6-K
Adecoagro S.A. (AGRO)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of March 2025
Commission File Number: 001-35052
Adecoagro S.A.
(Translation of registrant’s name into English)
28, Boulevard F.W. Raiffeisen,
L-2411, Luxembourg
Grand Duchy of Luxembourg
(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 |
|---|
TABLE OF CONTENTS
| ITEM | |
|---|---|
| 99.1 | Press release dated March 13, 2025 related to the registrant’s results of operations for the year ended December 31, 2024. |
| 99.2 | Audited consolidated financial statements of the registrant as of and for the year ended December 31, 2024. |
SIGNATURE
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/ Emilio Federico Gnecco | |
| Name: | Emilio Federico Gnecco | |
| Title: | Chief Financial Officer |
Date: March 13, 2025
Document
| Adjusted EBITDA in 2024 was 444 million and NCFO 161 million. Crushing volume and sugar production at all-time record. 102 million in shareholder distribution. | |||||||
|---|---|---|---|---|---|---|---|
| 4Q24 Earning Release Conference Call | |||||||
| English Conference Call | |||||||
| March 14, 2025 | |||||||
| 8 a.m. (US EST) | |||||||
| 9 a.m. (Buenos Aires/Sao Paulo time) | |||||||
| 1 p.m. (Luxembourg) | |||||||
| Zoom ID: 868 1551 9589 | 4Q24 | 4Q23 | Chg % | 12M24 | 12M23 | Chg % | |
| Passcode: 995202 | 368,379 | 400,139 | (7.9)% | 1,476,378 | 1,442,441 | 2.4% | |
| 103,250 | 95,763 | 7.8% | 444,261 | 476,570 | (6.8)% | ||
| Investor Relations | 28.4% | 24.6% | 15.8% | 30.7% | 33.6% | (8.6)% | |
| Emilio Gnecco | 45,904 | (16,402) | n.a | 202,557 | 153,463 | 32.0% | |
| CFO | 0.46 | (0.15) | n.a | 2.02 | 1.45 | 39.8% | |
| Victoria Cabello | 26,108 | 24,729 | 5.6% | 101,887 | 61,241 | 66.4% | |
| IR Officer | 32,480 | 15,223 | 113.4% | 104,067 | 67,119 | 55.0% | |
| 522,215 | 502,531 | 3.9% | 522,215 | 502,531 | 3.9% | ||
| 1.2x | 1.1x | 11.5% | 1.2x | 1.1x | 11.5% | ||
| ir@adecoagro.com | 160,883 | 175,874 | (8.5)% | 160,883 | 175,874 | (8.5)% | |
| 56,816 | 108,756 | (47.8)% | 56,816 | 108,756 | (47.8)% | ||
| 4Q24 | 4Q23 | Chg % | 12M24 | 12M23 | Chg % | ||
| 105,289 | 87,476 | 20.4% | 364,160 | 395,637 | (8.0)% | ||
| (3,196) | (304) | n.a | 19,092 | 26,979 | (29.2)% | ||
| Website: | (1,214) | 8,188 | n.a. | 50,185 | 47,869 | 4.8% | |
| www.adecoagro.com | 8,219 | 5,930 | 38.6% | 33,723 | 28,485 | 18.4% | |
| (5,848) | (5,527) | 5.8% | (22,899) | (22,400) | 2.2% | ||
| 103,250 | 95,763 | 7.8% | 444,261 | 476,570 | (6.8)% | ||
 |
All values are in US Dollars.
Full Year Results Overview
◦In 2024, we delivered solid results, in spite of the challenging price scenario for most of our products and the adverse weather conditions that impacted some of our operations. This was possible thanks to the investments we have made throughout the years and our continuous focus on enhancing efficiencies in every stage of the value chain, while focusing on being the lowest cost producer. The commercial strategy in each of our operations enabled us to profit from opportunities that arose in both the export and domestic markets, as well as to leverage our storage capacity to build stocks. For example: (i) we conducted rice sales when both global and domestic supply was limited; (ii) we maximized production of fluid milk for our consumer brand in Argentina given its attractive marginal contribution and our growing presence in the local market; and (iii) we carried over ethanol stocks to profit from better prices in the next quarters.
◦Consequently, Adecoagro's Adjusted EBITDA amounted to $444.3 million, whereas Adjusted Free Cash Flow from Operations (NCFO) reached $160.9 million. Shareholder distribution (cash dividend and share repurchase) totaled $101.9 million, $31.5 million above the minimum stated in our policy and marking a 9.4% distribution yield. Expansion capex amounted to $104.1 million as we continued to invest in organic projects with attractive returns across all our operations and to consolidate our assets, while keeping our sustainable and innovative footprint. This was accomplished without compromising our balance sheet structure, as our net debt stood at $522.2 million, reaching 1.2x Net Debt/EBITDA.
Sugar, Ethanol & Energy business
Performance Highlights
◦Adjusted EBITDA reached $105.3 million during 4Q24, marking a 20.4% year-over-year increase, whereas in 2024 it amounted to $364.2 million, 8.0% lower than the previous year.
▪(+/-) Annual crushing record of 12.8 million tons despite dry weather. Quarterly crushing down 12.0% year-over-year on lower yields.
▪(+) Record sugar production and mix (55% in 4Q24 / 52% in 2024). Despite a recovery in domestic ethanol prices, we are carrying over 31% of our 2024 production to profit from higher expected prices.
▪(+) Cash cost down 8.4% year-over-year to 12.7 cts/lb due to better cost dilution, higher tax recovery on higher ethanol sales and weaker FX, among others.
▪(-/+) Lower net sales in 4Q24 on lower volumes sold and lower sugar prices in US dollar terms. Annual sales in line with 2023 on higher selling volumes due to higher production.
▪(-) Year-over-year loss in biological assets (harvested cane) due to lower Consecana prices versus 2023.
Outlook
◦(+) Despite challenging weather, we are currently crushing and producing sugar and ethanol thanks to our continuous harvest model.
◦(-/+) Although we foresee a slower crushing pace in 1H25 due to lower productivity, we expect to compensate this during 2H25. Thus, we forecast a slight year-over-year increase in crushing volume.
◦(+) Global sugar market dependent on Brazil's output. Potential upside to spot prices. 2025 sugar production remains open (31% hedged at 20.7 cts/lb). 2024 production sold at 22.5 cts/lb.
◦(+) Tight supply & demand scenario for ethanol. Prices expected to converge to the 70% parity at the pump. Commercial strategy paid off as we are clearing out our ethanol tanks at higher prices (+32.5% net price increase in Brazilian Real versus the lowest level seen in January 2024).
Farming business
Performance Highlights
◦Adjusted EBITDA amounted to $3.8 million during 4Q24, representing a 72.4% year-over-year decline, whereas for 2024 it reached $103.0 million, in line with the previous year. Excluding the results of the farm sales conducted during 2024 and 2023, Adjusted EBITDA in 2024 was 19.5% higher year-over-year, totaling $87.9 million, reflecting record results for our Rice and Dairy segments.
▪(+) Year-over-year gains in the mark-to-market of our biological asset and agricultural produce for our Rice operations (higher prices and area) and Crops (higher yields and area).
▪(+/-) Higher prices for Dairy and Rice's higher value-added products, despite the latter presenting a downward trend by year-end, as expected.
▪(+/-) One-off events: Sale of La Pecuaria farm ($15.0 million in Adjusted EBITDA) conducted in 2Q24 and El Meridiano in 3Q23 ($29.8 million in Adjusted EBITDA).
▪(-) Lower prices for soybean, corn and wheat.
▪(-) Higher costs in US dollar terms.
Outlook
◦(-/+) Crops: International prices for our main grains continue to be pressured on greater global supply, while costs are higher in US dollar terms. Crops productivity expected to be in line with historical production due to precipitation throughout the summertime.
◦(+/-) Rice: Higher expected production on greater productivity and higher planted area. As anticipated, global rice prices declined, but our diversified product portfolio and market flexibility act as a mitigant.
◦(+) Dairy: Maximizing production for the domestic market. Expected increase in the amount of milk processed by our facilities, as well as new products being launched throughout the year.
| Remarks |
|---|
2024 Shareholder Distribution
◦During 2024, we distributed a total of $101.9 million, equivalent to 58% of the Adjusted Free Cash Flow from Operations (NCFO) generated in 2023. This represents a distribution yield of 9.4%, and $31.5 million above the annual minimum stated in our policy. This was executed via:
▪Cash dividends: $35 million paid in two installments of $17.5 million each in May and November 2024, representing a dividend per share of approximately $0.34.
▪Share repurchases: 6.5 million shares repurchased (6.2% of the company's equity) at an average price of $10.22 per share, totaling $66.9 million.
2025 Announced Shareholder Distribution
◦In 2024, we generated $160.9 million of NCFO, which implies a minimum distribution of $64.4 million to be distributed via a combination of cash dividends and share buybacks throughout 2025. Cash dividends will amount to $35.0 million, to be paid in two installments of $17.5 million each, in or about May and November 2025. The balance will be distributed via stock buybacks and/or cash dividends, as the case may be.
◦During the first two months of the year, we repurchased 1.1 million shares (1.1% of the company's equity) under our existing share buyback program at an average price of $9.65 per share, totaling $10.2 million.
Unsolicited non-binding proposal from Tether Investments S.A. de C.V.
◦On February 18, 2025, the Company announced that its Board of Directors received an unsolicited non-binding proposal from Tether Investments S.A. de C.V. (“Tether”) dated February 14, 2025, to acquire outstanding Common Shares of the Company at a price of $12.41 per Common Share through a tender offer that would result in Tether collectively holding 51% of the outstanding Common Shares of the Company. The Company decided to engage legal counsel and a financial advisor to negotiate and further assist the Board in its evaluation of the proposal.
◦On February 25, 2025, the Company issued a press release announcing that it is engaging in discussions with Tether on the terms and conditions of the proposal received on February 14th, 2025. The Company has entered into an Exclusivity Letter to facilitate further negotiations with Tether. No assurances can be given that a definitive agreement will be entered into, that any transaction will be consummated, or the timing, terms or conditions of any such transaction.
◦For more information, please refer to our 6-K Press Releases available on our Investor Relations' website (www.ir.adecoagro.com).
| ESG Update |
|---|
Commitment to reach 25% female participation in leadership positions by 2030
◦As a food and renewable energy producer, we have a key role in meeting the needs of a growing population. Our continuous focus on increasing production while consolidating our business units and growth projects has resulted in a demand for new talent across our operations. We strongly believe that developing actions that promote respect, equal opportunities and career development will make us a better company.
◦Therefore, we are proud to announce our 2030 commitment to reach at least 25% female participation in leadership positions. By setting this target, we aim to not only meet our business needs but also create a more balanced and inclusive workforce that reflects diverse perspectives and strengthens our organizational culture. As of December 31, 2023, female leaders represented 16% of the Company's workforce.
◦To achieve this, we have implemented various actions across our business units to contribute toward female inclusion in the workplace:
▪Women in Agribusiness: we train women from our communities with the goal of offering them employment opportunities.
▪Leadership: we identify women with potential and provide them training, mentoring and overall support to prepare them for leadership positions.
▪Communication: we raise awareness on biases that prevent us from including women in our workforce.
▪Maternity: we accompany women in navigating maternity through mentorship by fellow mothers.
◦ESG is a cornerstone of our business models and is embedded in our day-to-day decisions. The implementation of a gender diversity target, along with our carbon intensity target announced in March 2024, reinforce our commitment to promote economic and social growth in the communities in which we have a presence, while taking care of the environment and its natural resources.
| Sugar, Ethanol & Energy Segment - Operational Performance | | --- || SUGAR, ETHANOL & ENERGY - SELECTED INFORMATION | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | Operating Data | Metric | 4Q24 | 4Q23 | Chg % | 12M24 | 12M23 | Chg % | | Milling | | | | | | | | | Sugarcane Milled | tons | 2,575,641 | 2,927,587 | (12.0)% | 12,762,597 | 12,497,423 | 2.1% | | Own Cane | tons | 2,441,170 | 2,692,136 | (9.3)% | 11,668,117 | 11,685,815 | (0.2)% | | Third Party Cane | tons | 134,471 | 235,450 | (42.9)% | 1,094,480 | 811,608 | 34.9% | | Production | | | | | | | | | TRS Equivalent Produced | tons | 352,722 | 397,310 | (11.2)% | 1,771,500 | 1,731,127 | 2.3% | | Sugar | tons | 175,910 | 186,443 | (5.6)% | 832,389 | 805,608 | 3.3% | | Ethanol | M3 | 98,955 | 119,314 | (17.1)% | 532,715 | 522,508 | 2.0% | | Hydrous Ethanol | M3 | 58,109 | 85,959 | (32.4)% | 416,147 | 341,270 | 21.9% | | Anhydrous Ethanol (1) | M3 | 40,846 | 33,356 | 22.5% | 116,568 | 181,238 | (35.7)% | | Sugar mix in production | % | 55% | 52% | 5.6% | 52% | 52% | 0.7% | | Ethanol mix in production | % | 45% | 48% | (6.1)% | 48% | 48% | (0.7)% | | Energy Exported (sold to grid) | MWh | 179,541 | 198,895 | (9.7)% | 743,488 | 694,259 | 7.1% | | Cogen efficiency (KWh sold/ton crushed) | KWh/ton | 69.7 | 67.9 | 2.6% | 58.3 | 55.6 | 4.9% | | Agricultural Metrics | | | | | | | | | Harvested area | Hectares | 39,343 | 32,793 | 20.0% | 167,246 | 146,707 | 14.0% | | Yield | tons/hectare | 62 | 82 | (24.2)% | 70 | 80 | (12.4)% | | TRS content | kg/ton | 132 | 127 | 3.5% | 132 | 132 | 0.6% | | Area | | | | | | | | | Sugarcane Plantation | hectares | 212,996 | 198,747 | 7.2% | 212,996 | 198,747 | 7.2% | | Expansion Area | hectares | 4,755 | 1,920 | 147.7% | 14,249 | 5,761 | 147.3% | | Renewal Area | hectares | 3,940 | 6,360 | (38.1)% | 21,730 | 28,083 | (22.6)% |
(1) Does not include 4,360 and 13,313 cubic meters of anhydrous ethanol that were converted by dehydrating our hydrous ethanol stocks during 4Q24 and 12M24, respectively. During 4Q23 and 2023, we dehydrated 28,773 and 81,689 cubic meters of hydrous ethanol.
On a full year basis, crushing volume reached 12.8 million tons, marking a 2.1% increase compared to the previous year and an all-time record for our mills. Although Brazil's sugarcane production areas experienced lower-than-average rainfalls throughout the year, we saw an increase in our annual crushing figure due to (i) greater sugarcane availability driven by the expansion planting activities conducted in the last years; and (ii) higher crushing of third-party cane. The 34.9% year-over-year increase in sourcing of third-party cane enabled us to mitigate the reduction in crushing volume from own cane, allowing it to be harvested in the upcoming months with better expected productivity. In terms of productivity, our average yield stood at 70 tons per hectare, 12.4% lower than the previous year as a consequence of the decline in precipitation levels, whereas TRS content remained in line at 132 kg/ton.
Focusing on the quarterly figures, crushing volume amounted to 2.6 million tons, 12.0% lower than the same period of last year. The aforementioned dry weather, coupled with our strategic decision to harvest cane with limited growth potential (and thus allow areas with greater potential to continue to grow), were
the main drivers toward the 24.2% year-over-year decline in yields to 62 tons per hectare. However, this was partially offset by higher TRS content, which stood at 132 kg/ton.
During 4Q24, average sugar prices traded at a significant premium to both hydrous and anhydrous ethanol in Mato Grosso do Sul (42% and 27%, respectively). Consequently, we maximized sugar production, achieving a 55% mix. Within our ethanol production, 59% was hydrous ethanol, as demand for this type of fuel had been significantly increasing and gaining market share in the Otto cycle. This high degree of flexibility constitutes one of our most important competitive advantages, since it allows us to make more efficient use of our fixed assets and profit from higher relative prices. Moreover, we can dehydrate hydrous ethanol at any time and turn it into anhydrous ethanol, which can be sold either to the domestic or export market, wherever the price premium is better.
On an annual basis, we maximized the production of sugar given its attractive pricing premium over ethanol, as was the case in 2023. Therefore, our production mix stood at 52% sugar (above the mix achieved by Brazil's Center-South region) and 48% ethanol. This resulted in a sugar production of 832 thousand tons, marking a new record for our mills, as well as a 2.0% year-over-year increase in ethanol production due to the increase in total TRS equivalent produced.
Exported energy during the quarter totaled 179,541 MWh, 9.7% lower compared to 4Q23 driven by the decline in crushing. However, we used our stored bagasse to produce energy and profit from the hike in spot prices seen during the period. On a full year basis, exported energy reached 743,488 MWh, marking a 7.1% year-over-year increase. This was mainly explained by (i) the increase in our annual crushing volume, coupled with (ii) the use of stored bagasse to profit from better prices. Consequently, our cogeneration efficiency ratio was up 2.6% year-over-year in 4Q24 and 4.9% in 12M24.
| Sugar, Ethanol & Energy Segment - Financial Performance | |||||||
|---|---|---|---|---|---|---|---|
| NET SALES BREAKDOWN | thousands | Units | (/unit) | ||||
| --- | --- | --- | --- | --- | --- | --- | --- |
| 4Q24 | Chg % | 4Q24 | 4Q23 | Chg % | 4Q24 | Chg % | |
| Sugar (tons) | 101,624 | (26.6)% | 214,079 | 250,252 | (14.5)% | 475 | (14.2)% |
| Ethanol (cubic meters) | 63,686 | (19.3)% | 147,011 | 181,975 | (19.2)% | 433 | (0.1)% |
| Hydrous Ethanol (cubic meters) | 41,473 | (15.9)% | 100,946 | 123,698 | (18.4)% | 411 | 3.1% |
| Anhydrous Ethanol (cubic meters) | 22,213 | (25.1)% | 46,065 | 58,277 | (21.0)% | 482 | (5.2)% |
| Energy (Mwh) (2) | 10,094 | 14.9% | 235,957 | 240,650 | (2.0)% | 43 | 17.1% |
| CBios | 2,465 | 4.3% | 196,754 | 119,234 | 65.0% | 13 | (36.8)% |
| Others (5) | 2 | (99.3)% | 2 | 271 | (99.3)% | 1,000 | (7.5)% |
| TOTAL (3) | 177,871 | (22.3)% | |||||
| Cover Crops (tons) (4) | — | —% | — | 274 | —% | — | —% |
| TOTAL NET SALES (1) | 177,871 | (22.3)% | |||||
| NET SALES BREAKDOWN | 12M24 | Chg % | 12M24 | 12M23 | Chg % | 12M24 | Chg % |
| Sugar (tons) | 390,751 | (6.1)% | 845,807 | 796,298 | 6.2% | 462 | (11.6)% |
| Ethanol (cubic meters) | 242,854 | 4.1% | 550,322 | 460,721 | 19.4% | 441 | (12.9)% |
| Hydrous Ethanol (cubic meters) | 162,466 | 64.3% | 381,982 | 228,941 | 66.8% | 425 | (1.5)% |
| Anhydrous Ethanol (cubic meters) | 80,388 | (40.2)% | 168,340 | 231,780 | (27.4)% | 478 | (17.7)% |
| Energy (Mwh) (2) | 30,485 | (4.6)% | 844,686 | 834,371 | 1.2% | 36 | (5.8)% |
| CBios | 8,513 | 0.9% | 601,426 | 443,111 | 35.7% | 14 | (25.6)% |
| Others (5) | 558 | 17.0% | 562 | 473 | 18.8% | 993 | (1.5)% |
| TOTAL (3) | 673,161 | (2.5)% | |||||
| Cover Crops (tons) (4) | 6,447 | (35.3)% | 16,698 | 23,036 | (27.5)% | 386 | (10.7)% |
| TOTAL NET SALES (1) | 679,608 | (3.0)% |
All values are in US Dollars.
| HIGHLIGHTS - $ thousand | 4Q24 | 4Q23 | Chg % | 12M24 | 12M23 | Chg % |
|---|---|---|---|---|---|---|
| Net Sales (1) | 177,871 | 228,883 | (22.3)% | 679,608 | 700,284 | (3.0)% |
| Margin on Manufacturing and Agricultural Act. Before Opex | 62,256 | 55,069 | 13.1% | 250,834 | 312,017 | (19.6)% |
| Adjusted EBITDA | 105,289 | 87,476 | 20.4% | 364,160 | 395,637 | (8.0)% |
| Adjusted EBITDA Margin | 59.2% | 38.2% | 54.9% | 53.6% | 56.5% | (5.2)% |
(1) Net Sales are calculated as Gross Sales net of ICMS, PIS COFINS, INSS and IPI taxes; (2) Includes commercialization of energy from third parties; (3) Total Net Sales does not include the sale of soybean, corn and beans planted as cover crop during the implementation of the agricultural technique known as meiosis; (4) Corresponding to the sale of soybean, corn and beans planted as cover crop during the implementation of meiosis. (5) Diesel sold by Monte Alegre Distribuidora (MAC), our own fuel distributor located in UMA mill.
Adjusted EBITDA during 4Q24 was $105.3 million, 20.4% higher than the same period of last year. This was explained by (i) a year-over-year reduction in selling expenses on lower freight costs and lower sugar and ethanol volumes sold; coupled with (ii) an improvement in our sales margin on lower costs. This, in turn, more than offset the year-over-year decline in net sales.
On a full year basis, Adjusted EBITDA amounted to $364.2 million, presenting an 8.0% decrease versus last year. Despite year-over-year gains in the mark-to-market of our commodity hedge position, lower EBITDA generation was mainly driven by a $53.3 million year-over-year loss in the mark-to-market of our biological
assets. As explained in prior releases, the biological assets line captures the present value of the sugarcane that is going to be harvested in the following 12 months, in addition to the one already harvested. In this case, the year-over-year decrease is mainly explained by a decline in Consecana prices on harvested cane. Results were also negatively impacted by a $4.6 million year-over-year increase in selling expenses on higher taxes due to higher volumes of ethanol sold, coupled with an increase in freight costs on higher volumes of sugar invoiced versus the prior year given the higher production.
Net sales reached $177.9 million during 4Q24, marking a 22.3% year-over-year reduction on lower selling volumes in all our products and lower sugar prices in US dollar terms. On the other hand, annual net sales amounted to $679.6 million, in line with the previous year, mainly explained by higher selling volumes of all our products, which in turn, offset the decline in prices.
In the case of sugar, lower average selling prices throughout the quarter and the year were the main drivers towards the decline in net sales - in 2023 global sugar prices reached record levels. Nevertheless, our average selling price (as seen in the net sales breakdown table) only reflects the average price of the respective Sugar #11 contract as the Company does not perform hedge accounting. Once we incorporated the gain/losses from our commodity derivative financial instruments reported within our Other Operating Income line, our average selling price for the year stood at 22.6 cts/lb versus 23.2 cts/lb in 2023.
Ethanol sales presented a 19.3% year-over-year decline during the quarter due to lower selling volumes on lower quarterly production given the decrease in crushing and our focus on maximizing sugar production. As explained in prior releases, ethanol prices have been recovering month-over-month on strong domestic consumption due to the low parity at the pump versus gasoline. Therefore, our average net selling price expressed in local currency stood at ∼R$2,500/m3 in 4Q24, 17.9% higher than 4Q23, even though in US dollar terms it experienced a slight decline given the depreciation of the Brazilian Real throughout the period. In addition, the average selling price in 4Q23 includes the export of 25.8 thousand cubic meters at an average price of $572/m3 (R$2,844/m3), compared to no exports in 4Q24, adding to an uneven year-over-year comparison.
On a full year basis, ethanol sales were 4.1% higher compared to the same period of last year. This was explained by higher volumes sold of hydrous ethanol which, in turn, fully offset the year-over-year decrease in selling prices in US dollars. During the year, we strategically sold our production in order to profit from peaks in prices, while our tanks remained full as we continue to hold on to our ethanol inventories (31% of our annual production) in order to capture higher expected prices.
Due to the efficiency and sustainability in our operations, ranked among the highest in the industry, we have the right to issue carbon credits (CBio) every time we sell ethanol. During the quarter, we sold $2.5 million worth of CBios, marking a 4.3% year-over-year increase. During 2024, we sold 601,426 CBios, amounting to $8.5 million.
Net sales of energy presented a 14.9% year-over-year increase in 4Q24, as we used our stored bagasse to produce energy to profit from the hike in spot prices explained by the lower reservoir levels. This, in turn, enabled us to book sales at R$480/MWh during the peak of demand. On an annual basis, energy sales experienced a decline versus 2023 due to a combination of lower energy prices and a weaker Brazilian Real, which in turn offset the increase in selling volumes.
| SUGAR, ETHANOL & ENERGY - PRODUCTION COSTS(1) | |||||
|---|---|---|---|---|---|
| Total Cost ('000) | Total Cost per Pound (cts/lbs) | ||||
| 4Q24 | Chg % | 4Q24 | 4Q23 | Chg % | |
| Industrial costs | 22,138 | (31.0)% | 3.1 | 4.1 | (24.3)% |
| Industrial costs | 18,018 | (20.2)% | 2.5 | 2.9 | (12.3)% |
| Cane from 3rd parties | 4,120 | (56.8)% | 0.6 | 1.2 | (52.5)% |
| Agricultural costs | 88,991 | (1.5)% | 12.5 | 11.5 | 8.2% |
| Harvest costs | 34,961 | (5.9)% | 4.9 | 4.7 | 3.4% |
| Cane depreciation | 23,415 | 26.5% | 3.3 | 2.4 | 39.0% |
| Agricultural Partnership Costs | 8,267 | (36.6)% | 1.2 | 1.7 | (30.4)% |
| Maintenance costs | 22,348 | 3.2% | 3.1 | 2.8 | 13.4% |
| Total Production Costs | 111,129 | (9.2)% | 15.6 | 15.6 | (0.3)% |
| Depreciation & Amortization PP&E | (47,025) | 2.6% | (6.6) | (5.8) | 12.7% |
| Total Production Costs (excl D&A)(2) | 64,104 | (16.3)% | 9.0 | 9.8 | (8.1)% |
All values are in US Dollars.
| SUGAR, ETHANOL & ENERGY - PRODUCTION COSTS(1) | |||||
|---|---|---|---|---|---|
| Total Cost ('000) | Total Cost per Pound (cts/lbs) | ||||
| 12M24 | Chg % | 12M24 | 12M23 | Chg % | |
| Industrial costs | 113,893 | 0.2% | 3.2 | 3.3 | (2.4)% |
| Industrial costs | 74,258 | (9.1)% | 2.1 | 2.4 | (11.5)% |
| Cane from 3rd parties | 39,635 | 24.0% | 1.1 | 0.9 | 20.7% |
| Agricultural costs | 362,754 | 4.9% | 10.2 | 10.0 | 2.2% |
| Harvest costs | 138,066 | 2.3% | 3.9 | 3.9 | (0.3)% |
| Cane depreciation | 97,890 | 23.8% | 2.7 | 2.3 | 20.6% |
| Agricultural Partnership Costs | 46,746 | (10.7)% | 1.3 | 1.5 | (13.0)% |
| Maintenance costs | 80,052 | 0.9% | 2.2 | 2.3 | (1.8)% |
| Total Production Costs | 476,647 | 3.8% | 13.4 | 13.2 | 1.0% |
| Depreciation & Amortization PP&E | (189,007) | 7.4% | (5.3) | (5.1) | 4.6% |
| Total Production Costs (excl D&A)(2) | 287,640 | 1.5% | 8.1 | 8.2 | (1.2)% |
All values are in US Dollars.
(1)Total production cost may differ from our COGS figure as the former refers to the cost of our goods produced, whereas the latter refers to the cost of our goods sold. (2) Excludes the recognition of PIS/COFINS tax credits generated during 4Q24.
Total production costs excluding depreciation and amortization reached 9.0 cts/lb in 4Q24, marking an 8.1% decrease compared to 4Q23. This was mainly explained by (i) a year-over-year decline in the cost of cane from third-parties on lower sourcing; (ii) a year-over-year decrease in leasing costs due to lower Consecana prices; as well as to (iii) a weaker Brazilian Real. On a full year basis, total production costs excluding depreciation and amortization amounted to 8.1 cts/lb, 1.2% lower than the previous year. This was driven by the aforementioned decline in leasing costs, which in turn, offset the increase in cane from third parties on higher sourcing versus 2023. Furthermore, our production cost was positively impacted by a 2.3% year-over-year increase in total TRS equivalent produced due to the increase in crushing volume which enabled us to better dilute our fixed costs, especially agricultural costs that represent roughly 80% of our cost structure. As always, we continue to use concentrated vinasse and filter cake to replace 100% of our potash fertilizer requirements and 48% of total agricultural inputs needs, reducing our sourcing needs.
| SUGAR, ETHANOL & ENERGY - TOTAL COST OF PRODUCTION | |||||
|---|---|---|---|---|---|
| Total Cost ('000) | Total Cost per Pound (cts/lbs) | ||||
| 12M24 | Chg % | 12M24 | 12M23 | Chg % | |
| Total Production Cost (excl. D&A) | 287,640 | 1.5% | 8.1 | 8.2 | (1.2)% |
| Maintenance Capex | 157,573 | (10.2)% | 4.4 | 5.1 | (13.0)% |
| SG&A | 69,493 | (5.7)% | 2.0 | 2.1 | (5.9)% |
| Cogeneration | (26,748) | (7.9)% | (0.8) | (0.8) | (4.4)% |
| Tax Recovery | (36,992) | 63.5% | (1.0) | (0.7) | 53.4% |
| Total Cash Cost(1) | 450,967 | (6.2)% | 12.7 | 13.9 | (8.4)% |
All values are in US Dollars.
(1) Excludes the recognition of PIS/COFINS tax credits generated during 4Q24.
Total cash cost reflects, on a cash basis, how much it costs us to produce one pound of sugar and ethanol (in sugar equivalent). Maintenance capex is included in the calculation since it is a recurring investment, necessary to maintain the productivity of the sugarcane plantation. As we are calculating sugar and ethanol costs, energy is deemed a by-product and thus deducted from total costs. As for the tax recovery line item, it includes the ICMS tax incentive that the state of Mato Grosso do Sul granted us until 2032.
As shown in the table above, on a yearly basis, total cash cost on a per pound basis reached 12.7 cts/lb, 8.4% lower compared to the previous year. This decline is mainly explained by (i) a 53.4% year-over-year increase in tax recovery due to higher ethanol sales; (ii) lower maintenance capex on lower renewal area; along with (iii) the depreciation of the Brazilian Real which positively impacted our cost structure. Cash cost was also benefited by the 2.3% year-over-year increase in TRS equivalent produced, which in turn, enabled us to better dilute our costs.
All of our efforts are devoted to further enhance efficiencies to continue reducing total cash cost. As we continue ramping up operations in our cluster, cash cost will continue its downward trend as more fixed costs will be diluted.
| Farming - Financial Performance | | --- || FARMING - FINANCIAL HIGHLIGHTS | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | $ thousands | 4Q24 | 4Q23 | Chg % | 12M24 | 12M23 | Chg % | | Gross Sales | | | | | | | | Crops | 61,063 | 46,071 | 32.5% | 236,128 | 216,912 | 8.9% | | Rice | 49,163 | 60,231 | (18.4)% | 248,198 | 256,347 | (3.2)% | | Dairy | 74,850 | 54,791 | 36.6% | 284,098 | 246,875 | 15.1% | | Total Sales | 185,076 | 161,093 | 14.9% | 768,424 | 720,134 | 6.7% | | Adjusted EBITDA (1) | | | | | | | | Crops | (3,196) | (304) | n.a | 19,092 | 26,979 | (29.2)% | | Rice | (1,214) | 8,188 | n.a. | 50,185 | 47,869 | 4.8% | | Dairy | 8,219 | 5,930 | 38.6% | 33,723 | 28,485 | 18.4% | | Total Adjusted EBITDA (1) | 3,809 | 13,814 | (72.4)% | 103,000 | 103,333 | (0.3)% |
(1) Please see “Reconciliation of Non-IFRS measures” starting on page 27 for a reconciliation of Adjusted EBITDA and Adjusted EBIT to Profit/Loss. Adjusted EBITDA margin and Adjusted EBIT margin are calculated as a percentage of net sales.
Adjusted EBITDA in our Farming business totaled $3.8 million in 4Q24, marking a 72.4% decrease compared to the same period of last year. Despite an outperformance of our Dairy segment on higher prices of our value added products (mainly in the domestic market), results were fully offset by higher costs in US dollar terms and lower prices for our Crops and Rice businesses. In addition, our Crops business was also negatively impacted by a slight reduction in wheat production due to the dry weather experienced by year-end.
On an annual basis, Adjusted EBITDA amounted to $103.0 million, in line with the previous year. Excluding the farm sales conducted during 2024 and 2023 (La Pecuaria farm which booked $15.0 million in 2024 and El Meridiano farm which booked $29.8 million in 2023), Adjusted EBITDA in our Farming business in 2024 marked a 19.5% increase versus the prior year, amounting to $87.9 million. Both our Rice and Dairy businesses achieved record results driven by higher average selling prices, as well as to year-over-year gains in the mark-to-market of our biological assets in the case of our Rice operations. Focusing on Crops, the recovery in yields drove the increase in results, although these were partially offset by higher costs in US dollar terms, lower commodity prices and lower-than-expected productivity for some of our grains.
For a more detailed explanation, please refer to the performance description of each business line starting on the next page.
| Crops Segment | |||||||
|---|---|---|---|---|---|---|---|
| GROSS SALES BREAKDOWN | Amount ( '000) | Volume | per unit | ||||
| --- | --- | --- | --- | --- | |||
| Crops | 4Q24 | Chg % | 4Q24 | 4Q23 | 4Q24 | 4Q23 | Chg % |
| Soybean | 13,559 | 48.0% | 47,727 | 18,604 | 284 | 492 | (42.3)% |
| Corn (1) | 12,812 | 114.2% | 69,658 | 28,523 | 184 | 210 | (12.3)% |
| Wheat (2) | 9,006 | 282.1% | 42,418 | 10,221 | 212 | 231 | (7.9)% |
| Sunflower | 2,214 | 31.9% | 2,212 | 2,309 | 1,001 | 727 | 37.7% |
| Cotton Lint | 388 | (93.0)% | 233 | 2,579 | 1,662 | 2,156 | (22.9)% |
| Peanut | 19,820 | 13.9% | 13,808 | 10,571 | 1,435 | 1,646 | (12.8)% |
| Others (3) | 3,263 | (17.1)% | 1,066 | 1,150 | |||
| Total | 61,063 | 32.5% | 177,123 | 73,957 | |||
| GROSS SALES BREAKDOWN | 12M24 | Chg % | 12M24 | 12M23 | 12M24 | 12M23 | Chg % |
| Soybean | 68,791 | 34.6% | 225,725 | 108,942 | 305 | 469 | (35.0)% |
| Corn (1) | 53,556 | 51.0% | 302,459 | 160,522 | 177 | 221 | (19.9)% |
| Wheat (2) | 23,305 | 45.9% | 106,643 | 60,019 | 219 | 266 | (17.9)% |
| Sunflower | 10,203 | (48.5)% | 15,608 | 34,649 | 654 | 572 | 14.3% |
| Cotton Lint | 3,542 | (70.8)% | 2,386 | 5,767 | 1,484 | 2,102 | (29.4)% |
| Peanut | 59,602 | (11.1)% | 36,357 | 49,725 | 1,639 | 1,349 | 21.5% |
| Others (3) | 17,129 | 11.4% | 3,893 | 8,024 | |||
| Total | 236,128 | 8.9% | 693,072 | 427,649 |
All values are in US Dollars.
| HIGHLIGHTS - $ thousand | 4Q24 | 4Q23 | Chg % | 12M24 | 12M23 | Chg % |
|---|---|---|---|---|---|---|
| Gross Sales | 61,063 | 46,071 | 32.5% | 236,128 | 216,912 | 8.9% |
| Adjusted EBITDA | (3,196) | (304) | n.a | 19,092 | 26,979 | (29.2)% |
(1) Includes sorghum; (2) Includes barley; (3) Includes sale of certifications related to RTRS soybean (Round Table on Responsible Soy Association) and sales related to our cattle activities.
In 2024, Adjusted EBITDA reached $19.1 million, marking a 29.2% year-over-year reduction. Excluding the Adjusted EBITDA figure generated by the farm sale conducted in 2024 (La Pecuaria farm: $15.0 million) and 2023 (El Meridiano farm: $29.8 million), Adjusted EBITDA amounted to $4.0 million in 2024 compared to negative $2.8 million in 2023. Despite a significant year-over-year recovery in production (mainly soybean, wheat and peanut), results were negatively impacted by (i) lower international commodity prices on higher global supply; (ii) higher costs in US dollar terms; and (iii) lower-than-expected corn production due to the impact of spiroplasma (bacteria transmitted by leafhoppers).
Focusing solely on the quarterly figures, the year-over-year reduction in Adjusted EBITDA is explained by the aforementioned drivers, coupled with lower-than-expected productivity of our winter crops (mainly wheat) due to the dry weather experienced by year-end.
| Rice Segment | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| RICE | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Highlights | 4Q24 | 4Q23 | Chg % | 12M24 | 12M23 | Chg % | ||||||
| Gross Sales | 49,163 | 60,231 | (18.4)% | 248,198 | 256,347 | (3.2)% | ||||||
| Sales of white rice | 63 | 64 | (1.5)% | 269 | 320 | (15.8)% | ||||||
| per ton | 786 | (15.6)% | 799 | 679 | 17.7% | |||||||
| thousands | 50,667 | (16.9)% | 214,901 | 217,052 | (1.0)% | |||||||
| Sales of By-products | 7,062 | 9,564 | (26.2)% | 33,297 | 39,295 | (15.3)% | ||||||
| Adjusted EBITDA | (1,214) | 8,188 | n.a. | 50,185 | 47,869 | 4.8% | ||||||
| Rice Mills | ||||||||||||
| Total Processed Rough Rice(2) | 63 | 62 | 0.9% | 277 | 280 | (1.0)% | ||||||
| Ending stock - White Rice | 77 | 32 | 144.2% | 77 | 32 | 144.2% |
All values are in US Dollars.
(1) Includes the sale of 1k and 36k tons of white rice sourced from third-parties during 2024 & 2023, respectively (no sourcing during 4Q24 and 4Q23); (2) Expressed in white rice equivalent
Rice sales in 4Q24 marked a 18.4% year-over-year decrease, mainly explained by a reduction in our average selling price to $663/ton. Throughout the quarter, global rice prices experienced a decline as India, the world's largest producer and exporter of rice, came back to the market after the government lifted the export ban on long grain white rice. During 2024, rice sales were 3.2% lower than the previous year. Despite capturing a $120/ton year-over-year increase in our average selling price given the record prices captured during 1Q24, this was partially offset by lower volumes sold due to a delay in the departure of a maritime cargo. Consequently, we are carrying over 45 thousand tons more than the prior year, as the aforementioned sale will be booked during 1Q25 instead.
Adjusted EBITDA reached $50.2 million in 2024, an annual record for the business and 4.8% higher than the previous year. Results were positively impacted by year-over-year gains reported in our biological assets line on higher prices and higher planted area, which in turn, fully offset the increase in costs in US dollar terms and the aforementioned decline in gross sales. Focusing on the quarter, Adjusted EBITDA amounted to negative $1.2 million, compared to $8.2 million in 4Q23, explained by higher costs in US dollar terms, coupled with a decline in the price of our carry over stocks which negatively impacted results during the period.
| Dairy Segment | | --- || DAIRY | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | Highlights | | metric | 4Q24 | 4Q23 | Chg % | 12M24 | 12M23 | Chg % | | Gross Sales | | $ thousands (1) | 74,850 | 54,791 | 36.6% | 284,098 | 246,875 | 15.1% | | | | million liters (2) (3) | 92.9 | 108.0 | (14.1)% | 366.5 | 404.2 | (9.3)% | | Adjusted EBITDA | | $ thousands | 8,219 | 5,930 | 38.6% | 33,723 | 28,485 | 18.4% | | Dairy - Farm | | | | | | | | | | Milking Cows | average heads | 14,443 | 14,547 | (0.7)% | 14,478 | 14,509 | (0.2)% | | Cow Productivity | | liter/cow/day | 38.0 | 38.6 | (1.5)% | 37.6 | 37.7 | (0.5)% | | Total Milk Produced | million liters | 50.4 | 51.6 | (2.2)% | 199.1 | 199.9 | (0.4)% | | Dairy - Industry | | | | | | | | | | Total Milk Processed | million liters | 94.2 | 96.7 | (2.7)% | 354.5 | 351.8 | 0.8% |
(1) Includes sales of raw milk, processed dairy products, electricity and culled cows; (2) Includes sales of raw milk, fluid milk, powder milk and cheese, among others; (3) The difference between volume processed and volume sold is explained by the sale of raw milk to third parties.
In 4Q24, raw milk production was 50.4 million liters, 2.2% lower compared to the same period of last year. This was explained by a 1.5% decrease in productivity compared to 4Q23, although levels are still strong at 38.0 liters per cow per day. On a full-year basis, total raw milk production amounted to 199.1 million liters, in line with the previous year. We continue enhancing efficiencies in our free-stalls, which are already at full capacity.
At the industry level, we processed 94.2 million liters of raw milk during 4Q24, 2.7% lower than the same period of last year. Out of this volume, approximately 41% came from our dairy farm operations whereas the balance was sourced from local producers in nearby areas or supplied by partners to whom we provide tolling services. In 2024, total processed milk amounted to 354.5 million liters of raw milk, slightly higher than the previous year. We continue working on product development for the domestic and export markets, offering higher value added products as well as commoditized products, and being present across different price tiers with our consumer product brands.
Adjusted EBITDA amounted to $8.2 million in 4Q24, 38.6% higher compared to the same period of last year, whereas on a full-year basis it reached $33.7 million, marking a 18.4% year-over-year increase and a new record for the business. Results were positively impacted by (i) an increase in sales due to higher average selling prices, as we improved the mix of higher value added products and produced more fluid milk for the domestic market which offered the highest marginal contribution; (ii) our continuous focus on achieving efficiencies in our vertically integrated operations and increasing our productivity levels in every stage of the value chain; and (iii) our flexibility to divert milk to the production of a variety of dairy products, as well as to shift sales across markets.
