11		-		-		54		65		1,808		219		2,092
Other taxes		-		22		-		-		304		326		167		-		493
Contingencies		-		-		-		-		-		-		689		-		689
Lease expense and similar arrangements		-		49		-		-		-		49		350		16		415
Third parties raw materials		-		-		-		-		5,239		5,239		-		-		5,239
Tax recoveries		-		-		-		-		(492)		(492)		-		-		(492)
Others		-		138		-		-		745		883		741		1,511		3,135
Subtotal		77		6,267		-		56		33,188		39,588		14,017		16,014		69,619
Own agricultural produce consumed		-		10,725		-		-		17,758		28,483		-		-		28,483
Total		77		16,992		-		56		50,946		68,071		14,017		16,014		98,102

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

F - 20

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements (continued)

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

6. Expenses by nature (continued)

Expenses by nature for the year ended March 31, 2016:

	Cost of production of manufactured products (Note 5)												General and Administrative Expenses		Selling Expenses		Total
	Crops		Rice		Dairy		All other segments		Sugar, Ethanol and Energy		Total
Salaries, social security expenses and employee benefits	-		1,430		-		24		6,757		8,211		6,653		868		15,732
Raw materials and consumables	37		719		-		-		1,442		2,198		-		-		2,198
Depreciation and amortization	-		219		-		8		10,305		10,532		1,026		161		11,719
Fuel, lubricants and others	-		26		-		-		3,215		3,241		106		25		3,372
Maintenance and repairs	-		255		-		-		1,779		2,034		194		63		2,291
Freights	3		932		-		-		-		935		-		2,974		3,909
Export taxes / selling taxes	-		-		-		-		-		-		-		4,582		4,582
Export expenses	-		-		-		-		-		-		-		625		625
Contractors and services	-		-		-		-		438		438		-		-		438
Energy transmission	-		-		-		-		-		-		-		589		589
Energy power	-		253		-		-		137		390		31		8		429
Professional fees	3		7		-		-		48		58		977		82		1,117
Other taxes	-		19		-		-		334		353		188		1		542
Contingencies	-		-		-		-		-		-		142		-		142
Lease expense and similar arrangements	-		14		-		-		184		198		301		11		510
Third parties raw materials	-		416		-		-		1,096		1,512		-		-		1,512
Tax recoveries	-		-		-		-		(2,858)		(2,858)		-		-		(2,858)
Others	-		162		-		-		150		312		686		1,047		2,045
Subtotal	43		4,452		-		32		23,027		27,554		10,304		11,036		48,894
Own agricultural produce consumed	-		8,590		-		-		10,001		18,591		-		-		18,591
Total	43		13,042		-		32		33,028		46,145		10,304		11,036		67,485

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

F - 21

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements (continued)

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

7. Salaries and social security expenses

	March 31, 2017		March 31, 2016
	(unaudited)
Wages and salaries	31,876		24,141
Social security costs	7,776		5,625
Equity-settled share-based compensation	1,429		1,195
	41,081		30,961
Number of employees	8,358		8,111

8. Other operating (loss)/income, net

	March 31, 2017		March 31, 2016
	(unaudited)
Gain/(Loss) from commodity derivative financial instruments	16,274		(170)
(Loss)/Gain from disposal of  other property items	(557)		134
Compensation between energy markets	(3,247)		-
Others	802		94
	13,272		58

9. Financial results, net

	March 31, 2017		March 31, 2016
	(unaudited)
Finance income:
- Interest income	1,422		2,796
- Cash flow hedge – transfer from equity	666		-
- Gain from interest rate/foreign exchange rate derivative financial instruments	-		1,155
- Other income	24		194
Finance income	2,112		4,145
Finance costs:
- Interest expense	(13,253)		(10,326)
- Cash flow hedge – transfer from equity	-		(4,975)
- Foreign exchange losses, net	(3,684)		(9,862)
- Taxes	(517)		(513)
- Loss from interest rate/foreign exchange rate derivative financial	(1,703)		-
- Other expenses	(285)		(3,037)
Finance costs	(19,442)		(28,713)
Total financial results, net	(17,330)		(24,568)

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

F - 22

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements (continued)

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

10. Taxation

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

	March 31,  2017		March 31,  2016
	(unaudited)
Current income tax	(295)		(11,162)
Deferred income tax	(3,516)		8,811
Income tax expense	(3,811)		(2,351)

There has been no change in the statutory tax rates in the countries where the Group operates since December 31, 2016.

