6-K 1 p56301_6k.htm 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 August, 2017

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    o

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):   o

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):   o

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   o      No  x

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

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

UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS AS OF AND FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2017

This Report of Foreign Private Issuer on Form 6-K (this “Form 6-K”) is being filed by Adecoagro S.A. (“Adecoagro” or the “Company”) with the Securities and Exchange Commission (the “SEC”) and is incorporated by reference into the Company’s Registration Statement on Form F-3 filed with the SEC on December 6, 2013 (File No. 333-191325) and will be deemed to be a part thereof from the date on which this Form 6-K is filed with the SEC, to the extent not superseded by documents or reports subsequently filed or furnished. The Company is filing this report on Form 6-K for the purpose of filing a copy of the Company’s unaudited condensed consolidated interim financial statements as of and for the six month period ended June 30, 2017 (the “Consolidated Financial Statements”) as Exhibit 99.1. 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: August 15, 2017

Adecoagro S.A.

Condensed Consolidated Interim Financial Statements as of June 30, 2017 and for the six-month periods ended June 30, 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 1,577,594 are treasury shares)

F - 2

Adecoagro S.A.

Condensed Consolidated Interim Statements of Income

for the six-month and three-month periods ended June 30, 2017 and 2016

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

				Six-months ended June 30								Three-months ended June 30
		Note		2017				2016				2017				2016
				(unaudited)
Sales of goods and services rendered		4			394,621				290,704				228,530				169,220
Cost of goods sold and services rendered		5			(335,309)				(238,428)				(195,947)				(139,405)
Initial recognition and changes in fair value of biological assets and agricultural produce		14			22,702				83,494				5,337				57,661
Changes in net realizable value of agricultural produce after harvest					3,193				(369)				3,420				(3,028)
Margin on Manufacturing and Agricultural Activities Before Operating Expenses					85,207				135,401				41,340				84,448
General and administrative expenses		6			(28,501)				(21,610)				(14,484)				(11,306)
Selling expenses		6			(37,077)				(27,165)				(21,063)				(16,129)
Other operating income / (loss), net		8			36,138				(34,161)				22,866				(34,219)
Profit from Operations Before Financing and Taxation					55,767				52,465				28,659				22,794
Finance income		9			5,222				5,071				3,110				926
Finance costs		9			(45,410)				(67,918)				(25,968)				(39,205)
Financial results, net		9			(40,188)				(62,847)				(22,858)				(38,279)
Profit / (loss) Before Income Tax					15,579				(10,382)				5,801				(15,485)
Income tax expense		10			(5,811)				(4,616)				(2,000)				(2,265)
Profit / (loss) for the Period					9,768				(14,998)				3,801				(17,750)
Attributable to:
Equity holders of the parent					8,694				(16,385)				3,703				(17,985)
Non-controlling interest					1,074				1,387				98				235
Earnings per share attributable to the equity holders of the parent during the period:
Basic					0.072				(0.135)				0.031				(0.148)
Diluted					0.071				(0.135)				0.030				(0.148)

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 six-month and three-month periods ended June 30, 2017 and 2016

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

		Six-months ended June 30								Three-months ended June 30
		2017				2016				2017				2016
		(unaudited)
Profit / (loss) for the period			9,768				(14,998)				3,801				(17,750)
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations			(8,474)				47,826				(23,191)				33,270
Cash flow hedge, net of tax (Note 2)			(2,508)				65,971				(13,900)				40,117
Other comprehensive earnings for the period			(10,982)				113,797				(37,091)				73,387
Total comprehensive earnings for the period			(1,214)				98,799				(33,290)				55,637
Attributable to:
Equity holders of the parent			(1,966)				98,441				(32,851)				55,584
Non-controlling interest			752				358				(439)				53

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 June 30, 2017 and December 31, 2016

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

				June 30,				December 31,
		Note		2017				2016
				(unaudited)
ASSETS
Non-Current Assets
Property, plant and equipment		11			837,360				802,608
Investment property		12			2,547				2,666
Intangible assets		13			16,966				17,252
Biological assets		14			8,951				8,516
Deferred income tax assets		10			37,096				38,586
Trade and other receivables		16			18,002				17,412
Other assets					555				566
Total Non-Current Assets					921,477				887,606
Current Assets
Biological assets		14			93,645				136,888
Inventories		17			151,052				111,754
Trade and other receivables		16			182,376				157,528
Derivative financial instruments		15			3,015				3,398
Other assets					42				24
Cash and cash equivalents		18			219,934				158,568
Total Current Assets					650,064				568,160
TOTAL ASSETS					1,571,541				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			933,961				937,250
Cumulative translation adjustment					(535,516)				(527,364)
Equity-settled compensation					15,142				17,218
Cash flow hedge					(39,807)				(37,299)
Treasury shares					(2,368)				(1,859)
Reserve from the sale of non-controlling interests in subsidiaries					41,574				41,574
Retained earnings					59,692				50,998
Equity attributable to equity holders of the parent					656,251				664,091
Non-controlling interest					6,670				7,582
TOTAL SHAREHOLDERS EQUITY					662,921				671,673
LIABILITIES
Non-Current Liabilities
Trade and other payables		21			892				1,427
Borrowings		22			537,484				430,304
Deferred income tax liabilities		10			14,491				14,689
Payroll and social security liabilities		23			1,070				1,235
Derivatives financial instruments		15			1,439				662
Provisions for other liabilities					3,175				3,299
Total Non-Current Liabilities					558,551				451,616
Current Liabilities
Trade and other payables		21			61,774				92,158
Current income tax liabilities					2,461				1,387
Payroll and social security liabilities		23			28,024				26,844
Borrowings		22			256,795				205,092
Derivative financial instruments		15			372				6,406
Provisions for other liabilities					643				590
Total Current Liabilities					350,069				332,477
TOTAL LIABILITIES					908,620				784,093
TOTAL SHAREHOLDERS EQUITY AND LIABILITIES					1,571,541				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 six-month periods ended June 30, 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
Loss for the period			-				-				-				-				-				-				-				(16,385)				(16,385)				1,387				(14,998)
Other comprehensive income:
-   Items that may be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations			-				-				48,855				-				-				-				-				-				48,855				(1,029)				47,826
Cash flow hedge (*)			-				-				-				-				65,971				-				-				-				65,971				-				65,971
Other comprehensive income for the period			-								48,855				-				65,971				-				-				-				114,826				(1,029)				113,797
Total comprehensive income for the period			-								48,855				-				65,971				-				-				(16,385)				98,441				358				98,799
Employee share options (Note 20)
-   Exercised			-				323				-				(102)				-				55				-				-				276				-				276
-   Forfeited			-				-				-				(98)				-				-				-				98				-				-				-
Restricted shares (Note 20):
-   Value of employee services			-				-				-				2,545				-				-				-				-				2,545				-				2,545
-   Vested			-				3,225				-				(3,905)				-				680				-				-				-				-				-
Balance at June 30, 2016 (unaudited)			183,573				941,222				(519,461)				15,071				(71,940)				(1,201)				41,574				32,508				621,346				7,693				629,039