Adjusted EBIT was $4.5 million and $21.5 million during 4Q24 and 2024, respectively. However, once interest expense and the foreign exchange loss related to the financial debt are considered, the full year results decrease to negative $10.5 million.
| Corporate expenses | | --- || CORPORATE EXPENSES | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | $ thousands | 4Q24 | 4Q23 | Chg % | 12M24 | 12M23 | Chg % | | Corporate Expenses | (5,848) | (5,527) | 5.8% | (22,899) | (22,400) | 2.2% |
Adecoagro’s corporate expenses include items that are not allocated to a specific business segment, such as the remuneration of executive officers and headquarters staff, certain professional services and office lease expenses, among others. Corporate expenses for 4Q24 were $5.8 million, 5.8% higher than the previous year, while in 2024 they amounted to $22.9 million, 2.2% higher year-over-year. In both cases, this reflects the impact in costs from inflation in US dollar terms.
| Net Income & Adjusted Net Income |
|---|
Net income reached $16.2 million and $92.1 million during 4Q24 and 2024, respectively, marking an 80.3% and 59.4% year-over-year reduction.
Nevertheless, once we exclude the impact of foreign exchange variation, as well as inflation accounting effects (all non-cash impacts), Adjusted net income amounted to $45.9 million during the quarter, whereas on an annual basis it reached $202.6 million, $62.3 million and $49.1 million higher year-over-year, respectively. Higher results were mainly explained by tax gains recorded throughout the year ($43.9 million and $135.7 thousand during 4Q24 and 2024, respectively) due to effects of inflation in the income tax calculation in Argentina. This, in turn, fully offset the year-over-year loss in financial results due to a one-time event as 2023 figures reflect financial gains from opportunities that the Argentine financial market offered.
| ADJUSTED NET INCOME (1) | ||||||
|---|---|---|---|---|---|---|
| $ thousands | 4Q24 | 4Q23 | Chg % | 12M24 | 12M23 | Chg % |
| Profit for the period | 16,178 | 82,209 | (80.3)% | 92,101 | 226,721 | (59.4)% |
| Foreign exchange losses/(gains), net | 32,518 | (56,976) | n.a. | 37,569 | (90,930) | n.a |
| Cash flow hedge - transfer from equity | 426 | (6,358) | n.a | 28,650 | 36,863 | (22.3)% |
| Inflation accounting effects | (4,332) | (23,744) | n.a | (2,421) | (28,816) | n.a |
| Net results from Fair Value adjustment of Investment Property | 891 | (11,533) | n.a | 23,375 | (10,620) | n.a |
| Impairment of assets destroyed by fire | 223 | — | n.m. | 14,259 | — | n.m. |
| Revaluation surplus of farmland sold | — | — | n.m. | 9,024 | 20,245 | (55.4)% |
| Adjusted Net Income | 45,904 | (16,402) | n.a | 202,557 | 153,463 | 32.0% |
(1) Please see “Reconciliation of Non-IFRS measures” starting on page 27 for a reconciliation of Adjusted Net Income.
| Indebtedness | | --- || NET DEBT BREAKDOWN | | | | | | | --- | --- | --- | --- | --- | --- | | $ thousands | 4Q24 | 3Q24 | Chg % | 4Q23 | Chg % | | Farming | 121,042 | 156,203 | (22.5)% | 171,501 | (29.4)% | | Short term Debt | 55,401 | 123,744 | (55.2)% | 157,629 | (64.9)% | | Long term Debt | 65,641 | 32,459 | n.m | 13,873 | 373.2% | | Sugar, Ethanol & Energy | 658,514 | 703,221 | (6.4)% | 733,447 | (10.2)% | | Short term Debt | 44,150 | 47,052 | (6.2)% | 49,477 | (10.8)% | | Long term Debt | 614,364 | 656,169 | (6.4)% | 683,970 | (10.2)% | | Total Short term Debt | 99,551 | 170,796 | (41.7)% | 207,106 | (51.9)% | | Total Long term Debt | 680,005 | 688,628 | (1.3)% | 697,843 | (2.6)% | | Gross Debt | 779,556 | 859,424 | (9.3)% | 904,949 | (13.9)% | | Cash & Equivalents | 211,244 | 198,255 | 6.6% | 339,781 | (37.8)% | | Short-Term Investments | 46,097 | 15,351 | 200.3% | 62,637 | (26.4)% | | Net Debt | 522,215 | 645,818 | (19.1)% | 502,531 | 3.9% | | EOP Net Debt / Adj. EBITDA LTM | 1.2x | 1.5x | (20.5)% | 1.1x | 11.5% |
As of December 31, 2024, Adecoagro's net debt amounted to $522.2 million, in line with the previous year. Throughout the year, we have diligently reduced our gross debt and cash as efficiently as possible while looking to finance our operations at the lowest cost. A clear example of this was the improvement in our Liquidity ratio (Cash & Equivalents + Marketable Inventories / Short Term Debt), which stood at 4.5x versus 2.8x reported in 4Q23, as short-term maturities were reduced by 51.9% year-over-year. Furthermore, we were able to finance our operations at attractive rates, which resulted in a significant decline in the amount of interest paid throughout the year ($24.6 million compared to $55.5 million in 2023).
All this was possible thanks to the solid operating results achieved during 2024, which also enabled us to continue investing in growth projects across all our operating segments as well as distributing profits to shareholders, via cash dividend and share repurchases.
Our Net Debt ratio (Net Debt/EBITDA) as of 4Q24 was 1.2x, 20.5% lower than the previous quarter, but 11.5% higher year-over-year due to the lower Adjusted EBITDA generated during the last twelve months.
We believe that our balance sheet is in a healthy position based not only on the adequate overall debt levels but also in terms of our indebtedness, most of which is long-term debt.
| Capital Expenditures | | --- || CAPITAL EXPENDITURES | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | $ thousands | 4Q24 | 4Q23 | Chg % | 12M24 | 12M23 | Chg % | | Farming | 13,599 | 4,884 | 178.4% | 51,357 | 22,809 | 125.2% | | Expansion | 11,370 | 1,172 | 870.4% | 38,827 | 15,229 | 154.9% | | Maintenance | 2,229 | 3,713 | (40.0)% | 12,530 | 7,579 | 65.3% | | Sugar, Ethanol & Energy | 44,531 | 54,878 | (18.9)% | 222,813 | 227,430 | (2.0)% | | Maintenance | 23,422 | 40,827 | (42.6)% | 157,573 | 175,541 | (10.2)% | | Planting | 12,604 | 26,969 | (53.3)% | 75,649 | 101,157 | (25.2)% | | Industrial & Agricultural Machinery | 10,818 | 13,858 | (21.9)% | 81,924 | 74,384 | 10.1% | | Expansion | 21,110 | 14,051 | 50.2% | 65,240 | 51,889 | 25.7% | | Planting | 19,106 | 11,360 | 68.2% | 57,280 | 32,117 | 78.3% | | Industrial & Agricultural Machinery | 2,004 | 2,691 | (25.5)% | 7,960 | 19,772 | (59.7)% | | Total | 58,130 | 59,763 | (2.7)% | 274,170 | 250,239 | 9.6% | | Total Maintenance Capex | 25,650 | 44,540 | (42.4)% | 170,103 | 183,120 | (7.1)% | | Total Expansion Capex | 32,480 | 15,223 | 113.4% | 104,067 | 67,119 | 55.0% |
Adecoagro's capital expenditures amounted to $58.1 million in 4Q24, 2.7% lower compared to last year, while in 2024 it reached $274.2 million, marking a 9.6% year-over-year increase.
The Sugar, Ethanol and Energy business accounted for 77% or $44.5 million of total capex in 4Q24, marking a 18.9% year-over-year reduction, whereas on an annual basis it reached $222.8 million, in line with the previous year. Focusing on the annual figures, the 10.2% year-over-year decline in maintenance capex is mainly explained by a reduction in our renewal planting activities on 21,730 hectares being renewed versus 28,083 hectares in 2023. On the other hand, this was partially offset by a 10.1% year-over-year increase in the renewal of our industrial & agricultural machinery as we continue to update our harvesting machinery with two-line harvesters and grunners. Expansion capex, in turn, was 25.7% higher compared to the previous year, reaching $65.2 million. This was mainly explained by the expansion planting activities conducted throughout the year (14,249 hectares planted) as we were able to secure more area at attractive lease rates.
The Farming businesses accounted for 23%, or $13.6 million of total capex in 4Q24, presenting a year-over-year increase of $8.7 million, while on a full-year basis it amounted to $51.4 million, $28.5 million more than the previous year. Higher investments during both periods were mainly driven by growth capex projects including (i) the development of croppable land for our Rice operations; (ii) the third (and final) installment of Viterra's rice mills in Argentina and Uruguay; (iii) the expansion of the drying and storage capacity of our Paso Dragon rice mill; coupled with (iv) the construction of a new warehouse for our dairy products at our Chivilcoy facility.
| Other Operational & Financial Metrics |
|---|
2023/24 Harvest Season
| FARMING PRODUCTION DATA | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Planting & Production | Planted Area (hectares) | 2022/23 Harvested Area | Yields (Tons per hectare) | ||||||
| 2023/24 | 2022/23 | Chg % | Hectares | % Harvested | Production | 2023/24 | 2022/23 | Chg % | |
| Soybean | 64,753 | 51,944 | 24.7% | 64,753 | 100.0% | 181,702 | 2.8 | 1.8 | 57.3% |
| Soybean 2nd Crop | 23,927 | 29,827 | (19.8)% | 23,927 | 100.0% | 52,362 | 2.2 | 1.0 | 109.3% |
| Corn (1) | 57,043 | 38,575 | 47.9% | 57,043 | 100.0% | 298,969 | 5.2 | 4.9 | 7.7% |
| Corn 2nd Crop | 2,548 | 2,836 | (10.1)% | 2,548 | 100.0% | 11,528 | 4.5 | 1.7 | 160.2% |
| Wheat (2) | 28,142 | 35,789 | (21.4)% | 28,142 | 100.0% | 88,207 | 3.1 | 2.3 | 34.7% |
| Sunflower | 10,832 | 18,131 | (40.3)% | 10,832 | 100.0% | 18,500 | 1.7 | 1.8 | (4.9)% |
| Cotton | 5,199 | 10,075 | (48.4)% | 5,199 | 100.0% | 2,207 | 0.4 | 0.6 | (31.3)% |
| Peanut | 24,282 | 19,813 | 22.6% | 24,282 | 100.0% | 87,586 | 3.6 | 2.0 | 81.8% |
| Other (3) | 3,698 | 2,658 | 39.1% | 3,698 | 100.0% | 2,452 | |||
| Total Crops | 220,425 | 209,646 | 5.1% | 220,425 | 100.0% | 743,514 | |||
| Rice | 58,452 | 55,648 | 5.0% | 58,452 | 100.0% | 357,980 | 6.1 | 6.4 | (3.8)% |
| Total Farming | 278,877 | 265,294 | 5.1% | 278,877 | 100.0% | 1,101,494 | |||
| Owned Croppable Area | 99,357 | 97,812 | 1.6% | ||||||
| Leased Area | 153,044 | 134,820 | 13.5% | ||||||
| Second Crop Area | 26,476 | 32,662 | (18.9)% | ||||||
| Total Farming Area | 278,877 | 265,294 | 5.1% |
(1) Includes sorghum; (2) Includes barley and peas; (3) Includes chia, sesame, potatoes and beans
Our 2023/24 campaign concluded in October 2024, with a total harvested area of 278,877 hectares and a production of over 1.1 million tons of aggregate grains. As previously stated, most of our crops significantly recovered in productivity given the normal weather conditions experienced, as opposed to last year which was affected by La Niña weather event. Nevertheless, we experienced lower-than-expected yields for our late corn production as it was negatively impacted by spiroplasma.
During the second half of 2024, we began our planting activities for the 2024/25 season, which continued throughout early 2025. Our planting plan consists of 305,258 hectares, which represents a 9.5% increase in area compared to the previous season. As of the date of this report, 99.8% of the area has already been seeded.
2024/25 Planting Plan
| FARMING PLANTING PLAN | |||||
|---|---|---|---|---|---|
| Planting | Planted Plan (hectares) | 2023/24 Planting Progress | |||
| 2024/2025 | 2023/2024 | Chg % | Hectares | % Planted | |
| Soybean | 50,920 | 64,753 | (21.4)% | 50,920 | 100.0% |
| Soybean 2nd Crop | 41,499 | 23,927 | 73.4% | 41,499 | 100.0% |
| Corn (1) | 44,331 | 57,043 | (22.3)% | 44,331 | 100.0% |
| Corn 2nd Crop | 2,505 | 2,548 | (1.7)% | 2,505 | 100.0% |
| Wheat (2) | 47,818 | 28,142 | 69.9% | 47,818 | 100.0% |
| Sunflower | 12,614 | 10,832 | 16.5% | 12,614 | 100.0% |
| Cotton | 4,890 | 5,199 | (5.9)% | 4,890 | 100.0% |
| Peanut | 25,353 | 24,282 | 4.4% | 25,353 | 100.0% |
| Other (3) | 10,850 | 3,698 | 193.4% | 10,371 | 95.6% |
| Total Crops | 240,781 | 220,425 | 9.2% | 240,302 | 99.8% |
| Rice | 64,477 | 58,452 | 10.3% | 64,477 | 100.0% |
| Total Farming | 305,258 | 278,877 | 9.5% | 304,780 | 99.8% |
| Owned Croppable Area | 99,036 | 99,357 | (0.3)% | ||
| Leased Area | 162,218 | 153,044 | 6.0% | ||
| Second Crop Area | 44,004 | 26,476 | 66.2% | ||
| Total Farming Area | 305,258 | 278,877 | 9.5% |
(1) Includes sorghum; (2) Includes barley and peas; (3) Includes chia, sesame, potatoes and beans
Planting Plan Update
Due to normal weather experienced during the first half of 2024, we saw an improvement in soil moisture conditions in Argentina, which in turn, enabled us to increase our wheat area in the Northern region of the country. Planting activities for our summer crops were conducted under good conditions. However, weather in South America shifted to a moderate-to-weak "La Niña" (below average precipitations) by 2024 year-end, which continued during January 2025. In anticipation for this, we designed our planting plan in order to increase our exposure to crops that are more resilient to low rainfalls, such as soybean, while we reduced our late corn production given the spiroplasma event in the prior campaign. Despite the combination of high temperatures and lower-than-average rainfalls experienced during this period, precipitations received by the end of January and throughout February enabled our crop production to continue with its normal course of development. The evolution of weather in the upcoming weeks will be key as most of our crops are undergoing their yield definition phase.
Soybean 1st crop: We successfully planted 50,920 hectares of soybean. Although planting activities were carried out under normal soil moisture conditions in all areas, weather evolved differently across regions. By late January, the center area of Argentina received good precipitation, while the high temperatures registered and the reduction in precipitation in the Northern region led to a slight reduction in yields versus budget. Rainfall in the upcoming weeks will be necessary as yields are currently being defined. Overall, we
expect yields to be in line with historical.
Corn: 44,331 hectares of corn have been successfully planted, marking a 22.3% decrease compared to the 2023/24 harvest season. The reduction in corn area was mainly explained by (i) our agronomic decision to reduce our late corn production due to the spiroplasma event experienced the prior year; coupled with (ii) our strategy of switching to crops that are more resilient to dry weather, such as soybean. Despite this, yields for our early corn saw a slight decline versus our initial expectations as these are defined in December-January, when the weather was the driest. We are entering into the critical period of yield definition for our late corn, reason why rains will be necessary in the upcoming weeks. On a consolidated basis, we expect a year-over-year improvement in our corn yields.
Peanut: We have completed planting activities for all 25,353 hectares planned. The farms where our peanut production is concentrated received enough precipitation since the beginning of the season, allowing for a normal crop development. Despite the high temperatures registered, we are forecasting yields to be in line with historical average. Rains will be necessary during the next weeks as yields are being defined.
Sunflower: We concluded planting activities for sunflower, which represents 12,614 hectares of our total planting plan. We are forecasting yields to be in line with historical average due to a normal development of the crop.
Wheat: Planting activities for wheat are carried out during the South American winter and harvesting activities are completed during the summertime. In this line, 47,818 hectares of wheat, which also includes other winter crops such as barley and peas, have been planted and harvested. Despite presenting a year-over-year increase in planted area, our average yield was down to 2.5 ton/ha (versus 3.1 ton/ha during the prior campaign) driven by the aforementioned dry weather, which negatively impacted crop productivity.
Rice: All 64,477 hectares of the 2024/25 campaign have been seeded, while our water reservoirs remained full as a consequence of the rainfalls received throughout the year. In the case of Rice, as long as water availability is enough to conduct irrigation activities, dry and sunny weather is excellent for its development. Harvesting activities are on its way, and we are forecasting a significant improvement in yields versus the prior campaigns.
Inventories
| END OF PERIOD INVENTORIES | ||||||
|---|---|---|---|---|---|---|
| Volume | thousand | |||||
| Product | Metric | 4Q24 | 4Q23 | % Chg | 4Q24 | % Chg |
| Soybean | tons | 9,430 | 8,897 | 6.0% | 2,393 | (17.6)% |
| Corn (1) | tons | 21,807 | 16,183 | 34.8% | 3,448 | 13.6% |
| Wheat (2) | tons | 86,354 | 60,934 | 41.7% | 15,400 | 17.6% |
| Sunflower | tons | 1,920 | 2,540 | (24.4)% | 1,047 | (0.1)% |
| Cotton | tons | 1,832 | 2,289 | (20.0)% | 2,401 | 178.3% |
| Rice (3) | tons | 76,965 | 31,517 | 144.2% | 32,624 | 250.3% |
| Peanut | tons | 14,122 | 11,096 | 27.3% | 14,543 | 37.7% |
| Organic Sugar | tons | — | 1,834 | (100.0)% | — | (100.0)% |
| Sugar | tons | 61,514 | 76,691 | (19.8)% | 20,581 | (29.8)% |
| Ethanol | m3 | 165,736 | 186,699 | (11.2)% | 72,795 | (24.1)% |
| Hydrous Ethanol | m3 | 154,093 | 135,790 | 13.5% | 67,442 | (1.5)% |
| Anhydrous Ethanol | m3 | 11,643 | 50,910 | (77.1)% | 5,353 | (80.5)% |
| Fluid Milk | Th Lts | 9,342 | 5,215 | 79.1% | 6,309 | 165.0% |
| Powder Milk | tons | 2,413 | 2,258 | 6.9% | 8,929 | 38.2% |
| Cheese | tons | 679 | 370 | 83.4% | 3,114 | 147.2% |
| Butter | tons | 345 | 140 | 147.3% | 2,179 | 488.9% |
| Cbios | units | 123,633 | 37,232 | 232.1% | 1,211 | 62.3% |
| Fuel | m3 | 48 | 262 | (81.6)% | 37 | (86.7)% |
| Others | tons | 1,664 | 2,755 | (39.6)% | 1,142 | (39.9)% |
| Total | 577,804 | 446,913 | 29.3% | 188,154 | 4.3% |
All values are in US Dollars.
(1) Includes sorghum; (2) Includes barley: (3) Expressed in white rice equivalent
Adecoagro’s financial performance is affected by the volatile price environment inherent in agricultural commodities. The company uses forward and derivative markets to mitigate swings in commodity prices and stabilize cash flows.
The table below shows the average selling price of our hedged production volumes, including volumes that have already been invoiced and delivered, forward contracts with fixed-price and volumes hedged through derivative instruments.
| COMMODITY HEDGE POSITION - As of December 31, 2024 | |||||
|---|---|---|---|---|---|
| Consolidated Hedge Position | |||||
| Crops | Avg. FAS Price | CBOT FOB | |||
| Volume | USD/Ton | USD/Bu | Hedge (%) | ||
| 2023/2024 Harvest season | |||||
| Soybeans (tons) | 199,224 | 316.7 | 1,275.6 | 97% | |
| Corn (tons) | 248,299 | 178.0 | 572.1 | 99% | |
| Wheat (tons) | 66,433 | 228.3 | 732.2 | 100% | |
| 2024/2025 Harvest season | |||||
| Soybeans (tons) | 62,600 | 295.5 | 1,199.0 | 28% | |
| Corn (tons) | 57,500 | 179.1 | 575.1 | 23% | |
| Wheat (tons) | 52,964 | 222.5 | 720.7 | 61% | |
| Consolidated Hedge Position | |||||
| Sugar, Ethanol & Energy | Avg. FOB Price | ICE FOB | |||
| Volume | USD/Unit | Cents/Lb | Hedge (%) | ||
| 2024 FY | |||||
| Sugar (tons) | 710,259 | 503.3 | 22.8 | 85% | |
| Ethanol (m3) | — | — | — | —% | |
| Energy (MW/h) (1) | 811,721 | 40.6 | n.a. | 100% | |
| 2025 FY | |||||
| Sugar (tons) | 96,825 | 456.1 | 20.7 | 12% | |
| Ethanol (m3) | — | — | — | ||
| Energy (MW/h) (1) | 574,979 | 43.5 | n.a | 72% |
(1) Energy prices in 2024 and 2025 were converted to USD at an exchange rate of BRL/USD 5.39 and BRL/USD 5.80, respectively.
| 4Q24 Market Highlights |
|---|
◦Sugar prices experienced a downward trend during 4Q24 mainly due to a larger-than-expected production from Brazil's Center-South region, together with India resuming sugar exports. As a result, funds increased their short position reaching its biggest one since 2019, adding to more volatility in prices. Nevertheless, the global trade balance continues to show a deficit, while the stock-to-use ratio in many importing countries remains low. Future prices will largely depend on the production size of the upcoming season, and therefore how weather evolves in Brazil during summertime. It is expected that Brazil's harvest season will start later than usual in order to allow for the cane to recover, which means production will lag behind last year, creating uncertainty in the near term about the crop size.
◦The Brazilian ethanol market experienced significant growth during 4Q24. According to the ESALQ index, both hydrous and anhydrous ethanol prices increased by 24% and 22%, respectively, compared to 4Q23. As reported by UNICA (Brazil’s sugarcane industry association), total ethanol sales in 4Q24 were 3% higher year-over-year, driven by greater competitiveness against gasoline at the pump and a larger market share in the Otto Cycle. Consequently, domestic hydrous ethanol sales saw a remarkable 28% increase during 2024 versus the previous year. In terms of outlook, the recovery in ethanol prices continues to be supported by (i) a low stock-to-use ratio; (ii) no new supply of cane ethanol until March-April, when most mills resume operations; coupled with (iii) the change in ICMS tax on gasoline during February.
◦Brazil's carbon credit market under the RenovaBio program presented a 30% year-over-year decrease in prices during 4Q24, reaching an average of 80 BRL/CBio (approximately 14 USD/CBio) versus 114 BRL/CBio in 4Q23.
◦In 4Q24, energy spot prices in the southeast region of Brazil were almost three times higher year-over-year and 79% higher compared to 3Q24. The peak in prices was mainly seen in October due to the high temperatures which led to more energy being consumed, while the southeast reservoirs levels remained mostly unchanged (from 46% to 51% in December).
◦During 4Q24, soybean traded 3% lower at CBOT compared to 3Q24, while corn traded 1% down. The quarter-over-quarter decrease was mainly driven by (i) USA increasing stocks after a solid harvest; (ii) higher production expected in Argentina and Brazil; and (iii) no major changes in global demand. At the local market, prices traded 10% lower for soybean and 4% lower for corn compared to 3Q24. Local prices were less resilient due to good precipitations received during November. By beginning of 2025, prices significantly increased due to the dry weather experienced throughout January, coupled with the reduction of export taxes announced by the national government.
◦During 4Q24, all rice varieties and origins experienced a decline in prices as India (largest rice producer and exporter in the world) lifted the export ban for long grain white rice and started to divert its stocks to the market. Consequently, other Asian origins had to revise its prices in order to compete with Indian supply (which was offered at ∼$450/ton). In South America, planted area for the 2024/25 harvest season increased by 10% compared to the prior year. Planting pace was favorable and weather forecasts called for a "La Niña" event, which normally favors rice development. Thus, prices experienced a downward pressure.
◦International dairy prices continued its recovery trend throughout the period due to (i) more demand from Asia and China; and (ii) less supply available from South America (mainly Argentina and Uruguay).
Moreover, raw milk prices in Argentina remained firm at $0,42/liter driven by (i) lower milk production in 2024 compared to the previous year, and (ii) drier and warmer weather in Argentina and Uruguay during summertime. Thus, competition for raw milk sourcing during the high season of production remained strong.
| Forward-looking Statements |
|---|
This press release contains forward-looking statements that are based on our current expectations, assumptions, estimates and projections about us and our industry. These forward-looking statements can be identified by words or phrases such as “anticipate,” “forecast”, “believe,” “continue,” “estimate,” “expect,” “intend,” “is/are likely to,” “may,” “plan,” “should,” “would,” or other similar expressions.
The forward-looking statements included in this press release relate to, among others: (i) our 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 our business, including limitations on ownership of farmland by foreign entities in certain jurisdictions in which we operate, environmental laws and regulations; (iv) the implementation of our business strategy; (v) the correlation between petroleum, ethanol and sugar prices; (vi) our plans relating to acquisitions, joint ventures, strategic alliances or divestitures, and to consolidate our position in different businesses; (vii) the efficiencies, cost savings and competitive advantages resulting from acquisitions; (viii) the implementation of our financing strategy, capital expenditure plan and expected shareholder distributions; (ix) the maintenance of our relationships with customers; (x) the competitive nature of the industries in which we operate; (xi) the cost and availability of financing; (xii) future demand for the commodities we produce; (xiii) international prices for commodities; (xiv) the condition of our land holdings; (xv) the development of the logistics and infrastructure for transportation of our products in the countries where we operate; (xvi) the performance of the South American and world economies; (xvii) the relative value of the Brazilian Reais, the Argentine Peso, and the Uruguayan Peso compared to other currencies; and (xviii) the proposed tender offer by Tether.
These forward-looking statements involve various risks and uncertainties. Although we believe that our expectations expressed in these forward-looking statements are reasonable, our expectations may turn out to be incorrect. Our actual results could be materially different from our expectations. In light of the risks and uncertainties described above, the estimates and forward-looking statements discussed in this press release might not occur, and our future results and our 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 this press release relate only to events or information as of the date on which the statements are made in this press release. We undertake 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.
No Offer or Solicitation; Additional Information and Where to Find It
The tender offer referenced in this press release has not yet commenced. This announcement is for informational purposes only and is neither an offer to purchase nor a solicitation of an offer to sell securities. The solicitation and offer to buy the Company’s securities will only be made pursuant to an Offer to Purchase and related tender offer materials. At the time the tender offer is commenced, Tether will be required to file a tender offer statement on Schedule TO and thereafter the Company will file a Solicitation/Recommendation Statement on Schedule 14D-9 with the SEC with respect to the tender offer. THE TENDER OFFER MATERIALS (INCLUDING AN OFFER TO PURCHASE, A RELATED LETTER OF TRANSMITTAL AND CERTAIN OTHER TENDER OFFER DOCUMENTS) AND THE SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 WILL CONTAIN IMPORTANT INFORMATION. THE COMPANY’S STOCKHOLDERS ARE URGED TO READ THESE DOCUMENTS CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION THAT HOLDERS OF THE COMPANY’S SECURITIES SHOULD CONSIDER BEFORE MAKING ANY DECISION REGARDING TENDERING THEIR SECURITIES. These materials will be made available to the Company’s stockholders at no expense to them. The tender offer materials and the Solicitation/Recommendation Statement will be made available for free at the SEC's website at www.sec.gov. Copies of the documents filed by the Company with the SEC by will be available free of charge on the Company’s internet website at www.adecoagro.com or by contacting the Company’s investor relations department at ir@adecoagro.com.
| Reconciliation of Non-IFRS measures |
|---|
To supplement our consolidated financial statements, which are prepared and presented in accordance with IFRS, we use the following non-IFRS financial measures in this press release:
•Adjusted EBITDA
•Adjusted EBIT
•Adjusted EBITDA margin
•Net Debt
•Net Debt to Adjusted EBITDA
•Adjusted Net Income
•Adjusted Free Cash Flow from Operations
•Adjusted Free Cash Flow
In this section, we provide an explanation and a reconciliation of each of our non-IFRS financial measures to their most directly comparable IFRS measures. The presentation of these financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with IFRS.
We believe these non-IFRS financial measures provide investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management for financial and operational decision making.
There are limitations associated with the use of non-IFRS financial measures as an analytical tool. In particular, many of the adjustments to our IFRS financial measures reflect the exclusion of items, such as depreciation and amortization, changes in fair value, the related income tax effects of the aforementioned exclusions and exchange differences generated by the net liability monetary position in USD in the countries where the functional currency is the local currency, that are recurring and will be reflected in our financial results for the foreseeable future. In addition, these measures may be different from non-IFRS financial measures used by other companies, limiting their usefulness for comparison purposes.
Adjusted EBITDA & Adjusted EBIT
Adjusted Consolidated EBITDA equals the sum of our Adjusted Segment EBITDA for each of our operating segments. Effective for the third quarter ended September 30, 2024, we changed our definition of Adjusted Consolidated EBITDA and Adjusted Segment EBITDA to exclude any charges related to impairments. We did not have any impairment or disposal charges for any of the previous periods presented.
We define “Adjusted Consolidated EBITDA” as (i) consolidated net profit (loss) for the year, as applicable, before interest expense, income taxes, depreciation of property, plant and equipment and amortization of intangible assets, net gain or loss from fair value adjustments of investment property land, foreign exchange gains or losses, other net financial results and bargain purchase gain on acquisition and any charges related to impairments (ii) adjusted by those items, that do not impact profit and loss, but are recorded directly in shareholders’ equity, including (a) the gains or losses from disposals of noncontrolling interests in subsidiaries whose main underlying asset is farmland, reflected under the line item: "Reserve from the sale of noncontrolling interests in subsidiaries” and (b) the net increase in value of sold farmland, which has been recognized in either revaluation surplus or retained earnings; and (iii) net of the combined effect of the application of IAS 29 and IAS 21 from the Argentine operations included in profit from operations.
We believe that Adjusted Consolidated EBITDA and Adjusted Segment EBITDA are important measures of operating performance for our company and each operating segment, respectively, because they allow investors to evaluate and compare our consolidated operating results and to evaluate and compare the operating performance of our segments, respectively, including our return on capital and operating efficiencies, from period to period by removing the impact of our capital structure (interest expense from our outstanding debt), asset base (depreciation and amortization), tax consequences (income taxes), bargain purchase gain, any charges related to impairments, foreign exchange gains or losses and other financial results. In addition, by including the gains or losses from disposals of noncontrolling interests in subsidiaries whose main underlying asset is farmland, investors can also evaluate and compare the full value and returns generated by our land transformation activities. Other companies may calculate Adjusted Consolidated EBITDA and Adjusted Segment EBITDA differently, and therefore our Adjusted Consolidated EBITDA and Adjusted Segment EBITDA may not be comparable to similar measures used by other companies. Adjusted Consolidated EBITDA and Adjusted Segment EBITDA
are not measures of financial performance under IFRS, and should not be considered in isolation or as an alternative to consolidated net profit (loss), cash flows from operating activities, segment profit from operations and other measures determined in accordance with IFRS. Items excluded from Adjusted Consolidated EBITDA and Adjusted Segment EBITDA are significant and necessary components to the operations of our business, and, therefore, Adjusted Consolidated EBITDA and Adjusted Segment EBITDA should only be used as a supplemental measure of our company’s operating performance, and of each of our operating segments, respectively. We also believe Adjusted Consolidated EBITDA and Adjusted Segment EBITDA are useful for securities analysts, investors and others to evaluate and compare the financial performance of our company and other companies in the agricultural industry. These non-IFRS measures should be considered in addition to, but not as a substitute for or superior to, the information contained in either our statements of income or segment information.
Our Adjusted Consolidated EBIT equals the sum of our Adjusted Segment EBITs for each of our operating segments. Effective for the third quarter ended September 30, 2024, we changed our definition of Adjusted Consolidated EBIT and Adjusted Segment EBIT to exclude any charges related to impairments. We did not have any impairment or disposal charges for any of the previous periods presented.
We define “Adjusted Consolidated EBIT” as (i) consolidated net profit (loss) for the year, as applicable, before interest expense, income taxes, net gain from fair value adjustments of investment property land, foreign exchange gains or losses, other net financial results, bargain purchase gain on acquisition and any charges related to impairments (ii) adjusted by those items, that do not impact profit and loss, but are recorded directly in shareholders’ equity, including (a) the gains or losses from disposals of noncontrolling interests in subsidiaries whose main underlying asset is farmland, reflected under the line item: "Reserve from the sale of noncontrolling interests in subsidiaries” and (b) the net increase in value of sold farmland, which has been recognized in either revaluation surplus or retained earnings; and (iii) net of the combined effect of the application of IAS 29 and IAS 21 from the Argentine operations included in profit from operations.
We believe that Adjusted Consolidated EBIT and Adjusted Segment EBIT are important measures of operating performance, for our company and each operating segment, respectively, because they allow investors to evaluate and compare our consolidated operating results and to evaluate and compare the operating performance of our segments, from period to period by including the impact of depreciable fixed assets and removing the impact of our capital structure (interest expense from our outstanding debt), tax consequences (income taxes), foreign exchange gains or losses and other financial results. In addition, by including the gains or losses from disposals of noncontrolling interests in subsidiaries whose main underlying asset is farmland and also the sale of farmlands, and impairments, investors can evaluate the full value and returns generated by our land transformation activities. Other companies may calculate Adjusted Consolidated EBIT and Adjusted Segment EBIT differently, and therefore our Adjusted Consolidated EBIT and Adjusted Segment EBIT may not be comparable to similar measures used by other companies. Adjusted Consolidated EBIT and Adjusted Segment EBIT are not measures of financial performance under IFRS, and should not be considered in isolation or as an alternative to consolidated net profit (loss), cash flows from operating activities, segment profit from operations and other measures determined in accordance with IFRS. Items excluded from Adjusted Consolidated EBIT and Adjusted Segment EBIT are significant and necessary components to the operations of our business, and, therefore, Adjusted Consolidated EBIT and Adjusted Segment EBIT should only be used as a supplemental measure of the operating performance of our company, and of each of our operating segments, respectively.
Reconciliation of both Adjusted EBITDA and Adjusted EBIT starts on page 32.
Net Debt & Net Debt to Adjusted EBITDA
Net debt is defined as the sum of non-current and current borrowings less cash and cash equivalents and short-term investments (namely US-Treasury Bills use as collateral of short-term borrowings). This measure is widely used by management. Management is consistently tracking our leverage position and our ability to repay and service our debt obligations over time. We have therefore set a leverage ratio target that is measured by net debt divided by Adjusted Consolidated EBITDA.
We believe that the ratio net debt to Adjusted Consolidated EBITDA provides useful information to investors because management uses it to manage our debt-equity ratio in order to promote access to capital markets and our ability to meet scheduled debt service obligations.
| RECONCILIATION - NET DEBT | |||||
|---|---|---|---|---|---|
| $ thousands | 4Q24 | 3Q24 | Chg % | 4Q23 | Chg % |
| Total Borrowings | 779,556 | 859,424 | (9.3)% | 904,949 | (13.9)% |
| Cash and Cash equivalents | 211,244 | 198,255 | 6.6% | 339,781 | (37.8)% |
| Short-term investments | 46,097 | 15,351 | 200.3% | 62,637 | (26.4)% |
| Net Debt | 522,215 | 645,818 | (19.1)% | 502,531 | 3.9% |
Adjusted Net Income
Effective for the third quarter ended September 30, 2024, we changed our definition of Adjusted Net Income to exclude any charges related to impairments. We did not have any impairment or disposal charges for any of the previous periods presented.
We define Adjusted Net Income as (i) profit / (loss) of the period/year before net gain / (losses) from fair value adjustments of investment property land, bargain purchase gain on acquisition and any impairment; plus (ii) any non-cash finance costs resulting from foreign exchange gain/losses for such period, which are composed by both exchange differences and cash flow hedge transfer from equity, included in Financial Results, net, in our statement of income; net of the related income tax effects, plus (iii) gains or losses from disposals of non-controlling interests in subsidiaries whose main underlying asset is farmland, which are reflected in our shareholders’ equity under the line item “Reserve from the sale of non-controlling interests in subsidiaries” if any, plus (iv) the reversal of the aforementioned income tax effect, plus (v) inflation accounting effect; plus (vi) the net increase in value of sold farmland, which has been recognized in either revaluation surplus or retained earnings, if any.
We believe that Adjusted Net Income is an important measure of performance for our company allowing investors to properly assess the impact of the results of our operations in our equity. In fact, results arising from the revaluation effect of our net monetary position held in foreign currency in the countries where our functional currency is the local currency do not affect the equity of the Company, when measured in foreign / reporting currency. Conversely, the tax effect resulting from the aforementioned revaluation effect does impact the equity of the Company, since it reduces/increases the income tax to be paid in each country. Accordingly we have added back the income tax effect to Adjusted Net Income.
In addition, by including the gains or losses from disposals of non-controlling interests in subsidiaries whose main underlying asset is farmland, investors can also include the full value and returns generated by our land transformation activities.
Other companies may calculate Adjusted Net Income differently, and therefore our Adjusted Net Income may not be comparable to similar measures used by other companies. Adjusted Net Income is not a measure of financial performance under IFRS, and should not be considered in isolation or as an alternative to consolidated net profit (loss). This non-IFRS measure should be considered in addition to, but not as a substitute for or superior to, the information contained in our financial statements.
| ADJUSTED NET INCOME | ||||||
|---|---|---|---|---|---|---|
| $ thousands | 4Q24 | 4Q23 | Chg % | 12M24 | 12M23 | Chg % |
| Profit for the period | 16,178 | 82,209 | (80.3)% | 92,101 | 226,721 | (59.4)% |
| Foreign exchange losses/(gains), net | 32,518 | (56,976) | n.a. | 37,569 | (90,930) | n.a |
| Cash flow hedge - transfer from equity | 426 | (6,358) | n.a | 28,650 | 36,863 | (22.3)% |
| Inflation accounting effects | (4,332) | (23,744) | n.a | (2,421) | (28,816) | n.a |
| Net results from Fair Value adjustment of Investment Property | 891 | (11,533) | n.a | 23,375 | (10,620) | n.a |
| Impairments of assets destroyed by fire | 223 | — | n.m. | 14,259 | — | n.m. |
| Revaluation surplus of farmland sold | — | — | n.m. | 9,024 | 20,245 | (55.4)% |
| Adjusted Net Income | 45,904 | (16,402) | n.a | 202,557 | 153,463 | 32.0% |
Adjusted Free Cash Flow and Adjusted Free Cash Flow from Operations
We believe that the measures of Adjusted Free Cash Flow and Adjusted Free Cash Flow from Operations are important measures of liquidity that enable investors to draw important comparisons year to year of the amount of cash generated by the Company’s
principal business and financing activities, which includes the cash generated from our land transformation activities, after paying for recurrent items, including interest, taxes and maintenance capital expenditures.
We define Adjusted Free Cash Flow as the aggregate of (i) net cash generated from operating activities net of the combined effect of the application of IAS 29 and IAS 21 to the Argentine operations, (ii) net cash used in investing activities net of the combined effect of the application of IAS 29 and IAS 21 to the Argentine operations -excluding the net of the combined effect in other financial income-, less (iii) interest paid net of the combined effect of the application of IAS 29 and IAS 21 to the Argentine operations, plus (iv) proceeds from the sale of non-controlling interest in farming subsidiaries; less (v) lease payments; less (vi) dividends paid to noncontrolling interest, plus (vii) the net of acquisition/disposal of short-term investments net of the combined effect of the application of IAS 29 and IAS 21 to the Argentine operations, and less (viii) other financial income derived from gains on bond arbitrage transactions. We define Adjusted Free Cash Flow from Operations as the aggregate of (i) net cash generated from operating activities net of the combined effect of the application of IAS 29 and IAS 21 to the Argentine operations, (ii) net cash used in investing activities net of the combined effect of the application of IAS 29 and IAS 21 to the Argentine operations -excluding the net of the combined effect in other financial income-, less (iii) interest paid net of the combined effect of the application of IAS 29 and IAS 21 to the Argentine operations, plus (iv) proceeds from the sale of noncontrolling interest in subsidiaries; less (v) lease payments; less (vi) dividends paid to noncontrolling interest, plus (vii) the net acquisition/disposal of short-term investment net of the combined effect of the application of IAS 29 and IAS 21 to the Argentine operations, plus (viii) expansion capital expenditures, less (ix) other financial income derived from gains on bond arbitrage transactions.
Expansion capex is defined as the required investment to expand current production capacity including organic growth, joint ventures and acquisitions. We define maintenance capital expenditures ("maintenance capex") as the necessary investments in order to maintain the current level of productivity both at an agricultural and at an industrial level. Proceeds from the sale of non-controlling interest in farming subsidiaries is a measure of the cash generated from our land transformation activities that is included under cash from financing activities pursuant to IFRS.
We believe Adjusted Free Cash Flow is an important liquidity measure for the Company because it allows investors and others to evaluate and compare the amount of cash generated by the Company business and financing activities to undertake growth investments, to fund acquisitions, to reduce outstanding financial debt and to provide a return to shareholders in the form of dividends and/or share repurchases, among other things.
We believe Adjusted Free Cash Flow from Operations is an additional important liquidity metric for the Company because it allows investors and others to evaluate and compare the total amount of cash generated by the Company's business and financing activities after paying for recurrent items including interest, taxes and maintenance capex. We believed this metric is relevant in evaluating the overall performance of our business.
