Adecoagro S.A. (Form: 20-F, Received: 04/27/2018 18:07:43)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 20-F



¨	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
	OR
þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED ON DECEMBER 31, 2017
	OR
¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	FOR THE TRANSITION PERIOD FROM TO ________________
	OR
¨	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	Date of event requiring this shell company report

COMMISSION FILE NUMBER: 001-35052

Adecoagro S.A.

(Exact name of Registrant as specified in its charter)

N/A

(Translation of Registrant’s name into English)

Grand Duchy of Luxembourg

(Jurisdiction of incorporation or organization)

Vertigo Naos Building, 6, Rue Eugène Ruppert,

L - 2453 Luxembourg

Tel: +352.2644.9372

(Address of principal executive offices)

Catherine Drissens

Vertigo Naos Building, 6, Rue Eugène Ruppert,

L - 2453 Luxembourg

Email: catherine.Drissens@intertrustgroup.com

Tel: +352.26449.167

(Name, Telephone, E-Mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:



Title of Each Class	Name of Each Exchange on Which Registered
Common Shares	New York Stock Exchange

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

The number of outstanding shares of each of the issuer’s classes of capital stock

as of December 31, 2017 :

117,738,419 Common Shares, par value $1.50 per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act

Yes þ No ¨

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes ¨ No þ

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer," accelerated filer,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer þ	Accelerated filer ¨	Non-accelerated filer ¨
		Emerging growth company ¨

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ¨ International Financial Reporting Standards as issued by the International Accounting Standards Board þ Other ¨

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the Registrant has elected to follow:

Item 17 ¨ Item 18 ¨

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ

TABLE OF CONTENTS



FORWARD-LOOKING STATEMENTS			iv

PRESENTATION OF FINANCIAL AND OTHER INFORMATION			v

PART I			1

Item 1.	Identity of Directors, Senior Management and Advisers		1

Item 2.	Offer Statistics and Expected Timetable		1

Item 3.	Key Information		1
	A.	SELECTED FINANCIAL DATA	1
	B.	CAPITALIZATION AND INDEBTEDNESS	10
	C.	REASONS FOR THE OFFER AND USE OF PROCEEDS	10
	D.	RISK FACTORS	10

Item 4.	Information on the Company		40
	A.	HISTORY AND DEVELOPMENT OF THE COMPANY	40
	B.	BUSINESS OVERVIEW	44
	C.	ORGANIZATIONAL STRUCTURE	82
	D.	PROPERTY, PLANTS AND EQUIPMENT	83

Item 4B.	Unresolved Staff Comments		83

Item 5.	Operating and Financial Review and Prospects		83
	A.	OPERATING RESULTS	84
	B.	LIQUIDITY AND CAPITAL RESOURCES	107
	C.	RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.	112
	D.	TREND INFORMATION	113
	E.	OFF-BALANCE SHEET ARRANGEMENTS	113
	F.	TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS	113
	G.	SAFE HARBOR	114

Item 6.	Directors, Senior Management and Employees		114
	A.	DIRECTORS AND SENIOR MANAGEMENT	114
	B.	COMPENSATION	118
	C.	BOARD PRACTICES	118
	D.	EMPLOYEES	120
	E.	SHARE OWNERSHIP	121

Item 7.	Major Shareholders and Related Party Transactions		123
	A.	MAJOR SHAREHOLDERS	123
	B.	RELATED PARTY TRANSACTIONS	123
	C.	INTERESTS OF EXPERTS AND COUNSEL	124



Item 8.	Financial Information		125
	A.	CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION	125
	B.	SIGNIFICANT CHANGES	126

Item 9.	The Offer and Listing		126
	A.	OFFER AND LISTING DETAILS	126
	B.	PLAN OF DISTRIBUTION	127
	C.	MARKETS	127
	D.	SELLING SHAREHOLDERS	127
	E.	DILUTION	128
	F.	EXPENSES OF THE ISSUE	128

Item 10.	Additional Information		128
	A.	SHARE CAPITAL	128
	B.	MEMORANDUM AND ARTICLES OF ASSOCIATION	128
	C.	MATERIAL CONTRACTS	136
	D.	EXCHANGE CONTROLS	136
	E.	TAXATION	137
	F.	DIVIDENDS AND PAYING AGENTS	142
	G.	STATEMENT BY EXPERTS	142
	H.	DOCUMENTS ON DISPLAY	142
	I.	SUBSIDIARY INFORMATION	143

Item 11.	Quantitative and Qualitative Disclosures About Market Risk		143

Item 12.	Description of Securities Other than Equity Securities		143
	A.	DEBT SECURITIES	143
	B.	WARRANTS AND RIGHTS	143
	C.	OTHER SECURITIES	143
	D.	AMERICAN DEPOSITORY SHARES	143

PART II			144

Item 13.	Defaults, Dividend Arrearages and Delinquencies		144

Item 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds		144

Item 15.	Controls and Procedures		144

Item 16.			145

	A.	Audit Committee Financial Expert	145
	B.	Code of Ethics	145
	C.	Principal Accountant Fees and Services	145
	D.	Exemptions from the Listing Standards for Audit Committees	145
	E.	Purchases of Equity Securities by the Issuer and Affiliated Purchasers	146
	F.	Change in Registrant’s Certifying Accountant	146



	G.	Corporate Governance	146
	H.	Mine Safety Disclosure	148

PART III			148

Item 17.	Financial Statements		148

Item 18.	Financial Statements		148

Item 19.	Exhibits		148

iii

FORWARD-LOOKING STATEMENTS

This annual report 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,” “believe,” “continue,” “estimate,” “expect,” “intend,” “is/are likely to,” “may,” “plan,” “should,” “would,” or other similar expressions. The forward-looking statements included in this annual report relate to, among others:


•	our business prospects and future results of operations;


•	weather and other natural phenomena;


•	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 jurisdiction in which we operate, environmental laws and regulations;


•	the implementation of our business strategy;


•	our plans relating to acquisitions, joint ventures, strategic alliances or divestitures;


•	the implementation of our financing strategy and capital expenditure plan;


•	the maintenance of our relationships with customers;


•	the competitive nature of the industries in which we operate;


•	the cost and availability of financing;


•	future demand for the commodities we produce;


•	international prices for commodities;


•	the condition of our land holdings;


•	the development of the logistics and infrastructure for transportation of our products in the countries where we operate;


•	the performance of the South American and world economies;


•	the relative value of the Brazilian Real, the Argentine Peso, and the Uruguayan Peso compared to other currencies; and


•	the factors discussed under the section entitled “Risk Factors” in this annual report.

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 annual report might not occur, and our future results and our performance may differ materially from those expressed in these forward-looking statements due to, including, 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 annual report relate only to events or information as of the date on which the statements are made. 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.

PRESENTATION OF FINANCIAL AND OTHER INFORMATION

Certain Defined Terms

In this annual report, unless otherwise specified or if the context so requires:


•	References to the terms “Adecoagro S.A.,” “Adecoagro,” “we,” “us,” “our,” “Company” and “our company” refer to, Adecoagro S.A., a corporation organized under the form of a société anonyme under the laws of the Grand Duchy of Luxembourg, and its subsidiaries.


•	References to “IFH” and “IFH LP” mean the former International Farmland Holdings, LP, a limited partnership (previously IFH LP and International Farmland Holdings, LLC, or IFH LLC).


•	References to “Adecoagro LP” mean Adecoagro, LP SCS, a limited partnership organized under the form of a société comandite simple under the laws of the Grand Duchy of Luxembourg (previously Adecoagro LP and Adecoagro, LLC).


•	References to “$,” “US$,” “U.S. dollars” and “dollars” are to U.S. dollars.


•	References to “Argentine Pesos,” “Pesos” or “Ps.” are to Argentine Pesos, the official currency of Argentina.


•	References to “Brazilian Real,” “Real,” “Reais” or “R$” are to the Brazilian Real, the official currency of Brazil.


•	Unless stated otherwise, references to “sales” are to the consolidated sales of manufactured products and services rendered plus sales of agricultural produce and biological assets.


•	References to “IFRS” are International Financial Reporting Standards issued by the International Accounting Standards Board (“IASB”) and the interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”), together “IFRS.”

Background

As part of a corporate reorganization (the “Reorganization”), Adecoagro, a Luxembourg corporation under the form of a société anonyme , was formed as a holding company for IFH for the purpose, among others, of facilitating the initial public offering (the “IPO”) of our common shares, completed on January 28, 2011. Before the IPO, Adecoagro had not engaged in any business or other activities except in connection with its formation and the Reorganization. For an additional discussion of the Reorganization, see “Item 4. Information on the Company—A. History and Development of the Company—History.”

During 2011, we contributed the net proceeds of the IPO to increase our interest in IFH from 98% to 98.64%. During 2012, we issued, in a series of transactions, 1,654,752 shares to certain limited partners of IFH in exchange for their residual interest in IFH, totaling 1.3595%, thereby increasing our interest in IFH to approximately 100%. During 2015 IFH merge into Adecoagro LP; consequently we own 100% of Adecoagro LP for further information please see "Item 4 - A. History and development of the Company - General Information.".

The consolidated financial statements as of December 31, 2017 , 2016 and 2015 , and for the years then ended (hereinafter, the “Consolidated Financial Statements”) included in this annual report have been prepared in accordance with IFRS. All IFRS effective at the time of preparing the Consolidated Financial Statements have been applied.

Financial Statements

Non-IFRS Financial 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 annual report:


•	Adjusted Consolidated EBITDA


•	Adjusted Segment EBITDA


•	Adjusted Consolidated EBIT


•	Adjusted Segment EBIT


•	Adjusted Free Cash Flow


•	Adjusted Free Cash Flow from Operations


•	Net Debt


•	Net Debt to Adjusted Consolidated EBITDA

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 of each non-IFRS measure. 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 use non-IFRS measures to internally evaluate and analyze financial results. We believe these non-IFRS financial measures provide investors with useful supplemental information about the liquidity and financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and enable comparison of our financial results with other public companies, many of which present similar non-IFRS financial measures.

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 and the related income tax effects of the aforementioned exclusions, 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 Consolidated EBITDA, Adjusted Segment EBITDA, Adjusted Consolidated EBIT and Adjusted Segment EBIT

We present Adjusted Consolidated EBITDA, Adjusted Segment EBITDA, Adjusted Consolidated EBIT and Adjusted Segment EBIT in this annual report as supplemental measures of performance of our company and of each operating segment, respectively, that are not required by, or presented in accordance with IFRS. Our Adjusted Consolidated EBITDA equals the sum of our Adjusted Segment EBITDA for each of our operating segments. We define “Adjusted Consolidated EBITDA” as (i) consolidated net profit (loss) for the year, as applicable, before interest expense, income taxes, depreciation and amortization, foreign exchange gains or losses, other net financial expenses; and (ii) adjusted by profit or loss from discontinued operations; and (iii) adjusted by 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.” We define “Adjusted Segment EBITDA” for each of our operating segments as (i) the segment’s share of consolidated profit (loss) from operations before financing and taxation for the year, as applicable, before depreciation and amortization; and (ii) adjusted by profit or loss from discontinued operations; and (iii) adjusted by 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.”

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 and others 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), foreign exchange gains or losses and other financial expenses. 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 evaluate 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 similarly titled 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’s profit from operations before financing and taxation 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 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. We define “Adjusted Consolidated EBIT” as (i) consolidated net profit (loss) for the year, as applicable, before interest expense, income taxes, foreign exchange gains or losses and other net financial expenses; and (ii) adjusted by profit or loss from discontinued operations; and (iii) adjusted by gains or losses from disposals of non controlling interests in subsidiaries whose main underlying asset farmland. We define “Adjusted Segment EBIT” for each of our operating segments as the segment’s share of (i) consolidated profit (loss) from operations before financing and taxation for the year, as applicable; and (ii) adjusted by profit or loss from discontinued operations; and (iii) adjusted by 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.” 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 and others 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 expenses. In addition, by including the gains or losses from disposals of non-controlling interests in subsidiaries whose main underlying asset is farmland, 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 similarly titled 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’s profit from operations before financing and taxation 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. We also believe Adjusted Consolidated EBIT and Adjusted Segment EBIT are useful for securities analysts, investors and others to evaluate the financial performance of our company and other companies in the agricultural industry.

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 (i) net cash generated from operating activities, less (ii) net cash used in investing activities, less (iii) interest paid, plus (iv) proceeds from the sale of non-controlling interest in farming subsidiaries. We define Adjusted Free Cash Flow from Operations as (i) net cash generated from operating activities less (ii) net cash used in investing activities, less (iii) interest paid, plus (iv) proceeds from the sale of non-controlling interest in subsidiaries; plus (v) expansion capital expenditures.

Expansion capital expenditures is defined as the required investment to expand current production capacity including organic growth, joint ventures and acquisitions. We define maintenance capital expenditures as the necessary investments in order to maintain the current level of productivity both at an agricultural and industrial level. Proceeds from the sale of non-controlling interest in farming subsidiaries is a measure of the cash generated from our land transformation business 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

vii

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 interests, taxes and maintenance capital expenses. We believe 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

Net Debt and Net Debt to Adjusted Consolidated EBITDA

Net debt is defined as the sum of non-current and current borrowings less cash and cash equivalents. 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.

Fiscal Year and Harvest Year

Our fiscal year begins on January 1 and ends on December 31 of each year. However, our production is based on the harvest year for each of our crops and rice. A harvest year varies according to the crop or rice and to the climate in which it is grown. Due to the geographic diversity of our farms, the planting period for a given crop or rice may start earlier on one farm than on another, causing differences in their respective harvesting periods. The presentation of production volume (tons) and product area (hectares) in this annual report, in respect of the harvest years for each of our crops and rice, starts with the first day of the planting period at the first farm to start planting on that harvest year and continues to the last day of the harvesting period of the respective crop or rice on the last farm to finish harvesting that harvest year, as shown in the table below.

viii

Product area for cattle is presented on a harvest year basis given that land utilized for cattle operations is linked to our farming operations and use of farmland during a harvest year. Production volumes for dairy and cattle operations are presented on a fiscal year basis. On the other hand, production volumes and product area in our sugar, ethanol and energy business are presented on a fiscal year basis.

The financial results for all of our products are presented on a fiscal year basis.

Certain Weight Units and Measures in the Agricultural Business

Weight units and measures used in agriculture vary according to the crop and producing country. In order to permit comparability of our operating data with operating data from the international markets, the following table sets forth key weight units and measures used in the agriculture industry:



Agricultural weight units and measures
1 metric ton	1,000 kg	1.102 U.S. (short) tons
1 cubic meter	1,000 liters
1 kilogram (kg)	2.20462 pounds
1 pound	0.45359 kg
1 acre	0.40469 hectares
1 hectare (ha)	2.47105 acres
Soybean and Wheat
1 bushel of soybean	60 pounds	27.2155 kg
1 bag of soybean	60 kg	2.20462 bushels
1 bushel/acre	67.25 kg/ha
1.00 U.S. dollar/bushel	2.2046 U.S. dollar/bag
Corn
1 bushel of corn	56 pounds	25.4012 kg
1 bag of corn	60 kg	2.36210 bushels
1 bushel/acre	62.77 kg/ha
1.00 U.S. dollar/bushel	2.3621 U.S. dollar/bag
Cotton
1 bale	480 pounds	217.72 kg
1 arroba	14.68 kg
Coffee
1 bag of coffee	60 kg	132.28 pounds
1.00 US$ cents/pound	1.3228 U.S. dollar/bag
Dairy
1 liter	0.264 gallons	2.273 pounds
1 gallon	3.785 liters	8.604 pounds
1 lbs	0.440 liters	0.116 gallons
1.00 U.S. dollar/liter	43.995 U.S. dollar/cwt	3.785 U.S. dollar/gallon
1.00 U.S. dollar/cwt	0.023 U.S. dollar/liter	0.086 U.S. dollar/gallon
1.00 U.S. dollar/gallon	0.264 U.S. dollar/liter	11.622 U.S. dollar/cwt
Sugar & Ethanol
1 kg of TRS equivalent	0.95 kg of VHP Sugar	0.59 liters of Hydrated Ethanol
1.00 US$ cents/pound	22.04 U.S. dollar/ton

Presentation of Information — Market Data and Forecasts

This annual report includes information provided by us and by third-party sources that we believe are reliable, including data related to the economic conditions in the markets in which we operate. Unless otherwise indicated, information in this annual report concerning economic conditions is based on publicly available information from third-party sources which we believe to be reasonable. The economic conditions in the markets in which we operate may deteriorate, and those economies may not grow at the rates projected by market data, or at all. The deterioration of the economic conditions in the markets in which we operate may have a material adverse effect on our business, results of operations and financial condition and the market price of our common shares.

Rounding

We have made rounding adjustments to reach some of the figures included in this annual report. Accordingly, numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that preceded them.

Recent Developments

On March 23, 2018 - the Company announced the submission of an investment proposal to partner with SanCor Cooperativas Unidas Limitadas (“SanCor”), one of the leading dairy processors of Argentina (the “Offer”). The Offer has been approved by the constituent members of the SanCor cooperative, however the Offer is still subject to the satisfaction of certain conditions precedent relating to SanCor’s restructuring and refinancing of SanCor’s indebtedness as well as SanCor and Adecoagro agreeing on formal documentation, among others. SanCor is one of the largest milk processors in Argentina. SanCor produces a wide range of dairy products, including milk, powdered milk, cheese, cream. SanCor is a well-established brand with more than 80 years in the marketplace. It owns several industrial assets with a total milk processing capacity of 4 million liters per day.

PART I

Item 1. Identity of Directors, Senior Management and Advisers

Not applicable.

Item 2. Offer Statistics and Expected Timetable

Not applicable.

Item 3. Key Information

A. SELECTED FINANCIAL DATA

The following selected statement of financial position data as of December 31, 2017 and 2016 and selected statement of income data and cash flow data for the three years in the period ended December 31, 2017 have been derived from our Consolidated Financial Statements appearing elsewhere in this annual report on Form 20-F. The selected statement of financial position data as of December 31, 2015 and 2014 and for the years ended December 31, 2015 and 2014 have been derived from our annual consolidated financial statements as of December 31, 2016, 2015 and 2014 and for the three years in the period ended December 31, 2016, which are not included herein. The selected statement of financial position data as of December 31, 2013 and for the year ended December 31, 2013 have been derived from our annual consolidated financial statements as of December 31, 2014, 2013 and 2012 and for the three years in the period ended December 31, 2014, which are not included herein.

The Consolidated Financial Statements are prepared in accordance with IFRS. All IFRS effective at the time of preparing the Consolidated Financial Statements have been applied.

You should read the information contained in the following tables in conjunction with “Item 5. Operating and Financial Review and Prospects”, “Item 8. Financial Information”, “Item 18. Financial Statements” and the Consolidated Financial Statements and the accompanying notes included elsewhere in this annual report.

▪ Effects of the adoption of the amendments to IAS 41 and IAS 16

IASB amended IAS 16 “Property, Plant and Equipment” and IAS 41 “Agriculture,” which distinguish bearer plants from other biological assets. Bearer plants are used solely to grow produce over their productive lives and are considered to bear more resemblance to machinery and equipment (IAS 16) than other biological assets (under IAS 41). Accordingly, they are now accounted for under IAS 16. However, the agricultural produce growing on bearer plants remains within the scope of IAS 41 and is measured at fair value less cost to sell. The amendments were applicable for our fiscal year ended December 31, 2016.

Our sugarcane and coffee plantations qualify as bearer plants under the new definition in IAS 41. As required under IAS 8, “Accounting Policies, Changes in Accounting Estimates and Errors”, we effected the change in accounting policy retrospectively. Consequently, effective January 1, 2016, our sugarcane and coffee plantations were reclassified to property, plant and equipment, measured at amortized cost and depreciated over their useful life on a straight-line basis. We adopted the transitional rule provided for in the amendment, which allowed us to apply the fair value of bearer plants as their deemed cost as of January 1, 2014. Accordingly, we revised the comparative amounts financial data for the years ended December 31, 2015 and 2014. Financial data for the year ended December 31, 2013 have not been revised, and is not comparable to financial data for the years 2017, 2016, 2015 and 2014.

For further information, and an analysis of the impact of the adoption of IAS 41 and IAS 16 to our Consolidated Financial Statements please see Note 32.1 to our Consolidated Financial Statements as of December 31, 2016 included in our Annual Report on Form 20-F for the year ended December 31, 2016.



	For the years ended December 31,
	2017		2016		2015		2014		2013 (*)
	(In thousands of $)
Statements of Income Data:
Sale of goods and services rendered	933,178		869,235		674,314		722,966		644,624
Cost of goods sold and services rendered	(766,727	)	(678,581	)	(557,786	)	(605,325	)	(491,578	)
Initial recognition and changes in fair value of biological assets and agricultural produce	63,220		125,456		54,528		100,216		(39,123	)
Changes in net realizable value of agricultural produce after harvest	8,852		(5,841	)	14,691		3,401		12,875
Margin on manufacturing and agricultural activities before operating expenses	238,523		310,269		185,747		221,258		126,798
General and administrative expenses	(57,299	)	(50,750	)	(48,425	)	(52,695	)	(53,352	)
Selling expenses	(95,399	)	(80,673	)	(70,268	)	(78,864	)	(68,069	)
Other operating income, net	39,461		(8,297	)	31,066		11,977		49,650
Share of loss of joint ventures	—		—		(2,685	)	(924	)	(219	)
Profit from operations before financing and taxation	125,286		170,549		95,435		100,752		54,808
Finance income	11,744		7,957		9,150		7,291		7,234
Finance costs	(131,349	)	(165,380	)	(116,890	)	(86,472	)	(98,916	)
Financial results, net	(119,605	)	(157,423	)	(107,740	)	(79,181	)	(91,682	)
Profit / (Loss) before income tax	5,681		13,126		(12,305	)	21,571		(36,874	)
Income tax benefit / (expense)	6,068		(9,387	)	7,954		(10,535	)	9,277
Profit / (Loss) for the year from continuing operations	11,749		3,739		(4,351	)	11,036		(27,597	)
Profit for the year from discontinued operations ⁽¹⁾	—		—		—		—		1,767
Profit / (Loss) for the year	11,749		3,739		(4,351	)	11,036		(25,830	)
Attributable to:
Equity holders of the parent	9,972		2,039		(5,593	)	11,116		(25,828	)
Non-controlling interest	1,777		1,700		1,242		(80	)	(2	)
Earnings/(Loss) per share from continuing and discontinued operations attributable to the equity holders of the parent during the year:
Basic earnings/(loss) per share
From continuing operations	0.083		0.017		(0.046	)	0.092		(0.226	)
From discontinued operations	—		—		—		—		0.014
Diluted earnings/(loss) per share
From continuing operations	0.082		0.017		(0.046	)	0.091		(0.226	)
From discontinued operations	—		—		—		—		0.014

(1) Our joint venture (equity method) investment in La Lacteo, was disposed on June 2013 and it was reflected as discontinued operations.

(*) 2013 figures have not been revised (to give effect to the adoption of the amendments of IAS 41 and IAS 16. See “Effects of the adoption of the amendments to IAS 41 and IAS 16.”



	For the Year Ended December 31,
	2017		2016		2015		2014		2013 (*)
Cash Flow Data:
Net cash generated from operating activities	237,105		255,401		145,186		120,151		102,080
Net cash used in investing activities	(188,335	)	(122,014	)	(125,051	)	(300,472	)	(161,536	)
Net cash generated from financing activities	70,194		(181,682	)	92,413		73,289		104,671
Other Financial Data:
Adjusted Segment EBITDA (unaudited) ⁽¹⁾
Crops	25,678		27,462		33,211		36,671		36,720
Rice	12,179		11,698		6,274		14,198		12,902
Dairy	12,243		5,717		6,356		9,663		9,801
All Other segments	556		9,085		677		686		1,347
Farming subtotal	50,656		53,962		46,518		61,218		60,770
Ethanol, sugar and energy	247,301		265,044		167,180		200,441		115,239
Land transformation	—		—		23,980		25,508		28,172
Corporate	(21,664	)	(20,957	)	(21,776	)	(23,233	)	(23,478	)
Adjusted Consolidated EBITDA (unaudited) ⁽¹⁾	276,293		298,049		215,902		263,934		180,703

________________________________________________________________________________________________


(1)	See “Presentation of Financial and Other Information” for the definitions of Adjusted Segment EBITDA and Adjusted Consolidated EBITDA and the reconciliation in the table below.



	As of December 31,
	2017	2016	2015	2014	2013 (*)
	(In thousands of $)
Statement of Financial Position Data:
Biological assets	167,994	145,404	111,818	124,736	292,144
Inventories	108,919	111,754	85,286	117,106	108,389
Property, plant and equipment, net	820,931	802,608	696,889	991,581	790,520
Total assets	1,607,201	1,455,766	1,355,394	1,646,164	1,711,476
Non-current borrowings	663,060	430,304	483,651	491,324	512,164
Total borrowings	817,958	635,396	723,339	698,506	660,131
Share Capital	183,573	183,573	183,573	183,573	183,573
Equity attributable to equity holders of the parent	639,714	664,091	520,084	769,638	854,304
Non-controlling interest	5,417	7,582	7,335	7,589	45
Number of shares (including treasury shares)	122,382	122,382	122,382	122,382	122,382

(*) 2013 figures have not been revised to give effect to the adoption of the amendments of IAS 41 and IAS 16. See "Effects of the adoption of the amendments to IAS 41 and IAS 16”.

The following tables show a reconciliation of Adjusted Segment EBITDA to our segments’ profit / (loss) from operations before financing and taxation, the most directly comparable IFRS financial measure, and a reconciliation of Adjusted Consolidated EBITDA to our net profit (loss) for the year, the most directly comparable IFRS financial measure.



	For the year ended December 31, 2017
	Crops	Rice	Dairy	All other segments	Farming Subtotal	Sugar, Ethanol and Energy	Land Trans- formation	Corporate		Total
	(In thousands of $)
Adjusted Segment EBITDA (unaudited)
Profit/(Loss) from Operations Before Financing and Taxation	24,167	8,328	11,206	397	44,098	102,852	—	(21,664	)	125,286
Adjusted Segment EBIT (unaudited) ⁽¹⁾	24,167	8,328	11,206	397	44,098	102,852	—	(21,664	)	125,286
Depreciation and amortization	1,511	3,851	1,037	159	6,558	144,449	—	—		151,007
Adjusted Segment EBITDA (unaudited) ⁽¹⁾	25,678	12,179	12,243	556	50,656	247,301	—	(21,664	)	276,293
Reconciliation to Profit
Profit for the year										11,749
Income tax (benefit)										(6,068	)
Interest expense, net										41,078
Foreign exchange, net										38,708
Other financial results, net										39,819
Adjusted Consolidated EBIT (unaudited) ⁽¹⁾										125,286
Depreciation and amortization										151,007
Adjusted Consolidated EBITDA (unaudited) ⁽¹⁾										276,293


(1)	See “Presentation of Financial and Other Information” for the definitions of Adjusted Segment EBIT, Adjusted Consolidated EBIT, Adjusted Segment EBITDA and Adjusted Consolidated EBITDA.



	For the year ended December 31, 2016
	Crops	Rice	Dairy	All other segments	Farming Subtotal	Sugar, Ethanol and Energy	Land Trans- formation	Corporate		Total
	(In thousands of $)
Adjusted Segment EBITDA (unaudited)
Profit/(Loss) from Operations Before Financing and Taxation	26,093	8,932	4,753	8,893	48,671	142,835	—	(20,957	)	170,549
Adjusted Segment EBIT (unaudited) ⁽¹⁾	26,093	8,932	4,753	8,893	48,671	142,835	—	(20,957	)	170,549
Depreciation and amortization	1,369	2,766	964	192	5,291	122,209	—	—		127,500
Adjusted Segment EBITDA (unaudited) ⁽¹⁾	27,462	11,698	5,717	9,085	53,962	265,044	—	(20,957	)	298,049
Reconciliation to Profit
Profit for the year										3,739
Income tax expense										9,387
Interest expense, net										40,527
Foreign exchange, net										19,062
Other financial results, net										97,834
Adjusted Consolidated EBIT (unaudited) ⁽¹⁾										170,549
Depreciation and amortization										127,500
Adjusted Consolidated EBITDA (unaudited) ⁽¹⁾										298,049


(1)	See “Presentation of Financial and Other Information” for the definitions of Adjusted Segment EBIT, Adjusted Consolidated EBIT, Adjusted Segment EBITDA and Adjusted Consolidated EBITDA.



	For the year ended December 31, 2015
	Crops	Rice	Dairy	All other segments	Farming Subtotal	Sugar, Ethanol and Energy	Land Trans- formation	Corporate		Total
	(In thousands of $)
Adjusted Segment EBITDA (unaudited)
Profit/(Loss) from Operations Before Financing and Taxation	30,784	3,287	4,900	401	39,372	69,925	7,914	(21,776	)	95,435
Reserve from the sale of non-controlling interests in subsidiaries ⁽²⁾	—	—	—	—	—	—	16,066	—		16,066
Adjusted Segment EBIT (unaudited) ⁽¹⁾	30,784	3,287	4,900	401	39,372	69,925	23,980	(21,776	)	111,501
Depreciation and amortization	2,427	2,987	1,456	276	7,146	97,255	—	—		104,401
Adjusted Segment EBITDA (unaudited) ⁽¹⁾	33,211	6,274	6,356	677	46,518	167,180	23,980	(21,776	)	215,902
Reconciliation to Profit
Loss for the year										(4,351	)
Income tax (benefit)										(7,954	)
Interest expense, net										49,491
Foreign exchange, net										23,423
Other financial results, net										34,826
Reserve from the sale of non-controlling interests in subsidiaries ⁽²⁾										16,066
Adjusted Consolidated EBIT (unaudited) ⁽¹⁾										111,501
Depreciation and amortization										104,401
Adjusted Consolidated EBITDA (unaudited) ⁽¹⁾										215,902


(1)	See “Presentation of Financial and Other Information” for the definitions of Adjusted Segment EBIT, Adjusted Consolidated EBIT, Adjusted Segment EBITDA and Adjusted Consolidated EBITDA.


(2)	This corresponds to an equity line item in our consolidated statements of financial position. See “Presentation of Financial and Other Information” for the definitions of Adjusted Segment EBIT, Adjusted Consolidated EBIT, Adjusted Segment EBITDA and Adjusted Consolidated EBITDA.



	For the year ended December 31, 2014
	Crops	Rice	Dairy	All other segment	Farming Subtotal	Sugar, Ethanol and Energy	Land Trans- formation	Corporate		Total
	(In thousands of $)
Adjusted Segment EBITDA (unaudited)
Profit/(Loss) from Operations Before Financing and Taxation	34,745	10,937	8,112	288	54,082	69,903	—	(23,233	)	100,752
Reserve from the sale of non-controlling interests in subsidiaries (2)	—	—	—	—	—	—	25,508	—		25,508
Adjusted Segment EBIT (unaudited) ⁽²⁾	34,745	10,937	8,112	288	54,082	69,903	25,508	(23,233	)	126,260
Depreciation and amortization	1,926	3,261	1,551	398	7,136	130,538	—	—		137,674
Adjusted Segment EBITDA (unaudited) ⁽²⁾	36,671	14,198	9,663	686	61,218	200,441	25,508	(23,233	)	263,934
Reconciliation to Profit
Profit for the year										11,036
Income tax expense										10,535
Interest expense, net										47,847
Foreign exchange, net										9,246
Other financial results, net										22,088
Reserve from the sale of non-controlling interest in subsidiaries)										25,508
Adjusted Consolidated EBIT (unaudited) ⁽²⁾										126,260
Depreciation and amortization										137,674
Adjusted Consolidated EBITDA (unaudited) ⁽²⁾										263,934


(1)	See “Presentation of Financial and Other Information” for the definitions of Adjusted Segment EBIT, Adjusted Consolidated EBIT, Adjusted Segment EBITDA and Adjusted Consolidated EBITDA.


(2)	This corresponds to an equity line item in our consolidated statements of financial position. See “Presentation of Financial and Other Information” for the definitions of Adjusted Segment EBIT, Adjusted Consolidated EBIT, Adjusted Segment EBITDA and Adjusted Consolidated EBITDA.



	For the year ended December 31, 2013 (*)
	Crops	Rice	Dairy	All other segments		Farming Subtotal	Sugar, Ethanol and Energy	Land Trans- formation	Corporate		Total
	(In thousands of $)
Adjusted Segment EBITDA (unaudited)
Profit/(Loss) from Operations Before Financing and Taxation	34,549	8,171	6,714	(7,238	)	42,196	7,918	28,172	(23,478	)	54,808
Profit from discontinued operations	—	—	1,767	—		1,767	—	—	—		1,767
Initial recognition and changes in fair value of “long term” biological assets(l) (unrealized)	—	—	234	8,121		8,355	47,341	—	—		55,696
Adjusted Segment EBIT (unaudited) ⁽²⁾	34,549	8,171	8,715	883		52,318	55,259	28,172	(23,478	)	112,271
Depreciation and amortization	2,171	4,731	1,086	464		8,452	59,980	—	—		68,432
Adjusted Segment EBITDA (unaudited) ⁽²⁾	36,720	12,902	9,801	1,347		60,770	115,239	28,172	(23,478	)	180,703
Reconciliation to Profit
Loss for the year											(25,830	)
Initial recognition and changes in fair value of “long term” biological assets(l) (unrealized)											55,696
Income tax (benefit)											(9,277	)
Interest expense, net											42,367
Foreign exchange losses, net											21,087
Other financial results, net											28,228
Adjusted Consolidated EBIT (unaudited) ⁽²⁾											112,271
Depreciation and amortization											68,432
Adjusted Consolidated EBITDA (unaudited) ⁽²⁾											180,703


(1)	Long-term biological assets were sugarcane, coffee, dairy and cattle.


(2)	See “Presentation of Financial and Other Information” for the definitions of Adjusted Segment EBIT, Adjusted Consolidated EBIT, Adjusted Segment EBITDA and Adjusted Consolidated EBITDA.

(*) 2013 figures have not been revised to give effect to the adoption of the amendments of IAS 41 and IAS 16. See "Effects of the adoption of the amendments to IAS 41 and IAS 16”.



Adjusted Free Cash Flow	2017		2016		2015		2014		2013 (*)
Net cash generated from operating activities	237,105		255,401		145,186		120,151		102,080
Net cash used in investing activities	(188,335	)	(122,014	)	(125,051	)	(300,472	)	(161,536	)
Interest paid	(41,612	)	(48,400	)	(48,438	)	(48,899	)	(45,972	)
Proceeds from the sale of non-controlling interest in subsidiaries	—		—		21,964		49,343		—
Expansion Capital expenditures reversal (unaudited)	70,804		48,295		87,956		237,277		166,494
Adjusted Free Cash Flow from Operations (unaudited)	77,962		133,282		81,617		57,400		61,066
Expansion Capital expenditures (unaudited)	(70,804	)	(48,295	)	(87,956	)	(237,277	)	(166,494	)
Adjusted Free Cash Flow (unaudited)	7,158		84,987		(6,339	)	(179,877	)	(105,428	)



Indebtedness	2017		2016		2015		2014		2013 (*)
Net Debt (unaudited)	548,763		476,828		524,445		584,711		427,984
Net Debt / Adjusted Consolidated EBITDA (unaudited)	1.98	x	1.60	x	2.43	x	2.22	x	2.37	x



Reconciliation - Net Debt	2017		2016		2015		2014		2013 (*)
Total Borrowings	817,958		635,396		723,339		698,506		660,131
Cash and cash equivalents	(269,195	)	(158,568	)	(198,894	)	(113,795	)	(232,147	)
Net Debt (unaudited)	548,763		476,828		524,445		584,711		427,984

(*) 2013 figures have not been adjusted to give effect to the adoption of the amendments of IAS 41 and IAS 16. Please see "Effects of the adoption of the amendments to IAS 41 and IAS 16.”

Reconciliation of Adjusted Free Cash Flow to Net increase/(decrease) in Cash and Cash Equivalents



	2017		2016		2015		2014		2013 (*)
Net increase/(decrease) in cash and cash equivalents	118,964		(48,295	)	112,548		(107,032	)	45,215
Proceeds from the sale of minority interest in subsidiaries	—		—		21,964		49,343		—
Interest Paid	(41,612	)	(48,400	)	(48,438	)	(48,899	)	(45,972	)
Net cash generated from financing activities	(70,194	)	181,682		(92,413	)	(73,289	)	(104,671	)
Adjusted Free Cash Flow (unaudited)	7,158		84,987		(6,339	)	(179,877	)	(105,428	)

(*) 2013 figures have not been adjusted to give effect to the adoption of the amendments of of IAS 41 and IAS 16. Please see "Effects of the adoption of the amendments to IAS 41 and IAS 16.”