(*) Net of 34,145 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 six-month periods ended June 30, 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			-				-				-				-				-				-				-				8,694				8,694				1,074				9,768
Other comprehensive loss:
-   Items that may be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations			-				-				(8,152)				-				-				-				-				-				(8,152)				(322)				(8,474)
Cash flow hedge (*)			-				-				-				-				(2,508)				-				-				-				(2,508)				-				(2,508)
Other comprehensive income for the period			-				-				(8,152)				-				(2,508)				-				-				-				(10,660)				(322)				(10,982)
Total comprehensive income for the period			-				-				(8,152)				-				(2,508)				-				-				8,694				(1,966)				752				(1,214)
Restricted shares (Note 20):
-   Value of employee services			-				-				-				2,807				-				-				-				-				2,807				-				2,807
-   Vested			-				4,149				-				(4,883)				-				734				-				-				-				-				-
-   Purchase of own shares			-				(7,438)				-				-				-				(1,243)				-				-				(8,681)				-				(8,681)
-   Dividends			-				-				-				-								-				-				-				-				(1,664)				(1,664)
Balance at June 30, 2017 (unaudited)			183,573				933,961				(535,516)				15,142				(39,807)				(2,368)				41,574				59,692				656,251				6,670				662,921

(*) Net of 1,291 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 six-month periods ended June 30, 2017 and 2016

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

		Note		June 30, 2017				June 30, 2016
				(unaudited)
Cash flows from operating activities:
Profit for the period					9,768				(14,998)
Adjustments for:
Income tax expense		10			5,811				4,616
Depreciation		11			55,750				41,592
Amortization		13			416				313
Loss / (Gain) from disposal of other property items		8			618				(181)
Equity settled share-based compensation granted		7, 20			2,807				2,545
(Gain) / loss from derivative financial instruments		8, 9			(36,558)				41,121
Interest and other expense, net		9			21,188				18,940
Initial recognition and changes in fair value of non harvested biological assets (unrealized)					2,441				(49,592)
Changes in net realizable value of agricultural produce after harvest (unrealized)					(616)				1,542
Provision and allowances					298				48
Foreign exchange losses, net		9			11,883				12,276
Cash flow hedge – transfer from equity		9			3,320				23,594
Subtotal					77,126				81,816
Changes in operating assets and liabilities:
Increase in trade and other receivables					(29,055)				(43,937)
Increase in inventories					(29,724)				(37,455)
Decrease in biological assets					25,671				15,538
Decrease / (Increase) in other assets					24				(60)
Decrease /(increase) in derivative financial instruments					40,010				(19,623)
(Decrease) / increase in trade and other payables					(32,990)				11,511
Increase in payroll and social security liabilities					1,578				1,243
(Decrease) / Increase in provisions for other liabilities					(88)				1,640
Net cash generated in operating activities before taxes paid					52,552				10,673
Income tax paid					(1,653)				(911)
Net cash generated from operating activities					50,899				9,762

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 six-month periods ended June 30, 2017 and 2016 (continued)

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

		Note		June 30, 2017				June 30, 2016
				(unaudited)
Cash flows from investing activities:
Purchases of property, plant and equipment		11			(106,053)				(60,034)
Purchases of cattle					(581)				-
Purchases of intangible assets		13			(576)				(804)
Interest received		9			5,021				4,621
Proceeds from sale of property, plant and equipment					798				754
Net cash used in investing activities					(101,391)				(55,463)
Cash flows from financing activities:
Proceeds from equity settled share-based compensation exercise					-				276
Proceeds from long-term borrowings					189,769				42,701
Payments of long-term borrowings					(103,724)				(69,514)
Proceeds from short-term borrowings					84,595				147,496
Payment of short-term borrowings					(9,531)				(94,929)
Payment of derivatives financial instruments					(9,419)				(1,213)
Interest paid					(22,540)				(20,504)
Purchase of own shares					(8,681)				-
Dividends paid to non-controlling interest		25			(1,506)				-
Net cash generated from financing activities					118,963				4,313
Net decrease in cash and cash equivalents					68,471				(41,388)
Cash and cash equivalents at beginning of period					158,568				198,894
Effect of exchange rate changes on cash and cash equivalents					(7,105)				10,081
Cash and cash equivalents at end of period					219,934				167,587

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 August 11, 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 six month period ended June 30, 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 June 30, 2017. All amounts are shown in US dollars.

		June 30, 2017
		(unaudited)
		Functional currency
Net monetary position (Liability)/ Asset		Argentine Peso				Brazilian Reais				Uruguayan Peso				US Dollar				Total
Argentine Peso			12,119				-				-				-				12,119
Brazilian Reais			-				(108,567)				-				-				(108,567)
US Dollar			(96,128)				(415,299)				22,688				69,560				(419,179)
Uruguayan Peso			-				-				(860)				-				(860)
Total			(84,009)				(523,866)				21,828				69,560				(516,487)

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 June 30, 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).