Argentine law includes a 10% withholding tax on dividend distributions made by Argentine companies to individuals and foreign beneficiaries. As of March 31, 2017, 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.

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

	March 31,  2017		March 31,  2016
	(unaudited)
Beginning of period asset	23,897		53,108
Exchange differences	579		6,684
Tax charge relating to cash flow hedge (i)	(5,920)		(13,288)
Income tax expense	(3,516)		8,811
End of period asset/(liability)	15,040		55,315

(i) Relates to the gain or loss before income tax of cash flow hedge recognized in other comprehensive income net of the amount reclassified from equity to profit and loss amounting to U$S 17.978 loss for the three-month period ended March 31, 2017.

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:

	March 31,  2017		March 31,  2016
	(unaudited)
Tax calculated at the tax rates applicable to profits in the respective countries	(3,348)		(2,374)
Non-deductible items	(501)		(421)
Tax losses where no deferred tax asset was recognized	-		(68)
Non-taxable income	-		565
Others	38		(53)
Income tax expense	(3,811)		(2,351)

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

F - 23

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements (continued)

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

11. Property, plant and equipment

Changes in the Group’s property, plant and equipment in the three-month periods ended March 31, 2017 and 2016 were as follows:

	Farmlands		Farmland improvements		Buildings and facilities		Machinery, equipment, furniture and Fittings		Bearer plants		Others		Work in progress		Total
Three-month period ended March 31, 2016
Opening net book amount.	114,527		5,141		167,468		226,049		156,671		3,920		23,113		696,889
Exchange differences	(5,114)		(590)		12,616		22,471		15,871		33		(264)		45,023
Additions	-		-		2,545		15,302		11,225		296		4,211		33,579
Transfers	-		1,205		292		1,155		-		(18)		(2,634)		-
Disposals	-		-		-		(277)		-		(5)		-		(282)
Reclassification to non-income  tax credits (*)	-		-		(224)		(22)		-		-		(32)		(278)
Reclassification to Investment property (Note 12)	-		-		-		(219)		-		-		-		(219)
Depreciation (Note 6)	-		(286)		(1,752)		(7,954)		(3,155)		(282)		-		(13,429)
Closing net book amount	109,413		5,470		180,945		256,505		180,612		3,944		24,394		761,283
At March 31, 2016 (unaudited)
Cost	109,413		15,504		282,702		586,447		362,773		13,850		24,394		1,395,083
Accumulated depreciation	-		(10,034)		(101,757)		(329,942)		(182,161)		(9,906)		-		(633,800)
Net book amount	109,413		5,470		180,945		256,505		180,612		3,944		24,394		761,283
Three-month period ended March 31, 2017
Opening net book amount	109,858		9,640		190,055		251,310		216,169		3,935		21,641		802,608
Exchange differences	3,364		306		5,356		7,377		6,100		127		337		22,967
Additions	-		-		5,163		31,075		18,266		860		10,742		66,106
Transfers	-		226		1,472		2,896		-		-		(4,594)		-
Disposals	-		-		(56)		(974)		-		(3)		-		(1,033)
Reclassification to non-income  tax credits (*)	-		-		(33)		(250)		-		-		(91)		(374)
Reclassification to Investment property (Note 12)	-		-		-		-		-		-		-		-
Depreciation (Note 6)	-		(508)		(2,209)		(6,209)		(8,174)		(358)		-		(17,458)
Closing net book amount	113,222		9,664		199,748		285,225		232,361		4,561		28,035		872,816
At March 31, 2017 (unaudited)
Cost	113,222		20,206		303,714		621,376		422,696		14,825		28,035		1,524,074
Accumulated depreciation	-		(10,542)		(103,966)		(336,151)		(190,335)		(10,264)		-		(651,258)
Net book amount	113,222		9,664		199,748		285,225		232,361		4,561		28,035		872,816

(*) Brazilian federal tax law allows entities to take a percentage of the total cost of the assets purchased as a tax credit. As of March 31, 2017, ICMS tax credits were reclassified to trade and other receivables.