Other companies may calculate Adjusted Free Cash Flow and Adjusted Free Cash Flow from Operations differently, and therefore our formulation may not be comparable to similarly titled measures used by other companies. Adjusted Free Cash Flow and Adjusted Free Cash Flow from Operations are not measures of liquidity under IFRS, and should not be considered in isolation or as an alternative to consolidated cash flows from operating activities, net increase (decrease) in cash and cash equivalents and other measures determined in accordance with IFRS.
| ADJUSTED FREE CASH FLOW SUMMARY | |||
|---|---|---|---|
| $ thousands | 2024 | 2023 | Chg % |
| Net cash generated from operating activities (1) | 431,128 | 451,290 | (4.5)% |
| Net cash used in investing activities(1) | (224,292) | (100,917) | n.a. |
| Interest paid(1) | (34,024) | (47,223) | n.a. |
| Expansion capex reversal | 104,067 | 67,119 | 55.0% |
| Lease payments | (98,478) | (104,097) | n.a. |
| Dividends paid to non-controlling interest | (736) | — | n.a |
| Other financial income(1) | (238) | (54,687) | n.a. |
| Short-term investments | (16,544) | (35,610) | n.a. |
| Adjusted Free Cash Flow from Operations (NCFO)(2) | 160,883 | 175,874 | (8.5)% |
| Expansion Capex | (104,067) | (67,119) | n.a. |
| Adjusted Free Cash Flow(2) | 56,816 | 108,756 | (47.8)% |
(1) Net of the combined effect of IAS 29 and IAS 21 of the Argentine subsidiaries; (2) Please refer to "Reconciliation of Non-IFRS measures" starting on page 27 for a definition of Adjusted Free Cash Flow from Operations and Adjusted Free Cash Flow.
| RECONCILIATION - ADJUSTED FREE CASH FLOW | ||||||||
|---|---|---|---|---|---|---|---|---|
| $ thousands | 2024 | 2023 | Chg % | |||||
| Net increase/(decrease) in cash and cash equivalents | (177,234) | 114,612 | n.a. | |||||
| Interest paid | (24,629) | (55,476) | n.a. | |||||
| Lease payments | (98,478) | (104,097) | n.a. | |||||
| Dividends paid to non-controlling interest | (736) | — | n.a. | |||||
| Restricted short-term investments | (14,510) | (35,610) | n.a. | |||||
| Cash flow from financing activities | 274,000 | 208,743 | 31.3% | |||||
| Other financial income | (238) | (54,687) | n.a. | |||||
| IAS 29 & IAS 21 Effect for Investing Activities | 7,273 | 10,635 | (31.6)% | |||||
| IAS 29 & IAS 21 Effect for Operating Activities | 102,797 | 16,383 | 527.5% | |||||
| IAS 29 & IAS 21 Effect for Acquisition of Short-term Investments | (2,034) | — | n.a. | |||||
| IAS 29 & IAS 21 Effect for Interest Paid | (9,395) | 8,253 | n.a. | |||||
| Adjusted Free Cash Flow | 56,816 | 108,756 | (47.8)% | RECONCILIATION - ADJUSTED FREE CASH FLOW FROM OPERATIONS | ||||
| --- | --- | --- | --- | |||||
| $ thousands | 2024 | 2023 | Chg % | |||||
| Net increase/(decrease) in cash and cash equivalents | (177,234) | 114,612 | n.a. | |||||
| Expansion Capex | 104,067 | 67,119 | 55.0% | |||||
| Interest Paid | (24,629) | (55,476) | n.a. | |||||
| Lease Payments | (98,478) | (104,097) | n.a. | |||||
| Dividends paid to non-controlling interest | (736) | — | n.a. | |||||
| Restricted short-term investments | (14,510) | (35,610) | n.a. | |||||
| Cash flow from financing activities | 274,000 | 208,743 | 31.3% | |||||
| Other financial income | (238) | (54,687) | n.a. | |||||
| IAS 29 & IAS 21 Effect for Investing Activities | 7,273 | 10,635 | (31.6)% | |||||
| IAS 29 & IAS 21 Effect for Operating Activities | 102,797 | 16,383 | 527.5% | |||||
| IAS 29 & IAS 21 Effect for Acquisition of Short-term Investments | (2,034) | — | n.a. | |||||
| IAS 29 & IAS 21 Effect for Interest Paid | (9,395) | 8,253 | n.a. | |||||
| Adjusted Free Cash Flow from operations (NCFO) | 160,883 | 175,874 | (8.5)% | |||||
| ADJUSTED EBITDA & ADJUSTED EBITDA RECONCILIATION TO PROFIT/LOSS - 4Q24 | ||||||||
| --- | --- | --- | --- | --- | --- | --- | ||
| $ thousands | Crops | Rice | Dairy | Farming | Sugar, Ethanol & Energy | Corporate | Total | |
| Sales of goods and services rendered | 61,063 | 49,163 | 74,850 | 185,076 | 183,303 | — | 368,379 | |
| Cost of goods sold and services rendered | (54,685) | (50,788) | (66,916) | (172,389) | (120,696) | — | (293,085) | |
| Initial recog. and changes in FV of BA and agricultural produce | (607) | 13,853 | 7,878 | 21,124 | (365) | — | 20,759 | |
| Gain from changes in NRV of agricultural produce after harvest | (2,197) | (6,614) | — | (8,811) | 14 | — | (8,797) | |
| Margin on Manufacturing and Agricultural Act. Before Opex | 3,574 | 5,614 | 15,812 | 25,000 | 62,256 | — | 87,256 | |
| General and administrative expenses | (2,427) | (5,634) | (3,498) | (11,559) | (6,815) | (5,698) | (24,072) | |
| Selling expenses | (4,034) | (6,265) | (8,490) | (18,789) | (17,920) | (578) | (37,287) | |
| Other operating income, net | 54 | 275 | 634 | 963 | 20,743 | 22 | 21,728 | |
| Profit from Operations Before Financing and Taxation | (2,833) | (6,010) | 4,458 | (4,385) | 58,264 | (6,254) | 47,625 | |
| Net results from Fair value adjustment of Investment property | — | 537 | — | 537 | — | — | 537 | |
| Adjusted EBIT | (2,833) | (5,473) | 4,458 | (3,848) | 58,264 | (6,254) | 48,162 | |
| (-) Depreciation and Amortization | (363) | 4,259 | 3,761 | 7,657 | 47,025 | 406 | 55,088 | |
| Adjusted EBITDA | (3,196) | (1,214) | 8,219 | 3,809 | 105,289 | (5,848) | 103,250 | |
| Reconciliation to Profit/(Loss) | ||||||||
| Adjusted EBITDA | 103,250 | |||||||
| (+) Depreciation and Amortization | (55,088) | |||||||
| (+) Financial result, net | (48,403) | |||||||
| (+) Net results from Fair value adjustment of Investment property | (537) | |||||||
| (+) Income Tax (Charge)/Benefit | 17,035 | |||||||
| (+) Translation Effect (IAS 21) | (79) | |||||||
| Profit/(Loss) for the Period | 16,178 | |||||||
| ADJUSTED EBITDA & ADJUSTED EBITDA RECONCILIATION TO PROFIT/LOSS - 4Q23 | ||||||||
| --- | --- | --- | --- | --- | --- | --- | ||
| $ thousands | Crops | Rice | Dairy | Farming | Sugar, Ethanol & Energy | Corporate | Total | |
| Sales of goods and services rendered | 46,071 | 60,231 | 54,791 | 161,093 | 239,046 | — | 400,139 | |
| Cost of goods sold and services rendered | (38,523) | (38,131) | (49,013) | (125,667) | (180,467) | — | (306,134) | |
| Initial recog. and changes in FV of BA and agricultural produce | (7,036) | (9,476) | 4,184 | (12,328) | (3,521) | — | (15,849) | |
| Gain from changes in NRV of agricultural produce after harvest | 3,067 | — | — | 3,067 | 11 | — | 3,078 | |
| Margin on Manufacturing and Agricultural Act. Before Opex | 3,579 | 12,624 | 9,962 | 26,165 | 55,069 | — | 81,234 | |
| General and administrative expenses | (2,194) | (4,583) | (3,029) | (9,806) | (7,363) | (5,411) | (22,580) | |
| Selling expenses | (5,073) | (7,948) | (6,000) | (19,021) | (25,563) | (197) | (44,781) | |
| Other operating income, net | 12,482 | 4,674 | 2,098 | 19,254 | 19,506 | (245) | 38,515 | |
| Profit from Operations Before Financing and Taxation | 8,794 | 4,767 | 3,031 | 16,592 | 41,649 | (5,853) | 52,388 | |
| Net results from Fair value adjustment of Investment property | (11,192) | (1,283) | — | (12,475) | — | — | (12,475) | |
| Adjusted EBIT | (2,398) | 3,484 | 3,031 | 4,117 | 41,649 | (5,853) | 39,913 | |
| (-) Depreciation and Amortization | 2,094 | 4,704 | 2,899 | 9,697 | 45,827 | 326 | 55,850 | |
| Adjusted EBITDA | (304) | 8,188 | 5,930 | 13,814 | 87,476 | (5,527) | 95,763 | |
| Reconciliation to Profit/(Loss) | ||||||||
| Adjusted EBITDA | 95,763 | |||||||
| (+) Depreciation and Amortization | (55,850) | |||||||
| (+) Financial result, net | 70,616 | |||||||
| (+) Net results from Fair value adjustment of Investment property | 12,475 | |||||||
| (+) Income Tax (Charge)/Benefit | (26,899) | |||||||
| (+) Translation Effect (IAS 21) | (13,896) | |||||||
| Profit/(Loss) for the Period | 82,209 | |||||||
| ADJUSTED EBITDA & ADJUSTED EBITDA RECONCILIATION TO PROFIT/LOSS - 12M24 | ||||||||
| --- | --- | --- | --- | --- | --- | --- | ||
| $ thousands | Crops | Rice | Dairy | Farming | Sugar, Ethanol & Energy | Corporate | Total | |
| Sales of goods and services rendered | 236,128 | 248,198 | 284,098 | 768,424 | 707,954 | — | 1,476,378 | |
| Cost of goods sold and services rendered | (213,909) | (208,266) | (241,770) | (663,945) | (498,840) | — | (1,162,785) | |
| Initial recog. and changes in FV of BA and agricultural produce | 28,347 | 45,780 | 14,539 | 88,666 | 41,166 | — | 129,832 | |
| Gain from changes in NRV of agricultural produce after harvest | (19,780) | (6,614) | — | (26,394) | 554 | — | (25,840) | |
| Margin on Manufacturing and Agricultural Act. Before Opex | 30,786 | 79,098 | 56,867 | 166,751 | 250,834 | — | 417,585 | |
| General and administrative expenses | (18,622) | (17,025) | (11,769) | (47,416) | (25,179) | (25,452) | (98,047) | |
| Selling expenses | (17,240) | (30,771) | (27,678) | (75,689) | (73,804) | 736 | (148,757) | |
| Other operating income, net | (5,304) | (14,052) | 4,084 | (15,272) | 23,303 | 294 | 8,325 | |
| Profit from Operations Before Financing and Taxation | (10,380) | 17,250 | 21,504 | 28,374 | 175,154 | (24,422) | 179,106 | |
| Net results from Fair value adjustment of Investment property | 588 | 18,137 | — | 18,725 | — | — | 18,725 | |
| Transfer of revaluation surplus derived from the disposals of assets | 9,024 | — | — | 9,024 | — | — | 9,024 | |
| Impairment of assets destroyed by fire | 14,162 | — | — | 14,162 | — | — | 14,162 | |
| Adjusted EBIT | 13,394 | 35,387 | 21,504 | 70,285 | 175,154 | (24,422) | 221,017 | |
| (-) Depreciation and Amortization | 5,698 | 14,798 | 12,219 | 32,715 | 189,006 | 1,523 | 223,244 | |
| Adjusted EBITDA | 19,092 | 50,185 | 33,723 | 103,000 | 364,160 | (22,899) | 444,261 | |
| Reconciliation to Profit/(Loss) | ||||||||
| Adjusted EBITDA | 444,261 | |||||||
| (+) Depreciation and Amortization | (223,244) | |||||||
| (+) Financial result, net | (147,212) | |||||||
| (+) Net results from Fair value adjustment of Investment property | (18,725) | |||||||
| (+) Income Tax (Charge)/Benefit | 57,015 | |||||||
| (+) Revaluation surplus of farmland sold | (9,024) | |||||||
| (+) Impairment of assets destroyed by fire | (14,162) | |||||||
| (+) Translation Effect (IAS 21) | 3,192 | |||||||
| Profit/(Loss) for the Period | 92,101 | |||||||
| ADJUSTED EBITDA & ADJUSTED EBITDA RECONCILIATION TO PROFIT/LOSS - 12M23 | ||||||||
| --- | --- | --- | --- | --- | --- | --- | ||
| $ thousands | Crops | Rice | Dairy | Farming | Sugar, Ethanol & Energy | Corporate | Total | |
| Sales of goods and services rendered | 216,912 | 256,347 | 246,875 | 720,134 | 722,307 | — | 1,442,441 | |
| Cost of goods sold and services rendered | (188,954) | (178,322) | (209,362) | (576,638) | (504,570) | — | (1,081,208) | |
| Initial recog. and changes in FV of BA and agricultural produce | (4,862) | (2,488) | 14,086 | 6,736 | 94,436 | — | 101,172 | |
| Gain from changes in NRV of agricultural produce after harvest | 2,730 | — | — | 2,730 | (156) | — | 2,574 | |
| Margin on Manufacturing and Agricultural Act. Before Opex | 25,826 | 75,537 | 51,599 | 152,962 | 312,017 | — | 464,979 | |
| General and administrative expenses | (14,779) | (15,709) | (10,411) | (40,899) | (25,591) | (23,061) | (89,551) | |
| Selling expenses | (22,450) | (33,407) | (25,488) | (81,345) | (69,155) | (305) | (150,805) | |
| Other operating income, net | 20,006 | 7,470 | 1,872 | 29,348 | 2,463 | (309) | 31,502 | |
| Profit from Operations Before Financing and Taxation | 8,603 | 33,891 | 17,572 | 60,066 | 219,734 | (23,675) | 256,125 | |
| Net results from Fair value adjustment of Investment property | (10,199) | (1,176) | — | (11,375) | — | — | (11,375) | |
| Transfer of revaluation surplus derived from the disposals of assets | 20,245 | — | — | 20,245 | — | — | 20,245 | |
| Adjusted EBIT | 18,649 | 32,715 | 17,572 | 68,936 | 219,734 | (23,675) | 264,995 | |
| (-) Depreciation and Amortization | 8,330 | 15,154 | 10,913 | 34,397 | 175,903 | 1,275 | 211,575 | |
| Adjusted EBITDA | 26,979 | 47,869 | 28,485 | 103,333 | 395,637 | (22,400) | 476,570 | |
| Reconciliation to Profit/(Loss) | ||||||||
| Adjusted EBITDA | 476,570 | |||||||
| (+) Depreciation and Amortization | (211,575) | |||||||
| (+) Financial result, net | 63,829 | |||||||
| (+) Net results from Fair value adjustment of Investment property | 11,375 | |||||||
| (+) Income Tax (Charge)/Benefit | (78,673) | |||||||
| (+) Transfer of revaluation surplus derived from the disposals of assets | (20,245) | |||||||
| (+) Translation Effect (IAS 21) | (14,560) | |||||||
| Profit/(Loss) for the Period | 226,721 | |||||||
| Condensed Consolidated Interim Financial Statments | ||||||||
| --- | ||||||||
| Statement of Income | ||||||||
| --- | --- | --- | --- | --- | --- | --- | ||
| $ thousands | 4Q24 | 4Q23 | Chg % | 12M24 | 12M23 | Chg % | ||
| Revenue | 374,220 | 263,946 | 41.8% | 1,518,907 | 1,298,871 | 16.9% | ||
| Cost of revenue | (297,905) | (203,509) | 46.4% | (1,198,715) | (973,180) | 23.2% | ||
| Initial recognition and Changes in fair value of biological assets and agricultural produce | 21,779 | (28,150) | (177.4)% | 143,081 | 87,858 | 62.9% | ||
| Changes in net realizable value of agricultural produce after harvest | (8,984) | 2,237 | n . a | (28,437) | 1,838 | n . a | ||
| Margin on Manufacturing and Agricultural Activities Before Operating Expenses | 89,110 | 34,524 | 158.1% | 434,836 | 415,387 | 4.7% | ||
| General and administrative expenses | (24,922) | (4,326) | 476.1% | (103,880) | (70,320) | 47.7% | ||
| Selling expenses | (37,971) | (24,222) | 56.8% | (153,482) | (129,092) | 18.9% | ||
| Other operating income, net | 21,329 | 32,517 | (34.4)% | 4,824 | 25,590 | (81.1)% | ||
| Profit from operations | 47,546 | 38,493 | 23.5% | 182,298 | 241,565 | (24.5)% | ||
| Finance income | 7,644 | 51,317 | (85.1)% | 16,808 | 157,100 | (89.3)% | ||
| Finance costs | (60,379) | (4,446) | 1,258.1% | (166,441) | (122,087) | 36.3% | ||
| Other financial results - Net gain / (loss) of inflation effects on the monetary items | 4,332 | 23,744 | n .a | 2,421 | 28,816 | n .a | ||
| Financial results, net | (48,403) | 70,615 | (168.5)% | (147,212) | 63,829 | (330.6)% | ||
| Profit before income tax | (857) | 109,108 | (100.8)% | 35,086 | 305,394 | (88.5)% | ||
| Income tax | 17,035 | (26,899) | (163.3)% | 57,015 | (78,673) | (172.5)% | ||
| Profit for the period | 16,178 | 82,209 | (80.3)% | 92,101 | 226,721 | (59.4)% | ||
| Statement of Cashflows | ||||||||
| --- | --- | --- | --- | --- | --- | --- | ||
| thousands | 4Q24 | 4Q23 | Chg % | 12M24 | 12M23 | Chg % | ||
| Cash flows from operating activities: | ||||||||
| Profit from operations | 16,178 | 82,209 | (80.3)% | 92,101 | 226,721 | (59.4)% | ||
| Adjustments for: | ||||||||
| Income tax (benefit) / expense | (17,035) | 26,899 | (163.3)% | (57,015) | 78,673 | (172.5)% | ||
| Depreciation | 54,998 | 44,755 | 22.9% | 223,843 | 198,288 | 12.9% | ||
| Amortization | 545 | 145 | 275.9% | 2,314 | 1,730 | 33.8% | ||
| Depreciation of right of use assets | 13,740 | 14,226 | (3.4)% | 77,867 | 74,085 | 5.1% | ||
| Gain from disposal of farmland and other assets | — | 3,192 | n . a | (6,050) | (6,334) | (4.5)% | ||
| Loss / (gain) from disposal of other property items | 2,886 | (2,919) | (198.9)% | 2,408 | (4,747) | n . a | ||
| Impairment due to fire | 223 | — | n . a | 14,259 | — | n . a | ||
| Equity settled shared-based compensation granted | 1,599 | 1,897 | (15.7)% | 6,680 | 8,581 | (22.2)% | ||
| Loss / (gain) from derivative financial instruments and forwards | 1,965 | (21,658) | (109.1)% | (1,153) | (8,605) | (86.6)% | ||
| Interest and other expense , net | 9,430 | 17,650 | (46.6)% | 68,315 | 16,428 | 315.8% | ||
| Initial recognition and changes in fair value of non harvested biological assets (unrealized) | 24,205 | 32,983 | (26.6)% | 18,301 | 17,663 | 3.6% | ||
| Changes in net realizable value of agricultural produce after harvest (unrealized) | 5,493 | (4,221) | (230.1)% | 7,327 | (2,599) | n . a | ||
| Provision and allowances | 173 | 775 | (77.7)% | (1,820) | 654 | n . a | ||
| Net gain from fair value adjustment of Investment property | 891 | (11,533) | n . a | 23,375 | (10,620) | n . a | ||
| Tax credit recognized | (19,486) | — | n . a | (19,486) | — | n . a | ||
| Net gain of inflation effects on the monetary items of the effect of inflation on monetary items | (4,332) | (23,744) | (81.8)% | (2,421) | (28,816) | (91.6)% | ||
| Foreign exchange gains, net | 32,518 | (56,976) | (157.1)% | 37,569 | (90,930) | n . a | ||
| Cash flow hedge – transfer from equity | 426 | (6,358) | (106.7)% | 28,650 | 36,863 | (22.3)% | ||
| Subtotal | 124,417 | 97,322 | 27.8% | 515,064 | 507,035 | 1.6% | ||
| Changes in operating assets and liabilities: | ||||||||
| (Increase)/Decrease in trade and other receivables | 82,693 | 71,156 | 16.2% | (68,299) | 3,683 | n . a | ||
| (Increase)/Decrease in inventories | 114,168 | 82,559 | 38.3% | 3,089 | (12,410) | n . a | ||
| (Increase)/Decrease in biological assets | (103,210) | (88,585) | 16.5% | (38,861) | (23,393) | 66.1% | ||
| (Increase)/Decrease in other assets | (1,680) | 618 | (371.8)% | (2,054) | (37) | 5,451.4% | ||
| (Increase)/Decrease in derivatives financial instruments | 1,349 | (391) | (445.0)% | 21,820 | (11,181) | n . a | ||
| (Increase)/Decrease in trade and other payables | (51,283) | 10,115 | (607.0)% | (100,346) | (43,925) | 128.4% | ||
| (Increase)/Decrease in payroll and social securities liabilities | (877) | 5,541 | (115.8)% | 4,093 | 15,674 | (73.9)% | ||
| (Increase)/Decrease in provisions for other liabilities | 209 | (25) | (936.0)% | 1,110 | 803 | 38.2% | ||
| Cash generated in operations | 165,786 | 178,310 | (7.0)% | 335,616 | 436,249 | (23.1)% | ||
| Income taxes paid | (2,322) | (602) | 285.7% | (7,285) | (1,342) | 442.8% | ||
| Net cash generated from operating activities | 163,464 | 177,708 | (8.0)% | 328,331 | 434,907 | (24.5)% |
All values are in US Dollars.
| Statement of Cashflows | ||||||
|---|---|---|---|---|---|---|
| thousands | 4Q24 | 4Q23 | Chg % | 12M24 | 12M23 | Chg % |
| Cash flows from investing activities | ||||||
| Acquisition of business, net of cash acquired | (261) | — | n . a | (16,184) | (3,193) | 406.9% |
| Purchases of property, plant and equipment | (57,058) | (56,753) | 0.5% | (260,211) | (241,623) | 7.7% |
| Purchase of cattle and non current biological assets planting cost | (483) | 259 | n . a | (1,928) | (511) | 277.3% |
| Purchases of intangible assets | (171) | 65 | n . a | (1,190) | (1,291) | (7.8)% |
| Interest received | 1,351 | (7,561) | n . a | 7,847 | 62,120 | (87.4)% |
| Proceeds from sale of property, plant and equipment | 1,442 | 1,366 | 5.6% | 2,332 | 4,094 | (43.0)% |
| Proceeds from sale of farmlands | — | (14,855) | n . a | 23,259 | 33,242 | (30.0)% |
| Acquisition of short term | (14,175) | (72,397) | (80.4)% | (47,886) | (106,897) | (55.2)% |
| Dispositions of short term investment | (15,155) | 49,498 | (130.6)% | 62,396 | 142,507 | (56.2)% |
| Net cash used in investing activities | (84,510) | (100,378) | (15.8)% | (231,565) | (111,552) | 107.6% |
| Cash flows from financing activities | ||||||
| Proceeds from EQ settled share-based compensation exercise | 1 | 176 | (99.4)% | 99 | 214 | (53.7)% |
| Interest paid | (5,565) | (22,660) | (75.4)% | (24,629) | (55,476) | (55.6)% |
| Proceeds from long-term borrowings | 32,163 | (12,161) | (364.5)% | 126,757 | 7,739 | 1537.9% |
| Payment of long-term borrowings | (9,022) | (12,308) | (26.7)% | (105,749) | (24,105) | 338.7% |
| Proceeds from short-term borrowings | 79,965 | (31,765) | (351.7)% | 169,901 | 448,532 | (62.1)% |
| Payment of short-term borrowings | (118,287) | (54,466) | 117.2% | (239,947) | (420,276) | (42.9)% |
| Payment of derivatives financial instruments | 1,250 | (32) | n . a | 669 | (32) | n . a |
| Lease Payments | (17,722) | (22,446) | (21.0)% | (98,478) | (104,097) | (5.4)% |
| Purchase of own shares | (8,608) | (7,230) | 19.1% | (66,887) | (26,242) | 154.9% |
| Dividends paid to non-controlling interest | (360) | — | n . a | (736) | — | n . a |
| Dividends to shareholders | (17,500) | (17,500) | —% | (35,000) | (35,000) | —% |
| Net cash used in financing activities | (63,685) | (180,392) | (64.7)% | (274,000) | (208,743) | 31.3% |
| Net increase / (decrease) in cash and cash equivalents | 15,269 | (103,062) | (114.8)% | (177,234) | 114,612 | (254.6)% |
| Cash and cash equivalents at beginning of year | 198,255 | 349,812 | (43.3)% | 339,781 | 230,653 | 47.3% |
| Exchange gains on cash and cash equivalents | (2,280) | 93,031 | (102.5)% | 48,697 | (5,484) | (988.0)% |
| Cash and cash equivalents at end of year | 211,244 | 339,781 | (37.8)% | 211,244 | 339,781 | (37.8)% |
All values are in US Dollars.
| Combined effect of IAS 29 and IAS 21 of the Argentine subsidiaries over: | 4Q24 | 4Q23 | 12M24 | 12M23 | |
|---|---|---|---|---|---|
| Operating activities | (a) | (35,553) | (41,496) | (102,797) | (16,383) |
| Acquisition of short term investment | (b) | (2,034) | — | (2,034) | — |
| Investing activities | (c) | 721 | (39,809) | (7,168) | (41,179) |
| Interest paid | (d) | 1,966 | (9,908) | 9,395 | (8,253) |
| Financing activities | (e) | 28,929 | (9,296) | 71,386 | 45,933 |
| Exchange rate changes and inflation on cash and cash equivalents | (f) | 5,903 | 90,601 | 38,579 | 11,629 |
(*) Includes 238 in 2024 related to gains on bond arbitrage transactions (54,687 in 2023) of which the combined effect of IAS 29 and 21 of the Argentine subsidiaries is (105) for 2024 and 30,544 in 2023.
| Statement of Financial position | |||
|---|---|---|---|
| $ thousands | 12M24 | 12M23 | Chg % |
| ASSETS | |||
| Non-Current Assets | |||
| Property, plant and equipment | 1,548,589 | 1,549,565 | (0.1)% |
| Right of use assets | 373,846 | 406,713 | (8.1)% |
| Investment property | 33,542 | 33,364 | 0.5% |
| Intangible assets, net | 37,231 | 27,519 | 35.3% |
| Biological assets | 43,418 | 23,706 | 83.2% |
| Deferred income tax assets | 15,507 | 9,777 | 58.6% |
| Trade and other receivables, net | 38,510 | 39,060 | (1.4)% |
| Derivative financial instruments | 5,482 | 18,001 | (69.5)% |
| Other Assets | 3,761 | 1,515 | 148.3% |
| Total Non-Current Assets | 2,099,886 | 2,109,220 | (0.4)% |
| Current Assets | |||
| Biological assets | 250,527 | 204,331 | 22.6% |
| Inventories | 289,664 | 256,051 | 13.1% |
| Trade and other receivables, net | 213,356 | 179,055 | 19.2% |
| Derivative financial instruments | 4,114 | 13,819 | (70.2)% |
| Short-term investment | 46,097 | 62,637 | (26.4)% |
| Cash and cash equivalents | 211,244 | 339,781 | (37.8)% |
| Total Current Assets | 1,015,002 | 1,055,674 | (3.9)% |
| TOTAL ASSETS | 3,114,888 | 3,164,894 | (1.6)% |
| SHAREHOLDERS EQUITY | |||
| Capital and reserves attributable to equity holders of the parent | |||
| Share capital | 167,073 | 167,073 | —% |
| Share premium | 659,399 | 743,810 | (11.3)% |
| Cumulative translation adjustment | (413,757) | (603,861) | (31.5)% |
| Equity-settled compensation | 17,264 | 18,654 | (7.5)% |
| Cash Flow Hedge | — | (17,124) | (100.0)% |
| Other reserves | 151,261 | 150,677 | 0.4% |
| Treasury shares | (16,989) | (8,062) | 110.7% |
| Revaluation surplus | 245,261 | 317,598 | (22.8)% |
| Reserve from the sale of minority interests in subsidiaries | 41,574 | 41,574 | —% |
| Retained earnings | 518,064 | 418,789 | 23.7% |
| Equity attributable to equity holders of the parent | 1,369,150 | 1,229,128 | 11.4% |
| Non controlling interest | 38,951 | 36,520 | 6.7% |
| TOTAL SHAREHOLDERS EQUITY | 1,408,101 | 1,265,648 | 11.3% |
| LIABILITIES | |||
| Non-Current Liabilities | |||
| Trade and other payables | 767 | 1,008 | (23.9)% |
| Borrowings | 680,005 | 697,843 | (2.6)% |
| Lease liabilities | 287,679 | 325,569 | (11.6)% |
| Deferred income tax liabilities | 330,336 | 376,331 | (12.2)% |
| Payrroll and Social liabilities | 1,454 | 1,570 | (7.4)% |
| Derivatives financial instruments | 3,983 | — | n. a |
| Provisions for other liabilities | 2,244 | 2,871 | (21.8)% |
| Total Non-Current Liabilities | 1,306,468 | 1,405,192 | (7.0)% |
| Current Liabilities | |||
| Trade and other payables | 206,907 | 190,730 | 8.5% |
| Current income tax liabilities | 3,471 | 5,023 | (30.9)% |
| Payrroll and Social liabilities | 32,735 | 37,357 | (12.4)% |
| Borrowings | 99,551 | 207,106 | (51.9)% |
| Lease liabilities | 54,351 | 52,941 | 2.7% |
| Derivative financial instruments | 1,796 | 169 | 962.7% |
| Provisions for other liabilities | 1,508 | 728 | 107.1% |
| Total Current Liabilities | 400,319 | 494,054 | (19.0)% |
| TOTAL LIABILITIES | 1,706,787 | 1,899,246 | (10.1)% |
| TOTAL SHAREHOLDERS EQUITY AND LIABILITIES | 3,114,888 | 3,164,894 | (1.6)% |
39
Document
Adecoagro S.A.
Consolidated Financial Statements as of December 31, 2024 and 2023 and for the years ended December 31, 2024, 2023 and 2022
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Adecoagro S.A.
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of financial position of Adecoagro S.A. and its subsidiaries (the “Company”) as of December 31, 2024 and 2023, and the related consolidated statements of income, comprehensive income, changes in shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2024, including the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024 in conformity with IFRS Accounting Standards as issued by the International Accounting Standards Board.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Valuation of Level 3 Biological Assets
As described in Notes 16, 32 (b) and 33.11 to the consolidated financial statements, the total aggregated fair value of the Company’s level 3 biological assets related to sown land – crops, sown land – rice and sown land – sugarcane was US$ 239 million as of December 31, 2024. The fair value of these level 3 biological assets is determined by management using a discounted cash flow model which requires the input of highly subjective assumptions including significant unobservable inputs. The discounted cash flow model included significant judgements and assumptions relating to management’s cash flow projections
F-2
including future market prices, estimated yields at the point of harvest, estimated production cycle, future costs of harvesting and other costs and estimated discount rate.
The principal considerations for our determination that performing procedures relating to the valuation of the level 3 biological assets related to sown land – crops, sown land – rice and sown land – sugarcane is a critical audit matter are (i) the significant judgment by management when developing the fair value measurement; (ii) a high degree of auditor judgement, subjectivity, and effort in performing procedures and evaluating management’s cash flow projections and significant assumptions related to future market prices, estimated yields at the point of harvest, estimated production cycle, future costs of harvesting and other costs and estimated discount rate; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the valuation of the level 3 biological assets related to sown land – crops, sown land – rice and sown land – sugarcane. These procedures also included, among others evaluating the significant assumptions and methods used by management in developing the fair value measurement including future market prices, estimated yields at the point of harvest, estimated production cycle, future costs of harvesting and other costs and estimated discount rate. Evaluating management’s assumptions involved evaluating whether these assumptions were reasonable considering the consistency with external information and past records and testing management’s sensitivity analysis of certain significant assumptions. Professionals with specialized skill and knowledge were used to assist in the evaluation of certain significant assumptions, including estimated yields at the point of harvest and estimated production cycle.
Net Assets Impairment Assessment – Farming and Sugar, Ethanol and Energy Business
As described in Notes 32 and 33.10 to the consolidated financial statements, the Company´s net assets balance was US$ 1.4 billion as of December 31, 2024. At each statement of financial position date, management reviews the carrying amount of its net assets to determine whether there is any indication that those assets may be impaired. If any such indication exists, such as when the carrying value of the net assets is higher than the market capitalization of the Company, the recoverable amount of the net assets is estimated using the value-in-use in order to determine if there is a potential impairment. The value-in-use is estimated by management using a discounted cash flow model. Management´s cash flow projections for the Farming and Sugar, Ethanol and Energy business included significant judgments and assumptions related to perpetuity growth rate, projected operating income, and discount rate.
The principal consideration for our determination that performing procedures relating to the net assets impairment assessment of the Farming and Sugar, Ethanol and Energy business is a critical audit matter are (i) the significant judgment by management when developing the value-in-use estimate of the Farming and Sugar, Ethanol and Energy business; (ii) a high degree of auditor judgement, subjectivity, and effort in performing procedures and evaluating management´s significant assumptions related to perpetuity growth rates, projected operating income, and discounted rate; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management´s net assets impairment assessment, including controls over the valuation of the Farming and Sugar, Ethanol and Energy business. These procedures also included, among others (i) testing management´s process for developing the value-in-use estimate; (ii) evaluating the appropriateness of the discounted cash flow model used by management; (iii) testing the completeness and accuracy of underlying data used in the discounted cash flow model; and (iv) evaluating the reasonableness of the significant assumptions used by management related to perpetuity growth rates, projected operating income, and discount rate. Evaluating management’s assumptions related to perpetuity growth rates and projected operating income involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the Farming and Sugar,
F-3
Ethanol and Energy business; (ii) the consistency with external market and industry data; and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the discounted cash flow model and (ii) the reasonableness of the discount rate assumption.
/s/ PRICE WATERHOUSE & CO. S.R.L.
/s/ Eduardo Alfredo Loiácono (Partner)
Eduardo Alfredo Loiácono
Buenos Aires, Argentina.
March 13, 2025.
We have served as the Company’s auditor since 2008.
F-4
Legal information
Name as specified in charter: Adecoagro S.A.
Legal address: 28, Boulevard F.W. Raiffeisen, L-2411, Luxembourg
Company activity: Agricultural and agro-industrial
Date of registration: June 11, 2010
Expiration of company charter: No term defined
Number of register (RCS Luxembourg): B153.681
Issued Capital Stock: 111,381,815 common shares
Outstanding Capital stock: 100,053,777 common shares
Treasury shares: 11,328,038 common shares
F-5
Adecoagro S.A.
Consolidated Statements of Income
for the years ended December 31, 2024, 2023 and 2022
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
| Note | 2024 | 2023 | 2022 | |
|---|---|---|---|---|
| Revenue | 4 | 1,518,907 | 1,298,871 | 1,347,724 |
| Cost of revenue | 5 | (1,198,715) | (973,180) | (1,075,747) |
| Initial recognition and changes in fair value of biological assets and agricultural produce | 16 | 143,081 | 87,858 | 215,941 |
| Changes in net realizable value of agricultural produce after harvest | (28,437) | 1,838 | (22,293) | |
| Margin on manufacturing and agricultural activities before operating expenses | 434,836 | 415,387 | 465,625 | |
| General and administrative expenses | 6 | (103,880) | (70,320) | (84,287) |
| Selling expenses | 6 | (153,482) | (129,092) | (143,515) |
| Other operating income, net | 8 | 4,824 | 25,590 | 1,870 |
| Bargain purchase gain on acquisition | 21 | — | — | 10,107 |
| Profit from operations | 182,298 | 241,565 | 249,800 | |
| Finance income | 9 | 16,808 | 157,100 | 25,308 |
| Finance costs | 9 | (166,441) | (122,087) | (137,600) |
| Other financial results - Net gain / (loss) of inflation effects on monetary items | 9 | 2,421 | 28,816 | (2,144) |
| Financial results, net | 9 | (147,212) | 63,829 | (114,436) |
| Profit before income tax | 35,086 | 305,394 | 135,364 | |
| Income tax benefit / (expense) | 10 | 57,015 | (78,673) | (26,758) |
| Profit for the year | 92,101 | 226,721 | 108,606 | |
| Attributable to: | ||||
| Equity holders of the parent | 92,340 | 226,291 | 108,138 | |
| Non-controlling interest | (239) | 430 | 468 | |
| Earnings per share attributable to the equity holders of the parent during the year: | ||||
| Basic earnings per share | 11 | 0.900 | 2.113 | 0.982 |
| Diluted earnings per share | 11 | 0.896 | 2.105 | 0.979 |
The accompanying notes are an integral part of these consolidated financial statements.
F- 6
Adecoagro S.A.
Consolidated Statements of Comprehensive Income
for the years ended December 31, 2024, 2023 and 2022
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| Profit for the year | 92,101 | 226,721 | 108,606 |
| Other comprehensive income: | |||
| - Items that may be reclassified subsequently to profit or loss: | |||
| Exchange differences on translation of foreign operations | 396,416 | (222,166) | 98,741 |
| Cash flow hedge, net of income tax | 17,124 | 27,748 | 16,060 |
| - Items that will not be reclassified to profit or loss: | |||
| Revaluation surplus net of income tax (Note 12) | (268,415) | 122,793 | (46,903) |
| Other comprehensive income / (loss) for the year | 145,125 | (71,625) | 67,898 |
| Total comprehensive income for the year | 237,226 | 155,096 | 176,504 |
| Attributable to: | |||
| Equity holders of the parent | 234,166 | 155,044 | 174,705 |
| Non-controlling interest | 3,060 | 52 | 1,799 |
The accompanying notes are an integral part of these consolidated financial statements.
F- 7
Adecoagro S.A.
Consolidated Statements of Financial Position
as of December 31, 2024 and 2023
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
| Note | 2024 | 2023 | |
|---|---|---|---|
| ASSETS | |||
| Non-Current Assets | |||
| Property, plant and equipment, net | 12 | 1,548,589 | 1,549,565 |
| Right of use assets | 13 | 373,846 | 406,713 |
| Investment property | 14 | 33,542 | 33,364 |
| Intangible assets, net | 15 | 37,231 | 27,519 |
| Biological assets | 16 | 43,418 | 23,706 |
| Deferred income tax assets | 10 | 15,507 | 9,777 |
| Trade and other receivables, net | 18 | 38,510 | 39,060 |
| Derivative financial instruments | 17 | 5,482 | 18,001 |
| Other assets | 3,761 | 1,515 | |
| Total Non-Current Assets | 2,099,886 | 2,109,220 | |
| Current Assets | |||
| Biological assets | 16 | 250,527 | 204,331 |
| Inventories | 19 | 289,664 | 256,051 |
| Trade and other receivables, net | 18 | 213,356 | 179,055 |
| Derivative financial instruments | 17 | 4,114 | 13,819 |
| Short-term investments | 17 | 46,097 | 62,637 |
| Cash and cash equivalents | 20 | 211,244 | 339,781 |
| Total Current Assets | 1,015,002 | 1,055,674 | |
| TOTAL ASSETS | 3,114,888 | 3,164,894 | |
| SHAREHOLDERS EQUITY | |||
| Capital and reserves attributable to equity holders of the parent | |||
| Share capital | 22 | 167,073 | 167,073 |
| Share premium | 22 | 659,399 | 743,810 |
| Cumulative translation adjustment | (413,757) | (603,861) | |
| Equity-settled compensation | 17,264 | 18,654 | |
| Cash flow hedge | 2 | — | (17,124) |
| Other reserves | 151,261 | 150,677 | |
| Treasury shares | (16,989) | (8,062) | |
| Revaluation surplus | 245,261 | 317,598 | |
| Reserve from the sale of non-controlling interests in subsidiaries | 41,574 | 41,574 | |
| Retained earnings | 518,064 | 418,789 | |
| Equity attributable to equity holders of the parent | 1,369,150 | 1,229,128 | |
| Non-controlling interest | 38,951 | 36,520 | |
| TOTAL SHAREHOLDERS EQUITY | 1,408,101 | 1,265,648 | |
| LIABILITIES | |||
| Non-Current Liabilities | |||
| Trade and other payables | 25 | 767 | 1,008 |
| Borrowings | 26 | 680,005 | 697,843 |
| Lease liabilities | 27 | 287,679 | 325,569 |
| Deferred income tax liabilities | 10 | 330,336 | 376,331 |
| Payroll and social security liabilities | 28 | 1,454 | 1,570 |
| Derivatives financial instruments | 18 | 3,983 | — |
| Provisions for other liabilities | 29 | 2,244 | 2,871 |
| Total Non-Current Liabilities | 1,306,468 | 1,405,192 | |
| Current Liabilities | |||
| Trade and other payables | 25 | 206,907 | 190,730 |
| Current income tax liabilities | 3,471 | 5,023 | |
| Payroll and social security liabilities | 28 | 32,735 | 37,357 |
| Borrowings | 26 | 99,551 | 207,106 |
| Lease liabilities | 27 | 54,351 | 52,941 |
| Derivative financial instruments | 17 | 1,796 | 169 |
| Provisions for other liabilities | 29 | 1,508 | 728 |
| Total Current Liabilities | 400,319 | 494,054 | |
| TOTAL LIABILITIES | 1,706,787 | 1,899,246 | |
| TOTAL SHAREHOLDERS EQUITY AND LIABILITIES | 3,114,888 | 3,164,894 |
The accompanying notes are an integral part of these consolidated financial statements.
F- 8
Adecoagro S.A.