		June 30, 2017
		(unaudited)
		Functional currency
Net monetary position		Argentine Peso				Brazilian Reais				Uruguayan Peso				US Dollar				Total
US Dollar			(9,613)				(41,530)				2,269				-				(48,874)
(Decrease) or increase in Profit Before Income Tax			(9,613)				(41,530)				2,269				-				(48,874)

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 June 30, 2017, a total amount before income tax of US$ 2,508 loss was recognized in other comprehensive income and an amount of US$ 3,320 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 June 30, 2017 (all amounts are shown in US dollars):

		June 30, 2017
		(unaudited)
		Functional currency
Rate per currency denomination		Argentine Peso				Brazilian Reais				Uruguayan Peso				Total
Fixed rate:
Argentine Peso			7,747				-				-				7,747
Brazilian Reais			-				127,706				-				127,706
US Dollar			85,486				36,568				27,990				150,044
Subtotal Fixed-rate borrowings			93,233				164,274				27,990				285,497
Variable rate:
Brazilian Reais			-				62,430				-				62,430
US Dollar			49,835				396,393				-				446,228
Subtotal Variable-rate borrowings			49,835				458,823				-				508,658
Total borrowings as per analysis			143,068				623,097				27,990				794,155
Finance leases			124				-				-				124
Total borrowings at June 30, 2017			143,192				623,097				27,990				794,279

At June 30, 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:

		June 30, 2017
		(unaudited)
		Functional currency
Rate per currency denomination		Argentine Peso				Brazilian Reais				Uruguayan Peso				Total
Variable rate:
Brazilian Reais			-				(624)				-				(624)
US Dollar			(498)				(3,964)				-				(4,462)
Decrease in Profit Before Income Tax			(498)				(4,588)				-				(5,086)

· Credit risk

As of June 30, 2017, seven banks accounted for more than 83% of the total cash deposited (Banco do Brasil, Banco Votoratim, Banco Itau, Banco Santander, HSBC, JP Morgan and Galicia).

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 June 30, 2017:

§ Futures / Options

		June 30, 2017
Type of derivative contract		Quantities (thousands) (**)				Notional amount				Market Value Asset/ (Liability)				Profit  / (Loss) (*)
										(unaudited)				(unaudited)
Futures:
Sale
Corn			120				19,008				(80)				(16)
Soybean			4				(418)				192				(274)
Sugar			147,646				48,357				(3,720)				6,087
Options:
Buy put
Sugar			68,999				(2,896)				8,686				6,312
Sell call
Sugar			876				1,907				(34)				2,058
Sell put
Sugar			32,042				504				(2,704)				(2,287)
Buy call
Soybean			(2)				36				48				12
Sale
Ethanol			1,500				(25,467)				44				44
Total			251,185				41,031				2,432				11,936

(*) 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 June 30, 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 June 30, 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$ 42.5 million. No contract of this kind was entered in 2015. Those contracts entered in 2016 have maturity dates ranging between March 2016 and April 2017. The outstanding contracts resulted in the recognition of a loss of US$ 7 million in 2016.

During the period ended on June 30, 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$ 15.37 million and US$ 15.7 million, respectively. The currency forward contracts maturity date are between September 2017, and September 2016, respectively. The outstanding contracts resulted in the recognition of a loss of US$ 0.25 and US$ 0.1 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 significance Coffee and Cattle.

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

· The 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 six-month period ended June 30, 2017 (unaudited)

		Farming
		Crops				Rice				Dairy				All Other Segments				Farming subtotal				Sugar, Ethanol and Energy				Land Transformation				Corporate				Total
Sales of goods and services rendered			84,896				43,278				19,322				438				147,934				246,687				-				-				394,621
Cost of goods sold and services rendered			(84,692)				(37,702)				(18,988)				(175)				(141,557)				(193,752)				-				-				(335,309)
Initial recognition and changes in fair value of biological assets and agricultural produce			17,343				5,796				4,528				163				27,830				(5,128)				-				-				22,702
Changes in net realizable value of agricultural produce after harvest			3,193				-				-				-				3,193				-				-				-				3,193
Margin on Manufacturing and Agricultural Activities Before Operating Expenses			20,740				11,372				4,862				426				37,400				47,807				-				-				85,207
General and administrative expenses			(1,401)				(2,279)				(496)				(88)				(4,264)				(13,984)				-				(10,253)				(28,501)
Selling expenses			(2,946)				(6,401)				(468)				(53)				(9,868)				(27,150)				-				(59)				(37,077)
Other operating (loss)/income, net			3,339				637				422				(161)				4,237				31,919				-				(18)				36,138
Profit / (loss) from Operations Before Financing and Taxation			19,732				3,329				4,320				124				27,505				38,592				-				(10,330)				55,767
Depreciation and amortization			(692)				(1,886)				(494)				(60)				(3,132)				(53,034)				-				-				(56,166)
Initial recognition and changes in fair value of biological assets and agricultural produce (unrealized)			9,880				4,369				508				163				14,920				(17,361)				-				-				(2,441)
Initial recognition and changes in fair value of biological assets and agricultural produce (realized)			7,463				1,427				4,020				-				12,910				12,233				-				-				25,143
Changes in net realizable value of agricultural produce after harvest (unrealized)			616				-				-				-				616				-				-				-				616
Changes in net realizable value of agricultural produce after harvest (realized)			2,577				-				-				-				2,577				-				-				-				2,577
Farmlands and farmland improvements, net			64,011				14,543				127				10,325				89,006				26,342				-				-				115,348
Machinery, equipment, building and facilities, and other fixed assets, net			4,231				15,286				7,447				415				27,379				438,276				-				-				465,655
Bearer plants, net			-				-				-				1,832				1,832				225,805				-				-				227,637
Work in progress			1,037				3,739				5,234				-				10,010				18,710				-				-				28,720
Investment property			-				-				-				2,547				2,547				-				-				-				2,547
Goodwill			3,614				1,660				-				1,157				6,431				6,600				-				-				13,031
Biological assets			15,836				4,898				7,479				3,366				31,579				71,017				-				-				102,596
Finished goods			57,805				6,757				-				-				64,562				31,288				-				-				95,850
Raw materials, Stocks held by third parties and others			6,802				29,383				3,365				-				39,550				15,652				-				-				55,202
Total segment assets			153,336				76,266				23,652				19,642				272,896				833,690				-				-				1,106,586
Borrowings			89,729				81,473				852				3,727				175,781				618,498				-				-				794,279
Total segment liabilities			89,729				81,473				852				3,727				175,781				618,498				-				-				794,279

