Segment information

According to IFRS 8, operating segments are identified based on the ‘management approach’. 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 Group’s CODM is the Management Committee. IFRS 8 stipulates external segment reporting based on the Group’s internal organizational and management structure and on internal financial reporting to the chief operating decision maker.

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

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

•The Company’s ‘Crops’ Segment consists of planting, harvesting and sale of grains, oilseeds and fibers (including wheat, corn, soybeans, cotton and sunflowers, among others), and to a lesser extent the provision of grain warehousing/conditioning and handling and drying services to third parties. Each underlying crop in this 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 Company’s ‘Rice’ Segment consists of planting, harvesting, processing and marketing of rice.

•The Company’s ‘Dairy’ Segment consists of the production and sale of raw milk and industrialized products, including UHT, cheese and powder milk among others.

•The Company’s ‘All Other Segments’ consists of the aggregation of the remaining non-reportable operating segments, which do not meet the quantitative thresholds for disclosure, namely, Coffee and Cattle.

•The Company’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 Company’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).

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

Effective July 1, 2018, the Group applied IAS 29 “Financial Reporting in Hyperinflationary Economies” (“IAS 29”) to its operations in Argentina. IAS 29 “Financial Reporting in Hyperinflationary Economies” requires that the financial statements of entities whose functional currency is that of a hyperinflationary economy be adjusted for the effects of changes in the general price index and be expressed in terms of the current unit of measurement at the closing date of the reporting period (“inflation accounting”). In order to determine whether an economy is classified as hyperinflationary, IAS 29 sets forth a series of factors to be considered, including whether the amount of cumulative inflation nears or exceeds a threshold of 100 %. Accordingly, Argentina has been classified as a hyperinflationary economy under the terms of IAS 29 from July 1, 2018. (Please see Note 33 - Basis of preparation and presentations).

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

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

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

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

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

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

The following tables show a reconciliation of each reportable segment as per the information reviewed by the CODM and the reportable segment measured in accordance with IAS 29 and IAS 21 as per the consolidated financial statements for the years ended December 31, 2019 and 2018.

Segment reconciliation for the year ended December 31, 2019:



	2019
	Crops						Rice						Dairy
	Total segment reporting		Adjustment		Total as per statement of income		Total segment reporting		Adjustment		Total as per statement of income		Total segment reporting		Adjustment		Total as per statement of income
Sales of goods sold and services rendered	168,938		(2,492	)	166,446		102,162		(1,006	)	101,156		84,767		(945	)	83,822
Cost of goods and services rendered	(159,197	)	2,687		(156,510	)	(74,480	)	529		(73,951	)	(77,532	)	838		(76,694	)
Initial recognition and changes in fair value of biological assets and agricultural produce	30,290		(549	)	29,741		13,194		(979	)	12,215		13,741		(231	)	13,510
Gain from changes in net realizable value of agricultural produce after harvest	1,542		283		1,825		—		—		—		—		—		—
Margin on Manufacturing and Agricultural Activities Before Operating Expenses	41,573		(71	)	41,502		40,876		(1,456	)	39,420		20,976		(338	)	20,638
General and administrative expenses	(5,446	)	(87	)	(5,533	)	(6,752	)	147		(6,605	)	(4,188	)	90		(4,098	)
Selling expenses	(12,852	)	128		(12,724	)	(21,072	)	498		(20,574	)	(6,252	)	18		(6,234	)
Other operating income, net	(1,133	)	(225	)	(1,358	)	282		(15	)	267		(635	)	(68	)	(703	)
Profit from Operations Before Financing and Taxation	22,142		(255	)	21,887		13,334		(826	)	12,508		9,901		(298	)	9,603

Depreciation and amortization	(4,662	)	(137	)	(4,799	)	(6,994	)	171		(6,823	)	(5,064	)	98		(4,966	)
Net (loss) / gain from Fair value adjustment of investment property	—		—		—		—		—		—		—		—		—