Reconciliation of Adjusted Free Cash Flow from operations to Net increase/(decrease) in Cash and Cash Equivalents



	2017		2016		2015		2014		2013 (*)
Net increase/(decrease) in cash and cash equivalents	118,964		(48,295	)	112,548		(107,032	)	45,215
Expansion Capital Expenditures (unaudited)	71,891		48,295		87,956		237,277		166,494
Proceeds from the sale of minority interest in subsidiaries	—		—		21,964		49,343		—
Interest Paid	(41,612	)	(48,400	)	(48,438	)	(48,899	)	(45,972	)
Net cash (used)/generated from financing activities	(70,194	)	181,682		(92,413	)	(73,289	)	(104,671	)
Adjusted Free Cash Flow from operations (unaudited)	79,049		133,282		81,617		57,400		61,066

(*) 2013 figures have not been adjusted to give effect to the adoption of the amendments of of IAS 41 and IAS 16. Please see "Effects of the adoption of the amendments to IAS 41 and IAS 16.”

B. CAPITALIZATION AND INDEBTEDNESS

Not Applicable.

C. REASONS FOR THE OFFER AND USE OF PROCEEDS

Not Applicable.

D. RISK FACTORS

Investing in our common shares involves a high degree of risk. Before making an investment decision, you should carefully consider the information contained in this annual report, particularly the risks described below, as well as in our consolidated financial statements and accompanying notes. Our business activities, cash flow, financial condition and results of operations could be materially and adversely affected by any of these risks. The market price of our common shares may decrease due to any of these risks or other factors, and you may lose all or part of your investment. The risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our business operations.

Risks Related to Our Business and Industries

Unpredictable weather conditions, pest infestations and diseases may have an adverse impact on agricultural production.

The occurrence of severe adverse weather conditions, especially droughts, hail, floods or frost or diseases are unpredictable and may have a potentially devastating impact on agricultural production and may otherwise adversely affect the supply and price of the agricultural commodities that we sell and use in our business. Adverse weather conditions may be exacerbated by the effects of climate change which impacts the entirety of our business and policies.

The effects of severe adverse weather conditions may reduce yields of our agricultural activities. Additionally, higher than average temperatures and rainfall can contribute to an increased presence of pest and insects that may adversely impact our agricultural production.

We experienced drought conditions during the first half of 2013 in the countries where we operate, which resulted in a reduction of approximately 21% to 31% in our yields for the 2012/2013 harvest, for corn and soybean, compared with our historical averages. The actual yields following the drought generated a decrease in Initial Recognition and Changes in Fair Value of Biological Assets and Agricultural Produce in respect of corn, soybean and the remaining crops of $5.9 million, $16.6 million and $2.7 million, respectively, for the year ended December 31, 2013. See “Item 5.—Operating and Financial Review and Prospects—Trends and Factors Affecting Our Results of Operations—(i) Effects of Yield Fluctuations”. Since November 2017, Argentina has been experiencing a drought with rain levels below historical averages. Argentina´s Humid Pampas, the country´s corn-belt region, along with the north-east region are among the most affected by the dry weather. The final impact, which will be recognized in a lower Initial Recognition and Changes in Fair Value of Biological Assets and Agricultural Produce, is still uncertain.

The occurrence and effects of disease and plagues can be unpredictable and devastating to agricultural products, potentially rendering all or a substantial portion of the affected harvests unsuitable for sale. Our agricultural products are also susceptible to fungus and bacteria that are associated with excessively moist conditions. Even when only a portion of the production is damaged, our results of operations could be adversely affected because all or a substantial portion of the production costs have been incurred. Although some diseases are treatable, the cost of treatment is high, and we cannot assure you that such events in the future will not adversely affect our operating results and financial condition. Furthermore, if we fail to control a given plague or disease and our production is threatened, we may be unable to supply our main customers, which could affect our results of operations and financial condition.

Our sugar production depends on the volume and sucrose content of the sugarcane that we cultivate or that is supplied to us by growers located in the vicinity of our mills. Both sugarcane yields and sucrose content depend primarily on weather conditions such as rainfall and temperature, which vary. Weather conditions have historically caused volatility in the ethanol and sugar industries. Future weather patterns may reduce the amount of sugarcane that we can harvest or purchase, or the sucrose content in such sugarcane, and, consequently, the amount of sugar and ethanol we can produce in any given harvest. Any reduction in production volumes could have a material adverse effect on our operating results and financial condition.

As a result, we cannot assure you that future severe adverse weather conditions or pest infestations will not adversely affect our operating results and financial condition.

Fluctuation in market prices for our products could adversely affect our financial condition and results of operations.

Prices for agricultural products and by-products, including, among others, sugar, ethanol, and grains, like those of other commodities, have historically been cyclical and sensitive to domestic and international changes in supply and demand and can be expected to fluctuate significantly. In addition, the agricultural products and by-products we produce are traded on commodities and futures exchanges and thus are subject to speculative trading, which may adversely affect us. The prices that we are able to obtain for our agricultural products and by-products depend on many factors beyond our control including:


•	prevailing world commodity prices, which historically have been subject to significant fluctuations over relatively short periods of time, depending on worldwide demand and supply;


•	changes in the agricultural subsidy levels of certain important producers (mainly the U.S. and the European Union (“E.U.”) and the adoption of other government policies affecting industry market conditions and prices;


•	changes to trade barriers of certain important consumer markets (including China, India, the U.S. and the E.U.) and the adoption of other governmental policies affecting industry market conditions and prices;


•	changes in government policies for biofuels;


•	world inventory levels, i.e., the supply of commodities carried over from year to year;


•	climatic conditions and natural disasters in areas where agricultural products are cultivated;


•	the production capacity of our competitors; and


•	demand for and supply of competing commodities and substitutes.

Further, because we may not hedge 100% of the price risk of our agricultural products, we may be unable to have minimum price guarantees for all of our production and are, therefore, exposed to risks associated with the prices of agricultural products and their volatility. We are subject to fluctuations in prices of agricultural products that could result in our receiving lower prices for our agricultural products than our production costs.

In addition, there is a strong relationship between the value of our land holdings and market prices of the commodities we produce, which are affected by global economic conditions. A decline in the prices of grains, sugar, ethanol, or related by-products below their current levels for a sustained period of time could significantly reduce the value of our land holdings and materially and adversely affect our financial condition and results of operations.

Ethanol prices are correlated to the price of sugar and are becoming closely correlated to the price of oil, so that a decline in the price of sugar will adversely affect both our ethanol and sugar businesses, and a decline in the price of oil may adversely affect our ethanol business.

A vast majority of ethanol in Brazil is produced at sugarcane mills that produce both ethanol and sugar. Because sugarcane millers are able to alter their product mix in response to the relative prices of ethanol and sugar, this results in the prices of both products being directly correlated, and the correlation between ethanol and sugar may increase over time. In addition, sugar prices in Brazil are determined by prices in the world market, resulting in a correlation between Brazilian ethanol prices and world sugar prices. Accordingly, a decline in sugar prices would have an adverse effect on the financial performance of our ethanol and sugar businesses.

Currently, gasoline prices in Brazil are set by the Brazilian government through Petrobras. Because flex-fuel vehicles, which have become popular in Brazil, allow consumers to choose between gasoline and ethanol at the pump rather than in the showroom, ethanol prices are now becoming increasingly correlated to gasoline prices and, consequently, oil prices. Therefore, a decline in oil prices or a decision by Petrobras to lower gasoline prices would have an adverse effect on the financial performance of our ethanol and sugar business.

The expansion of our business through acquisitions poses risks that may reduce the benefits we anticipate from these transactions.

As part of our business strategy, we have grown through acquisitions. We plan to continue growing by acquiring other farms and production facilities throughout South America. We believe that the agricultural industry and agricultural activity in the region are highly fragmented and that our future consolidation opportunities will continue to be significant to our growth. However, our management is unable to predict whether or when any prospective acquisitions or strategic alliances will occur, or the likelihood of a certain transaction being completed on favorable terms and conditions. In addition, we are unable to predict the effect that changes in Argentine or Brazilian legislation regarding foreign ownership of rural properties could have in our business. See “—Risks Related to Argentina—Argentine law concerning foreign ownership of rural properties may adversely affect our results of operations and future investments in rural properties in Argentina” and “—Risks Related to Brazil—Changes in Brazilian rules

concerning foreign investment in rural properties may adversely affect our investments.” Our ability to continue to expand our business successfully through acquisitions depends on many factors, including our ability to identify acquisitions or access capital markets at an acceptable cost and negotiate favorable transaction terms. Even if we are able to identify acquisition targets and obtain the necessary financing to make these acquisitions, we could financially overextend ourselves, especially if an acquisition is followed by a period of lower than projected prices for our products.

Acquisitions also expose us to the risk of successor liability relating to actions involving an acquired company, its management or contingent liabilities incurred before the acquisition. The due diligence we conduct in connection with an acquisition, and any contractual guarantees or indemnities that we receive from the sellers of acquired companies, may not be sufficient to protect us from, or compensate us for, actual liabilities. Any material liability associated with an acquisition could adversely affect our reputation and results of operations and reduce the benefits of the acquisition.

To support the acquisitions we hope to make, we may need to implement new or upgraded strategies, systems, procedures and controls for our operations and will face risks, including diversion of management time and focus and challenges associated with integrating new managers and employees. Our failure to integrate new businesses successfully could adversely affect our business and financial performance.

We may be unable to realize synergies and efficiency gains from our recent acquisitions in the timeframe we anticipate or at all, because of integration or other challenges. In addition, we may be unable to identify, negotiate or finance future acquisitions, particularly as part of our international growth strategy, successfully or at favorable valuations, or to effectively integrate these acquisitions or joint venture businesses with our current businesses. Any future joint ventures or acquisitions of businesses, technologies, services or products might require us to obtain additional equity or debt financing, which may not be available on favorable terms, or at all. Future acquisitions and joint ventures may also results in unforeseen operating difficulties and expenditures, as well as strain on our organizational culture.

A significant increase in the price of raw materials we use in our operations, or the shortage of such raw materials, could adversely affect our results of operations.

Our production process requires various raw materials, including primarily fertilizer, pesticides and seeds, which we acquire from local and international suppliers. We do not have long-term supply contracts for most of these raw materials. A significant increase in the cost of these raw materials, especially fertilizer and agrochemicals, a shortage of raw materials or the unavailability of these raw materials entirely could reduce our profit margin, reduce our production and/or interrupt the production of some of our products, in all cases adversely affecting the results of our operations and our financial condition.

For example, we rely on fertilizers and agrochemicals, many of which are petro-chemical based. In our Farming business, fertilizers and agrochemicals represented approximately 30% of our total cost of production (including manufacturing and administrative expenses) for the 2015/2016 harvest year. In our Sugar, Ethanol and Energy business, fertilizers and agrochemicals represented 7% of our cost of production (including manufacturing and administrative expenses) for 2017. Worldwide production of agricultural products has increased significantly in recent years, increasing the demand for agrochemicals and fertilizers. This has resulted, among other things, in increased prices for agrochemicals and fertilizers.

Increased energy prices and frequent interruptions of energy supply could adversely affect our business.

We require substantial amounts of fuel oil and other resources for our harvest activities and transport of our agricultural products. During the 2016 / 17 harvest year, fuel represented 11% of the cost of production (including manufacturing and administrative expenses) of our Farming business. In our Sugar, Ethanol and Energy business, fuel represented 8% of our cost of production (including manufacturing and administrative expenses) for the 2016 / 17 harvest year. We rely upon third parties for our supply of energy resources used in our operations. The prices for and availability of energy resources may be subject to change or curtailment, respectively, due to, among other things, new laws or regulations, imposition of new taxes or tariffs, interruptions in production by suppliers, imposition of restrictions on energy supply by government, worldwide price levels and market conditions. Over the last few years, the Argentine government has taken certain measures in order to reduce the use of energy during peak months of the year by frequently cutting energy supply to industrial facilities and large consumers to ensure adequate supply for residential buildings. For example, certain of our industrial facilities have been subject to a quota system whereby electricity cuts occur on a work shift basis, resulting in our facilities being shut down during certain work shifts. Also, the Macri administration in Argentina has declared a state of emergency with respect to the national energy system until December 31, 2017. The state of emergency will allow the Macri administration to take any action to ensure the supply of energy. A revision to the current subsidy policies has also been announced by the Macri administration. While some of our facilities utilize different sources of energy, such as firewood and liquefied natural gas, and have attempted to stock their required supplies ahead of higher demand periods, we cannot assure you that we will be able to procure the required energy inputs at acceptable prices. If energy supply is

cut for an extended period of time and we are unable to find replacement sources at comparable prices, or at all, our business and results of operations could be adversely affected.

We depend on international trade and economic and other conditions in key export markets for our products.

Our operating results depend largely on economic conditions and regulatory policies for our products in major export markets. The ability of our products to compete effectively in these export markets may be adversely affected by a number of factors that are beyond our control, including the deterioration of macroeconomic conditions, volatility of exchange rates, the imposition of greater tariffs or protectionist policies or other trade barriers or other factors in those markets, such as regulations relating to chemical content of products and safety requirements. The European Union, for example, limits the import of genetically modified organisms, or “GMOs.” See “Some of the agricultural commodities and food products that we produce contain genetically modified organisms.”

Due to the growing participation in the worldwide agricultural commodities markets by commodities produced in South America, South American growers, including us, are increasingly affected by the measures taken by importing countries in order to protect their local producers. Measures such as the limitation on imports adopted in a particular country or region may affect the sector’s export volume significantly and, consequently, our operating results.

If the sale of our products into a particular importing country is adversely affected by trade barriers or by any of the factors mentioned above, the relocation of our products to other consumers on terms equally favorable could be impaired, and our business, financial condition and operating results may be adversely affected.

A worldwide economic downturn could weaken demand for our products or lower prices.

The demand for the products we sell may be affected by international, national and local economic conditions that are beyond our control. Adverse changes in the perceived or actual economic climate, such as higher fuel prices, higher interest rates, stock and real estate market declines and/or volatility, more restrictive credit markets, higher taxes, and changes in governmental policies could reduce the level of demand or prices of the products we produce. We cannot predict the duration or magnitude of this downturn or the timing or strength of economic recovery. If a downturn were to continue for an extended period of time or worsen, we could experience a prolonged period of decreased demand and prices. In addition, economic downturns have and may adversely impact our suppliers, which can result in disruptions in goods and services and financial losses.

Our business is seasonal, and our results may fluctuate significantly depending on the growing cycle of our crops.

As with any agricultural business enterprise, our business operations are predominantly seasonal in nature. The harvest of corn, soybean and rice generally occurs from January to May. Wheat is harvested from December to January. Cotton is harvested from June to August, but requires processing which takes approximately two to three months. Our operations and sales are affected by the growing cycle of our crops process and the timing of our harvest sales. In addition, our sugar and ethanol business is subject to seasonal trends based on the sugarcane growing cycle in the center-south region of Brazil. Although, we operate under a “non-stop” or “continuous” harvest model which allows us to crush sugarcane year round, the annual sugarcane harvesting period in the center-south region of Brazil begins in March/April and ends in November/December. This creates price fluctuations which result in fluctuations in our sugar and ethanol inventories, usually peaking in December to take advantage of higher prices during the traditional off-season (i.e., January through April), and a degree of seasonality in our gross profit. Seasonality could have a material adverse effect on our business and financial performance. In addition, our quarterly results may vary as a result of the effects of fluctuations in commodities prices, production yields and costs. Therefore, our results of operations have varied significantly from period to period and are likely to continue to vary, due to seasonal factors.

Our dairy cattle are vulnerable to diseases.

Diseases among our dairy cattle herds, such as mastitis, tuberculosis, brucellosis and foot-and-mouth disease, can have an adverse effect on the productivity of our dairy cows. Outbreaks of cattle diseases may also result in the closure of certain important markets to our cattle-derived products. Although we abide by national veterinary health guidelines, including laboratory analyses and vaccination, to control diseases among our herds, especially foot-and-mouth disease, we cannot assure you that future outbreaks will not occur. A future outbreak of diseases among our cattle herds could adversely affect our milk sales and operating results and financial condition.

Furthermore, outbreaks, or fears of outbreaks, of any of these or other animal diseases may lead to cancellation of orders by our customers and, particularly if the disease has the potential to affect humans, or create adverse publicity that may have a material adverse effect on consumer demand for our products. Moreover, outbreaks of animal disease may result in foreign

governmental action to close export markets to some or all of our products, which may result in the destruction of some or all of these animals.

We face significant competition from Brazilian and foreign producers, which could adversely affect our financial performance.

We face strong competition from other producers in our domestic market and from foreign producers in our export markets. The market for commodities is highly fragmented. Small producers can also be important competitors, some of which operate in the informal economy and are able to offer lower prices by meeting lower quality standards. Competition from other producers is a barrier to expanding our sales in the domestic/foreign market. With respect to exports, we compete with other large, vertically integrated producers that have the ability to produce quality products at low cost, as well as with foreign producers.

The Brazilian markets, in particular, are highly price-competitive and sensitive to product substitution. Even if we remain a low-cost producer, customers may seek to diversify their sources of supply by purchasing a portion of the products they need from producers in other countries, as some of our customers in key export markets have begun to do. We expect that we will continue to face strong competition in all of our markets and anticipate that existing or new competitors may broaden their product lines and extend their geographic scope. Any failure by us to respond to product, pricing and other moves by competitors may negatively affect our financial performance.

Our current insurance coverage may not be sufficient to cover our potential losses.

Our production is, in general, subject to different risks and hazards, including adverse weather conditions, fires, diseases and pest infestations, other natural phenomena, industrial accidents, labor disputes, changes in the legal and regulatory framework applicable to us, environmental contingencies and other natural phenomena. Our insurance currently covers only part of the losses we may incur and does not cover losses on crops due to hail storms, fires or similar risks. Furthermore, although we maintain insurance at levels that are customary in our industry, certain types of risks may not be covered by the policies we have for our industrial facilities. Additionally, we cannot guarantee that the indemnification paid by the insurer due to the occurrence of a casualty covered by our policies will be sufficient to entirely compensate us for the damages suffered. Moreover, we may not be able to maintain or obtain insurance of the type and amount desired at reasonable costs. If we were to incur significant liability for which we were not fully insured, it could have a materially adverse effect on our business, financial condition and results of operations.

In addition, even where we incur losses that are ultimately covered by insurance, we may incur additional expenses to mitig ate the loss, such as shifting production to another facility. These costs may not be fully covered by our insurance.

A reduction in market demand for ethanol or a change in governmental policies reducing the amount of ethanol required to be added to gasoline may adversely affect our business.

Government authorities of several countries, including Brazil and certain states of the United States, currently require the use of ethanol as an additive to gasoline. Commencing in March 2015, the Brazilian Government increased the required blend of anhydrous ethanol to gasoline from 25% to 27% which created an additional demand for anhydrous ethanol in the order of approximately 800 thousand cubic meters of anhydrous per year.

Approximately 45% of all fuel ethanol in Brazil is consumed in the form of anhydrous ethanol blended with gasoline; the remaining 55% of fuel ethanol is consumed in the form of hydrous ethanol, which is mostly used to power flex-fuel vehicles. Flex-fuel vehicles have the flexibility to run either on gasoline (blended with anhydrous ethanol) or hydrous ethanol. In the United States, almost all gasoline sold contains 10% ethanol. The European Union aims for 10% of the energy used in the transport sector to derive from renewable energy sources by 2020, without specific targets for certain renewable energy sources and without intermediate targets, to be determined by each Member State. Other countries such as Colombia, Mexico, Canada, Philippines and China have a 10% biofuel blending mandate, while Argentina currently has a 12% ethanol blending. In addition, flex-fuel and ethanol powered vehicles in Brazil are entitled to a tax benefit in the form of a lower tax rate on manufactured products (Imposto sobre Produtos Industrializados) and therefore are currently taxed at lower levels than gasoline-only vehicles, which has contributed to the increase in production and sale of flex-fuel vehicles. Many of these policies and incentives stem from, and are mostly driven by, climate change issue. If such concerns or perception were to change, the legal framework and incentive structure promoting the use of ethanol may change, leading to a reduction in the demand for ethanol. In addition, any reduction in the percentage of ethanol required in fuel blended with gasoline or increase in the levels at which flex-fuel vehicles are taxed in Brazil, or any growth in the demand for natural gas and other fuels as an alternative to ethanol, lower gasoline prices or an increase in gasoline consumption (versus ethanol), may cause demand for ethanol to decline and affect our business.

Growth in the sale and distribution of ethanol depends in part on infrastructure improvements, which may not occur on a timely basis, if at all.

In contrast to the well-established logistical operations and infrastructure supporting sugar exports, ethanol exports inherently demand much more complex preparation and means of distribution, including outlets from our facilities to ports and shipping to other countries. Substantial infrastructure development by persons and entities outside our control is required for our operations, and the ethanol industry generally, to grow. Areas requiring expansion include, but are not limited to, additional rail capacity, additional storage facilities for ethanol, increases in truck fleets capable of transporting ethanol within localized markets, expansion of refining and blending facilities to handle ethanol, growth in service stations equipped to handle ethanol fuels, and growth in the fleet of flex-fuel vehicles. Specifically, with respect to ethanol exports, improvements in consumer markets abroad are needed in the number and capacity of ethanol blending industrial plants, the distribution channels of gasoline-ethanol blends and the chains of distribution stations capable of handling fuel ethanol as an additive to gasoline. Substantial investments required for these infrastructure changes and expansions may not be made or they may not be made on a timely basis. Any delay or failure in making the changes in or expansion of infrastructure may hurt the demand for or prices of our products, prevent our products’ delivery, impose additional costs on us or otherwise have a serious adverse effect on our business, operating results or financial status. Our business relies on the continuing availability of infrastructure for ethanol production, storage and distribution, and any infrastructure disruptions may have a material adverse effect on our business, financial condition and operating results.

We may be harmed by competition from alternative fuels, products and production methods.

Ethanol competes in the biofuel market with other, established fuels such as biodiesel, as well as fuels that are still in the development phase, including methanol and butanol from biomass. Alternative fuels could become more successful than ethanol in the biofuels market over the medium or long term due to, for example, lower production costs, greater environmental benefits or other more favorable product characteristics. In addition, alternative fuels may also benefit from tax incentives or other more favorable governmental policies than those that apply to ethanol. Furthermore, our success depends on early identification of new developments relating to products and production methods and continuous improvement of existing expertise in order to ensure that our product range keeps pace with technological change. Competitors may gain an advantage over us by, for example, developing or using new products and production methods, introducing new products to the market sooner than we do, or securing exclusive rights to new technologies, thereby significantly harming our competitive position.

A substantial portion of our assets is farmland that is highly illiquid.

We have been successful in partially rotating and monetizing a portion of our investments in farmland. During the last fourteen years, we have executed transactions for the purchase and disposition of land for over $688 million. Ownership of a significant portion of the land we operate is a key part of our business model. However, agricultural real estate is generally an illiquid asset. Moreover, the adoption of laws and regulations that impose limitations on ownership of rural land by foreigners in the jurisdictions in which we operate may also limit the liquidity of our farmland holdings. See “—Risks Related to Argentina—Argentine law concerning foreign ownership of rural properties may adversely affect our results of operations and future investments in rural properties in Argentina” and “—Risks Related to Brazil—Recent changes in Brazilian rules concerning foreign investment in rural properties may adversely affect our investments.” As a result, it is unlikely that we will be able to adjust our owned agricultural real estate portfolio promptly in response to changes in economic, business or regulatory conditions. Illiquidity in local market conditions may adversely affect our ability to complete dispositions, to receive proceeds generated from any such sales or to repatriate any such proceeds.

We have entered into agriculture partnership agreements in respect of a significant portion of our sugarcane plantations.

As of December 31, 2017 , approximately 91 % of our sugarcane plantations were leased through agriculture partnership agreements, for periods of an average of six to twelve years. We cannot guarantee that these agriculture partnerships will be renewed after their respective terms. Even if we are able to renew these agreements, we cannot guarantee that such renewals will be on terms and conditions satisfactory to us. Any failure to renew the agriculture partnerships or obtain land suitable for sugarcane planting in sufficient quantity and at reasonable prices to develop our activities could adversely affect our results of operations, increase our costs or force us to seek alternative properties, which may not be available or be available only at higher prices.

We may be subject to labor disputes from time to time that may adversely affect us.

Our employees are represented by unions or equivalent bodies and are covered by collective bargaining or similar agreements which are subject to periodic renegotiation. We may not successfully conclude our labor negotiations on satisfactory terms, which may result in a significant increase in the cost of labor or may result in work stoppages or labor disturbances that disrupt our

operations. Cost increases, work stoppages or disturbances that result in substantial amounts of raw product not being processed could have a material and adverse effect on our business, results of operations and financial condition.

We may not possess all of the permits and licenses required to operate our business, or we may fail to renew or maintain the licenses and permits we currently hold. This could subject us to fines and other penalties, which could materially adversely affect our results of operations.

We are required to hold a variety of permits and licenses to conduct our farming and industrial operations, including but not limited to permits and licenses concerning land development, agricultural and harvesting activities, seed production, labor standards, occupational health and safety, land use, water use and other matters. We may not possess all of the permits and licenses required for each of our business segments. In addition, the approvals, permits or licenses required by governmental agencies may change without substantial advance notice, and we could fail to obtain the approvals, permits or licenses required to expand our business. If we fail to obtain or to maintain such permits or licenses, or if renewals are granted with onerous conditions, we could be subject to fines and other penalties and be limited in the number or the quality of the products that we could offer. As a result, our business, results of operations and financial condition could be adversely affected.

We are subject to extensive environmental regulation, and concerns regarding climate change may subject us to even stricter environmental regulations.

Our activities are subject to a broad set of laws and regulations relating to the protection of the environment. Such laws include compulsory maintenance of certain preserved areas within our properties, management of pesticides and associated hazardous waste and the acquisition of permits for water use and effluents disposal. In addition, the storage and processing of our products may create hazardous conditions. We could be exposed to criminal and administrative penalties in addition to the obligation to remedy the adverse effects of our operations on the environment and to indemnify third parties for damages.

In addition, pursuant to Brazilian environmental legislation, the corporate entity of a company will be disregarded (such that the owners of the company will be liable for its debts) if necessary to guarantee the payment of costs related to the recovery of environmental damages, whenever the legal entity is deemed by a court to be an obstacle to reimbursement of damages caused to the quality of the environment. We have incurred, and will continue to incur, capital and operating expenditures to comply with these laws and regulations. Because of the possibility of unanticipated regulatory measures or other developments, particularly as environmental laws become more stringent, the amount and timing of future expenditures required to maintain compliance could increase from current levels and could adversely affect the availability of funds for capital expenditures and other purposes. Compliance with existing or new environmental laws and regulations, as well as obligations in agreements with public entities, could result in increased costs and expenses.

Environmental laws and their enforcement are becoming more stringent in Argentina and Brazil increasing the risk of and penalties associated with violations, which could impair or suspend our operations or projects and our operations expose us to potentially adverse environmental legislation and regulation. Failure to comply with past, present or future laws could result in the imposition of fines, third party claims, and investigation by environmental authorities and the relevant public attorney office. For example, the perceived effects of climate change may result in additional legal and regulatory requirements to reduce or mitigate the effects of our industrial facilities’ emissions. Such requirements, if enacted, could increase our capital expenditures and expenses for environmental compliance in the future, which may have a material and adverse effect on our business, results of operations and financial condition. Moreover, the denial of any permit that we have requested, or the revocation of any of the permits that we have already obtained, may have an adverse effect on our results of operations.

Some of the agricultural commodities and food products that we produce contain genetically modified organisms.

Our soybean, corn and cotton products contain GMOs in varying proportions depending on the year and the country of production. The use of GMOs in food has been met with varying degrees of acceptance in the markets in which we operate. The United States, Argentina and Brazil, for example, have approved the use of GMOs in food products, and GMO and non-GMO grain in those countries is produced and frequently commingled during the grain origination process. Elsewhere, adverse publicity about genetically modified food has led to governmental regulation limiting sales of GMO products in some of the markets in which our customers sell our products, including the European Union. It is possible that new restrictions on GMO products will be imposed in major markets for some of our products or that our customers will decide to purchase fewer GMO products or not buy GMO products at all, which could have a material adverse effect on our business, results of operations, financial condition or prospects.

Increased regulation of food safety could increase our costs and adversely affect our results of operations.

Our manufacturing facilities and products are subject to regular local, as well as foreign, governmental inspections and extensive regulation in the food safety area, including governmental food processing controls. We currently comply with all food safety requirements in the markets where we conduct our business. We already incur significant costs in connection with such compliance and changes in government regulations relating to food safety could require us to make additional investments or incur additional costs to meet the necessary specifications for our products. Our products are often inspected by foreign food safety officials, and any failure to pass those inspections can result in our being required to return all or part of a shipment, destroy all or part of a shipment or incur costs because of delays in delivering products to our customers. Any tightening of food safety regulations could result in increased costs and could have an adverse effect on our business and results of operations.

If our products become contaminated, we may be subject to product liability claims, product recalls and restrictions on exports that would adversely affect our business.

The sale of food products for human consumption involves the risk of injury to consumers. These injuries may result from tampering by third parties, bioterrorism, product contamination or spoilage, including the presence of bacteria, pathogens, foreign objects, substances, chemicals, other agents, or residues introduced during the growing, storage, handling or transportation phases.

We cannot be sure that consumption of our products will not cause a health-related illness in the future or that we will not be subject to claims or lawsuits relating to such matters. Even if a product liability claim is unsuccessful or is not fully pursued, the negative publicity surrounding any assertion that our products caused illness or injury could adversely affect our reputation with existing and potential customers and our corporate and brand image, and we could also incur significant legal expenses. Moreover, claims or liabilities of this nature might not be covered by any rights of indemnity or contribution that we may have against others, which could have a material adverse effect on our business, results of operations or financial condition.

IFRS accounting standards related to biological assets require us to make numerous estimates in the preparation of our financial statements and therefore limit the comparability of our financial statements to similar issuers using U.S. GAAP.

IAS 41 “Biological Assets” requires that we measure our biological assets and agriculture produce at the point of harvest at fair value less costs to sell. Therefore, we are required to make assumptions and estimates relating to, among other things, future agricultural commodity yields, prices, and production costs extrapolated through a discounted cash flow method. For example, the value of our biological assets generated initial recognition and changes in fair value of biological assets amounting to a $63,2 million gain in 2017 ; $125.5 million gain in 2016 and a $54.5 million gain in 2015 . The assumptions and estimates used to determine the fair value of biological assets, and any changes to such prior estimates, directly affect our reported results of operations. If actual market conditions differ from our estimates and assumptions, there could be material adjustments to our results of operations. In addition, the use of such discounted cash flow method utilizing these future estimated metrics differs from generally accepted accounting principles in the United States (“U.S. GAAP”). As a result, our financial statements and reported earnings are not directly comparable to those of similar companies in the United States.

Certain of our subsidiaries have substantial indebtedness which could impair their financial condition and decrease the amount of dividends we receive.

Certain of our subsidiaries in Argentina and Brazil have a substantial amount of debt, which requires significant principal and interest payments. As of December 31, 2017 , we had $548.7 million of net debt outstanding on a consolidated basis, including $500 million of Notes 2027, incurred by Adecoagro S.A. Such indebtedness could affect our subsidiaries’ future operations, for example, by requiring a substantial portion of their cash flows from operations to be dedicated to the payment of principal and interest on indebtedness instead of funding working capital and capital improvements and other investments. The substantial amount of debt incurred by our subsidiaries also imposes significant debt obligations, increasing their cost of borrowing to satisfy business needs and limiting their ability to obtain additional financing.

The substantial level of indebtedness borne by certain of our subsidiaries also affects the amount of cash available to them to pay as dividends, increasing our vulnerability to economic downturns or other adverse developments relative to competitors with less leverage, and limiting our ability to obtain additional financing on their behalf for working capital, capital expenditures, acquisitions or other corporate purposes in the future. Moreover, by reducing the level of dividends we may receive, such indebtedness places limits on our ability to make acquisitions or needed capital expenditures or to pay dividends to our shareholders.

The terms of our indebtedness and that of certain of our subsidiaries impose significant restrictions on our operating and financial flexibility.

The terms of our Senior Notes due 2027 and the debt instruments of some of our subsidiaries contain customary covenants including limitations on our ability to, among other things, incur or guarantee additional indebtedness; make restricted payments, including dividends and prepaying indebtedness; create or permit liens; enter into business combinations and asset sale transactions; make investments, including capital expenditures; and enter into new businesses. Some of these debt instruments are also secured by various collateral including mortgages on farms, pledges of subsidiary stock and liens on certain facilities, equipment and accounts. Some of these debt instruments also contain cross-default provisions, where a default on one loan by one subsidiary could result in lenders of otherwise performing loans declaring a default. These restrictions could limit our ability to obtain future financing, withstand a future downturn in business or the economy in general, conduct operations or otherwise take advantage of business opportunities that may arise. Moreover, by reducing the level of dividends we may receive, the terms of our subsidiaries’ indebtedness places limits on our ability to make acquisitions or needed capital expenditures or to pay dividends to our shareholders.

The financial ratio covenants we are currently required to meet, some of which are measured on a combined basis aggregating results of the borrowing subsidiaries and others which are measured on an individual debtor basis, include, among others, debt service coverage, minimum liquidity and leverage ratios.

The failure to maintain applicable financial ratios, in certain circumstances, would prevent us from borrowing additional amounts and could result in a default under such indebtedness. If we or our subsidiaries are unable to repay those amounts, the affected lenders could initiate bankruptcy-related proceedings or enforce their rights to the collateral securing such indebtedness, which would have a material and adverse effect on our business, results of operations and financial condition.

Fluctuations in interest rates could have a significant impact on our results of operations, indebtedness and cash flow.

As of December 31, 2017 , approximately 88.2% of our total debt on a consolidated basis was subject to fixed interest rates and 11.8% was subject to variable interest rates. As of December 31, 2017 , borrowings incurred by the Company’s subsidiaries in Brazil were repayable at various dates between January 2018 and September 2024 and bear either fixed interest rates ranging from 2.5% to 9.0% per annum or variable rates based on LIBOR or other specific base-rates plus spreads ranging from 4.13% to 17.52% per annum. At December 31, 2017 , LIBOR (six months) was 1.84%. Borrowings incurred by the Company´s subsidiaries in Argentina are repayable at various dates between January 2018 and September 2024 and bear either fixed interest rates ranging from 6.11% to 7.0% per annum. Significant interest rate increases can have an adverse effect on our profitability, liquidity and financial position. Currently, our variable interest rate exposure is mainly linked to the LIBOR rate plus specified spreads. If interest rates increase, whether because of an increase in market interest rates or an increase in our own cost of borrowing, our debt service obligations for our variable rate indebtedness would increase even though the amount of borrowings remains the same, and our net income could be adversely affected.

We occasionally use interest rate swaps and forward interest rate contracts to reduce interest rate volatility and funding costs associated with certain debt issues and to achieve a desired proportion of variable-versus fixed-rate debt, based on current and projected market conditions. We have not applied hedge accounting to these transactions and may not do so in the future. Therefore, changes in the fair value of these derivative instruments can result in a non-cash charge or gain being recognized in our financial results for a period preceding the period or periods in which settlement occurs under the derivative instruments and interest payments are made. Changes or shifts in interest rates can significantly impact the valuation of our derivatives and therefore could expose us to substantial mark-to-market losses or gains if interest rates fluctuate materially from the time when the derivatives were entered into. Accordingly, fluctuations in interest rates may impact our financial position, results of operations, and cash flows. See “Item 11. Quantitative and Qualitative Disclosures About Market Risk”.

We may not be able to renew our credit lines when they mature, depriving us of needed liquidity.

Certain of our subsidiaries rely substantially on existing uncommitted credit lines to support their operations and business needs through the agricultural harvest cycle. If we are unable to renew these credit lines, or if we cannot replace such credit lines with other borrowing facilities, our financial condition and results of operations may be adversely affected.

There is a risk that we could be treated as a U.S. domestic corporation for U.S. federal income tax purposes, which could materially increase our U.S. federal income tax liability and subject any dividends we pay to U.S. federal withholding tax.

We acquired approximately 98% of IFH, a holding company, which was a partnership for U.S. federal income tax purposes organized under the laws of Delaware, immediately prior to our IPO, in exchange for our common shares. Under U.S. Internal

Revenue Code section 7874(b), we would be treated as a U.S. domestic corporation if we were deemed to have acquired substantially all of the assets constituting the trade or business of a U.S. domestic partnership and former members of IFH were deemed to own at least 80% of our common shares by reason of the transfer of those trade or business assets (ignoring common shares issued in our IPO for purposes of the 80% threshold). Although we and our subsidiaries conduct no direct business activity in the United States and we believe that our acquisition of IFH should not be subject to the rules above, those rules are unclear in certain respects and there is limited guidance on the application of the rules to partnership acquisitions. Accordingly, we cannot assure you that the U.S. Internal Revenue Service (“IRS”) will not seek to assert that we are a U.S. domestic corporation, which assertion if successful could materially increase our U.S. federal income tax liability and require us to withhold tax from any dividends we pay to holders of our common shares who are not United States persons within the meaning of U.S. Internal Revenue Code section 7701(a)(30). See “Item 10. Additional Information—E. Taxation” .