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 six-month period ended June 30, 2016 (unaudited)

		Farming
		Crops				Rice				Dairy				All Other Segments				Farming subtotal				Sugar, Ethanol and Energy				Land Transformation				Corporate				Total
Sales of goods and services rendered			68,097				45,556				12,029				545				126,227				164,477				-				-				290,704
Cost of goods sold and services rendered			(68,009)				(40,673)				(11,995)				(96)				(120,773)				(117,655)				-				-				(238,428)
Initial recognition and changes in fair value of biological assets and agricultural produce			45,657				9,458				1,625				90				56,830				26,664				-				-				83,494
Changes in net realizable value of agricultural produce after harvest			(369)				-				-				-				(369)				-												(369)
Margin on Manufacturing and Agricultural Activities Before Operating Expenses			45,376				14,341				1,659				539				61,915				73,486				-				-				135,401
General and administrative expenses			(1,315)				(1,433)				(505)				(141)				(3,394)				(8,541)				-				(9,675)				(21,610)
Selling expenses			(2,440)				(5,260)				(341)				(19)				(8,060)				(19,080)				-				(25)				(27,165)
Other operating (loss)/income, net			(21,941)				193				116				1				(21,631)				(12,593)				-				63				(34,161)
Profit / (loss) from Operations Before Financing and Taxation			19,680				7,841				929				380				28,830				33,272				-				(9,637)				52,465
Depreciation and amortization			(676)				(1,173)				(490)				(110)				(2,449)				(39,456)				-				-				(41,905)
Initial recognition and changes in fair value of biological assets and agricultural produce (unrealized)			24,534				6,752				-				-				31,286				18,306				-				-				49,592
Initial recognition and changes in fair value of biological assets and agricultural produce (realized)			21,123				2,706				1,625				90				25,544				8,358				-				-				33,902
Changes in net realizable value of agricultural produce after harvest (unrealized)			(1,542)				-				-				-				(1,542)				-				-				-				(1,542)
Changes in net realizable value of agricultural produce after harvest (realized)			1,173				-				-				-				1,173				-				-				-				1,173
As of December 31, 2016
Farmlands and farmland improvements, net			68,224				18,868				168				5,504				92,764				26,734				-				-				119,498
Machinery, equipment, building and facilities, 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
Finished goods			13,415				5,474				-				-				18,889				49,302				-				-				68,191
Raw materials, Stocks held by third parties and others			16,147				6,628				2,060				-				24,835				18,728				-				-				43,563
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

		June 30, 2017				June 30, 2016
		(unaudited)
Sales of manufactured products and services rendered:
Ethanol (*)			104,966				69,414
Sugar (*)			121,801				81,517
Rice (*)			42,592				44,353
Energy			19,875				13,503
Powder milk			2,660				380
Operating leases			381				554
Services			735				390
Others			796				703
			293,806				210,814
Sales of agricultural produce and biological assets:
Soybean (*)			40,764				39,358
Cattle for dairy production			1,490				1,305
Corn			31,297				15,816
Pop Corn			215				287
Rice			-				892
Cotton			46				1,118
Milk			14,956				10,183
Wheat			8,996				5,017
Sunflower			438				5,245
Peanut			711				-
Barley			1,527				625
Seeds			87				15
Others (*)			288				29
			100,815				79,890
Total sales			394,621				290,704

(*) Includes sales of soybean, corn, rice, powder milk, sugar, wheat, sunflower and others produced by third parties for an amount of US$ 11.2, US$ 24.1 million; US$ 3.0 million; US$ 2.7 million; US$ 35.1 million; US$ 4.7 million; US$ 0.2 million and US$ 0.1 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$ 83.6 million as of June 30, 2017 (June 30, 2016: US$ 137.9 million) comprised primarily of 125,147 tons of sugar (US$ 49.9), 14,414 m³ of ethanol (US$ 2.5 million), 297,803 mhw of energy (U$S 18.5 million) , 15,613 tons of soybean (U$S 2.2 million), 50,610 tons of corn (US$ 7.6 million), and 17,659 tons of wheat (US$ 2.9 million) which expire between July 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 June 30, 2017:

		June 30, 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)			309				35,331				-				101				144,919				180,660
Purchases			46,258				4,050				2,616				-				41,785				94,709
Agricultural produce			76,921				-				16,372				74				-				93,367
Transfer to raw material			(4,577)				-				-				-				-				(4,577)
Direct agricultural selling expenses			9,900				-				-				-				-				9,900
Tax recoveries (i)			-				-				-				-				(12,023)				(12,023)
Changes in net realizable value of agricultural produce after harvest			3,193				-				-				-				-				3,193
Finished goods at the end of June 30, 2017 (Note 17)			(57,804)				(6,757)				-				-				(31,289)				(95,850)
Exchange differences			(2,625)				(395)				-				-				759				(2,261)
Cost of goods sold and services rendered, and direct agricultural selling expenses			84,692				37,702				18,988				175				193,752				335,309

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

As of June 30, 2016:

		June 30, 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)			320				28,207				-				96				112,043				140,666
Purchases			13,221				11,595				459				-				26,457				51,732
Agricultural produce			79,189				-				11,489				-				-				90,678
Transfer to raw material			(3,416)				-				-				-				-				(3,416)
Direct agricultural selling expenses			7,754				-				-				-				-				7,754
Tax recoveries (i)			-				-				-				-				(8,033)				(8,033)
Changes in net realizable value of agricultural produce after harvest			(369)				-				-				-				-				(369)
Finished goods at the end of June 30, 2016			(41,518)				(4,998)				-				-				(42,009)				(88,525)
Exchange differences			(3,206)				(1,035)				(8)				-				4,566				317
Cost of goods sold and services rendered, and direct agricultural selling expenses			68,009				40,673				11,995				96				117,655				238,428

(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 June 30, 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			-				3,962				-				96				20,029				24,087				17,181				3,250				44,518
Raw materials and consumables			306				2,039				-				-				3,350				5,695				-				-				5,695
Depreciation and amortization			-				409				-				5				43,807				44,221				2,970				361				47,552
Fuel, lubricants and others			-				56				-				-				10,754				10,810				248				126				11,184
Maintenance and repairs			-				739				-				-				5,879				6,618				511				275				7,404
Freights			-				3,369				-				-				224				3,593				-				11,187				14,780
Export taxes / selling taxes			-				-				-				-				-				-				-				14,024				14,024
Export expenses			-				-				-				-				-				-				-				1,448				1,448
Contractors and services			-				-				-				-				2,594				2,594				-				-				2,594
Energy transmission			-				-				-				-				-				-				-				1,576				1,576
Energy power			-				782				-				-				754				1,536				91				29				1,656
Professional fees			-				20				-				-				154				174				3,699				784				4,657
Other taxes			-				44				-				-				77				121				433				-				554
Contingencies			-				-				-				-				-				-				947				-				947
Lease expense and similar arrangements			-				121				-				-				-				121				701				32				854
Third parties raw materials			-				4,127				-				-				9,088				13,215				-				-				13,215
Tax recoveries			-				-				-				-				(14)				(14)				-				-				(14)
Others			3				386				-				-				2,557				2,946				1,720				3,985				8,651
Subtotal			309				16,054				-				101				99,253				115,717				28,501				37,077				181,295
Own agricultural produce consumed			-				19,277				-				-				45,666				64,943				-				-				64,943
Total			309				35,331				-				101				144,919				180,660				28,501				37,077				246,238

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 June 30, 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			-				2,744				-				81				20,530				23,355				13,096				2,614				39,065
Raw materials and consumables			176				1,366				-				-				2,549				4,091				-				-				4,091
Depreciation and amortization			-				443				-				15				32,111				32,569				2,181				339				35,089
Fuel, lubricants and others			-				40				-				-				9,367				9,407				187				58				9,652
Maintenance and repairs			-				591				-				-				6,726				7,317				425				186				7,928
Freights			9				2,329				-				-				-				2,338				-				8,391				10,729
Export taxes / selling taxes			-				-				-				-				124				124				-				9,501				9,625
Export expenses			-				-				-				-				-				-				-				1,642				1,642
Contractors and services			129				-				-				-				1,447				1,576				-				-				1,576
Energy transmission			-				-				-				-				-				-				-				1,287				1,287
Energy power			-				537				-				-				480				1,017				74				22				1,113
Professional fees			6				42				-				-				145				193				3,123				439				3,755
Other taxes			-				32				-				-				795				827				375				-				1,202
Contingencies			-				-				-				-				-				-				273				-				273
Lease expense and similar arrangements			-				39				-				-				-				39				573				24				636
Third parties raw materials			-				1,604				-				-				5,244				6,848				-				-				6,848
Tax recoveries			-				-				-				-				(4,872)				(4,872)				-				-				(4,872)
Others			-				380				-				-				2,721				3,101				1,303				2,662				7,066
Subtotal			320				10,147				-				96				77,367				87,930				21,610				27,165				136,705
Own agricultural produce consumed			-				18,060				-				-				34,676				52,736				-				-				52,736
Total			320				28,207				-				96				112,043				140,666				21,610				27,165				189,441

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

		June 30, 2017				June 30, 2016
		(unaudited)
Wages and salaries			64,851				52,608
Social security costs			16,824				13,145
Equity-settled share-based compensation			2,807				2,545
			84,482				68,298
Number of employees			8,092				8,229

8. Other operating income / (loss), net

		June 30, 2017				June 30, 2016
		(unaudited)
Gain/(Loss) from commodity derivative financial instruments			38,753				(33,159)
(Loss) from disposal of  other property items			(618)				181
Losses related to energy business			(3,247)				-
Others			1,250				(1,183)
			36,138				(34,161)

9. Financial results, net

		June 30, 2017				June 30, 2016
		(unaudited)
Finance income:
- Interest income			5,021				4,621
- Other income			201				450
Finance income			5,222				5,071
Finance costs:
- Interest expense			(25,798)				(22,029)
- Cash flow hedge – transfer from equity			(3,320)				(23,594)
- Foreign exchange losses, net			(11,883)				(12,276)
- Taxes			(1,304)				(1,231)
- Loss from interest rate/foreign exchange rate derivative financial			(2,195)				(6,806)
- Other expenses			(910)				(1,982)
Finance costs			(45,410)				(67,918)
Total financial results, net			(40,188)				(62,847)

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.

		June 30, 2017				June 30, 2016
		(unaudited)
Current income tax			(2,865)				(2,551)
Deferred income tax			(2,946)				(2,065)
Income tax expense			(5,811)				(4,616)

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

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

		June 30, 2017				June 30, 2016
		(unaudited)
Beginning of period asset			23,897				53,108
Exchange differences			363				10,868
Tax charge relating to cash flow hedge (i)			1,291				(34,145)
Income tax expense			(2,946)				(2,065)
End of period asset			22,605				27,766

(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 7,119 loss for the six-month period ended June 30, 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:

		June 30, 2017				June 30, 2016
		(unaudited)
Tax calculated at the tax rates applicable to profits in the respective countries			(4,929)				2,362
Non-deductible items			(750)				(5,115)
Non-deductible items – Change in estimates or previous year			-				(1,180)
Tax losses where no deferred tax asset was recognized			-				(100)
Others			(132)				(583)
Income tax expense			(5,811)				(4,616)