Consolidated Statements of Changes in Shareholders’ Equity
for the years ended December 31, 2024, 2023 and 2022
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
| Attributable to equity holders of the parent | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Share capital<br>(Note 22) | Share<br>premium<br>(Note 22) | Cumulative<br>translation<br>adjustment | Equity-settled<br>compensation | Cash flow hedge | Other Reserves | Treasury<br>shares | Revaluation surplus | Reserve from the sale of non-controlling<br>interests in subsidiaries | Retained<br>earnings | Subtotal | Non-<br>controlling<br>interest | Total<br>shareholders’<br>equity | |
| Balance at January 1, 2022 | 183,573 | 851,060 | (514,609) | 16,073 | (60,932) | 106,172 | (16,909) | 289,982 | 41,574 | 115,735 | 1,011,719 | 36,111 | 1,047,830 |
| Profit for the year | — | — | — | — | — | — | — | — | — | 108,138 | 108,138 | 468 | 108,606 |
| Other comprehensive income: | |||||||||||||
| –Items that may be reclassified subsequently to profit or loss: | |||||||||||||
| Exchange differences on translating foreign operations | — | — | 58,580 | — | — | — | — | 35,367 | — | — | 93,947 | 4,794 | 98,741 |
| Cash flow hedge (*) | — | — | — | — | 16,060 | — | — | — | — | — | 16,060 | — | 16,060 |
| –Items that will not be reclassified subsequently to profit or loss: | |||||||||||||
| Revaluation surplus (**) | — | — | — | — | — | — | — | (43,440) | — | — | (43,440) | (3,463) | (46,903) |
| Other comprehensive income for the year | — | — | 58,580 | — | 16,060 | — | — | (8,073) | — | — | 66,567 | 1,331 | 67,898 |
| Total comprehensive income for the year | — | — | 58,580 | — | 16,060 | — | — | (8,073) | — | 108,138 | 174,705 | 1,799 | 176,504 |
| Reduction of issued share capital of the company (Note22) | (16,500) | — | — | — | — | — | 16,500 | — | — | — | — | — | — |
| Reserves for the benefit of government grants (1) | — | — | — | — | — | 21,531 | — | — | — | (21,531) | — | — | — |
| Employee share options (Note 23) | |||||||||||||
| - Exercised | — | 2,432 | — | (778) | — | — | 470 | — | — | — | 2,124 | — | 2,124 |
| Restricted shares (Note 23): | |||||||||||||
| - Value of employee services | — | — | — | 7,563 | — | — | — | — | — | — | 7,563 | — | 7,563 |
| - Vested | — | 4,647 | — | (4,066) | — | 1,243 | — | — | — | — | 1,824 | — | 1,824 |
| - Forfeited | — | — | — | — | — | 85 | (85) | — | — | — | — | — | — |
| - Granted | — | — | — | — | — | (2,106) | 2,106 | — | — | — | — | — | — |
| Purchase of own shares (Note 22) | — | (29,970) | — | — | — | — | (6,874) | — | — | — | (36,844) | — | (36,844) |
| Dividends to shareholders (Note 22) | — | (35,000) | — | — | — | — | — | — | — | — | (35,000) | — | (35,000) |
| Dividends to non-controlling interest | — | — | — | — | — | — | — | — | — | — | — | (358) | (358) |
| Balance at December 31, 2022 | 167,073 | 793,169 | (456,029) | 18,792 | (44,872) | 126,925 | (4,792) | 281,909 | 41,574 | 202,342 | 1,126,091 | 37,552 | 1,163,643 |
(*) Net of ($7,337) of income tax.
(**) Net of ($25,307) of Income tax.
(1) Correspond to the presumed credit of ICMS (Imposto sobre Circulação de Mercadorias e Prestação de Serviços) over the sale values in our Sugar, ethanol and energy business. (see Note 24).
The accompanying notes are an integral part of these consolidated financial statements.
F- 9
Adecoagro S.A.
Consolidated Statements of Changes in Shareholders’ Equity
for the years ended December 31, 2024, 2023 and 2022
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
| Attributable to equity holders of the parent | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Share capital<br>(Note 22) | Share<br>premium<br>(Note 22) | Cumulative<br>translation<br>adjustment | Equity-settled<br>compensation | Cash flow<br>hedge | Other Reserves | Treasury<br>shares | Revaluation surplus | Reserve from the sale of non-controlling interests in subsidiaries | Retained<br>earnings | Subtotal | Non-<br>controlling<br>interest | Total<br>shareholders’<br>equity | |
| Balance at January 1, 2023 | 167,073 | 793,169 | (456,029) | 18,792 | (44,872) | 126,925 | (4,792) | 281,909 | 41,574 | 202,342 | 1,126,091 | 37,552 | 1,163,643 |
| Profit for the year | — | — | — | — | — | — | — | — | — | 226,291 | 226,291 | 430 | 226,721 |
| Other comprehensive income: | |||||||||||||
| –Items that may be reclassified subsequently to profit or loss: | |||||||||||||
| Exchange differences on translating foreign operations | — | — | (147,832) | — | — | — | — | (63,523) | — | — | (211,355) | (10,811) | (222,166) |
| Cash flow hedge (*) | — | — | — | — | 27,748 | — | — | — | — | — | 27,748 | — | 27,748 |
| –Items that will not be reclassified subsequently to profit or loss: | |||||||||||||
| Revaluation surplus (**) | — | — | — | — | — | — | — | 112,360 | — | — | 112,360 | 10,433 | 122,793 |
| Reserve of the revaluation surplus derived from the disposals of assets (***) | — | — | — | — | — | — | — | (13,148) | — | 13,148 | — | — | — |
| Other comprehensive (loss) / income for the year | — | — | (147,832) | — | 27,748 | — | — | 35,689 | — | 13,148 | (71,247) | (378) | (71,625) |
| Total comprehensive income for the year | — | — | (147,832) | — | 27,748 | — | — | 35,689 | — | 239,439 | 155,044 | 52 | 155,096 |
| Reserves for the benefit of government grants (1) | — | — | — | — | — | 22,992 | — | — | — | (22,992) | — | — | — |
| Employee share options (Note 23): | |||||||||||||
| - Exercised | — | 236 | — | (77) | — | — | 55 | — | — | — | 214 | — | 214 |
| Restricted shares and restricted units (Note 23): | |||||||||||||
| - Value of employee services | — | — | — | 6,084 | — | — | — | — | — | — | 6,084 | — | 6,084 |
| - Vested | — | 7,528 | — | (6,145) | — | 1,554 | — | — | — | — | 2,937 | — | 2,937 |
| - Forfeited | — | — | — | — | — | 30 | (30) | — | — | — | — | — | — |
| - Granted | — | — | — | — | — | (824) | 824 | — | — | — | — | — | — |
| Purchase of own shares (Note 22) | — | (22,123) | — | — | — | — | (4,119) | — | — | — | (26,242) | — | (26,242) |
| Dividends to shareholders (Note 22) | — | (35,000) | — | — | — | — | — | — | — | — | (35,000) | — | (35,000) |
| Dividends to non-controlling interest | — | — | — | — | — | — | — | — | — | — | — | (1,084) | (1,084) |
| Balance at December 31, 2023 | 167,073 | 743,810 | (603,861) | 18,654 | (17,124) | 150,677 | (8,062) | 317,598 | 41,574 | 418,789 | 1,229,128 | 36,520 | 1,265,648 |
(*) Net of $(8,498) of Income tax.
(**) Net of $62,988 of Income tax.
(***) Net of $10,492 of Income tax.
(1) Correspond to the presumed credit of ICMS (Imposto sobre Circulação de Mercadorias e Prestação de Serviços) over the sale values in our Sugar, ethanol and energy business. (see Note 24).
The accompanying notes are an integral part of these consolidated financial statements.
F- 10
Adecoagro S.A.
Consolidated Statements of Changes in Shareholders’ Equity
for the years ended December 31, 2024, 2023 and 2022
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
| Attributable to equity holders of the parent | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Share capital<br>(Note 22) | Share<br>premium<br>(Note 22) | Cumulative<br>translation<br>adjustment | Equity-settled<br>compensation | Cash flow<br>hedge | Other reserves | Treasury<br>shares | Revaluation surplus | Reserve from the sale of non-controlling interests in subsidiaries | Retained<br>earnings | Subtotal | Non-<br>controlling<br>interest | Total<br>shareholders’<br>equity | |
| Balance at January 1, 2024 | 167,073 | 743,810 | (603,861) | 18,654 | (17,124) | 150,677 | (8,062) | 317,598 | 41,574 | 418,789 | 1,229,128 | 36,520 | 1,265,648 |
| Profit for the year | — | — | — | — | — | — | — | — | — | 92,340 | 92,340 | (239) | 92,101 |
| Other comprehensive income: | |||||||||||||
| - Items that may be reclassified subsequently to profit or loss: | |||||||||||||
| Exchange differences on translating foreign operations | — | — | 190,104 | — | — | — | — | 180,252 | — | — | 370,356 | 26,060 | 396,416 |
| Cash flow hedge (*) | — | — | — | — | 17,124 | — | — | — | — | — | 17,124 | — | 17,124 |
| - Items will not be reclassified to profit or loss: | |||||||||||||
| Revaluation surplus (**) | — | — | — | — | — | — | — | (245,654) | — | — | (245,654) | (22,761) | (268,415) |
| Reserve of the revaluation surplus derived from the disposals of assets (***) | — | — | — | — | — | — | — | (6,935) | — | 6,935 | — | — | — |
| Other comprehensive income/ (loss) for the year | — | — | 190,104 | — | 17,124 | — | — | (72,337) | — | 6,935 | 141,826 | 3,299 | 145,125 |
| Total comprehensive income/ (loss) for the year | — | — | 190,104 | — | 17,124 | — | — | (72,337) | — | 99,275 | 234,166 | 3,060 | 237,226 |
| Reserves for the benefit of government grants (1) | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Employee share options (Note 23): | |||||||||||||
| - Exercised | — | 115 | — | (38) | — | — | 22 | — | — | — | 99 | — | 99 |
| Restricted shares (Note 23): | |||||||||||||
| - Value of employee services | — | — | — | 4,759 | — | — | — | — | — | — | 4,759 | — | 4,759 |
| - Vested | — | 7,540 | — | (6,111) | — | 1,456 | — | — | — | — | 2,885 | — | 2,885 |
| - Forfeited | — | — | — | — | — | 34 | (34) | — | — | — | — | — | — |
| - Granted | — | — | — | — | — | (906) | 906 | — | — | — | — | — | — |
| Purchase of own shares (Note 22) | — | (57,066) | — | — | — | — | (9,821) | — | — | — | (66,887) | — | (66,887) |
| Dividends to shareholders (Note 22) | — | (35,000) | — | — | — | — | — | — | — | — | (35,000) | — | (35,000) |
| Dividends to non-controlling interest | — | — | — | — | — | — | — | — | — | — | — | (629) | (629) |
| Balance at December 31, 2024 | 167,073 | 659,399 | (413,757) | 17,264 | — | 151,261 | (16,989) | 245,261 | 41,574 | 518,064 | 1,369,150 | 38,951 | 1,408,101 |
(*) Net of $(7,092) of Income tax.
(**) Net of $144,971 of Income tax.
(***) Net of $2,265 of Income tax.
(1) Correspond to the presumed credit of ICMS (Imposto sobre Circulação de Mercadorias e Prestação de Serviços) over the sale values in our Sugar, ethanol and energy business. (see Note 24).
The accompanying notes are an integral part of these consolidated financial statements.
F- 11
Adecoagro S.A.
Consolidated Statements of Cash Flows
for the years ended December 31, 2024, 2023 and 2022
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
| Note | 2024 | 2023 | 2022 | |
|---|---|---|---|---|
| Cash flows from operating activities: | ||||
| Profit for the year | 92,101 | 226,721 | 108,606 | |
| Adjustments for: | ||||
| Income tax (benefit) / expense | 10 | (57,015) | 78,673 | 26,758 |
| Depreciation | 12 | 223,843 | 198,288 | 188,775 |
| Amortization | 15 | 2,314 | 1,730 | 2,265 |
| Depreciation of right of use assets | 13 | 77,867 | 74,085 | 63,339 |
| Loss / (gain) from the disposal of other property items | 8 | 2,408 | (4,747) | (3,718) |
| Gain from the sale of farmland and other assets | 8 | (6,050) | (6,334) | — |
| Impairment due to fire | 8 | 14,259 | — | — |
| Bargain purchase gain on acquisition | — | — | (10,107) | |
| Net loss / (gain) from the fair value adjustment of Investment properties | 8 | 23,375 | (10,620) | 2,961 |
| Equity settled share-based compensation granted | 7 | 6,680 | 8,581 | 10,227 |
| (Gain) / loss from derivative financial instruments and forwards | 8, 9 | (1,153) | (8,605) | 13,685 |
| Interest, finance cost related to lease liabilities and other financial expense, net | 9 | 68,315 | 16,428 | 83,130 |
| Initial recognition and changes in fair value of non-harvested biological assets (unrealized) | 18,301 | 17,663 | (44,935) | |
| Changes in net realizable value of agricultural produce after harvest (unrealized) | 7,327 | (2,599) | (72) | |
| Provision and allowances | (1,820) | 654 | 999 | |
| Tax credits recognized | 8 | (19,486) | — | — |
| Net (gain) / loss of inflation effects on the monetary items | 9 | (2,421) | (28,816) | 2,144 |
| Foreign exchange losses / (gain), net | 9 | 37,569 | (90,930) | (19,278) |
| Cash flow hedge – transfer from equity | 9 | 28,650 | 36,863 | 40,195 |
| Subtotal | 515,064 | 507,035 | 464,974 | |
| Changes in operating assets and liabilities: | ||||
| (Increase) / decrease in trade and other receivables | (68,299) | 3,683 | (60,753) | |
| Decrease / (increase) in inventories | 3,089 | (12,410) | 45,437 | |
| Increase in biological assets | (38,861) | (23,393) | (3,686) | |
| Increase in other assets | (2,054) | (37) | (1,056) | |
| Decrease / (increase) in derivative financial instruments | 21,820 | (11,181) | (9,661) | |
| Decrease in trade and other payables | (100,346) | (43,925) | (64,502) | |
| Increase in payroll and social security liabilities | 4,093 | 15,674 | 7,681 | |
| Increase / (decrease) in provisions for other liabilities | 1,110 | 803 | (290) | |
| Net cash generated from operating activities before taxes paid | 335,616 | 436,249 | 378,144 | |
| Income tax paid | (7,285) | (1,342) | (8,118) | |
| Net cash generated from operating activities | (a) | 328,331 | 434,907 | 370,026 |
The accompanying notes are an integral part of these consolidated financial statements.
F- 12
Adecoagro S.A.
Consolidated Statements of Cash Flows (Continued)
for the years ended December 31, 2024, 2023 and 2022
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
| Note | 2024 | 2023 | 2022 | |
|---|---|---|---|---|
| Cash flows from investing activities: | ||||
| Acquisition of subsidiaries net of cash and cash equivalents acquired | 21 | (16,184) | (3,193) | 1,120 |
| Purchases of property, plant and equipment | 12 | (260,211) | (241,623) | (217,776) |
| Purchase of cattle and non-current biological assets | 16 | (1,928) | (511) | (9,096) |
| Purchases of intangible assets | 15 | (1,190) | (1,291) | (3,350) |
| Interest received and others (*) | 9 | 7,847 | 62,120 | 5,199 |
| Proceeds from disposal of other property items | 2,332 | 4,094 | 2,770 | |
| Proceeds from the sale of farmland and other assets | 21 | 23,259 | 33,242 | 9,879 |
| Proceeds from the sale of subsidiary | 21 | — | — | 10,000 |
| Acquisition of short-term investment | 17 (b) | (47,886) | (106,897) | (98,010) |
| Disposals of short-term investment | 17 | 62,396 | 142,507 | — |
| Net cash used in investing activities | (c) | (231,565) | (111,552) | (299,264) |
| Cash flows from financing activities: | ||||
| Proceeds from long-term borrowings | 26 | 126,757 | 7,739 | 41,082 |
| Payments of long-term borrowings | 26 | (105,749) | (24,105) | (14,012) |
| Proceeds from short-term borrowings | 26 | 169,901 | 448,532 | 347,928 |
| Payments of short-term borrowings | 26 | (239,947) | (420,276) | (192,648) |
| Interest paid | (d) | (24,629) | (55,476) | (44,788) |
| Proceeds from exercise of employee share options | 99 | 214 | 2,124 | |
| Collections / (payments) of derivatives financial instruments | 669 | (32) | 118 | |
| Lease payments | (98,478) | (104,097) | (91,175) | |
| Purchase of own shares | (66,887) | (26,242) | (36,844) | |
| Dividends paid to non-controlling interest | (736) | — | (358) | |
| Dividends paid to shareholders | (35,000) | (35,000) | (35,000) | |
| Net cash used in financing activities | (e) | (274,000) | (208,743) | (23,573) |
| Net (decrease) / increase in cash and cash equivalents | (177,234) | 114,612 | 47,189 | |
| Cash and cash equivalents at beginning of year | 20 | 339,781 | 230,653 | 199,766 |
| Effect of exchange rate changes and inflation on cash and cash equivalents | (f) | 48,697 | (5,484) | (16,302) |
| Cash and cash equivalents at end of year | 20 | 211,244 | 339,781 | 230,653 |
Combined effect of IAS 29 and IAS 21 of the Argentine subsidiaries over:
| 2024 | 2023 | 2022 | ||
|---|---|---|---|---|
| Operating activities | (a) | (102,797) | (16,383) | (38,043) |
| Acquisition of short term investment | (b) | (2,034) | — | — |
| Investing activities | (c) | (7,168) | (41,179) | (83) |
| Interest paid | (d) | 9,395 | (8,253) | 77 |
| Financing activities | (e) | 71,386 | 45,933 | 45,359 |
| Effects of exchange rate changes and inflation on cash and cash equivalents | (f) | 38,579 | 11,629 | (7,233) |
(*) Includes 238 in 2024 related to gains on bond arbitrage transactions (54,687 in 2023 and nil in 2022) of which the combined effect of IAS 29 and 21 of the Argentine subsidiaries is (105) for 2024, 30,544 in 2023 and nil 2022.
For non-cash transactions, see Note 13 for Right of Use Assets and related to acquisition of subsidiaries, see Note 21.
The accompanying notes are an integral part of these consolidated financial statements.
F- 13
Adecoagro S.A.
Notes to the Consolidated Financial Statements
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
1. General information
Adecoagro S.A. (the "Company" or "Adecoagro") is the Group’s ultimate parent company and is a société anonyme (stock corporation) organized under the laws of the Grand Duchy of Luxembourg. Adecoagro is a holding company primarily engaged through its operating subsidiaries in agricultural and agro-industrial activities. The Company and its operating subsidiaries are collectively referred to hereinafter as the "Group." The Group’s activities are carried out through two major lines of business, namely, Farming and Sugar, Ethanol and Energy. The Farming line of business is further comprised of three reportable segments, which are described in detail in Note 3 to these Consolidated Financial Statements.
Adecoagro is a Public Company listed in the New York Stock Exchange (NYSE) as a foreign registered company under the ticker symbol of AGRO.
These Consolidated Financial Statements have been approved for issue by the Board of Directors on March 11, 2025.
2. Financial risk management
Risk management principles and processes
The Group’s activities are exposed to a variety of financial risks. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize the Group’s capital costs by using suitable means of financing and to manage and control the Group’s financial risks effectively. The Group uses financial instruments to hedge certain risk exposures.
The Group’s approach to the identification, assessment and mitigation of risk is carried out by a Risk and Commercial Committee, which focuses on timely and appropriate risk management.
The principal financial risks are related to raw material price, end-product price, exchange rate, interest rate, liquidity and credit risk. This section provides a description of the principal risks and uncertainties that could have a material adverse effect on the Group’s strategy, performance, results of operations and financial condition. These risks do not appear in any particular order of materiality or probability of occurrence.
Argentina currency status and macroeconomic outlook:
The Argentine subsidiaries of the Group operate in an economic context in which main variables have a strong volatility as a consequence of political and economic uncertainties, both in national and international environments. Argentina’s annual inflation rate for the years ended December 31, 2024, 2023 and 2022 was 117.8%, 211.4% and 94.8%, respectively. The Group uses Argentina’s official exchange rate to account for transactions in Argentina, mainly affecting the farming business segment, which as of December 31, 2024, 2023 and 2022 was Ps.1,032.00, Ps.808.45 and Ps.177.16, respectively, against the U.S. dollar. For the years ended December 31, 2024, 2023 and 2022, Argentina’s official exchange rate against the U.S. dollar increased 27.7%, 356.3% and 72.5%, respectively.
On December 10, 2023, a new government took office with the aim to boost a deregulation of the Argentine economy and other regulations. Certain regulations and/or restrictions have been eased and others remain in force, although it is expected that they will be lifted gradually. However, the scope and timing of the measures, including but not limited to the existing foreign exchange regulations remains uncertain as of the date of these Consolidated Financial Statements.
The Argentine Central Bank under prior administration, had implemented certain measures that control and restrict the ability of companies and individuals to access the foreign exchange market known as MULC (for its acronym in Spanish) for certain transactions. However, the performance of blue-chip swap transactions known as Contado con Liquidación or CCL (for its acronym in Spanish) was an alternative lawful mechanism. The blue-chip swap transactions are capital markets transactions that could be implemented in different ways, both for the inflow and outflow of funds. The implicit exchange rate applicable to this type of transactions is higher with respect to the official foreign exchange rate.
F- 14
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
2. Financial risk management (continued)
The Company is permanently monitoring the evolution of the program to determine the possible impacts that these new measures could have on the Company’s business and financial position.
•Exchange rate risk
The Group’s cash flows, statement of income and statement of financial position are presented in U.S. Dollars and may be affected by fluctuations in exchange rates. Currency risks, as defined by IFRS 7, arise on account of monetary assets and liabilities being denominated in a currency that is not the functional currency.
A significant majority of the Group’s business activities is conducted in the functional currencies of the respective subsidiaries (primarily the Brazilian Reais and the Argentine Peso). However, the Group may transact in currencies other than the respective functional currencies, mainly the U.S. Dollar. As such, these subsidiaries may hold U.S. Dollar denominated monetary balances at each year-end as indicated in the tables below.
The Group’s net financial position exposure to the U.S. Dollar is managed on a case-by-case basis, partly by hedging certain expected cash flows with foreign exchange derivative contracts.
The following tables show the net monetary position of the respective subsidiaries within the Group categorized by functional currency. Non-U.S. Dollar amounts are presented in U.S. Dollars for purpose of these tables.
| 2024 | |||||
|---|---|---|---|---|---|
| Subsidiaries’ functional currency | |||||
| Net monetary position<br>(Liability)/ Asset | Argentine<br>Peso | Brazilian<br>Reais | Uruguayan<br>Peso | U.S. Dollar | Total |
| Argentine Peso | 3,374 | — | — | — | 3,374 |
| Brazilian Reais | — | (553,476) | — | — | (553,476) |
| U.S. Dollar | (189,915) | (201,818) | 35,958 | (22,319) | (378,094) |
| Uruguayan Peso | — | — | (4,476) | — | (4,476) |
| Total | (186,541) | (755,294) | 31,482 | (22,319) | (932,672) |
| 2023 | |||||
| --- | --- | --- | --- | --- | --- |
| Subsidiaries’ functional currency | |||||
| Net monetary position<br>(Liability)/ Asset | Argentine<br>Peso | Brazilian<br>Reais | Uruguayan<br>Peso | U.S. Dollar | Total |
| Argentine Peso | (70,608) | — | — | (39) | (70,647) |
| Brazilian Reais | — | (575,933) | — | — | (575,933) |
| U.S. Dollar | (90,313) | (262,485) | 19,226 | 82,423 | (251,149) |
| Uruguayan Peso | — | — | (2,711) | — | (2,711) |
| Total | (160,921) | (838,418) | 16,515 | 82,384 | (900,440) |
The Group’s analysis shown on the tables below is carried out based on the exposure of each functional currency subsidiary against the U.S. Dollar. The Group estimated that, other factors being constant, a hypothetical 10% appreciation/(depreciation) of the U.S. Dollar against the Brazilian real respective functional currencies for the years ended December 31, 2024 and 2023 or the Uruguayan peso, or a 25% appreciation/(depreciation) of the U.S. Dollar against the Argentine peso.
| Functional currency | |||||
|---|---|---|---|---|---|
| Net monetary position | Argentine<br>Peso | Brazilian<br>Reais | Uruguayan<br>Peso | Total | |
| 2024 | U.S. Dollar | (47,479) | (20,182) | 3,596 | (64,065) |
| 2023 | U.S. Dollar | (22,578) | (26,249) | 1,923 | (46,904) |
F- 15
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
2. Financial risk management (continued)
The tables above only consider the effect of a hypothetical appreciation / (depreciation) of the U.S. Dollars on the Group’s net financial position. A hypothetical appreciation / (depreciation) of the U.S. Dollar against the functional currencies of the Group’s subsidiaries has historically had a positive / negative effect, respectively, on the fair value of the Group’s biological assets and the end prices of the Group’s agriculture produce, both of which are generally linked to the U.S. Dollar.
Hedge Accounting Cash Flow Hedge
As part of the exchange rate risk, the Group may document and designate cash flow hedging relationships to hedge the foreign exchange rate risk of all or part of its highly probable future sales in U.S. Dollars using either all or a portion of its US dollar-denominated borrowings and/or derivative instruments including but not limited to currency forwards and foreign currency floating-to-fixed interest rate swaps, as needed.
The Group had formally hedged a portion of its highly probable future US dollar-denominated sales using a portion of its US dollar-denominated borrowings. For the year ended December 31, 2024, a loss before income tax of US$ 601 was recognized in other comprehensive income (December 31, 2023: US$ 7,319) and US$ 26,997 (December 31, 2023: US$ 49,737) was reclassified from equity to profit or loss within “Financial results, net”.
•Raw material price risk
Inflation in the costs of raw materials and goods and services from industry suppliers and manufacturers presents risks to project economics. A significant portion of the Group’s cost structure includes the cost of raw materials primarily seeds, fertilizers and agrochemicals, among others. Prices for these raw materials may vary significantly.
•End-product price risk
Prices for commodity products have historically been cyclical, reflecting overall economic conditions and changes in capacity within the industry, which affect the profitability of entities engaged in the agribusiness industry. The Group combines different actions to minimize price risk. A percentage of crops are to be sold during and post-harvest period. The Group manages minimum and maximum prices for each commodity as well as gross margin per each crop as to decide when and how to sell. End-product price risks are hedged if economically viable and possible by entering into forward contracts with major trading houses or by using derivative financial instruments, consisting mainly of crops and sugar future contracts, but also includes occasionally put and call options. A movement in end-product futures prices would result in a change in the fair value of the end product hedging contracts. These fair value changes, after taxes, are recorded in the consolidated statement of income.
Contract positions are designed to ensure that the Group would receive a defined minimum price for certain quantities of its production. The counterparties to these instruments generally are major financial institutions. In entering into these contracts, the Group has assumed the risk that might arise from the possible inability of counterparties to meet the terms of their contracts. The Group does not expect any material losses as a result of counterparty defaults. The Group is also obliged to pay margin deposits and premiums for these instruments. These estimates represent only the sensitivity of the financial instruments to market risk and not the Group exposure to end product price risks as a whole, since the crops and cattle products sales are not financial instruments within the scope of IFRS 7 disclosure requirements.
Liquidity risk
The Group is exposed to liquidity risks, including risks associated with refinancing borrowings as they mature, and that borrowing facilities are not available to meet cash requirements. Failure to manage liquidity risks could have a material impact on the Group’s cash flow and statement of financial position.
Prudent liquidity risk management includes managing the profile of debt maturities and funding sources close oversight of cash flows projections, maintaining sufficient cash, and ensuring the availability of funding from an adequate amount of committed credit facilities and the ability to close out market positions. The Group's ability to fund its existing and
F- 16
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
2. Financial risk management (continued)
prospective debt requirements is managed by maintaining diversified funding sources with adequate available funding lines from high quality lenders; and reaching to have long-term financial facilities.
As of December 31, 2024, cash and cash equivalents of the Group totaled US$211.2 million.
The tables below analyzes the Group’s non-derivative financial liabilities and derivative financial liabilities into relevant maturity groupings based on the remaining period at the statement of financial position to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows and as a result they do not reconcile to the amounts disclosed on the statement of financial position except for short-term payables where discounting is not applied.
| At December 31, 2024 | Less than<br>1 year | Between<br>1 and 2 years | Between 2<br>and 5 years | Over<br>5 Years | Total |
|---|---|---|---|---|---|
| Trade and other payables | 174,096 | 767 | — | — | 174,863 |
| Borrowings | 242,332 | 153,989 | 500,453 | 107,225 | 1,003,999 |
| Leases Liabilities | 66,365 | 82,192 | 183,204 | 196,594 | 528,355 |
| Derivative financial instruments | 5,779 | — | — | — | 5,779 |
| Total | 488,572 | 236,948 | 683,657 | 303,819 | 1,712,996 |
| At December 31, 2023 | Less than<br>1 year | Between<br>1 and 2 years | Between 2<br>and 5 years | Over<br>5 Years | Total |
| --- | --- | --- | --- | --- | --- |
| Trade and other payables | 163,873 | 528 | 82 | 398 | 164,881 |
| Borrowings | 254,162 | 83,359 | 723,250 | 2,013 | 1,062,784 |
| Leases Liabilities | 69,858 | 84,059 | 206,413 | 233,484 | 593,814 |
| Derivative financial instruments | 169 | — | — | — | 169 |
| Total | 488,062 | 167,946 | 929,745 | 235,895 | 1,821,648 |
•Interest rate risk
The Group’s interest rate risk arises from long-term borrowings at floating rates, which expose the Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. The interest rate profile of the Group's borrowings is set out in Note 26.
The Group occasionally manages its cash flow interest rate risk exposure by using floating-to-fixed interest rate swaps. Such interest rate swaps have the economic effect of converting borrowings from floating rates to fixed rates.
The following tables show a breakdown of the Group’s fixed-rate and floating-rate borrowings per currency denomination and functional currency of the subsidiary debt holder. These analyses are performed after giving effect to interest rate swaps.
The analysis for the year ended December 31, 2024 and 2023 is as follows:
F- 17
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
2. Financial risk management (continued)
| 2024 | ||||
|---|---|---|---|---|
| Subsidiaries’ functional currency | ||||
| Rate per currency denomination | Argentine<br>Peso | Brazilian<br>Reais | U.S. Dollar | Total |
| Fixed rate: | ||||
| Argentine Peso | 8,827 | — | — | 8,827 |
| Brazilian Reais | — | 39,370 | — | 39,370 |
| U.S. Dollar | 83,500 | 292,293 | 152,782 | 528,575 |
| Subtotal fixed-rate borrowings | 92,327 | 331,663 | 152,782 | 576,772 |
| Variable rate: | ||||
| Brazilian Reais | — | 189,339 | — | 189,339 |
| U.S. Dollar | 13,445 | — | — | 13,445 |
| Subtotal variable-rate borrowings | 13,445 | 189,339 | — | 202,784 |
| Total borrowings as per statement of financial position | 105,772 | 521,002 | 152,782 | 779,556 |
| 2023 | ||||
| --- | --- | --- | --- | |
| Subsidiaries’ functional currency | ||||
| Rate per currency denomination | Argentine<br>Peso | Brazilian<br>Reais | U.S. Dollar | Total |
| Fixed rate: | ||||
| Argentine Peso | 35,318 | — | — | 35,318 |
| Brazilian Reais | — | 14,575 | — | 14,575 |
| U.S. Dollar | 36,050 | 373,939 | 167,088 | 577,077 |
| Subtotal fixed-rate borrowings | 71,368 | 388,514 | 167,088 | 626,970 |
| Variable rate: | ||||
| Argentine Peso | 51,460 | — | — | 51,460 |
| Brazilian Reais | — | 210,186 | — | 210,186 |
| U.S. Dollar | 16,333 | — | — | 16,333 |
| Subtotal variable-rate borrowings | 67,793 | 210,186 | — | 277,979 |
| Total borrowings as per statement of financial position | 139,161 | 598,700 | 167,088 | 904,949 |
For the years ended December 31, 2024 and 2023, if interest rates on floating-rate borrowings had been 1% higher with all other variables held constant, the Group’s Profit before income tax for the years would have decreased as shown below. A 1% decrease in interest rates would have an equal and opposite effect on the income statement.
| 2024 | |||
|---|---|---|---|
| Subsidiaries’ functional currency | |||
| Rate per currency denomination | Argentine<br>Peso | Brazilian<br>Reais | Total |
| Variable rate: | |||
| Brazilian Reais | — | (2) | (2) |
| U.S. Dollar | — | — | — |
| Total effects on profit before income tax | — | (2) | (2) |
F- 18
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
2. Financial risk management (continued)
| 2023 | |||
|---|---|---|---|
| Subsidiaries’ functional currency | |||
| Rate per currency denomination | Argentine<br>Peso | Brazilian<br>Reias | Total |
| Variable rate: | |||
| Argentine peso | (515) | — | (515) |
| Brazilian Reais | — | (2,102) | (2,102) |
| U.S. Dollar | (163) | — | (163) |
| Total effects on profit before income tax | (678) | (2,102) | (2,780) |
The sensitivity analysis has been determined assuming that the change in interest rates had occurred at the date of the statement of financial position and had been applied to the exposure to interest rate risk for financial instruments in existence at that date. The 100 basis point increase or decrease represents management's assessment of a reasonable possible change in those interest rates, which have the most impact on the Group, specifically the United States and Brazilian rates over the period until the next annual statement of financial position date.
•Credit risk
The Group’s exposure to credit risk mainly arise from the potential non-performance of contractual obligations by the parties, in relation to amounts owed for physical product sales, the use of derivative instruments, and the investment of surplus cash balances. The Group is also exposed to political and economic risk events, which may cause non-payment of foreign currency obligations to the Group.
Credit risk from trade receivables is considered to be low because the Group’s policy is to manage credit exposure to trading counterparties within defined trading limits. All of the Group’s significant counterparties are assigned internal credit limits.
The Group regularly sells to a large base of customers. The type and class of customers may differ depending on the Group’s business segments. For the years ended December 31, 2024 and 2023, more than 67% and 64%, respectively, of the Group’s sales of crops were sold to 19 and 15 well-known customers (both multinational and local) with a good credit history with the Group. In the rice segment 65% and 61% of sales were sold to 19 and 13 well-known customers for the years ended December 31, 2024 and 2023, respectively.
In the dairy segment, 67% and 69% of the sales were concentrated in 19 and 19 well-known customers for the years ended December 31, 2024 and 2023, respectively.
In the Sugar, Ethanol and Energy segment, (i) 89% of the sales of ethanol were concentrated in 12 and 9 large well known customers for the years ended December 31, 2024 and 2023, respectively, with a satisfactory credit history with the Company; (ii) 49% of the sales of Energy were made to Cámara de Comercialização de Energia Elétrica (CCEE ) and an other 28% and 42% is concentrated in 11 and 9 large well known customers with a satisfactory credit history with the Company and for the years ended December 31, 2024 and 2023, respectively, (iii) 94% and 82% of the export of Sugar were concentrated in 6 and 6 large well customers for the years ended December 31, 2024 and 2023, respectively.
No credit limits were exceeded during the reporting periods and management does not expect any losses from non-performance by these counterparties. If any of the Group’s customers are independently rated, these ratings are used. Otherwise, the Group assesses the credit quality of the customer taking into account its financial position, past experience and other factors (see Note 17 for details). The Group may seek cash collateral, letter of credit or parent company guarantees, as considered appropriate. Sales to customers are primarily made by credit with customary payment terms. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the statement of financial position after deducting any impairment allowance. The Group’s exposure of credit risk arising from trade receivables is set out in Note 18.
F- 19
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
2. Financial risk management (continued)
The Group is exposed to counterparty credit risk on cash and cash equivalent balances. The Group holds cash on deposit with a number of financial institutions. The Group manages its credit risk exposure by limiting individual deposits to clearly defined limits. The Group only deposits with high quality banks and financial institutions. As of December 31, 2024 and 2023, the total amount of cash and cash equivalents mainly comprise cash in banks and short-term bank deposits. The Group is authorized to transact with banks rated “BBB+” or higher. As of both December 31, 2024 and 2023, 5 banks (primarily Credit Agricole, Banco Itaú, Banco Galicia, JP Morgan and FCI) accounted for more than 70% and 80%, respectively, of the total cash deposited. The remaining amount of cash and cash equivalents relates to cash in hand. Additionally, during the year ended December 31, 2024, the Group invested in BOPREAL (Bonos para la Reconstrucción de una Argentina Libre), LECAPs (Letras del Tesoro Nacional Capitalizables en Pesos), in fixed-term bank deposits, treasury bills and also entered into derivative contracts (currency forward). The Group’s exposure of credit risk arising from cash and cash equivalents is set out in Note 20.
The Group’s primary objective for holding derivative financial instruments is to manage currency exchange rate risk, interest rate risk and commodity price risk. The Group generally enters into derivative transactions with high-credit-quality counterparties and, by policy, limits the amount of credit exposure to any one counterparty based on an analysis of that counterparty's relative credit standing. The amounts subject to credit risk related to derivative instruments are generally limited to the amounts, if any, by which counterparty's obligations exceed the obligations with that counterparty.
The Group also entered into crop commodity futures traded in the established trading markets of Argentina and Brazil through well-rated brokers. Management does not expect any counterparty to fail to meet its obligations.
•Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, it may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or buy own shares or sell assets to reduce debt. Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio. This ratio is calculated as total debt (including current and non-current borrowings as shown in the consolidated statement of financial position, if applicable) divided by total capital. Total capital is calculated as equity, as shown in the consolidated statement of financial position, plus total borrowings. During the year ended December 31, 2024, the strategy was to maintain the gearing ratio within 0.30 to 0.60, as follows:
| 2024 | 2023 | |
|---|---|---|
| Total borrowings | 779,556 | 904,949 |
| Total equity | 1,408,101 | 1,265,648 |
| Total capital | 2,187,657 | 2,170,597 |
| Gearing ratio | 0.36 | 0.42 |
•Derivative financial instruments
As part of its business operations, the Group may uses a variety of derivative financial instruments to manage its exposure to the financial risks discussed above. As part of its strategy, the Group may enter into derivatives of (i) interest rate to manage the composition of floating and fixed rate debt; (ii) currency to manage exchange rate risk, and (iii) crop (future contracts and put and call options) to manage its exposure to price volatility stemming from its integrated crop production activities. The Group’s policy is not to use derivatives for speculative purposes.
Derivative financial instruments involve, to a varying degree, elements of market and credit risk not recognized in the financial statements. The market risk associated with these instruments resulting from price movements is expected to offset the market risk of the underlying transactions, assets and liabilities, being hedged. The counterparties to the agreements relating to the Group’s contracts generally are large institutions with credit ratings equal to or higher than BBB+. The Group continually monitors the credit rating of such counterparties and seeks to limit its financial exposure to any one financial institution. While
F- 20
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
2. Financial risk management (continued)
the contract or notional amounts of derivative financial instruments provide one measure of the volume of these transactions, they do not represent the amount of the Group’s exposure to credit risk. The amounts potentially subject to credit risk (arising from the possible inability of counterparties to meet the terms of their contracts) are generally limited to the amounts, if any, by which the counterparties’ obligations under the contracts exceed the Group’s obligations to the counterparties.
The following tables show the outstanding positions for each type of derivative contract as of the date of each statement of financial position:
▪ Futures / options
As of December 31, 2024:
| 2024 | ||||
|---|---|---|---|---|
| Type of<br>derivative contract | Quantities<br>(thousands)<br>(**) | Notional<br>amount | Fair<br>Value Asset/<br>(Liability) | (Loss)/Gain<br>(*) |
| Futures: | ||||
| Sale | ||||
| Soybean | 2 | 407 | (18) | (18) |
| Wheat | 3 | 697 | 16 | 16 |
| Sugar | 46 | 19,357 | 854 | 3,446 |
| OTC: | ||||
| Sugar | 5 | 2,509 | 160 | 828 |
| Total | 56 | 22,970 | 1,012 | 4,272 |
As of December 31, 2023:
| 2023 | ||||
|---|---|---|---|---|
| Type of<br>derivative contract | Quantities<br>(thousands)<br>(**) | Notional<br>amount | Fair<br>Value Asset/<br>(Liability) | (Loss)/Gain<br>(*) |
| Futures: | ||||
| Sale | ||||
| Soybean | 3 | 518 | (9) | (9) |
| Wheat | 2 | 537 | (12) | (12) |
| Sugar | 157 | 79,404 | 8,678 | 8,586 |
| OTC: | ||||
| Sugar | 112 | 55,696 | 5,141 | 5,250 |
| Total | 274 | 136,155 | 13,798 | 13,815 |
(*) Included in the line item “gain / (loss) from commodity derivative financial instruments” of Note 8.
(**) All quantities expressed either in tons or cubic meters, as applicable.
Commodity future contract fair values are computed with reference to quoted market prices on future exchanges.
▪Floating-to-fixed interest rate swaps
The Group’s subsidiary Adecoagro Vale do Ivinhema entered into interest rate swap operations:
a) In December 2020, with Itaú BBA in an aggregate amount of R$ 400 million. In these operations the company receives IPCA (Extended National Consumer Price Index) plus 4,24% per year, and pays CDI (an interbank floating interest rate in Reais) plus 1,85% per year. This swap expires semiannually until December, 2026.
b) In July 2024 with:
F- 21
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
2. Financial risk management (continued)
–Itaú BBA in an aggregate amount of R$ 76 million. In this operation the company receives IPCA (Extended National Consumer Price Index) plus 6.80% per year and pays CDI (an interbank floating interest rate in Reais) plus 0.49% per year. This swap expires in July 2034.
–BR Partners in an aggregate amount of R$ 115 million. In this operation the company receives IPCA (Extended National Consumer Price Index) plus 6.76% per year and pays CDI (an interbank floating interest rate in Reais) plus 0.41% per year. This swap expires in July 2031.
– XP Investimentos in an aggregate amount of R$ 209 million. In this operation the Company receives pre-fixed rate 12.61% per year and pays CDI (an interbank floating interest rate in Reais) plus 0.48% per year. This swap expires in July 2031.
These four interest rate swap agreements resulted in a recognition of a loss of US$ 10.5 million and US$ 4.2 million for the years ended December 31, 2024 and 2023, respectively.
▪Currency forward
The Group did not enter nor have outstanding any significant currency forward contract in 2024 and 2023
Gains and losses on currency forward contracts are included within “Financial results, net” in the statement of income.
3. Segment information
The Group is engaged in agricultural, manufacturing and land transformation activities. Our agricultural activities consist of harvesting certain agricultural products, including crops, rough rice, and sugarcane, for sale to third parties and for internal use as inputs in its various manufacturing processes, and producing fluid milk. The manufacturing activities consist of (i) selling manufactured products, including processed peanuts, sunflower rice, sugar, ethanol and energy, among others, (ii) in our milk facilities we produce UHT and UP milk, powder milk and semi-hard cheese, among others; and (iii) providing services, such as grain warehousing and conditioning and handling and drying services, among others. The land transformation activities consist of the acquisition of farmlands or businesses with underdeveloped or underutilized agricultural land and implementing production technology and agricultural best practices on the Group’s farmlands to enhance yields and increase their value for potential realization through sale.
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 two major lines of business, namely, Farming and Sugar, Ethanol and Energy
•The ‘Farming’ is further comprised of three reportable segments:
•‘Crops’ Segment which consists of planting, harvesting and sale of grains, oilseeds and fibers (including wheat, corn, soybeans, peanuts, 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.
F- 22
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
3. Segment information (continued)
•‘Rice’ Segment which consists of planting, harvesting, processing and marketing of rice, and the genetic development of seeds.
•‘Dairy’ Segment which consists of the production and sale of raw milk and industrialized products, including UHT, cheese and powder milk among others.