We may be classified by the IRS as a “passive foreign investment company” (a “PFIC”), which may result in adverse tax consequences for U.S. investors.

We believe that we will not be a PFIC for U.S. federal income tax purposes for our current taxable year and do not expect to become one in the foreseeable future. Whether the Company will be a PFIC for the current or future tax year will depend on the Company’s assets and income over the course of each such tax year and, as a result, cannot be predicted with certainty as of the date of this Form 20-F. Under circumstances where the cash is not deployed for active purposes, our risk of becoming a PFIC may increase. If we were treated as a PFIC for any taxable year during which a U.S. investor held common shares, certain adverse tax consequences could apply to such U.S. investor. A U.S. taxpayer who holds stock in a foreign corporation during any year in which such corporation qualifies as a PFIC may mitigate such negative tax consequences by making certain U.S. federal income tax elections, which are subject to numerous restrictions and limitations. Holders of the Company’s common shares are urged to consult their own tax advisors regarding the acquisition, ownership, and disposition of the Company’s common shares. See “Material U.S. Federal Income Tax Considerations for U.S. Holders—Passive Foreign Investment Company (“PFIC”) Rules”.

Risks associated with the Countries in which we operate

We operate our business in emerging markets. Our results of operations and financial condition are dependent upon economic conditions in those countries in which we operate, and any decline in economic conditions could harm our results of operations or financial condition.

All of our operations and/or development activities are in South America. As of December 31, 2017 , based on total asset value, 20.4% of our assets were located in Argentina, 70.4% in Brazil and 3.0% in Uruguay. Adjusting our farmland book value by the market value derived from the Cushman and Wakefield independent farmland appraisal, the allocation would result in a 43.3% value attributable to Argentina, a 50.0% value attributable to Brazil and a 2.3% value attributable to Uruguay. During the year ended December 31, 2017 , 58.5% of our consolidated sales of goods and services rendered were attributable to our Brazilian operations, 23.0% were attributable to our Argentine operations and 18.5% were attributable to our Uruguayan operations. In the future we expect to have additional operations in the South American countries in which we now operate or in other countries with similar political, economic and social conditions. Many of these countries have a history of economic instability or crises (such as inflation or recession), government deadlock, political instability, civil strife, changes in laws and regulations, expropriation or nationalization of property, and exchange controls which could adversely affect our business, financial condition and results of operations.

In particular, fluctuations in the economies of Argentina and Brazil and actions adopted by the governments of those countries have had and may continue to have a significant impact on companies operating in those countries, including us. Specifically, we have been affected and may continue to be affected by inflation, increased interest rates, fluctuations in the value of the Argentine Peso and Brazilian Real against foreign currencies, price and foreign exchange controls, regulatory policies, business and tax regulations and in general by the political, social and economic scenarios in Argentina and Brazil and in other countries that may affect Argentina and Brazil.

The economies of the countries in which we operate may be adversely affected by the deterioration of other global markets.

Financial and securities markets in the countries in which we operate are influenced, to different degrees, by the economic and market conditions in other countries, including other South American and emerging market countries and other global markets. Although economic conditions in these countries may differ significantly from economic conditions in the countries in which we operate, investors’ reactions to developments in these other countries, such as the recent developments in the global financial markets, may substantially affect the capital flows into, and the market value of securities of issuers with operations in, the countries in which we operate. A crisis in other emerging market countries could dampen investor enthusiasm for securities of issuers with South American operations, including our common shares. This could adversely affect the market price for our common shares,

as well as make it difficult for us to access capital markets and obtain financing for our operations in the future, on acceptable terms or under any conditions.

A significant deterioration in the economic growth of any of the main trading partners of Brazil or Argentina could have a material impact on the trade balance of those countries and could adversely affect their economic growth and that of other countries in the region.

Governments have a high degree of influence in the economies in which we operate, which could adversely affect our results of operations or financial condition.

Governments in many of the markets in which we currently, or may in the future operate frequently intervene in their respective economies and occasionally make significant changes in monetary, credit, industry and other policies and regulations. Government actions to control inflation and other policies and regulations have often involved, among other measures, price controls, currency devaluations, capital controls and limits on imports. We have no control over, and cannot predict what measures or policies governments may take in the future. The results of operations and financial condition of our businesses may be adversely affected by changes in governmental policy or regulations in the jurisdictions in which they operate that impact factors such as:


•	labor laws;


•	economic growth;


•	currency fluctuations;


•	inflation;


•	exchange and capital control policies;


•	interest rates;


•	liquidity of domestic capital and lending markets;


•	monetary policy;


•	liquidity and solvency of the financial system;


•	limitations on ownership of rural land by foreigners;


•	developments in trade negotiations through the World Trade Organization or other international organizations;


•	environmental regulations;


•	tax laws, including royalties and the effect of tax laws on distributions from our subsidiaries;


•	restrictions on repatriation of investments and on the transfer of funds abroad;


•	expropriation or nationalization;


•	import/export restrictions or other laws and policies affecting foreign trade and investment;


•	price controls or price fixing regulations;


•	restrictions on land acquisition or use or agricultural commodity production; and


•	other political, social and economic developments, including political, social or economic instability, in or affecting the country where each business is based.

Uncertainty over whether governments will implement changes in policy or regulation affecting these or other factors in the future may contribute to economic uncertainty and heightened volatility in the securities markets, which may have a material and adverse effect on our business, results of operations and financial condition.

Currency exchange rate fluctuations relative to the U.S. dollar in the countries in which we operate our businesses may adversely impact our results of operations and financial condition.

We operate exclusively outside the United States, and our businesses may be impacted by significant fluctuations in foreign currency exchange rates. Our exposure to currency exchange rate fluctuations results from the currency translation adjustments required in connection with the preparation of our Consolidated Financial Statements. The currency exchange exposure stems from the generation of revenues and incurrence of expenses in different currencies and the devaluation of local currency revenues impairing the value of investments in U.S. Dollars. While the Consolidated Financial Statements presented herein are, and our future Consolidated Financial Statements will be, presented in U.S. dollars, the financial statements of our subsidiaries are prepared using the local currency as the functional currency and translated into U.S. dollars by applying: (i) a year-end exchange rate for assets and liabilities; and (ii) an average exchange rate for the year for income and expenses. Resulting exchange differences arising from the translation to our presentation currency are recognized as a separate component of equity. Currencies in Argentina and Brazil have fluctuated significantly against the U.S. dollar in the past. Accordingly, fluctuations in exchange rates relative to the U.S. dollar could impair the comparability of our results from period to period and have a material adverse effect on our results of operations and financial condition.

The Argentine Peso depreciated 32.5% against the U.S. dollar in 2013 , 31.2% in 2014 , 52.1% in 2015 , 21.9% in 2016 and 17.4% in 2017 , based on the official exchange rates published by the Argentine Central Bank. In the past years, the Argentine government imposed restrictions on the purchase of foreign currency (see “—Risks Related to Argentina—Exchange controls could restrict the inflow and outflow of funds in Argentina.”) which measures gave rise to an unofficial market where the U.S. dollar traded at a different market value than reflected in the official Argentine Peso – U.S. Dollar exchange rate. Following national elections in Argentina in 2015, the newly elected Macri administration (the “Macri Administration”) changed the currency policy and lifted almost all of the restrictions on the purchase of foreign currency while at the same time officially depreciating the Argentine Peso, practically eliminating the gap between the official and unofficial exchange rates that coexisted during the previous years. We cannot predict future fluctuations in the exchange rate of the Argentine Peso or whether the Argentine government will change its currency policy.

The Brazilian currency has historically suffered frequent fluctuations. As a consequence of inflationary pressures, in the past, the Brazilian government has implemented various economic plans and adopted a number of exchange rate policies, including sudden devaluations, periodic mini-devaluations during which the frequency of adjustments has ranged from daily to monthly, floating exchange rate systems, exchange controls and dual exchange rate markets. Formally the value of the Real against foreign currencies is determined under a free-floating exchange rate regime, but in fact the Brazilian government is currently intervening in the market, through currency swaps and trading in the spot market, among other measures, every time the currency exchange rate is above or below the levels that the Brazilian government considers appropriate, taking into account, inflation, growth, the performance of the Real against the U.S dollar in comparison with other currencies and other economic factors. Periodically, there are significant fluctuations in the value of the Real against the U.S. dollar. The Real depreciated 15.13% against the U.S. dollar in 2013, 12.52% in 2014, 49.04% in 2015, in 2016 the Real appreciated 16,54% against U.S. dollar and 1.95% in 2017.

Future fluctuations in the value of the local currencies relative to the U.S. dollar in the countries in which we operate may occur, and if such fluctuations were to occur in one or a combination of the countries in which we operate, our results of operations or financial condition could be adversely affected.

Inflation in some of the countries in which we operate, along with governmental measures to curb inflation, may have a significant negative effect on the economies of those countries and, as a result, on our financial condition and results of operations.

In the past, high levels of inflation have adversely affected the economies and financial markets of some of the countries in which we operate, particularly Argentina and Brazil, and the ability of their governments to create conditions that stimulate or maintain economic growth. Moreover, governmental measures to curb inflation and speculation about possible future governmental measures have contributed to the negative economic impact of inflation and have created general economic uncertainty. As part of these measures, governments have at times maintained a restrictive monetary policy and high interest rates that has limited the availability of credit and economic growth.

A portion of our operating costs in Argentina are denominated in Argentine Pesos and most of our operating costs in Brazil are denominated in Brazilian Reais. Inflation in Argentina or Brazil, without a corresponding Peso or Real devaluation, could result in an increase in our operating costs without a commensurate increase in our revenues, which could adversely affect our financial condition and our ability to pay our foreign currency denominated obligations.

After several years of price stability in Argentina, the devaluation of the Peso in January 2002 imposed pressures on the domestic price system that generated high inflation throughout 2002. In 2003, inflation decreased significantly and stabilized. However, in recent years, encouraged by the pace of economic growth, according to the Instituto Nacional de Estadisticas y Censos, or “INDEC” (Argentine Statistics and Census Agency), the consumer price index increased by 9.5% in 2011, 10.8% in 2012, and 10.9% in 2013; while the wholesale price index increased 10.3% in 2009, 14.6% in 2010, 12.7% in 2011, 13.1% in 2012, 14.7% in 2013 and 28.3% in 2014. The accuracy of the measurements of the INDEC has been questioned in the past, and the actual consumer price index and wholesale price index could be substantially higher than those indicated by the INDEC. See “—Risks Related to Argentina—The credibility of several Argentine economic indices have been called into question, which may lead to a lack of confidence in the Argentine economy and may in turn limit our ability to access the credit and capital markets.”

In February 2014 the INDEC modified the methodology for the calculation of the consumer price index (“CPI”) and the gross domestic product. Under the new calculation methodology, the CPI increased by 23.9% in 2014 and 11.9% as of October 2015 (for the first nine months of 2015). However, opposition lawmakers reported an inflation rate of 38.5% and 27.5%, respectively. In December 2015, the Macri administration appointed a former director of a private consulting firm to manage the INDEC. The new director initially suspended the publication of any official data prepared by INDEC and implemented certain methodological reforms and adjusted certain indices based on those reforms. In January 25, 2016, INDEC published two alternative measures of the CPI for the year 2015, 29.6% and 31.6%, which were based on data from the City of Buenos Aires and the Province of San Luis. After implementing these methodological reforms in June 2016, the INDEC resumed its publication of the consumer price index. According to INDEC, the monthly CPI increase in 2017 was 1.3% in January, 2.5% in February, 2.4% in March, 2.6% in April, 1.3% in May, 1.2% in June, 1.7% in July, 1.4% in August, 1.9% in September, 1.5% in October, 1.4% in November and 3.1% in December. In 2018, the monthly CPI increase was 1.8% in January and 2.4% in February.

Brazil has historically experienced high rates of inflation. Inflation, as well as government efforts to curb inflation, has had significant negative effects on the Brazilian economy, particularly prior to 1995. Inflation rates were 7.8% in 2007 and 9.8% in 2008, compared to deflation of 1.7% in 2009, inflation of 11.3% in 2010, inflation of 5.1% in 2011, inflation of 7.8% in 2012, inflation of 5.5% in 2013, inflation of 3.7% in 2014, inflation of 10.5% in 2015, and 7.2% in 2016, as measured by the General Market Price Index (Indice Geral de Preços — Mercado), compiled by the Getúlio Vargas Foundation (Fundação Getúlio Vargas). However, in 2017 Brazil registered a deflation of 0.53% due to a decrease in the price of food products. A significant proportion of our cash costs and our operating expenses are denominated in Brazilian Reais and tend to increase with Brazilian inflation. The Brazilian government’s measures to control inflation have in the past included maintaining a tight monetary policy with high interest rates, thereby restricting the availability of credit and reducing economic growth. This policy has changed in the last two years, when the Brazilian government decreased the interest rate by 525 basis points. Subsequently, the high inflation, arising from the lower interest rate, and the intention to maintain this rate at low levels, led the Brazilian government to adopt other measures to control inflation, such as tax relief for several sectors of the economy and tax cuts for the products included in the basic food basket. These measures were not sufficient to control the inflation, which led the Brazilian government to reinstate a tighter monetary policy. As a result, interest rates have fluctuated significantly. The Special System for Settlement and Custody (Sistema Especial de Liquidação e Custódia, or “SELIC”) interest rate in Brazil at year-end was 13.25% in 2006, 11.25% in 2007, 13.75% in 2008, 8.75% in 2009, 10.75% in 2010, 11.0% in 2011, and 7.25% in 2012, 10.0% in 2013, 11.75% in 2014, 14.25% in 2015, 13.75% in 2016 as determined by the Comitê de Política Monetária, or COPOM. In the quarter ended on December 31, 2017 , the SELIC was 7.0%.

Argentina and/or Brazil may experience high levels of inflation in the future, which may impact domestic demand for our products. Inflationary pressures may also weaken investor confidence in Argentina and/or Brazil, curtail our ability to access foreign financial markets and lead to further government intervention in the economy, including interest rate increases, restrictions on tariff adjustments to offset inflation, intervention in foreign exchange markets and actions to adjust or fix currency values, which may trigger or exacerbate increases in inflation, and consequently have an adverse impact on us. In an inflationary environment, the value of uncollected accounts receivable, as well as of unpaid accounts payable, declines rapidly. If the countries in which we operate experience high levels of inflation in the future and price controls are imposed, we may not be able to adjust the rates we charge our customers to fully offset the impact of inflation on our cost structures, which could adversely affect our results of operations or financial condition.

Depreciation of the Peso or the Real relative to the U.S. Dollar or the Euro may also create additional inflationary pressures in Argentina or Brazil that may negatively affect us. Depreciation generally curtails access to foreign financial markets and may prompt government intervention, including recessionary governmental policies. Depreciation also reduces the U.S. Dollar or Euro value of dividends and other distributions on our common shares and the U.S. Dollar or Euro equivalent of the market price of our common shares. Any of the foregoing might adversely affect our business, operating results, and cash flow, as well as the market price of our common shares.

Conversely, in the short term, a significant increase in the value of the Peso or the Real against the U.S. Dollar would adversely affect the respective Argentine and/or Brazilian government’s income from exports. This could have a negative effect on gross domestic product (“GDP”) growth and employment and could also reduce the public sector’s revenues in those countries by reducing tax collection in real terms, as a portion of public sector revenues are derived from the collection of export taxes.

Disruption of transportation and logistics services or insufficient investment in public infrastructure could adversely affect our operating results.

One of the principal disadvantages of the agricultural sector in the countries in which we operate is that key growing regions lie far from major ports. As a result, efficient access to transportation infrastructure and ports is critical to the growth of agriculture as a whole in the countries in which we operate and of our operations in particular. Improvements in transportation infrastructure are likely to be required to make more agricultural production accessible to export terminals at competitive prices. A substantial portion of agricultural production in the countries in which we operate is currently transported by truck, a means of transportation significantly more expensive than the rail transportation available to U.S. and other international producers. Our dependence on truck transportation may affect our position as a low-cost producer so that our ability to compete in the world markets may be impaired.

Even though road and rail improvement projects have been considered for some areas of Brazil and Argentina, and in some cases implemented, substantial investments are required for road and rail improvement projects, which may not be completed on a timely basis, if at all. Any delay or failure in developing infrastructure systems could reduce the demand for our products, impede our products’ delivery or impose additional costs on us. We currently outsource the transportation and logistics services necessary to operate our business. Any disruption in these services could result in supply problems at our farms and processing facilities and impair our ability to deliver our products to our customers in a timely manner.

Security breaches and other disruptions could compromise our technology infrastructure and information and expose us to processes disruption and liability, which would cause our business and reputation to suffer.

In the ordinary course of our business, we depend on technology to carry out our business. We also collect and store sensitive data, including intellectual property, our proprietary business information and that of our customers and suppliers, and personally identifiable information of our employees, in our data centers and on our networks. The secure processing, maintenance and transmission of this information is critical to our operations. Despite our security measures, our information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions. Any such breach could compromise our networks, our systems, and eventually suffer from systems disruption and/or having the information stored there accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information could result in legal claims or proceedings, disrupt our operations, damage our reputation, and cause over costs to remedy the harm suffered, which could adversely affect our business/operating margins, revenues and competitive position.

Risks Related to Argentina

Argentine economic and political conditions and perceptions of these conditions in the international market may have a direct impact on our business and our access to international capital and debt markets, and could adversely affect our results of operations and financial condition.

A significant portion of our operations, properties and customers are located in Argentina. The Argentine economy has experienced significant volatility in recent decades, characterized by periods of low or negative growth, high and variable levels of inflation and currency devaluation. Between 2001 and 2003 Argentina experienced a period of severe political, economic and social crisis. In 2002, the enactment of Law No. 25,561 (the “Public Emergency Law”) ended more than a decade of uninterrupted Peso/dollar parity, and the value of the Peso against the U.S. dollar has fluctuated significantly since then.

The global economic crisis of 2008 led to a period of economic decline, accompanied by political and social unrest, inflationary and Peso depreciation pressures and lack of consumer and investor confidence. The lingering economic crises in Europe, including the financial crisis in Greece, Spain, Italy and Portugal, the international demand for Argentine products, the stability and competitiveness of the Peso against foreign currencies, confidence among consumers and foreign and domestic investors, the stability and level of inflation and the future political uncertainties, among other factors, may also affect the development of the Argentine economy.

Since 2011, the economic conditions have continued to deteriorate, due to, among other things, the rise of inflation, the continued demand for salary increases, the growth of the fiscal deficit, the required payments to be made on public debt, the reduction of industrial growth, the recession and the increase of the capital outflows from Argentina. The foregoing prevailing economic conditions forced the Argentine government to adopt different measures, including the tightening of foreign exchange controls, the elimination of subsidies to the private sector and the proposals for new taxes. See “—Risks Related to Argentina—Changes in the Argentine tax laws may adversely affect the results of our operations, financial condition and cash flows”.

Since the beginning of 2015, international commodity prices for Argentina’s primary commodity exports have declined, which has had an adverse effect on Argentina’s economic growth. A continued decline in the international prices for Argentina’s main commodity exports could have a direct negative effect on our business, results of operation and financial condition, as well as on Argentina’s economy.

According to the INDEC, Argentina’s GDP, in real terms, grew by 9.2% in 2010, 8.9% in 2011, 1.9% in 2012, 5.6% in 2013 and 0.5% in 2014. The GDP for the first two quarters of 2015 grew by 1.1% and 2.3%, respectively, compared to the same periods in 2014. See “—Risks related to Argentina—The credibility of several Argentine economic indices have been called into question, which may lead to a lack of confidence in the Argentine economy and may in turn limit our ability to access the credit and capital markets” and “—Risks Associated with the Countries in which We Operate—Inflation in some of the countries in which we operate, along with governmental measures to combat inflation, may have a significant negative effect on the economies of those countries and, as a result, on our financial condition and results of operations”. Because of the implementation of certain methodological reforms by the Macri administration and the adjustment of certain indices based on these reforms, the INDEC also revised the GDP data from 2004 through 2015. Among other adjustments, in calculating GDP for 2004, the INDEC made changes to the composition of GDP that resulted in a negative adjustment of approximately 12% for that year. By previously understating inflation, the INDEC had overstated economic growth in real terms. The adjustments made by the INDEC lead to a determination of real GDP growth of 48.6% for the period of 2004 to 2015, as opposed to 65% growth in real terms for the same period resulting from the information used prior to June 2016. As a consequence of these reforms, on November 9, 2016, the Executive Board of the IMF lifted its censure on Argentina, noting that Argentina had resumed the publication of data in a manner consistent with its obligations under the Articles of Agreement of the IMF. On June 29, 2017, INDEC also published revised GDP data for the years 2004 through 2015. Despite these reforms, we cannot assure you that any future official information regarding GDP will be reliable or whether the GDP will increase or remain stable in the future.

In the recent past, social and political tension and high levels of poverty and unemployment have persisted and in recent months industrial activity and consumption has diminished considerably. The deterioration of the economy significantly increased the social and political turmoil, including civil unrest, riots, looting, nationwide protests, strikes and street demonstrations. Due to the high levels of inflation and devaluation, employers both in the public and private sectors are experiencing significant pressure from organized labor unions and their employees to further increase salaries. See “—Risks related to Argentina—The Argentine government may order salary increases to be paid to employees in the private sector, which would increase our operating costs”.

In addition, during the recent past the Argentine Central Bank’s reserves have suffered a substantial decrease mainly as a consequence of the increasing need to import energy and payments of sovereign debt. The reduction of the Argentine Central Bank’s reserves may weaken Argentina’s ability to overcome economic deterioration. This could inhibit the ability of the Argentine Central Bank to adopt measures to curb inflation and could adversely affect Argentina’s economic growth and public finances.

A continued deterioration of the economic, social and/or political conditions may adversely affect the development of the Argentine economy and force the Macri administration to adopt future policies including forced renegotiation or modification of existing contracts, suspension of the enforcement of creditors’ rights, new taxation policies, including royalty and tax increases and retroactive tax claims, and changes in laws and policies affecting foreign trade and investment and salary increases, and/or the provision of additional employee benefits. Any such economic, social and/or political conditions and/or measures could materially affect our business, results of operations and financial condition.

The current Argentine administration’s ability to implement economic reforms may be limited.

Argentine presidential, congressional and state government elections were held during 2015 (with the majority of such elections occurring in October 2015). Presidential elections were won by the opposing political party, led by Mauricio Macri, after conducting the first run-off in Argentine history. The elected government, in office since December 10, 2015, has announced and adopted several significant economic and policy reforms:


•	INDEC Reforms: On January 8, 2016, based on the determination that the INDEC has failed to produce reliable statistical information, particularly with respect to the CPI, GDP, poverty and foreign trade data, the Macri administration declared the national statistical system and the INDEC in a state of administrative emergency. As a

result, the INDEC ceased publishing certain key statistical data until a rearrangement of its technical and administrative structure is finalized. In June 2016, the INDEC resumed its publication of the CPI. As of the date of this annual report, the INDEC has begun publishing certain revised data, including GDP, foreign trade and balance of payment statistics, although it remains in a state of administrative emergency. On June 29, 2017 INDEC also published revised GDP data for the years 2004 through 2015.

•

Agreement with holdout creditors: The Macri administration settled the substantial majority of outstanding claims brought by holdout creditors and issued sovereign bonds in the international financial markets passed by Congress through Law No. 27,249. Although the size of the claims involved has decreased significantly, litigation initiated by bondholders that have not accepted Argentina’s settlement offer continues in several jurisdictions.


•	Foreign Exchange Reforms: The elected government eliminated most foreign exchange restrictions, including certain currency controls, which were imposed by the previous administration. See “—Risks related to Argentina—Exchange controls could restrict the inflow and outflow of funds in Argentina”.

•

Foreign trade reforms. The Macri administration eliminated export duties on wheat, corn, beef and regional products, and reduced the duty on soybeans from 35% to 30%. Further, the 5% export duty on most industrial and mining exports was eliminated. With respect to payments for imports of goods and services, the Macri administration announced the elimination of limitations for access to the Foreign Exchange Market for any new transactions as of December 17, 2015, and for existing debts incurred in connection with imports of goods and services as of April 22, 2016. On January 2, 2017, the federal government enacted a further reduction of the export duties rate set for soybean and soybean products, setting a monthly 0.5% cut on the export duties rate beginning on January 2018 and until December 2019.

•

Fiscal policy: The Macri administration took steps to anchor fiscal accounts, reduce the primary fiscal deficit, eliminate subsidies, reorganize certain expenditures and generate increased revenue through a tax amnesty program. The fiscal deficit for 2016 was approximately 4.6% of GDP, 0.2% lower than expected; reducing fiscal deficit is one of the most important objectives for the administration in the coming years.

•

Infrastructure state of emergency and reforms. The Macri administration issued Resolution No. 6/2016 of the Ministerio de Energía y Minería de la Nación (National Ministry of Energy and Mining) and Resolution No. 1/2016 of the Ente Nacional Regulador de la Electricidad (National Electricity Regulatory Agency), through which the Macri administration announced the elimination of some energy subsidies currently in effect and a substantial increase in electricity rates. Additionally, the government declared a state of emergency with respect to the national electrical system, which remained effective until December 31, 2017. Under this state of emergency, the Macri administration will be permitted to take actions designed to guarantee the supply of electricity.In addition, the Macri administration announced the elimination of certain natural gas subsidies and adjustments to natural gas rates.

•

Correction of monetary imbalances: The Argentine administration has adopted an inflation targeting regime in parallel with the floating exchange rate regime and set inflation targets for the next few years. The Central Bank has increased stabilization efforts to reduce excess monetary imbalances and raised peso interest rates to offset inflationary pressure. The Central Bank also announced inflation target ranges of 15% for 2018 and 10% for 2019.

•

Tax Amnesty Law: On June 29, 2016, the Argentine Congress passed Law No. 27,260, which became effective on July 22, 2016 and provides for a tax amnesty regime and tax reform. This regime allowed individuals and entities to disclose undeclared assets both abroad and in Argentina, under the conditions set forth in the law and within a period extending from its effectiveness until March 31, 2017, without the need to repatriate such assets to Argentina and without penalty (other than charges described below) or the need to explain the source of the funds, among other benefits. The law also provides that there will be no charge on assets worth up to US$25,000, and a discounted applicable tax of 5% on property and assets worth up to US$80,000. Above that threshold, the applicable tax was 10% until the end of 2016 and 15% until the end of March 2017, when the amnesty window closed.

•

Corporate Criminal Liability Law ( Ley de Responsabilidad Penal Empresaria ): On November 8, 2017, the Argentine Congress passed Law No. 27,401 which provides for the criminal liability of corporate entities when the following crimes are committed, directly or indirectly: (a) local or international bribery and influence peddling, (b) negotiations that are incompatible with public office, (c) illegal payments made to public officials under the appearance of taxes or fees owed to the relevant government agency (concusión), (d) illegal enrichment of public officers and employees, and (e) producing knowingly false balance sheets and reports to cover up local or international bribery or influence peddling. Companies found liable for committing such crimes may be subject to various sanctions and penalties,

including, among others, fines ranging from two to five times the ‘‘undue’’ benefit that was obtained or that could have been obtained through the actions incurred in breach of this regulation. Additionally, Companies found liable may forfeit assets obtained through the illegal actions. The law became effective on March 1, 2018.

•

Amendment to Labor Risks Law: On February 15, 2017, the Argentine congress passed Law 27,348, which amends and complements Labor Risks Law No. 24,557, or the Labor Risks Law, and aims to reduce litigation arising from accidents at work. Under the new regime, prior to filing a lawsuit resulting from work-related accidents, affected workers must go through jurisdictional medical commissions, in order to assess the impact of any accident and to assign benefits provided for under the Labor Risks Law.

•

Draft Bill for Productive Financing: On November 13, 2017, the Argentine Administration submitted to the Argentine congress a draft bill that aims to develop Argentina’s capital markets. The draft bill amends and updates the Argentine Capital Markets Law, the Mutual Funds Law and the Argentine Negotiable Obligations Law, among others. Furthermore, the bill amends certain tax provisions, regulates relating to derivatives and promotes a financial inclusion program. On November 22, 2017, the draft bill was passed by the lower chamber of the Argentine congress and was sent to the Argentine senate. The Argentine senate approved the bill with certain amendments on March 21, 2018, and it will therefore be re-approved by the Argentine lower chamber. The draft bill has not yet been approved.


•	Social Security Reform Law: On December 28, 2017 Argentine Law No. 27,426 was promulgated. The law provides for modifications to the method of calculation of increases of social security benefits.

•

Labor Reform Draft Bill: The Argentine administration recently announced a draft bill to reform labor and social security which was sent to the Argentine congress for debate on November 21, 2017. On November 29, 2017, the draft bill was passed by the Argentine senate, and sent to the Argentine congress. The draft bill aims to improve competitiveness and efficiency of various sectors, increase employment, attract investment and reduce labor costs.

•

Tax Regime: On December 27, 2017, a draft bill proposing a series of tax and social security reforms was approved by the Argentine congress by means of Law No. 27,430. The law provides for a series of tax and social security reforms intended to eliminate certain existing complexities and inefficiencies of the Argentine tax regime, reduce tax evasion, increase the coverage of income tax as applied to individuals and encourage investment while sustaining the Argentine administration’s medium- and long-term efforts aimed at restoring fiscal balance.


•	Limitation of Bureaucracy and Simplification: On January 11, 2018, Decree No. 27/2018, or Decree 27/2018, was published in the Argentine Official Gazette, with the objective to reduce government bureaucracy and approve new practices which reduce costs and boost competitiveness.

We cannot predict the impact that these policies or any future polices implemented by the Macri administration or any other national government will have on the Argentine economy as a whole or on our business, results of operation or financial condition, in particular. Moreover, there is uncertainty as to when and if other measures announced during the presidential campaign will be implemented. Some of the measures proposed by the Macri administration may also generate political and social opposition, which may in turn prevent the new government from adopting such measures as proposed. In addition, political parties opposed to the new government retained a majority of the seats in the Argentine Congress in the recent elections, which will require the new government to seek political support from the opposition for its economic proposals and creates further uncertainty in the ability of the new government to pass measures. Political uncertainty in Argentina relating to the measures to be taken by the Macri administration in respect of the Argentine economy could lead to volatility in the market prices of securities of Argentine companies.

The economy of Argentina may be affected by its government’s limited access to financing from international markets.

The Argentine economy has experienced significant instability in the past decades, including devaluations, high inflation, and prolonged periods of reduced economic growth, which have led to payment defaults on Argentina’s foreign debt and multiple downgrades in Argentina’s foreign debt rating with attendant restrictions on Argentina’s ability to obtain financing in the international markets.

Argentina’s 2001 sovereign default and its failure to fully restructure its sovereign debt and negotiate with the holdout creditors has limited and may continue to limit Argentina’s ability to access international financing. In 2005, Argentina completed the restructuring of a substantial portion of its indebtedness and settled all of its debt with the IMF. Additionally, in June 2010, Argentina completed the restructuring of a significant portion of the defaulted bonds that were not exchanged in the 2005 restructuring. As a result of debt exchanges carried out in 2005 and 2010, Argentina restructured approximately 93% of its defaulted debt that was eligible for restructuring. However, holdout bondholders that declined to participate in the restructuring, filed lawsuits against

Argentina in several countries, including the United States. Since late 2012, rulings from courts in the United States favorable to holdout bondholders aggravated investors’ concerns regarding investment in the country.

In November 2012, the United States District Court for the Southern District of New York in re: “NML Capital, Ltd. v. Republic of Argentina”, ratified and amended the injunction order issued in February 2012, which held that Argentina violated the pari passu clause with respect to the bondholders that had not participated in the sovereign debt restructuring in 2005 and 2010. Pursuant to such ruling, Argentina was required to pay 100% of the amounts due to the plaintiffs, simultaneously with the payment of the amounts due on the next maturity date of the bonds to the bondholders who participated in the debt restructuring. In June 2014, the U.S. Supreme Court denied Argentina’s petition for a writ of certiorari of the U.S. Second Circuit Court of Appeals’ ruling affirming the U.S. District Court’s judgment. Later that month, the U.S. District Court ruled that funds deposited with the Bank of New York Mellon, the trustee which manages payments for Argentina's bonds issued in the 2005 and 2010 debt restructuring, could not be delivered to the holders of restructured debt in the absence of a prior agreement with the holdout bondholders. In June 2015, the U.S. District Court granted partial summary judgment to a group of “me-too” plaintiffs in 36 separate lawsuits, finding that, consistent with the previous ruling of such court, Argentina violated the pari passu clause in the bonds issued to the “me-too” bondholders.

In February 2016, the Macri administration entered into settlement agreements with certain holdout bondholders to settle these claims, which were subject to the approval of the Argentine Congress and the lifting of the pari passu injunctions. In March 2016, after the U.S. District Court agreed to vacate the pari passu injunctions subject to certain conditions, the Argentine Congress ratified these settlement agreements through Law No. 27,249 and repealed the provisions of the so called Lock Law No. 26,017 and the Sovereign Payment Law No. 26,984, which prohibited Argentina from offering holdout bondholders more favorable terms than those offered in the 2005 and 2010 debt restructuring. In recent months, the Argentine national government has reached settlement agreements with holders of a significant portion of the defaulted bonds and has repaid the majority of the holdout creditors with the proceeds of a US$16.5 billion international offering of 3-year, 5-year, 10-year and 30-year bonds on April 22, 2016. Although the size of the claims involved has decreased significantly, litigation initiated by bondholders that have not accepted Argentina’s settlement offer continues in several jurisdictions.

Additionally, foreign shareholders of several Argentine companies have filed claims with the ICSID alleging that the emergency measures adopted by the Argentine national government since the crisis in 2001 and 2002 differ from the just and equal treatment standards set forth in several bilateral investment treaties to which Argentina is a party. ICSID has ruled against Argentina with respect to many of these claims.

Litigation involving holdout creditors, claims with ICSID and other claims against the Argentine national government, resulted and may result in material judgments against the government, lead to attachments of or injunctions relating to Argentina’s assets, or could cause Argentina to default under its other obligations, and such events may prevent Argentina from obtaining favorable terms or interest rates when accessing international capital markets or from accessing international financing at all. Our ability to obtain U.S. dollar-denominated financing has been adversely impacted by these factors. During 2015 , 2016 and 2017 , it became increasingly difficult for Argentine companies to obtain financing in U.S. dollars, and loans in local currencies carry significantly higher interest rates. The termination of the injunctions issued by the United States courts preventing bondholders from receiving their interest payments on the bonds issued pursuant to the 2005 and 2010 exchange offers, and the related subsequent events, have paved the way for the Argentine national government to regain access to the international capital markets. Nonetheless, Argentina’s ability to obtain international or multilateral private financing or direct foreign investment may be limited, which may in turn impair its ability to implement reforms and public policies to foster economic growth. In addition, Argentina’s ongoing litigation with the remaining holdout creditors as well as ICSID and other claims against the Argentine national government, or any future defaults of its financial obligations, may prevent us from accessing the international capital markets or cause the terms of any such transactions less favorable than those provided to companies in other countries in the region, potentially impacting our financial condition.

Without access to international private financing, Argentina may not be able to finance its obligations, and financing from multilateral financial institutions may be limited or not available. This could also inhibit the ability of the Argentine Central Bank to adopt measures to curb inflation and could adversely affect Argentina’s economic growth and public finances, which could, in turn, adversely affect our operations in Argentina, our financial condition or the results of our operations.

Argentine law concerning foreign ownership of rural properties may adversely affect our results of operations and future investments in rural properties in Argentina.

Law No. 26,737, passed by the Argentine Congress in December 2011, and its implementing regulation Decree No. 274/2012, as amended and supplemented by Decree No. 820/2016 dated as of February 28, 2012 and of June 30, 2016, respectively, impose limits on the ownership or possession of rural land by foreign legal entities or certain foreign individuals.