	2019
	All other segments						Corporate					Total
	Total segment reporting		Adjustment		Total as per statement of income		Total segment reporting		Adjustment	Total as per statement of income		Total segment reporting		Adjustment		Total as per statement of income
Sales of goods sold and services rendered	3,904		27		3,931		—		—	—		891,554		(4,416	)	887,138
Cost of goods and services rendered	(3,412	)	(40	)	(3,452	)	—		—	—		(675,187	)	4,014		(671,173	)
Initial recognition and changes in fair value of biological assets and agricultural produce	(40	)	53		13		—		—	—		70,295		(1,706	)	68,589
Gain from changes in net realizable value of agricultural produce after harvest	—		—		—		—		—	—		1,542		283		1,825
Margin on Manufacturing and Agricultural Activities Before Operating Expenses	452		40		492		—		—	—		288,204		(1,825	)	286,379
General and administrative expenses	(167	)	17		(150	)	(19,319	)	428	(18,891	)	(57,797	)	595		(57,202	)
Selling expenses	(171	)	(11	)	(182	)	(165	)	23	(142	)	(107,628	)	656		(106,972	)
Other operating income, net	(956	)	602		(354	)	(175	)	21	(154	)	(1,137	)	315		(822	)
Profit from Operations Before Financing and Taxation	(842	)	648		(194	)	(19,659	)	472	(19,187	)	121,642		(259	)	121,383

Depreciation and amortization	(181	)	4		(177	)	(20	)	3	(17	)	(174,578	)	139		(174,439	)
Net (loss) / gain from Fair value adjustment of investment property	(927	)	602		(325	)	—		—	—		(927	)	602		(325	)

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

Segment reconciliation for the year ended December 31, 2018:



	2018
	Crops						Rice						Dairy
	Total segment reporting		Adjustment		Total as per statement of income		Total segment reporting		Adjustment		Total as per statement of income		Total segment reporting		Adjustment		Total as per statement of income
Sales of goods sold and services rendered	164,538		(9,120	)	155,418		100,013		(4,610	)	95,403		33,201		(3,491	)	29,710
Cost of goods and services rendered	(165,988	)	9,052		(156,936	)	(75,739	)	766		(74,973	)	(31,488	)	3,361		(28,127	)
Initial recognition and changes in fair value of biological assets and agricultural produce	36,422		(7,755	)	28,667		8,967		(4,842	)	4,125		7,295		(1,840	)	5,455
Gain from changes in net realizable value of agricultural produce after harvest	2,704		(3,613	)	(909	)	—		—		—		—		—		—
Margin on Manufacturing and Agricultural Activities Before Operating Expenses	37,676		(11,436	)	26,240		33,241		(8,686	)	24,555		9,008		(1,970	)	7,038
General and administrative expenses	(4,239	)	37		(4,202	)	(5,070	)	(869	)	(5,939	)	(2,034	)	(246	)	(2,280	)
Selling expenses	(5,921	)	474		(5,447	)	(15,465	)	1,375		(14,090	)	(983	)	41		(942	)
Other operating income, net	5,422		1,741		7,163		275		(58	)	217		(1,055	)	58		(997	)
Profit from Operations Before Financing and Taxation	32,938		(9,184	)	23,754		12,981		(8,238	)	4,743		4,936		(2,117	)	2,819

Depreciation and amortization	(1,697	)	(329	)	(2,026	)	(5,846	)	5,840		(6	)	(2,253	)	(280	)	(2,533	)
Net (loss) / gain from Fair value adjustment of investment property	—		—		—		—		—		—		—		—		—



	2018
	All other segments						Corporate					Total
	Total segment reporting		Adjustment		Total as per statement of income		Total segment reporting		Adjustment	Total as per statement of income		Total segment reporting		Adjustment		Total as per statement of income
Sales of goods sold and services rendered	1,919		(149	)	1,770		—		—	—		810,609		(17,370	)	793,239
Cost of goods and services rendered	(1,412	)	99		(1,313	)	—		—	—		(623,243	)	13,278		(609,965	)
Initial recognition and changes in fair value of biological assets and agricultural produce	(806	)	(393	)	(1,199	)	—		—	—		31,025		(14,830	)	16,195
Gain from changes in net realizable value of agricultural produce after harvest	—		—		—		—		—	—		2,704		(3,613	)	(909	)
Margin on Manufacturing and Agricultural Activities Before Operating Expenses	(299	)	(443	)	(742	)	—		—	—		221,095		(22,535	)	198,560
General and administrative expenses	(155	)	(9	)	(164	)	(19,626	)	1,433	(18,193	)	(56,426	)	346		(56,080	)
Selling expenses	(165	)	16		(149	)	(178	)	33	(145	)	(92,154	)	1,939		(90,215	)
Other operating income, net	10,668		2,728		13,396		(167	)	36	(131	)	99,727		4,505		104,232
Profit from Operations Before Financing and Taxation	10,049		2,292		12,341		(19,971	)	1,502	(18,469	)	172,242		(15,745	)	156,497

Depreciation and amortization	(171	)	(6	)	(177	)	—		—	—		(153,169	)	(1,085	)	(154,254	)
Net (loss) / gain from Fair value adjustment of investment property	10,680		2,729		13,409		—		—	—		10,680		2,729		13,409

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

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’.