•‘Sugar, Ethanol and Energy’ Segment which consists of cultivating sugarcane which is processed in owned sugar mills, transformed into ethanol, sugar and electricity, in addition to biomethane and then marketed;
As further discussed in Note 32, the Group applies IAS 29 to its operations in Argentina. 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 are 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, which is our 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 these processes, the re-measured and translated results of operations for a given month are subject to change until year-end, affecting comparison and analysis.
However, the internal reporting reviewed by the CODM departs from the application of IAS 29 and IAS 21 re-measurement and translation processes discussed above. For segment reporting purposes, the segment results of Argentine operations for each reporting period were adjusted for inflation and translated into the 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 guidelines. In order to evaluate the segment’s performance, results of operations in Argentina are based on monthly data adjusted for inflation and converted into the monthly US dollar average exchange rate. These converted amounts are not subsequently readjusted and reconverted as described under IAS 29 and IAS 21. It should be noted that this translation methodology for evaluating segment information is the same that the Group uses to translate results of operations 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 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.
For all the Group’s segments, the primary operating performance measure is “Profit or Loss from Operations” measured in accordance with the procedure outlined above. 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.
The following tables show a reconciliation of the reportable segments information reviewed by our CODM with the reportable segment information measured in accordance with IAS 29 and IAS 21 as per the Consolidated Financial Statements for all years presented. These tables do not include information for the Sugar, Ethanol and Energy reportable segment since this information is not affected by the application of IAS 29 and therefore there is no difference between the information reviewed by our CODM and the information included in the Consolidated Financial Statements:
F- 23
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
3. Segment information (continued)
Segment reconciliation for the year ended December 31, 2024:
| 2024 | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 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 | |||||||||||
| Revenue | 236,128 | 13,068 | 249,196 | 248,198 | 12,242 | 260,440 | 284,098 | 17,219 | 301,317 | ||||||||||
| Cost of revenue | (213,909) | (12,424) | (226,333) | (208,266) | (10,029) | (218,295) | (241,770) | (13,477) | (255,247) | ||||||||||
| Initial recognition and changes in fair value of biological assets and agricultural produce | 28,347 | 4,703 | 33,050 | 45,780 | 7,656 | 53,436 | 14,539 | 890 | 15,429 | ||||||||||
| Loss from changes in net realizable value of agricultural produce after harvest | (19,780) | (2,656) | (22,436) | (6,614) | 59 | (6,555) | — | — | — | ||||||||||
| Margin on Manufacturing and Agricultural Activities Before Operating Expenses | 30,786 | 2,691 | 33,477 | 79,098 | 9,928 | 89,026 | 56,867 | 4,632 | 61,499 | ||||||||||
| General and administrative expenses | (18,622) | (1,517) | (20,139) | (17,025) | (1,255) | (18,280) | (11,769) | (918) | (12,687) | ||||||||||
| Selling expenses | (17,240) | (1,060) | (18,300) | (30,771) | (1,735) | (32,506) | (27,678) | (1,915) | (29,593) | ||||||||||
| Other operating income / (expense), net | (5,304) | 252 | (5,052) | (14,052) | (4,288) | (18,340) | 4,084 | 530 | 4,614 | ||||||||||
| Profit / (loss) from Operations | (10,380) | 366 | (10,014) | 17,250 | 2,650 | 19,900 | 21,504 | 2,329 | 23,833 | ||||||||||
| Depreciation and amortization | (5,698) | (701) | (6,399) | (14,798) | (1,057) | (15,855) | (12,219) | (1,028) | (13,247) | ||||||||||
| Net loss from Fair value adjustment of investment property | (588) | (50) | (638) | (18,137) | (4,600) | (22,737) | — | — | — | ||||||||||
| Impairment of assets destroyed by fire | (14,162) | (97) | (14,259) | — | — | — | — | — | — | 2024 | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||||||||
| Corporate | Total | ||||||||||||||||||
| Total segment reporting | Adjustment | Total as per statement of income | Total segment reporting | Adjustment | Total as per statement of income | ||||||||||||||
| Revenue | — | — | — | 1,476,378 | 42,529 | 1,518,907 | |||||||||||||
| Cost of revenue | — | — | — | (1,162,785) | (35,930) | (1,198,715) | |||||||||||||
| Initial recognition and changes in fair value of biological assets and agricultural produce | — | — | — | 129,832 | 13,249 | 143,081 | |||||||||||||
| Loss from changes in net realizable value of agricultural produce after harvest | — | — | — | (25,840) | (2,597) | (28,437) | |||||||||||||
| Margin on Manufacturing and Agricultural Activities Before Operating Expenses | — | — | — | 417,585 | 17,251 | 434,836 | |||||||||||||
| General and administrative expenses | (25,452) | (2,143) | (27,595) | (98,047) | (5,833) | (103,880) | |||||||||||||
| Selling expenses | 736 | (15) | 721 | (148,757) | (4,725) | (153,482) | |||||||||||||
| Other operating income / (expense), net | 294 | 5 | 299 | 8,325 | (3,501) | 4,824 | |||||||||||||
| Profit / (loss) from Operations | (24,422) | (2,153) | (26,575) | 179,106 | 3,192 | 182,298 | |||||||||||||
| Depreciation and amortization | (1,523) | (127) | (1,650) | (223,244) | (2,913) | (226,157) | |||||||||||||
| Net loss from Fair value adjustment of investment property | — | — | — | (18,725) | (4,650) | (23,375) | |||||||||||||
| Impairment of assets destroyed by fire | — | — | — | (14,162) | (97) | (14,259) |
F- 24
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
3. Segment information (continued)
Segment reconciliation for the year ended December 31, 2023:
| 2023 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 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 | |
| Revenue | 216,912 | (50,659) | 166,253 | 256,347 | (26,155) | 230,192 | 246,875 | (66,756) | 180,119 |
| Cost of revenue | (188,954) | 45,075 | (143,879) | (178,322) | 8,064 | (170,258) | (209,362) | 54,889 | (154,473) |
| Initial recognition and changes in fair value of biological assets and agricultural produce | (4,862) | (5,465) | (10,327) | (2,488) | (1,813) | (4,301) | 14,086 | (6,036) | 8,050 |
| Gain from changes in net realizable value of agricultural produce after harvest | 2,730 | (736) | 1,994 | — | — | — | — | — | — |
| Margin on Manufacturing and Agricultural Activities Before Operating Expenses | 25,826 | (11,785) | 14,041 | 75,537 | (19,904) | 55,633 | 51,599 | (17,903) | 33,696 |
| General and administrative expenses | (14,779) | 4,866 | (9,913) | (15,709) | 4,436 | (11,273) | (10,411) | 3,456 | (6,955) |
| Selling expenses | (22,450) | 6,336 | (16,114) | (33,407) | 6,958 | (26,449) | (25,488) | 8,312 | (17,176) |
| Other operating income / (expense), net | 20,006 | (4,721) | 15,285 | 7,470 | (252) | 7,218 | 1,872 | (960) | 912 |
| Profit from Operations | 8,603 | (5,304) | 3,299 | 33,891 | (8,762) | 25,129 | 17,572 | (7,095) | 10,477 |
| Depreciation and amortization | (8,330) | 2,909 | (5,421) | (15,154) | 4,342 | (10,812) | (10,913) | 3,852 | (7,061) |
| Net gain from Fair value adjustment of investment property | 10,199 | (650) | 9,549 | 1,176 | (105) | 1,071 | — | — | — |
| 2023 | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | |
| Corporate | Total | ||||||||
| Total segment reporting | Adjustment | Total as per statement of income | Total segment reporting | Adjustment | Total as per statement of income | ||||
| Revenue | — | — | — | 1,442,441 | (143,570) | 1,298,871 | |||
| Cost of revenue | — | — | — | (1,081,208) | 108,028 | (973,180) | |||
| Initial recognition and changes in fair value of biological assets and agricultural produce | — | — | — | 101,172 | (13,314) | 87,858 | |||
| Gain from changes in net realizable value of agricultural produce after harvest | — | — | — | 2,574 | (736) | 1,838 | |||
| Margin on Manufacturing and Agricultural Activities Before Operating Expenses | — | — | — | 464,979 | (49,592) | 415,387 | |||
| General and administrative expenses | (23,061) | 6,473 | (16,588) | (89,551) | 19,231 | (70,320) | |||
| Selling expenses | (305) | 107 | (198) | (150,805) | 21,713 | (129,092) | |||
| Other operating income / (expense), net | (309) | 21 | (288) | 31,502 | (5,912) | 25,590 | |||
| Profit / (loss) from Operations | (23,675) | 6,601 | (17,074) | 256,125 | (14,560) | 241,565 | |||
| Depreciation and amortization | (1,275) | 454 | (821) | (211,575) | 11,557 | (200,018) | |||
| Net gain from Fair value adjustment of investment property | — | — | — | 11,375 | (755) | 10,620 |
F- 25
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
3. Segment information (continued)
Segment reconciliation for the year ended December 31, 2022:
| 2022 | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 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 | |||||||||||
| Revenue | 280,329 | (2,578) | 277,751 | 204,396 | (195) | 204,201 | 236,222 | (1,210) | 235,012 | ||||||||||
| Cost of revenue | (257,925) | 2,330 | (255,595) | (160,047) | (379) | (160,426) | (204,924) | 1,039 | (203,885) | ||||||||||
| Initial recognition and changes in fair value of biological assets and agricultural produce | 62,567 | 1,494 | 64,061 | 16,032 | 525 | 16,557 | 27,523 | (266) | 27,257 | ||||||||||
| Loss from changes in net realizable value of agricultural produce after harvest | (21,495) | 136 | (21,359) | — | — | — | — | — | — | ||||||||||
| Margin on Manufacturing and Agricultural Activities Before Operating Expenses | 63,476 | 1,382 | 64,858 | 60,381 | (49) | 60,332 | 58,821 | (437) | 58,384 | ||||||||||
| General and administrative expenses | (13,312) | 2 | (13,310) | (15,487) | 173 | (15,314) | (10,378) | 181 | (10,197) | ||||||||||
| Selling expenses | (31,894) | 212 | (31,682) | (34,665) | 229 | (34,436) | (27,050) | 76 | (26,974) | ||||||||||
| Other operating income / (expense), net | 463 | (804) | (341) | (507) | (37) | (544) | (8) | (3) | (11) | ||||||||||
| Bargain purchase gain on acquisition | — | — | — | 10,070 | 37 | 10,107 | — | — | — | ||||||||||
| Profit from Operations | 18,733 | 792 | 19,525 | 19,792 | 353 | 20,145 | 21,385 | (183) | 21,202 | ||||||||||
| Depreciation and amortization | (8,017) | 39 | (7,978) | (12,215) | 98 | (12,117) | (10,075) | 57 | (10,018) | ||||||||||
| Net loss from Fair value adjustment of investment property | (2,184) | (158) | (2,342) | (580) | (39) | (619) | — | — | — | 2022 | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||||||||
| Corporate | Total | ||||||||||||||||||
| Total segment reporting | Adjustment | Total as per statement of income | Total segment reporting | Adjustment | Total as per statement of income | ||||||||||||||
| Revenue | — | — | — | 1,351,707 | (3,983) | 1,347,724 | |||||||||||||
| Cost of revenue | — | — | — | (1,078,737) | 2,990 | (1,075,747) | |||||||||||||
| Initial recognition and changes in fair value of biological assets and agricultural produce | — | — | — | 214,188 | 1,753 | 215,941 | |||||||||||||
| Loss from changes in net realizable value of agricultural produce after harvest | — | — | — | (22,429) | 136 | (22,293) | |||||||||||||
| Margin on Manufacturing and Agricultural Activities Before Operating Expenses | — | — | — | 464,729 | 896 | 465,625 | |||||||||||||
| General and administrative expenses | (23,413) | (136) | (23,549) | (84,507) | 220 | (84,287) | |||||||||||||
| Selling expenses | (257) | (1) | (258) | (144,031) | 516 | (143,515) | |||||||||||||
| Other operating income / (expense), net | (136) | 21 | (115) | 2,693 | (823) | 1,870 | |||||||||||||
| Bargain purchase gain on acquisition | — | — | — | 10,070 | 37 | 10,107 | |||||||||||||
| Profit / (loss) from Operations | (23,806) | (116) | (23,922) | 248,954 | 846 | 249,800 | |||||||||||||
| Depreciation and amortization | 22 | (29) | (7) | (191,205) | 165 | (191,040) | |||||||||||||
| Net loss from Fair value adjustment of investment property | — | — | — | (2,764) | (197) | (2,961) |
F- 26
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
3. Segment information (continued)
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, 2024:
| Farming | Sugar,<br>Ethanol and Energy | Corporate | Total | |||||
|---|---|---|---|---|---|---|---|---|
| Crops | Rice | Dairy | Farming<br>subtotal | |||||
| Revenue | 236,128 | 248,198 | 284,098 | 768,424 | 707,954 | — | 1,476,378 | |
| Cost of revenue | (213,909) | (208,266) | (241,770) | (663,945) | (498,840) | — | (1,162,785) | |
| Initial recognition and changes in fair value of biological assets and agricultural produce | 28,347 | 45,780 | 14,539 | 88,666 | 41,166 | — | 129,832 | |
| Changes in net realizable value of agricultural produce after harvest | (19,780) | (6,614) | — | (26,394) | 554 | — | (25,840) | |
| Margin on manufacturing and agricultural activities before operating expenses | 30,786 | 79,098 | 56,867 | 166,751 | 250,834 | — | 417,585 | |
| General and administrative expenses | (18,622) | (17,025) | (11,769) | (47,416) | (25,179) | (25,452) | (98,047) | |
| Selling expenses | (17,240) | (30,771) | (27,678) | (75,689) | (73,804) | 736 | (148,757) | |
| Other operating income / (expense), net | (5,304) | (14,052) | 4,084 | (15,272) | (*) | 23,303 | 294 | 8,325 |
| Profit / (loss) from operations | (10,380) | 17,250 | 21,504 | 28,374 | 175,154 | (24,422) | 179,106 | |
| Depreciation and amortization | (5,698) | (14,798) | (12,219) | (32,715) | (189,006) | (1,523) | (223,244) | |
| Net loss from Fair value adjustment of investment property | (588) | (18,137) | — | (18,725) | — | — | (18,725) | |
| Reverse of revaluation surplus derived from the disposals of assets before taxes | 9,024 | — | — | 9,024 | — | — | 9,024 | |
| Impairment of assets destroyed by fire | (14,162) | — | — | (14,162) | — | — | (14,162) | |
| Initial recognition and changes in fair value of biological assets and agricultural produce (unrealized) | 10,197 | 18,669 | (30,487) | (1,621) | (23,937) | — | (25,558) | |
| Initial recognition and changes in fair value of biological assets and agricultural produce (realized) | 18,150 | 27,111 | 45,026 | 90,287 | 65,103 | — | 155,390 | |
| Changes in net realizable value of agricultural produce after harvest (unrealized) | (775) | (6,552) | — | (7,327) | — | — | (7,327) | |
| Changes in net realizable value of agricultural produce after harvest (realized) | (19,005) | (62) | — | (19,067) | 554 | — | (18,513) | |
| Farmlands and farmland improvements, net | 432,826 | 176,516 | 2,454 | 611,796 | 80,357 | — | 692,153 | |
| Machinery, equipment and other fixed assets, net | 41,770 | 112,849 | 143,640 | 298,259 | 203,679 | — | 501,938 | |
| Bearer plants, net | 1,292 | — | — | 1,292 | 326,278 | — | 327,570 | |
| Work in progress | 468 | 6,276 | 4,009 | 10,753 | 16,175 | — | 26,928 | |
| Right of use assets | 20,850 | 15,234 | 474 | 36,558 | 336,521 | 767 | 373,846 | |
| Investment property | 28,193 | 5,349 | — | 33,542 | — | — | 33,542 | |
| Goodwill | 10,397 | 6,319 | — | 16,716 | 3,526 | — | 20,242 | |
| Biological assets | 79,363 | 102,098 | 42,864 | 224,325 | 69,620 | — | 293,945 | |
| Finished goods | 40,345 | 32,623 | 20,553 | 93,521 | 94,633 | — | 188,154 | |
| Raw materials, stocks held by third parties and others | 44,809 | 18,446 | 16,390 | 79,645 | 21,865 | — | 101,510 | |
| Total segment assets | 700,313 | 475,710 | 230,384 | 1,406,407 | 1,152,654 | 767 | 2,559,828 | |
| Borrowings | 36,573 | 15,270 | 69,199 | 121,042 | 532,230 | 126,284 | 779,556 | |
| Lease liabilities | 17,385 | 12,549 | 538 | 30,472 | 310,769 | 789 | 342,030 | |
| Total segment liabilities | 53,958 | 27,819 | 69,737 | 151,514 | 842,999 | 127,073 | 1,121,586 |
(*) This amount includes US$ 11.3 million related to tax credits resulting from a judicial decision regarding the exclusion of ICMS from the calculation base for PIS and COFINS, as well as US$ 8.1 million related to federal grant credits.
F- 27
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
3. Segment information (continued)
Segment analysis for the year ended December 31, 2023
| Farming | Sugar,<br>Ethanol and Energy | Corporate | Total | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Crops | Rice | Dairy | Farming<br>subtotal | ||||||
| Revenue | 216,912 | 256,347 | 246,875 | 720,134 | 722,307 | — | 1,442,441 | ||
| Cost of revenue | (188,954) | (178,322) | (209,362) | (576,638) | (504,570) | — | (1,081,208) | ||
| Initial recognition and changes in fair value of biological assets and agricultural produce | (4,862) | (2,488) | 14,086 | 6,736 | 94,436 | — | 101,172 | ||
| Changes in net realizable value of agricultural produce after harvest | 2,730 | — | — | 2,730 | (156) | — | 2,574 | ||
| Margin on manufacturing and agricultural activities before operating expenses | 25,826 | 75,537 | 51,599 | 152,962 | 312,017 | — | 464,979 | ||
| General and administrative expenses | (14,779) | (15,709) | (10,411) | (40,899) | (25,591) | (23,061) | (89,551) | ||
| Selling expenses | (22,450) | (33,407) | (25,488) | (81,345) | (69,155) | (305) | (150,805) | ||
| Other operating income / (expense), net | 20,006 | 7,470 | 1,872 | 29,348 | 2,463 | (309) | 31,502 | ||
| Profit / (loss) from operations | 8,603 | 33,891 | 17,572 | 60,066 | 219,734 | (23,675) | 256,125 | ||
| Depreciation and amortization | (8,330) | (15,154) | (10,913) | (34,397) | (175,903) | (1,275) | (211,575) | ||
| Net gain from Fair value adjustment of investment property | 10,199 | 1,176 | — | 11,375 | — | — | 11,375 | ||
| Reverse of revaluation surplus derived from the disposals of assets before taxes | (20,245) | — | — | (20,245) | — | — | (20,245) | ||
| Initial recognition and changes in fair value of biological assets and agricultural produce (unrealized) | 4,171 | (1,002) | (12,655) | (9,486) | (15,393) | — | (24,879) | ||
| Initial recognition and changes in fair value of biological assets and agricultural produce (realized) | (9,033) | (1,486) | 26,741 | 16,222 | 109,829 | — | 126,051 | ||
| Changes in net realizable value of agricultural produce after harvest (unrealized) | 2,599 | — | — | 2,599 | — | — | 2,599 | ||
| Changes in net realizable value of agricultural produce after harvest (realized) | 131 | — | — | 131 | (156) | — | (25) | ||
| Farmlands and farmland improvements, net | 447,772 | 178,291 | 1,462 | 627,525 | 78,322 | — | 705,847 | ||
| Machinery, equipment and other fixed assets, net | 24,250 | 71,584 | 86,670 | 182,504 | 264,561 | — | 447,065 | ||
| Bearer plants, net | 753 | — | — | 753 | 375,089 | — | 375,842 | ||
| Work in progress | 10 | 291 | 5,584 | 5,885 | 14,926 | — | 20,811 | ||
| Right of use assets | 13,608 | 15,076 | 29 | 28,713 | 377,420 | 580 | 406,713 | ||
| Investment property | 29,192 | 4,172 | — | 33,364 | — | — | 33,364 | ||
| Goodwill | 6,095 | 3,704 | — | 9,799 | 4,510 | — | 14,309 | ||
| Biological assets | 55,545 | 32,843 | 23,191 | 111,579 | 116,458 | — | 228,037 | ||
| Finished goods | 33,407 | 9,306 | 9,927 | 52,640 | 126,971 | — | 179,611 | ||
| Raw materials, stocks held by third parties and others | 26,779 | 16,577 | 11,230 | 54,586 | 21,854 | — | 76,440 | ||
| Total segment assets | 637,411 | 331,844 | 138,093 | 1,107,348 | 1,380,111 | 580 | 2,488,039 | ||
| Borrowings | 30,326 | 32,340 | 57,376 | 120,042 | 604,827 | 180,080 | 904,949 | ||
| Lease liabilities | 12,341 | 13,475 | 57 | 25,873 | 352,238 | 399 | 378,510 | ||
| Total segment liabilities | 42,667 | 45,815 | 57,433 | 145,915 | 957,065 | 180,479 | 1,283,459 |
F- 28
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
3. Segment information (continued)
Segment analysis for the year ended December 31, 2022
| Farming | Sugar,<br>Ethanol and Energy | Corporate | Total | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Crops | Rice | Dairy | Farming<br>subtotal | ||||||
| Revenue | 280,329 | 204,396 | 236,222 | 720,947 | 630,760 | — | 1,351,707 | ||
| Cost of revenue | (257,925) | (160,047) | (204,924) | (622,896) | (455,841) | — | (1,078,737) | ||
| Initial recognition and changes in fair value of biological assets and agricultural produce | 62,567 | 16,032 | 27,523 | 106,122 | 108,066 | — | 214,188 | ||
| Changes in net realizable value of agricultural produce after harvest | (21,495) | — | — | (21,495) | (934) | — | (22,429) | ||
| Margin on manufacturing and agricultural activities before operating expenses | 63,476 | 60,381 | 58,821 | 182,678 | 282,051 | — | 464,729 | ||
| General and administrative expenses | (13,312) | (15,487) | (10,378) | (39,177) | (21,917) | (23,413) | (84,507) | ||
| Selling expenses | (31,894) | (34,665) | (27,050) | (93,609) | (50,165) | (257) | (144,031) | ||
| Other operating income / (expense), net | 463 | (507) | (8) | (52) | 2,881 | (136) | 2,693 | ||
| Bargain purchase gain on acquisition | — | 10,070 | — | 10,070 | — | — | 10,070 | ||
| Profit / (loss) from operations | 18,733 | 19,792 | 21,385 | 59,910 | 212,850 | (23,806) | 248,954 | ||
| Depreciation and amortization | (8,017) | (12,215) | (10,075) | (30,307) | (160,920) | 22 | (191,205) | ||
| Net loss from Fair value adjustment of investment property | (2,184) | (580) | — | (2,764) | — | — | (2,764) | ||
| Initial recognition and changes in fair value of biological assets and agricultural produce (unrealized) | 2,071 | 3,327 | (2,276) | 3,122 | 35,232 | — | 38,354 | ||
| Initial recognition and changes in fair value of biological assets and agricultural produce (realized) | 60,496 | 12,705 | 29,799 | 103,000 | 72,834 | — | 175,834 | ||
| Changes in net realizable value of agricultural produce after harvest (unrealized) | 72 | — | — | 72 | — | — | 72 | ||
| Changes in net realizable value of agricultural produce after harvest (realized) | (21,567) | — | — | (21,567) | (934) | — | (22,501) |
Total reportable segments’ assets and liabilities are reconciled to total assets as per the statement of financial position as follows:
| 2024 | 2023 | |
|---|---|---|
| Total reportable assets as per segment information | 2,559,828 | 2,488,039 |
| Intangible assets (excluding goodwill) | 16,989 | 13,210 |
| Deferred income tax assets | 15,507 | 9,777 |
| Trade and other receivables | 251,866 | 218,115 |
| Other assets | 3,761 | 1,515 |
| Derivative financial instruments | 9,596 | 31,820 |
| Short-term investment | 46,097 | 62,637 |
| Cash and cash equivalents | 211,244 | 339,781 |
| Total assets as per the statement of financial position | 3,114,888 | 3,164,894 |
| 2024 | 2023 | |
| --- | --- | --- |
| Total reportable liabilities as per segment information | 1,121,586 | 1,283,459 |
| Trade and other payables | 207,674 | 191,738 |
| Deferred income tax liabilities | 330,336 | 376,331 |
| Payroll and social liabilities | 34,189 | 38,927 |
| Provisions for other liabilities | 3,752 | 3,599 |
| Current income tax liabilities | 3,471 | 5,023 |
| Derivative financial instruments | 5,779 | 169 |
| Total liabilities as per the statement of financial position | 1,706,787 | 1,899,246 |
.
F- 29
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
3. Segment information (continued)
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, Uruguay and others.
As of and for the year ended December 31, 2024:
| Argentina | Brazil | Uruguay | Chile | Total | |
|---|---|---|---|---|---|
| Property, plant and equipment | 904,340 | 626,606 | 17,643 | — | 1,548,589 |
| Investment property | 33,542 | — | — | — | 33,542 |
| Goodwill | 16,716 | 3,526 | — | — | 20,242 |
| Non-current portion of biological assets | 43,418 | — | — | — | 43,418 |
| Revenue | 480,662 | 435,719 | 551,179 | 8,818 | 1,476,378 |
| Initial recognition and changes in fair value of biological assets and agricultural produce | 83,400 | 41,166 | 5,266 | — | 129,832 |
| Changes in net realizable value of agricultural produce after harvest | (22,045) | 554 | (4,349) | — | (25,840) |
As of and for the year ended December 31, 2023:
| Argentina | Brazil | Uruguay | Chile | Total | |
|---|---|---|---|---|---|
| Property, plant and equipment | 786,201 | 733,055 | 30,309 | — | 1,549,565 |
| Investment property | 33,364 | — | — | — | 33,364 |
| Goodwill | 9,799 | 4,510 | — | — | 14,309 |
| Non-current portion of biological assets | 23,706 | — | — | — | 23,706 |
| Revenue | 402,205 | 401,051 | 632,165 | 7,020 | 1,442,441 |
| Initial recognition and changes in fair value of biological assets and agricultural produce | 6,469 | 94,436 | 267 | — | 101,172 |
| Changes in net realizable value of agricultural produce after harvest | 3,341 | (156) | (611) | — | 2,574 |
As of and for the year ended December 31, 2022:
| Argentina | Brazil | Uruguay | Chile | Total | |
|---|---|---|---|---|---|
| Revenue | 373,746 | 494,215 | 472,538 | 11,208 | 1,351,707 |
| Initial recognition and changes in fair value of biological assets and agricultural produce | 102,656 | 108,066 | 3,466 | — | 214,188 |
| Changes in net realizable value of agricultural produce after harvest | (21,482) | (934) | (13) | — | (22,429) |
F- 30
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
4. Revenue
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| Manufactured products and services rendered: | |||
| Ethanol | 265,154 | 247,008 | 387,124 |
| Sugar | 391,738 | 419,858 | 188,769 |
| Energy (*) | 37,029 | 35,985 | 34,919 |
| Peanut | 59,310 | 63,646 | 63,041 |
| Sunflower | 7,621 | 8,301 | 14,948 |
| Cotton | 3,893 | 8,383 | 6,780 |
| Rice (*) | 224,398 | 199,746 | 188,263 |
| Fluid milk (UHT) | 136,699 | 74,402 | 76,596 |
| Powder milk (*) | 55,552 | 43,958 | 84,257 |
| Other diary products (*) | 77,589 | 35,385 | 37,648 |
| Services | 10,887 | 6,080 | 10,987 |
| Rental income | 2,831 | 1,210 | 841 |
| Others | 45,641 | 43,436 | 24,199 |
| 1,318,342 | 1,187,398 | 1,118,372 | |
| Agricultural produce and biological assets: | |||
| Soybean | 79,445 | 42,610 | 81,757 |
| Corn | 56,125 | 22,490 | 71,188 |
| Wheat | 22,942 | 7,984 | 19,915 |
| Sunflower | 3,148 | 7,095 | 9,885 |
| Barley | 2,578 | 2,826 | 4,175 |
| Seeds | 4,328 | 428 | 1,940 |
| Raw milk | 9,383 | 15,081 | 21,623 |
| Cattle | 5,765 | 3,542 | 5,039 |
| Cattle for dairy | 13,700 | 6,718 | 7,543 |
| Others | 3,151 | 2,699 | 6,287 |
| 200,565 | 111,473 | 229,352 | |
| Total revenue | 1,518,907 | 1,298,871 | 1,347,724 |
(*) Includes sales of mwh of energy and tons rice products produced by third parties for an amount of US$3.2 million, and US$0.7 million respectively (December 31, 2023: sales of mwh of energy, tons rice and powder milk US$2.4 million, US$22.3 million and US$0.8 million, respectively and December 31, 2022: sales of mwh of energy, tons rice and butter US$2.3 million, US$0.9 million and US$1.3 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 of 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$67.5 million as of December 31, 2024 (2023: US$73.5 million; 2022: US$89.9 million) and comprised primarily of 9,314 thousand tons of sugar (US$ 4.5 million), 8,975 thousand m3 of ethanol (US$4.5 million), 555,744 thousand mwh of energy (US$21.2 million), 68,408 thousand tons of soybean (US$20.5 million), 17,183 thousand tons of wheat (US$3.8 million), and 47,414 thousand tons of corn (US$8.5 million) which expire between January and December 2025.
F- 31
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
5. Cost of revenue
For the year ended December 31:
| 2024 | |||||
|---|---|---|---|---|---|
| Crops | Rice | Dairy | Sugar,<br>Ethanol and<br>Energy | Total | |
| Finished goods at the beginning of year (Note 19) | 33,407 | 9,306 | 9,927 | 126,971 | 179,611 |
| Cost of production of manufactured products (Note 6) | 67,821 | 241,734 | 236,410 | 543,176 | 1,089,141 |
| Purchases | 24,015 | 1,128 | 6,839 | 1,837 | 33,819 |
| Agricultural produce | 220,471 | — | 23,083 | 6,067 | 249,621 |
| Transfer to raw material | (102,773) | 2,302 | — | — | (100,471) |
| Direct agricultural selling expenses | 27,861 | — | — | — | 27,861 |
| Tax recoveries (i) | — | — | — | (56,361) | (56,361) |
| Changes in net realizable value of agricultural produce after harvest | (22,436) | (6,555) | — | 554 | (28,437) |
| Loss of idle capacity | — | — | — | 4,918 | 4,918 |
| Finished goods at the end of the year (Note 19) | (40,345) | (32,623) | (20,553) | (94,633) | (188,154) |
| Exchange differences | 18,312 | 3,003 | (459) | (33,689) | (12,833) |
| Cost of revenue | 226,333 | 218,295 | 255,247 | 498,840 | 1,198,715 |
(i) Correspond to the presumed credit of ICMS (Imposto sobre Circulação de Mercadorias e Prestação de Serviços) over the sale values for an amount of USD 37.8 million and for PIS and COFINS for an amount of USD 18.5 million.
For the year ended December 31:
| 2023 | |||||
|---|---|---|---|---|---|
| Crops | Rice | Dairy | Sugar,<br>Ethanol and<br>Energy | Total | |
| Finished goods at the beginning of year | 37,539 | 13,659 | 12,825 | 88,693 | 152,716 |
| Cost of production of manufactured products (Note 6) | 47,086 | 123,629 | 121,341 | 548,553 | 840,609 |
| Purchases | 4,361 | 22,594 | 3,170 | 1,011 | 31,136 |
| Agricultural produce | 115,893 | 18 | 15,081 | 9,736 | 140,728 |
| Transfer to raw material | (49,108) | (5,714) | — | — | (54,822) |
| Direct agricultural selling expenses | 9,214 | — | — | — | 9,214 |
| Tax recoveries (i) | — | — | — | (25,767) | (25,767) |
| Changes in net realizable value of agricultural produce after harvest | 1,994 | — | — | (156) | 1,838 |
| Loss of idle capacity | — | — | — | 3,861 | 3,861 |
| Finished goods at the end of the year (Note 19) | (33,407) | (9,306) | (9,927) | (126,971) | (179,611) |
| Exchange differences | 10,307 | 25,378 | 11,983 | 5,610 | 53,278 |
| Cost of revenue | 143,879 | 170,258 | 154,473 | 504,570 | 973,180 |
(i) Correspond to the presumed credit of ICMS (Imposto sobre Circulação de Mercadorias e Prestação de Serviços) over the sale values and of PIS/COFINS crédits.
F- 32
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
5. Cost of revenue (continued)
For the year ended December 31:
| 2022 | |||||
|---|---|---|---|---|---|
| Crops | Rice | Dairy | Sugar,<br>Ethanol and<br>Energy | Total | |
| Finished goods at the beginning of year | 37,225 | 5,015 | 15,157 | 80,857 | 138,254 |
| Cost of production of manufactured products (Note 6) | 68,510 | 165,330 | 180,723 | 455,336 | 869,899 |
| Purchases | 10,528 | 1,866 | 1,285 | 856 | 14,535 |
| Acquisition of subsidiaries | — | 8,413 | — | — | 8,413 |
| Agricultural produce | 245,402 | 106 | 21,647 | 11,571 | 278,726 |
| Transfer to raw material | (75,158) | (6,549) | — | — | (81,707) |
| Direct agricultural selling expenses | 25,623 | — | — | — | 25,623 |
| Tax recoveries (i) | — | — | — | (17,800) | (17,800) |
| Changes in net realizable value of agricultural produce after harvest | (21,359) | — | — | (934) | (22,293) |
| Loss of idle capacity | — | — | — | 7,507 | 7,507 |
| Finished goods at the end of the year | (37,539) | (13,659) | (12,825) | (88,693) | (152,716) |
| Exchange differences | 2,363 | (96) | (2,102) | 7,141 | 7,306 |
| Cost of revenue | 255,595 | 160,426 | 203,885 | 455,841 | 1,075,747 |
(i) Correspond to the presumed credit of ICMS (Imposto sobre Circulação de Mercadorias e Prestação de Serviços) over the sale values.
F- 33
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
6. Expenses by nature
The statement of income is presented under the function of expense method. Under this method, expenses are classified according to their function as “cost of goods sold and services rendered," “general and administrative expenses” and “selling expenses”.
The following table provides the additional disclosure required on the nature of expenses and their relationship to the function within the Group:
Expenses by nature for the year ended December 31, 2024:
| Cost of production of manufactured products (Note 5) | General and<br>Administrative<br>Expenses | Selling<br>Expenses | Total | |||||
|---|---|---|---|---|---|---|---|---|
| Crops | Rice | Dairy | Sugar,<br>Ethanol and<br>Energy | Total | ||||
| Salaries, social security expenses and employee benefits | 5,348 | 15,941 | 14,372 | 47,731 | 83,392 | 34,578 | 12,327 | 130,297 |
| Raw materials and consumables | — | 886 | 28,319 | 5,930 | 35,135 | — | — | 35,135 |
| Depreciation and amortization | 2,055 | 5,204 | 6,156 | 149,453 | 162,868 | 25,270 | 1,042 | 189,180 |
| Depreciation of right of use assets | — | 54 | — | 8,901 | 8,955 | 14,914 | 130 | 23,999 |
| Fuel, lubricants and others | 263 | 1,534 | 1,611 | 35,069 | 38,477 | 1,478 | 406 | 40,361 |
| Maintenance and repairs | 1,698 | 5,051 | 5,386 | 37,045 | 49,180 | 5,904 | 1,135 | 56,219 |
| Freights | 344 | 11,561 | 3,635 | 395 | 15,935 | — | 70,697 | 86,632 |
| Export taxes / selling taxes | — | — | — | — | — | — | 36,145 | 36,145 |
| Export expenses | — | — | — | — | — | — | 12,816 | 12,816 |
| Contractors and services | 2,882 | 1,554 | 687 | 13,031 | 18,154 | — | — | 18,154 |
| Energy transmission | — | — | — | — | — | — | 2,340 | 2,340 |
| Energy power | 1,392 | 3,742 | 3,276 | 780 | 9,190 | 705 | 223 | 10,118 |
| Professional fees | 91 | 362 | 131 | 1,166 | 1,750 | 11,916 | 872 | 14,538 |
| Other taxes | 87 | 478 | 218 | 22,093 | 22,876 | 686 | 35 | 23,597 |
| Contingencies | — | — | — | — | — | 1,115 | — | 1,115 |
| Lease expense and similar arrangements | 246 | 1,228 | 201 | — | 1,675 | 1,629 | 708 | 4,012 |
| Third parties raw materials | 5,300 | 40,938 | 85,376 | 39,635 | 171,249 | — | — | 171,249 |
| Tax recoveries | — | — | — | (18,536) | (18,536) | — | — | (18,536) |
| Others | 786 | 3,287 | 2,908 | 8,947 | 15,928 | 5,685 | 14,606 | 36,219 |
| Subtotal | 20,492 | 91,820 | 152,276 | 351,640 | 616,228 | 103,880 | 153,482 | 873,590 |
| Own agricultural produce consumed | 47,329 | 149,914 | 84,134 | 191,536 | 472,913 | — | — | 472,913 |
| Total | 67,821 | 241,734 | 236,410 | 543,176 | 1,089,141 | 103,880 | 153,482 | 1,346,503 |
F- 34
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
6. Expenses by nature (continued)
Expenses by nature for the year ended December 31, 2023:
| Cost of production of manufactured products (Note 5) | General and<br>Administrative<br>Expenses | Selling<br>Expenses | Total | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Crops | Rice | Dairy | Sugar,<br>Ethanol and<br>Energy | Total | |||||
| Salaries, social security expenses and employee benefits | 2,549 | 10,541 | 7,733 | 47,050 | 67,873 | 30,581 | 8,899 | 107,353 | |
| Raw materials and consumables | 293 | 818 | 19,361 | 7,878 | 28,350 | — | — | 28,350 | |
| Depreciation and amortization | 3,087 | 4,514 | 3,153 | 131,536 | 142,290 | 14,632 | 1,166 | 158,088 | |
| Depreciation of right of use assets | — | 32 | 350 | 9,402 | 9,784 | 7,837 | 208 | 17,829 | |
| Fuel, lubricants and others | 139 | 665 | 1,338 | 37,707 | 39,849 | 572 | 251 | 40,672 | |
| Maintenance and repairs | 724 | 2,550 | 1,490 | 32,594 | 37,358 | 1,377 | 583 | 39,318 | |
| Freights | 80 | 5,662 | 1,921 | 106 | 7,769 | — | 57,629 | 65,398 | |
| Export taxes / selling taxes | — | — | — | — | — | — | 29,910 | 29,910 | |
| Export expenses | — | — | — | — | — | — | 11,550 | 11,550 | |
| Contractors and services | 2,013 | 2,705 | 214 | 11,313 | 16,245 | — | — | 16,245 | |
| Energy transmission | — | — | — | — | — | — | 2,621 | 2,621 | |
| Energy power | 817 | 2,291 | 1,693 | 776 | 5,577 | 342 | 66 | 5,985 | |
| Professional fees | 38 | 71 | 69 | 1,105 | 1,283 | 8,553 | 1,725 | 11,561 | |
| Other taxes | 12 | 160 | 102 | 4,232 | 4,506 | 582 | 23 | 5,111 | |
| Contingencies | — | — | — | — | — | 988 | — | 988 | |
| Lease expense and similar arrangements | 127 | 523 | 145 | — | 795 | 975 | 567 | 2,337 | |
| Third parties raw materials | 3,838 | 35,289 | 47,336 | 31,969 | 118,432 | — | — | 118,432 | |
| Tax recoveries | — | — | — | (74) | (74) | — | — | (74) | |
| Others | 552 | 1,396 | 1,498 | 6,091 | 9,537 | 3,881 | 13,894 | 27,312 | |
| Subtotal | 14,269 | 67,217 | 86,403 | 321,685 | 489,574 | 70,320 | 129,092 | 688,986 | |
| Own agricultural produce consumed | 32,817 | 56,412 | 34,938 | 226,868 | 351,035 | — | — | 351,035 | |
| Total | 47,086 | 123,629 | 121,341 | 548,553 | 840,609 | 70,320 | 129,092 | 1,040,021 |
F- 35
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
6. Expenses by nature (continued)
Expenses by nature for the year ended December 31, 2022:
| Cost of production of manufactured products (Note 5) | ||||||||
|---|---|---|---|---|---|---|---|---|
| Crops | Rice | Dairy | Sugar,<br>Ethanol and<br>Energy | Total | General and<br>Administrative<br>Expenses | Selling<br>Expenses | Total | |
| Salaries, social security expenses and employee benefits | 4,216 | 12,362 | 11,627 | 35,890 | 64,095 | 39,347 | 9,472 | 112,914 |
| Raw materials and consumables | 367 | 367 | 29,317 | 14,094 | 44,145 | — | — | 44,145 |
| Depreciation and amortization | 4,463 | 3,814 | 4,007 | 123,960 | 136,244 | 18,109 | 1,408 | 155,761 |
| Depreciation right-of-use and other leases | — | 115 | 971 | 7,475 | 8,561 | 7,702 | 99 | 16,362 |
| Fuel, lubricants and others | 239 | 249 | 1,886 | 38,813 | 41,187 | 712 | 340 | 42,239 |
| Maintenance and repairs | 1,264 | 3,320 | 1,856 | 22,674 | 29,114 | 1,718 | 741 | 31,573 |
| Freights | 519 | 9,319 | 2,862 | 75 | 12,775 | — | 57,913 | 70,688 |
| Export taxes / selling taxes | — | — | — | — | — | — | 39,202 | 39,202 |
| Export expenses | — | — | — | — | — | — | 17,963 | 17,963 |
| Contractors and services | 2,218 | 720 | 569 | 7,044 | 10,551 | — | — | 10,551 |
| Energy transmission | — | — | — | — | — | — | 3,053 | 3,053 |
| Energy power | 1,577 | 3,172 | 3,189 | 733 | 8,671 | 373 | 89 | 9,133 |
| Professional fees | 59 | 86 | 110 | 837 | 1,092 | 8,337 | 802 | 10,231 |
| Other taxes | 25 | 117 | 110 | 2,775 | 3,027 | 852 | 63 | 3,942 |
| Contingencies | — | — | — | — | — | 568 | — | 568 |
| Lease expense and similar arrangements | 178 | 682 | 197 | — | 1,057 | 1,153 | 271 | 2,481 |
| Third parties raw materials | 8,270 | 23,934 | 75,674 | 13,693 | 121,571 | — | — | 121,571 |
| Tax recoveries | — | — | — | (556) | (556) | — | — | (556) |
| Others | 1,335 | 2,736 | 1,269 | 4,322 | 9,662 | 5,416 | 12,099 | 27,177 |
| Subtotal | 24,730 | 60,993 | 133,644 | 271,829 | 491,196 | 84,287 | 143,515 | 718,998 |
| Own agricultural produce consumed | 43,780 | 104,337 | 47,079 | 183,507 | 378,703 | — | — | 378,703 |
| Total | 68,510 | 165,330 | 180,723 | 455,336 | 869,899 | 84,287 | 143,515 | 1,097,701 |
7. Salaries and social security expenses
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| Wages and salaries (i) | 160,955 | 127,113 | 132,010 |
| Social security costs | 46,912 | 41,404 | 36,932 |
| Equity-settled share-based compensation | 6,680 | 8,581 | 10,227 |
| 214,547 | 177,098 | 179,169 |
(i)Includes US$33,148, US$35,007 and US$30,014, capitalized in Property, Plant and Equipment for the years 2024, 2023 and 2022, respectively.