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 six-month periods ended June 30, 2017 and 2016 were as follows:

		Farmlands				Farmland improvements				Buildings and facilities				Machinery, equipment, furniture and Fittings				Bearer plants				Others				Work in progress				Total
Six-month period ended June 30, 2016
Opening net book amount			114,527				5,141				167,468				226,049				156,671				3,920				23,113				696,889
Exchange differences			(2,149)				(670)				30,126				50,795				36,332				88				(154)				114,368
Additions			-				-				4,771				20,960				27,872				886				8,200				62,689
Transfers			-				3,866				2,287				5,957				-				-				(12,110)				-
Disposals			-				-				-				(961)				-				(24)				-				(985)
Reclassification to non-income tax credits (*)			-				-				(655)				(110)				-				-				(39)				(804)
Reclassification to Investment property (Note 12)			-				-				-				140				-				-				-				140
Depreciation (Note 6)			-				(611)				(4,427)				(24,974)				(10,964)				(616)				-				(41,592)
Closing net book amount			112,378				7,726				199,570				277,856				209,911				4,254				19,010				830,705
At June 30, 2016 (unaudited)
Cost			112,378				18,085				304,002				624,818				399,881				14,494				19,010				1,492,668
Accumulated depreciation			-				(10,359)				(104,432)				(346,962)				(189,970)				(10,240)				-				(661,963)
Net book amount			112,378				7,726				199,570				277,856				209,911				4,254				19,010				830,705
Six-month period ended June 30, 2017
Opening net book amount			109,858				9,640				190,055				251,310				216,169				3,935				21,641				802,608
Exchange differences			(3,176)				(373)				(3,318)				(5,924)				(3,889)				(144)				(796)				(17,620)
Additions			-				-				7,764				47,650				36,828				1,555				16,809				110,606
Transfers			-				429				2,700				5,709				-				-				(8,838)				-
Disposals			-				-				(102)				(1,753)				-				(4)				-				(1,859)
Reclassification to non-income tax credits (*)			-				-				(82)				(447)				-				-				(96)				(625)
Reclassification to Investment property (Note 12)			-				-				-				-				-				-				-				-
Depreciation (Note 6)			-				(1,030)				(6,896)				(25,554)				(21,471)				(799)				-				(55,750)
Closing net book amount			106,682				8,666				190,121				270,991				227,637				4,543				28,720				837,360
At June 30, 2017 (unaudited)
Cost			106,682				20,055				301,449				643,507				439,078				15,582				28,720				1,555,073
Accumulated depreciation			-				(11,389)				(111,328)				(372,516)				(211,441)				(11,039)				-				(717,713)
Net book amount			106,682				8,666				190,121				270,991				227,637				4,543				28,720				837,360

(*) Brazilian federal tax law allows entities to take a percentage of the total cost of the assets purchased as a tax credit. As of June 30, 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 June 30, 2017 and 2016, respectively.

As of June 30, 2017, borrowing costs of US$ 1,391 (June 30, 2016: US$ 1,538) 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$ 577,397 as of June 30, 2017.

As of June 30, 2017 included within property, plant and equipment balances are US$ 320 related to the net book value of assets under finance leases.

12. Investment property

Changes in the Group’s investment property in the six-month periods ended June 30, 2017 and 2016 were as follows:

		June 30, 2017				June 30, 2016
		(unaudited)
Beginning of the period			2,666				4,796
Reclassification from Property, plant and equipment			-				-
Exchange differences			(119)				(638)
End of the period			2,547				4,158
Cost			2,547				4,158
Net book amount			2,547				4,158

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

		June 30, 2017				June 30, 2016
		(unaudited)
Rental income			370				545

As of June 30, 2017, the fair value of investment property was US$ 45 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 six-month periods ended June 30, 2017 and 2016 were as follows:

		Goodwill				Software				Others				Total
Six-month period ended June 30, 2016
Opening net book amount			13,510				2,200				951				16,661
Exchange differences			345				284				(3)				626
Additions			-				785				19				804
Amortization charge (i) (Note 6)			-				(292)				(21)				(313)
Closing net book amount			13,855				2,977				946				17,778
At June 30, 2016 (unaudited)
Cost			13,855				5,113				2,652				21,620
Accumulated amortization							(2,136)				(1,706)				(3,842)
Net book amount			13,855				2,977				946				17,778
Six-month period ended June 30, 2017
Opening net book amount			13,405				2,901				946				17,252
Exchange differences			(374)				(70)				(2)				(446)
Additions			-				561				15				576
Amortization charge (i) (Note 6)			-				(393)				(23)				(416)
Closing net book amount			13,031				2,999				936				16,966
At June 30, 2017 (unaudited)
Cost			13,031				5,898				2,684				21,613
Accumulated amortization			-				(2,899)				(1,748)				(4,647)
Net book amount			13,031				2,999				936				16,966

(i) Amortization charges are included in “General and administrative expenses” and “Selling expenses” for the period ended June 30, 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 six-month periods ended June 30, 2017 and 2016 were as follows:

		June 30, 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			-				-				-				581				-				581
Initial recognition and changes in fair value of biological assets			17,343				5,796				4,528				163				(5,128)				22,702
Decrease due to harvest / disposals			(76,924)				(43,858)				(1,418)				(75)				(47,650)				(169,925)
Decrease due to sales of agricultural produce			-				-				(14,956)				-				-				(14,956)
Costs incurred during the year			47,704				17,100				12,846				457				42,412				120,519
Exchange differences			(476)				285				(348)				(193)				(997)				(1,729)
End of the period			15,836				4,898				7,479				3,366				71,017				102,596

		June 30, 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
Increase due to purchases			-				-				-				1,132				-				1,132
Initial recognition and changes in fair value of biological assets			45,657				9,458				1,625				90				26,664				83,494
Decrease due to harvest / disposals			(79,303)				(38,548)				(1,306)				-				(35,868)				(155,025)
Decrease due to sales of agricultural produce			-				-				(10,183)				-				-				(10,183)
Costs incurred during the year			31,150				13,165				10,860				388				37,479				93,042
Exchange differences			(1,542)				(2,476)				(949)				(102)				15,357				10,288
End of the period			18,498				4,730				6,833				1,796				102,709				134,566