Segment analysis for the year ended December 31, 2019



	Farming										Sugar, Ethanol and Energy		Land Transformation	Corporate		Total
	Crops		Rice		Dairy		All other segments		Farming subtotal		Sugar, Ethanol and Energy		Land Transformation	Corporate		Total
Sales of goods and services rendered	168,938		102,162		84,767		3,904		359,771		531,783		—	—		891,554
Cost of goods sold and services rendered	(159,197	)	(74,480	)	(77,532	)	(3,412	)	(314,621	)	(360,566	)	—	—		(675,187	)
Initial recognition and changes in fair value of biological assets and agricultural produce	30,290		13,194		13,741		(40	)	57,185		13,110		—	—		70,295
Changes in net realizable value of agricultural produce after harvest	1,542		—		—		—		1,542		—		—	—		1,542
Margin on manufacturing and agricultural activities before operating expenses	41,573		40,876		20,976		452		103,877		184,327		—	—		288,204
General and administrative expenses	(5,446	)	(6,752	)	(4,188	)	(167	)	(16,553	)	(21,925	)	—	(19,319	)	(57,797	)
Selling expenses	(12,852	)	(21,072	)	(6,252	)	(171	)	(40,347	)	(67,116	)	—	(165	)	(107,628	)
Other operating income, net	(1,133	)	282		(635	)	(956	)	(2,442	)	126		1,354	(175	)	(1,137	)
Profit / (loss) from operations before financing and taxation	22,142		13,334		9,901		(842	)	44,535		95,412		1,354	(19,659	)	121,642

Depreciation and amortization	(4,662	)	(6,994	)	(5,064	)	(181	)	(16,901	)	(157,657	)	—	(20	)	(174,578	)
Net (loss) / gain from Fair value adjustment of investment property	—		—		—		(927	)	(927	)	—		—	—		(927	)
Reverse of revaluation surplus derived from the disposals of assets before taxes	—		—		—		—		—		—		8,022	—		8,022
Initial recognition and changes in fair value of biological assets and agricultural produce (unrealized)	6,091		509		(3,957	)	(72	)	2,571		(851	)	—	—		1,720
Initial recognition and changes in fair value of biological assets and agricultural produce (realized)	24,199		12,685		17,698		32		54,614		13,961		—	—		68,575
Changes in net realizable value of agricultural produce after harvest (unrealized)	(481	)	—		—		—		(481	)	—		—	—		(481	)
Changes in net realizable value of agricultural produce after harvest (realized)	2,023		—		—		—		2,023		—		—	—		2,023

Farmlands and farmland improvements, net	474,922		142,864		611		52,874		671,271		63,594		—	—		734,865
Machinery, equipment and other fixed assets, net	29,038		25,425		74,403		507		129,373		316,304		—	—		445,677
Bearer plants, net	592		—		—		—		592		252,928		—	—		253,520
Work in progress	11,457		15,669		15,394		1,214		43,734		15,424		—	—		59,158
Right of use assest	4,378		567		371		—		5,316		231,832		—	905		238,053
Investment property	—		—		—		34,295		34,295		—		—	—		34,295
Goodwill	9,896		3,890		—		817		14,603		5,417		—	—		20,020
Biological assets	38,404		21,484		11,521		3,673		75,082		55,354		—	—		130,436
Finished goods	17,830		5,805		4,779		—		28,414		36,864		—	—		65,278
Raw materials, stocks held by third parties and others	17,187		4,876		5,156		90		27,309		20,203		—	—		47,512
Total segment assets	603,704		220,580		112,235		93,470		1,029,989		997,920		—	905		2,028,814
Borrowings	28,045		45,602		100,262		—		173,909		240,001		—	554,370		968,280
Lease liabilities	4,857		490		378		—		5,725		209,700		—	959		216,384
Total segment liabilities	32,902		46,092		100,640		—		179,634		449,701		—	555,329		1,184,664