F- 36
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
8. Other operating income / (expense), net
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| Gain / (loss) from commodity derivative financial instrument | 10,593 | 6,913 | (6,842) |
| (Loss) / gain from disposal of other property items | (2,408) | 4,747 | 3,718 |
| Net (loss) / gain from fair value adjustment of investment property | (23,375) | 10,620 | (2,961) |
| Gain from disposal of farmland and other assets (Note 21) | 6,050 | 6,334 | — |
| Impairment of assets destroyed by fire (*) | (14,259) | — | — |
| Tax credits recognized (**) | 19,486 | — | — |
| Others | 8,737 | (3,024) | 7,955 |
| 4,824 | 25,590 | 1,870 |
(*) In September 2024, a fire in our Peanut facility located in the Province of Cordoba damaged a warehouse cell and inventory stored therein. As a result, the Company recognized an impairment loss of approximately US$ 12.0 million and US$ 2.0 million for inventories and property, plant and equipment, respectively. The appraisal of damages is currently being evaluated by insurance experts. The Company has insurance coverage that we estimate will cover all damages caused by the event suffered. Any insurance proceeds will be recognized as other income when received.
(**) This amount includes US$ 11.3 million related to non-income tax credits resulting from a judicial decision regarding the exclusion of ICMS from the calculation base for PIS and COFINS, as well as US$ 8.1 million related to federal grant credits.
9. Financial results, net
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| Finance income: | |||
| - Interest income | 16,048 | 7,134 | 5,781 |
| - Foreign exchange gains, net | — | 90,930 | 19,278 |
| - Gain from interest rate/foreign exchange rate derivative financial instruments | — | 3,501 | — |
| - Other income | 760 | 55,535 | 249 |
| Finance income | 16,808 | 157,100 | 25,308 |
| Finance costs: | |||
| - Interest expense | (40,869) | (31,906) | (50,037) |
| - Finance cost related to lease liabilities | (32,938) | (40,203) | (31,113) |
| - Cash flow hedge – transfer from equity (Note 2) | (28,650) | (36,863) | (40,195) |
| - Foreign exchange losses, net | (37,569) | — | — |
| - Taxes | (7,572) | (5,473) | (4,862) |
| - Loss from interest rate/foreign exchange rate derivative financial instruments | (9,347) | — | (2,384) |
| - Other expenses | (9,496) | (7,642) | (9,009) |
| Finance costs | (166,441) | (122,087) | (137,600) |
| Other financial results - Net gain / (loss) of inflation effects on monetary items | 2,421 | 28,816 | (2,144) |
| Total financial results, net | (147,212) | 63,829 | (114,436) |
F- 37
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
10. Taxation
Adecoagro is subject to the applicable general tax regulations in Luxembourg.
The Group’s income tax has been calculated on the estimated assessable taxable results for the year at the rates prevailing in the respective foreign tax jurisdictions. The subsidiaries of the Group are required to calculate their income taxes on a separate basis according to the rules and regulations of the jurisdictions where they operate. Therefore, the Group is not legally permitted to compensate subsidiaries’ losses against subsidiaries’ income. The details of the provision for the Group’s consolidated income tax are as follows:
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| Current income tax | (14,335) | 4,570 | (4,655) |
| Deferred income tax | 71,350 | (83,243) | (22,103) |
| Income tax benefit / (expense) | 57,015 | (78,673) | (26,758) |
The statutory tax rate in the countries where the Group operates for all of the years presented are:
| Tax Jurisdiction | Income Tax Rate | |
|---|---|---|
| Argentina | 35 | % |
| Brazil | 34 | % |
| Uruguay | 25 | % |
| Spain | 25 | % |
| Luxembourg | 24.94 | % |
| Chile | 27 | % |
Deferred tax assets and liabilities of the Group as of December 31, 2024 and 2023, without taking into consideration the offsetting of balances within the same tax jurisdiction, will be recovered or settled as follows:
| 2024 | 2023 | |
|---|---|---|
| Deferred income tax asset to be recovered after more than 12 months | 23,428 | 36,028 |
| Deferred income tax asset to be recovered within 12 months | 77,777 | 43,337 |
| Deferred income tax assets | 101,205 | 79,365 |
| Deferred income tax liability to be settled after more than 12 months | (272,403) | (427,360) |
| Deferred income tax liability to be settled within 12 months | (143,631) | (18,559) |
| Deferred income tax liability | (416,034) | (445,919) |
| Deferred income tax liability, net | (314,829) | (366,554) |
The gross movement on the deferred income tax account is as follows:
The accompanying notes are an integral part of these consolidated financial statements.
F- 38
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
10. Taxation (continued)
| 2024 | 2023 | |
|---|---|---|
| Beginning of year | (366,554) | (292,656) |
| Exchange differences | (160,927) | 69,707 |
| Changes of fair value valuation for farmlands | 144,971 | (62,988) |
| Disposal of farmland | 2,265 | 10,492 |
| Others | 1,158 | 632 |
| Tax credit relating to cash flow hedge (i) | (7,092) | (8,498) |
| Income tax benefit / (expense) | 71,350 | (83,243) |
| End of year | (314,829) | (366,554) |
(i) Relates to the gain or loss before income tax of cash flow hedge recognized in other comprehensive income amounting to US$601 for the year ended December 31, 2024 (2023: US$7,319; 2022: US$15,621); net of the reclassification from Equity to the Income Statement of US$ 26,997 for the year ended December 31, 2024 (2023: US$ 49,737; 2022:
US$ 40,388).
The movement in the deferred income tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the same tax jurisdiction, is as follows:
| Deferred income tax<br>liabilities | Property,<br>plant and<br>equipment | Investment property | Biological<br>assets | Others | Total |
|---|---|---|---|---|---|
| At January 1, 2023 | 389,146 | 8,979 | 30,461 | 9,810 | 438,396 |
| Charged / (credited) to the statement of income | 18,229 | 9,760 | (2,984) | 12,460 | 37,465 |
| Farmlands revaluation | 62,988 | — | — | — | 62,988 |
| Disposals of farmland | (10,492) | — | — | — | (10,492) |
| Exchange differences | (75,928) | (2,851) | (4,097) | 438 | (82,438) |
| At December 31, 2023 | 383,943 | 15,888 | 23,380 | 22,708 | 445,919 |
| Charged / (credited) to the statement of income | (11,199) | (17,396) | 550 | (8,815) | (36,860) |
| Farmlands revaluation | (144,971) | — | — | — | (144,971) |
| Disposals of farmland | (2,265) | — | — | — | (2,265) |
| Exchange differences | 137,102 | 11,215 | 8,679 | (2,785) | 154,211 |
| At December 31, 2024 | 362,610 | 9,707 | 32,609 | 11,108 | 416,034 |
F- 39
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
10. Taxation (continued)
| Deferred income tax<br>assets | Provisions | Tax loss<br>carry<br>forwards | Equity-settled<br>share-based<br>compensation | Borrowings | Biological<br>assets | Others | Total |
|---|---|---|---|---|---|---|---|
| At January 1, 2023 | 6,622 | 110,195 | 3,575 | 25,932 | — | (584) | 145,740 |
| (Credited) / charged to the statement of income | 1,064 | (29,585) | — | (26,696) | 3,242 | 6,197 | (45,778) |
| Tax charge relating to cash flow hedge | — | (8,498) | — | — | — | — | (8,498) |
| Exchange differences | 3,752 | (15,011) | — | 1,137 | (3,242) | 633 | (12,731) |
| Others | — | — | 440 | — | — | 192 | 632 |
| At December 31, 2023 | 11,438 | 57,101 | 4,015 | 373 | — | 6,438 | 79,365 |
| Charged / (credited) to the statement of income | (4,433) | 27,133 | — | 14,828 | 9,176 | (12,214) | 34,490 |
| Tax charge relating to cash flow hedge | — | (7,092) | — | — | — | — | (7,092) |
| Exchange differences | 4,555 | (6,200) | — | (1,712) | (6,643) | 3,284 | (6,716) |
| Others | — | — | 964 | — | — | 194 | 1,158 |
| At December 31, 2024 | 11,560 | 70,942 | 4,979 | 13,489 | 2,533 | (2,298) | 101,205 |
Tax loss carry forwards in Argentina and Uruguay generally expire within 5 years. Tax loss carry forwards in Brazil do not expire. However, in Brazil, the taxable profit for each year can only be reduced by tax loss carry forward up to a maximum of 30%. Tax loss carry forward in Luxembourg expire within 17 years.
In order to fully realize the deferred tax asset, the Group will need to generate future taxable income in the countries where the tax loss carry forward were incurred. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible.
.
As of December 31, 2024, the Group’s tax loss carry forwards and their corresponding jurisdictions are as follows:
| Jurisdiction | Tax loss carry forward |
|---|---|
| Argentina (1) | 104,947 |
| Brazil | 93,253 |
| Uruguay | 5,667 |
| Luxembourg | 19,209 |
(1) As of December 31, 2024, the aging of the determination tax loss carry forward in Argentina is as follows:
| Year of generation | Amount |
|---|---|
| 2020 | 499 |
| 2021 | 157 |
| 2022 | 29,873 |
| 2023 | 1,204 |
| 2024 | 73,213 |
The tax on the Group’s profit before income tax differs from the theoretical amount that would arise using the tax rates applicable to profits in the respective countries as follows:
F- 40
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
10. Taxation (continued)
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| Tax calculated at the tax rates applicable to profits in the respective countries | (8,735) | (103,860) | (43,827) |
| Non-deductible items | (316) | (1,616) | (1,921) |
| Effect of the changes in the statutory income tax rate in Argentina | — | 1,280 | (2,237) |
| Tax losses where no deferred tax asset was recognized | (20) | (706) | (107) |
| Non-taxable income | 15,215 | 19,994 | 16,879 |
| Previously unrecognized tax losses now recouped to reduce tax expenses (1) | 9,908 | 38,646 | 19,419 |
| Effect of IAS 29 and tax adjustment per inflation in Argentina | 36,563 | (29,526) | (18,195) |
| Others | 4,400 | (2,885) | 3,231 |
| Income tax expense | 57,015 | (78,673) | (26,758) |
(1) 2024 includes US$8,832 of adjustment by inflation of tax loss carryforwards in Argentina (US$37,151 in 2023 and US$16,044 in 2022).
Tax Inflation Adjustment in Argentina
Laws 27,430, 27,468 and 27,541 introduced several amendments to the income tax inflation adjustments provided by the Income Tax Law. According to these provisions, and effective as from fiscal years beginning on or after January 1, 2018, the inflation adjustment procedure set out in Title VI of the Income Tax Law shall be applicable in fiscal years in which the variation of IPC price index, accumulated in the 36 months immediately preceding the end of the relevant fiscal year, is higher than 100%. As from its effectiveness, this procedure is applicable because the variation of the IPC reached the prescribed limits.
However, Section 39 of Law No. 24,073 suspended the application of the provisions of Title VI of the Income Tax Law relating to the income tax inflation adjustment since April 1, 1992 to certain items, such as, fixed assets, inventory, and tax loss carryforwards, among others.
After the economic crisis of 2002, many taxpayers began to question the legality of the provisions suspending the income tax inflation adjustment. Also, the Argentine Supreme Court of Justice issued its verdict in the "Candy" case July 3, 2009 in which it stated that particularly for fiscal year 2002 and considering the serious state of disturbance of that year, the taxpayer could demonstrate that not applying the income tax inflation adjustment resulted in confiscatory income tax rates.
More recently, the Argentine Supreme Court of Justice applied a similar criterion to the 2010, 2011, 2012 and 2014 fiscal years in the cases brought by “Distribuidora Gas del Centro” (10/14/14, 06/02/15, 10/04/16 and 06/25/19), among others, enabling the application of income tax inflation adjustment for periods not affected by a severe economic crisis such as 2002.
The Company believes that the lack of application of the income tax inflation adjustment is confiscatory. Accordingly, based on the precedents and the opinion of external and internal tax advisors, the Company has adjusted all items for inflation including those suspended by Section 39 of Law 24,073 as described above. The net effect of the inflation adjustment of Tax loss carryforwards resulted in a deferred tax asset of US$96.0 million as of December 31, 2024, of which US$ 86.8 million has already been applied.
The application of local tax laws require interpretation, and accordingly involves the application of judgement and is open to challenge by the relevant tax authorities. This gives rise to a level of uncertainty. Provisions for uncertain tax positions are established in accordance with IFRIC 23 based on an assessment of the range of likely tax outcomes in open years and reflecting the strength of technical arguments. Amounts are provided for individual tax uncertainties based on management’s assessment of whether the most likely amount or an expected amount based on a probability weighted methodology is the more appropriate predicter of amounts that the Company is ultimately expected to settle. When making this assessment, the Company utilizes specialist in-house tax knowledge and experience and takes into consideration specialist tax advice from third party advisers on specific items. The Company has not provided any amount in this case based on its belief that it has solid arguments to support its position.
F- 41
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
10. Taxation (continued)
OECD Pillar Two model rules
The group is within the scope of the OECD Pillar Two model rules. Pillar Two legislation was enacted in Luxembourg, the jurisdiction in which Adecoagro S.A. is incorporated, and came into effect for the fiscal year starting on January 1st,, 2024.
The group has not recognized Pillar Two current tax for the year ended December 31, 2024.
The group applies the IAS 12 exception to recognising and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes.
F- 42
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
11. Earnings per share
(a) Basic
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the parent by the weighted average number of shares in issue during the period excluding ordinary shares held as treasury shares (Note 22).
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| Profit from operations attributable to equity holders of the parent | 92,340 | 226,291 | 108,138 |
| Weighted average number of shares in issue (thousands) | 102,604 | 107,092 | 110,079 |
| Basic earnings per share | 0.900 | 2.113 | 0.982 |
(b) Diluted
Diluted earnings per share is calculated by adjusting the weighted average number of shares outstanding to assume conversion of all dilutive potential shares. The Group has two categories of dilutive potential shares: equity-settled share options and restricted units. For these instruments, a calculation is done to determine the number of shares that could have been acquired at fair value, based on the monetary value of the subscription rights attached to outstanding share options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the equity-settled share options. During 2024, the share options outstanding average were 465 thousands (2023: 401 thousands; 2022: 361 thousands) share options outstanding.
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| Profit from operations attributable to equity holders of the parent | 92,340 | 226,291 | 108,138 |
| Weighted average number of shares in issue (thousands) | 102,604 | 107,092 | 110,079 |
| Adjustments for: | |||
| - Employee share options and restricted units (thousands) | 465 | 401 | 361 |
| Weighted average number of shares for diluted earnings per share (thousands) | 103,069 | 107,493 | 110,440 |
| Diluted earnings per share | 0.896 | 2.105 | 0.979 |
F- 43
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
12. Property, plant and equipment, net
Changes in the Group’s property, plant and equipment, net in 2024 and 2023 were as follows:
| Farmlands | Farmland<br>improvements | Buildings and <br>facilities | Machinery, <br>equipment, <br>furniture and<br>fittings | Bearer plants | Others | Work in <br>progress | Total | |
|---|---|---|---|---|---|---|---|---|
| At January 1, 2023 | ||||||||
| Fair value for farmlands / Cost | 727,591 | 46,148 | 526,464 | 893,172 | 858,823 | 52,846 | 79,089 | 3,184,133 |
| Accumulated depreciation | — | (29,406) | (258,084) | (801,960) | (506,096) | (23,232) | — | (1,618,778) |
| Net book amount | 727,591 | 16,742 | 268,380 | 91,212 | 352,727 | 29,614 | 79,089 | 1,565,355 |
| At December 31, 2023 | ||||||||
| Opening net book amount | 727,591 | 16,742 | 268,380 | 91,212 | 352,727 | 29,614 | 79,089 | 1,565,355 |
| Exchange differences | (197,377) | (4,029) | (43,653) | 97,152 | (46,372) | (21,835) | (21,863) | (237,977) |
| Additions | — | — | 15,165 | 71,100 | 144,777 | 2,635 | 29,252 | 262,929 |
| Revaluation surplus | 188,879 | — | — | — | — | — | — | 188,879 |
| Transfers | (33) | 1,307 | 33,405 | 22,032 | 8,939 | 17 | (65,667) | — |
| Disposals | (24,858) | — | (3,404) | (2,745) | — | (33) | — | (31,040) |
| Reclassification to non-income tax credits (*) | — | — | — | (293) | — | — | — | (293) |
| Depreciation | — | (2,375) | (28,737) | (81,463) | (84,229) | (1,484) | — | (198,288) |
| Closing net book amount | 694,202 | 11,645 | 241,156 | 196,995 | 375,842 | 8,914 | 20,811 | 1,549,565 |
| Farmlands | Farmland<br>improvements | Buildings and<br>facilities | Machinery,<br>equipment,<br>furniture and<br>fittings | Bearer plants | Others | Work in<br>progress | Total | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| At December 31, 2023 | ||||||||
| Fair value for farmlands / Cost | 694,202 | 43,426 | 527,977 | 1,080,418 | 966,167 | 33,630 | 20,811 | 3,366,631 |
| Accumulated depreciation | — | (31,781) | (286,821) | (883,423) | (590,325) | (24,716) | — | (1,817,066) |
| Net book amount | 694,202 | 11,645 | 241,156 | 196,995 | 375,842 | 8,914 | 20,811 | 1,549,565 |
| Year ended December 31, 2024 | ||||||||
| Opening net book amount | 694,202 | 11,645 | 241,156 | 196,995 | 375,842 | 8,914 | 20,811 | 1,549,565 |
| Exchange differences | 410,088 | 4,793 | 55,872 | (4,666) | (86,586) | 5,160 | 1,755 | 386,416 |
| Additions | — | — | 17,282 | 66,997 | 144,484 | 5,708 | 39,605 | 274,076 |
| Revaluation surplus | (413,798) | — | — | — | — | — | — | (413,798) |
| Transfers | — | 2,900 | 24,871 | 7,348 | — | 124 | (35,243) | — |
| Disposals | (13,732) | (8) | (3,094) | (4,351) | (2,199) | (136) | — | (23,520) |
| Reclassification to non-income tax credits (*) | — | — | — | (307) | — | — | — | (307) |
| Depreciation | — | (3,937) | (32,332) | (80,901) | (103,971) | (2,702) | — | (223,843) |
| Closing net book amount | 676,760 | 15,393 | 303,755 | 181,115 | 327,570 | 17,068 | 26,928 | 1,548,589 |
| At December 31, 2024 | ||||||||
| Fair value for farmlands / Cost | 676,760 | 51,111 | 622,908 | 1,145,439 | 1,021,866 | 44,487 | 26,928 | 3,589,499 |
| Accumulated depreciation | — | (35,718) | (319,153) | (964,324) | (694,296) | (27,419) | — | (2,040,910) |
| Net book amount | 676,760 | 15,393 | 303,755 | 181,115 | 327,570 | 17,068 | 26,928 | 1,548,589 |
(*) Brazilian federal tax law allows entities to take a percentage of the total cost of the assets purchased as a tax credit. As of December 31, 2024 and 2023, ICMS (Imposto sobre Circulação de Mercadorias e Prestação de Serviços) tax credits were reclassified to trade and other receivables.
Depreciation is calculated using the straight-line method to allocate their cost over the estimated useful lives. Farmlands are not depreciated, except for bearer plants.
F- 44
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
12. Property, plant and equipment, net (continued)
| Farmland improvements | 5-25 |
|---|---|
| Buildings and facilities | 20 |
| Furniture and fittings | 10 |
| Computer equipment (*) | 3-5 |
| Machinery and equipment | 4-10 |
| Vehicles (*) | 4-5 |
| Bearer plants | 6 - based on productivity |
(*) Included in Machinery, equipment, furniture and fittings.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each statement of financial position date. Farmlands are measured at fair value using a sales comparison approach. prepared by an independent expert. Sale prices of comparable properties are adjusted considering the specific aspects of each property, the most relevant assumption being the price per hectare (Level 3). The Group estimated that, other factors being constant, a 10% reduction on the sales price for the year ended December 31, 2024 would have reduced the value of the farmlands on US$67.7 million (2023: US$69.4 million), which would impact, net of its tax effect on the "Revaluation surplus" item in the statement of Changes in Shareholders' Equity. Should farmlands be carried at historical cost, the net book value as of December 31, 2024 would have been US$312.6 million.
Depreciation charges are included in “Cost of production of Biological Assets," “Cost of production of manufactured products,”“General and administrative expenses,”“Selling expenses” and capitalized in “Property, plant and equipment” for the years ended December 31, 2024, 2023 and 2022.
During the year ended December 31, 2024, borrowing costs of US$4.9 million (2023:US$4.2 million) were capitalized as components of the cost of acquisition or construction for qualifying assets.
Certain of the Group’s assets had been pledged as collateral to secure the Group’s borrowings and other payables. The net book value of the pledged assets amounts to US$ 218 millions, both as of December 31, 2024 and 2023. Those pledge assets were guarantying the IFC Loan, which was fully cancelled during 2024. The Group is in the process of releasing those mortgages. We have no other debt guaranteed with any other asset.
F- 45
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
13. Right of use assets, net
Changes in the Group’s right of use assets, net in 2024 and 2023 were as follows:
| Agricultural partnerships (*) | Others | Total | |
|---|---|---|---|
| At January 1, 2023 | |||
| Opening net book amount | 333,562 | 26,619 | 360,181 |
| Exchange differences | 19,095 | 1,074 | 20,169 |
| Additions and re-measurements | 95,386 | 5,062 | 100,448 |
| Depreciation | (63,195) | (10,890) | (74,085) |
| Closing net book amount | 384,848 | 21,865 | 406,713 |
| At December 31, 2024 | |||
| Opening net book amount | 384,848 | 21,865 | 406,713 |
| Exchange differences | (71,415) | (1,571) | (72,986) |
| Additions and re-measurements | 107,050 | 10,936 | 117,986 |
| Depreciation | (67,803) | (10,064) | (77,867) |
| Closing net book amount | 352,680 | 21,166 | 373,846 |
(*) Agricultural partnership has an average term of 6 years.
Depreciation charges are included in “Cost of production of Biological Assets,”“Cost of production of manufactured products,”“General and administrative expenses,”“Selling expenses” and capitalized in “Property, plant and equipment” for the year ended December 31, 2024, 2023 and 2022.
14. Investment property
Changes in the Group’s investment property in 2024 and 2023 were as follows:
| 2024 | 2023 | |
|---|---|---|
| Beginning of the year | 33,364 | 33,330 |
| Net (loss) / gain from fair value adjustment (Note 8) | (23,375) | 10,620 |
| Exchange difference | 23,553 | (10,586) |
| End of the year | 33,542 | 33,364 |
| Fair value | 33,542 | 33,364 |
| Net book amount | 33,542 | 33,364 |
Investment properties are measured at fair value using a sales comparison approach prepared by an independent expert. Sale prices of comparable properties are adjusted considering the specific aspects of each property, the most relevant assumption being the price per hectare (Level 3). The increase/decrease in the fair value of investment property is recognized in the Statement of income under the line item “Other operating income, net”. The Group estimated that, other factors being constant, a 10% reduction on the sales price for the period ended December 31, 2024 and 2023 would have caused a reduction of US$3.4 million and US$3.3 million respectively in the value of the investment properties, which would impact the line item “Net gain from fair value adjustment”.
F- 46
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
15. Intangible assets, net
Changes in the Group’s intangible assets, net in 2024 and 2023 were as follows:
| Goodwill | Software | Trademarks | Others | Total | |
|---|---|---|---|---|---|
| At January 1, 2023 | |||||
| Cost | 18,544 | 17,255 | 11,848 | 1,279 | 48,926 |
| Accumulated amortization | — | (9,513) | (2,747) | (546) | (12,806) |
| Net book amount | 18,544 | 7,742 | 9,101 | 733 | 36,120 |
| Year ended December 31, 2023 | |||||
| Opening net book amount | 18,544 | 7,742 | 9,101 | 733 | 36,120 |
| Exchange differences | (4,235) | (1,631) | (2,354) | 58 | (8,162) |
| Additions | — | 1,284 | — | 7 | 1,291 |
| Amortization charge (i) | — | (1,353) | (316) | (61) | (1,730) |
| Closing net book amount | 14,309 | 6,042 | 6,431 | 737 | 27,519 |
| At December 31, 2023 | |||||
| Cost | 14,309 | 16,908 | 9,494 | 1,344 | 42,055 |
| Accumulated amortization | — | (10,866) | (3,063) | (607) | (14,536) |
| Net book amount | 14,309 | 6,042 | 6,431 | 737 | 27,519 |
| Year ended December 31, 2024 | |||||
| Opening net book amount | 14,309 | 6,042 | 6,431 | 737 | 27,519 |
| Exchange differences | 5,933 | 1,935 | 3,332 | (159) | 11,041 |
| Additions | — | 1,190 | — | — | 1,190 |
| Disposal | — | (205) | — | — | (205) |
| Amortization charge (i) | — | (1,800) | (507) | (7) | (2,314) |
| Closing net book amount | 20,242 | 7,162 | 9,256 | 571 | 37,231 |
| At December 31, 2024 | |||||
| Cost | 20,242 | 19,828 | 12,826 | 1,185 | 54,081 |
| Accumulated amortization | — | (12,666) | (3,570) | (614) | (16,850) |
| Net book amount | 20,242 | 7,162 | 9,256 | 571 | 37,231 |
(i)Amortization charges are included in “General and administrative expenses” and “Selling expenses” for the years ended December 31, 2024 and 2023, respectively. There were no impairment charges for any of the years presented (see Note 32 (a)).
The accompanying notes are an integral part of these consolidated financial statements.
F- 47
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
16. Biological assets
Changes in the Group’s biological assets in 2024 and 2023 were as follows:
| 2024 | |||||
|---|---|---|---|---|---|
| Crops<br>(ii) | Rice<br>(ii) | Dairy | Sugarcane<br>(ii) | Total | |
| Beginning of the year | 55,545 | 32,843 | 23,191 | 116,458 | 228,037 |
| Increase due to purchases | 1,275 | 653 | — | — | 1,928 |
| Initial recognition and changes in fair value of biological assets (i) | 33,050 | 53,436 | 15,429 | 41,166 | 143,081 |
| Decrease due to harvest / disposals | (220,801) | (151,317) | (107,878) | (205,967) | (685,963) |
| Costs incurred during the year | 172,927 | 145,752 | 95,749 | 142,205 | 556,633 |
| Exchange differences | 37,367 | 20,731 | 16,373 | (24,242) | 50,229 |
| End of the year | 79,363 | 102,098 | 42,864 | 69,620 | 293,945 |
| 2023 | |||||
| --- | --- | --- | --- | --- | |
| Crops<br>(ii) | Rice<br>(ii) | Dairy | Sugarcane<br>(ii) | Total | |
| Beginning of the year | 72,843 | 54,125 | 30,045 | 109,431 | 266,444 |
| Increase due to purchases | 369 | 142 | — | — | 511 |
| Initial recognition and changes in fair value of biological assets (i) | (10,327) | (4,301) | 8,050 | 94,436 | 87,858 |
| Decrease due to harvest / disposals | (116,007) | (58,110) | (57,262) | (245,325) | (476,704) |
| Costs incurred during the year | 130,965 | 57,990 | 51,901 | 146,592 | 387,448 |
| Exchange differences | (22,298) | (17,003) | (9,543) | 11,324 | (37,520) |
| End of the year | 55,545 | 32,843 | 23,191 | 116,458 | 228,037 |
(i) Biological asset with a production cycle of more than one year (that is dairy cattle) generated “Initial recognition and changes in fair value of biological assets” amounting to US$14,263 for the year ended December 31, 2024 (2023: US$15,795). In 2024, an amount of US$525 (2023: US$3,999) was attributable to price changes, and an amount of US$13,738 (2023: US$11,796) was attributable to physical changes.
(ii) Biological assets that are measured at fair value within level 3 of the hierarchy.
F- 48
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
16. Biological assets (continued)
Cost of production for the year ended December 31, 2024:
| Crops | Rice | Dairy | Sugar,<br>Ethanol and<br>Energy | Total | |
|---|---|---|---|---|---|
| Salaries, social security expenses and employee benefits | 6,635 | 16,241 | 14,412 | 13,814 | 51,102 |
| Depreciation and amortization | — | — | — | 4,940 | 4,940 |
| Depreciation of right of use assets | — | — | — | 44,553 | 44,553 |
| Fertilizers, agrochemicals and seeds | 76,280 | 46,336 | 50 | 51,180 | 173,846 |
| Fuel, lubricants and others | 1,011 | 2,367 | 1,584 | 4,277 | 9,239 |
| Maintenance and repairs | 2,451 | 17,665 | 5,454 | 4,100 | 29,670 |
| Freights | 5,502 | 2,130 | 190 | — | 7,822 |
| Contractors and services | 30,196 | 46,830 | — | 11,580 | 88,606 |
| Feeding expenses | 410 | 157 | 45,112 | — | 45,679 |
| Veterinary expenses | 279 | 97 | 5,050 | — | 5,426 |
| Energy power | 68 | 5,681 | 2,230 | — | 7,979 |
| Professional fees | 662 | 399 | 257 | 354 | 1,672 |
| Other taxes | 909 | 91 | 246 | 48 | 1,294 |
| Lease expense and similar arrangements (1) | 46,886 | 5,262 | 2 | 5,374 | 57,524 |
| Others | 953 | 2,386 | 930 | 1,985 | 6,254 |
| Subtotal | 172,242 | 145,642 | 75,517 | 142,205 | 535,606 |
| Own agricultural produce consumed | 685 | 110 | 20,232 | — | 21,027 |
| Total | 172,927 | 145,752 | 95,749 | 142,205 | 556,633 |
(1) Correspond mainly to lease arrangement short term
F- 49
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
16. Biological assets (continued)
Cost of production for the year ended December 31, 2023:
| Crops | Rice | Dairy | Sugar,<br>Ethanol and<br>Energy | Total | |
|---|---|---|---|---|---|
| Salaries, social security expenses and employee benefits | 3,572 | 10,333 | 7,280 | 13,553 | 34,738 |
| Depreciation and amortization | — | — | — | 5,192 | 5,192 |
| Depreciation of right of use assets | — | — | — | 56,256 | 56,256 |
| Fertilizers, agrochemicals and seeds | 63,742 | 17,333 | — | 49,125 | 130,200 |
| Fuel, lubricants and others | 860 | 979 | 903 | 3,924 | 6,666 |
| Maintenance and repairs | 1,958 | 6,351 | 3,175 | 3,494 | 14,978 |
| Freights | 1,534 | 473 | 109 | — | 2,116 |
| Contractors and services | 30,694 | 17,447 | — | 10,731 | 58,872 |
| Feeding expenses | 1,578 | 189 | 23,711 | — | 25,478 |
| Veterinary expenses | 126 | 65 | 2,334 | — | 2,525 |
| Energy power | 29 | 1,847 | 1,339 | — | 3,215 |
| Professional fees | 282 | 287 | 219 | 393 | 1,181 |
| Other taxes | 480 | 142 | 148 | 52 | 822 |
| Lease expense and similar arrangements (1) | 24,536 | 1,547 | — | 2,100 | 28,183 |
| Others | 867 | 925 | 487 | 1,772 | 4,051 |
| Subtotal | 130,258 | 57,918 | 39,705 | 146,592 | 374,473 |
| Own agricultural produce consumed | 707 | 72 | 12,196 | — | 12,975 |
| Total | 130,965 | 57,990 | 51,901 | 146,592 | 387,448 |
(1) Correspond mainly to lease arrangement of short term periods.
Biological assets in December 31, 2024 and 2023 were as follows:
| 2024 | 2023 | |
|---|---|---|
| Non-current | ||
| Cattle for dairy production (i) | 42,449 | 23,191 |
| Breeding cattle (ii) | 607 | 371 |
| Other cattle (ii) | 362 | 144 |
| 43,418 | 23,706 | |
| Current | ||
| Breeding cattle (iii) | 11,433 | 6,037 |
| Other cattle (iii) | 415 | — |
| Sown land – crops (ii) | 69,339 | 49,813 |
| Sown land – rice (ii) | 99,720 | 32,023 |
| Sown land – sugarcane (ii) (iv) | 69,620 | 116,458 |
| 250,527 | 204,331 | |
| Total biological assets | 293,945 | 228,037 |
(i)Classified as bearer and mature biological assets.
(ii)Classified as consumable and immature biological assets.
(iii)Classified as consumable and mature biological assets.
(iv)It includes US$6,254 and US$3,833 of crops planted in sugarcane farms.
F- 50
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
16. Biological assets (continued)
The fair value less estimated point of sale costs of agricultural produce at the point of harvest amounted to US$578,085 for the year ended December 31, 2024 (2023: US$419,442).
The following table presents the Group’s biological assets that are measured at fair value at December 31, 2024 and 2023 (See Note 17 for a the description of each fair value level):
| 2024 | 2023 | |||||||
|---|---|---|---|---|---|---|---|---|
| Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |
| Cattle for dairy production | — | 42,449 | — | 42,449 | — | 23,191 | — | 23,191 |
| Breeding cattle | 12,040 | — | — | 12,040 | 6,408 | — | — | 6,408 |
| Other cattle | — | 777 | — | 777 | — | 144 | — | 144 |
| Sown land – sugarcane | — | — | 69,620 | 69,620 | — | — | 116,458 | 116,458 |
| Sown land – crops | — | — | 69,339 | 69,339 | — | — | 49,813 | 49,813 |
| Sown land – rice | — | — | 99,720 | 99,720 | — | — | 32,023 | 32,023 |
There were no transfers between any levels during the year.
The following significant unobservable inputs were used to measure the Group’s biological assets using the discounted cash flow valuation technique:
| Description | Unobservable<br>inputs | Range of unobservable inputs | Relationship of unobservable<br>inputs to fair value | |
|---|---|---|---|---|
| 2024 | 2023 | |||
| Sown land – sugarcane | Sugarcane yield – tonnes per hectare; Sugarcane TRS (kg of sugar per ton of cane) Production Costs – US$ per hectare. (Include maintenance, harvest and leasing costs) | '-Sugarcane yield: 50-100 tonnes/ha -Sugarcane TRS: 120-140 kg of sugar/tonnes of cane -Maintenance costs: 550-850 US$/ha -Harvest costs: 7.0-13.0 US$/tonnes of cane -Leasing costs: 12.0-14.4 tonnes/ha-Discount rate: 13.61% in Brazilian real. | '-Sugarcane yield: 50-100 tonnes/ha - Sugarcane TRS: 120-140kg of sugar/tonnes of cane - Maintenance costs: 550-850 US$/ha - Harvest costs: 7.0-13.0 US$/ tonnes of cane - Leasing costs: 12.0-14.4 tonnes/ha-Discount rate: 14.44% in Brazilian real. | The higher the sugarcane yield, the higher the fair value. The higher the maintenance, harvest and leasing costs per hectare, the lower the fair value. The higher the TRS of sugarcane, the higher the fair value. |
| Sown land – crops | Crops yield – tonnes per hectare; Commercial Costs – US$ per hectare;<br>Production Costs – US$ per hectare. | '- Crops yield: 0.60 – 7.0 tonnes/ha for Wheat, 0.4 – 13 tonnes/ha for Corn, 0.1 - 4900.0 tonnes/ha for Soybean, 0.5 - 2.8 for Sunflower and 0.9 - 6.3 tonnes/ha for Peanut - Commercial Costs: 9-57 US$/tonnes for Wheat, 11-63 US$/tonnes for Corn, 12-71 US$/tonnes for Soybean, 11-73 US$/tonnes for Sunflower and 19-70 US$/ha for Peanut - Production Costs: 187-1031 US$/ha for Wheat, 195-1616 US$/ha for Corn, 186-1054 US$/ha for Soybean, 291-1184 US$/ha for Sunflower and 750-2007 US$/ha for Peanut-Discount rate: 2% in US$. | '- Crops yield: 0.37 – 4.6 tonnes/ha for Wheat, 3.6 – 11 tonnes/ha for Corn, 0.9 - 3.7 tonnes/ha for Soybean, 0.8-2.2 for Sunflower and 2.4 - 3.6 tonnes/ha for Peanut<br><br>- Commercial Costs: 14-39 US$/ha for Wheat, 16-65 US$/ha for Corn, 21-48 US$/ha for Soybean, 22-65 US$/ha for Sunflower and 25.0 - 56.0 US$/ha for Peanut<br><br>- Production Costs: 143-823 US$/ha for Wheat, 231-1318 US$/ha for Corn, 193-776 US$/ha for Soybean, 215-1000 US$/ha for Sunflower and 861.0 - 1,866.0 US$/ha for Peanut-Discount rate: 6% in US$. | The higher the crops yield, the higher the fair value. The higher the commercial and direct costs per hectare, the lower the fair value. |
| Sown land – rice | Rice yield – tonnes per hectare;<br>Commercial Costs – US$ per hectare;<br>Production Costs – US$ per hectare. | '-Rice yield: 4.9 -7.4 tonnes/ha -Commercial Costs: 18-53 US$/ha -Production Costs: 1275-2438 US$/ha-Discount rate: 2% in US$. | '-Rice yield: 4.7 -6.4 tonnes/ha<br><br>-Commercial Costs: 11-35 US$/ha<br><br>-Production Costs: 1033-3121 US$/ha-Discount rate: 6% in US$. | The higher the rice yield, the higher the fair value. The higher the commercial and direct costs per hectare, the lower the fair value. |
F- 51
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
16. Biological assets (continued)
As of December 31, 2024, the impact of a reasonable 10% increase / (decrease) in estimated costs, with all other variables held constant, would result in a decrease (increase) in the fair value of the Group’s biological asset less cost to sell of US$23.3 million for sugarcane, US$3.4 million for crops and US$6.5 million for rice.
As of December 31, 2023, the impact of a reasonable 10% increase / (decrease) in estimated costs, with all other variables held constant, would result in a decrease (increase) in the fair value of the Group’s biological asset less cost to sell of US$23.3 million for sugarcane, US$3.4 million for crops and US$6.5 million for rice.
“La Niña” weather event in 2023
“La Niña” is a weather phenomenon caused by the fluctuation of the ocean temperatures in the central and eastern equatorial Pacific due to changes in the atmosphere, which affects the climate of several regions worldwide. When the temperature of the ocean decreases by 0.5°C below the five-quarter average, a so called “La Niña” weather pattern begins. This whether phenomenon is characterized by below average precipitations during spring and summertime in South America. We have experienced this weather pattern in Argentina and Uruguay, where most of our Farming operations are based, throughout the last three consecutive years and it has extended its effects during 2023, resulting in a severe drought in almost all productive regions in Argentina and Uruguay. Our diversification in terms of geographic footprint and crops planted (soybean, peanut, corn, wheat, sunflower, among others), acts as a natural hedge against weather risk, and enables us to adopt defensive strategies such as delaying planting activities and switching between crops which are either more resilient to dry weather or have a later development stage. However, and despite our ability to partially mitigate this effect, during 2023, as a consequence of the La Niña weather event, yields of our different crops had a reduction ranging from 18% to 60%, depending on the crop, thus significantly affecting our results of operations for the year ended December 31,2023.
17. Financial instruments by category
The Group classified its financial assets in the following categories:
(a) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short-term. Derivatives are also categorized as held for trading unless they are designated as hedges. For all years presented, the Group’s financial assets at fair value through profit or loss comprise mainly short-term investment and derivative financial instruments.
(b) Financial assets at amortized cost
Financial assets at amortized cost, namely loans and receivables, are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables comprise “trade and other receivables” and “cash and cash equivalents” in the statement of financial position.
The following tables show the carrying amounts of financial assets and financial liabilities by category of financial instrument and reconciliation to the corresponding line item in the statements of financial position, as appropriate. Since the line items “Trade and other receivables, net” and “Trade and other payables” contain both financial instruments and non-financial assets or liabilities (such as other tax receivables or advance payments for services to be received in the future), the reconciliation is shown in the columns headed “Non-financial assets” and “Non-financial liabilities”.