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

F - 24

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements (continued)

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

11. Property, plant and equipment (continued)

Depreciation charges are included in “Cost of production of Biological Assets”, “Cost of production of manufactures products”, “General and administrative expenses”, “Selling expenses” and capitalized in “Property, plant and equipment” for the period ended March 31, 2017 and 2016, respectively.

As of March 31, 2017, borrowing costs of US$ 551 (March 31, 2016: US$ 1,115) were capitalized as components of the cost of acquisition or construction of qualifying assets.

Certain of the Group’s assets have been pledged as collateral to secure the Group’s borrowings and other payables. The net book value of the pledged assets amounts to US$ 592,428 as of March 31, 2017.

As of March 31, 2017 included within property, plant and equipment balances are US$ 312 related to the net book value of assets under finance leases.

12. Investment property

Changes in the Group’s investment property in the three-month periods ended March 31, 2017 and 2016 were as follows:

		March 31, 2017		March 31, 2016
		(unaudited)
Beginning of the period		2,666		4,796
Reclassification from Property, plant and equipment		-		219
Exchange differences		86		(760)
End of the period		2,752		4,255
Cost		2,752		4,255
Net book amount		2,752		4,255

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

		March 31, 2017		March 31, 2016
		(unaudited)
Rental income		171		266

As of March 31, 2017, the fair value of investment property was US$ 57 million.

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

F - 25

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements (continued)

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

13. Intangible assets

Changes in the Group’s intangible assets in the three-month periods ended March 31, 2017 and 2016 were as follows:

		Goodwill		Trademarks		Software		Others		Total
Three-month period ended March 31, 2016
Opening net book amount		13,510		930		2,200		21			16,661
Exchange differences		(233)		(5)		105		-			(133)
Additions		-		-		661		6			667
Amortization charge (i) (Note 6)		-		-		(104)		(9)			(113)
Closing net book amount		13,277		925		2,862		18			17,082
At March 31, 2016 (unaudited)
Cost		13,277		2,464		4,810		173			20,724
Accumulated amortization		-		(1,539)		(1,948)		(155)			(3,642)
Net book amount		13,277		925		2,862		18			17,082
Three-month period ended March 31, 2017
Opening net book amount		13,405		922		2,901		24			17,252
Exchange differences		402		1		74		1			478
Additions		-		-		94		7			101
Amortization charge (i) (Note 6)		-		-		(180)		(11)			(191)
Closing net book amount		13,807		923		2,889		21			17,640
At March 31, 2017 (unaudited)
Cost		13,807		2,462		5,580		218			22,067
Accumulated amortization		-		(1,539)		(2,691)		(197)			(4,427)
Net book amount		13,807		923		2,889		21			17,640

(i)       Amortization charges are included in “General and administrative expenses” and “Selling expenses” for the period ended March 31, 2017 and 2016, respectively.

The Group tests annually whether goodwill has suffered any impairment. The last impairment test of goodwill was performed as of September 30, 2016.

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

F - 26

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements (continued)

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

14. Biological assets

Changes in the Group’s biological assets in the three-month periods ended March 31, 2017 and 2016 were as follows:

	March 31, 2017
	Crops (i)		Rice (i)		Dairy		All other segments		Sugarcane (i)		Total
Beginning of the year	28,189		25,575		6,827		2,433		82,380		145,404
Increase due to purchases	-		-		-		233		-		233
Initial recognition and changes in fair value of biological assets	11,897		6,022		1,941		184		(2,679)		17,365
Decrease due to harvest / disposals	(12,881)		(40,986)		(735)		-		(18,983)		(73,585)
Decrease due to sales of agricultural produce	-		-		(7,181)		-		-		(7,181)
Costs incurred during the year	23,779		12,565		6,133		221		18,281		60,979
Exchange differences	1,528		525		226		(19)		2,407		4,667
End of the period	52,512		3,701		7,211		3,052		81,406		147,882