Law No. 26,737 and its implementing regulation require that, “foreign ownership” of rural land may not exceed 15% of the total amount of rural land in the Argentine territory calculated also in relation to the territory of the Province, Department or Municipality where the relevant lands are located. For purposes of the law, “foreign ownership” means the ownership (whether by acquisition, transfer, assignment of rights or otherwise) over rural land by: (i) foreign individuals, regardless of whether they are Argentine residents or not; (ii) legal entities where foreign individuals or entities own, whether directly or indirectly, a number of votes sufficient to prevail in the local entity´s decision-making process. It is presumed that foreign legal entities where more than 51% of the stock is directly or indirectly owned by foreign individuals or entities are subject to Law No. 26,737; (iii) companies that issue bonds (a) convertible in stock representing 51% or more of the company’s stock upon conversion and (b) whose holders are foreign individuals or entities; (iv) trusts whose beneficiaries are foreign individuals or entities, as defined pursuant to (i) and (ii) above; (v) joint ventures in which foreign entities or individuals hold a participating interest higher than those set forth by the law; (vi) foreign public law-governed legal entities; and (vii) simple associations or de facto corporations in which foreigners hold shares in the percentage set forth by the new law in relation to corporations or which are controlled by foreigners.

Law No. 26,737 created a National Registry of Rural Land ( Registro Nacional de Tierras Rurales ) in charge of the enforcement of the provisions of the law and registry of rural land.

Any modification to the capital stock of companies that own or possess rural land, by public or private instrument, that implies a direct or indirect change of control, must be reported to the National Registry of Rural Land within 30 days from the date of such modification.

In addition, foreign entities or individuals of the same nationality may not own more than 4.5% of rural land in Argentina and a single foreign entity or individual may not own more than 1,000 hectares in the “core area”, or the “equivalent surface”, as determined by the Interministerial Council of Rural Land (Consejo Interministerial de Tierras Rurales) in accordance with the provinces’ proposal, specifying districts, sub-regions or areas and taking into consideration the location of the land, the proportion of the land area in respect of the total territory of the relevant Province, Department or Municipality and, the quality of the land for use and exploitation. The “equivalent surface” regime may be modified by the Interministerial Council of Rural Lands (Consejo Interministerial de Tierras Rurales) taking into account possible changes in the quality of the land or the growth of urban populations. Pursuant to Decree No. 274/2012, as amended and supplemented by Decree No. 820/2016 the departments that comprise the “core area” are: Marcos Juarez and Union in the Province of Córdoba; Belgrano, San Martin, San Jeronimo, Iriondo, San Lorenzo, Rosario, Constitución, Caseros and General Lopez in the Province of Santa Fe; and the districts of Leandro N. Alem, General Viamonte, Bragado, General Arenales, Junin, Alberti, Rojas, Chivilcoy, Chacabuco, Colon, Salto, San Nicolas, Ramallo, San Pedro, Baradero, San Antonio de Areco, Exaltacion de La Cruz, Capitan Sarmiento, San Andres de Giles, Pergamino, Arrecifes and Carmen de Areco in the Province of Buenos Aires.

Foreign legal entities or individuals may not own rural land that contain or are located beside permanent and significant bodies of water to be determined by the Federal Hydrological Council ( Consejo Hídrico Federal ) and may also include hydrological works and projects considered strategic and of public interest.

Acquisition of rural land will not be deemed as an “investment” under bilateral investment treaties signed by the Argentine Republic, since rural land is deemed as “a non-renewable natural resource”.

The regulatory decrees of Law No. 26,737 provide that no previous authorization certificate is required for certain operations such as (i) the transfer of the property or possession rights over real estate properties that were located in an “Industrial Area” or an “Industrial Park”, independently from the acquirer’s nationality, (ii) any modification to the capital stock of companies that own or possess rural land, by public or private instrument, when such modification implies a direct or indirect change of control, provided that such change of control is not made in favor of a new foreign legal entity or individual; and (iii) creation of certain real property rights over the rural land, such as easements.

Upon the issue of Decree No. 820/2016, the effects of Law No. 26,737 have been somewhat mitigated, by setting forth a term of 90 days during which the foreign legal entity or individual that has exceeded the allowed limit of ownership of rural land must reduce their current ownership to the legal limit by (i) transferring or causing any of its controlled legal entities to transfer the amount of rural land that exceeds the legal limit, or (ii) modifying or causing any of its controlled legal entities to modify the type of exploitation awarded to rural lands owned by such foreign legal entity, or (iii) transferring its participation to legal entities that are considered compliant pursuant to the terms of Law No. 26,737.

Law No. 26,737 initially stated that, even though no vested rights could be affected as a result of the application of such law, any act in violation of its provisions would be considered null and void. Decree No. 820/2016 clarified this situation and established that the foreign entities or individuals who owned rural land in excess to the allowed limit of ownership when the Law No. 26,737 came into effect (i) are not obliged to transfer such rural land in excess, and (ii) in the event of transfer of rural lands

acquired before Law No. 26,737 was in force, they can acquire the equivalent to such transferred rural land, provided the legal limits established to the type of exploitation and location. Hence, the application of laws regarding foreign ownership of rural lands does not have an adverse effect on the current rural land owned by our Argentine subsidiaries. However, our Argentine subsidiaries may be prevented from acquiring additional rural land in Argentina, which may adversely affect our financial condition and results of our operations.

Our results of operations may be adversely affected by high and possibly increasing inflation in Argentina.

In the past, inflation has materially undermined the Argentine economy and the government’s ability to create conditions that would permit stable growth. High inflation may also undermine Argentina’s foreign competitiveness in international markets and adversely affect economic activity and employment, as well as our business and results of operation. In particular, the profit margin on our services is impacted by the increase in our costs in providing those services, which is influenced by wage inflation in Argentina, as well as other factors.

According to data published by the INDEC, the CPI increased 23.9% in 2014 and 11.9% as of October 2015 (for the first nine months of year 2015). In November 2015, the INDEC suspended the publication of the CPI. According to the most recent publicly available information based on data from the Province of San Luis, the CPI grew by 31.6% in 2016 and by 31.4% in 2017 . According to the most recent publicly available information based on data from the City of Buenos Aires, the CPI grew by 29.6% in 2016 and by 41.0% in 2017 . After implementing certain methodological reforms and adjusting certain macroeconomic statistics based on these reforms, in June 2016 the INDEC resumed its publication of the CPI. According to the INDEC, the monthly CPI increase in 2017 was 1.3% in January, 2.5% in February, 2.4% in March, 2.6% in April, 1.3% in May, 1.2% in June, 1.7% in July, 1.4% in August, 1.9% in September, 1.5% in October, 1.4% in November and 3.1% in December. In 2018, the monthly CPI increase was 1.8% in January and 2.4% in February. INDEC has also published inflation figures for the Wholesale Price Index ( Índice de Precios Internos al por Mayor or “WPI”) , for 2018, reporting a monthly increase of 4.6% in January and 4.8% in February. The WPI for the year ended December 31, 2017 showed an annual increase of 18.8%. The WPI for the year ended December 31, 2016 showed an annual increase of 34.5%. The WPI for the Transition Period showed an increase of 7.4%.

Uncertainty surrounding future inflation rates may have an adverse impact for Argentina in the long-term credit market.

The INDEC implemented certain methodological reforms and adjusted certain indexes based on these reforms The lack of accuracy in the INDEC’s indexes could result in a further decrease in confidence in Argentina’s economy, which could, in turn, have an adverse effect on our ability to access the international credit markets at acceptable market rates to be able to finance our operations and growth. See “—Risks Related to Argentina—The credibility of several Argentine economic indexes has been called into question, which may lead to a lack of confidence in the Argentine economy and may in turn limit our ability to access the credit and capital markets” and — “The economy of Argentina may be affected by its government’s limited access to financing from international markets” —.

Inflation rates could escalate, and there is uncertainty regarding the effects that the measures taken, or that may be taken, by the Macri administration to control inflation could have. If inflation remains high or continues to increase, Argentina’s economy may be negatively impacted and our results of operations could be materially adeversely affected.

If the Argentine peso qualifies as a currency of a hyperinflationary economy under IAS 29, our audited consolidated financial statements and other financial information may need to be restated

If the Argentine peso qualifies as a currency of a hyperinflationary economy under IAS 29, our audited consolidated financial statements and other financial information may need to be restated IAS 29 (Financial Reporting in Hyperinflationary Economies) requires that financial statements of any entity whose functional currency is the currency of a hyperinflationary economy, whether based on the historical cost method or on the current cost method, be stated in terms of the measuring unit current at the end of the reporting period. IAS 29 does not establish an absolute rate at which hyperinflation is deemed to arise. However, it is common practice to consider there is hyperinflation where changes in price levels are close to or exceed 100 % on a cumulative basis over the last three years, along with other several macroeconomic-related qualitative factors. Despite the high inflation rates in Argentina in recent years, we conducted an analysis pursuant to the criteria set forth in IAS 29, and we have determined that Argentina does not qualify as a hyperinflationary economy for any of the years included in our audited consolidated financial statements included elsewhere in this Annual Report.

In making our determination, we considered the lack of objective data available regarding the Consumer Price Index (“CPI”); the existence of other qualitative and quantitative indicators, such as the program established by the Argentine Central Bank to foster monetary stability that aims to induce a systematic and sustainable low inflation rate and the alternative WPI, according to which the inflation rate was below 100% in the three-year cumulative period during 2017; and that the market has evidenced a strong

downward trend in inflation rates during December 2017. We believe that our analysis and conclusion is consistent with that of most public entities in Argentina. We reassess inflation data periodically to determine whether this conclusion continues to be applicable.

However, certain macroeconomic variables that affect our business, such as salary costs and the prices of supplies, have experienced a significant annual variation, a circumstance that must be taken into account when evaluating and interpreting our results of operations and financial condition as reflected in our audited consolidated financial statements included elsewhere in this Annual Report. Although the current rate of inflation does not rise to the level required for Argentina to be considered a hyperinflationary economy under IAS 29, if inflation rates continue to escalate in the future, the Argentine peso may qualify as a currency of a hyperinflationary economy. In such case, our audited consolidated financial statements and other financial information may need to be adjusted by applying a general price index and expressed in the measuring unit (the hyperinflationary currency) current at the end of each reporting period. We cannot determine at this time the impact such a restatement would have on our business, results of operations and financial condition. See Item 5. "Operating and Financial Review and Prospects - Trends and Factors Affecting Our Results of Operations."

The credibility of several Argentine economic indices have been called into question, which may lead to a lack of confidence in the Argentine economy and may in turn limit our ability to access the credit and capital markets.

Since 2007, the inflation index determined by INDEC has been the subject of widespread criticism and extensive discussions in connection with analysis of the Argentine economy. The intervention of the former Argentine government in the INDEC in 2007 and the change in the way the inflation index was measured have resulted in disagreements between the former Argentine government and private consultants as to the actual annual inflation rate. The former Argentine government imposed fines on private consultants reporting inflation rates higher than the INDEC data. As a result, private consultants typically shared their data with Argentine lawmakers who opposed the previous government, and who released such data from time to time. The widespread disagreements had the negative effect of eroding public confidence in Argentina’s economy.

Reports published by the International Monetary Fund (“IMF”) in the past state that their staff uses alternative measures of inflation for macroeconomic surveillance, including data produced by private sources, which have shown considerably higher inflation rates than those published by the INDEC since 2007. The IMF has also criticized Argentina for not taking sufficient remedial measures to address the quality of its official data, including inflation and GDP data, as required under the Articles of Agreement of the IMF.

In February 2014, the INDEC released a new inflation index, known as National Urban Consumer Price Index ( Índice de Precios al Consumidor Nacional Urbano ) that measured the prices of goods across the country and replaced the previous index that only measured inflation in the urban sprawl of the City of Buenos Aires. Pursuant to these calculations, such new consumer price index rose 23.9% in 2014 and 11.9% during the ten-month period ended October 31, 2015. Even though the new methodology brought inflation statistics closer to those estimated by private sources, material differences between recent official inflation data and private estimates remained during 2015.

However, during December 2015 and January 2016, the new government declared the national statistical system and the INDEC to be in a state of administrative emergency through December 31, 2016. Accordingly, the new head of the INDEC announced the temporary suspension of the publication of official data of prices, poverty, unemployment and GDP until the completion of a full review of INDEC’s policies. Shortly thereafter, the new administration released an alternative CPI index based on data from the City of Buenos Aires and the Province of San Luis. The INDEC resumed its publication of the CPI in June 2016, after implementing certain methodological reforms and adjusting certain macroeconomic statistics on the basis of those reforms. The INDEC also revised GDP data from 2004 through 2015. Among other adjustments, in calculating GDP for 2004, the INDEC made changes to the composition of GDP that resulted in a negative adjustment of approximately 12% for that year. To calculate real GDP for subsequent years based on the revised 2004 GDP, the INDEC used deflators that are consistent with its revised methodology to calculate inflation. By previously understating inflation, the INDEC had overstated economic growth in real terms. The adjustments made by the INDEC lead to a determination of real GDP growth of 48.6% for the period of 2004 to 2015, as opposed to 65% growth in real terms for the same period resulting from the information used prior to June 2016. As a consequence of these reforms, on November 9, 2016, the Executive Board of the IMF lifted its censure on Argentina, noting that Argentina had resumed the publication of data in a manner consistent with its obligations under the Articles of Agreement of the IMF.

As of the date of this annual report, the impact that these measures and any future measures taken by the new administration with respect to the INDEC will have on the Argentine economy and investors’ perception of the country cannot be predicted. Concern regarding lack of accuracy in the INDEC´s indices could adversely affect investor confidence in the Argentine economy and our ability to access international credit markets to finance our operations and growth.

Government intervention in Argentina may have a direct impact on our prices and sales.

The Argentine government has in the past set certain industry market conditions and prices. In March 2002, the Argentine government fixed the price for milk after a conflict among producers and the government. In 2005, the Argentine government adopted measures in order to increase the domestic availability of beef and reduce domestic prices. The export tax rate was increased and a minimum weight requirement for animals to be slaughtered was established. In March 2006, sales of beef products to foreign markets were temporarily suspended until prices decreased. Furthermore, in 2007 the Argentine government significantly increased export tax rates on exports of crops. A number of restrictions were also imposed on the grain and oilseed markets that essentially limited the access of traders to exports, resulting in a disparity between domestic and world prices. In March 2012, the Undersecretary of Transport created an “indicative price” for the transportation of grains by road fixed on a quarterly basis. The actual price paid for the road transportation of grains cannot be lower than 5% or higher than 15% of the “indicative price” fixed for the applicable period. In some cases, the imposition of this “indicative price” would produce increases in our transportation costs. In addition, on April 9, 2013, the Secretary of Commerce issued a resolution that established a fixed price for selling liquid hydrocarbons for a six months period. The fixed price would be the highest selling price on the date of issuance of the resolution, in certain regions of the country. Notwithstanding the April 9 resolution, YPF (the Argentine government-controlled oil and gas company) implemented gas price increases that were matched by other oil companies. Due to the increase in the price of the wheat, on July 4, 2013, the Secretary of Commerce issued a resolution mandating wheat producers and distributors to sell their stocks to satisfy the domestic demand, seeking to reduce the wheat price. On January 2014, the Secretary of Commerce launched a new program of price controls called Precios Cuidados. Producers and suppliers committed to fixed prices for more than 300 basic products subject to review on a quarterly basis. As of the date hereof, one of our rice products sold under the trademark “Molinos Ala” is subject to this program. Violation of the program may result in sanctions, including fines of up to AR$5,000,000.

The Argentine government may pursue other expropriations or similar interventions such as the one relating to YPF. See “—Risks related to Argentina—The economy of Argentina may be affected by its government’s limited access to financing from international markets.” On December 27, 2012 the Argentine Congress passed Law N° 26,831, known as the new Capital Markets Law, which modifies the public offer regime set forth by Law No. 17,811 as amended. On August 1, 2013 Decree No. 1023/2013, which regulates the Capital Markets Law, was enacted.

The Capital Markets Law modifies the applicable regime of the Capital Markets, including local Stock Exchange and commodities markets, and of the agents and also the powers conferred to the Argentine Securities Commission ( Comisión Nacional de Valores ) (“CNV”). The main amendments introduced refer to the increase in the power of intervention by the CNV over the Exchange Markets and agents entitling the CNV to appoint supervisors with the ability to veto listed companies´ board decisions, and even disband the board of directors for a period of 180 days; and suspend the activities of agents and markets, without prior notice, when the CNV determines that a breach of applicable regulations has occurred. Also the new Capital Markets Law introduces new and more stringent requirements for agents to obtain authorization to operate in the markets which may result in a reduction of the current number of authorized agents operating in the grain markets. In November, 2016, the Argentine executive branch sent a bill to the Argentine Congress to reform the current Capital Markets Law No. 26,831 which, among other changes, proposes the abrogation of these interventionist powers granted to the CNV and generally seeks to modernize the entire regulatory framework applicable to the Argentine Capital Markets, incorporating current international practices to further its development. However, as of the date of this annual report, such bill has not yet been passed.

Moreover, the Argentine government may increase its level of intervention in certain areas of the economy. For example, on May 3, 2012 the Argentine Congress passed Law No. 26,741 providing for the expropriation of 51% of the share capital of YPF, S.A. (“YPF”), the largest Argentine oil and gas company in Argentina, represented by an identical stake of Class D shares owned, directly or indirectly, by Repsol S.A., a Spanish integrated oil and gas company. This particular measure also sparked a strong international condemnation and had a significant negative impact on foreign direct investment in Argentina as well as further impaired the already limited access to international capital and debt markets. In response to the nationalization of YPF by the Argentine government, the European Union Commission threatened with the imposition of commercial sanctions ( i.e. unilateral tariff preferences to Argentina). However, during February 2014, the Argentine government and Repsol S.A. agreed to a compensation of $5,000 million payable in Argentine sovereign bonds to compensate Repsol S.A. for the seizure of the YPF shares.

Furthermore, on April 1, 2014 the Argentine Tax Federal Authority (“Administración Federal de Ingresos Públicos – AFIP”) issued Resolution No. 3,593/14 which established a “Systematic Registration of Movements and Grains Stocks Regime” (“Régimen de Registración Sistemática de Movimientos y Existencias de Granos”) pursuant to which all persons involved in the commercialization and manufacturing of grains and dairy products registered with the Registro Único de Operadores de la Cadena Agroindustrial (“RUCA” for its acronym in Spanish) must report the stock and stock variations (including locations, transport between the producer´s facilities, etc.) of all grains and other agricultural products (other than those to be applied to sowing) held in inventory or through third parties.

On April 16, 2015, the Argentine Congress passed a law approving the government takeover of the passenger and cargo railways, which became owned by a State-owned company called Ferrocarriles Argentinos Sociedad del Estado. This law is another example of intervention by the Argentine government and may result in higher transportation costs for our products and operations.

In May 2016, the Argentine congress barred companies from laying off workers for a 180-day period in a law later vetoed by President Macri. The law has returned to the Argentine congress where it would need special majorities to override the veto.

Expropriations and other interventions by the Argentine government such as the one relating to YPF can have an adverse impact on the level of foreign investment in Argentina, the access of Argentine companies to the international capital markets and Argentina’s commercial and diplomatic relations with other countries. In the future, the level of governmental intervention in the economy may continue, which may have adverse effects on Argentina’s economy and, in turn, our business, results of operations and financial condition.

Although many of the above measures were adopted or announced by the former Argentine government, we cannot assure you that the Macri administration will not interfere or increase its intervention by setting prices or regulating other market conditions. Accordingly, we cannot assure you that we will be able to freely negotiate the prices of all our Argentine products in the future or that the prices or other market conditions that the Macri administration might impose will allow us to freely negotiate the prices of our products, which could have a material and adverse effect on our business, results of operations and financial condition.

Government measures to preempt or respond to social unrest may adversely affect the Argentine economy and our business.

Argentina has experienced significant social and political turmoil, including civil unrest, riots, looting, nationwide protests, strikes and street demonstrations. Despite Argentina’s economic recovery and relative stabilization, social and political tension and high levels of poverty and unemployment continue. Currently, Argentina is facing national protests, including a general massive strike and several protests during 2017.

Future government policies to preempt, or in response to, social unrest may include expropriation, nationalization, forced renegotiation or modification of existing contracts, suspension of the enforcement of creditors’ rights, new taxation policies, including royalty and tax increases and retroactive tax claims, and changes in laws and policies affecting foreign trade and investment. Such policies could destabilize the country and adversely and materially affect the Argentine economy, and thereby our business, results of operations and financial condition.

The Argentine government may order salary increases to be paid to employees in the private sector, which would increase our operating costs.

In the past, the Argentine government has passed laws, regulations and decrees requiring companies in the private sector to increase wages and provide specified benefits to employees, and may do so again in the future. Argentine employers, both in the public and private sectors, have experienced significant pressure from their employees and labor organizations to increase wages and to provide additional employee benefits. Due to the high levels of inflation, employees and labor organizations are demanding significant wage increases. In August 2012, the Argentine government established a 25% increase in minimum monthly salary to 2,875 Argentine pesos, effective as of February 2013. The Argentine government increased the minimum salary , to 4,716 in January 2015, to 5,588 Argentine pesos in August 2015, to 6,060 Argentine pesos in January 2016, to 6,810 Argentine pesos in June 2016, 7,560 Argentine pesos in September 2016, 8.060 Argentine pesos in January 2017, 8,860 Argentine pesos in July 2017 and 9,500 Argentine pesos in January 2018, and it will increase to 10,000 Argentine pesos in July 2018. Recently, the INDEC published data regarding the evolution of salaries in the private and public sectors, which reflects approximately 32.91% and 32.58% salary increases in the private and public sectors, respectively, for the period from November 2015 through December 2017 . As of August 31, 2017, labor unions agreed annual salary increases with employers’ associations of between 22% and 25%.

Due to the high levels of inflation, employers in both the public and private sectors have historically experienced, and currently are experiencing significant pressure from organized labor and their employees to further increase salaries. If, as a result of such measures, future salary increases in Argentine peso exceed the pace of the devaluation of the Argentine pesos, they could have a material and adverse effect on our expenses and business, results of operations and financial condition.

An increase in export and import duties and controls may have an adverse impact on our sales.

Since 2002, the Argentine government has imposed duties on the exports of various primary and manufactured products, including some of our products. During the last ten years, such export taxes have undergone significant increases, reaching a maximum of 35% in the case of soybean. As of December 2015, the Macri administration eliminated farm export duties on corn, wheat and local products, while soy export taxes were reduced by 5% to 30% and 27% for most soybean products.

On January 2, 2017, the Macri administration enacted a further reduction of the export duties on soybean and soybean products, including a monthly 0.5% cut on the export duties rate starting on January 2018 and until December 2019 has been set.

The Macri administration imposed the Import Monitoring System (Sistema Integral de Monitoreo de Importaciones or “SIMI”). Under this new system, importers are required to submit certain information electronically through the SIMI application which, once approved, will be valid for 180 calendar days.

The Macri administration has also enacted an import licensing regime that includes automatic and non-automatic licensing for imports. Automatic import licensing provides that the importer is only required to submit information through the SIMI as well as provide other certification related to the imported goods. Non-automatic licensing provides that the authorities have a 10-day period to either approve or reasonably reject the import license requested based on its effect on local businesses, in addition to the other import requirements that the goods be subject to (SIMI, certifications, etc).

Notwithstanding the above, we cannot assure you that there will not be further increases in the export taxes or that other new export taxes or quotas will not be imposed. The imposition of new export taxes or quotas or a significant increase in existing export taxes or the application of export quotas or the imposition of regimes that aim to restrict or control imports and exports could adversely affect our financial condition or results of operations.

Exchange controls could restrict the inflow and outflow of funds in Argentina.

Beginning in 2001 Argentina imposed exchange controls and transfer restrictions substantially limiting the ability of enterprises to retain or obtain foreign currency or make payments abroad.

Although some of these restrictions were subsequently eased, in June 2005, the Argentine government issued Decree No. 616/2005, which established new controls on capital inflows that could result in reduced availability of international credit, including the requirement, subject to certain exceptions, that 30% of all funds remitted to Argentina remain deposited in a domestic financial institution for 365 days in a non-interest bearing account. In addition, since the second half of 2011, the Argentine government increased certain controls on the incurrence of foreign currency-denominated indebtedness, the acquisition of foreign currency and foreign assets by local residents. For example, the Argentine Central Bank adopted regulations that (i) shortened the period for a borrower to convert foreign currency-denominated indebtedness into Argentine pesos, (ii) shortened a borrower’s window of access to the local foreign exchange market in connection with a prepayment of scheduled interest payments in respect of foreign currency-denominated indebtedness and (iii) suspended the ability of local residents to access the local exchange market for the acquisition of foreign currency.

Notwithstanding the measures, adopted by the Macri administration since December 2015, which lifted virtually all exchange and capital controls , the Argentine government may impose or increase exchange controls or transfer restrictions in the future in response to capital flight or a significant depreciation of the Argentine peso. These restrictions and requirements, and any additional exchange controls and transfer restrictions in the future that may be adopted by the Argentine government, could adversely affect our financial condition and the results of our operations, or the market price of our common shares. In addition, other exchange controls could in the future impair or prevent the conversion of anticipated dividends, distributions, or the proceeds from any sale of equity holdings in Argentina, as the case may be, from Argentine pesos into U.S. dollars and the remittance of the U.S. dollars abroad. These restrictions and controls could interfere with the ability of our Argentine subsidiaries to make distributions in U.S. dollars to us and thus our ability to pay dividends in the future.

Changes in the Argentine tax laws may adversely affect the results of our operations, financial condition and cash flows.

On July 22, 2016, Argentina published Law No. 27,260 in the Argentine Official Gazette, which makes significant changes to the Argentine tax laws and establishes new tax regimes as the “Voluntary and extraordinary disclosure regime of national and foreign currency holding and other assets, within Argentina and abroad” (Tax Amnesty) and a moratorium for tax, social security and customs obligations.

Compliant taxpayers are able to obtain an exemption from Personal Assets Tax payable by Argentine resident companies as substitute taxpayers on the participation held by their foreign shareholders and Argentine individual shareholders until fiscal year 2018 inclusive. The applicable tax on shares and other equity participations in Argentine companies is 0.25% on the net worth value of the company. Regarding the other tax on wealth, the Minimum Presumed Income Tax for fiscal years to be initiated as from January 1, 2019 has been abrogated.

On December 29, 2017, Argentine Law No. 27,430 amending the Income Tax Law was enacted. According to the amendments, for fiscal years beginning on or after January 1st, 2018 the corporate income tax rate is reduced to 30%; and 25%

for fiscal years beginning on or after January 1, 2019. The distribution of dividends is now subject to a 7% and 13% withholding, respectively. The equalization tax, which levied distributions made out of previously untaxed income, was eliminated. The sale, exchange or disposition of shares and other securities not trading in, or listed on, capital markets and securities exchanges by resident individuals and non-residents in general is subject to a withholding tax at a rate of 15%. Non-residents can opt to be taxed on a deemed net income base of 90% of the sale price (therefore the effective tax rate is 13.5%), or the actual gain.

Risks Related to Brazil

Brazilian economic and political conditions and perceptions of these conditions in international markets have a direct impact on our business and our access to international capital and debt markets, which could adversely affect our results of operations and financial condition.

A significant portion of our operations, properties and customers are located in Brazil. Accordingly, our financial condition and results of operations are substantially dependent on economic conditions in Brazil. The Brazilian economy has experienced significant volatility in recent decades, characterized by periods of low or negative growth, high and variable levels of inflation and currency devaluation. Brazil’s GDP, in nominal terms, grew by 6.1% in 2008 , 5.1% in 2009 , decreased 0.1% in 2010 , increased 7.5% in 2011 , increased 3.9% in 2012 , increased 1.9% in 2013 , increased 3.0% in 2014 , increased 0.1% in 2015 and decreased 3.8% in 2016 . We cannot assure you that GDP will increase or remain stable in the future. Future developments in the Brazilian economy may affect Brazil’s growth rates and, consequently, the consumption of sugar, ethanol, and our other products. As a result, these developments could impair our business strategies, results of operations and financial condition.

Historically, Brazil’s political situation has influenced the performance of the Brazilian economy, and political crisis have affected the confidence of investors and the general public, which has resulted in economic deceleration and heightened volatility in the securities issued abroad by Brazilian companies. Future developments in policies of the Brazilian government and/or the uncertainty of whether and when such policies and regulations may be implemented.

Changes in Brazilian tax laws may have a material adverse impact on the taxes applicable to our business and may increase our tax burden.

The Brazilian government frequently implements changes to the Brazilian tax regime that may affect us and our clients. These changes include changes in prevailing tax rates and, occasionally, imposition of temporary taxes, the proceeds of which are earmarked for designated Brazilian government purposes. Some of these changes may result in increases in our tax payments, which could adversely affect industry profitability and increase the prices of our products, restrict our ability to do business in our existing and target markets and cause our financial results to suffer.

Last years Brazil has faced an economic recession and the Government is adopting fiscal adjustment measures. Any fiscal adjustment is complex and involves radical and unpopular measures. The Minister of Finance has also been raising the possibility of increasing or creating new taxes. For example, the Brazilian government may reduce or increase at any time through a presidential decree the rates of the tax levied on financial operations, such as credit transactions (“IOF/Credit”), foreign exchange transactions (“IOF/Exchange”), derivative securities transactions (“IOF/Securities”), among other taxable events. On March, 30, 2017, a presidential decree was published in order to introduce a 0,38% rate of the IOF/Credit on some loan transactions, such as credits provided by cooperatives, which were previously subject to a zero percent rate.

It is also common for taxpayers to file suits for the declaration that a certain tax is illegal or unconstitutional. Such cases where the final decision is favorable to taxpayers, a situation that occurs very frequently. Accordingly, the Brazilian Government may propose changes in the tax legislation in order to increase rates or to create new taxes.

The effects of these changes and any other change that could result from the enactment of additional legislation cannot be quantified. We cannot assure you that we will be able to maintain our projected cash flow and profitability following any increases in Brazilian taxes applicable to us and our operations.

We receive certain tax benefits from Brazilian Tax Authorities which we cannot assure will be maintained or renewed.

We receive certain tax benefits by virtue of our production facilities and investment projects in underdeveloped regions in Brazil. We also benefit from tax incentives based on state law, which may become subject to legal challenges based on the argument that the benefits we receive require the unanimous approval of the Brazilian National Board of Financial Policy (Conselho Nacional de Politica Fazendaria), or the CONFAZ, a federal agency composed of the state treasurers of each state. Our main tax benefit of the ICMS (circulation tax for goods and services) from the state of Mato Grosso do Sul (Ivinhema and Angélica Mill) was renewed until 2028.

We cannot assure you that the tax incentives we currently benefit from will be maintained, renewed or that we will obtain new tax incentives on favorable terms. In the event we fail to comply with specific obligations to which we are subject in connection with the tax benefits described above, such benefits may be suspended or cancelled, or we may be required to pay the taxes due in full, plus penalties, which may adversely affect us. Additionally, we cannot assure you that we will be able to renew these tax benefits when they expire, or to obtain additional tax benefits under favorable conditions. State and federal governments frequently implement changes to the tax regimes, such as changes in tax rates, that may adversely affect us or our customers. If our current tax benefits are cancelled or not renewed, we may be materially adversely affected.

Widespread corruption and fraud relating to ownership of real estate may adversely affect our business, especially our land transformation business.

Under Brazilian Legislation, real property ownership is normally transferred by means of a transfer deed, and subsequently registered at the appropriate Real Estate Registry Office under the corresponding real property record. There are uncertainties, corruption and fraud relating to title ownership of real estate in Brazil, mostly in rural areas. In certain cases, the Real Estate Registry Office may register deeds with errors, including duplicate and/or fraudulent entries, and, therefore, deed challenges frequently occur, leading to judicial actions. Property disputes over title ownership are frequent in Brazil, and, as a result, there is a risk that errors, fraud or challenges could adversely affect us.

Social movements and the possibility of expropriation may affect the normal use of, damage, or deprive us of the use of or fair value of, our properties.

Social movements, such as Movimento dos Trabalhadores Rurais Sem Terra and Comissão Pastoral da Terra, are active in Brazil and advocate land reform and mandatory property redistribution by the Brazilian government. Land invasions and occupations of rural areas by a large number of individuals is common practice for these movements, and, in certain areas, including those in which we have invested or are likely to invest, police protection and effective eviction proceedings are not available to land owners. As a result, we cannot assure you that our properties will not be subject to invasion or occupation by these groups. A land invasion or occupation could materially impair the normal use of our lands or have a material adverse effect on our results of operations, financial condition or the value of our common shares. In addition, our land may be subject to expropriation by the Brazilian government. Under Article 184 of the Brazilian Constitution, the Brazilian government may expropriate land that is not in compliance with mandated local “social functions”. A “social function” is defined in Article 186 of the Brazilian Constitution as (i) rational and adequate exploitation of land; (ii) adequate use of natural resources available and preservation of the environment; (iii) compliance with labor laws; and (iv) exploitation of land to promote welfare of owners and employees. If the Brazilian government decides to expropriate any of our properties, our results of operations may be adversely affected, to the extent that potential compensation to be paid by the Brazilian government may be less than the profit we could make from the sale or use of such land. Disputing the Brazilian government’s (*) expropriation of land is usually time-consuming and the outcomes of such challenges are uncertain. In addition, we may be forced to accept public debt bonds, which have limited liquidity, as compensation for expropriated land instead of cash.

Brazilian rules concerning foreign investment in rural properties may adversely affect our investments.

Brazilian Federal Law No. 5,709, effective October 7, 1971 (“Law 5709”) established certain restrictions on the acquisition of rural property by foreigners, including that (i) foreign investors may only acquire rural properties in which agricultural, cattle-raising, industrial or colonization projects are going to be developed as approved by the relevant authorities; (ii) the total rural area to be acquired by a foreign investor cannot exceed one quarter of the surface of the municipality where it is located, and foreigners with the same nationality may not own, cumulatively, more than 10% of the surface of the municipality in which it is located; and (iii) the acquisition or possession (or any in rem right) by a foreigner of rural property situated in an area considered important to national security (i.e. land located at or near the Brazilian border) must be previously approved by the General Office of the National Security Council (Secretaria-Geral do Conselho de Segurança Nacional). Pursuant to Article 23 of Law No. 8,629, of February 25, 1993 (“Law 8629”), the restrictions mentioned in items (i) and (ii) above established by Law 5709 are also applicable for rural lease agreements executed by foreigners. “Parcerias Agrícolas” (agriculture partnerships agreements) have not been subject to these restrictions. Although, a broader interpretation of the existing regulations could have also included these agreements within the limitations for foreigners, the Federal General Attorney’s Office (“AGU”) on October 8, 2012 issued a legal opinion 005/2012, pursuant to which the AGU confirmed the understanding that the “Parcerias Rurais” are not subject to the restrictions or limitations of Law 5709. In addition, pursuant to Law 8629, the acquisition or lease by a foreigner of a rural property exceeding 100 módulos de exploração indefinida – “MEI,” a measurement unit defined by the Regional Superintendence of the National Institute of Colonization and Land Reform (Superintendencia Regional do Instituto Nacional de Colonizaçao e Reforma Agrária – “INCRA”) must be previously approved by the Brazilian National Congress. Law 5709 also establishes that the same restrictions apply to Brazilian companies that are directly or indirectly controlled by foreign investors. Any acquisition or lease of rural property by foreigners in violation of the terms of Law 5709 would be considered null and void under Brazilian law.

Since the enactment of the Brazilian Constitution in 1988, the consensus view was that the restrictions imposed by Federal Law 5709 on the acquisition or lease of rural property above-mentioned did not apply to Brazilian companies controlled by foreigners, pursuant to legal opinion No. GQ-22, issued by the AGU in 1994, which was ratified by legal opinion No. GQ-181, also issued by the AGU in 1998. The Brazilian Constitution and its amendments, in particular Constitutional Amendment No. 6, of August 15, 1995, provides that (i) no restrictions on the acquisition of rural land in Brazil should apply to Brazilian companies; and (ii) any company incorporated and headquartered in Brazil and controlled by foreign investors must receive the same treatment as any other company incorporated and headquartered in Brazil and controlled by Brazilian investors. However, the Brazilian Justice National Council issued an Official Letter on July 13, 2010 addressed to all the Brazilian local State Internal Affairs Bureaus in order for them to adopt procedures within sixty (60) days and instruct the local State Notary and Real Estate Registry Offices to observe the restrictions of the Brazilian law on the acquisitions of rural land by Brazilian companies with foreign equity holders. Thereafter, on August 19, 2010, the AGU revised its prior opinion, and published a new legal opinion which: (i) revoked the AGU’s legal opinions No. GQ-22 and GQ-181; and (ii) confirmed that Brazilian entities controlled by foreigners should be subject to the restrictions described above, and transactions entered into by foreigners in connection with the acquisition of rural properties would be subject to approval from INCRA, the Ministry of Agrarian Development and the Brazilian National Congress, when applicable. This revised opinion was ratified by the President of Brazil and published in the Official Gazette of the Federal Executive on August 23, 2010, becoming effective as of such date. We believe that the acquisitions of rural properties by Brazilian companies directly or indirectly controlled by foreigners registered in the appropriate real estate registry prior to August 23, 2010 are not affected by the AGU’s legal opinion. As a confirmation of such understanding, pursuant to the Joint Normative Ruling N. 1 issued on September 27, 2012 by the Ministries of: (i) Agricultural Development; (ii) Agriculture, Cattle-raising and Supply; (iii) Industry Development and Foreign Commerce; and (iv) Tourism (the “Joint Normative Ruling N. 1”); and the Normative Ruling/IN INCRA No.76, issued on August 23, 2013, a Brazilian company controlled by foreign individuals or companies which acquired or leased rural properties, by means of an act or agreement entered into from June 7, 1994 and August 22, 2010, may register such property before the National System of Rural Registry (Sistema Nacional de Catastro Rural-SNCR), without any administrative sanction. However, as of said date, the acquisition and leasing of rural land in Brazil, including through corporate transactions, will be subject to the above-mentioned restrictions, and will require several additional layers of review and approvals, which may be discretionary (including the approvals from INCRA, Ministry of Agrarian Development and the Brazilian National Congress, when applicable), burdensome and time consuming. Additionally, the Joint Normative Ruling N. 1 sets forth the administrative procedures applicable to requests for authorization for the acquisition or lease of rural properties by foreign investors pursuant to Law 5709. Under the Joint Normative Ruling, in order to obtain the authorization for the acquisition or lease of rural properties, foreign investors must present a project proposal to the INCRA, containing: (i) the rationale for the relationship between the property to be acquired or leased and the project size; (ii) physical and financial schedule of the investment and implementation of the project; (iii) use of official credit (governmental funds) for the total or partial finance of the project; (iv) logistic viability of the execution of the project and, in case of an industrial project, proof of compatibility between the local industrial sites and the geographic location of the lands; and (v) proof of compatibility with the criteria established by the Brazilian Ecological and Economical Zoning (Zoneamento Ecológico Económico do Brasil – ZEE), relating to the location of the property.