F- 52
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
17. Financial instruments by category (continued)
| Financial assets at amortized cost | Financial assets at fair<br>value through<br>profit or loss | Subtotal<br>financial<br>assets | Non-<br>financial<br>assets | Total | |
|---|---|---|---|---|---|
| December 31, 2024 | |||||
| Assets as per statement of financial position | |||||
| Trade and other receivables | 102,619 | — | 102,619 | 149,247 | 251,866 |
| Derivative financial instruments | — | 9,596 | 9,596 | — | 9,596 |
| Short term investment | — | 46,097 | 46,097 | — | 46,097 |
| Cash and cash equivalents | 211,244 | — | 211,244 | — | 211,244 |
| Total | 313,863 | 55,693 | 369,556 | 149,247 | 518,803 |
| Financial<br>liabilities at<br>amortized cost | Liabilities at<br>fair value<br>through profit<br>or loss | Subtotal<br>financial<br>liabilities | Non-<br>financial<br>liabilities | Total | |
| --- | --- | --- | --- | --- | --- |
| Liabilities as per statement of financial position | |||||
| Trade and other payables | 174,863 | — | 174,863 | 32,811 | 207,674 |
| Borrowings | 779,556 | — | 779,556 | — | 779,556 |
| Leases Liabilities | 342,030 | — | 342,030 | — | 342,030 |
| Derivative financial instruments | — | 5,779 | 5,779 | — | 5,779 |
| Total | 1,296,449 | 5,779 | 1,302,228 | 32,811 | 1,335,039 |
| Financial assets at amortized cost | Financial assets at fair<br>value through<br>profit or loss | Subtotal<br>financial<br>assets | Non-<br>financial<br>assets | Total | |
| --- | --- | --- | --- | --- | --- |
| December 31, 2023 | |||||
| Assets as per statement of financial position | |||||
| Trade and other receivables | 113,831 | — | 113,831 | 104,284 | 218,115 |
| Derivative financial instruments | — | 31,820 | 31,820 | — | 31,820 |
| Short term investment | — | 62,637 | 62,637 | — | 62,637 |
| Cash and cash equivalents | 339,781 | — | 339,781 | — | 339,781 |
| Total | 453,612 | 94,457 | 548,069 | 104,284 | 652,353 |
F- 53
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
17. Financial instruments by category (continued)
| Financial<br>liabilities at<br>amortized cost | Liabilities at<br>fair value<br>through profit<br>or loss | Subtotal<br>financial<br>liabilities | Non-<br>financial<br>liabilities | Total | |
|---|---|---|---|---|---|
| Liabilities as per statement of financial position | |||||
| Trade and other payables | 163,481 | 1,400 | 164,881 | 26,857 | 191,738 |
| Borrowings (i) | 904,949 | — | 904,949 | — | 904,949 |
| Leases Liabilities | 378,510 | — | 378,510 | — | 378,510 |
| Derivative financial instruments (i) | — | 169 | 169 | — | 169 |
| Total | 1,446,940 | 1,569 | 1,448,509 | 26,857 | 1,475,366 |
(i) The Group formally documents and designates cash flow hedging relationships to hedge the foreign exchange rate risk of a portion of its highly probable future sales in U.S. Dollars using a portion of its borrowings denominated in U.S. Dollars, currency forwards and foreign currency floating-to-fixed interest rate swaps (See Note 2 for details).
Because of the short maturities of most trade accounts receivable and payable, other receivables and liabilities, and cash and cash equivalents, their carrying amounts at the closing date do not differ significantly from their respective fair values. The fair value of long-term borrowings is disclosed in Note 26.
Income, expense, gains and losses on financial instruments can be assigned to the following categories:
| Financial asset / liabilities at amortized cost | Assets/ liabilities<br>at fair value<br>through profit or<br>loss | Total | ||||||
|---|---|---|---|---|---|---|---|---|
| December 31, 2024 | ||||||||
| Interest income (i) | 16,048 | — | 16,048 | |||||
| Interest expense (i) | (40,869) | — | (40,869) | |||||
| Foreign exchange loss (i) | (37,569) | — | (37,569) | |||||
| Gain from derivative financial instruments (ii) | — | 1,246 | 1,246 | |||||
| Finance cost related to lease liabilities | (32,938) | — | (32,938) | Financial assets / liabilities at amortized cost | Assets/ liabilities<br>at fair value<br>through profit or<br>loss | Total | ||
| --- | --- | --- | --- | |||||
| December 31, 2023 | ||||||||
| Interest income (i) | 7,134 | — | 7,134 | |||||
| Interest expense (i) | (31,906) | — | (31,906) | |||||
| Foreign exchange gains (i) | 90,930 | — | 90,930 | |||||
| Gain from derivative financial instruments (ii) | — | 10,414 | 10,414 | |||||
| Finance cost related to lease liabilities | (40,203) | — | (40,203) |
(i)Included in “Financial Results, net” in the consolidated statement of income.
(ii)Included in “Other operating income, net” and “Financial Results, net” in the consolidated statement of income.
F- 54
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
17. Financial instruments by category (continued)
Determining fair values
IFRS 13 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. All financial instruments recognized at fair value are allocated to one of the valuation hierarchy levels of IFRS 13. This valuation hierarchy provides for three levels. The allocation reflects which of the fair values derive from transactions in the market and where valuation is based on models because market transactions are lacking. The level in the fair value hierarchy is categorized in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety.
As of December 31, 2024 and 2023, 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. The financial instruments the Group has allocated to this level mainly comprise crop futures and options traded on the stock market.
Derivatives not traded on the stock market allocated to Level 2 are valued using models based on observable market data. 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 Group does not have financial instruments allocated to this level for any of the years presented.
The following tables present the Group’s financial assets and financial liabilities that are measured at fair value as of December 31, 2024 and 2023 and their allocation to the fair value hierarchy:
| Level 1 | Level 2 | Total | ||
|---|---|---|---|---|
| Assets | ||||
| Derivative financial instruments | 2024 | 1,148 | 8,448 | 9,596 |
| Short-term investment (1) | 2024 | 46,097 | — | 46,097 |
| Derivative financial instruments | 2023 | 13,819 | 18,001 | 31,820 |
| Short-term investment (2) | 2023 | 62,637 | — | 62,637 |
| Liabilities | ||||
| Derivative financial instruments | 2024 | (2) | (5,777) | (5,779) |
| Derivative financial instruments | 2023 | (68) | (101) | (169) |
(1) It includes US$ 1,474 of BOPREAL (Bonos para la Reconstrucción de una Argentina Libre) and US$ 44,623 of LECAPs (Letras del Tesoro Nacional Capitalizables en Pesos).
(2) US-Treasury Bills with maturity from the date of acquisition longer than 90 days used as collateral for short-term borrowings. As of December, 2023, US$ 59,475 of these US T-bills are used as collateral for short-term borrowings and are not available for use by other entities of the Group.
There were no transfers within level 1 and 2 during the years ended December 31, 2024 and 2023.
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:
F- 55
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
17. Financial instruments by category (continued)
| Class | Pricing Method | Parameters | Pricing Model | Level | 2024 | 2023 |
|---|---|---|---|---|---|---|
| Futures | Quoted price | — | — | 1 | 852 | 8,657 |
| Options/OTC | Quoted price | — | — | 1 | 160 | 5,141 |
| NDF | Quoted price | Foreign-exchange curve | Present value method | 1 | 134 | (47) |
| Interest-rate swaps | Theoretical price | Money market interest-rate curve | Present value method | 2 | 2,671 | 17,900 |
| Public securities | Quoted price | — | — | 1 | 46,097 | 62,637 |
18. Trade and other receivables, net
| 2024 | 2023 | |
|---|---|---|
| Non-current | ||
| Advances to suppliers | 3,316 | 3,266 |
| Income tax credits | 4,639 | 2,332 |
| Non-income tax credits (i) | 26,240 | 24,860 |
| Judicial deposits | 1,816 | 2,187 |
| Receivable from disposal of subsidiary | — | 3,899 |
| Other receivables | 2,499 | 2,516 |
| Non-current portion | 38,510 | 39,060 |
| Current | ||
| Trade receivables | 87,645 | 90,526 |
| Less: Allowance for trade receivables | (1,114) | (2,888) |
| Trade receivables – net | 86,531 | 87,638 |
| Prepaid expenses | 18,038 | 6,953 |
| Advances to suppliers | 35,996 | 42,808 |
| Income tax credits | 5,680 | 1,253 |
| Non-income tax credits (i) | 53,522 | 22,812 |
| Receivable from disposal of subsidiary | 2,900 | 3,971 |
| Cash collateral | — | 11 |
| Other receivables | 10,689 | 13,609 |
| Subtotal | 126,825 | 91,417 |
| Current portion | 213,356 | 179,055 |
| Total trade and other receivables, net | 251,866 | 218,115 |
(i) Includes US$307 (2023: US$293) reclassified from property, plant and equipment. It also includes US$16 million corresponding to tax credits resulting from a judicial decision regarding the exclusion of ICMS from the calculation base for PIS and COFINS.
F- 56
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
18. 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 U.S. Dollars):
| 2024 | 2023 | |
|---|---|---|
| Currency | ||
| U.S. Dollar | 84,477 | 88,811 |
| Argentine Peso | 70,837 | 24,304 |
| Uruguayan Peso | 2,478 | 6,570 |
| Brazilian Reais | 94,074 | 98,430 |
| 251,866 | 218,115 |
As of December 31, 2024 trade receivables of US$29,123 (2023: US$22,989) were past due but not impaired. The aging analysis of these receivables indicates that US$289 and US$449 are over 6 months in December 31, 2024 and 2023, respectively.
For trade receivables, the Group applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognized from initial recognition of the receivables.
Delinquency in payments is an indicator that a receivable may be impaired. However, management considers all available evidence in determining when a receivable is impaired. Generally, trade receivables, which are more than 180 days past due are fully provided for. However, certain receivables 180+ days overdue are not provided for based on a case-by-case analysis of credit quality analysis. Furthermore, receivables, which are not 180+ days overdue, may be provided for if specific analysis indicates a potential impairment.
Movements on the Group’s allowance for trade receivables are as follows:
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| At January 1 | 2,888 | 4,266 | 3,023 |
| Charge of the year | 391 | 1,874 | 3,570 |
| Unused amounts reversed | (892) | (1,371) | (661) |
| Used during the year | (1,129) | (173) | (100) |
| Exchange differences | (144) | (1,708) | (1,566) |
| At December 31 | 1,114 | 2,888 | 4,266 |
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 maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above.
As of December 31, 2024, approximately 89% (2023: 70%) of the outstanding unimpaired trade receivables (neither past due not impaired) relate to sales to 13 well-known multinational companies with good credit quality standing, including but not limited to Camara de comercializacion de energia electrica, Central Energica Vicentica LTDA, Syngenta AGRO S.A., YPF S.A., Bunge Argentina S.A., among others. Most of these entities or their parent companies are externally credit-rated. The Group reviews these external ratings from credit agencies.
F- 57
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
18. Trade and other receivables, net (continued)
The remaining percentage as of December 31, 2024 and 2023 of the outstanding unimpaired trade receivables (neither past due nor impaired) relate to sales to a dispersed large quantity of customers for which external credit ratings may not be available. However, the total base of customers without an external credit rating is relatively stable.
New customers with less than six months of history with the Group are closely monitored. The Group has not experienced credit problems with these new customers to date. The majority of the customers for which an external credit rating is not available are existing customers with more than six months of history with the Group and with no defaults in the past. A minor percentage of customers may have experienced some non-significant defaults in the past but fully recovered.
19. Inventories
| 2024 | 2023 | |
|---|---|---|
| Raw materials | 101,510 | 76,440 |
| Finished goods (Note 5) | 188,154 | 179,611 |
| 289,664 | 256,051 |
20. Cash and cash equivalents
| 2024 | 2023 | |
|---|---|---|
| Cash at bank and on hand | 137,294 | 179,068 |
| Short-term bank deposits | 73,950 | 160,713 |
| 211,244 | 339,781 |
21. Acquisitions and disposals
Disposals
In April 2024, the Company sold “La Pecuaria” farm, a 3,177 hectares farm located in Uruguay for an aggregate amount of US$ 20.7 million, collected in full at closing. This transaction resulted in a pre-tax gain of US$ 6.1 million included in the line item “Other operating income” in the statement of income for year ended December 31, 2024. Also, an amount of US$ 6.9 million was reclassified to retained earnings out of the revaluation surplus reserve.
In September 2023, the Company sold “El Meridiano” farm, a 6,302 hectares farm located in the Province of Buenos Aires, Argentina for an aggregate amount of US$ 48 million, collected in full. This transaction resulted in a pre-tax gain of US$6.3 million included in the line item “Other operating income / (expense), net”. Also, an amount of US$ 13.1 million was reclassified to retained earnings out of the revaluation surplus reserve.
The Group did not complete any disposals during the years ended December 31, 2022.
Acquisitions
2024 and 2023 Acquisition Activity
The Group did not complete any acquisitions during the year ended December 31, 2024 and 2023.
2022 Acquisition Activity
During the year ended December 31, 2022, we completed one business combination, as follows:
Acquisition of subsidiaries of Viterra Group in Argentina and Uruguay
On May 3, 2022, (the “Closing Date”) the Group, through certain subsidiaries consummated the acquisition of the rice operations in Uruguay and Argentina of the Viterra Group, comprising a 100% ownership of Molinos Libres S.A. (Argentina), Viterra Uruguay S.A. (Uruguay) and Paso Dragón S.A. (Uruguay). The transaction also included the acquisition of certain leasing agreements. All of the acquired subsidiaries form part of the Rice Business Segment.
F- 58
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
The terms and conditions of the agreement contemplate the payment, subject to adjustments, of a purchase price of approximately US$ 17.8 million payable in three annual installments and the assumption of the existing financial debt for an amount of US$ 17.9 million. As of December 31, 2024, all installments have been cancelled.
The Company has made an allocation of the estimated purchase price to the identifiable assets acquired and liabilities assumed based on their fair values at acquisition date. The Company has made significant assumptions and estimates in determining the purchase price, including the contingent payment and the allocation of the estimated purchase price in these consolidated financial statements.
As the fair value of the identifiable net assets acquired was greater than the total consideration paid, negative goodwill arises on the acquisition. The negative goodwill is recognized as “Bargain purchase gain on acquisition” in the income statement for the year end December 31, 2022 reflecting the opportunity to acquire the rice operations in Argentina and Uruguay from an outgoing market player.
The following table summarizes the purchase price:
| Purchase consideration: | |
|---|---|
| Amount paid in cash | 1,512 |
| Amounts to be paid in installments (*) | 16,242 |
| Total purchase consideration | 17,754 |
| Fair value of net assets acquired | 27,507 |
| Bargain purchase on acquisition over the total purchase consideration | 9,753 |
(*) Amounts to be paid in installments were discounted at present value as of the date of acquisition at a 6.5% discount rate.
During 2024, all installments were cancelled.
Acquisition-related costs of US$ 193 are included in General and administrative expenses in the Consolidated Statement of Income.
The following table summarizes the sales of goods and services rendered and profit from operations of the subsidiaries acquired included in the consolidated financial statements of income for the year end December 31, 2022 as from the date of acquisition:
| Period from the date of acquisition to December 31 2022 | |
|---|---|
| Sales of goods and services rendered | 61,363 |
| Profit from operations | 6,131 |
If the acquisition had occurred on January 1, 2022 consolidated pro-forma sales of goods and services rendered, profit from operations and profit for the year, for the year ended 31 December 2022 would have been US$ 1,369,462, US$ 249,462 and US$ 106,950.
F- 59
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
22. Shareholders' contributions
The share capital of the Group is represented by common shares with a nominal value of US$1.5 per share and one vote each.
| Number of shares | Share capital and<br>share premium | |
|---|---|---|
| At January 1, 2022 | 122,382 | 1,034,633 |
| Reduction of issued share capital of the company | (11,000) | (16,500) |
| Employee share options exercised (Note 23) (1) | — | 2,432 |
| Restricted shares granted and units vested (Note 23) | — | 4,647 |
| Purchase of own shares | — | (29,970) |
| Dividends paid to shareholders | — | (35,000) |
| At December 31, 2022 | 111,382 | 960,242 |
| Employee share options exercised (Note 23) (1) | — | 236 |
| Restricted shares granted and units vested (Note 23) | — | 7,528 |
| Purchase of own shares | — | (22,123) |
| Dividends paid to shareholders | — | (35,000) |
| At December 31, 2023 | 111,382 | 910,883 |
| Employee share options exercised (Note 23) (1) | 115 | |
| Restricted shares granted (Note 23) | 7,540 | |
| Purchase of own shares | (57,066) | |
| Dividends provided for and paid to mayor shareholders | — | (35,000) |
| At December 31, 2024 | 111,382 | 826,472 |
(1)Treasury shares were used to settle these options, units and grants.
Decision of the Extraordinary General Shareholders’ meeting
On April 20, 2022 the extraordinary general meeting of the shareholders of the Company resolved to reduce the issued share capital of the Company by an amount of $16,500,000 by the cancellation of 11,000,000 shares with a nominal value of $1.50 each held in treasury by the Company so that, as from April 20, 2022, the issued share capital amounts to $167,072,722.50, represented by 111,381,815 shares in issue with a nominal value of $1.50 each.
Share Repurchase Program
On September 24, 2013, the Board of Directors of the Company has authorized a share repurchase program for up to 5% of its outstanding shares. The repurchase program has commenced on September 24, 2013 and is reviewed by the Board of Directors after each 12-month period. On December 11, 2024, the Board of Directors approved the renewal of the program, and also its extension for an additional twelve-month period, ending December 31, 2025.
Repurchases of shares under the program are made from time to time in open market transactions in compliance with the trading conditions of Rule 10b-18 under the U.S. Securities Exchange Act of 1934, as amended, and applicable rules and regulations. The share repurchase program does not require Adecoagro to acquire any specific number or amount of shares and may be modified, suspended, reinstated or terminated at any time in the Company’s discretion and without prior notice.
As of December 31, 2024, the Company repurchased 31,241,925 shares under this program, of which 9,067,146 have been applied to some exercise of the Company’s stock option plan and restricted stock units and the grant of restricted shares.
F- 60
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
22. Shareholders' contributions (continued)
In 2024, 2023 and 2022 the Company repurchased shares for an amount of US$66.9 million; US$26.2 million and US$36.8 million respectively.
As of December 31, 2024 the company held 11,328,038 own shares, representing 10,2% of its issued capital stock. The Board of Directors intends to propose a reduction of capital through the cancellation of shares, with the objective of reducing the balance to below ten percent.
Dividend distribution
On April 17, 2024 the general meeting of the shareholders of the Company resolved the payment of an annual dividend of $35 million to be paid to outstanding shares in two installments. The first payment of the year 2024, of US$17.5 million (0.1682 per share) was made on May 29, 2024 and the second installment was made in November 27, 2024 (0.1740 per share).
On April 19, 2023 the general meeting of the shareholders of the Company resolved the payment of an annual dividend of $35 million to be paid to outstanding shares in two installments. The first payment of the year 2023, of US$ 17.5 million (0.1626 per share) was made on May 24, 2023 and the second installment was made in November 24, 2023 (0.1649 per share).
On April 20, 2022 the general meeting of the shareholders of the Company resolved the payment of an annual dividend of US$ 35 million to be paid to outstanding shares in two installments in May and November. The first payment, of US$ 17.5 million (0.1572 per share) was made on May 17, 2022 and the second also US$ 17.5 million (0.1602 per share) installment was made on November 17, 2022.
Interim Dividend Proposal
On March 11, 2025 the Company’s Board of Directors approved the distribution of an interim dividend of US$17.5 million, to be paid in May of 2025. These Consolidated Financial Statements do not reflect this dividend payable.
F- 61
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
23. Equity-settled share-based payments
The Group has set a “2004 Incentive Option Plan” (collectively referred to as “Option Schemes”) under which the Group granted equity-settled options to senior managers and selected employees of the Group's subsidiaries with a term of ten years. 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 stock units and restricted shares to senior and medium management and key employees of the Group’s subsidiaries.
(a)Option Schemes
The fair value of the options under the Option Schemes was measured at the date of grant using the Black-Scholes valuation technique.
As of the date of these financial statements all options has already been vested and expensed.
The Adecoagro/ IFH 2004 Stock Incentive Option Plan was effectively established in 2004 and is administered by the Compensation Committee of the Company. Options are exercisable over a ten-year period. The 2004 Plan was amended to extend the term to the 20th anniversary of its adoption.
Movements in the number of equity-settled options outstanding and their related weighted average exercise prices under the Adecoagro/ IFH 2004 Stock Incentive Option Plan are as follows:
| 2024 | 2023 | 2022 | ||||
|---|---|---|---|---|---|---|
| Average<br>exercise<br>price per<br>share | Options<br>(thousands) | Average<br>exercise<br>price per <br>Share | Options<br>(thousands) | Average<br>exercise<br>price per <br>Share | Options<br>(thousands) | |
| At January 1 | 6.66 | 1,284 | 6.66 | 1,321 | 6.66 | 1,634 |
| Exercised | 6.83 | (14) | 5.83 | (37) | 6.77 | (313) |
| At December 31 | 6.66 | 1,270 | 6.66 | 1,284 | 6.66 | 1,321 |
Options outstanding at year end under this Plan have the following expiry date and exercise prices:
| Exercise<br>price per share | Shares (in thousands) | ||||||
|---|---|---|---|---|---|---|---|
| Expiry date (i): | 2024 | 2023 | 2022 | ||||
| May 1, 2034 | 5.83 | 400 | 400 | 400 | |||
| May 1, 2035 | 5.83 | 358 | 363 | 369 | |||
| January 1, 2036 | 5.83 | 90 | 94 | 124 | |||
| February 16, 2036 | 7.11 | 84 | 84 | 84 | |||
| October 1, 2036 | 8.62 | 338 | 343 | 344 |
(i) On August 2023, the Board of Directors decided to extend the expired date of the Plan.
F- 62
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
23. Equity-settled unit-based payments (continued)
(b)Restricted Share Plan
The Restricted Share and Restricted Stock Unit Plan was effectively established in 2010 and amended in November 2011. It is administered by the Compensation Committee of the Company. Restricted shares or units under these Plan vest over a 3-year period from the date of grant at 33% on each anniversary of the grant date. Participants are entitled to receive one common share of the Company for each restricted share or restricted unit granted. There are no performance requirements for the delivery of common shares, except that a participant’s employment with the Group must not have been terminated prior to the relevant vesting date. If the participant ceases to be an employee for any reason, any unvested restricted share or unit shall not be converted into common shares. The maximum number of ordinary shares with respect to which awards may be made under the Plan is 9,228,795, of which 7,322,787 have already been vested. The maximum numbers of ordinary shares are revised annually.
At December 31, 2024, the Group recognized compensation expense US$6.8 million related to the restricted stock units granted under the Restricted Share Plan (2023: US$8.6 million and 2022: US$10.9 million).
.
The restricted shares under the Restricted Share Plan were measured at fair value at the date of grant.
Key grant-date fair value and other assumptions under the Restricted Share Plan are detailed below:
| Grant Date | Apr 1, 2022 | May 15, 2022 | Mar 17, 2023 | April 20, 2023 | March 15, 2024 | April 19, 2024 |
|---|---|---|---|---|---|---|
| Fair value | 10.87 | 12.60 | 7.44 | 8.12 | 10.07 | 10.90 |
Movements in the number of restricted shares outstanding under the Restricted Share Plan are as follows:
| Restricted shares (thousand) | |||
|---|---|---|---|
| 2024 | 2023 | 2022 | |
| At January 1 | 1,789 | 2,301 | 1,766 |
| Granted (1) | 604 | 549 | 1,406 |
| Forfeited | (22) | (26) | (43) |
| Vested | (971) | (1,035) | (828) |
| At December 31 | 1,400 | 1,789 | 2,301 |
(1) Approved by the Board of Directors of March 12, 2024 and the Shareholders Meeting of April 17, 2024.
24. Legal and other reserves
According to the laws of certain of the countries in which the Group operates, a portion of the profit of the year (5%) is separated to constitute legal reserves until they reach legal capped amounts. These legal reserves are not available for dividend distribution and can only be released to absorb losses. The legal limit of these reserves has not been met.
Legal and other reserves amount to US$23,302 as of December 31, 2024 (2023: US$26,124) and are included within the balance of retained earnings in the statement of changes in shareholders’ equity.
The Company may make distributions in the form of dividends or otherwise to the extent that it has distributable retained earnings or available distributable reserves (including share premium) that result from the Stand Alone Financial Statements prepared in accordance with Luxembourg GAAP. No distributable retained earning result from the Stand Alone Financial Statements of the Company as of December 31, 2024, but the Company has distributable reserves in excess of US$754,009.
F- 63
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
24. Legal and other reserves (continued)
In the other reserves line, it is included the benefit that the Company has regarding ICMS conceded by the government of the Estate of Mato Grosso do Sul. In accordance with the Complementary Law 160/17, grants related to ICMS, conceded by any Estate of Brazil, were considered as Investments Grants. This investment grants will not be computed to calculate income tax, since they were accounted as an Equity Reserve. This reserve cannot be distributed, unless income tax is paid on the reserve.
25. Trade and other payables
| 2024 | 2023 | |
|---|---|---|
| Non-current | ||
| Trade payables | 384 | 514 |
| Other payables | 383 | 494 |
| 767 | 1,008 | |
| Current | ||
| Trade payables | 173,157 | 140,949 |
| Advances from customers | 22,609 | 16,351 |
| Taxes payable | 9,499 | 9,482 |
| Dividends to be paid | 703 | 1,024 |
| Payable from acquisition of subsidiary (Note 21) | — | 13,404 |
| Other payables | 939 | 9,520 |
| 206,907 | 190,730 | |
| Total trade and other payables | 207,674 | 191,738 |
The fair values of current trade and other payables approximate their respective carrying amounts due to their short-term nature. The fair values of non-current trade and other payables approximate their carrying amounts, as the impact of discounting is not significant.
26. Borrowings
| 2024 | 2023 | |
|---|---|---|
| Non-current | ||
| Senior Notes | 414,638 | 498,347 |
| Bank borrowings | 265,367 | 199,496 |
| 680,005 | 697,843 | |
| Current | ||
| Senior Notes | 6,858 | 8,250 |
| Bank overdrafts | — | 4,386 |
| Bank borrowings | 92,693 | 194,470 |
| 99,551 | 207,106 | |
| Total borrowings | 779,556 | 904,949 |
As of December 31, 2024, total bank borrowings include collateralized liabilities of US$3,842 (2023: US$77,055). These loans are mainly collateralized by property, plant and equipment, sugarcane plantations, sugar export contracts, shares of certain subsidiaries of the Group and U.S. Treasury Bills.
Notes 2027
On September 21, 2017, the Company issued senior notes (the “Notes”) for a total amount of US$500 million, at an annual fixed rate of 6%. The Notes will mature on September 21, 2027. Interest on the Notes are payable semi-annually in arrears on March 21 and September 21 of each year. The total proceeds net of expenses was US$495.2 million.
F- 64
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
26. Borrowings (continued)
The Notes are fully and unconditionally guaranteed on a senior unsecured basis by certain of our current and future subsidiaries. As of December 31, 2024, Adeco Agropecuaria S.A., Adecoagro Brasil Participações S.A., Adecoagro Vale do Ivinhema S.A., Pilagá S.A. and Usina Monte Alegre Ltda. are the only Subsidiary Guarantors.
The Notes contain customary financial covenants and restrictions which require us to meet pre-defined financial ratios, among other restrictions. As of December 31, 2024 and 2023 the Group was in compliance with these financial covenants.
On July 22, 2024, the Company announced a cash tender offer for up to US$100.0 million of the Notes due 2027. As of the closing date of the Tender (August 19, 2024) US$84.36 million in aggregate principal amount of Notes had been validly tendered by Holders and fully cancelled. The total consideration, including the Early Tender Premium, was US$ 980 for each US$1,000 principal amount of Notes.
Debt maturity breakdown
The maturity of the Group's borrowings and the Group's exposure to fixed and variable interest rates is as follows:
| 2024 | 2023 | |
|---|---|---|
| Fixed rate: | ||
| Less than 1 year | 69,178 | 117,105 |
| Between 1 and 2 years | 55,952 | 6,010 |
| Between 2 and 3 years | 414,994 | 5,508 |
| Between 3 and 4 years | 356 | 498,347 |
| Between 4 and 5 years | 356 | — |
| More than 5 years | 35,936 | — |
| 576,772 | 626,970 | |
| Variable rate: | ||
| Less than 1 year | 30,373 | 90,001 |
| Between 1 and 2 years | 83,142 | 37,712 |
| Between 2 and 3 years | 46,593 | 91,878 |
| Between 3 and 4 years | 2,932 | 56,605 |
| Between 4 and 5 years | 441 | 1,783 |
| More than 5 years | 39,303 | — |
| 202,784 | 277,979 | |
| 779,556 | 904,949 |
Borrowings incurred by the Group’s subsidiaries in Brazil are repayable at various dates between January 2025 and November 2040 and bear either fixed interest rates ranging from 5.64% to 12.65% per annum or variable rates based on base-rates plus spreads ranging from 4.42% to 13.83% per annum.
Borrowings incurred by the Group’s subsidiaries in Argentina are repayable at various dates between March 2025 and December 2028 and bear either no interest rate or variable rates based on specific base-rates plus spreads of 3.1% for those borrowings denominated in U.S. Dollar, and a fixed interest rates ranging from 43.0% to 45% per annum for those borrowings denominated in Argentine pesos.
F- 65
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
26. Borrowings (continued)
Brazilian Subsidiaries
The main loans of the Group’s Brazilian Subsidiaries are:
| Bank | Grant date | Nominal amount | Capital outstanding as of December 31 | Maturity date | Annual interest rate | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | ||||||||||
| (In millions) | Millions of<br>equivalent<br>Dollars | ||||||||||
| Certificados Recebíveis do Agronegócio (CRA) (2) | December, 2019 | R | 400.0 | R | 400.0 | 64.6 | 82.6 | November-27 | 3.80% + IPCA | ||
| Debênture (1) | December, 2020 | R | 400.0 | R | 400.0 | 64.6 | 82.6 | December-26 | 4.24% + IPCA | ||
| Certificados Recebíveis do Agronegócio (CRA) (2) | July, 2024 | R | 400.0 | R | 400.0 | 64.6 | — | Jul-31 / Jul-34 | IPCA + 6,8% / 12,65% |
All values are in US Dollars.
(1) Collateralized by long term power purchase agreement (PPA).
(2) This debt was issued with no guarantee.
The Debenture contains certain customary financial covenants and restrictions which require the Brazilian subsidiaries to meet pre-defined financial ratios, among other restrictions, as well as restrictions on the payment of dividends. These financial ratios are measured considering the statutory financial statements of the Brazilian Subsidiaries.
As of December 31, 2024 and 2023 the Group was in compliance with all financial covenants.
Argentinian Subsidiaries
The main loans of the Group’s Argentinian Subsidiaries are:
| Bank | Grant date | Nominalamount | Capital outstanding as of<br>December 31 | Maturity date | Annual interest rate | |||
|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | |||||||
| (In millions) | (In millions) | |||||||
| IFC (1) | June, 2020 | US20.0 | — | 16.33 | June, 2028 | 4% plus SOFR | ||
| Rabobank | June, 2024 | US13.6 | 13.60 | — | December, 2028 | 3,1% + SOFR |
All values are in US Dollars.
(1) During 2024, the Group settled the outstanding amount of US$16.4 million under the loan agreement entered into with the International Finance Corporation (IFC).
The above mentioned loans contain certain customary financial covenants which require us to meet pre-defined financial ratios. These financial ratios are measured considering the statutory financial statements of the Argentinian Subsidiaries.
As of December 31, 2024 and 2023 the Group was in compliance with all financial covenants.
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 significantly differ from their fair value. The fair value (level 2) of the notes as of December 31, 2024 and 2023 equals US$403.6 million and US$485.3 million, 97.24% and 97.06% of the nominal amount, respectively.
The breakdown of the Group’s borrowing by currency is included in Note 2 - Interest rate risk.
F- 66
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
26. Borrowings (continued)
Evolution of the Group's borrowings as December 31, 2024 and 2023 is as follow:
| 2024 | 2023 | |
|---|---|---|
| Amount at the beginning of the year | 904,949 | 1,007,752 |
| Proceeds from long term borrowings | 126,757 | 7,739 |
| Payments of long term borrowings | (105,749) | (24,105) |
| Proceeds from short term borrowings | 169,901 | 448,532 |
| Payments of short term borrowings | (239,947) | (420,276) |
| Payments of interest (1) | (741) | (43,457) |
| Accrued interest | 23,489 | 33,495 |
| Exchange differences, inflation and translation, net | (99,800) | (105,465) |
| Others | 697 | 734 |
| Amount at the end of the year | 779,556 | 904,949 |
(1) Excludes payment of interest related to trade and other payables.
- Lease liabilities
| 2024 | 2023 | |
|---|---|---|
| Lease liabilities | ||
| Non-current | 287,679 | 325,569 |
| Current | 54,351 | 52,941 |
| 342,030 | 378,510 |
The maturity of the Group’s lease liabilities is as follows:
| 2024 | 2023 | |
|---|---|---|
| Less than 1 year | 54,351 | 52,941 |
| Between 1 and 2 years | 65,697 | 66,474 |
| Between 2 and 3 years | 51,325 | 61,398 |
| Between 3 and 4 years | 43,571 | 47,677 |
| Between 4 and 5 years | 35,764 | 39,254 |
| More than 5 years | 91,322 | 110,766 |
| 342,030 | 378,510 |
F- 67
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
27. Lease liabilities (continued)
Changes in the Group’s lease liabilities, net in 2024 and 2023 were as follows:
| Agricultural "partnerships" | Others | Total | |
|---|---|---|---|
| Amount at the beginning of the year 2023 | 312,066 | 25,914 | 337,980 |
| Exchange differences | 17,062 | 1,151 | 18,213 |
| Additions and re-measurement | 95,386 | 5,061 | 100,447 |
| Payments | (104,261) | (14,072) | (118,333) |
| Finance cost related to lease liabilities | 36,906 | 3,297 | 40,203 |
| Closing net book amount | 357,159 | 21,351 | 378,510 |
| Amount at the beginning of the year 2024 | 357,159 | 21,351 | 378,510 |
| Exchange differences | (87,462) | (1,464) | (88,926) |
| Additions and re-measurement | 107,050 | 10,936 | 117,986 |
| Payments | (86,276) | (12,202) | (98,478) |
| Finance cost related to lease liabilities | 30,137 | 2,801 | 32,938 |
| Closing net book amount | 320,608 | 21,422 | 342,030 |
28. Payroll and social security liabilities
| 2024 | 2023 | |
|---|---|---|
| Non-current | ||
| Social security payable | 1,454 | 1,570 |
| 1,454 | 1,570 | |
| Current | ||
| Salaries payable | 4,077 | 4,498 |
| Social security payable | 4,821 | 4,062 |
| Provision for vacations | 13,314 | 12,783 |
| Provision for bonuses | 10,523 | 16,014 |
| 32,735 | 37,357 | |
| Total payroll and social security liabilities | 34,189 | 38,927 |
29. 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.
F- 68
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
29. Provisions for other liabilities (continued)
The table below shows the movements in the Group's provisions for other liabilities categorized by type of provision:
| Labor, legal and<br>other claims | Others | Total | |
|---|---|---|---|
| At January 1, 2023 | 3,029 | 406 | 3,435 |
| Additions | 2,522 | 34 | 2,556 |
| Used during year | (1,558) | (379) | (1,937) |
| Exchange differences | (426) | (29) | (455) |
| At December 31, 2023 | 3,567 | 32 | 3,599 |
| Additions | 1,327 | 674 | 2,001 |
| Used during year | (1,945) | (34) | (1,979) |
| Exchange differences | 124 | 7 | 131 |
| At December 31, 2024 | 3,073 | 679 | 3,752 |
Analysis of total provisions:
| 2024 | 2023 | |
|---|---|---|
| Non current | 2,244 | 2,871 |
| Current | 1,508 | 728 |
| 3,752 | 3,599 |
The Group is engaged in several legal proceedings, including tax, labor, civil, administrative and other proceedings in Brazil, which qualified as contingent liabilities for an aggregate claimed nominal amount of US$64 million and US$75.6 million as of December 31, 2024 and 2023, respectively. These amounts refers to a claim of the tax authorities in Brazil of the exclusion of the calculation base of Income Tax of the accelerated depreciation of rural activity as provided for in article 6 of Provisional Measure 2,159-70 / 01 and in Article 325 of the Income Tax Regulation / 18.
F- 69
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
30. Group companies
The following table details the subsidiaries that comprised the Group as of December 31, 2024 and 2023:
| 2024 | 2023 | |||||
|---|---|---|---|---|---|---|
| Activities | Country of<br>incorporation<br>and operation | Ownership<br>percentage<br>held if not<br>100 % | Ownership<br>percentage<br>held if not<br>100 % | |||
| Details of principal subsidiary undertakings: | ||||||
| Operating companies (unless otherwise stated): | ||||||
| Adeco Agropecuaria S.A. | (a) | Argentina | — | — | ||
| Pilagá S.A. | (a) | Argentina | 99.98 | % | 99.98 | % |
| Cavok S.A. | (a) | Argentina | 51 | % | 51 | % |
| Establecimientos El Orden S.A. | (a) | Argentina | 51 | % | 51 | % |
| Bañado del Salado S.A. | (a) | Argentina | — | — | ||
| Agro Invest S.A. | (a) | Argentina | 51 | % | 51 | % |
| Forsalta S.A. | (a) | Argentina | 51 | % | 51 | % |
| Dinaluca S.A. | (a) | Argentina | — | — | ||
| Compañía Agroforestal S.M.S.A. | (a) | Argentina | — | — | ||
| Energía Agro S.A.U. | (a) | Argentina | — | — | ||
| L3N S.A. | (d) | Argentina | — | — | ||
| Girasoles del Plata S.A. | (a) | Argentina | — | — | ||
| Molinos Libres S.A.U. | (a) | Argentina | — | — | ||
| Adeco Agropecuaria Brasil Ltda. | (b) | Brazil | — | — | ||
| Adecoagro Vale do Ivinhema S.A. ("AVI") | (b) | Brazil | — | — | ||
| Usina Monte Alegre Ltda. ("UMA") | (b) | Brazil | — | — | ||
| Adecoagro Biogas LTDA. (ex Adecoagro GD LTDA.) | (b) | Brazil | — | — | ||
| Monte Alegre Combustiveis Ltda. | (b) | Brazil | — | — | ||
| Adecoagro Energia Ltda. | (b) | Brazil | — | — | ||
| Adecoagro Agricultura e Participação Ltda. | (b) | Brazil | — | — | ||
| Methanum Engenharia Ambiental Ltda. | (b) | Brazil | 85 | % | 85 | % |
| Angelica Energia Ltda. | (b) | Brazil | — | — | ||
| Ivinhema Energia Ltda. | (b) | Brazil | — | — | ||
| Kelizer S.A. | (a) | Uruguay | — | — | ||
| Adecoagro Uruguay S.A. | (a) | Uruguay | — | — | ||
| Arroz del Plata S.A. | (a) | Uruguay | — | — | ||
| Paso Dragón S.A. | (a) | Uruguay | — | — | ||
| Adecoagro Chile S.P.A | (a) | Chile | — | — | ||
| Holdings companies: | ||||||
| Adecoagro Brasil Participações S.A. | — | Brazil | — | — | ||
| Adecoagro LP S.C.S. | — | Luxembourg | — | — | ||
| Adecoagro GP S.a.r.l. | — | Luxembourg | — | — | ||
| Ladelux S.A. | — | Uruguay | — | — | ||
| Spain Holding Companies | (c) | Spain | — | — |
(a) Mainly crops, rice, cattle and others.
(b) Mainly sugarcane, ethanol and energy.
(c) Comprised by (1) wholly owned subsidiaries: Kadesh Hispania S.L.U.; Leterton España S.L.U.; Global Asterion S.L.U.; Global Acasto S.L.U.; Global Laertes S.L.U.; Global Pindaro S.L.U.; Global Pileo S.L.U.; Peak Texas S.L.U.; Global Neimoidia S.L.U. and 51% controlled subsidiaries; Global Acamante S.L.U.; Global Carelio S.L.U.; Global Calidon S.L.U.; Global Mirabilis S.L.U. Global Anceo S.L.U.Global Hisingen S.L.U.
(d) Mainly dairy.
F- 70
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
30. Group companies (continued)
The percentage voting right for each principal subsidiary is the same as the percentage of capital stock held. Issued share capital represents only ordinary shares/ quotas, units or their equivalent. There are no preference shares or units issued in any subsidiary undertaking.
According to the laws of certain of the countries in which the Group operates, 5% of the profit of the year is separated to constitute legal reserves until they reach legal capped amounts (20% of total capital). These legal reserves are not available for dividend distribution and can only be released to absorb losses.
31. Related-party transactions
The following is a summary of the balances and transactions with related parties:
| Related party | Relationship | Description of transaction | Loss included in the<br>statement of income | Balance receivable<br>(payable)/(equity) | |||||
|---|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | 2022 | 2024 | 2023 | |||||
| Management and selected employees | Employment | Compensation selected employees | (7,515) | (8,218) | (11,497) | (17,409) | (18,781) |
32. Material accounting estimates and judgments
Critical accounting policies are those that are most important to the portrayal of the Group’s financial condition, results of operations and cash flows, and require management to make difficult, subjective or complex judgments and estimates about matters that are inherently uncertain. Management bases its estimates on historical experience and other assumptions that it believes are reasonable. The Group’s critical accounting policies are discussed below.
Actual results could differ from estimates used in employing the critical accounting policies and these could have a material impact on the Group’s results of operations. The Group also has other policies that are considered key accounting policies, such as the policy for revenue recognition. However, these other policies, which are discussed in the notes to the Group’s financial statements, do not meet the definition of critical accounting estimates, because they do not generally require estimates to be made or judgments that are difficult or subjective.
(a) Impairment of non-financial assets
At the date of each statement of financial position, the Group reviews the carrying amounts of its property, plant and equipment and finite lived intangible assets to determine whether there is any indication that those assets could have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent, if any, of the impairment loss. Where the asset does not generate cash flows that are independently from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. The Group’s property, plant and equipment items generally do not generate independent cash flows.
Net assets
The carrying amount of the net assets of the Company as of December 31, 2024 was USD 1.4 billions, which exceeds the Market Capitalization as of that date. This situation could mean that there is an impairment indicator as referred in IAS 36. The Company also considered the unsolicited non-binding proposal made by Tether described in Note 34. A calculation of the value in use of net assets of the Company was made, through a discounted cash flow projections of the two major lines of business, Farming and Sugar, Ethanol and Energy, based on financial forecast approved by the management covering a five-year period. The Company reached to the conclusion that no impairment should be recognized given the value in use of the Company determined is higher that its net assets book value as of December 31, 2024.
The key assumptions used by management in the value-in-use calculations which are considered to be most sensitive to the calculation are the followings.
F- 71
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
32. Material accounting estimates and judgments (continued)
| Key Assumptions | December 31, 2024 | ||
|---|---|---|---|
| Perpetuity growth rate | 2% | ||
| Discount rate | 10% | ||
| Projected operating income | Business/segment key assumption | ||
| Crops | Dairy | ||
| --- | --- | --- | --- |
| Main assumptions | 2025 | Main assumptions | 2025 |
| Area ('000 Has.) (1) | 224 | Milking cows ('000 Heads) | 14.484 |
| Soy yield (tons/hect) (2) | 2.5 | Cow productivity (lt/head/day) | 37.8 |
| Corn yield (tons/hect) | 6.4 | Processed milk ('000 lt/day) | 1.159 |
| Peanut yield (tons/hect) | 3.4 | International milk powder price ($/ton) | 3.803 |
| Soy FAS average price ($/ton) | 300 | ||
| Wheat price ($/ton) | 215 | ||
| Peanut planted Area (000 Has) | 25.4 | ||
| Rice | Sugar, Ethanol & Energy | ||
| Main assumptions | 2025 | Main assumptions | 2025 |
| Area ('000 Has.) | 62.8 | Milling (MM Tons) | 13.1 |
| Rice yield (tons/hect) | 6.7 | TRS (Kg/Ton) | 130.2 |
| Domestic white rice price ($/ton) | 777 | Sugar #11 price (cents/lb) | 18.7 |
| Production cost (usd/ha) | 1.583 | Energy efficiency (KWH/ton) | 60 |
| Rough rice production ('000) | 418 | Ethanol mix (%) | 0.5 |
| Rice export price ($/ton - FOB) | 636 | Yield. Ton/ha | 78.5 |
(1) Planted area expressed as calendar year. Includes summer crops from the 2024/25 harvest season and winter crops from the upcoming 2025/26 campaign.