	March 31, 2016
	Crops (i)		Rice (i)		Dairy		All other segments		Sugarcane (i)		Total
Beginning of the year	22,536		23,131		6,786		288		59,077		111,818
Initial recognition and changes in fair value of biological assets	16,040		8,479		434		66		814		25,833
Decrease due to harvest / disposals	(17,615)		(38,333)		(706)		-		(10,667)		(67,321)
Decrease due to sales of agricultural produce	-		-		(4,301)		-		-		(4,301)
Costs incurred during the year	16,220		9,587		5,330		242		18,951		50,330
Exchange differences	(3,207)		(2,646)		(1,031)		(30)		5,952		(962)
End of the period	33,974		218		6,512		566		74,127		115,397

(i)       Biological assets that are measured at fair value within level 3 of the hierarchy.

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

F - 27

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements (continued)

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

14. Biological assets (continued)

Cost of production as of March 31, 2017:

	March 31, 2017
	Crops		Rice		Dairy		All other segments		Sugar, Ethanol and Energy		Total
Salaries, social security expenses and employee benefits	1,192		2,488		1,181		95		2,136		7,092
Depreciation and amortization	129		-		-		-		558		687
Fertilizers, agrochemicals and seeds	14,175		1,052		2		-		8,372		23,601
Fuel, lubricants and others	249		268		173		1		728		1,419
Maintenance and repairs	398		676		436		49		433		1,992
Freights	16		236		37		1		-		290
Contractors and services	5,147		6,431		-		-		1,132		12,710
Feeding expenses	-		-		2,350		3		-		2,353
Veterinary expenses	-		-		421		42		-		463
Energy power	20		855		155		-		-		1,030
Professional fees	47		11		11		1		23		93
Other taxes	439		35		2		29		30		535
Lease expense and similar arrangements	1,171		176		1		-		4,609		5,957
Others	796		337		78		-		260		1,471
Subtotal	23,779		12,565		4,847		221		18,281		59,693
Own agricultural produce consumed	-		-		1,286		-		-		1,286
Total	23,779		12,565		6,133		221		18,281		60,979

Cost of production as of March 31, 2016:

	March 31, 2016
	Crops		Rice		Dairy		All other segments		Sugar, Ethanol and Energy		Total
Salaries, social security expenses and employee benefits	777		1,862		861		34		2,064		5,598
Depreciation and amortization	88		-		-		-		749		837
Fertilizers, agrochemicals and seeds	8,403		861		100		-		5,889		15,253
Fuel, lubricants and others	295		358		179		2		573		1,407
Maintenance and repairs	218		413		428		174		286		1,519
Freights	131		222		16		2		-		371
Export expenses	80		-		-		-		-		80
Contractors and services	4,185		5,173		-		-		665		10,023
Feeding expenses	-		-		1,976		-		-		1,976
Veterinary expenses	-		-		407		4		-		411
Energy power	25		286		117		-		-		428
Professional fees	37		7		25		-		38		107
Other taxes	349		32		2		24		19		426
Lease expense and similar arrangements	1,167		210		2		2		8,486		9,867
Others	465		163		112		-		182		922
Subtotal	16,220		9,587		4,225		242		18,951		49,225
Own agricultural produce consumed	-		-		1,105		-		-		1,105
Total	16,220		9,587		5,330		242		18,951		50,330

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

F - 28

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements (continued)

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

14. Biological assets (continued)

Biological assets as of March 31, 2017 and December 31, 2016 were as follows:

	March 31, 2017		December 31, 2016
	(unaudited)
Non-current
Cattle for dairy production	6,833		6,584
Breeding cattle	1,695		1,533
Other cattle	411		399
	8,939		8,516
Current
Breeding cattle	946		501
Other cattle	378		243
Sown land – crops	52,512		28,189
Sown land – rice	3,701		25,575
Sown land – sugarcane	81,406		82,380
	138,943		136,888
Total biological assets	147,882		145,404

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

F - 29

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements (continued)

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

15. Financial instruments

As of March 31, 2017, the financial instruments recognized at fair value on the statement of financial position comprise derivative financial instruments.