While we conduct our operations in Brazil through local subsidiaries, we would be considered a foreign controlled entity within the meaning of the restrictions described above. Therefore, if we are not able to comply with these restrictions and obtain the required approvals in connection with future acquisitions or lease transactions, our business plan, contemplated expansion in Brazil and results of operations will be adversely affected.

Furthermore, there is currently proposed legislation under review in the Brazilian National Congress regarding the acquisition of rural land by Brazilian companies controlled by foreign holders, which if approved may further limit and restrict the investments of companies with foreign equity capital in rural land in Brazil. Such further restrictions, if adopted, may place more strain on our ability to expand our operations in Brazil.

The Brazilian government has exercised, and continues to exercise, significant influence over the Brazilian economy, which, combined with Brazilian political and economic conditions, may adversely affect us.

We may be adversely affected by the following factors, as well as the Brazilian government’s response to these factors:


•	economic and social instability;


•	increase in interest rates;


•	exchange controls and restrictions on remittances abroad;


•	restrictions and taxes on agricultural exports;


•	exchange rate fluctuations;


•	inflation;


•	volatility and liquidity in domestic capital and credit markets;


•	expansion or contraction of the Brazilian economy, as measured by GDP growth rates;


•	allegations of corruption against political parties, elected officials or other public officials, including allegations made in relation to the ”Car Wash Operation” ( Operação Lava-Jato) investigation;


•	government policies related to our sector;


•	fiscal or monetary policy and amendments to tax legislation; and


•	other political, diplomatic, social or economic developments in or affecting Brazil.

Historically, the Brazilian government has frequently intervened in the Brazilian economy and has occasionally made significant changes in economic policies and regulations, including, among others, the imposition of a tax on foreign capital entering Brazil (IOF tax), changes in monetary, fiscal and tax policies, currency devaluations, capital controls and limits on imports. The administration is currently facing domestic pressure to retreat from the current macroeconomic policies in an attempt to achieve higher rates of economic growth. In addition, the Brazilian government is proposing the creation of a tax on financial transactions, including wire transfers, (the so-called “CPMF”) in order to improve the fiscal situation of the country. We cannot predict which policies will be adopted by the Brazilian government and whether these policies will negatively affect the economy or our business or financial performance.

The Brazilian economy has been experiencing a slowdown – GDP growth rates were 7.5%, 3.9%, 1.9%, 2.7%, and 0.1% in 2010, 2011, 2012 , 2013 and 2014 , respectively.GDP decreased 3.8%, 3.6% in 2015 and 2016 , respectively and has shown growth rate in 2017 of 1.0%. Inflation, unemployment and interest rates have increased more recently and the Brazilian Real has weakened significantly in comparison to the U.S. dollar. The market expectations for the years 2017 and 2018 is that the Brazilian economy will continue to slow down and GDP will decrease. Our results of operations and financial condition may be adversely affected by the economic conditions in Brazil.

Allegations of political corruption against the Brazilian government and the Brazilian legislative branch could create economic and political instability.

In the past, members of the Brazilian government and of the Brazilian legislative branch have faced allegations of political corruption. As a result, a number of politicians, including senior federal officials and congressmen, resigned and/or have been arrested. Currently, several members of the Brazilian executive and legislative branches of government are being investigated as a result of allegations of unethical and illegal conduct identified by the Car Wash Operation ( Operação Lava-Jato ) being conducted by the Office of the Brazilian Federal Prosecutor. On April 17th, 2016 the impeachment process of the Brazilian President was approved by the House of Representatives and, on August 31st, 2016 the process was approved by Senate. The Brazilian President was replaced by the Vice-President until a new election is to be held in 2018. The new President has been trying to implement political and economic reforms related to fiscal and social security matters, and other measures targeting higher economic rates of growth and employment. On November 11, 2017, a reform to Brazil's labor laws (Law No. 13,467/2017)establish that mutually agreed arrangements between an employer and employee in many circumstances prevail over general labor laws.

We cannot predict which policies will be adopted by the new Brazilian government and whether these policies will negatively affect the economy and our business or results of operations.

Additionally, the potential outcome of investigations and proceedings related to the Car Wash Operation ( Operação Lava-Jato ) is unknown, but they have already had an adverse impact on the general market perception of the Brazilian economy and the conclusion of these proceedings or further allegations of illicit conduct could have additional adverse effects in the Brazilian economy. In this sense, the political crisis could worsen the economic conditions in Brazil, which may adversely affect our results of operations and financial condition.

Moreover, the economic and political crisis have resulted in a further downgrading of the country’s long-term credit rating from two of the three major rating companies, placing Brazil 3 notches below the limit of the speculative investment grade level (“junk”). Standard & Poor's downgraded Brazil to BB with a stable outlook in January 2018, Fitch Ratings downgraded to BB- with a stable outlook in February 2018, while Moody’s maintained its Ba2 rating, with a negative outlook since May 2017. According to Standard & Poor's and Fitch, the downgrade is mainly based on the postponement of the constitutional amendment to reform Brazil’s current pension system, considered vital to closing a huge fiscal deficit, and the great uncertainty surrounding the upcoming presidential elections. Although Brazilian economy is currently showing better results, such as lower inflation and higher growth rate, we cannot neither predict which candidate will become the next president nor which policies this candidate will adopt and whether these policies will negatively affect the economy or our business or financial performance.

Restrictions on the movement of capital out of Brazil may impair our ability to receive payments from our Brazilian Subsidiaries and restrict their ability to make payments in U.S. dollars.

In the past, the Brazilian economy has experienced balance of payment deficits and shortages in foreign exchange reserves, and the Brazilian government has responded by restricting the ability of Brazilian or foreign persons or entities to convert reais into foreign currencies. The Brazilian government may institute a restrictive exchange control policy in the future. Any restrictive exchange control policy could prevent or restrict our Brazilian Subsidiaries’ access to U.S. dollars, and consequently their ability to meet their U.S. dollar obligations and may adversely affect our financial condition and results of operations.

Our business in Brazil is subject to governmental regulation.

Our Brazilian operations are subject to a variety of national, state, and local laws and regulations, including environmental, agricultural, health and safety and labor laws. We invest financial and managerial resources to comply with these laws and related permit requirements. Our failure to do so could subject us to fines or penalties, enforcement actions, claims for personal injury or property damages, or obligations to investigate and/or remediate damage or injury. Moreover, if applicable laws and regulations, or the interpretation or enforcement thereof, become more stringent in the future, our capital or operating costs could increase beyond what we currently anticipate, and the process of obtaining or renewing licenses for our activities could be hindered or even opposed by the competent authorities.

We are also subject to laws and regulations imposed in Brazil and its agencies, including (i) the National Agency of Petroleum, Natural Gas and Biofuels ( Agência Nacional do Petróleo , Gás Natural e Biocombustível(“ANP”) ) and by the Brazilian Electricity Regulatory Agency ( Agência Nacional de Energia Elétrica ) (“ANEEL”) on account of our production of sugarcane, ethanol and electric energy (ii) the Ministry of Agriculture, Breeding Cattle and Supply ( Ministerio da Agricultura , Pecuaria e Abastecimento(“MAPA”) ), on account of our agricultural, sugarcane and ethanol production activities. If an adverse final decision is issued in an administrative process, we could be exposed to penalties and sanctions derived from the violation of any of these laws and regulations, including the payment of fines, and, depending on the level of severity applied to the infraction, the closure of facilities and/or stoppage of activities and the cancellation or suspension of the registrations, authorizations and licenses, which may also result in temporary interruption or discontinuity of activities in our plants, and adversely affect our business, financial status, and operating results.

Government laws and regulations in Brazil governing the burning of sugarcane could have a material adverse impact on our business or financial performance.

In Brazil, a relevant percentage of sugarcane is currently harvested by burning the crop, which removes leaves in addition to eliminating insects and other pests. The states of São Paulo, Minas Gerais and Mato Grosso do Sul, among others, have established laws and regulations that limit and/or entirely prohibit the burning of sugarcane and there is a likelihood that increasingly stringent regulations will be imposed by those states and other governmental agencies in the near future.

Such limitations arise from a Brazilian Federal Decree that set forth the complete elimination of the harvest by burning the crop until 2018 in areas where it is possible to carry out mechanized harvest. In the state of Minas Gerais, the deadline imposed by the State Government for the elimination of the harvest by burning the crop is 2014, for areas with declivity lower than 12%, and for areas with declivity higher than 12%, they are subject to an additional term at the discretion of the State Environmental Agency, on a case by case basis. Nevertheless, in the state of Mato Grosso do Sul, the current deadline is 2018 for the elimination of harvest by burning the crop for areas where mechanized harvest can be carried out, as per the Brazilian Federal Decree.

We currently make significant investments to comply with these laws and regulations. Although our plans for the implementation of mechanized harvesting are underway, with 98.3% of our sugarcane harvest mechanized during the 2016 - 2017 harvest, the strengthening of these laws and regulations or the total prohibition of sugarcane burning would require us to increase our planned investment in harvesting equipment, which, in turn, would limit our ability to fund other investments. In addition, the state of São Paulo has imposed an obligation on growers to dedicate a certain percentage of land used for sugarcane cultivation for native or reclaimed forest area. The cost of setting aside this land is difficult to predict and may increase costs for us or our sugarcane suppliers. As a result, the costs to comply with existing or new laws or regulations are likely to increase, and, in turn, our ability to operate our plants and harvest our sugarcane crops may be adversely affected.

Risks Related to a Luxembourg Company

We are a Luxembourg corporation (“société anonyme”) and it may be difficult for you to obtain or enforce judgments against us or our executive officers and directors in the United States.

We are organized under the laws of the Grand Duchy of Luxembourg. Most of our assets are located outside the United States. Furthermore, most of our directors and officers and experts reside outside the United States, and most of their assets are located outside the United States. As a result, you may find it difficult to effect service of process within the United States upon these persons or to enforce outside the United States judgments obtained against us or these persons in U.S. courts, including judgments in actions predicated upon the civil liability provisions of the U.S. federal securities laws. Likewise, it may also be difficult for you to enforce in U.S. courts judgments obtained against us or these persons in courts located in jurisdictions outside the United States, including actions predicated upon the civil liability provisions of the U.S. federal securities laws. It may also be difficult for an investor to bring an action in a Luxembourg court predicated upon the civil liability provisions of the U.S. federal securities laws against us or these persons. Luxembourg law provides shareholders the right to bring a derivative action on behalf of the Company only in limited circumstances and subject to conditions only admit, shareholders’ right to bring a derivative action on behalf of the company.

Service of process within Luxembourg upon the Company may be possible, provided that The Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters of November 15, 1965 is complied with. As there is no treaty in force on the reciprocal recognition and enforcement of judgments in civil and commercial matters between the United States and the Grand Duchy of Luxembourg, courts in Luxembourg will not automatically recognize and enforce a final judgment rendered by a U.S. court. The enforceability in Luxembourg courts of judgments entered by U.S. courts will be subject prior any enforcement in Luxembourg to the procedure and the conditions set forth in particular in the Luxembourg procedural code, which conditions may include the following (subject to court interpretation which may evolve):


•	the judgment of the U.S. court is final and duly enforceable ( exécutoire ) in the United States;


•	the U.S. court had jurisdiction over the subject matter leading to the judgment (that is, its jurisdiction was established in compliance both with Luxembourg private international law rules and with the applicable domestic U.S. federal or state jurisdictional rules);


•	the U.S. court has applied to the dispute the substantive law which would have been applied by Luxembourg courts;


•	the judgment was granted following proceedings where the counterparty had the opportunity to appear, and if it appeared, to present a defense;


•	the U.S. court has acted in accordance with its own procedural laws; and


•	the judgment of the U.S. court does not contravene Luxembourg international public policy.

Under our articles of incorporation, we indemnify and hold our directors harmless against all claims and suits brought against them, subject to limited exceptions. Under our articles of incorporation, to the extent allowed or required by law, the rights and obligations among or between us, any of our current or former directors, officers and company employees and any current or former shareholder will be governed exclusively by the laws of Luxembourg and subject to the jurisdiction of the Luxembourg courts, unless such rights or obligations do not relate to or arise out of their capacities as such. Although there is doubt as to whether U.S. courts would enforce such provision in an action brought in the United States under U.S. securities laws, such provision could make the enforcement of judgments obtained outside Luxembourg more difficult as to the enforcement against our assets in Luxembourg or jurisdictions that would apply Luxembourg law.

You may have more difficulty protecting your interests than you would as a shareholder of a U.S. corporation.

Our corporate affairs are governed by our articles of incorporation and by the laws governing joint stock companies organized under the laws of the Grand Duchy of Luxembourg as well as such other applicable local law, rules and regulations. The rights of our shareholders and the responsibilities of our directors and officers under Luxembourg law are different from those applicable to a corporation incorporated in the United States. There may be less publicly available information about us than is regularly published by or about U.S. issuers. Also, Luxembourg regulations governing the securities of Luxembourg companies may not be as extensive as those in effect in the United States, and Luxembourg law and regulations in respect of corporate governance matters may not be as protective of minority shareholders as state corporation laws in the United States. Therefore, you may have more difficulty protecting your interests in connection with actions taken by our directors and officers or our principal shareholders than you would as a shareholder of a corporation incorporated in the United States.

You may not be able to participate in equity offerings, and you may not receive any value for rights that we may grant.

Pursuant to Luxembourg corporate law, existing shareholders are generally entitled to preemptive subscription rights in the event of capital increases and issues of shares against cash contributions. However, under our articles of incorporation, the board of directors has been authorized to waive, limit or suppress such preemptive subscription rights until the fifth anniversary of the publication of the authorization granted to the board in respect of such waiver by the general meeting of shareholders. The current authorization was renewed by decision of the shareholder meeting held on April 20, 2016 and is valid until April 20, 2021.

Item 4. Information on the Company

A. HISTORY AND DEVELOPMENT OF THE COMPANY

General Information

Adecoagro is a Luxembourg société anonyme (a joint stock company). The Company’s legal name is “Adecoagro S.A.” Adecoagro was incorporated on June 11, 2010 and on October 26, 2010 all the outstanding shares of Adecoagro were acquired by IFH.

On October 30, 2010, the members of IFH transferred pro rata approximately 98% of their membership interests in IFH to Adecoagro in exchange for common shares of Adecoagro. On January 28, 2011, Adecoagro completed the IPO of its shares listed on the New York Stock Exchange (“NYSE”). The shares are traded under the symbol “AGRO.” In a series of transactions during 2012, we transferred shares of Adecoagro to certain limited partners of IFH in exchange for their residual interest in IFH increasing our interest in IFH to approximately 100%.

On March 27, 2015, Adecoagro commenced a series of transactions for the purpose of transfering the domicile of Adecoagro LP to Luxembourg. In connection with the Adecoagro LP redomiciliation, Adecoagro merged IFH into Adecoagro LP (Delaware) with Adecoagro LP (Delaware) as the surviving entity and on April 1, 2015 Adecoagro GP S.à r.l., a société à responsibilitié limitée organized under the laws of Luxembourg, became he general partner of Adecoagro LP on April 1, 2015. Also on April 1, 2015, Adecoagro completed the redomiciliation of Adecoagro LP (Delaware) out of Delaware to Luxembourg and Adecoagro LP without dissolution or liquidation, continued its corporate existence as Adecoagro LP S.C.S., a société en commandite simple organized under Luxembourg law, effective April 2, 2015. For a detailed description of the Adecoagro LP redomiciliation please see “Corporate Development” below.

Adecoagro is registered with the Luxembourg Registry of Trade and Companies under number B153681. Adecoagro has its registered office at 6, Rue Eugène Ruppert, L-2453, Luxembourg, Grand Duchy of Luxembourg. Our telephone number is (+352) 264491.

History

In September 2002, we commenced our operations with the acquisition of 100% of the equity interests of Pecom Agropecuaria S.A., an Argentine corporation (sociedad anónima), and we rapidly became one of the largest agricultural companies in Argentina. Totaling more than 74,000 hectares of farmland, this acquisition represented one of the largest stock purchase transactions in South America in 2002. In connection with the acquisition, Pecom Agropecuaria S.A. changed its name to Adeco Agropecuaria S.A. (“Adeco Agropecuaria”). Adeco Agropecuaria was the platform from which we executed our expansion plans, including the acquisition of additional land and the diversification of our business activities.

In 2004, we began our regional expansion and acquired a farm in Uruguay (approximately 5,086 hectares) and three farms in Western Bahia Brazil (20,419 hectares). In 2005, we continued the expansion of our crop business in Argentina with the acquisitions of La Agraria S.A. (approximately 4,857 hectares) and Establecimientos El Orden S.A. and Cavok S.A. (approximately 15,157 hectares) and Las Horquetas farm (2,086 hectares).

In 2005, we acquired our first sugar and ethanol mill, Usina Monte Alegre S.A. (“UMA”), with a crushing capacity of 0.9 million tons of sugarcane per year at that time. UMA became our platform for expansion in the Brazilian sugar and ethanol sector.

In 2006 and 2007, we continued our land portfolio expansion and vertical integration through the acquisitions of Pilagá S.A. (formerly Pilagá S.R.L. and before that, Pilagá S.A.G.), one of the largest and oldest agriculture companies in Argentina, with more than 88,000 hectares and two rice processing facilities, and one additional farm of approximately 2,400 hectares in Argentina and two farms of approximately 4,000 hectares in Brazil for the production of crops. Also, in December 2007, we

acquired Bañado del Salado S.A., Agro Invest S.A. and Forsalta S.A., with more than 43,000 hectares for crop production in Argentina, and one farm in Uruguay of approximately 3,177 hectares.

During 2007, we also began the expansion of our dairy business in Argentina. After five years of research, we began the construction of a “free-stall” dairy facility with a capacity to milk 3,000 cows.

In Brazil, during 2007, we began the construction of a sugarcane cluster in Mato Grosso do Sul with a projected 10.0 million tons of sugarcane crushing capacity. Angelica was the first greenfield mill we built from inception, with a nominal crushing capacity of 4.9 million tons. We also bought approximately 13,000 hectares of farmland for the planting of sugarcane to supply the mill. Angelica began operating during August 2008, and reached full operational capacity during April 2010.

Additionally, in August 2010, we acquired Dinaluca S.A., an agricultural company consisting of a farm located in the province of Corrientes, Argentina, and with more than 14,000 hectares for crop production in Argentina. Further, between August and November 2011, we acquired: (i) Compañía Agroforestal de Servicios y Mandatos S.A., an agricultural Argentine company owning more than 4,900 hectares of land in the province of Santiago del Estero, (ii) Simoneta S.A., an agricultural Argentine company owner of more than 4,600 hectares of land in the province of La Pampa, and (iii) 3,400 hectares of land for crop production in the province of San Luis, Argentina.

During 2012, we began the construction of our second free stall dairy facility in Argentina, with a capacity of 3,500 milking cows.

On February 26, 2013, Adecoagro formed CHS Agro S.A., a joint venture with a leading farmer-owned energy, grains and foods company based in the United States. We hold 50% interest in CHS Agro. CHS Agro will build a sunflower processing facility located in the city of Pehuajo, Province of Buenos Aires, Argentina. The facility will process blackoil and confectionary sunflower into speciatly products such as in-shell seeds and oil seeds, which will be entirely exported to markets in Europe and the Middle East. The joint venture will grow confectionary sunflower on leased farms, while blackoil sunflower will be originated from third parties. As of December 31, 2014, we and CHS Inc. have made individual capital contributions to CHS Agro of approximately US$ 4 million each.

During March 2013, we began the construction of the second greenfield project in our sugarcane cluster in Mato Grosso do Sul. The Ivinhema mill, with 5.7 million tons of sugarcane crushing capacity and located 45 km south of Angelica, consolidate our cluster, generating important synergies and economies of scale, improving operational margins and Adjusted Free Cash Flow. Ivinhema was built in two phases: the first phase with 2.0 million tons of capacity was completed during April 2012 and the second phase, with 3.0 million tons of crushing capacity was completed during mid 2015.

During October 2017, we completed the construction of our first bio-digester. The facility generates electricity by burning biogas extracted from the effluents produced by our milking cows. On November 3, 2017, we began generating and delivering 1.4 MW of electricity to the local power grid. In addition to increasing revenues and securing our energy requirements, this facility enhances the sustainability of our free stall dairy operation by reducing greenhouse gas emissions, improving the effluent management and concentrating valuable nutrients, which are applied back to the fields.

In light of the improved regulatory framework and outlook for the agribusiness sector in Argentina, we have identified several growth opportunities across our farming operations. These investments will allow us to increase operational efficiency, reduce costs and enhance returns across our dairy, rice and crops segments.

Dairy business: Our free-stall dairies #1 and #2 are fully ramped-up and delivering productivity. We plan to invest $50.0 million over the next four years to build free-stalls #3 and #4. We believe that this project will allow us to double production capacity, reaching over 185 million liters of fluid milk production per year and reach over 14 thousand milking cows. We believe this investment is a unique opportunity to leverage on Argentina’s competitive advantages in transforming vegetable protein into milk protein, our operational expertise and the positive outlook for global and local milk prices.

Rice business: During the second half of the year we will be investing $6.0 million in equipment and machines to improve our rice processing and distribution. These projects include: (i) a rice parboiling plant; (ii) a new packaging machine for branded white rice; (iii) expansion of finished goods storage capacity; (iv) a rice husk bailing press; and (v) a rice bran oil de-activation system. We believe that these projects will allow us to strengthen our brand in the local market and increase margins.

Crops business: Following the recent boost in Argentina’s grain production volumes, specifically corn and wheat, certain regions are suffering from lack of grain storage and conditioning capacity. This is generating bottlenecks and increasing logistics costs. In order to continue managing our production capacity efficiently, we will build two new storage and conditioning facilities

located near the Rosario and Bahia Blanca ports. We believe that these pojects will allow us to reduce our conditioning and logistics costs and enhance our commercial flexibility. Total investment is expected to reach $11.0 million over the next 12-months.

Corporate Development

On October 30, 2010, as part of the corporate reorganization, referred to herein as the Reorganization, AFI Ltd., a subsidiary of IFH LLC and the parent of Adecoagro LLC, distributed its interest in Adecoagro LLC to IFH LLC and commenced a process of dissolution, making IFH LLC the direct parent of Adecoagro LLC. Thereafter, our shareholders transferred pro rata 98% of their membership interests in IFH LLC to Adecoagro (a corporation organized under the laws of the Grand Duchy of Luxembourg with no prior holdings or operations, formed for the purpose, among others, of facilitating our IPO) in exchange for 100% of the common shares of Adecoagro.

In connection with the Reorganization, Adecoagro converted IFH LLC from a limited liability company to IFH LP, a Delaware limited partnership. owned 2% by our shareholders, approximately 98% by Adecoagro, in each case as limited partners, and the remainder by Ona Ltd., a newly formed Maltese corporation, as its general partner. Adecoagro LLC was also converted to Adecoagro LP, a Delaware limited partnership, owned approximately 100% by IFH LP as limited partner, and the remainder by Toba Ltd., a newly formed Maltese corporation, as its general partner.

On January 28, 2011, we successfully completed our initial public offering of our shares listed on the NYSE and on February 2, 2011 we issued 28,405,925 shares, at a price of US$11 per share. The shares trade under the symbol “AGRO.”

On February 2, 2011, we also issued and sold to Al Gharrafa Investment Company (“Al Gharrafa”), a wholly owned subsidiary of Qatar Holding LLC and one of our shareholders, 7,377,598 common shares at a purchase price of $10.65 per share, which is equal to the price per common share paid by the underwriters of our initial public offering of the Company, pursuant to an agreement entered into on January 6, 2011. In addition, on February 11, 2011, we issued 4,285,714 shares when the over-allotment option was exercised by the underwriters in our IPO.

During 2012, the Company issued in a series of transactions 1,654,752 shares to certain limited partners of IFH in exchange for their residual interest in IFH increasing Adecoagro’s interest in IFH to approximately 100%.

On February 5, 2013, we completed an underwritten secondary offering of 13.9 million common shares of Adecoagro offered by our shareholder, HBK Master Fund LP at a price per share to the public of $8.00 pursuant to an effective shelf registration statement on Form F-3 filed with the SEC. On February 13, 2013, HBK Master Fund LP sold an additional 2.1 million common shares of Adecoagro pursuant to the overallotment option it granted to the underwriter in the secondary offering.

On March 27, 2015, Adecoagro commenced a series of transactions for the purpose of transferring the domicile of Adecoagro LP to Luxembourg. In connection with the Adecoagro LP redomiciliation, Adecoagro merged IFH LP into Adecoagro LP with Adecoagro LP (Delaware) as the surviving entity. In connection with this merger, all of the assets and liabilities of IFH L.P. vested in Adecoagro LP (Delaware), Ona Ltd became its general partner and Toba Ltd became a wholly owned subsidiary of Adecoagro LP (Delaware). In connection with the transactions completed on March 27, 2015, Ona Ltd. assigned its general partnership interest in Adecoagro LP to Adecoagro GP S.a.r.l., a societe responsibilitie limitee organized under the laws of Luxembourg, on April 1, 2015. Also on April 1, 2015, Adecoagro completed the redomiciliation of Adecoagro LP (Delaware) out of Delaware to Luxembourg and Adecoagro LP, without dissolution or liquidation, continued its corporate existence as Adecoagro LP S.C.S., a societe en commandite simple organized under Luxembourg law, effective April 2, 2015. Since that date the affairs of Adecoagro LP S.C.S. have been governed by its by-laws and Luxembourg law.

On March 21, 2016, we completed an underwritten secondary offering of 12.0 million shares of Adecoagro offered by our shareholders, Quantum Partner LP and Geosor Corporation, at a price per share to the public of $11.7 pursuant to an effective shelf registration statement on Form F-3 filed with the SEC. In connection with this offering, the selling shareholders granted the underwriter the right to purchase up to 1,800,000 additional common shares exercisable once at any time within 30 days after March 21,2016. On April 20, 2016, the underwriter elected to purchase an additional 350,000 common shares at a price of 11.40 per common share.

On September 21, 2017, the Company issued US$500 million principal amount of its 6.000% Senior Notes due 2027 (the “Securities”). The Securities were issued pursuant to an Indenture dated as of September 21, 2017 (the “Indenture”), among us, as issuer, Adeco AgropecuariaS.A., Pilagá S.A., Adecoagro Brasil Participacoes S.A., Adecoagro Vale do Ivinhema S.A. and Usina Monte Alegre Ltda., as guarantors (the “Guarantors”) and The Bank of New York Mellon, as trustee, registrar, paying agent and transfer agent, and are be guaranteed on a senior unsecured basis by each of the Guarantors.

The following chart summarizes our corporate structure as of April 2018. The Restricted Subsidiaries and Unrestricted Subsidiaries shown on the chart refer to the terms Restricted Subsidiary and Unrestricted Subsidiary, respectively, as defined in our Senior Notes Indenture attached hereto as Exhibit 4.43.

Principal Capital Expenditures

Capital expenditures totaled $199.6 million, $133.2 million and $149.8 million for the years ended December 31, 2017 , 2016 and 2015 , respectively.

For a discussion of our capital expenditures and future projections, see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Capital Expenditure Commitments.”

B. BUSINESS OVERVIEW

Our Company

We are a leading agricultural company in South America, with operations in Argentina, Brazil and Uruguay. We are currently involved in a broad range of businesses, including farming crops and other agricultural products, dairy operations, sugar, ethanol and energy production and land transformation. Our sustainable business model is focused on (i) a low-cost production model that leverages growing or producing each of our agricultural products in regions where we believe we have competitive advantages, (ii) reducing the volatility of our returns through product and geographic diversification and use of advanced technology, (iii) benefiting from vertical integration in key segments of the agro-industrial chain, (iv) acquiring and transforming land to improve its productivity and realizing land appreciation through strategic dispositions, and (v) implementing sustainable production practices and technologies focused on long-term profitability.

As of December 31, 2017, we owned a total of 246,139 hectares, comprised of 19 farms in Argentina, 11 farms in Brazil and one farm in Uruguay. In addition we own and operate several agro-industrial production facilities including three rice processing facilities in Argentina, two dairy facilities with approximately 6,967 milking cows in Argentina, 11 grain and rice conditioning and storage plants in Argentina, and three sugar and ethanol mills in Brazil with a sugarcane crushing capacity of 12.3 million tons.

We believe that we are:


•	one of the largest owners of productive farmland in South America, with more than 203,620 owned productive hectares as of December 31, 2017 (excluding legal land reserves pursuant to local regulations and other land reserves) located in Argentina, Brazil and Uruguay, producing a wide range of agricultural products.


•	a leading producer of grains and oilseeds in South America. During the 2016/2017 harvest year, we harvested 185,149 hectares (including 62,545 leased hectares and 39,220 second crop hectares) and produced 654,872 tons of grains, including soybeans, corn, wheat, sunflower and cotton;

•

one of the largest fully integrated producers of rough (unprocessed) rice in the world, planting 39,728 hectares (including 1,700 leased hectares) and producing 234,831 tons during the 2016/2017 harvest year, which accounted for 21% of the total Argentine production according to the Confederacion de Molinos Arroceros del Mercosur (“Conmasur”). We are also a large processor and exporter of white rice (processed) in Argentina, accounting for 19% of total white rice production capacity in Argentina and 25% of total Argentine white rice exports during 2017, according to Camara de Industriales Arroceros de Entre Ríos (Federacion de Entidades Arroceras) .


•	a leading dairy producer in South America in terms of our cutting-edge technology, productivity per cow and grain conversion efficiencies, producing 93.2 million liters of raw milk during 2017.

•

a growing producer of sugar and ethanol in Brazil, where we currently own three sugar and ethanol mills, with an aggregate installed capacity of 12.3 million tons per year and full cogeneration capacity (the generation of electricity from sugarcane bagasse, the fiber portion of sugarcane that remains after the extraction of sugarcane juice) of 232 MW as of December 31, 2017. Our operation is highly integrated, meaning that 89% of the sugarcane crushed at our mills is supplied from our own plantations. As of December 31, 2017, our sugarcane plantation consisted of 137,697 hectares; and.


•	one of the leading companies in South America involved in the acquisition and transformation of undermanaged land to more productive uses, generating higher cash yields. During the last twelve fiscal years, we have consistently sold a portion of our fully mature farmland every year. In aggregate, we have sold over 77,000 hectares generating capital gains of approximately $210 million.

We are engaged in three main businesses:

• Farming Business : As of December 31, 2017 we owned 232,848 hectares (excluding sugarcane farms) of farmland in Argentina, Brazil and Uruguay, of which 122,680 hectares are croppable, 10,163 hectares are being evaluated for transformation, 60,713 hectares are suitable for raising beef cattle and are mostly leased to third party cattle farmers, constituting a total of 193,555 productive hectares, and 39,293 hectares are legal land reserves pursuant to local regulations or other land reserves. During the 2016/2017 harvest year we held leases or have entered into agriculture partnerships for an additional 64,245 croppable hectares. We own the facilities and have the resources to store and condition 100% of our crop and rice production. We do not depend on third parties to condition our production for sale. Our farming business is subdivided into four main businesses:

•

Crop business : We produce a wide range of agricultural commodities including soybeans, corn, wheat, sunflower and cotton, among others. In Argentina, our farming activities are conducted mainly in the Argentine humid pampas region, where agro-ecological conditions are optimal for low-cost production. Since 2004, we have expanded our operations throughout the center-west region of Uruguay and the western part of the state of Bahia, Brazil, as well as in the northern region of Argentina. During the 2016/2017 harvest year, we planted approximately 190,325 hectares of crops, including second harvests, producing 654,872 tons of grains, including soybeans, wheat and corn, sunflower and cotton. We also planted an additional 5,177 hectares where we produced over 155,300 tons of forage that we used for cow feed in our dairy operation. During the current 2017/18 harvest year, we planted approximately 189,918 hectares of crops, including second harvest, and also planted an additional 5,470 hectares of forage.

•

Rice business : We own a fully-integrated rice operation in Argentina. We produce irrigated rice in the northeast provinces of Argentina, where the availability of water, sunlight, and fertile soil results in one of the most ideal regions in the world for producing rice at low cost. We believe that we are one of the largest producers of rough (unprocessed) rice in Argentina, producing 234,831 tons during the 2016/2017 harvest year, which accounted for 21% of the total Argentine production according to Conmasur. We own three rice mills that process our own production, as well as rice purchased from third parties. We produce different types of white and brown rice that are sold both in the domestic Argentine retail market under our own brand; and exported. During the current 2017/18 harvest year, we planted 40,729 hectares of rice.

•

Dairy business : We believe that we are a leading dairy producer in South America in terms of our utilization of cutting-edge technology, productivity per cow and grain conversion efficiencies. Through the production of raw milk, we are able to transform forage and grains into value-added animal protein. Our “free-stall” dairies in Argentina allow us to optimize our use of resources (land, dairy cow feed and capital), increase our productivity and maximize the conversion of forage and grain into raw milk. We produced 93.2 million liters of raw milk during 2017, with a daily average of 6,967 milking cows, delivering an average of 36.6 liters of milk per cow per day. On October, 2017 we completed the construction of our first bio-digestor with a 1.4MWH of intalled capacity. The facility generates electricity by burning biogas extracted from the effluents produced by our seven thousand milking cows. On November 3, 2017, we began the energy generation and the delivery of electricity to the local power grid. In addition to increasing revenues and securing our energy requirements, this facility enhances the sustainability of our free stall dairy operation by reducing greenhouse gas emissions, improving the effluent management and concentrating valuable nutrients which are applied back to the fields.


•	All Other Segments business : Our all other segments business consists of leasing pasture land to cattle farmers in Argentina and leasing our coffee plantation in the Rio de Janeiro farm, located in Western Bahia, Brazil, to a third party. We lease over 27,216 hectares of pasture land which is not suitable for crop production to third party cattle farmers.

The following table sets forth, for the periods indicated, certain data relating to our farming business:



	Year Ended December 31,
	2017	2016	2015
Sales	(in thousands of $)
Crops (1)	197,222	142,124	154,741
Rice (2)	86,478	96,562	84,668
Dairy	37,523	32,897	32,981
All Other Segments (3)	1,336	960	1,302
Total	322,559	272,543	273,692



	Harvest year
	2016/2017	2015/2016	2014/2015
Production	(in tons)
Crops (tons) ⁽⁴⁾	652,201	583,639	627,824
Rice (tons) ⁽⁵⁾	234,831	220,758	180,149
Total	887,032	804,397	807,973



	Year Ended December 31
	2017	2016	2015
Dairy (thousands of liters) ⁽⁶⁾	93,168	92,395	88,556



	Harvest year
	2017/2018	2016/2017	2015/2016	2014/2015
Planted Area	(in hectares, including second harvest)
Crops ⁽⁷⁾	189,757	190,325	178,491	193,683
Rice	40,279	39,728	37,580	35,328

________________________________________________________________________________________________


(1)	Includes soybeans, corn, wheat, sunflower and cotton, among others.


(2)	Sales of processed rice, including rough rice purchased from third parties and processed in our facilities.