(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 June 30, 2017:

		June 30, 2017
		Crops				Rice				Dairy				All other segments				Sugar, Ethanol and Energy				Total
Salaries, social security expenses and employee benefits			2,091				4,307				2,440				156				4,884				13,878
Depreciation and amortization			203				-				-				-				1,936				2,139
Fertilizers, agrochemicals and seeds			16,733				970				-				-				15,343				33,046
Fuel, lubricants and others			539				386				355				25				1,322				2,627
Maintenance and repairs			787				1,109				895				91				747				3,629
Freights			74				357				56				17				-				504
Contractors and services			14,861				7,944				-				8				2,298				25,111
Feeding expenses			-				-				4,784				11				-				4,795
Veterinary expenses			-				-				918				58				-				976
Energy power			49				850				390				-				-				1,289
Professional fees			90				37				68				7				43				245
Other taxes			1,019				72				3				72				54				1,220
Lease expense and similar arrangements			9,155				187				-				-				15,291				24,633
Others			2,103				881				196				12				494				3,686
Subtotal			47,704				17,100				10,105				457				42,412				117,778
Own agricultural produce consumed			-				-				2,741				-				-				2,741
Total			47,704				17,100				12,846				457				42,412				120,519

Cost of production as of June 30, 2016:

		June 30, 2016
		Crops				Rice				Dairy				All other segments				Sugar, Ethanol and Energy				Total
Salaries, social security expenses and employee benefits			2,339				3,196				1,779				63				4,977				12,354
Depreciation and amortization			188				-				-				-				2,232				2,420
Fertilizers, agrochemicals and seeds			8,010				117				94				-				10,466				18,687
Fuel, lubricants and others			699				475				384				7				1,308				2,873
Maintenance and repairs			391				1,185				849				34				915				3,374
Freights			578				355				53				5				-				991
Contractors and services			11,261				6,687				-				-				1,344				19,292
Feeding expenses			-				-				3,844				5				-				3,849
Veterinary expenses			-				-				845				21				-				866
Energy power			54				356				243				-				-				653
Professional fees			94				39				70				-				57				260
Other taxes			732				66				5				49				50				902
Lease expense and similar arrangements			5,040				222				3				-				15,666				20,931
Others			1,764				467				214				204				464				3,113
Subtotal			31,150				13,165				8,383				388				37,479				90,565
Own agricultural produce consumed			-				-				2,477				-				-				2,477
Total			31,150				13,165				10,860				388				37,479				93,042

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 June 30, 2017 and December 31, 2016 were as follows:

		June 30, 2017				December 31, 2016
		(unaudited)
Non-current
Cattle for dairy production			7,061				6,584
Breeding cattle			1,527				1,533
Other cattle			363				399
			8,951				8,516
Current
Breeding cattle			1,476				501
Other cattle			418				243
Sown land – crops			15,836				28,189
Sown land – rice			4,898				25,575
Sown land – sugarcane			71,017				82,380
			93,645				136,888
Total biological assets			102,596				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 June 30, 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 June 30, 2017 and their allocation to the fair value hierarchy:

		2017
		Level 1				Level 2				Total
Assets
Derivative financial instruments			2,510				505				3,015
Total assets			2,510				505				3,015
Liabilities
Derivative financial instruments			(122)				(1,689)				(1,811)
Total liabilities			(122)				(1,689)				(1,811)

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			(3,608)
Options		Quoted price		-		-		1			5,996
Foreign-currency interest-rate swaps		Theoretical price		Swap curve		Present value method		2			256
Interest-rate swaps		Theoretical price		Swap curve; Money market interest-rate curve		Present value method		2			(1,440)
											1,204

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

		June 30,  2017				December 31, 2016
		(unaudited)
Non current
Trade receivables			1,759				1,802
Trade receivables – net			1,759				1,802
Advances to suppliers			1,635				1,930
Income tax credits			7,264				7,472
Non-income tax credits (i)			2,457				1,853
Judicial deposits			3,345				3,280
Other receivables			1,542				1,075
Non current portion			18,002				17,412
Current
Trade receivables			68,458				61,546
Receivables from related parties (Note 25)			8,313				8,114
Less: Allowance for trade receivables			(708)				(643)
Trade receivables – net			76,063				69,017
Prepaid expenses			8,821				8,302
Advance to suppliers			41,611				21,451
Income tax credits			5,838				7,116
Non-income tax credits (i)			42,901				43,572
Cash collateral			1,179				3,546
Receivables from related parties (Note 25)			1,228				172
Other receivables			4,735				4,352
Subtotal			106,313				88,511
Current portion			182,376				157,528
Total trade and other receivables, net			200,378				174,940

(i) Includes US$ 625 for the six month period ended June 30, 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):

		June 30, 2017				December 31, 2016
		(unaudited)
Currency
US Dollar			65,267				54,012
Argentine Peso			44,945				45,641
Uruguayan Peso			128				762
Brazilian Reais			90,038				74,525
			200,378				174,940

As of June 30, 2017 trade receivables of US$ 21,055 (December 31, 2016: US$ 14,641) were past due but not impaired. The ageing analysis of these receivables indicates that US$ 4,787 and US$ 5,264 are over 6 months in June 30, 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

		June 30, 2017				December 31, 2016
		(unaudited)
Raw materials			54,945				42,108
Finished goods			95,850				68,191
Stocks held by third parties			82				1,308
Others			175				147
			151,052				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

		June 30, 2017				December 31, 2016
		(unaudited)
Cash at bank and on hand			122,325				130,001
Short-term bank deposits			97,609				28,567
			219,934				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)			-				323
Restricted share vested			-				3,225
At June 30, 2016			122,382				1,124,795
At January 1, 2017			122,382				1,120,823
Restricted share vested			-				4,149
Purchase of own shares			-				(7,438)
At June 30, 2017			122,382				1,117,534

Share Repurchase Program

On September 24, 2013, the Board of Directors of the Company authorized a share repurchase program for up to 5% of its outstanding shares. The  repurchase program has been reauthorized by the Board of Directors following each 12-month period since its inception.