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

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

The following tables present the Group’s financial assets and financial liabilities that are measured at fair value as of March 31, 2017 and their allocation to the fair value hierarchy:

	2017
	Level 1		Level 2		Total
Assets
Derivative financial instruments	9,852		2,694		12,546
Total assets	9,852		2,694		12,546
Liabilities
Derivative financial instruments	(299)		(5,386)		(5,685)
Total liabilities	(299)		(5,386)		(5,685)

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

F - 30

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements (continued)

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

15. Financial instruments (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		2,712
Options		Quoted price		-		-		1		6,841
Foreign-currency interest-rate swaps		Theoretical price		-		-		2		633
Interest-rate swaps		Theoretical price		Swap curve; Money market interest-rate curve		Present value method		2		1,051
NDF		Quoted price		-		-		2		(4,376)
										6,861

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

F - 31

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements (continued)

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

16. Trade and other receivables, net

	March 31, 2017		December 31, 2016
	(unaudited)
Non current
Trade receivables	1,807		1,802
Trade receivables – net	1,807		1,802
Advances to suppliers	2,078		1,930
Income tax credits	8,427		7,472
Non-income tax credits (i)	3,415		1,853
Judicial deposits	3,379		3,280
Other receivables	1,173		1,075
Non current portion	20,279		17,412
Current
Trade receivables	71,650		61,546
Receivables from related parties (Note 25)	8,359		8,114
Less: Allowance for trade receivables	(701)		(643)
Trade receivables – net	79,308		69,017
Prepaid expenses	13,966		8,302
Advance to suppliers	27,865		21,451
Income tax credits	7,501		7,116
Non-income tax credits (i)	44,103		43,572
Cash collateral	3,506		3,546
Receivables from related parties (Note 25)	43		172
Other receivables	3,683		4,352
Subtotal	100,667		88,511
Current portion	179,975		157,528
Total trade and other receivables, net	200,254		174,940

(i) Includes US$ 374 for the three month period ended March 31, 2017 reclassified from property, plant and equipment (for the year ended December 31, 2016: US$ 1,499).

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

F - 32

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements (continued)

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

16. Trade and other receivables, net (continued)

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

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

	March 31, 2017		December 31, 2016
	(unaudited)
Currency
US Dollar	64,844		54,012
Argentine Peso	54,622		45,641
Uruguayan Peso	701		762
Brazilian Reais	80,087		74,525
	200,254		174,940

As of March 31, 2017 trade receivables of US$ 10,710 (December 31, 2016: US$ 14,641) were past due but not impaired. The ageing analysis of these receivables indicates that US$ 5,184 and US$ 5,264 are over 6 months in March 31, 2017 and December 31, 2016, respectively.

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

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

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

17. Inventories

	March 31, 2017		December 31, 2016
	(unaudited)
Raw materials	67,697		42,108
Finished goods	50,389		68,191
Stocks held by third parties	153		1,308
Others	192		147
	118,431		111,754

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

F - 33

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements (continued)

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

18. Cash and cash equivalents

	March 31, 2017		December 31, 2016
	(unaudited)
Cash at bank and on hand	175,508		130,001
Short-term bank deposits	55,813		28,567
	231,321		158,568

19. Shareholder´s Contributions

	Number of shares (thousands)		Share capital and share premium
At January 1, 2016	122,382		1,121,247
Employee share options exercised (Note 20)	-		181
At March 31, 2016	122,382		1,121,428
At January 1, 2017	122,382		1,120,823
Purchase of own shares	-		(1,059)
At March 31, 2017	122,382		1,119,764

20. 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 grants equity-settled options to senior managers and selected employees of the Group´s subsidiaries. Additionally, in 2010 the Group has set a “Adecoagro Restricted Share and Restricted Stock Unit Plan” (referred to as “Restricted Share Plan”) under which the Group grants restricted shares, or restricted stock units to senior and medium management and key employees of the Group’s subsidiaries.

(a) Option Schemes

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

As of March 31, 2017 nil options (March 31, 2016: 19,604) were exercised, and nil (March 31, 2016: nil) were forfeited.