(3)	All Other Segments encompasses our remaining interests in the beef Cattle and Coffee businesses. Our beef cattle business consists of over 61 thousand hectares of pasture land that is not suitable for crop production and as a result is leased to third parties for cattle grazing activities. We lease the coffee production rights with respect to our Rio de Janeiro coffee plantation.


(4)	Crop production does not include 155,300 tons, 136,797 tons and 102,527 tons, of forage produced in the 2016/2017, 2015/2016 and 2014/2015 harvest years, respectively.


(5)	Expressed in tons of rough rice produced on owned and leased farms . As of December 31, 2017, the 2017/18 harvest year of rice harvest had not began.


(6)	Raw milk produced at our dairy farms.


(7)	Includes 5,177 hectares, 5,514 hectares, and 4,669 hectares, used for the production of forage during the 2016/17, 2015/2016, and 2014/2015 harvest years, respectively.

Sugar , Ethanol and Energy Business: We cultivate and harvest sugarcane which is then processed in our own mills to produce sugar, ethanol and energy. As of December 31, 2017, our total sugarcane plantation consisted of 137,697 hectares, planted over both owned and leased land. We currently own and operate three sugar and ethanol mills, UMA, Angélica and Ivinhema, with a total crushing capacity of 12.3 million tons of sugarcane per year as of December 31, 2017. UMA is a small but efficient mill located in the state of Minas Gerais, Brazil, with a sugarcane crushing capacity of 1.2 million tons per year, full cogeneration capacity and an associated sugar brand with strong presence in the regional retail market ( Açúcar Monte Alegre ). We plant and harvest 99.8% of the sugarcane milled at UMA, with the remaining 0.2% acquired from third parties. Angélica and Ivinhema are

two new, modern mills, which we built in the state of Mato Grosso do Sul, Brazil, with current sugarcane crushing capacities of 5.5 and 5.6 million tons per year, respectively. Both mills are located 45 km apart, and form a cluster surrounded by one large sugarcane plantation. Angelica and Ivinhema are equipped with high pressure steam boilers and turbo-generators with the capacity to use all the sugarcane bagasse by-product to generate electricity. Approximately 33% of the electricity generated is used to power the mill and the excess electricity is sold to the local power grid, resulting in the mills having full cogeneration capacity.

For the year ended December 31, 2017, we crushed 10.2 million tons of sugarcane. Our mills produce both sugar and ethanol, and accordingly, we have some flexibility to adjust our production (within certain capacity limits that generally vary between 40% and 60%) between sugar and ethanol, to take advantage of more favorable market demand and prices at given points in time. For the year ended December 31, 2017 we produced 567,068 tons of sugar and 434,015 cubic meters of ethanol.

As of December 31, 2017, our overall sugarcane plantation consisted of 137,697 hectares of sugarcane in the states of Mato Grosso do Sul and Minas Gerais, Brazil, of which 9,748 hectares of sugarcane were planted on owned land, and 133,869 hectares were planted on land leased from third parties under long term agreements.

The following table sets forth, for the periods indicated, certain data relating to our sugar, ethanol and energy business:



	Year Ended December 31,
	2017	2016	2015
Sales	(In thousands of $)
Sugar	305,688	330,895	177,801
Ethanol	241,650	211,451	176,150
Energy	62,218	53,995	46,671
Other	1,061	351	—
Total	610,617	596,692	400,622



	Year Ended December 31,
Production	2017	2016	2015
Sugar (tons)	567,068	701,060	464,929
Ethanol (cubic meters)	434,015	422,395	361,001
Energy (MWh exported)	712,425	751,037	553,090



	Year Ended December 31,
Other Metrics	2017		2016		2015
Sugarcane milled (% owned)	89	%	91	%	89	%
Sugarcane crushing capacity (millions of tons)	12.3		11.2		10.2
% Mechanized harvesting operations — Consolidated	98	%	98	%	97	%
% Mechanized /harvesting operations — Cluster	100	%	100	%	100	%

Land Transformation Business: We acquire farmlands we believe are underdeveloped or underutilized and, by implementing cutting-edge production technology and agricultural best practices, transform the land to be suitable for more productive uses, enhance yields and increase the value of the land. During the sixteen-year period since our inception, we have effectively put into production 174,866 hectares of land that was previously undeveloped or undermanaged. During 2017, we put into production 1,065 hectares and in addition continued the transformation process of ove r 132,428 h ectares we own. We realize and capture land transformation value through the strategic disposition of assets that have reached full development potential. We believe that the rotation of our land portfolio allows us to re-allocate capital efficiently, maximizing our return on invested capital. Our current owned land portfolio consists of 246,139 hectares, distributed throughout our operating regions as follows: 85% in Argentina, 14% in Brazil, and 1% in Uruguay. During the last twelve years, we sold 20 of our fully mature farms, generating capital gains of approximately $210 million.

We promote sustainable land use through our land transformation activities, which seek to promote environmentally responsible agricultural production and a balance between production and ecosystem preservation. We do not operate in heavily wooded areas or wetland areas.

From time to time, the company seeks to recycle its capital by disposing of a portion of its fully developed farms. This allows the company to monetize the capital gains generated by its land transformation activities and allocate its capital to acquire land with higher transformation potential or to deploy it in other businesses, thereby enhancing the return on invested capital. Please see also “-Risks Related to Argentina-Recent Changes in Argentine law concerning foreign ownership of rural properties may adversely affect our results of operations and future investments in rural properties in Argentina” and “-Risks Related to Brazil- Recent changes in Brazilian rules concerning foreign investment in rural properties may adversely affect our investments.”

The following table sets forth, for the periods indicated, certain data relating to our land transformation business:



	Year Ended December 31,
	2017	2016	2015
Undeveloped/Undermanaged land put into production (hectares)	1,065	4,274	2,790
Ongoing transformation of croppable land (hectares)	132,428	131,363	127,428
Number of farms sold	—	—	3 (1)
Hectares sold	—	—	10,905
Capital gains from the sale of land ($ thousands) (1)	—	—	24

(1) Includes the sale of non-controlling interests in farmland companies

Our Strengths

We believe the following are our competitive strengths:

•

Unique and strategic asset base. We own strategically located farmland and agro-industrial assets in Argentina, Brazil and Uruguay. We engage in continuous improvement of our operations and practices, resulting in the reduction of operating costs and an increase in productivity, ultimately enhancing the value of our properties and generating capital gains. Our operations also benefit from strategically located industrial facilities throughout Argentina and Brazil, increasing operating efficiencies and reducing operating and logistical costs. We are vertically integrated where economics and returns are attractive, where the efficiency of our primary operation is significantly enhanced, or where lack of a competitive market results in the absence of a transparent price determination mechanism. Our diversified asset base creates valuable synergies and economies of scale, including (i) the ability to transfer the technologies and best practices that we have developed across our business lines, (ii) the ability to apply value-adding land transformation strategies to farmland in connection with our farming and sugarcane operations, and (iii) a greater ability to negotiate more favorable terms with our suppliers and customers.

Owning a significant portion of the land on which we operate is a key element of our business model.


•	Low-cost production leveraging agro-ecological competitive advantages. Each of the commodity products we grow is produced in regions where agro-ecological conditions provide competitive advantages and which, through the implementation of our efficient and sustainable production model, allow us to become one of the lowest cost producers.


•	Our grain and oilseed production is based in the Argentine humid pampas region where soil fertility, regular rainfalls, temperate climate, availability of land and proximity to ports contribute to the reduced use of fertilizers and agrochemicals, high productivity and stable yields and efficient logistics, ultimately resulting in one of the lowest costs per ton of grain produced and delivered.


•	Our rice operation is located in the northeast provinces of Argentina, one of the best rice farming regions in the world due to plentiful sunlight, abundant availability of water for low cost irrigation and large potential for expansion.


•	Our dairy operation is situated in the Argentine humid pampas region, where cow feed (grains, oilseeds and forage) is efficiently and abundantly produced at a low cost and climate and sanitary conditions are optimal for cow comfort, which enhances productivity, cow reproduction rates and milk quality.


•	We produce sugarcane in the center-south region of Brazil, where the combination of soil and climate result in high sugarcane productivity and quality, resulting in one of the lowest production costs in the world, significantly lower than other major sugar producing regions, including India, China, the United States, the United Kingdom, France and Germany.

•

Standardized and scalable agribusiness model applying technological innovation. We have consistently used innovative production techniques to ensure that we are at the forefront of technological improvements and environmental sustainability standards in our industry. We are implementing an agribusiness model that consists of specializing our workforce and defining standard protocols to track crop development and control production variables, thereby enhancing management decision-making. We further optimize our agribusiness model through the effective implementation and constant adaptation of a portfolio of advanced agricultural and information technologies and best practices tailored to each region in which we operate and commodity we produce, allowing us to improve our crop yields, reduce operating costs and maximize margins in a sustainable manner.

•

In our farming business, we use “no-till” technology as the cornerstone of our crop production and have been able to implement this technique in areas within our production regions where it had not been used before. Furthermore, we also utilize crop rotation, second harvests, integrated pest management, balanced fertilization, water management and mechanization. Additionally, we use the innovative silo bag storage method, utilizing large polyethylene bags with a capacity of 180-200 tons which can be left on the field for 12 months, resulting in low-cost, scalable and flexible storage on the field during harvest, which we believe allows us to expand our crop storage capacity at a low cost, generate important logistic and freight savings by moving our production in the off-season when freight fares are lower, and time the entry of our production into the market at optimal price points. See “-Operations and Principal Activities-Farming-Storage and Conditioning.”


•	In our dairy business, we believe that we were the first company in South America to implement the “free-stall” production system, resulting in more efficient conversion of feed to raw milk and higher production rates per cow compared to our peers in the region.

•

In our sugar, ethanol and energy business, our sugarcane cluster, constituted by the Ivinhema and Angélica mills (i) has a highly mechanized planting and harvesting operation, which has increased our sugarcane production, reduced our operating costs and contributed to environmental sustainability by eliminating the need to burn the sugarcane before harvest; (ii) has the capacity to use all the bagasse (a by-product of the sugar and ethanol production process) that is produced, with almost no incremental cost, to cogenerate 150 MW per day of clean and renewable electricity; (iii) has the capacity of processing 50,420 tons of sugarcane per day and (iv) has the ability to recycle by-products such as filter cake and vinasse by using them as fertilizers in our sugarcane fields, as well as recycling water and other effluents, generating important savings in input costs and protecting the environment.

•

Unique diversification model to mitigate cash flow volatility. We pursue a unique multi-tier diversification strategy to reduce our exposure to production and market fluctuations that may impact our cash flow and operating results. We seek geographic diversification by spreading our portfolio of farmland and agro-industrial assets across different regions of Argentina, Brazil and Uruguay, thereby lowering our risk exposure to weather-related losses and contributing to stable cash flows. Additionally, we produce a variety of products including soybeans, corn, wheat, sunflower, cotton, barley, sorghum, rice, raw milk, sugar, ethanol and energy, which lowers our risk exposure to potentially depressed market conditions of any specific product. Moreover, through vertical integration in the rice, dairy, sugar, ethanol and energy businesses, we process and transform a portion of our agricultural commodities into branded retail products, reducing our commodity price risk and our reliance on the standard market distribution channels for unprocessed products. Finally, our commercial committee defines our commercial policies based on market fundamentals and the consideration of logistical and production data to develop a customized sale/hedge risk management strategy for each product.

•

Expertise in acquiring farmland with transformation and appreciation potential. Since our inception in 2002, we have executed transactions for the purchase and disposition of land for over $652 million and sold over 77,000 hectares of developed land, generating capital gains of approximately $210 million. We believe we have a superior track record and have positioned ourselves as a key player in the land business in South America. Our business development team has gained extensive expertise in evaluating and acquiring farmland throughout South America and has a solid understanding of the productivity potential of each region and of the potential for land transformation and appreciation. To date, we have analyzed over 11 million hectares of farmland spread throughout the regions in which we operate and other productive regions in the world. We have developed a methodology to assess farmland and to appraise its potential value with a high degree of accuracy and efficiency by using information generated through sophisticated technology, including satellite images, rain and temperature records, soil analyses, and topography and drainage maps. Our management team has gained extensive

experience in transforming and maximizing the appreciation potential of our land portfolio through the implementation of our agribusiness techniques described above. We also have an extensive track record of rotating our asset portfolio to generate capital gains and monetize the transformation and appreciation generated through our land transformation activities and agricultural operations.

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Experienced management team, knowledgeable employees. Our people are our most important asset. We have an experienced senior management team with an average of more than 20 years of experience working in our sector and a solid track record of implementing and executing large scale growth projects such as land transformations, greenfield developments of industrial plants, and integrating acquisitions within our organization. Recruiting technically qualified employees at each of our farms and operating sites is a main focus of our senior management and a key to our success.

Our Business Strategy

We intend to maintain our position as a leading agricultural company in South America by expanding and consolidating each of our business lines, creating value for our shareholders. The key elements of our business strategy are:

•

Expand our farming business through organic growth , leasing and strategic acquisitions. We will continue to seek opportunities for organic growth, target attractive acquisition and leasing opportunities and strive to maximize operating synergies and achieve economies of scale in each of our three main farming business areas (crops, rice and dairy). We have identified several organic expansion projects that we are currently undertaking. These projects form part of our strategic growth plan, We believe that the execution risk associated with these projects is not expected to be significant as we are investing in existing operations that are highly efficient. It is worth of mention that we believe that our expected results do not rely exclusively on rising commodity prices, which we expect to remain constant at current levels.

Dairy business: The construction of free stall #3 is moving forward according to plan. By July 2018, we expect to start populating the facility, targeting operations at 40% of total capacity by the end of year. We are advancing well in growing and securing corn silage to feed the additional cows. As for the bio-digester, we already stabilized energy production generating attractive results.

Rice business: We expect to conclude investments by the first half of the year, allowing us to improve our rice processing and distribution, and increase the value of main by-products.

Crops: We expect to complete the construction of one of the two storage and grain conditioning facilities by end of 2018. This investment will allow us to reduce our conditioning and logistics costs and enhance our commercial flexibility.

•

Consolidate our sugar and ethanol cluster in the state of Mato Grosso do Sul, Brazil. Our main strategy for our sugar and ethanol business is to consolidate our cluster in Mato Grosso do Sul, Brazil, through the ramping up of our Ivinhema and Angelica mills, which as of December 2017 reached a nominal capacity of 12.3 million tons per year and are expected to reach 11.7 million tons by 2018. See “-Sugar, Ethanol and Energy-Our Mills.” The consolidation of the cluster will generate important synergies, operating efficiencies and economies of scale such as (i) a reduction in the average distance from the sugarcane fields to the mills, generating important savings in sugarcane transportation expenses; (ii) one centralized management team, reducing total administration cost per ton of sugarcane milled; and (iii) a large sugarcane plantation supplying two mills, allowing for non-stop harvesting. We believe that our sugarcane cluster in Mato Grosso do Sul will allow us to become one of the most efficient and low cost producers of sugar, ethanol and energy in Brazil. Additionally, we plan to continue to monitor closely the Brazilian sugar and ethanol industries and may pursue selective acquisitions that provide opportunities to increase our economies of scale, operating synergies and profitability.

After reaching full capacity, our operating teams have been focused on finding ways to continue maximizing efficiency and generating additional synergies and cost dilution. In this process, our teams have identified certain bottlenecks in our industrial operations that may be removed with minimal investments which will allow us to increase crushing volumes per hour and total capacity per year. We are now engaged in an organic growth project to increase the nominal crushing capacity by 30%. The project will be implemented during the next five years in two phases:

- Phase 1 consists of expanding Angelica’s crushing capacity by 0.9 million tons throughout 2017 and 2018. We will expand crushing capacity by 150 tons/hour by installing larger mill rollers in the first mill, and expanding the sugar centrifugation and ethanol filtration processes. Crushing will grow gradually and reach full capacity by 2019.

- Phase 2 will consist of expanding Ivinhema’s capacity by 2.1 million tons (400 tons/hour), between 2018 and 2022. This will be achieved by installing a new mill (#6) expanding the sugarcane reception, juice treatment and sugar factory. Crushing will grow gradually and reach full capacity in 2023.

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Further increase our operating efficiencies while maintaining a diversified portfolio. We intend to continue to focus on improving the efficiency of our operations and maintaining a low-cost structure to increase our profitability and protect our cash flows from commodity price cycle risk. We seek to maintain our low-cost platform by (i) making additional investments in advanced technologies, including those related to agricultural, industrial and logistical processes and information technology, (ii) improving our economies of scale through organic growth, strategic acquisitions, and more efficient production methods, and (iii) fully utilizing our resources to increase our production margins. In addition, we intend to mitigate commodity price cycle risk and minimize our exposure to weather related losses by (i) maintaining a diversified product mix and vertically integrating production of certain commodities and (ii) geographically diversifying the locations of our farms.

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Continue to implement our land transformation strategy. We plan to continue to enhance the value of our owned farmland and future land acquisitions by making them suitable for more profitable agricultural activities, thereby seeking to maximize the return on our invested capital in our land assets. In addition, we expect to continue rotating our land portfolio through strategic dispositions of certain properties in order to realize and monetize the transformation and appreciation value created by our land transformation activities. We also plan to leverage our knowledge and experience in land asset- management to identify superior buying and selling opportunities.

Operations and Principal Activities

Farming

Our Farming business line is divided into three main reportable operating businesses, namely crops, rice and dairy. We conduct our farming operations primarily on our own land and, to a lesser extent, on land leased from third parties. During harvest year 2016/2017 our farming operations were conducted on a total of 224,877 hectares of land, of which we own 154,338 hectares (excluding sugarcane farms) and we leased the remaining 70,539 hectares from third parties. The following table sets forth our production volumes for each of our farming business lines.



	Harvest Year
	2016/2017	2015/2016	2014/2015
Production	(in tons)
Crops ⁽¹⁾	652,201	583,639	627,824
Rice ⁽²⁾	234,831	220,758	180,149



	Year Ended December 31,
	2017	2016	2015
Dairy (thousands of liters) ⁽³⁾	93,168	92,395	88,556

________________________________________________________________________________________________


(1)	As of the date of this annual report, the harvest of soybean, corn, sunflower, cotton and rice pertaining to the 2017/2018 harvest year is ongoing. The only crop which has been almost fully harvested in the current 2017/18 harvest year is wheat, with a total production of 71,644 tons.


(2)	Expressed in tons of rough rice.


(3)	Raw milk produced.

Crops Business (Grains, Oilseeds and Cotton)

Our agricultural production is mainly based on planting, growing and harvesting crops over our owned croppable area. During the 2016/2017 harvest year, we planted crops over a total area of approximately 185,149 hectares, including our owned land, land leased from third parties and hectares planted in second harvests. During mid 2017 we began the planting of crops pertaining to the 2017/18 harvest year, which will be concluded during the first quarter of 2018, with a total planted area of 189,757 hectares.

Our main products include soybean, corn, wheat, sunflower, and cotton. Other products, such as sorghum and barley, among others, are sown occasionally and represent only a small percentage of total sown land.

The following table sets forth, for the harvest years indicated, the planted hectares for our main products:



	Harvest Year
	2016/2017	2015/2016	2014/2015
Product Area	(In hectares)
Soybeans ^(l)	84,434	88,377	96,476
Corn ⁽²⁾	54,653	42,657	40,044
Wheat ⁽³⁾	38,009	32,396	37,020
Sunflower	5,413	9,547	12,314
Cotton	2,640	—	3,160
Forage ⁽⁴⁾	5,177	5,514	4,669
Total	190,326	178,491	193,683

________________________________________________________________________________________________

(1) Includes soybean first crop and second crop planted area.

(2) Includes sorghum, peanut and chia.

(3) Includes barley crop.

(4) Forage includes corn silage, wheat silage and alfafa used for cow feed in our dairy operation.

(5) As of December 31, 2017.

The following table sets forth, for the harvest years indicated, the production volumes for our main products



	Harvest Year
	2017/2018	2016/2017	2015/2016	2014/2015
Crop Production ⁽¹⁾	(In tons)
Soybeans ⁽²⁾	6,571	230,899	237,681	285,914
Corn ⁽²⁾	55,951	298,324	248,269	232,763
Wheat	79,341	115,339	82,167	84,609
Sunflower ⁽²⁾	3,558	10,112	15,521	21,762
Cotton lint ⁽²⁾	—	198	—	2,336
Total ⁽²⁾	145,421	654,872	583,639	627,384

________________________________________________________________________________________________

(1) Does not include 155,300 ,136,797 and 102,527 tons of forage produced in the 2016/17, 2015/2016, and 2014/2015, harvest years respectively.

(2) As of the date of this annual report, the harvest of soybean, corn, sunflower and cotton pertaining to the 2017/18 harvest year is ongoing. The only crop which has been fully harvested is wheat.

The following table below sets forth, for the periods indicated, the sales for our main products:



	Year Ended December 31,
	2017	2016	2015
Sales	(In thousands of $)
Soybeans	85,527	63,797	77,432
Corn ^(l)	86,238	48,502	41,924
Wheat ⁽²⁾	16,723	18,191	16,750
Sunflower	3,163	7,275	12,659
Cotton	420	1,434	3,317
Other crops ⁽³⁾	5,151	2,925	2,659
Total	197,222	142,124	154,741

________________________________________________________________________________________________

(1) Includes sorghum, chia and peanut.

(2) Includes barley.

(3) Includes other crops and farming services.

Soybeans

Soybeans are an annual legume widely grown due to their high content of protein (40%) and oil (20%). They have been grown for over 3,000 years in Asia and, more recently, have been successfully cultivated around the world. The world’s top producers of soybeans currently are the United States, Brazil, Argentina, China and India. Soybeans are one of the few plants that provide a complete protein supply as they contain all eight essential amino acids. About 85% of the world’s soybeans are processed, or “crushed,” annually into soybean meal and oil. Approximately 98% of soybean meal is further processed into animal feed, with the balance used to make soy flour and proteins. Of the oil content, 85% is consumed as edible oil and the rest is used for industrial products such as fatty acids, soaps and biodiesel. We sell our soybeans mainly to crushing and processing industries, which produce soybean oil and soybean meal used in the food, animal feed and biofuel industries.

We grow soybeans in Argentina, Brazil and Uruguay. In the 2014/15 harvest year, we planted a total area of 96,476 hectares of soybeans, producing a total of 285,914 tons representing 51% of our total crop planted area that year, and 46% of our total crop production. In the 2015/16 harvest year, we planted a total area of 88,377 hectares of soybean, producing a total of 237,681 tons representing 51% of our total crop planted area that year, and 41% of our total crop production. In the 2016/17 harvest year, we planted a total area of 84,435 hectares of soybean, producing a total of 230,899 tons representing 46% of our total crop planted area that year, and 35% of our total crop production.

Soybeans comprised, 11%, 7%, and 9% of our total consolidated sales in 2015, 2016, and 2017 respectively

Corn

Corn is a cereal grown around the world and is one of the world’s most widely consumed foods. The main component of corn grain is starch (72% to 73% of grain weight), followed by proteins (8% to 11%). Corn grain is directly used for food and animal feed (beef, swine and poultry meat production and dairy). Corn is also processed to make food and feed ingredients (such as high fructose corn syrup, corn starch and lysine), or industrial products such as ethanol and polylactic acid (PLA). Oil, flour and sugar are also extracted from corn, with several uses in the food, medicine and cosmetic industries. Additionally, there are specific corn types used for direct human consumption such as popcorn and sweet corn.

We grow corn in Argentina, Brazil and Uruguay. In the 2014/2015 harvest year, we planted a total area of approximately 40,044 hectares of corn, including the second harvest, producing a total of 232,763 tons of corn representing 21% of our total planted area that year, and 37% of our total crop production. In the 2015/2016 harvest year, we planted a total area of approximately 42,657 hectares of corn, including the second harvest, producing a total of 243,972 tons of corn representing 25% of our total planted area that year, and 43% of our total crop production. In the 2016/2017 harvest year, we planted a total area of approximately 54,653 hectares of corn, including the second harvest, producing a total of 298,324 tons of corn representing 30% of our total planted area that year, and 46% of our total crop production.

Corn comprised 6% of our consolidated sales in 2015, 7% of our consolidated sales in 2016, and 9% of our consolidated sales in 2017.

Wheat

Wheat is the world’s largest cereal-grass crop. Unlike other cereals, wheat grain contains a high amount of gluten, the protein that provides the elasticity necessary for excellent bread making. Although most wheat is grown for human consumption, other industries use small quantities to produce starch, paste, malt, dextrose, gluten, alcohol, and other products. Inferior and surplus wheat and various milling byproducts are used for livestock feed. We sell wheat to exporters and to local mills that produce flour for the food industry.

We grow wheat in Argentina and Uruguay. In the 2015/2016 harvest years, we planted a total area of approximately 32,396 hectares of wheat, producing a total of 82,167 tons of wheat. In the 2016/2017 harvest year, we planted a total area of approximately 38,009 hectares of wheat, producing a total of 115,339 tons of wheat. In the current 2017/2018 harvest year, we planted a total area of approximately 36,533 hectares of wheat, producing a total of 79,675 tons of wheat.

Wheat comprised 2% of our total consolidated sales in 2015, 2% of our total consolidated sales in 2016, and 2% of our total consolidated sales in 2017.

Sunflower

There are two types of sunflower, the most important in terms of volume being the oilseed sunflower, which is primarily grown for the oil extracted from the seed. Sunflower oil is considered one of the top three oils for human consumption, due to its high oil content (39-49%) and its oil composition (90% of oleic and linoleic oil). The other type of sunflower is the confectionary sunflower, which is used for direct human consumption. Sunflower seeds are an exceptional source of vitamin E, omega-6 fatty acids, dietary fiber and minerals. We grow both types of sunflower.

We grow sunflower in Argentina and Uruguay. In the 2014/2015 harvest year, we planted a total area of approximately 12,314 hectares of sunflower producing a total of 21,762 tons of sunflower representing 7% of our total crop planted area that year, and 3% of our total crop production. In the 2015/2016 harvest year, we planted a total area of approximately 9,547 hectares of sunflower producing a total of 15,521 tons of sunflower representing 6% of our total crop planted area that year, and 3% of our total crop production. In the 2016/2017 harvest year, we planted a total area of approximately 5,413 hectares of sunflower producing a total of 10,112 tons of sunflower representing 3% of our total crop planted area that year, and 2% of our total crop production.

Sunflower comprised 2% of our total consolidated sales in 2015, 1% in 2016, and 0.3% in 2017.

Cotton

Cotton is the world’s most popular natural fiber. The cotton fiber is made primarily into yarns and threads for use in the textile and apparel sectors. Clothing accounts for approximately 60% of cotton consumption. Cotton is also used to make home furnishings, such as draperies (the third major end use), or professional garments (about 5% of cotton fiber demand). The cottonseed is used in animal feeding or crushed in order to separate its three products - oil, meal and hulls. Cottonseed oil is used primarily for cooking oil and salad dressing. In recent years, there has been a growing demand for cotton oil for biodiesel production.

We plant upland cotton, the most common type of cotton planted and processed around the world. We produce and sell cotton lint and cotton seed.

We grow cotton in northern Argentina and in the western part of Bahia, Brazil. In the 2014/2015 harvest year, we planted a total area of approximately 3,160 hectares of cotton producing a total of 2,344 tons of cotton lint, representing 2% of our total planted crop area that year, and 0.4% of our total crop production. We did not plant any cotton in the 2015/16 harvest year. In the 2016/2017 harvest year, we planted a total area of approximately 2,640 hectares of cotton producing a total of 198 tons of cotton lint, representing 1% of our total planted crop area that year, and 0.03% of our total crop production.

Cotton comprised 0.5% of our total consolidated sales in 2015, 0.2% of our total consolidated sales in 2016 and 0.05% of our total consolidated sales in 2017.

Forages

In addition to the above mentioned crops, we are engaged in the production of forage in Argentina, including corn silage, wheat silage, soybean silage and alfalfa silage. We use forage as cow feed in our dairy operation. During the 2016/2017 harvest year, we planted 5,177 hectares of forage and produced 155,300 tons of forage.

Crop Production Process

Our crop production process is directly linked to the geo-climatic conditions of our farms and our crop cycles, which define the periods for planting and harvesting our various products. Our crop diversification and the location of our farms in various regions of South America enable us to implement an efficient planting and harvesting system throughout the year, which includes second harvests in many cases. Our production process begins with the planting of each crop. After harvesting, crops may go through a processing phase where the grain or seeds are cleaned and dried to reach the required market standards.

For additional discussion of our harvest years and the presentation of production and product area information in this annual report, see “Presentation of Financial and Other Information-Fiscal Year and Harvest Year.”

Rice Business

Rice is the main food staple for about half of the world’s population. Although it is cultivated in over 100 countries and on almost every continent, 90% of the world’s rice is grown and consumed in Asia. Globally, rice is the most important crop in terms of its contribution to human diets and production value. There are three main types of rice: short grain, medium grain and long

grain rice. Each one has a different taste and texture. We produce long grain rice and Carolina double rice, a variety of medium grain rice.

We conduct our rice operation in the northeast of Argentina, which is one of the most efficient locations in the world for producing rice at a low cost. This is a result of optimum natural agronomic conditions, including plentiful sunlight, abundant availability of water for low cost irrigation and large quantities of land. The use of public water for artificial irrigation is governed by provincial regulations and is subject to the granting of governmental permits. We currently have permits for the use of water in our production of rice in the provinces of Corrientes and Santa Fe. Maintenance of our permits is subject to our compliance with applicable laws and regulations, which is supervised by the corresponding governmental authority ( e.g. , the Ministry of Water, Public Services and Environment ( Ministerio de Agua , Servicios Publicos y Medio Ambiente ), in the province of Santa Fe, and the Water Institute of the Province of Corrientes ( Instituto Correntino del Agua ).

The following table sets forth, for the harvest years indicated, the total number of planted rice hectares we owned and leased as well as the overall rough rice we produced:



	Harvest Year
Rice Product Area & Production	2017/2018	2016/2017	2015/2016	2014/2015
Owned planted area (hectares)	38,579	38,028	35,880	32,104
Leased planted area (hectares)	1,700	1,700	1,700	3,224
Total rice planted (hectares)	40,279	39,728	37,580	35,328
Rough rice production (tons) ⁽¹⁾	—	234,831	220,758	180,149

(1) As of the date of this annual report, the harvest of rice pertaining to the 2017/2018 harvest year is ongoing.

We grow rice on 4 farms we own and 2 farms we lease, all located in Argentina. In the 2015/2016 harvest year, we planted a total area of approximately 37,580 hectares of rice, producing a total of 220,758 tons, representing 18% of our total planted area that year, and 27% of our total farming production. In the 2016/2017 harvest year, we planted a total area of approximately 39,728 hectares of rice, producing a total of 234,831 tons, representing 18% of our total planted area that year, and 26% of our total farming production. In the current 2017/2018 harvest year, we planted a total of 40,279 hectares of rice, which have not been fully harvested as of the date of this report.

Production Process

The rice production cycle lasts approximately five to six months, beginning in September of each year and ending in April of the following year. Rice planting continues until November, followed by treatment of the rice, which lasts approximately three months, until January. In February we begin harvesting, which lasts until April. After harvesting, the rice is ready for processing.

We process rice in our three rice mills in Argentina, where we are able to process our entire rice crop and utilize our excess milling capacity to process rough rice we purchase from third party growers.

At the mill, we clean the rice to remove all impurities. We then put it through a dryer to remove excess moisture from the grains. Proper drying results in increased storage life, prevents deterioration in quality and leads to optimum milling. Once dried, the rice grain, now known as rough rice or paddy rice, is ready for storage. We store rice in elevators or in silo bags until milling. During the milling process, the rough rice goes through a de-husking machine that removes the husk from the kernel. The rice that is obtained after this process is known as brown rice and is ready for human consumption. Brown rice becomes white rice after it is polished to remove the excess bran.

The main objective of the milling process is to remove the husk and the bran, preserving the quality of the whole grain. Although the process is highly automated and uses advanced technology, some rice grains are broken in the process. The percentage of broken rice depends on a number of factors such as the crop development cycle at the farm, the variety of the grain, the handling and the industrial process. Average processing of rough rice results in 58% white rice, 11% broken rice and 31% rice husk and bran which is sold for use as cattle feed or floor bedding in the poultry business.



	Year Ended December 31,
	2017	2016	2015
Processed Rice Production	(In tons)
Rough rice processed — own	208,292	206,794	131,861
Rough rice processed — third party	33,282	16,382	38,618
Total rough rice processed	241,574	223,176	170,479



	Year Ended December 31,
	2017	2016	2015
Processed Rice Sales	(In thousand of $)
Total Sales	86,478	96,562	84,668

Rice comprised 13% of our total consolidated sales in 2015, 11% in 2016 and 9% in 2017.

Rice Seed Production

In our rice seed facility in Argentina, we are involved in the genetic development of new rice varieties adapted to local conditions to increase rice productivity and quality to improve both farm production as well as the manufacturing process. In connection with these efforts, we have entered into agreements with selected research and development institutions such as the National Institute of Agriculture Technology ( Instituto Nacional de Tecnología Agropecuaria , or “INTA”) in Argentina, the Latin American Fund for Irrigated Rice ( Fondo Latinoamericano para Arroz de Riego , or “FLAR”) in Colombia, the Santa Catarina State Agricultural Research and Rural Extension Agency ( Empresa de pesquisa Agropecuária e Extensão Rural de Santa Catarina , or “EPAGRI”) in Brazil and Badische Anilin- und Soda- Fabrik (“Basf”) in Germany. Our own technical team is continuously testing and developing new rice varieties. Our first rice seed variety, Ita Caabo 105, was released to the market in 2008. In 2011 we released our second variety Ita Caabo 110, and at the beginning of 2014 we released our third variety, Ita Caabo 107. We are currently experimenting with a wide range of varieties to continue improving our productivity. These seeds are both used at our farms and sold to rice farmers in Argentina, Brazil, Uruguay and Paraguay. We are also developing, alongside Basf, a herbicide-tolerant rice variety to assist in the control of harmful weeds.

Dairy Business

We conduct our dairy operation in our farms located in the Argentine humid pampas region. This region is one of the best places in the world for producing raw milk at a low cost, due to the availability of grains and forages produced efficiently and at low cost, and favorable weather for cow comfort and productivity. Our dairy operation consists of two free-stall dairy facilities with a total capacity of approximately 6,967 milking cows.

The following table sets forth, for the periods indicated below, the total number of our dairy cows, average daily milk production per cow and our total milk production:



	Year Ended December 31,
Dairy Herd & Production	2017	2016	2015
Total dairy herd (head)	8,043	7,947	7,701
Average milking cows	6,967	6,880	6,658
Average daily production (liters per cow)	36.6	36.7	36.4
Total production (thousands of liters)	93,168	92,395	88,556



	Year Ended December 31
Dairy Sales	2017	2016	2015
	(In thousands of $)
Sales	37,523	32,897	32,981

As of December 31, 2017, 2016 and 2015, we owned a dairy herd of 8,043, 7,947 and 7,701 head, respectively, including 6,967, 6,880 and 6,658 milking cows, respectively, with an average production of 36.6, 36.7 and 36.4 liters per cow per day, respectively.

Dairy comprised 5% of our total consolidated sales in 2015 and 4% of our total consolidated sales in 2016 and 2017.

Production Process

We wean calves during the 24 hours subsequent to birth and during the next 60 days raise them on pasteurized milk and high protein meal. Male calves are fed concentrates and hay for an additional 3 months in the farm before they are sent to our feedlot to be fattened for sale. Young heifers remain in open corrals during the next 13 months where they are fed with concentrates and forage until they are ready for breeding. Calving occurs nine months later. Heifers are subsequently milked for an average of 320 days. Dairy cows are once again inseminated during the 42- to 90-day period following calving. This process is repeated once a year for a period of six or seven years. The pregnancy rate for our herd is between 85% and 90% per year.

Each cow in our dairy herd is mechanically milked three times a day. The milk obtained is cooled to less than four degrees centigrade in order to preserve its quality and is then stored in a tank. Milk is delivered to large third party milk processing facilities on a daily basis by tank trucks. We feed our dairy cows mainly with corn and alfalfa silages, some grass and corn grain, supplemented as needed with soybean by-products, hay, vitamins and minerals.

We have invested in technology to improve the genetics of our cows, animal health and feeding in order to enhance our milk production. These investments include top quality imported semen from genetically improved North American Holstein bulls, agricultural machinery and devices, use of dietary supplements and modern equipment to control individual milk production and cooling. Our feeding program is focused on high conversion of feed into milk, while maintaining cows in good health and comfort. We have also invested in technology and know-how so as to increase our forage production and utilization.

In 2007, we began the construction of an advanced “free-stall” dairy in Argentina, and started operating in March 2008. This technology allows large- scale milk production at increased efficiency levels. Our free-stall dairy model consists of 3,500 cows confined inside a large barn where they are free to move within the indoor corrals. We feed our cows specific protein rich diets composed of corn grain and silage and milk them three times a day, using a milking mechanism consisting of an 80-cow rotary platform, which milks an average of 400 cows per hour. Having proved the success of our model we built a second free stall diary in 2011 and started operations during August 2012.