Segment analysis for the year ended December 31, 2018



	Farming										Sugar, Ethanol and Energy		Land Transformation	Corporate		Total
	Crops		Rice		Dairy		All other segments		Farming subtotal		Sugar, Ethanol and Energy		Land Transformation	Corporate		Total
Sales of goods and services rendered	164,538		100,013		33,201		1,919		299,671		510,938		—	—		810,609
Cost of goods sold and services rendered	(165,988	)	(75,739	)	(31,488	)	(1,412	)	(274,627	)	(348,616	)	—	—		(623,243	)
Initial recognition and changes in fair value of biological assets and agricultural produce	36,422		8,967		7,295		(806	)	51,878		(20,853	)	—	—		31,025
Changes in net realizable value of agricultural produce after harvest	2,704		—		—		—		2,704		—		—	—		2,704
Margin on manufacturing and agricultural activities before operating expenses	37,676		33,241		9,008		(299	)	79,626		141,469		—	—		221,095
General and administrative expenses	(4,239	)	(5,070	)	(2,034	)	(155	)	(11,498	)	(25,302	)	—	(19,626	)	(56,426	)
Selling expenses	(5,921	)	(15,465	)	(983	)	(165	)	(22,534	)	(69,442	)	—	(178	)	(92,154	)
Other operating income, net	5,422		275		(1,055	)	10,668		15,310		48,357		36,227	(167	)	99,727
Profit / (loss) from operations before financing and taxation	32,938		12,981		4,936		10,049		60,904		95,082		36,227	(19,971	)	172,242

Depreciation and amortization	(1,697	)	(5,846	)	(2,253	)	(171	)	(9,967	)	(143,202	)	—	—		(153,169	)
Net (loss) / gain from Fair value adjustment of investment property	—		—		—		10,680		10,680		—		—	—		10,680
Initial recognition and changes in fair value of biological assets and agricultural produce (unrealized)	8,205		(181	)	(599	)	102		7,527		(37,808	)	—	—		(30,281	)
Initial recognition and changes in fair value of biological assets and agricultural produce (realized)	28,217		9,148		7,894		(908	)	44,351		16,955		—	—		61,306
Changes in net realizable value of agricultural produce after harvest (unrealized)	(647	)	—		—		—		(647	)	—		—	—		(647	)
Changes in net realizable value of agricultural produce after harvest (realized)	3,351		—		—		—		3,351		—		—	—		3,351

Farmlands and farmland improvements, net	547,842		173,481		727		22,891		744,941		51,567		—	—		796,508
Machinery, equipment and other fixed assets, net	5,049		23,135		32,821		459		61,464		338,607		—	—		400,071
Bearer plants, net	427		—		—		—		427		232,529		—	—		232,956
Work in progress	8,690		5,214		14,317		18		28,239		22,665		—	—		50,904
Investment property	—		—		—		40,725		40,725		—		—	—		40,725
Goodwill	9,463		4,142		—		2,110		15,715		5,635		—	—		21,350
Biological assets	27,347		17,173		10,298		3,094		57,912		47,475		—	—		105,387
Finished goods	29,144		9,507		1,170		—		39,821		39,937		—	—		79,758
Raw materials,Stocks held by third parties and others	15,834		7,394		2,217		121		25,566		22,778		—	—		48,344
Total segment assets	643,796		240,046		61,550		69,418		1,014,810		761,193		—	—		1,776,003
Borrowings	111,692		58,999		543		4,860		176,094		600,810		—	85,212		862,116
Total segment liabilities	111,692		58,999		543		4,860		176,094		600,810		—	85,212		862,116