(b) Restricted Share and Restricted Stock Unit Plan

As of March 31, 2017, the Group recognized compensation expense US$ 1.4 million related to the restricted shares granted under the Restricted Share Plan (2016: US$ 1.2 million).

For the three-month period ended March 31, 2017, nil Restricted Stock Units were granted, (2016: nil), nil vested, (2016: nil), and 4,540 were forfeited (2016: 9,289).

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

F - 34

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements (continued)

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

21. Trade and other payables

	March 31, 2017		December 31, 2016
	(unaudited)
Non-current
Payable from acquisition of property, plant and equipment (i)	1,042		1,042
Other payables	400		385
	1,442		1,427
Current
Trade payables	66,688		77,325
Advances from customers	1,820		7,758
Amounts due to related parties (Note 25)	2,396		1,152
Taxes payable	2,921		4,685
Other payables	1,150		1,238
	74,975		92,158
Total trade and other payables	76,417		93,585

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

22. Borrowings

	March 31, 2017		December 31, 2016
	(unaudited)
Non-current
Bank borrowings (*)	565,502		430,202
Obligations under finance leases	105		102
	565,607		430,304
Current
Bank overdrafts	3,917		90
Bank borrowings (*)	226,231		204,923
Obligations under finance leases	65		79
	230,213		205,092
Total borrowings	795,820		635,396

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

As of March 31, 2017, total bank borrowings include collateralized liabilities of US$ 668,408 (December 31, 2016: US$ 525,663). These loans are mainly collateralized by property, plant and equipment sugarcane plantations, sugar export contracts and shares of certain subsidiaries of the Group.

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

F - 35

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements (continued)

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

22. Borrowings (continued)

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:

	March 31, 2017		December 31, 2016
	(unaudited)
Fixed rate:
Less than 1 year	123,291		67,682
Between 1 and 2 years	44,497		43,630
Between 2 and 3 years	35,981		40,047
Between 3 and 4 years	22,492		21,857
Between 4 and 5 years	21,729		21,116
More than 5 years	15,422		20,239
	263,412		214,571
Variable rate:
Less than 1 year	106,857		137,331
Between 1 and 2 years	160,934		150,517
Between 2 and 3 years	106,216		81,947
Between 3 and 4 years	87,586		18,457
Between 4 and 5 years	60,526		18,309
More than 5 years	10,119		14,083
	532,238		420,644
	795,650		635,215

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

	March 31, 2017		December 31, 2016
	(unaudited)
Currency
US Dollar	594,018		437,307
Brazilian Reais	197,027		196,903
Argentine Peso	4,775		1,186
	795,820		635,396

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

F - 36

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements (continued)

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

23. Payroll and social security liabilities

	March 31, 2017		December 31, 2016
	(unaudited)
Non-current
Social security payable	1,371		1,235
	1,371		1,235
Current
Salaries payable	10,260		7,351
Social security payable	3,126		3,063
Provision for vacations	11,302		12,109
Provision for bonuses	6,690		4,321
	31,378		26,844
Total payroll and social security liabilities	32,749		28,079

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. There have been no material changes to claimed amounts and current proceedings since December 31, 2016.

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

F - 37

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements (continued)

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

25. Related-party transactions

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

						Income (loss) included in the statement of income				Balance receivable (payable)
Related party		Relationship		Description of transaction		March 31, 2017		March 31, 2016		March 31, 2017		December 31, 2016		Other Transactions
						(unaudited)		(unaudited)		(unaudited)				(unaudited)
Mario Jorge de Lemos Vieira/ Cia Agropecuaria Monte Alegre/		(i)		Receivables (Note 16)		-		-		43		172		-
Alfenas Agricola Ltda/ Marcelo Weyland Barbosa Vieira/ Paulo				General and Administrative expenses		-		42		-		-		-
Albert Weyland Vieira				Payables (Note 21)		-		-		(1,038)		(701)		-
CHS Agro		Joint venture		Services		19		39		-		-		-
				Payables (Note 21)		-		-		(353)		(451)		-
				Interest income		80		81		-		-		-
				Receivables (Note 16)		-		-		8,359		8,114		-
Directors and senior management		Employment		Compensation selected employees		(2,046)		(2,352)		(18,787)		(17,355)		-
The Coca-Cola Export Corporation		Non-controlling interest		Payables (Note 21)		-		-		(847)		-		-
				Dividends paid		-		-		-		-		(659)
GGalilei I Uruguay Sociedad en comandita por acciones		Non-controlling interest		Payables (Note 21)		-		-		(158)		-		-

(i) Shareholder of the Company.