Implementation of the free-stall system allows us to position ourselves as a key player in the dairy industry and boost our agricultural and industrial integration presence in the South American agricultural sector. By eliminating cow grazing, we reduced the amount of land utilized for milk production, which freed up more land for our agricultural and land development activities. Cow productivity (measured in liters of milk produced per day) using the free-stall system increases by up to 40% compared to traditional grazing systems. These productivity gains are because the free-stall system significantly improves the conversion rate of animal feed to milk, resulting in an approximate 40% increase in the conversion ratio, or the production of 1.4 liters of milk for each 1 kg of animal feed as compared to the average of 1 liter of milk for each 1 kg of feed associated with the usual grazing model.

This increased productivity and conversion rate are mainly due to improved cow comfort and an enhanced diet quality. We assess cow comfort through the engagement of expert consultants, who recommended designing beds covered with sand. The sand plays a significant role in helping cows to rest comfortably. Additionally, we installed a cooling system to increase cow comfort as well. This system relies on water sprinklers and ventilation fans located all over the facility to create a controlled, cool atmosphere, which improves cow comfort as the Holstein herd is originally adapted to cold regions. Additionally, we manage diet quality by adapting our feeding regime based on the various feeding stages in the lifetime of each cow. The actual feeding is fully mechanized, and we carefully control the harvesting and storage of feed. The control of all productivity variables, such as reproduction, health and operations, supports efficiency gains through standardized processes. Finally, the physical concentration of the animals facilitates efficient overall management of the dairy business as a whole. In terms of the environment, the free-stall model allows for a better effluent treatment, which includes a sand-manure separator stage, a decantation pool and an anaerobic lagoon. All these processes help to decrease the organic matter content of the effluent and deliver a cleaner output. The final treated effluent is used to fert-irrigate crops adjacent to the dairy operation. Accordingly, we transform dairy waste into a high value-added by-product, which reduces fertilizer usage.

During October, 2017 we completed the construction of our first bio-digester. This facility enhances the sustainability of our free stall dairy operation by reducing greenhouse gas emissions, improving the effluent management and concentrating valuable

nutrients which are applied back to the fields. It generates electricity by burning biogas extracted from the effluents produced by our seven thousand milking cows. On November 3, 2017, we began generating and delivering 1.4 MW of electricity to the local power grid. In addition of enchancein the sustainability of our diary operation, it increases revenues and secures our energy requirements.

The free-stall dairy is expected to allow us to become an efficient large-scale milk producer and optimize the use of our resources (land, cattle and capital) through the standardization of processes. Process standardization provides high operational control and allows us to scale-up our production efficiently and quickly.

All Other Segments

All Other Segments encompasses our cattle and coffee businesses. In December 2009, we strategically decided to sell almost all of our cattle herd - other than our dairy cows - to Quickfood S.A. (now “Marfrig Argentina S.A.”), an Argentine company and a subsidiary of the Brazilian company, Marfrig Alimentos S.A. (“Marfrig”), for a purchase price of $14.2 million. Additionally, we entered into a 10-year lease agreement under which Marfig Argentina S.A. leases grazing land from us to raise and fatten cattle.

In September 2013, Marfrig Argentina S.A. notified us of their intention to early terminate in the fourth quarter of 2013 the lease agreements of the approximately 63,000 hectares of grazing land subject to the 10-year lease agreement. The termination of the lease agreement was effective in the fourth quarter of 2013. We commenced an arbitration proceeding against Marfrig Argentina and Marfrig Alimentos in 2014 claiming unpaid invoices and indemnification for early termination for US$ 23,000,000. See “Item8. Financial Information - Legal and Administrative Proceedings”.

We currently own 60,713 hectares of cattle grazing land located in the Argentine provinces of Corrientes, Santa Fe and Buenos Aires. In 2016 we entered into new lease agreements with third party cattle farmers for a total area of 27,216 hectares.

During May 2013, Adecoagro entered into an agreement to sell the Mimoso farm and Lagoa do Oeste farm located in Luis Eduardo Magalhaes, Bahia, Brazil. The farms have a total area of 3,834 hectares of which 904 hectares are planted with coffee trees. In addition, we entered into an agreement whereby the buyer will operate and make use of 728 hectares of existing coffee trees in our Rio de Janeiro farm for an 8-year period. The total consideration for this transaction was $24 million, of which $6.0 million were collected as of December 31, 2013 and the balance to be paid in three annual installments in 2014, 2015 and 2016. Pursuant to the terms of the agreement, we will retain ownership of the coffee trees, which are expected to have an estimated useful life of 8 years in respect of the Rio de Janeiro farm after expiration of the agreement. We do not expect our coffee business to generate sales in future periods.

Storage and Conditioning

Our storage and conditioning facilities in the farming business allow us to condition, store and deliver our products with no third-party involvement. All our crop storage facilities are located close to our farms, allowing us to (i) reduce storage and conditioning costs; (ii) reduce freight costs since we only commence moving the product once the final destination is determined, whether locally or to a port, (iii) capitalize on fluctuations in the prices of commodities; and (iv) improve commercial performance by mixing grains to avoid discounts due to sub-standard quality.

We own five conditioning and storage facilities for grains and oilseeds, with a total built storage capacity of 28,800 tons. Our largest storage facility, with a capacity of 18,700 tons, is located in the province of Santa Fe, Argentina, in the town of Christophersen. It has a railway loading terminal, providing logistical flexibility and savings. We also own in Argentina three rice mills, which account for over 116,854 tons of total storage capacity, and two additional storage and conditioning facilities for rice handling, with a total storage capacity of 5,700 tons.

Set forth below is our storage capacity as of December 31, 2017 :



Storage Capacity		Nominal
Crops (tons)		28,806
Rice (tons)		116,854

In addition, we use silo bags to increase our storage capacity at low cost. Silo bags are an efficient low-cost method for grain storage. As crops are harvested, they are placed inside large polyethylene bags that can be left in the fields for approximately 12 months without damaging the grain. Each silo bag can hold up to 180 to 200 tons of product, depending on the type of grain. During the 2016/2017 harvest year, we stored approximately 27% of our grain production through silo bags.

Silo bags offer important operational and logistic advantages, such as (i) low cost storage; (ii) flexible and scalable capacity that is adapted based on production and commercial strategy; (iii) harvest efficiencies since the bags are filled on the field allowing for a non-stop harvest operation regardless of any logistical setbacks; (iv) logistic efficiencies leading to lower freight since grains are transported during the off-season when truck fares are lower; (v) increased ability to monitor quality and identify different grain qualities, since grains are stored in relatively small amounts (200 tons) and easily monitored, maximizing our commercial performance; and (vi) better use of our drying capacity throughout the year. Silo bags are commercially accepted. Grains stored in silo bags can be sold in the market, and if such grains are to be delivered post harvest, we charge storage costs. Additionally, we can store grains to be used as seed during the following season (soybeans, rice and wheat), achieving quality seed management. We have expanded the use of silo bags from Argentina to our operations in Brazil and Uruguay.

Grain conditioning facilities at our farms allow our trade desk to optimize commercialization costs and to achieve commercial quality standards and avoid price discounts. These facilities are operated to dry, clean, mix and separate different qualities of each grain in order to achieve commercial standards. By mixing different batches of a same grain type, differentiated by quality parameters such as moisture, percentage broken, and percentage damaged, among others, we can achieve commercial standards without having to discount a lower-quality stand-alone batch. Efficient management of these facilities results in a lower cost for grain conditioning and a better achievable price.

Set forth below is our drying capacity as of December 31, 2017 :



Drying Capacity		Nominal
Crops (tons/day)		2,400
Rice (tons/day)		5,300

Some grains such as soybeans, wheat and rice, can be used for seed during the next planting season. We produce almost 97% of the seed used for planting these crops in our fields. The seed is stored in silo bags and/or grain facilities, where it can be processed, classified, and prepared for planting during next crop season. A deep survey and monitoring process is carried out in order to evaluate, control and deliver high quality seed to our farms.

The rest of our seed requirements are purchased from seed suppliers in order to incorporate new enhanced varieties into our planting plan.

Marketing, Sales and Distribution

Crops

In Argentina, grain prices are based on the market prices quoted on Argentine grain exchanges, such as the Bolsa de Cereales de Buenos Aires and the Bolsa de Cereales de Rosario , which use as a reference the prevailing prices in international grain exchanges (including CBOT and ICE-NY). In Uruguay, local prices are based on an export parity (during harvest) or import parity in the case of post-harvest sales, which, in each case, take into account the prices and costs associated with each market. In Brazil, the grain market includes the Bolsa de Mercadorias e Futuros (Brazilian Grain Exchange), which, as in Argentina, uses as a price reference the international grain exchanges (including CBOT and ICE-NY). Prices are quoted in relation to the month of delivery and the port in which the product is to be delivered. Different conditions in price, such as terms of storage and shipment, are negotiated between us and the end buyer. We negotiate sales with the top traders and industrial companies in our markets. We also engage in hedging positions by buying and selling futures and options in commodities exchanges, including the Chicago Board of Trade, the New York Board of Trade, BM&FBOVESPA and the Mercado a Término de Buenos Aires (MATBA).

Soybeans: Our soybean crop is sold to local companies and is ultimately exported or diverted to the crushing industry. Approximately 73% of the soybean crop was hedged pre-harvest, by forward sales and sales in the futures markets. Harvest and post-harvest sales are a function of the export market versus local premiums paid by crushers (oil, meal and biodiesel) and logistics considerations. Our five largest customers comprised approximately 63% of our sales in the year ended December 31, 2017. In Argentina, the applicable export tax rate on soybeans is 30%. There are no export taxes in Brasil and Uruguay.

During 2017 we sold more than 39,000 tons (approximately 16% of our production) certified by the Round Table on Responsible Soybean (“RTRS”), capturing premiums over market value. RTRS is a civil organization that promotes responsible production, processing, and trading of soy on a global level. During 2012 and 2013 we also certified our silo plant in Argentina under 2BSvs (Biomass, Biofuels Sustainability Voluntary Scheme), based on sustentability criteria of the European Directive 2009/28/EC.

Corn: Approximately 85% of our total production is exported. All of our Brazilian production is sold domestically for regional consumption. Approximately 19% of the corn crop was hedged pre-harvest. Approximately 3% of our corn production was destined for special products such as corn seed and popcorn. Our four largest customers comprised approximately 50% of our sales in the year ended December 31, 2015.

Wheat: Approximately 40% of our production is destined for local market and 60% is exported. Quality segregation allows us to negotiate premiums with the millers and export market. Brazil is the main importer of Argentine wheat. Our four largest customers comprised approximately 62% of our sales in the year ended December 31, 2017.

Sunflower: Our sunflower production from Argentina is sold to local companies. Sales are made pursuant by production agreements of sunflower for confectionary, high oil content sunflower and seed. Our three largest customers comprised 93% of our sales in the year ended December 31, 2017.

Cotton: We typically make pre-harvest sales of cotton fiber produced in Brazil and Argentina into the export market. Sales for the textile industry are based on domestic demand and premiums. Our five largest customers comprised approximately 83% of our sales in the year ended December 31, 2017. Cotton seed is sold in the domestic market to meet feed demand.

Rice: Rough rice is available for sale commencing after the harvest of each year. White rice availability is based on our milling capacity. 67% of our total rice production is sold into the export market, with the remainder sold in Argentina in the retail market. We export approximately 21% of our exported volume to the Middle East, 73% to other Latin American countries, and the remainder is exported to Africa. . We sell approximately 33% of our rice in the Argentine retail market through two brands we own that have a 15.9% market share. Local rice prices are driven by regional supply demand and exchange rate in Brazil. Our five largest customers for rice comprised approximately 67% of our sales in the year ended December 31, 2017.

Dairy : During most of 2017, we sold our entire raw milk production to four dairy producers. These companies manufacture a range of consumer products sold in Argentina and abroad. We negotiate the price of raw milk on a monthly basis in accordance with domestic supply and demand with these companies. The price of the milk we sell is mainly based on the percentage of fat and protein that it contains and the temperature at which it is cooled. The price we obtain for our milk also rises or falls based on the content of bacteria and somatic cells.

Sugar, Ethanol and Energy

Sugarcane

Sugarcane is the most efficient agricultural raw material used in the production of sugar and ethanol. Ethanol produced from sugarcane is highly regarded as an environmentally friendly biofuel with the following characteristics.

Renewable: Sugarcane ethanol, unlike coal or oil, which can be depleted, is produced from sugarcane plants that grow back year after year, provided that they are replanted every six to eight years.

Sustainable: Sugarcane only needs to be replanted every five to seven years, as a semi-perennial crop. It can be harvested without uprooting the plant, and therefore its cultivation has less of an impact on the soil and the surrounding environment. The mechanization of the harvesting and planting process further improves sustainable agricultural management.

Energy Efficient: Sugarcane is highly efficient in converting sunlight, water and carbon dioxide into stored energy. The energy output of sugarcane is equal to nine times the energy input used in the production process, whereas the energy output of corn ethanol is only about 1.9 to 2.3 times the energy input used in its production process. Sugarcane produces seven times more energy compared to corn used for ethanol production.

Low Carbon Emissions: Compared to gasoline, sugarcane ethanol reduces greenhouse gases by more than 61%, which is the greatest reduction of any other liquid biofuel produced today in large quantities. Ethanol made from sugarcane is deemed an advanced biofuel by the United States EPA.

Synergies: The main raw material used in the production of electricity in sugar mills is bagasse, which is a by-product of the sugarcane milling process, allowing for a renewable source of co- generated electricity.

Sugarcane is a tropical grass that grows best in locations with stable, warm temperatures and high humidity, although cold and dry winters are an important factor for the sucrose concentration of sugarcane. The climate and topography of the center-south region of Brazil is ideal for the cultivation of sugarcane and accounts for approximately 85% of Brazil’s sugarcane production.

As of December 31, 2017, our sugarcane plantations consisted of 137,697 hectares of sugarcane planted in the center-south region of Brazil. Approximately 94% of our sugarcane is planted over land leased through agricultural partnerships. Under these agreements, our partners lease land to us for periods of between one and two sugarcane cycles, equivalent to periods of between 10 to 12 years, on which we cultivate the sugarcane. Lease payments are based on the market value of the sugarcane set forth by the regulations of the State of Sao Paulo Sugarcane, Sugar and Alcohol Growers Counsel ( Conselho dos Produtores de Cana-de-Açúcar, Açúcar e Álcool do Estado de Sao Paulo , or “Consecana”). We planted and harvested approximately 89% of the total sugarcane we milled during 2017, with the remaining 11% purchased directly from third parties at prices also determined by the Consecana system, based on the sucrose content of the cane and the prices of sugar and ethanol. The following table sets forth a breakdown during the time periods indicated of the amount of sugarcane we milled that was grown on our owned and leased land or purchased from third parties:



	Year Ended December 31,
	2017	2016		2015
	(In tons)
Grown on our owned and leased land	9,068,844	10,164,671		6,418,274
Purchased from third parties	1,172,959	949,837		814,554
Total	10,241,803	11,114,509	960	7,232,828

Sugarcane Harvesting Cycle

The annual sugarcane harvesting period in the center-south region of Brazil begins in April and ends in November/December of each year. In Mato Grosso do Sul, where our cluster is located, the weather pattern is less seasonal than in Sao Paulo. Our wet season is dryer and our dry season is more humid than traditional sugarcane regions. As a consequence of this weather pattern, the sugar content (TRS) gap between the beginning and the end of the year compared to the peak of the harvest is much smaller than in Sao Paulo. This allows us to grow and harvest sugarcane year round with a minimal impact on sugar content (TRS).

Since the beginning of the 2016/17 harvest year we implemented a “non-stop” or “continuous harvest”. This means that we will harvest and crush sugarcane year-round, without stopping during the traditional off-season. This new strategy will allow us to increase annual sugarcane milling and sugar, ethanol and energy production by approximately 10%. Another benefit of the system is that we will be producing ethanol in the off-season, when market prices usually have a high premium to prices at harvest. In addition, cogeneration efficiency is related to harvested volumes and unrelated to TRS, enabling us to utilize our cogeneration potential during the whole year. Considering that approximately 85% of total costs are fixed, this model will result not only in higher revenues but also in the dilution of our fixed costs .

We plant several sugarcane varieties, depending on the quality of the soil, the local microclimate and the estimated date of harvest of such area. Once planted, sugarcane can be harvested, once a year, up to six to eight consecutive years. With each subsequent harvest, agricultural yields decrease. The plantations must be carefully managed and treated during the year in order to continue to attain sugar yields similar to a newly-planted crop.

We believe we own one of the most mechanized harvesting operations in Brazil. Our sugarcane harvesting process is currently 98% mechanized (100% at Angélica and Ivinhema mills and 86% at UMA mill) and the remaining 2% is harvested manually. Mechanized harvesting does not require burning prior to harvesting, significantly reducing environmental impact when compared to manual harvesting. In addition, the leaves that remain on the fields after the sugarcane has been harvested mechanically create a protective cover for the soil, reducing evaporation and protecting it from sunlight and erosion. This protective cover of leaves decomposes into organic material over time, which increases the fertility of the soil. Mechanized harvesting is more time efficient and has lower costs when compared to manual harvesting. Sugarcane is ready for harvesting when the crop’s sucrose content is at its highest level. Sucrose content and sugarcane yield (tons of cane per hectare) are important measures of productivity for our harvesting operations. Geographical factors, such as soil quality, topography and climate, as well as agricultural techniques that we implement, affect our productivity. Since most sugar mills produce both sugar and ethanol in variable mixes, the industry has adopted a conversion index for measuring sugar and ethanol production capacity, the Total Recoverable Sugar (“TRS”) index, which measures the amount of kilograms of sugar per ton of sugarcane.

During the 2017 harvest, our mills harvested sugarcane with an average TRS content of 127 kg/ton and an average yield of 85.1 tons of sugarcane per hectare.

Once the sugarcane is harvested, it is transported to our mills for inspection and weighing. We utilize our own trucks and trailers for transportation purposes. The average transportation distance from the sugarcane fields to the mills is approximately 28 kilometers at UMA and 33 kilometers at Angélica and Ivinhema.

Our Mills

We currently own three sugar mills in Brazil, UMA, Angélica and Ivinhema. Our mills produce sugar, ethanol and energy, and have the flexibility to adjust the production mix between sugar and ethanol, to take advantage of more favorable market demand and prices at given points in time. As of December 31, 2017, our sugar mills had a total installed crushing capacity of 12.3 million tons of sugarcane, of which 10.5 million tons correspond to our sugarcane cluster in Mato Grosso do Sul, Brazil. As of December 31, 2017, we concluded the 2017 harvest crushing an aggregate volume of 10.2 million tons of sugarcane.

The Usina Monte Alegre mill (“UMA”) is located in the state of Minas Gerais, Brazil, and has a sugarcane crushing capacity of 1.2 million tons per year, full cogeneration capacity and an associated sugar brand with strong presence in the regional retail market ( Açúcar Monte Alegre ). We plant and harvest 99.8% of the sugarcane milled at UMA, with the remaining 0.2% acquired from third parties. On December 31, 2017, UMA concluded its harvest operations for the 2017 season, crushing 1.1 million tons of sugarcane.

Angélica is an advanced mill, which we built in the state of Mato Grosso do Sul, Brazil, with a total sugarcane crushing capacity of 5.5 million tons per year. Angélica was completed in 2010 and is equipped with two modern high pressure boilers and three turbo-generators with the capacity to use all the sugarcane bagasse by-product to generate approximately 65 MW of electricity that is used to power the mill with an excess of 64MW available for sale to the power grid. Angélica has the flexibility to vary the product slate between 60% to 40% for either product.

During mid 2011, we started the construction of our third mill, Ivinhema, located in the state of Mato Grosso do Sul, approximately 45 kilometers south of our existing Angelica mill, in order to complete our planned sugarcane cluster in that region. The construction of the first phase of the Ivinhema mill was completed during the beginning of 2013 reaching 2.0 million tons of sugarcane crushing capacity, and milling operations commenced on April 25, 2013. During early 2014, we began the construction of the second phase of the Ivinhema, adding 3.0 million tons of additional nominal crushing capacity. The investment consisted of expanding the milling equipment, building a new fluidized bed boiler, two new electrical generators and expanding the sugar factory and ethanol distillery, as well as expanding the sugarcane plantation and agricultural machinery.The construction was completed during mid 2015. Ivinhema now has a total milling capacity of 5.6 million tons per year. The mill is equipped with state-of-the-art technology including full cogeneration capacity, flexibility to produce sugar and ethanol and fully mechanized agricultural operations. Ivinhema has capacity to produce up to 331,250 tons of sugar, 331,250 cubic meters of ethanol and 389,550 MWh of energy exports.

We are currently undertaking an expansion project to increase the nominal crushing capacity by 30%. The project will be implemented during the next five years in two phases:

We plant and harvest 87% of the sugarcane milled at our cluster, with the remaining 13% acquired from third parties. On December 31, 2017, our sugarcane cluster concluded its harvest operations for the 2017 season, crushing 9.1 million tons of sugarcane.

Our Main Products

The following table sets forth a breakdown of our production volumes by product for the years indicated:



	Year Ended December 31,
	2017	2016	2015
Sugar (tons)	567,068	701,060	464,929
Ethanol (cubic meters)	434,015	422,395	361,001
Energy (MWh exported)	712,425	751,037	553,090

The following table sets forth our sales for each of the sugarcane by-products we produce for the years indicated:



	Year Ended December 31,
	2017	2016	2015
	(In thousands of $)
Sugar	305,688	330,895	177,801
Ethanol	241,650	211,451	176,150
Energy	62,218	53,995	46,671
Other	1,061	351	—
Total	610,617	596,692	400,622

Sugar

As of December 31, 2017 our sugar production capacity was approximately 3,550 tons per day which, in a normal year of 6,819 hours of milling, results in an annual sugar maximum production capacity of over 1,008,643 tons of sugar. The increased capacity is the result of enhanced operational efficiencies and the completion of the second phase of the Ivinhema mill. In 2017, we produced 567,068 tons of sugar, compared to 701,060 tons of sugar in 2016 and 464,929 tons of sugar in 2015.

We produce two types of sugar: very high polarization (“VHP”) standard raw sugar and white crystal sugar. VHP sugar, a raw sugar with a 99.3% or higher sucrose content, is similar to the type of sugar traded in major commodities exchanges, including the standard NY11 contract. The main difference between VHP sugar and NY11 raw sugar is the sugar content of VHP sugar, and it therefore commands a price premium over NY11 raw sugar. Crystal sugar is a non-refined white sugar (color 150 ICUMSA) produced directly from sugarcane juice.

Sugar sales comprised 26%, 38% and 33% of our total consolidated sales in 2015, 2016 and 2017, respectively.

Ethanol

As of December 2017, our ethanol production capacity was approximately 2,900 cubic meters per day which, in a normal year of 6,819 hours of milling, results in maximum annual production capacity of over 823,938 cubic meters of ethanol. The increased capacity is the result of enhanced operational efficiencies and the completion of the second phase of the Ivinhema mill. In 2015 we produced 361,001 cubic meters of ethanol, compared to 422,395 cubic meters in 2016 and 434,015 cubic meters in 2017.

We produce and sell two different types of ethanol: hydrous ethanol and anhydrous ethanol (as further described in “-Production Process-Ethanol”). Ethanol sales comprised 26% of our total consolidated sales in 2015, 24% of our total consolidated sales in 2016 and 26% of our total consolidated sales in 2017.

Cogeneration

We generate electricity from sugarcane bagasse (the fiber portion of sugarcane that remains after the extraction of sugarcane juice) in our three mills located in Brazil. As of December 31, 2017, total installed cogeneration capacity reached 232MW, of which 161MW are available for resale to third parties after supplying our mills’ energy requirements. The ability to generate electricity from the by-product of the sugarcane crushing process on a large enough scale to fully power a mill with excess electricity being available is referred to as having full cogeneration capacity. Our three mills are duly licensed by the Agência Nacional de Energia Elétrica (“ANEEL”) to generate and sell electricity. During the year ended December 31, 2017 , 2016 and 2015 we sold 860,814 MWh, 1,028,323 MWh, and 607,532 MWh to the local electricity market, comprising 6%, 5%, and 13% of our consolidated sales respectively.

Production Process

Sugar. There are essentially five steps in the sugar manufacturing process. First, we crush the sugarcane to extract the sugarcane juice. We then treat the juice to remove impurities. The residue is used to make an organic compost used as fertilizer in our sugarcane fields. The juice is then boiled until the sugar crystallizes, and sugar is then separated from the molasses (glucose which does not crystallize) by centrifugation. The resulting sugar is dried and sent to storage and/or packaging. We use the molasses in our production of ethanol.

Ethanol. Ethanol is produced through the fermentation of sugarcane juice or diluted molasses. Initially, we process the sugarcane used in ethanol production the same way that we process it for sugar production. The molasses resulting from this process is mixed with clear juice and then with yeast in fermentation vats, and the resulting wine has an ethanol content of approximately 8% to 10%. After the fermentation is complete, the yeast is separated for recycling in the ethanol production process. We distill the wine to obtain hydrous ethanol. In order to produce anhydrous ethanol, hydrous ethanol undergoes a dehydration process in a molecular sieve. The liquid remaining after these processes is called vinasse, which we further process to make liquid organic fertilizer that we use in our sugarcane plantations.

Cogeneration. Sugarcane is composed of water, fibers, sucrose and other sugars and minerals. When the sugarcane goes through the milling process, we separate the water, sugar and minerals from the fibers or sugarcane bagasse. Bagasse is an important sub-product of sugarcane, and it is used as fuel for the boilers in our mills. Sugarcane bagasse is burned in our state-of-the-art boilers to produce high pressure steam (67 atm) which is used in our high-efficiency turbo-generators to generate electricity to power our mills. The excess electricity, about 66% of production, is sold to the national power grid.

The following flow chart demonstrates the sugar, ethanol and cogeneration production process:

Historically, the energy produced by Brazilian mills has not been price competitive when compared to the low-cost Brazilian hydro-electricity, which accounts for almost 90% of the country’s electricity matrix. Consequently, the majority of the groups in the sugar and ethanol sector have not invested in expanding their energy generation for sale, and the majority of the mills were constructed with less efficient, low-pressure boilers. Since 2000, the Brazilian economy has experienced significant growth, which in turn has resulted in increased demand for energy.

However, hydro- and thermo-electricity have not been able to keep pace for the following reasons: (1) new hydro-electric plants are located in regions (such as the Amazon) distant from consumption centers; (2) significant lead-time is required to construct new hydro- and thermo-electric plants; (3) significant investments are required for transmission lines, pipelines (for natural gas used in thermo-electric plants) and barges; (4) significant environmental costs are associated with both types of electricity generation; and (5) prices for fuel (natural gas) used in the generation of thermo-electricity have increased resulting in greater dependence on Bolivia (Brazil’s principal natural gas supplier). As a result, energy prices in Brazil have been increasing, and alternative sources, such as the electricity from the cogeneration of sugarcane bagasse, have become increasingly competitive and viable options to satisfy the increasing energy demands. Sugarcane bagasse cogeneration is particularly competitive since sugarcane-based electricity is generated following the sugarcane harvest and milling which occurs during the dry season in Brazil, when hydroelectric generation is at its lowest levels.

The main advantages of energy generated by sugarcane bagasse are:

It is a clean and renewable energy;

It complements hydropower, the main source of Brazilian energy, as it is generated during the sugarcane harvest period (April to December) when water reservoirs are at their lowest level;

It requires a short period of time to start operations; and

It requires only a small investment in transmission lines when plants are located close to consumer centers.

As of December 2017, our total installed cogeneration capacity at our cluster and UMA mill was 216MW and 16MW respectively, of which 150MW and 12MW are available to sell to the market.

We believe that there is a high potential for growth in the generation of electricity, and we are prepared to make investments to the extent economically viable.

Storage and Conditioning

Our sugar and ethanol storage and conditioning facilities are located at our mill sites and allow us to deliver our products when they are ready to be commercialized with no third-party involvement. Having such facilities at mill sites allows us to (i) reduce storage and conditioning costs; (ii) reduce freight costs since we only commence moving the product once the final destination is determined, whether locally or to a port; and (iii) capitalize on fluctuations in the prices of sugar and ethanol.



Nominal Storage Capacity	Cluster	UMA	Total
Ethanol (cubic meters)	160,000	27,000	187,000
Sugar (tons)	155,000	36,400	191,400

Marketing, Sales and Distribution

Sugar: We sell sugar both in the domestic and the international markets at prices that depend on our price parity calculation, which considers each market’s price and the associated costs. Prices for the sugar we sell in Brazil are set, using an index calculated by the Agriculture College of the University of São Paulo ( Escola Superior de Agricultura Luiz de Queiroz , or “ESALQ”), with a premium in the state of Minas Gerais due to the use of our regional brand, “Monte Alegre,” the market leader in the southern part of that state. Prices for the sugar we export are set in accordance with international market prices. International prices for raw sugar are established in accordance with the NY11 futures contracts. Our largest six customers for sugar comprised approximately 99% of our sales in the period ended December 31, 2017.

Ethanol: Almost all of our ethanol sales are in the domestic Brazilian market given the increasing demand generated from the increase in flex-fuel vehicles in Brazil and better ethanol parity at the gas stations. Around 41% of our ethanol sales are made through formal agreements. The remaining volumes are sold through daily sale orders through specialized brokerage firms that act in the ethanol domestic market, whose role is to intermediate the sale of ethanol between the ethanol producers and the domestic ethanol distribution companies, the prices for these transactions are set using the ESALQ and the futures and commodity exchange of the BM&FBOVESPA indices for ethanol as a reference. Our largest eight customers by volume comprised approximately 78% of our sales in the period ended December 31, 2017.

Cogeneration: We also sell electricity co-generated at our sugar and ethanol mills to local electricity commercialization companies and directly to the spot market. Sales are made in the spot market with brokers, through government auctions, to distributors and through long-term contracts. Our largest four customers comprised 72% of our sales revenues in the period ended December 31, 2017.

The Brazilian energy agency, ANEEL, has organized yearly auctions for alternative energy and for renewable sources at favored rates. As a hedging strategy, we sell the electricity production of our mills through long-term contracts adjusted for inflation by reference to the National Index of Consumer Prices (“IPCA”).

In 2009, UMA entered into a 10-year agreement with CEMIG for the sale of approximately 46,200 MWh during the harvest periods each year (May to November of each year) at a rate of R$ 233.93 per megawatt hour in 2015. In 2009, Angélica sold energy in a public auction carried out by Camara de Comercialização de Energia Elétrica (“CCEE”), Angélica entered into a 15-year agreement with CCEE for the sale of 87,600 MWh per year at a rate of R$232.10 per MWh (price for year 2015). In August 2010, Angélica participated in a public auction, whereupon Angélica entered into a second 15-year agreement with CCEE starting in 2011, for the sale of 131,400 MWh per year at a rate of R$206.30 per MWh (price for year 2015). The delivery period for the first auction is May to December and for the second the delivery period starts in April and ends in November of each year. The rates under both agreements are adjusted annually for inflation by reference to the IPCA. In August 2013, Ivinhema sold 87,600 MWh in an auction carried out by CCEE at R$146.08 per MWh. This volume will start to be delivered in 2018 and its price is adjusted annually by IPCA.

Land Transformation

Land transformation is an important element of our business model and a driver of value creation. Through land transformation, we optimize land use and increase the productive potential and value of our farmland. Our land transformation model consists of changing the use of underutilized or undermanaged agricultural land to more profitable cash generating agricultural activities, such as turning low cash-yielding cattle pasture land into high cash-yielding croppable land, allowing profitable agricultural activities, such as crop, rice and sugarcane production.

Since our inception, we have successfully identified multiple opportunities for the acquisition of undeveloped or undermanaged farmland with high potential for transformation. During the fourteen-year period since our inception, we have effectively put into production over 169,317 hectares that were previously undeveloped or inefficiently managed and are undergoing the transformation process.

The land transformation process begins by determining the productive potential of each plot of land. This will vary according to soil properties, climate, productive risks, and the available technology in each specific region. Before commencing the transformation process, we perform environmental impact studies to evaluate the potential impact on the local ecosystem, with the goal of promoting environmentally responsible agricultural production and ecosystem preservation, thereby supporting sustainable land use. We do not operate in heavily wooded areas or primarily wetland areas.

The transformation process for underdeveloped and undermanaged land requires us to make initial investments during a period of one to up to three years, and the land reaches stable productive capability the third to seventh year following commencement of the land transformation activities.

We are engaged in three different categories of the land transformation process, which are defined by the previous use of the land:

(i) Undeveloped land (savannahs and natural grasslands): This is the most drastic transformation phase since it demands both physical and chemical transformation of the soil. First, the land is mechanically cleared to remove native vegetation. The soil is then mechanically leveled for agricultural operations: in the case of land being transformed for rice production, this process involves heavy land movements and systematization required for irrigation and drainage channels, roads and bridges. In the case of land destined for sugarcane plantations, land movements will also be necessary for the construction of terraces to prevent the excess of water runoff. Certain soils must be chemically treated and corrected by incorporating nutrients such as limestone, gypsum and phosphorous, as is the case of the Brazilian ‘Cerrado’. Soil correction is not required in Argentina or Uruguay due to the natural fertility of the soil. Pesticides and fertilizers are then applied to the soil in preparation for planting. In the case of land destined for crop production (grains and oilseeds), soybean, which is sometimes referred to as a colonizing crop, is usually planted during the first years due to its resistance to pests, weeds and extreme weather and soil conditions. Thereafter, the land will enter into a crop rotation scheme to reduce the incidence of plague and disease and to balance soil

nutrients. In the case of rice and sugar cane, which are produced in a monoculture system, there is no colonizing crop or rotation involved. Intensive plague and weed controls and additional soil correction will take place during these first three to five years. Land productivity or yields, measured in tons of soybean or other crops per hectare, will be initially low and will gradually increase year by year. During the first five to seven years, the yields will increase at high and sustained rates. After the seventh year we consider the land developed as yield volatility is reduced and growth is only achievable at marginal rates. Since our inception in 2002, we have put into production 67,892 hectares of undeveloped land into productive croppable land.

(ii) Undermanaged or underutilized farmland (cultivated pastures and poorly managed agriculture): This transformation process is lighter than the one described above since it does not require the initial mechanical clearing of vegetation or land leveling. Only in the case of land being prepared for rice production will leveling be required for efficient flood-irrigation. The transformation of cattle pastures or poor agriculture in the Brazilian ‘Cerrado’ will begin with soil correction and soil tillage in preparation for planting of the first soybean or sugarcane crop. The process will then continue as described in the case above. Land productivity or crop yields will grow at high rates during the first three to five years of the transformation process and will then commence to stabilize and grow at marginal rates, at which point we consider the land developed. Since our inception in 2002 we have put into production 101,425 hectares of undermanaged or underutilized farmland into croppable land.

(iii) Ongoing transformation of croppable land: The application of efficient and sustainable crop production technologies and best practices such as “no-till”, crop rotations, integrated pest and weed management and balanced fertilization, among others, incrementally increases soil quality and land productivity over time, maximizing return on invested capital and increasing the land value of our properties. Our entire farmland portfolio is constantly undergoing this phase of land transformation. During the 2016/2017 harvest year, we operated 132,428 hectares of own developed farmland which were enhanced by the use of best productive practices and technology.

In each of these categories of transformation, the metric the company uses to track the level and analyze the progress of the transformation process is the level and tendency of crop yields and the number of years the land has been under crop production. Consequently, the process of land transformation is evidenced by the results of the activities within our other business segments, primarily our crops, rice and sugarcane segments. Accordingly the costs associated with the transformation process described above are allocated within these other business segments. As a result, there may be variations in our results from one season to the next according to the amount of farmland undergoing transformation and the amount of land sold and our ability to identify and acquire new farmland.

Our land transformation segment seeks not only to profit from crop and rice cultivation, but also from the opportunistic disposition of successfully transformed farmland. We strategically sell farms that have reached productive maturity with marginal potential for further productivity increases (years three to seven after commencing the land transformation process) to realize and monetize the capital gains arising from the land transformation process. Land transformation proceeds are in turn reinvested in the purchase of strategic farmland with potential for transformation and appreciation. The rotation of our land portfolio allows us to allocate capital efficiently. Since 2006 we have had a solid track record of selling farmland and achieving profitable returns. During the last eleven years, we have sold 20 farms, generating capital gains of approximately $190 million.