On August 11, 2017, the Board of Directors authorized the extension of the program for an additional twelve-month period ending on September 23, 2018. Repurchases of shares under the program may be made from time to time (i) in open market transactions in compliance with the trading conditions of Rule 10b-18 under the U.S. Securities Exchange Act of 1934, as amended, and applicable rules and regulations thereuner; and (ii) through privately negotiated transactions. The share repurchase program does not require Adecoagro to acquire any specific number or amount of shares and may be modified, suspended, reinstated or terminated at any time in the Company’s discretion and without prior notice. The size and the timing of repurchases will depend upon market conditions, applicable legal requirements and other factors.

As of June 30, 2017, the Company repurchased an aggregate of 3,669,516 shares under the program, of which 2,091,922 have been used to cover the exercise of options under the Company's employee stock option plan and to issue shares pursuant to the Company's restricted stock unit plan.

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 June 30, 2017 nil options (June 30, 2016: 36,768) were exercised, and nil (June 30, 2016: 40,100) were forfeited.

(b) Restricted Share and Restricted Stock Unit Plan

As of June 30, 2017, the Group recognized compensation expense US$ 2.8 million related to the restricted shares granted under the Restricted Share Plan (June 30, 2016: US$ 2.5 million).

For the six-month period ended June 30, 2017, 484,098 Restricted Stock Units were granted, (June 30, 2016: 464,139), 489,415 vested, (June 30, 2016: 453,001), and 6,140 were forfeited (June 30, 2016: 17,505).

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

		June 30, 2017				December 31, 2016
		(unaudited)
Non-current
Payable from acquisition of property, plant and equipment (i)			521				1,042
Other payables			371				385
			892				1,427
Current
Trade payables			51,023				77,325
Advances from customers			7,070				7,758
Amounts due to related parties (Note 25)			230				1,152
Taxes payable			2,642				4,685
Payables from acquisition of property, plant and equipment - Non Current			523				-
Other payables			286				1,238
			61,774				92,158
Total trade and other payables			62,666				93,585

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

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

22. Borrowings

		June 30, 2017				December 31, 2016
		(unaudited)
Non-current
Bank borrowings (*)			537,413				430,202
Obligations under finance leases			71				102
			537,484				430,304
Current
Bank overdrafts			7,171				90
Bank borrowings (*)			249,571				204,923
Obligations under finance leases			53				79
			256,795				205,092
Total borrowings			794,279				635,396

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

As of June 30, 2017, total bank borrowings include collateralized liabilities of US$ 638,143 (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:

		June 30, 2017				December 31, 2016
		(unaudited)
Fixed rate:
Less than 1 year			154,118				67,682
Between 1 and 2 years			41,525				43,630
Between 2 and 3 years			33,171				40,047
Between 3 and 4 years			22,784				21,857
Between 4 and 5 years			22,477				21,116
More than 5 years			11,422				20,239
			285,497				214,571
Variable rate:
Less than 1 year			102,624				137,331
Between 1 and 2 years			134,795				150,517
Between 2 and 3 years			90,564				81,947
Between 3 and 4 years			92,433				18,457
Between 4 and 5 years			74,953				18,309
More than 5 years			13,289				14,083
			508,658				420,644
			794,155				635,215

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

		June 30, 2017				December 31, 2016
		(unaudited)
Currency
US Dollar			596,272				437,307
Brazilian Reais			190,136				196,903
Argentine Peso			7,871				1,186
			794,279				635,396

The carrying amount of short-term borrowings is approximate its fair value due to the short-term maturity. Long term borrowings subject to variable rate approximate their fair value. The fair value of long-term subject to fix rate do not significant differ from their fair value.

The 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

		June 30, 2017				December 31, 2016
			(unaudited)
Non-current
Social security payable			1,070				1,235
			1,070				1,235
Current
Salaries payable			10,094				7,351
Social security payable			3,478				3,063
Provision for vacations			11,238				12,109
Provision for bonuses			3,214				4,321
			28,024				26,844
Total payroll and social security liabilities			29,094				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:

Related party		Relationship		Description of transaction		Income (loss) included in the statement of income								Balance receivable (payable)
						June 30, 2017				June 30, 2016				June 30, 2017				December 31, 2016
							(unaudited)				(unaudited)				(unaudited)
Mario Jorge de Lemos Vieira/ Cia Agropecuaria Monte Alegre/ Alfenas Agricola Ltda/ Marcelo Weyland Barbosa Vieira/ Paulo Albert Weyland Vieira		(i)		Receivables (Note 16)			-				-				1,228				172
				Payables (Note 21)			-				-				(15)				(701)
CHS Agro		Joint venture		Services			48				45				-				-
				Sales of good			-				366				-				-
				Payables (Note 21)			-				-				(215)				(451)
				Interest income			163				163				-				-
				Receivables (Note 16)			-				-				8,313				8,114
Directors and senior management		Employment		Compensation selected employees			(2,046)				(2,352)				(15,279)				(17,355)

(i) Shareholder of the Company.

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

F - 38

Adecoagro S.A.

Notes to the Condensed Consolidated Interim Financial Statements (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 June 30, 2017 and for the six-month periods ended June 30, 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 June 30, 2017, results of operations and cash flows for the six-month periods ended June 30, 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.

In January 2016, the IASB finished its long-standing project on lease accounting and published IFRS 16, ‘Leases’, which replaces the current guidance in IAS 17. This will require far-reaching changes in accounting by lessees in particular. The standard applies to annual periods beginning on or after 1 January 2019, with earlier application permitted if IFRS 15, ‘Revenue from Contracts with Customers’, is also applied.

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

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)

26. Basis of preparation and presentation (continued)

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, 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