(2) Includes soybean 1st crop and 2nd crop.
(3) Expected yield for wheat for the 2025/26 campaign.
(4) Physical yield
As of December 31, 2024, the impact of a reasonable 10% decrease in the growth rate, or a 10% decrease in sugar price, or a 10% increase in the cost of capital with all other variables held constant, would result that the value in use would reduce in 3%; 12% and 11%, respectively, which in all cases is still above the net assets book value.
We believe we have made reasonable estimates and utilized appropriate assumptions in the performance of our value in use calculation. If future results are not consistent with our assumptions and estimates, including future events such as significant increases in discount rates, significant reduction of yields due to climate or crops diseases, or a significant increase in costs, we could be exposed to impairment charges in the future. Any resulting impairment loss could have a material adverse impact on our consolidated statements of financial position, consolidated statements of income and consolidated statements of cash flows.
F- 72
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
32. Material accounting estimates and judgments (continued)
Goodwill
In the case of goodwill, any goodwill acquired is allocated to the cash-generating unit (‘CGU’) expected to benefit from the business combination. CGU to which goodwill is allocated is tested for impairment annually (every September), or more frequently if events or changes in circumstances indicate that the carrying amount of the CGU may be impaired. The carrying amount of the CGU is compared to its recoverable amount, which is the higher of fair value less costs to sell and the value in use. An impairment loss is recognized for the amount by which the carrying amount exceeds its recoverable amount. The impairment review requires management to undertake certain significant judgments, including estimating the recoverable value of the CGU to which goodwill is allocated, based on either fair value less costs-to-sell or the value-in-use, as appropriate, in order to reach a conclusion on whether it deems the goodwill is impaired or not.
For purposes of the impairment testing, each CGU represents the smallest identifiable group of assets that generate cash inflows that are largely independent of the cash inflows from other assets or group of assets.
Each farmland in Argentina and Uruguay represents one CGU. For its properties in Brazil, management identified a farmland together with its related mill as separate CGUs. Most of the farmlands in Argentina and Uruguay are treated as single CGUs.
Based on these criteria, management identified a total amount of 29 CGUs as of September 30, 2024 and 30 CGUs as of September 30, 2023.
As of September 30, 2024 and 2023, due to the fact that there were no impairment indicators, the Group only tested those CGUs with allocated goodwill in Argentina and Brazil.
CGUs tested based on a fair-value-less-costs-to-sell model at September 30, 2024 and 2023:
As of September 30, 2024, the Group identified 6 CGUs in Argentina (2023: 6 CGUs) to be tested based on this model (all CGUs with allocated goodwill). Estimating the fair value less costs-to-sell is based on the best information available, and refers to the amount at which the CGU could be bought or sold in a current transaction between willing parties. Management may be assisted by the work of external advisors. When using this model, the Group applies the “sales comparison approach” as its method of valuing most properties, which relies on results of sales of similar agricultural properties to estimate the value of the CGU. This approach is based on the theory that the fair value of a property is directly related to the selling prices of similar properties.
Fair values are determined by extensive analysis which includes current and potential soil productivity of the land (the ability to produce crops and maintain livestock) projected margins derived from soil use, rental value obtained for soil use, if applicable, and other factors such as climate and location. Farmland ratings are established by considering such factors as soil texture and quality, yields, topography, drainage and rain levels. Farmland may contain farm outbuildings. A farm outbuilding is any improvement or structure that is used for farming operations. Outbuildings are valued based on their size, age and design.
Based on the factors described above, each farm property is assigned different soil classifications for the purposes of establishing a value, Soil classifications quantify the factors that contribute to the agricultural capability of the soil. Soil classifications range from the most productive to the least productive.
The first step to establishing an assessment for a farm property is a sales investigation that identifies the valid farm sales in the area where the farm is located. A price per hectare is assigned for each soil class within each farm property. This price per hectare is determined based on the quantitative and qualitative analysis mainly described above.
The results are then tested against actual sales, if any, and current market conditions to ensure the values produced are accurate, consistent and fair.
The following table shows only the 6 CGUs (2023: 6 CGUs) where goodwill was allocated at each period end and the corresponding amount of goodwill allocated to each one:
F- 73
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
32. Material accounting estimates and judgments (continued)
| CGU / Operating segment / Country | September 30, 2024 | September 30, 2023 |
|---|---|---|
| La Carolina / Crops / Argentina | 314 | 281 |
| El Orden / Crops / Argentina | 301 | 271 |
| La Guarida / Crops / Argentina | 2,923 | 2,623 |
| Los Guayacanes / Crops / Argentina | 3,573 | 3,206 |
| Doña Marina / Rice / Argentina | 6,220 | 5,582 |
| El Colorado / Crops / Argentina | 3,124 | 2,804 |
| Closing net book value of goodwill allocated to CGUs tested (Note 15) | 16,455 | 14,767 |
| Closing net book value of PPE items and other assets allocated to CGUs tested | 143,202 | 143,976 |
| Total assets allocated to CGUs tested | 159,657 | 158,743 |
Based on the testing above, the Group determined that none of the CGUs, with allocated goodwill, were impaired at September 30, 2024 and 2023.
CGUs tested based on a value-in-use model at September 30, 2024 and 2023:
As of September 30, 2024, the Group identified 2 CGUs (2022: 2 CGUs) in Brazil to be tested based on this model (all CGUs with allocated goodwill). The determination of the value-in-use calculation required the use of significant estimates and assumptions related to management’s cash flow projections In performing the value-in-use calculation, the Group applied pre-tax rates to discount the future pre-tax cash flows. In each case, these key assumptions have been made by management reflecting past experience and are consistent with relevant external sources of information, such as appropriate market data. In calculating value-in-use, management may be assisted by the work of external advisors.
The key assumptions used by management in the value-in-use calculations which are considered to be most sensitive to the calculation are
| Key Assumptions | September 30, 2024 | September 30, 2023 |
|---|---|---|
| Financial projections | Covers 5 years for UMA (*) | Covers 5 years for UMA (*) |
| Covers 5 years for AVI (**) | Covers 5 years for AVI (**) | |
| Yield average growth rates | 0-2% | 0-2% |
| Future pricing increases | 0.46% per annum | 0.46% per annum |
| Future cost decrease | 0.96% per annum | 0.96% per annum |
| Discount rates | 5.0% | 5.2% |
| Perpetuity growth rate | 1% | 1% |
(*) UMA stands for Usina Monte Alegre LTDA.
(**) AVI stands for Adecoagro Vale Do Ivinhema S.A.
Discount rates are based on the risk-free rate for U. S. government bonds, adjusted for a risk premium to reflect the increased risk of investing in South America and Brazil in particular. The risk premium adjustment is assessed for factors specific to the respective CGUs and reflects the countries that the CGUs operate in.
The following table shows only the 2 CGUs where goodwill was allocated at each period end and the corresponding amount of goodwill allocated to each one:
F- 74
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
32. Material accounting estimates and judgments (continued)
| CGU/ Operating segment | September 30, 2024 | September 30, 2023 |
|---|---|---|
| AVI / Sugar, Ethanol and Energy | 2,915 | 2,937 |
| UMA / Sugar, Ethanol and Energy | 1,093 | 1,102 |
| Closing net book value of goodwill allocated to CGUs tested (Note 15) | 4,008 | 4,039 |
| Closing net book value of PPE items allocated to CGUs tested | 599,509 | 600,764 |
| Total assets allocated to 2 CGUs tested | 603,517 | 604,803 |
Based on the testing above, the Group determined that none of the CGUs, with allocated goodwill, were impaired at September 30, 2024 and 2023.
Management views these assumptions are conservative and does not believe that any reasonable change in the assumptions would cause the carrying value of these CGU’s to exceed the recoverable amount.
The Group’s goodwill and property, plant and equipment balances allocated to the cash generating units with allocated goodwill in Argentina were US$ 16.7 million and US$ 143.2 million, respectively, and goodwill and property, plant and equipment allocated to the cash generating units with allocated goodwill in Brazil were US$ 3.5 million and U$S 542.3 million, respectively as of December 31, 2024.
(b) Biological assets
The nature of the Group’s biological assets and the basis of determination of their fair value are explained under Note 33.11. The discounted cash flow model requires the input of highly subjective assumptions including observable and unobservable data. Generally the estimation of the fair value of biological assets is based on models or inputs that are not observable in the market and the use of such unobservable inputs is significant to the overall valuation of the assets. These inputs are determined based on the best information available, for example by reference to historical information of past practices and results, statistical and agronomic information, and other analytical techniques. The discounted cash flow model includes significant assumptions relating to the cash flow projections including future market prices, estimated yields at the point of harvest, estimated production cycle, future costs of harvesting and other costs, and estimated discount rate.
Market prices are generally determined by reference to observable data in the principal market for the agricultural produce. Harvesting costs and other costs are estimated based on historical and statistical data. Yields are estimated based on several factors including the location of the farmland and soil type, environmental conditions, infrastructure and other restrictions and growth at the time of measurement. Yields are subject to a high degree of uncertainty and may be affected by several factors out of the Group’s control including but not limited to extreme or unusual weather conditions, plagues and other crop diseases, among other factors.
The significant assumptions discussed above are highly sensitive. Reasonable shifts in assumptions including but not limited to increases or decreases in prices, costs and discount factors used would result in a significant increase or decrease to the fair value of biological assets. In addition, cash flows are projected over a number of years and based on estimated production. Estimates of production in themselves are dependent on various assumptions, in addition to those described above, including but not limited to several factors such as location, environmental conditions and other restrictions. Changes in these estimates could materially impact on estimated production, and could therefore affect estimates of future cash flows used in the assessment of fair value (see Note 16).
(c) Income taxes
The Group is subject to income taxes in numerous jurisdictions. Significant judgment is required in determining the worldwide provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain. The Group recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be
F- 75
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
32. Material accounting estimates and judgments (continued)
due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made.
Deferred tax assets are reviewed each reporting date and reduced to the extent that it is no longer probable that sufficient taxable income will be available to allow all or part of the asset to be settled. Deferred tax assets and liabilities are not discounted. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment (see Note 10).
(d) Fair value for farmlands and investment property
Property, plant and equipment
Farmlands are recognized at fair value based on periodic, but at least annual, valuations prepared by an external independent expert. A revaluation reserve is credited in shareholders’ equity. The valuation is determined using sales comparison approach. Sale prices of comparable properties are adjusted considering the specific aspects of each property, the most relevant premise being the price per hectare (Level 3) (see Note 12).
Investment property
Investment property consists of farmland for rental or for capital appreciation and not used in production or for sale in the ordinary course of business, and it is measured at fair value. The changes in the fair value, which is based on an independent external expert, impacts the profit and loss of the period, in the line item Other operating income, net (see Note 14).
(e) Purchase price allocation
The acquisition method of accounting is used to account for all acquisitions. Under this method, assets acquired and liabilities assumed of the Company are measured at fair value for financial reporting purposes. In estimating the fair value of an asset or a liability, the Company uses market-observable data to the extent it is available. Where Level 1 inputs are not available, the Company estimates the fair value of an asset or a liability by converting future amounts (e.g. cash flows or income and expenses) to a single current (i.e. discounted) amount.
Management applied judgement in estimating the fair value of certain identifiable assets acquired, which involved the use of estimates and assumptions, including the timing and amounts of cash flow projections and discount rates, as applicable.
F- 76
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
33. Summary of material accounting policies
The principal accounting policies applied in the preparation of these Consolidated Financial Statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
Financial reporting in a hyperinflation economy
IAS 29 “Financial Reporting in Hyperinflationary Economies” requires that the financial statements of entities whose functional currency is that of a hyperinflationary economy to be adjusted for the effects of changes in a suitable general price index and to be expressed in terms of the current unit of measurement at the closing date of the reporting period. Accordingly, the inflation produced from the date of acquisition or from the revaluation date, as applicable, must be computed in the non-monetary items.
In order to conclude on whether an economy is categorized as hyperinflationary under the terms of IAS 29, the Standard details a series of factors to be considered, including the existence of a cumulative inflation rate in three years that approximates or exceeds 100 %.
Since 2018, when cumulative inflation rate in three years exceeded the 100% threshold, Argentina’s operations are considered to be under hyperinflationary economy for accounting purposes under the terms of IAS 29 and since then, it has been applied IAS 29 in the financial reporting of its subsidiaries and associates with Argentine peso as functional currency.
Financial statements of a foreign entity with a functional currency of a country that has a highly inflationary economy, are restated to reflect changes in the general price level or index in that country before translation into U.S. Dollars. In adjusting for hyperinflation, a general price index is applied to all non-monetary items in the financial statements (including equity) and the resulting gain or loss, which is the gain or loss on the entity's net monetary position, is recognized in the income statement. Monetary items in the closing statement of financial position are not adjusted. The Group treated all Argentine subsidiaries as a hyperinflationary economy as all of them have Argentine peso as functional currency. The results and financial position of all foreign entities with a functional currency of a country that has a highly inflationary economy are translated at closing rates after the restatement for changes in the general purchasing power Argentine peso.
The inflation adjustment on the years 2024, 2023 and 2022 was calculated by means of conversion factor derived from the Argentine price indexes published by the National Institute of Statistics and the year-over-year change in the index was 2.178; 3.114 and 1.9479, respectively.
The main procedures for the above-mentioned adjustment are as follows:
•Monetary assets and liabilities which are carried at amounts current at the balance sheet date are not restated because they are already expressed in terms of the monetary unit current at the balance sheet date.
•Non-monetary assets and liabilities which are not carried at amounts current at the balance sheet date, and components of shareholders' equity are adjusted by applying the relevant conversion factors.
•All items in the income statement are restated by applying the relevant conversion factors.
•The effect of inflation on the Company’s net monetary position is included in the income statement, in "Other financial results" (Note 9).
•The ongoing application of the re-translation of comparative amounts to closing exchanges rates under IAS 21 and the hyperinflation adjustments required by IAS 29 will lead to a difference in addition to the difference arising on the application of hyperinflation accounting.
The comparative figures in these Consolidated Financial Statements presented in a stable currency are not adjusted for subsequent changes in the price level or exchange rates. This resulted in a difference between the closing equity of the previous year and the opening equity of the current year. The Company recognized this initial difference directly in equity.
F- 77
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
33. Summary of material accounting policies (continued)
The Consolidated Financial Statements of the Group have been prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (IASB) and the Interpretations of the International Financial Reporting Interpretations Committee (IFRIC). All IFRS Accounting Standards as issued by the IASB, effective at the time of preparing these Consolidated Financial Statements have been applied.
The Consolidated Financial Statements have been prepared under the historical cost convention as modified by financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss, biological assets and agricultural produce, harvested agricultural produced at the point of harvest (except for milk and rice) and farmlands measured at fair value.
The preparation of Consolidated Financial Statements in conformity with IFRS Accounting Standards as issued by the IASB requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the Consolidated Financial Statements are disclosed in Note 32.
Accounting standards and IFRIC interpretations newly applicable for 31 December 2024 year ends adopted by the Company.
Amendment to IAS 1 - Non-current liabilities with covenants
These amendments clarify how conditions which an entity must comply within twelve months after the reporting period affect the classification of a liability. The amendments also aim to improve information an entity provides related to liabilities subject to these amendments. The amendment did not have any impact to the Company.
Amendment to IFRS 16 - Leases on sale and leaseback
These amendments include requirements for sale and leaseback transactions in IFRS 16. The amendment did not have any impact to the Company.
Amendment to IAS 7 and IFRS 7 - Supplier finance
These amendments require disclosures to enhance the transparency of supplier finance arrangements and their effects on an entity’s liabilities, cash flows and exposure to liquidity risk. The amendment did not have any impact to the Company.
New IFRS accounting standards effective after January 1st 2025 and not early adopted by the Company
Amendments to IAS 21 - Lack of Exchangeability
An entity is impacted by the amendments when it has a transaction or an operation in a foreign currency that is not exchangeable into another currency at a measurement date for specified purpose. The Company estimate that it will have no material impact.This amendment will be enforceable from January 1, 2025.
Amendment to IFRS 9 and IFRS 7 - Classification and Measurement of Financial Instruments
These amendments:
•clarify the requirements for the timing of recognition and derecognition of some financial assets and liabilities, with anew exception for some financial liabilities settled through an electronic cash transfer system.
•make updates to the disclosures for equity instruments designated at Fair Value through Other Comprehensive Income (FVOCI).
The Company is assessing any possible effect, if any.
F- 78
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
33.1 Basis of preparation and presentation
IFRS 19, ‘Subsidiaries without Public Accountability: Disclosures’
This new standard works alongside other IFRS Accounting Standards. An eligible subsidiary applies the requirements in other IFRS Accounting Standards except for the disclosure requirements and instead applies the reduced disclosure requirements in IFRS 19. IFRS 18 will apply for reporting periods beginning on or after January 1, 2027. Earlier application is permitted.
IFRS 18, ‘Presentation and Disclosure in Financial Statements’
In particular, although IFRS 18 will replace IAS 1, many of the other existing principles in IAS 1 are retained, with limited changes. The key new concepts introduced in IFRS 18 relate to the structure of the statement of profit or loss, required disclosures in the financial statements for certain profit or loss performance measures that are reported outside an entity’s financial statements (that is, management-defined performance measures); and enhanced principles on aggregation and disaggregation which apply to the primary financial statements and notes in general. IFRS 18 will not impact the recognition or measurement of items in the financial statements, but it might change what an entity reports as its ‘operating profit or loss’. IFRS 18 will apply for reporting periods beginning on or after January 1, 2027 and also applies to comparative information. The Group is assessing any possible impact on the adoption of this standard.
33.2 Scope of consolidation
The Consolidated Financial Statements include the results of the Company and all of its subsidiaries from the date that control commences to the date that control ceases. They also include the Group’s share of the net income of its jointly-controlled entities on an equity-accounted basis from the point at which joint control commences, to the date that it ceases.
(a) Subsidiaries
Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date that control commences and deconsolidated from the date that control ceases.
The Group uses the acquisition method of accounting to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.
The Group recognizes any non-controlling interest in the acquiree on an acquisition-by-acquisition basis either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recorded as goodwill. The excess of consideration over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the consideration is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in the statement of income under the line item “Bargain purchase gain on acquisition”.
Inter-company transactions, balances and unrealized gains on transactions between group companies are eliminated. Unrealized losses are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
(b) Disposal of subsidiaries
F- 79
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
33.2 Scope of consolidation (continued)
When the Group ceases to have control any retained interest in the entity is re-measured to its fair value at the date when control is lost, with the change in carrying amount recognized in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amount previously recognized in other comprehensive income in respect of that entity is accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognized in other comprehensive income are reclassified to profit or loss, except for the related revaluation surplus which is reclassified to retained earnings.
33.3 Segment reporting
According to IFRS 8, operating segments are identified based on the ‘management approach’. This approach stipulates external segment reporting based on the Group’s internal organizational and management structure and on internal financial reporting to the chief operating decision maker (the Management Committee in the case of the Company).
33.4 Foreign currency translation
(a) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The Consolidated Financial Statements are presented in US dollars, which is the Group’s presentation currency.
Argentine currency status
Between September 2019 and December 13, 2023, the Argentine government imposed significant restrictions on foreign exchange transactions. Although after a new administration took office in Argentina in December 2023 certain restrictions were eased and other changes to such regulations are expected, at the date of these Consolidated Financial Statements the application of existing foreign exchange regulations remains uncertain and the scope and timing of upcoming changes remain unknown. The main currently applicable measures are described below:
• Access to the Argentine foreign exchange market (“MULC”) to pay for imports of services rendered by related and non-related parties (including royalties) on or before December 12, 2023, is subject to Argentine Central Bank approval. Currently, these approvals are rarely, if ever, granted. Access to the MULC to pay for imports of services that were rendered or accrued as from December 13, 2023, does not require government approval, but payment is deferred 30 calendar days as from the date of supply or accrual of the service (if the service was rendered by a non-related party) or 180 calendar days (if rendered by a related party).
• In the context of high, but decelerating, inflation during 2024, restrictions of access to the MULC to pay for imports of goods remain, but have been gradually made more flexible. The price for imports with customs clearance on or after October 21, 2024, may be paid in full as from on the 30thday from the date of customs clearance. In addition, the price for imports with customs clearance between August 1 and October 20, 2024, may be paid in two equal installments on the 30th and 60th day from the date of customs clearance, and the price for imports with customs clearance between December 13, 2023, and July 31, 2024, may be paid in four equal installments payable on the 30th, 60th, 90th and 120th day from the date of customs clearance. Access to the MULC to pay for imports that obtained customs clearance on or before December 12, 2023, continues to require Argentine Central Bank approval.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities
F- 80
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
33.4 Foreign currency translation (continued)
denominated in foreign currencies are recognized in the statement of income, in the line Item “Finance income” or “Finance cost,”as appropriate.
(c) Group companies
The results and financial position of Group entities (except those that has the currency of a hyper-inflationary economy - Argentine subsidiaries) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
•assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position;
•income and expenses for each statement of income are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and
•all resulting exchange differences are recognized as a separate component of equity.
When a foreign operation is sold, exchange differences that were recorded in equity are recognized in the statement of income as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.
33.5 Property, plant and equipment
Farmlands are initially recorded at fair value and subsequently under the revaluation model based on periodic, but at least annual, valuations prepared by an external independent expert. A revaluation reserve is credited in shareholders’ equity. All other property, plant and equipment is recorded at cost, less accumulated depreciation and impairment losses, if any. Historical cost comprises the purchase price and any costs directly attributable to the acquisition. Under the definition of Property plant and equipment is included the bearer plants, such as sugarcane and coffee trees.
Where individual components of an item of property, plant and equipment have different useful lives, they are accounted for as separate items, which are depreciated separately.
Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to the statement of income when they are incurred.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognized within “Other operating income, net” in the consolidated statement of income.
33.6 Investment property
Investment property consists of farmland for rental or for capital appreciation and not used in production or for sale in the ordinary course of business, and it is measured at fair value. Changes of the fair value, which is based on an independent external expert, impacts the profit and loss of the period, in the line item Other operating income, net.
33.7 Leases
Leases are recognized as a right-of-use asset and corresponding liability at the date of which the leased asset is available for use by the group. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of
The accompanying notes are an integral part of these consolidated financial statements.
F- 81
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
33.7 Leases (continued)
the liability for each period. The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis.
In determining the lease term, the Company considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated).
Short term leases are recognized on a straight line basis as an expense in the income statement.
Accounting as lessee
The Company recognizes a right-of-use asset and a lease liability at the commencement date of each lease contract that grants the right to control the use of an identified asset during a period of time. The commencement date is the date in which the lessor makes an underlying asset available for use by the lessee. The Company applied exemptions for leases with a duration lower than 12 months, with a value lower than thirty thousand dollars and/or with clauses related to variable payments. These leases have been considered as short-term leases and, accordingly, no right-of-use asset or lease liability have been recognized.
At initial recognition, the right-of-use asset is measured considering:
•The value of the initial measurement of the lease liability;
•Any lease payments made at or before the commencement date, less any lease incentives; and
•Any initial direct costs incurred by the lessee; and
After initial recognition, the right-of-use assets are measured at cost, less any accumulated depreciation and/or impairment losses, and adjusted for any re-measurement of the lease liability.
Depreciation of the right-of-use asset is calculated using the straight-line method over the estimated duration of the lease contract.
The lease liability is initially measured at the present value of the lease payments that are not paid at such date, including the following concepts:
•Variable lease payments that depend on an index or rate, initially measured using the index or rate as of the commencement date;
•Amounts expected to be payable by the lessee under residual value guarantees;
•The exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and
•Payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease;
•Fixed payments, less any lease incentives receivable;
After the commencement date, the Company measures the lease liability by:
•Increasing the carrying amount to reflect interest on the lease liability;
•Reducing the carrying amount to reflect lease payments made; and
•Re-measuring the carrying amount to reflect any reassessment or lease modifications.
The above mentioned inputs for the valuation of the right of use assets and lease liabilities including the determination of the contracts within the scope of the standard, the contract term ant interest rate used in the discounted cash flow involved a high degree of management’s estimations.
F- 82
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
33.8 Goodwill
Goodwill represents future economic benefits arising from assets that are not capable of being individually identified and separately recognized by the Group on an acquisition. Goodwill on acquisition is initially measured at cost. being the excess of the consideration over the fair value of the Group’s share of net assets of the acquired subsidiary undertaking at the acquisition date. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. It is allocated to those cash generating units expected to benefit from the acquisition for the purpose of impairment testing. Goodwill ais included within “Intangible assets” on the statement of financial position. Goodwill arising on the acquisition of foreign entities is treated as an asset of the foreign entity denominated in the local currency and translated at the closing rate.
Goodwill is not amortized but tested for impairment on an annual basis, or more frequently if there is an indication of impairment (see Note 33 (a)). Gains and losses on the disposal of a Group entity include any goodwill relating to the entity sold (see Note 33.10).
33.9 Other intangible assets
Other intangible assets that are acquired by the Group, which have finite useful lives, are measured at cost less accumulated amortization and impairment losses, if any. These intangible assets comprise mainly trademarks and computer software and are amortized in the statement of income on a straight-line basis over their estimated useful lives estimated to be 10 to 20 years and 3 to 5 years, respectively.
33.10 Impairment of assets
Goodwill
The Company conducts an impairment test annually or more frequently if events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the carrying amount exceeds its recoverable amount. For the purpose of impairment testing, assets are grouped at the lowest levels for which there are separately identifiable cash flows, known as cash-generating units. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the cash generating unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset may in the unit. Impairment losses recognized for goodwill cannot be reversed in a subsequent period. Recoverable amount is the higher of the fair value less costs to sell and value in use. In determining the value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted (see Note 33 (a) for details).
Property, plant and equipment and finite lived intangible assets
At each statement of financial position date, the Group reviews the carrying amounts of its property, plant and equipment, other intangible assets which have finite lives to determine whether a there is any indication that those assets may have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset through the calculation of the fair value, or the value in use, is estimated in order to determine the extent, if any, of the impairment loss. Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, that carrying amount is reduced to its recoverable amount. An impairment loss is recognized immediately in the statement of income.
Where an impairment loss subsequently reverses, the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, not to exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized immediately in the statement of income.
F- 83
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
33.10 Impairment of assets (continued)
Net assets
At each statement of financial position date, the Group reviews the carrying amounts of its net assets, to determine whether there is any indication that those assets may be impaired. If any such indication exists, such as when the carrying value of the net assets is higher than the market capitalization of the Company, the recoverable amount of the net assets is estimated using of the value in use, in order to determine if there is a potential impairment. In determining the value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
33.11 Biological assets
Biological assets comprise growing crops (mainly corn, wheat, soybeans, sunflower peanuts and rice), sugarcane and livestock (growing herd and cattle for dairy production).
The Group distinguishes between consumable and bearer biological assets, and between mature and immature biological assets. “Consumable” biological assets are those assets that may be harvested as agriculture produce or sold as biological assets, for example livestock intended for dairy production. “Bearer” biological assets are those assets capable of producing more than one harvest, for example sugarcane or livestock from which raw milk is produced. “Mature” biological assets are those that have attained harvestable specifications (for consumable biological assets) or are able to sustain regular harvests (for bearer biological assets). “Immature” biological assets are those assets other than mature biological assets.
Costs are capitalized as biological assets if, and only if, (a) it is probable that future economic benefits will flow to the entity, and (b) the cost can be measured reliably. The Group capitalizes costs such as: planting, harvesting, weeding, seedlings, irrigation, agrochemicals, fertilizers and a systematic allocation of fixed and variable production overheads that are directly attributable to the management of biological assets, among others. Costs that are expensed as incurred include administration and other general overhead and unallocated production overhead, among others.
Biological assets, both at initial recognition and at each subsequent reporting date, are measured at fair value less costs to sell, except where fair value cannot be reliably measured. Cost approximates fair value when little biological transformation has taken place since the costs were originally incurred or the impact of biological transformation on price is not expected to be material.
Gains and losses that arise on measuring biological assets at fair value less costs to sell and measuring agricultural produce at the point of harvest at fair value less costs to sell are recognized in the statement of income in the period in which they arise in the line item “Initial recognition and changes in fair value of biological assets and agricultural produce”.
Where there is an active market for a biological asset or agricultural produce, quoted market prices in the most relevant market are used as a basis to determine the fair value. Otherwise, when there is no active market or market-determined prices are not available, fair value of biological assets is determined through the use of valuation techniques.
Therefore, the fair value of biological assets is generally derived from the expected discounted cash flows of the related agricultural produce. The fair value of the agricultural produce at the point of harvest is generally derived from market determined prices.
A general description of the determination of fair values based on the Company’s business segments follow:
•Growing crops including rice:
Growing crops, for which biological growth is not significant, are measured at cost, which approximates fair value. Expenditure on growing crops includes land preparation expenses and other direct expenses incurred during the sowing period including labor, seedlings, agrochemicals and fertilizers among others.
The accompanying notes are an integral part of these consolidated financial statements.
F- 84
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
33.11 Biological assets (continued)
Otherwise, biological assets are measured at fair value less estimated point-of-sale costs at initial recognition and at any subsequent period. Point-of-sale costs include all costs that would be necessary to sell the assets
The fair value of growing crops including rice is measured based on a formula, which takes into consideration the estimate of crop yields, estimated market prices and costs, and discount rates. Estimated yields are determined based on several factors including location of farmland, environmental conditions and other restrictions and growth at the time of measurement. Yields are multiplied by sown hectares to determine the estimated tons of crops including rice to be obtained. The tons are then multiplied by a net cash flow determined at the future crop prices less the direct costs to be incurred. This amount is discounted at a discount rate, which reflects current market assessments of the assets involved and the time value of money.
•Growing herd and cattle:
Livestock are measured at fair value less estimated point-of-sale costs, with any changes therein recognized in the statement of income, on initial recognition as well as subsequently at each reporting period. The fair value of livestock is determined based on the actual selling prices less estimated point-of-sale costs in the markets where the Group operates.
•Sugarcane:
Sugarcane planting costs form part of Property plant and equipment. The agricultural produce growing on sugarcane is classified as biological assets and are measured at fair value less cost to sell. The fair value of agricultural produce growing on sugarcane depends on the variety, location and maturity of the plantation.
Agricultural produce growing in the Sugarcane, for which biological growth is not significant, is valued at cost, which approximates fair value. Expenditure on the agricultural produce growing in the sugarcane consists mainly of labor, agrochemicals and fertilizers among others. When it has attained significant biological growth, it is measured at fair value through a discounted cash flow model. Estimated revenues are based on estimated yearly production volume (which will be destined to sugar, ethanol, energy and raw cane production) and the price is calculated as the average of daily prices for sugar future contracts (Sugar #11 ICE-NY contracts) for a six months period. Projected costs include maintenance and land leasing among others. These estimates are discounted at an appropriate discount rate.
33.12 Inventories
Inventories comprise of raw materials, finished goods (including harvested agricultural produce and manufactured goods) and others.
Harvested agricultural produce (except for rice and milk) are measured at net realizable value until the point of sale because there is an active market in the produce, there is a negligible risk that the produce will not be sold and there is a well-established practice in the industry carrying the inventories at net realizable value. Changes in net realizable value are recognized in the statement of income in the period in which they arise under the line item “Changes in net realizable value of agricultural produce after harvest”.
All other inventories (including rice and milk) are measured at the lower of cost and net realizable value. Cost is determined using the weighted average method.
33.13 Financial assets
Financial assets are classified in the following categories: at fair value through profit or loss and at amortized cost, namely loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition (see Note 17).
(a) Recognition and measurement
Regular purchases and sales of financial assets are recognized on the trade-date – the date on which the Group commits to purchase or sell the asset. Financial assets not carried at fair value through profit or loss are initially recognized at
F- 85
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
33.13 Financial assets (continued)
fair value plus transaction costs. Financial assets carried at fair value through profit or loss are initially recognized at fair value and transaction costs are expensed in the statement of income. Financial assets are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are subsequently carried at amortized cost using the effective interest method.
Gains or losses arising from changes in the fair value of the “financial assets at fair value through profit or loss” category are presented in the statement of income within “Other operating income, net” in the period in which they arise.
If the market for a financial asset is not active (and for unlisted securities), the Group establishes fair value by using valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, and option pricing models, making maximum use of market inputs and relying as little as possible on entity-specific inputs.
The Group assesses at each statement of financial position date whether there is objective evidence that a financial asset or a group of financial assets is impaired. Impairment testing of trade receivables is described in Note 33.15.
(b) Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously. This right must not be contingent on future events and must be enforceable in any case.
Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. Commodity future contract fair values are computed with reference to quoted market prices on future exchanges markets. The fair values of commodity options are calculated using year-end market rates together with common option pricing models. The fair value of interest rate swaps has been calculated using a discounted cash flow analysis.
The Group manages exposures to financial and commodity risks using hedging instruments that provide the appropriate economic outcome. The principal hedging instruments used may include commodity future contracts, put and call options, foreign exchange forward contracts and interest rate swaps. The Group does not use derivative financial instruments for speculative purposes.
The Group’s policy is to apply hedge accounting to hedging relationships where it is both permissible under IFRS 9, practical to do so and its application reduces volatility, but transactions that may be effective hedges in economic terms may not always qualify for hedge accounting under IFRS 9. Any derivatives that the Group holds to hedge these exposures are classified as “held for trading” and are shown in a separate line on the face of the statement of financial position. The method of recognizing gains or losses on derivatives depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. Gains and losses on commodity derivatives are classified within “Other operating income, net”. Gains and losses on interest rate and foreign exchange rate derivatives are classified within ‘Financial results, net’. The Group designates certain derivatives as hedges of the foreign currency risk associated with highly probable forecast transactions (cash flow hedge).
The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the instruments that are used in hedging transactions are highly effective in offsetting changes in fair value or cash flows of hedged items.
Cash flow hedge
F- 86
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
33.14 Derivative financial instruments and hedging activities
The effective portion of the gain or loss on the instruments that are designated and qualify as cash flow hedges is recognized in other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in the statement of income within "Finance income” or “Finance cost,”as appropriate.
Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss. The gain or loss relating to the effective portion is recognized in the statement of income within "Finance income” or “Finance cost”, as appropriate.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognized when the forecast transaction is ultimately recognized in the statement of income. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the statement of income.
33.15 Trade and other receivables and trade and other payables
Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method. In the case of receivables, less allowance for trade receivables.
The group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due.
33.16 Short-term investment
Financial assets at fair value through profit or loss are valued at the initial recognition and subsequently at fair value and recognizing the variation in the Statement of income in the line Financial results.
33.17 Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less. In the statements of cash flows, interest paid is presented within financing cash flows and interest received is presented within investing activities.
33.18 Borrowings
Borrowings are initially recognized at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortized cost using the effective interest method. Borrowing costs are capitalized during the period of time that is required to complete and prepare the asset for its intended use.
33.19 Provisions
Provisions are recognized when (i) the Group has a present legal or constructive obligation as a result of past events; (ii) it is probable that an outflow of resources will be required to settle the obligation; and (iii) a reliable estimate of the amount of the obligation can be made. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation.
33.20 Onerous contracts
The Group enters into contracts, which require the Group to sell commodities in accordance with the Group's expected sales. These contracts do not qualify as derivatives. These contracts are not recognized until at least one of the parties has performed under the agreement. However, when the contracts are onerous, the Group recognizes the present obligation under the contracts as a provision included within “Provision and other liabilities” in the statement of financial position. Losses under these onerous contracts are recognized within “Other operating income, net” in the statement of income.
F- 87
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
33.21 Current and deferred income tax
The Group’s tax benefit or expense for each year comprises the charge for current tax payable and deferred taxation attributable to the Group’s operating subsidiaries. Tax is recognized in the statement of income, except to the extent that it relates to items recognized directly in equity. In this case, the tax is also recognized in equity.
The current income tax charge is calculated on the basis of the tax laws enacted at the date of the statement of financial position in the countries where the Group’s subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation and considers whether it is probable that a taxation authority will accept an uncertain tax treatment. The Group measures its tax balances either based on the most likely amount or the expected value, depending on which method provides a better prediction of the resolution of the uncertainty. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is recognized, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the Consolidated Financial Statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) effective in the countries where the Group’s subsidiaries operate and generate taxable income.
Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.
The Group is able to control the timing of dividends from its subsidiaries and hence does not expect to remit overseas earnings in the foreseeable future in a way that would result in a charge to taxable profit. Hence deferred tax is recognized in respect of the retained earnings of overseas subsidiaries only to the extent that, at the date of the statement of financial position, dividends have been accrued as receivable or a binding agreement to distribute past earnings in future has been entered into by the subsidiary.
33.22 Revenue Recognition
The Group’s primary activities comprise agricultural and agro-industrial activities.
The Group’s agricultural activities comprise growing and selling agricultural produce. In accordance with IAS 41 “Agriculture”, cattle are measured at fair value with changes therein recognized in the statement of income as they arise. Agricultural produce is measured at net realizable value with changes therein recognized in the statement of income as they arise. Therefore, sales of agricultural produce and cattle generally do not generate any separate gains or losses in the statement of income.
The Group’s agro-industrial activities comprise the selling of manufactured products (i.e. industrialized rice, milk-related products, ethanol, sugar, energy, among others). These sales are measured at the fair value of the consideration received or receivable, net of returns and allowances, trade and other discounts, and sales taxes, as applicable.
Revenue is recognized when the full control have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, and there is no continuing management involvement with the goods. Transfers of control vary depending on the individual terms of the contract of sale. Revenues are recognised when control of the products has transferred, being when the products are delivered to the customer, having this full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer’s acceptance of the products.
F- 88
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
33.22 Revenue Recognition (continued)
The Group also provides certain agricultural-related services such as grain warehousing/conditioning and other services, e.g. handling and drying services. Revenue from services is recognized as services are provided.
The Group leases owned farmland property to third parties under operating lease agreements. Rental income is recognized on a straight-line basis over the period of the lease.
The Group is a party to a 25-year power agreement for the sale of electricity which expires in 2042. The delivery period starts in April and ends in November of each year. The Group is also a party to a 15-year power agreement which delivery period starts in March and ends in December of each year, this agreement will expire in 2025. Prices under all the agreements are adjusted annually for inflation. Revenue related to the sale of electricity under this agreement is recorded based upon output delivered.
33.23 Farmlands sales
The Group’s strategy is to profit from land appreciation value generated through the transformation of its productive capabilities. Therefore, the Group may seek to realize value from the sale of farmland assets and businesses.
Farmland sales are not recognized until (i) the sale is completed, (ii) the Group has determined that it is probable the buyer will pay, (iii) the amount of revenue can be measured reliably, and (iv) the Group has transferred to the buyer the risk of ownership, and does not have a continuing involvement. Gains from “farmland sales” are included in the statement of income under the line item “Other operating income, net”.
33.24 Assets held for sale and discontinued operations
When the Group intends to dispose of, or classify as held for sale, a business component that represents a separate major line of business or geographical area of operations, or a subsidiary acquired exclusively with a view to resale, it classifies such operations as discontinued. The post tax profit or loss of the discontinued operations is shown as a single amount on the face of the statement of income, separate from the other results of the Group. Assets and liabilities classified as held for sale are measured at the lower of carrying value and fair value less costs to sell.
Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered through a disposal rather than through continuing use. This condition is regarded as met only when management is committed to the sale (disposal), the sale (disposal) is highly probable and expected to be completed within one year from classification and the asset is available for immediate sale (disposal) in its present condition. The statements of income for the comparative periods are represented to show the discontinued operations separate from the continuing operations.
33.25 Earnings per share
Basic earnings per share is calculated by dividing the net income for the year attributable to equity holders of the parent by the weighted average number of ordinary shares outstanding during the year. Diluted net earnings per share is computed by dividing the net income for the period by the weighted average number of ordinary shares outstanding, and when dilutive, adjusted for the effect of all potentially dilutive shares, including share options, on an as-if converted basis.
33.26 Equity-settled share-based payments
The Group issues equity settled share-based payments to certain directors, senior management and employees. Options under the awards were measured at fair value at the date of grant. An expense is recognized to spread the fair value of each award over the vesting period on a straight-line basis, after allowing for an estimate of the awards that will eventually vest. The estimate of the level of vesting is reviewed at least annually, with any impact on the cumulative charge being recognized immediately.
F- 89
Adecoagro S.A.
Notes to the Consolidated Financial Statements (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
33.27 Research and development
Research phase expenditure is expensed as incurred. Development expenditure is capitalized as an internally generated intangible asset only if it meets strict criteria, relating in particular to technical feasibility and generation of future economic benefits. Research expenses have been immaterial to date. The Group has not capitalized any development expenses to date.
34. Subsequent events
Unsolicited non-binding proposal from Tether Investments S.A. de C.V.
On February 18, 2025, the Company announced that its Board of Directors received an unsolicited non-binding proposal from Tether Investments S.A. de C.V. (“Tether”) on February 14, 2025, to acquire outstanding Common Shares of the Company at a price of $12.41 per Common Share through a tender offer that would result in Tether collectively holding 51% of the outstanding Common Shares of the Company. On February 25, 2025, the Company published a press release in which addressed that it is engaging in discussions with Tether on the proposal received on February 14, 2025. The Company has entered an Exclusivity Letter to facilitate further negotiations with Tether. At the date of these Consolidated Financial Statement, the negotiations are still in progress.
Loans to related parties
During February 2025, Adeco Agropecuaria S.A., a wholly owned subsidiary, grant a loan to senior management of the company for a total amount of up to USD 20 million for a period of one year and with a 2.17% annual interest rate. Under this line of credit, on February 24, 2025, an amount of USD 15.9 million has been disbursed. This credit line is guaranteed by the shares of the company Río Porá S.A. Adeco Agropecuaria has a lease agreement of a farm signed with Río Porá.
F- 90