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

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Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements (continued)

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

26. Basis of preparation and presentation

The information presented in the accompanying condensed consolidated interim financial statements (“interim financial statements”) as of March 31, 2017 and for the three-month periods ended March 31, 2017 and 2016 is unaudited and in the opinion of management reflect all adjustments necessary to present fairly the financial position of the Group as of March 31, 2017, results of operations and cash flows for the three-month periods ended March 31, 2017 and 2016. All such adjustments are of a normal recurring nature. In preparing these accompanying interim financial statements, management has made certain estimates and assumptions that affect reported amounts in the financial statements and disclosures of contingencies. Actual results may differ from those estimates. The results for interim periods are not necessarily indicative of annual results.

These interim financial statements have been prepared in accordance with IAS 34, ‘Interim financial reporting’ and they should be read in conjunction with the annual financial statements for the year ended December 31, 2016, which have been prepared in accordance with IFRSs.

In order to facilitate the understanding of our Consolidated Financial Statements, we have changed the format of the presentation of our income statement. During the fourth quarter of 2016, we aggregate our sales in a single line item titled “Sales of goods and services rendered”. Likewise, the corresponding cost has also been aggregated and presented as a single line item titled “Cost of goods sold and services rendered”. The breakdown of sales is now included in Note 4 to the Consolidated Financial Statements. The comparative figures have been retroactively changed accordingly.

The accounting policies adopted in the preparation of the interim financial statements are consistent with those followed in the preparation of the Group’s annual consolidated financial statements for the year ended December 31, 2016.

A complete list of standards, amendments and interpretations to existing standards published but not yet effective for the Group is described in Note 32.1 to the annual financial statements.

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 with closer adoption:

In May 2014, the IASB issued IFRS 15, "Revenue from contracts with customers", which deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. Revenue is recognized when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. The standard replaces IAS 18 ‘Revenue’ and IAS 11 ‘Construction contracts’ and related interpretations. The standard is effective for annual periods beginning on or after January 1, 2018 and earlier application is permitted.

In July 2014 the IASB published the final version of IFRS 9 Financial Instrument which replaces earlier versions of IFRS 9 and completes the IASB’s project to replace IAS 39 Financial Instruments: Recognition and Measurement. It includes requirements on the classification and measurement of financial assets and liabilities, as well as an expected credit losses model that replaces the current incurred loss impairment model. The standard is effective for accounting periods beginning on or after January 1, 2018. Early adoption is permitted.

We are currently evaluating the impact of our pending adoption of the new standard on our consolidated financial statements.

Seasonality of operations

The Group’s business activities are inherently seasonal. The Group generally harvest and sell its grains (corn, soybean, rice and sunflower) between February and June, with the exception of wheat, which is harvested from December to January. Coffee and cotton are different in that while both are typically harvested from June to August,

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

F - 39

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements (continued)

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

they require a conditioning process which takes about two to three months. Sales in other business segments, such as in Dairy business segments, tend to be more stable. However, the sale of milk is generally higher during the fourth quarter, when the weather is warmer and pasture conditions are more favorable. The sugarcane harvesting period typically begins April/May and ends in November/December. This creates fluctuations in sugar and ethanol inventory, usually peaking in December to cover sales between crop harvests (i.e., January through April). As a result of the above factors, there may be significant variations in the results of operations from one quarter to another, as planting activities may be more concentrated in one quarter whereas harvesting activities may be more concentrated in another quarter. In addition, quarterly results may vary as a result of the effects of fluctuations in commodities prices, production yields and costs on the determination of initial recognition and changes in fair value of biological assets and agricultural produce.

27. Critical accounting estimates and judgments

The Group's critical accounting policies are also consistent with those of the audited annual financial statements for the year ended December 31, 2016 described in Note 32.

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

F - 40