Segment analysis for the year ended December 31, 2017



	Farming										Sugar, Ethanol and Energy		Land Transformation	Corporate		Total
	Crops		Rice		Dairy		All other segments		Farming subtotal		Sugar, Ethanol and Energy		Land Transformation	Corporate		Total
Sales of goods and services rendered	197,222		86,478		37,523		1,336		322,559		610,619		—	—		933,178
Cost of goods sold and services rendered	(196,302	)	(71,087	)	(36,979	)	(853	)	(305,221	)	(461,506	)	—	—		(766,727	)
Initial recognition and changes in fair value of biological assets and agricultural produce	17,158		10,236		11,769		267		39,430		23,790		—	—		63,220
Changes in net realizable value of agricultural produce after harvest	8,852		—		—		—		8,852		—		—	—		8,852
Margin on manufacturing and agricultural activities before operating expenses	26,930		25,627		12,313		750		65,620		172,903		—	—		238,523
General and administrative expenses	(2,981	)	(4,699	)	(1,058	)	(174	)	(8,912	)	(26,806	)	—	(21,581	)	(57,299	)
Selling expenses	(7,501	)	(13,324	)	(711	)	(156	)	(21,692	)	(73,664	)	—	(43	)	(95,399	)
Other operating income, net	7,719		724		662		4,279		13,384		30,419		—	(40	)	43,763
Profit / (loss) from operations before financing and taxation	24,167		8,328		11,206		4,699		48,400		102,852		—	(21,664	)	129,588

Depreciation and amortization	(1,511	)	(3,851	)	(1,037	)	(159	)	(6,558	)	(144,449	)	—	—		(151,007	)
Net (loss) / gain from Fair value adjustment of investment property	—		—		—		4,302		4,302		—		—	—		4,302
Initial recognition and changes in fair value of biological assets and agricultural produce (unrealized)	4,366		5,346		1,849		159		11,720		2,925		—	—		14,645
Initial recognition and changes in fair value of biological assets and agricultural produce (realized)	12,792		4,890		9,920		108		27,710		20,865		—	—		48,575
Changes in net realizable value of agricultural produce after harvest (unrealized)	2,371		—		—		—		2,371		—		—	—		2,371
Changes in net realizable value of agricultural produce after harvest (realized)	6,481		—		—		—		6,481		—		—	—		6,481

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



	2019	2018
Total reportable assets as per segment information	2,028,814	1,776,003
Intangible assets (excluding goodwill)	13,659	6,559
Deferred income tax assets	13,664	16,191
Trade and other receivables	172,331	197,506
Other assets	1,128	1,192
Derivative financial instruments	1,435	6,286
Cash and cash equivalents	290,276	273,635
Total assets as per the statement of financial position	2,521,307	2,277,372



	2019	2018
Total reportable liabilities as per segment information	1,184,664	862,116
Trade and other payables	110,486	106,437
Deferred income tax liabilities	165,508	168,171
Payroll and social liabilities	26,417	27,197
Provisions for other liabilities	3,172	3,625
Current income tax liabilities	754	1,398
Derivative financial instruments	1,423	283
Total liabilities as per the statement of financial position	1,492,424	1,169,227

Non-current assets and revenues and fair value gains and losses are shown by geographic region. These are the regions in which the Group is active: Argentina, Brazil and Uruguay.

As of and for the year ended December 31, 2019:



	Argentina	Brazil		Uruguay		Total
Property, plant and equipment	834,248	648,471		10,501		1,493,220
Investment property	34,295	—		—		34,295
Goodwill	14,603	5,417		—		20,020
Non-current portion of biological assets	13,303	—		—		13,303

Sales of goods and services rendered	229,547	462,174		199,833		891,554
Initial recognition and changes in fair value of biological assets and agricultural produce	55,760	13,167		1,368		70,295
Changes in net realizable value of agricultural produce after harvest	2,682	(8	)	(1,132	)	1,542

As of and for the year ended December 31, 2018:



	Argentina	Brazil		Uruguay		Total
Property, plant and equipment	811,890	656,586		11,963		1,480,439
Investment property	40,725	—		—		40,725
Goodwill	15,081	6,269		—		21,350
Non-current portion of biological assets	11,270	—		—		11,270

Sales of goods and services rendered	207,480	496,966		106,163		810,609
Initial recognition and changes in fair value of biological assets and agricultural produce	45,985	(13,541	)	(1,419	)	31,025
Changes in net realizable value of agricultural produce after harvest	1,148	1,436		120		2,704

As of and for the year ended December 31, 2017:



	Argentina	Brazil	Uruguay	Total
Sales of goods and services rendered	214,888	545,859	172,431	933,178
Initial recognition and changes in fair value of biological assets and agricultural produce	36,341	26,326	553	63,220
Loss from changes in net realizable value of agricultural produce after harvest	5,705	1,346	1,801	8,852