These capital gains are generated by three main factors:

(i) the acquisition of land at opportunistic prices below the market value or fair value of the land;

(ii) the land transformation and ongoing land transformation process described above enhances the productivity and profitability of land, ultimately increasing the value of the land; and

(iii) general market appreciation of land driven by increase in commodity prices and supply and demand dynamics in the land market. In this regard, during the last 30 years, since 1977, farmland prices in Argentina’s core production region have increased an average of 8.1% per year according to data published by Margenes Agropecuarios . The value of the farms we sold between 2006 and 2015 as well as our overall land portfolio, has been positively impacted by this external factor.

We believe we are one of the most active players in the land business in South America. Since our inception in 2002, we have executed transactions for the purchase and sale of land for over $680 million. Our business development team is responsible for analyzing, selecting, acquiring and selling land. The team has gained extensive expertise in evaluating and acquiring farmland throughout South America, and has a solid understanding of the productivity potential of each region and of the potential for land transformation and appreciation. Since 2002, the team has analyzed over 11 million hectares of farmland with a total value of approximately $16 billion. We have developed a methodology to analyze investment opportunities, taking into account price, transformation potential, productive model, financial projections, and investment requirements, among others. Our analysis also

employs advanced information technology, including the use of satellite images, rain and temperature records, soil analyses, and topography and drainage maps. From time to time, we may leverage our favorable position in and knowledge of the land market to engage in opportunistic buying and selling transactions.

The following table sets forth our acquisitions and divestitures since our inception:



	Acquisition	Divestitures	Total Land Holdings
Year Ended December 31,	(In hectares)
2002	74,898	—	74,898
2003	—	—	74,898
2004	34,659	—	109,557
2005	22,262	—	131,819
2006	5,759	3,507	134,071
2007	113,197	8,714	239,274
2008	43,783	4,857	278,200
2009	—	5,005	273,195
2010	14,755	5,086	282,864
2011	12,992	2,439	293,417
2012	—	9,475	283,942
2013	—	14,176	269,766
2014	—	12,887	257,036
2015	—	10,905	246,139
2016	—	—	246,139
2017	—	—	246,139

Our Farms

Appraisal of Farms. In September 2016, in order to assess the market value of rural properties in Brazil, Argentina and Uruguay, we requested an appraisal by Cushman & Wakefield Argentina S.A., independent real estate valuation firm knowledgeable about the agriculture industry and the local real estate market. As part of these appraisals, the value of each of our properties was determined using the sales comparison approach taking into account current offerings and prices buyers had recently paid for comparable sites, adjusted for the differences between comparable properties and the subject property to arrive at an estimate of the value. The major elements of comparison used to value the properties included the property rights conveyed, the financial terms incorporated into the transaction, the conditions or motivations surrounding the sale, changes in market conditions since the sale, the location of the real estate and the physical characteristics of the property.

The above mentioned valuations assumed good and marketable title to subject properties, which were assumed to be free and clear of all liens and encumbrances. The valuation did not include site measurements and no surveys of the subject properties were undertaken. In addition, the valuations also assumed (a) responsible ownership and competent management of the subject properties; (b) there were no hidden or unapparent conditions of the subject properties, subsoil or structures that render the subject properties more or less valuable; (c) full compliance with all applicable federal, state and local zoning and environmental regulations and laws and (d) all required licenses, certificates of occupancy and other governmental consents were or can be obtained and renewed for any use on which the value opinion contained in the appraisals is based. Unless otherwise stated in the appraisals, the existence of potentially hazardous or toxic materials that may have been used in the construction or maintenance of the improvements or may be located at or about the subject properties was not considered in arriving at the appraisal of value. These materials (such as formaldehyde foam insulation, asbestos insulation and other potentially hazardous materials) may adversely affect the value of the subject properties.

Cushman & Wakefield has informed us their assessment of the market value of our farmland as of September 30, 2017. According to Cushman & Wakefield, the market value of our farmland totaled $900.8 million, out of which $788.1 million correspond to the market value of our farmland in Argentina and Uruguay, and the remaining $112.6 million correspond to the market value of our farmland in Brazil. Net of minority interests in certain Argentine farms, the market value of our farmland totaled $715.3million. These valuations are only intended to provide an indicative approximation of the market value of our

farmland property as of September 30, 2017 based on then current market conditions. This information is subject to change based on a host of variables and market conditions.



Farm	State, Country	Gross Size (Hectares)	Current Use
El Meridiano	Buenos Aires, Argentina	6,302	Grains
Las Horquetas	Buenos Aires, Argentina	2,086	Grains & Cattle
San Carlos	Buenos Aires, Argentina	4,215	Grains
Huelen	La Pampa, Argentina	4,633	Grains
La Carolina ⁽²⁾	Santa Fe, Argentina	4,306	Grains & Cattle
El Orden ⁽²⁾	Santa Fe, Argentina	3,506	Grains & Cattle
La Rosa	Santa Fe, Argentina	4,087	Grains & Cattle
San Joaquín	Santa Fe, Argentina	37,273	Rice, Grains & Cattle
Carmen	Santa Fe, Argentina	10,021	Grains
Abolengo	Santa Fe, Argentina	7,473	Grains
Santa Lucia	Santiago del Estero, Argentina	17,495	Grains & Cattle
El Colorado	Santiago del Estero, Argentina	4,960	Grains
La Guarida ⁽¹⁾	Santiago del Estero, Argentina	7,880	Grains & Cattle
La Garrucha ⁽¹⁾	Salta, Argentina	1,839	Grains
Los Guayacanes ⁽¹⁾	Salta, Argentina	3,693	Grains
Ombú	Formosa, Argentina	18,321	Grains & Cattle
Oscuro	Corrientes, Argentina	33,429	Rice, Grains & Cattle
Itá Caabó	Corrientes, Argentina	22,888	Rice, Grains & Cattle
Alto Alegre	Tocantins, Brazil	6,082	Grains & Cotton
Conquista	Tocantins, Brazil	4,415	Grains & Cotton
Rio de Janeiro	Bahia, Brazil	10,012	Grains & Cotton
Bela Manhã	Mato Grosso do Sul, Brazil	381	Sugarcane
Ouro Verde	Mato Grosso do Sul, Brazil	679	Sugarcane
Don Fabrício	Mato Grosso do Sul, Brazil	3,302	Sugarcane
Takuarê	Mato Grosso do Sul, Brazil	489	Sugarcane
Agua Branca	Mato Grosso do Sul, Brazil	1,614	Sugarcane
Nossa Senhora Aparecida	Mato Grosso do Sul, Brazil	540	Sugarcane
Sapálio	Mato Grosso do Sul, Brazil	6,140	Sugarcane
Carmen (Agua Santa)	Mato Grosso do Sul, Brazil	146	Sugarcane
La Pecuaria	Duranzo, Uruguay	3,177	Grains
Doña Marina	Corrientes, Argentina	14,755	Rice
Total		246,139

(1) On June 2014, we completed the sale of a 49.0% interest in Global Anceo S.L.U and Global Hisingen S.L.U, two Spanish subsidiaries that owned La Guarida, La Garrucha and Los Guayacanes farms.

(2) On December 2015, we completed the sale of a 49% interest in Global Acamante S.L.U, Global Calidon S.L.U, Global Carelio S.L.U, and Global Mirabilis S.L.U, whose main underlying assets are El Orden and La Carolina

A substantial portion of our assets consists of rural real estate. The agricultural real estate market in Brazil, Argentina and Uruguay is particularly characterized by volatility and illiquidity. As a result, we may experience difficulties in immediately adjusting our portfolio of rural properties in response to any alterations in the economic or business environments. The volatility of the local market could affect our ability to sell and receive the proceeds from such sales, which could give rise to a material adverse effect

on our business, results of operations and financial condition. See “Item 3. Key Information-D. Risk Factors-Risks Related to Our Business and Industries-A substantial portion of our assets is farmland that is highly illiquid.”

Land Leasing and Agriculture Partnerships. We enter into operating lease agreements based on criteria regarding the quality and projected profitability of the property, as well as our production and yield objectives in the short or medium term. Generally, we become aware of farms available for lease directly through the owners of farms near our farms and in some cases through regional brokers.

We tend to be more open to leasing farmland for sugarcane production than for our farming businesses, where we own the majority of the land that we farm. We lease land for our sugarcane production primarily because leases in this sector are long term, lasting between one or two sugarcane cycles (with each cycle lasting generally 6 years), which allows us to implement and reap the productivity benefits of our land transformation strategies. Sugarcane lease payments are established in terms of tons of sugarcane per hectare, depending on the productivity of the land in terms of tons per hectare and sucrose content per hectare and also on the distance from the land to the mill. Sugarcane prices are based on the market value of the sugarcane set forth by the regulations of the State of Sao Paulo Sugarcane, Sugar and Alcohol Growers Counsel (Conselho dos Produtores de Cana-de-Açúcar, Açúcar e Álcool do Estado de Sao Paulo, or “Consecana”). Given the strategic location of our mills in the region and the inherent inefficiency of growing crops other than sugarcane in this region, we expect to be able to renew our leases for the sugarcane farmland with minimal issues.

With respect to our farming business, the initial duration of lease agreements is generally one harvest year. Leases of farmland for production of grains include agreements with both fixed and variable lease payments in local currency or U.S. dollars per hectare.

Land Management. We manage our land through an executive committee composed of a country manager, regional manager, farm manager and members of the Technology Adecoagro Group (“TAG”) that meet on a monthly basis. We delegate individual farm management to farm managers, who are responsible for farm operations and receive advisory support from TAG to analyze and determine the most suitable and efficient technologies to be applied. Our executive committee establishes commercial and production rules based on sales, market expectations and risk allocation, and fulfilling production procedures and protocols.

Following an acquisition of property, we make investments in technology in order to improve productivity and to increase its value. Occasionally when we purchase property, a parcel of the property is sub-utilized or the infrastructure may be in need of improvement, including traditional fencing and electrical fencing, irrigation equipment and machinery, among other things.

Property, Plant and Equipment

In addition to our farmland, we also own the following principal industrial facilities:



Facility	Province, Country	Relevant Operational Data	Current Use
“Christophersen”	Santa Fe, Argentina	18,700 tons of storage capacity. 2,400 tons per day of drying capacity	Seedbed and stockpiling plant ⁽¹⁾
“Semillero Itá Caabó”	Corrientes, Argentina		Rice genetic improvement program
“Molino Ala — Mercedes”	Corrientes, Argentina	Installed capacity of 4,682 tons of white rice monthly, and husk rice drying capacity of 2,400 tons per day	Rice processing and drying plant
“Molino Ala — San Salvador”	Entre Ríos, Argentina	Installed capacity of 5,208 tons of white rice monthly, and husk rice drying capacity of 1,100 tons per day	Rice processing and drying plant
Molino Franck	Santa Fe, Argentina	Processing capacity of 5,617 tons of white rice monthly, and husk rice drying capacity of 1,600 tons per day	Rice processing and drying plant
Free-Stall I & Free-Stall II	Santa Fe, Argentina	Production capacity of 90 million liters of raw milk 7,000 milking cows	Raw milk production
Bio-digester	Santa Fe, Argentina	1,4 MW capacity	Energy generation
“Angélica Agroenergía”	Mato Grosso do Sul, Brazil	Installed milling capacity of 5.5 million tons of sugarcane annually, 330,000 tons of VHP sugar and over 261,000 cubic meters of ethanol, and over 330,000 MWh	Sugar and ethanol mill producing hydrated ethanol, anhydrous ethanol and VHP sugar. Sells energy to local network
“Ivinhema Agroenergía”	Mato Grosso do Sul, Brazil	Installed milling capacity of 5.6 million tons of sugarcane annually, 331,000 tons of VHP sugar, 331,000 cubic meters of ethanol, and over 390,000 MWh	Sugar and ethanol mill producing hydrated ethanol and VHP sugar. Sells energy to local network

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(1)	Classification of wheat and soybean seeds.

For additional information regarding our property, plant and equipment, see Note 12 of the Consolidated Financial Statements.

Customers

We sell manufactured and agricultural products to a large base of customers. The type and class of customers may differ depending on our business segments. For the year ended December 31, 2017 more than 60% of our sales of crops were sold to 13 well-known customers (both multinational or local) with good credit history. Of these customers, our biggest three customers represented almost 24% of our sales and the remaining ten represented approximately 36% of our net sales in the course of that year.

In the Sugar, Ethanol and Energy segment, sales of ethanol were concentrated in 8 customers, which represented 78% of total sales of ethanol for the year ended December 31, 2017. Approximately 97% of our sales of sugar were concentrated in 4 well-known traders for the year ended December 31, 2017. The remaining 3%, which mainly relates to “crystal sugar”, were dispersed among several customers. In 2017, energy sales are 97% concentrated in 4 major customers.

Competition

The farming sector is highly fragmented. Although we are one of South America’s leading producers, due to the atomized nature of the farming sector, our overall market share in some of the industries in which we participate is insubstantial. Our production volume, however, improves our ability to negotiate favorable supply, transportation and delivery logistics with our suppliers, third-party transporters, ports and other facilities, and customers. Although competition in agriculture varies considerably by product and sector, in general, there are a large number of producers, and each one of them controls only a small portion of the total production. Therefore individual producers often have little influence on the market and cause little or no effect on market prices as a result of their individual strategies, explaining why producers are price takers and not price makers. In many cases, the price is established in international market exchanges. As the majority of agricultural products are commodities, which stifles product differentiation, the principal competition factors are cost of production and volume efficiency gains. In addition, agricultural producers face strong foreign competition, and with this competition the factors are often more difficult to identify.

The majority of farming producers in developed countries can rely on specific protectionist policies and subsidies from their governments in order to maintain their position in the market. In general, we have been able to obtain discounts for the acquisition of supplies and excess prices for our production in the farming sector. In this sector, we view SLC Agrícola S.A., BrasilAgro - Companhia Brasileira de Propriedades Agrícolas, Sollus Agrícola, Radar Propriedades Agrícolas, El Tejar S.A., Cresud SACIF y A, MSU S.A. and Los Grobo Agropecuaria, among others, as our competitors. We also compete in Argentina with retailers of agricultural products, including other branded rice products, such as Molinos Río de la Plata S.A., Dos Hermanos S.H., Sagemüller S.A. and Cooperativa Arroceros Villa Elisa Ltda.

The sugar and ethanol industries are highly competitive. In Brazil, we compete with numerous small-and medium-sized sugar and ethanol producers. Despite increased consolidation, the Brazilian sugar and ethanol industries remain highly fragmented, with more than 436 sugar mills. Some of the largest industry players with whom we compete are Cosan Ltd., Grupo São Martinho S.A., Açúcar Guarani S.A., Louis Dreyfus Commodities Brasil S.A., ETH Bioenergia S.A., Bunge, Grupo Zillo Lorenzetti, Grupo Carlos Lyra S.A. and Grupo Irmãos Biaggi. We also face competition from international sugar producers, such as those in the U.S. and the European Union, where local regulators have historically implemented tariffs, agriculture subsidies and/or other governmental incentive programs, of which some remain, to protect local sugar producers from foreign competition. The following table describes the Brazilian competitive landscape:



	Brazil
Number of Mills	389
Sugarcane crushed (million tons)	641.2
Ethanol Production (million cubic meters)	27.4
Sugar Production (million tons)	36.5

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Source: Ministry of Agriculture & CONAB

With respect to farmland, there have historically been few companies competing to acquire and lease farmland for the purpose of benefiting from land appreciation and optimization of yields in different commercial activities. However, we believe that new companies, may become active players in the acquisition of farmland and the leasing of sown land, which would add competitors to the market in coming years.

Supplies and Suppliers

Our principal supplies for our farming business are seeds, fertilizers, pesticides and fuel, which represented 9%, 7%, 11% and 5%, respectively, of our total direct costs (including leasing cost). Further, these supplies represented 28% of our total cost of production (including manufacturing and administrative expenses) for 2017. As we use direct sowing in 99% of our planted area, without requiring soil preparation, fuel represents only 5% of the total cost of production for 2017.

Our principal supplies for our sugar, ethanol and energy business are diesel, lubricants and fertilizers, which collectively represented 21% of our total cost of production (including manufacturing and administrative expenses) the sugar, ethanol and energy business for 2017. We have an extensive network of suppliers for each of our business segments and for each required input within each segment, resulting in lower reliance on any particular supplier. Our ten largest suppliers account for 65% of our total expenditures for supplies in 2017. While we value the relationships we have developed with each of our suppliers given the quality we have come to expect, we do not consider any single supplier to be key to our production.

We have been able to obtain lower prices particularly due to the volume that derives from our large-scale operations.

Seasonality

Our business activities are inherently seasonal. We generally harvest and sell our grains (corn, soybean, rice and sunflower) between February and August, with the exception of wheat, which is harvested from December to January. Cotton is a unique in that while it is typically harvested from June to August, it requires processing which takes about two to three months to complete. Sales in our dairy business segment tend to be more stable. However, milk production is generally higher during the fourth quarter, when the weather is more suitable for production. Although our Sugar, Ethanol and Electricity cluster is currently operating under a “non-stop” or “continuous” harvest and without stopping during traditional off-season, the rest of the sector in Brazil is still primarily operating with large off-season periods from December/January to March/April. The result of large off-season periods is fluctuations in our sugar and ethanol sales and in our inventories, usually peaking in December to take advantage of higher prices during the traditional off-season period (i.e., January through April). As a result of the above factors, there may be significant variations in our financial results from one quarter to another. In addition our quarterly results may vary as a result of the effects of fluctuations in commodities prices, production yields and costs on the determination of changes in fair value of biological assets and agricultural produce. See “Item 5. Operating and Financial Review and Prospects-A. Operating Results-Critical Accounting Policies and Estimates-Biological Assets and Agricultural Produce.”

Sustainability

Our production model is based on sustainability standards that seek to produce food and renewable energy on a long-term basis. Those standards include best practices and certifications that promote development and health, customer satisfaction and stakeholders interest, neighboring community welfare, food care and safety, and environmental protection.Accordingly, our sustainable approach to farming requires that we take into account not only economic, but also social and environmental aspects specifically adapted to local circumstances. We believe we accomplish these goals through a team committed to our values: trust, transparency, efficiency, innovation and sustainability.

Our people

We constantly care about the development, health and safety of our employees. We also promote enhanced working conditions, while we support training and internal education programs to improve skills and educate with the newest technologies and business practices. We implement and constantly revise our health and safety programs in each of our businesses.

Standardized and Scalable Agribusiness Model

We have adopted an agribusiness model that allows us to engage in large-scale farming activities in an efficient and sustainable manner. Our agribusiness model consists of developing a specialized workforce and defining standard protocols to track crop development and control production variables, thereby enhancing efficient decision making and facilitating continuous improvement. This approach allows us to grow in scale, execute our expansion plan and efficiently manage various production units spread across different regions by effectively replicating our productive model. Process standardization also helps us assure compliance with local law and regulations and reduce social and environmental risks.

We continue to develop and implement crop protocols. The purpose of these protocols is to coordinate and consolidate the knowledge on crop management for each area in order to standardize the implementation of these protocols. The protocols contain all the technical information for managing crops. This information is constantly reviewed by agricultural teams and their advisors, making it possible to preserve the technical knowledge of the company and at the same time improve agricultural production and make decisions pursuant to the company’s guidelines. Based on the results of the application of these protocols, we conduct an annual review of the techniques used and their results. This evaluation is done by means of crop campaign analysis, in which all teams review and discuss the last harvest year’s productive performance and the technological package for the new harvest year.

When processes and protocols are defined they can be audited and certified by qualified third parties. Adecoagro is currently in the process of certifying its crop and rice production in Argentina under ISO 9001. We are also working to implement ISO 14001 and OHSAS 18001 in most of the operating units.

In order to achieve efficient scales of production, we have redesigned our field sizes by removing useless cattle infrastructure such as fencing. Larger fields reduce the overlapping of farmworks, enhancing operating efficiency, reducing the use of inputs and achieving agronomic timing (planting or harvesting on time). The goal is to reduce operative time and to improve efficiency

in the use of inputs. Large-scale production also requires the implementation of advanced technology such as GPS (Global Positioning System), GIS (Geographic Information System) and modern machinery as well.

We are also adopting Operational Protocols and Procedures in our industrial facilities to improve control of processing variables. In the case of our rice mills, we have certified Good Manufacturing Practices, and in some cases, HACCP (Hazard Analysis and Critical Control Points) standard. Currently we are in the process to implement the FSSC 22000 standard (Food Safety System Certification) in one rice mill.

When market conditions provide price premiums for certified grains or oilseeds, we evaluate the feasibility of implementing specific certifications. Some examples of this are RTRS (Round Table on Responsible Soybeans) and EPA (Environmental Protection Agency, US) certifications for Sustainable Soybeans in Argentina. In Brazil, we are certifying sugar-based products for EPA and Bonsucro certifications.

Contractors

Contractors play a significant role in our farming business model. We seek to outsource most of the typical farmwork, such as planting, spraying and harvesting. Outsourcing allows us to reduce our investments in heavy machinery and equipments such as tractors or harvesters, enhancing the efficient allocation of our capital in our core productive activities. Currently, we are reviewing the use of our own machinery in some of our crops and riceoperations.

The contractor model in the Argentine humid pampas region has existed for over fifty years and has developed into a highly competitive market. Contractors have gained extensive expertise and skill in the management of agricultural machinery and have access to modern advanced technology. We seek to develop win-win relationships with our contractors by considering them as part of our production team and providing constant technical training and support through our GTA (as defined below) activities. We strive to have a number of contractors associated with each farm to generate competition and allow benchmarking to enhance operational efficiency and ensure high-quality service.

In regions where this model is not fully developed, we use a mixed system where we hire the most experienced contractors in the region and we also operate our own machinery. We promote the development of new contractors by providing training and selling them our used machinery. We also promote the movement of selected contractors from developed regions into new marginal regions by offering them an opportunity to grow their businesses. In other regions where there is no established contractor system or there is specific farmwork (rice land leveling for instance), we own majority of the machinery. In our Sugar, Ethanol and Energy business, we own or lease and operate all the agricultural equipment and machinery needed for sugarcane planting and harvesting operations. Our main goal is to achieve high-quality farmworks, both when selecting any contractor and when using our own machinery. In Brazil we partially employ the contractor model only for specific tasks such as grain harvesting, land leveling, and aerial spraying among others.

Adecoagro Technical Group (Grupo Tecnico Adecoagro “GTA”)

The GTA is an internal group formed by agronomists, farm managers, external advisors, contractors, trainees and suppliers, whose main goal is to excel in production management by providing constant technical education and analysis regarding production technologies. Although the GTA is focused on developing such knowledge under common criteria for the whole company, it also considers different production systems, such as crops, rice and dairy in Argentina and Uruguay, crops in western Bahia, Brazil and sugarcane in Minas Gerais and Mato Grosso do Sul, Brazil. In order to achieve their goals, the group meets every 20 days to analyze and discuss technical aspects of the farming production processes.

The GTA participates in the design of the most efficient and productive land use strategies, the definition of the optimal crop production mix for each farm and region, and supervises and evaluates the implementation of the most profitable and sustainable technologies to be adapted and applied in each region. Additionally, the GTA promotes specific external training courses, facilitates participation in external technical groups, organizes technical farm tours, offers support in establishing the crop planting plan and delivers a full-season analysis for each crop annually. This analysis is essential in order to allow technical improvements to be implemented for the following crop season.

Since the GTA is involved in different regions, it plays a relevant role in spreading best practices among productive regions, including “no-till” in lesser-developed areas. In order to evaluate and adapt the proper technologies locally, a vast network of test plots in agrochemicals, seeds, and farm-works are being carried out under specific technical guidelines. Such development is performed to make the necessary technological adjustments in respect of fertilizer levels, choice of the best product varieties for each crop, determination of the best planting periods and improvement in crop management and agricultural mechanization, resulting in higher yields coupled with reduced costs.

In order to continually improve our technical development, we participate in specialized industry groups, such as CREA and AAPRESID, with which we share values and goals. “CREA” is a 50-year-old farmers’ association focused on developing and supporting technical excellence with local farmers. “AAPRESID” is a technical association of highly innovative farmers specializing in no-till development. We participate in certain CREA and AAPRESID discussion groups in which we share and evaluate common technical matters. We take advantage of their vast network of test plots and we constantly exchange technological knowledge for implementation in our farms.

In addition, the GTA is focusing its resources on pursuing improvements trough implementing advanced techniques such as variable inputs usage by type of soil based on precision agriculture technology, intensification techniques relating to soil occupation times and diversified crop rotations, adjusting “no-till” in rice production, developing sugarcane production technologies involving agricultural mechanization and minimum tillage, and developing cotton production technologies involving “no-till” and crop rotation among others.

By implementing all these education programs and development activities, the GTA provides to the company a network that focuses on the fine-tuning and optimization of the efficiencies throughout all the production processes of each business line.

Technology and Best Practices

We have consistently used innovative production techniques to ensure that we are at the forefront of technological improvements and standards in our industry. For example, we use the “no-till” technology and “crop rotation” to improve our crop yields. We also practice the use of “second harvests” or double cropping where conditions permit, allowing us to plant and harvest a second crop from the same farmland in the same harvest year. Our crop production model is based on balanced fertilization, integrated pest and weed management and crop intensification. We use the innovative silo bag storage method in our rice and crop businesses allowing us to time the entry of our rice production into the market at optimal price points. Additionally, we believe we were the first company in South America to implement the innovative “free-stall” infrastructure in dairy operations resulting in increased raw milk production compared to our peers. The free-stall method is a model that provides for better control over production variables by confining dairy cows into large barns. Those barns are equipped with state-of-the-art technology to enhance cow-comfort conditions, such as sand beds, water-spray cooling system and fans. In addition, installations are equipped with indoor corrals and a mechanical advanced milking system on a rotary platform, allowing us to utilize production efficiencies and thereby increase milk production volumes while maximizing our land use and resulting in significantly higher conversion rates of animal feed into milk.

Our sugarcane harvesting is 98% mechanized, which has significantly improved operating efficiency, therefore reducing operating costs. We have modern facilities in the sugar and ethanol business including advanced sugar and ethanol mills with high-pressure boilers and that achieve one of the highest ratios of energy produced per ton of cane milled, according to the Cane Technology Center Benchmark program. Our Angélica sugar plant was the first continuously operative facility in Brazil, requiring no production stoppages between sugar batches.

No-Till

“No-till” is the cornerstone of our crop production technology and the key to maintaining and even increasing the value and productivity of our land assets. “No-till” - often called zero tillage or direct sowing - is a technology developed more than 30 years ago to grow crops from year to year without disturbing the soil through tillage, and arose as an opposition to conventional tillage.

Conventional farming consists of using plows to turn and till the soil to remove weeds, mix in soil additives such as fertilizers, and prepare the surface for seeding. Soil tillage leads to unfavorable effects such as soil compaction, loss of organic matter, degradation of soil components, death or disruption of microorganisms, evaporation of soil humidity and soil erosion where topsoil is blown or washed away by wind or rain.

“No-till” farming avoids these negative effects by excluding the use of tillage. The “no-till” technology consists of leaving crop plant residues on the surface of the soil after harvesting a crop. These residues form a mulch or permanent cover protecting the soil from erosion risks caused by heavy rains and strong winds. This protective cover also helps natural precipitation and irrigation water infiltrate the soil effectively while decreasing water loss from evaporation. Absence of tillage helps prevent soil compaction, allowing the soil to absorb more water and roots to grow deeper into the soil. Furthermore, “no-till” reduces the emergence of weeds and enhances biological processes that positively impact soil properties, conserving and even improving the presence of organic matter and microorganisms and associated nutrients (nitrogen, phosphorous, etc).

The combination of these advantages results in important cost reductions due to a lower use of inputs, mainly diesel, fertilizers and pesticides, and higher crop yields, thus increasing the profitability of our business. These benefits are achieved in the medium to long term, resulting in a continuous increase of land productivity and thus its value. From an operational standpoint, “no-till”

facilitates the conditions to perform most of the operations on time such as planting, spraying and harvesting, which enhances the development of large-scale operations and specially improves the probability of planting each crop at the optimum moment.

Crop Rotation

Crop rotation is the practice of growing a series of dissimilar types of crops in the same area in sequential seasons. Crop rotation allows us to better control the buildup of harmful weeds and reduces the incidence of plagues and diseases that often occur when the same commodity is continuously cropped. Crop rotation also allows us to balance the fertility demands of various crops to avoid the excessive depletion of soil nutrients, contributing to a more efficient use of fertilizers and a sustainable use of herbicides and pesticides. Crop rotation results in increased yields and reduced production costs, providing a high rate of return. Our crop rotation model is tailored to each of our farming regions based on climatic and soil conditions. For example, in Argentina’s Humid Pampas, our three-year crop rotation cycle involves the planting of a wheat crop followed by a soybean double-crop in the first year, a corn crop in the second year, and a soybean crop in the third year. In Brazil, we pursue a six-year crop rotation cycle whereby we plant in the following crop sequence: corn, cotton, soybeans, cotton, soybeans and cotton.

Second Harvest - Double Cropping

Second harvest, also known as “double cropping”, is the practice of consecutively producing two crops on the same land within the same growing year. Double cropping is possible only in regions with long growing seasons, which is determined mainly by climate conditions such as rain and temperature. Double cropping allows us to increase the profitability of our land, diversify our production and commercial risk and enhance operational efficiencies through a better utilization of machinery, freight, labor and other resources, resulting in a dilution of our fixed costs. Double cropping has important agronomical advantages as well, such as having crops on the land for a longer period of time, which, enhanced by “no-till” and crop rotation practices results in the improvement of the physical and chemical properties of the soil in the long term. We implement and adapt different double cropping systems for each of our productive regions in Argentina and Uruguay, with the most frequent being wheat/soybean, wheat/corn, sunflower/soybean, corn/soybean and sunflower/corn.

Integrated Pest Management (IPM)

Integrated pest management (“IPM”) involves a deep analysis of agronomical, economical and environmental aspects with the goal of determining the most efficient way to control the pests. It simultaneously achieves three main goals: (i) enhancing crop productivity, (ii) reducing use of pesticides and (iii) decreasing the risk of agrochemical contamination. The first stage of IPM is to train the people who will be involved in pesticide usage. The pesticide to be applied is selected considering local regulations (only locally approved pesticides are used) and the minimum resulting environmental risks due to its chemical classification. Additionally, when selecting biotechnologically developed crops, we evaluate the potential reduction of pesticide uses that may be achieved. The doses of pesticides are defined by vendor recommendations and adjusted through agronomical expertise (specific to a crop and a pest). The timing of pesticide application is based on economic threshold that takes into account the crop situation (growing stage, climate conditions), the potential damage of the pest (type, population, growing stage), the presence of “beneficial” pests, and finally, the price relationship between grains and pesticides. We also use biological pest controls by breeding and releasing natural enemies of the relevant pest, as is the case with the borer plague in sugarcane. The relevance of the pest is measured by implementing specific scouting methodologies, which are adapted to large-scale farming. Scouting is carried out by trained employees who supervise all the fields on a weekly basis. The pesticide doses are applied by high-tech machinery, the majority of which is outsourced. IPM machinery is accurately calibrated to increase its application efficiency and to reduce any potential contamination risk. Climate conditions are taken into account, as well, in determining the optimal timing for spraying, to avoid drifting, evaporation and leakage risks.

Balanced Fertilization

Balanced fertilization consists of determining an optimum use of fertilizers at the proper grades and in the proper amounts to supply the correct ratio of nutrients and to ensure that the soil will sustain high crop yields over time, consequently decreasing contamination risks. At the beginning of each crop season, we perform extensive soil studies in each of our farms to monitor the amount of organic matter, nitrogen, phosphorus and potassium levels in each field. Based on this analysis and considering the potential yield for each field, the crop rotation, and relative prices between fertilizers and agricultural products, we determine the optimum amount of fertilizer to be applied in order to maximize the economic response of the crop.

Water management

Since crops need sufficient water to achieve their potential yields, we are engaged in techniques aimed to increase the efficiency of water usage and at the same time to decrease soil erosion risks. In that regard, “no-till” presents strong advantages since it improves rainfall infiltration and increases the soil’s water storage capacity. In areas that may be subject to excess water,

we are developing terraces, soil leveling and other techniques intended to decrease runoff and erosion risks. In some of the jurisdictions in which we operate, the use of water for irrigation requires obtaining special permits. For certain irrigated crops such as rice, we focus on the design and operation of rainwater harvesting, collecting water from rain in semi-natural reservoirs destined for future irrigation. In addition, we have developed a water recycle system for each farm where excess of water (derived from drainage and rainfalls) can be reused, instead of being drained out of the farm. Channels to conduct the water and drain the fields are developed by experts in order to deliver water in the most efficient manner. We are also developing the zero grade level system in some of our rice farms to increase productivity and reduce production costs. This technique involves a precise levelling of the land based on GPS and Laser technology. When fields are accurately leveled, water irrigation requirements are reduced, thus lowering the cost of labor and energy. Efficient management of irrigation results in a positive impact on yields. Additionally, as the fields can be larger, there are some operational benefits that can be achieved by reducing machinery working times. Currently, we are implementing polypipe irrigation system in some rice-fields. This technology consists of deploying plastic pipes to conduct irrigation water from big channel to the fields, thus reducing water consumption, alongside with a small reduction of area devoted to infrastructure. In addition, we are using drones to assess water levels during rice irrigation season. Through this high-precision surveillance method, we are enhancing water management, which improves potential yield, while reducing water consumption. Drones use different cameras to detect water levels even when dense canopies cover the fields. Other crops such corn seed and, sunflower seed are irrigated by highly efficient pivot spraying systems. This type of irrigation system allows us to distribute water uniformly throughout the field, improving the use of water in terms of total millimeters per year. We conduct soil moisture sampling to define the best moment and amount of water to be used for irrigation in each plot.

Mechanization

We incorporate all available mechanization technology into our business that is cost-effective. We believe that by employing mechanization technology we improve our operating efficiency and are better able to reach desired economies of scale in our operations. Mechanization also enables us to adopt new associated technologies faster and hastens our development efforts. In our farming business, we are using cutting-edge mechanized technology for planting, spraying, harvesting and irrigating and for soil preparation and management. We also employ advanced mechanization technology in our logistics and product processing operations, including transportation, drying operations and grain sorting and storage. We are in the process of developing mechanization technology to benefit our other businesses, such as sugarcane planting, which traditionally have not benefitted from such mechanization.

Synergies

The technologies we employ are very closely linked, and the joint implementation of a number of them will result in positive synergies for our entire production system. For example, implementation of the “no-till” technology can be enhanced by crop rotations, due to the positive biological effects generated by the different types of roots from each crop in the soil. Benefits of integrated pest management are improved when combined with the “no-till” and crop rotation strategies, since the crop stubble that remains on the soil can be a barrier to some plagues, and because some other pests are specific to a particular crop and the crop rotation can be sufficient to control them. We consider these synergies when we develop our crop seeding schedule.

AgTech (Agricultural digital-based Technology)

Since inception, we have been introducing cutting-edge technologies to increase our production efficiency. As digital and information-based technologies are rapidly advancing, we are currently devoting time and efforts to work closely with AgTech Startups that could bring solutions to our operational processes. We are monitoring both local and international startups, with the goal of adopting efficient digital technology in our operations (see “Research & Developments” section).

In accordance with the growing risks in cybersecurity threats, we have adopted a series of measures design to mitigate these risks. Among these measures, we perform periodic analyses in order to detect and correct vulnerabilities; we have adopted well known tools to try to stop cyber-attacks like viruses, trojans, hackers and other threats; we have a Disaster Recovery Plan , and we have implemented procedures and policies to address or minimize internal risks.

Information Technology

We employ the World Class ERP Oracle eBusiness Suite to standardize and integrate our processes throughout the company and improve controls and information accuracy and consolidation. The Oracle eBusiness Suite allows us to fulfill our local accounting and fiscal needs while facilitating operational coordination across our geographic areas and lines of business, reducing our operational costs and minimizing duplication and inefficiencies. It also provides our management with consolidated results

in a timely manner. In addition, our integrated security plan includes an offsite safeguarded system that guarantees business continuity.

Environmental Aspects

We are implementing a production model that reflects a strong commitment to the environment. Our responsibility to the environment begins with complying with local regulations. In order to be better stewards of the environment, we are implementing environmental management plans for our operations. Those plans involve different stages, which include educating our own and outsourced staff, monitoring ecological parameters, preventing negative effects, and correcting deviations. Natural resources such as land, water, air and biodiversity are taken into account when we evaluate both the development of a new production project and the operation of an on-going one. In that regard, we are constantly evaluating best practices to be implemented in our operations. See “-Technology and Best Practices.” With land being the most relevant natural resource in our operations, we have developed a sustainable land use strategy that considers factors beyond the requirements of local law and regulations. There are ecosystems that we do not consider appropriate for agricultural development, such as heavy forests and key wetlands. We evaluate development of other areas (savannahs, natural grasses, bush land, lowlands) only after carrying out an environmental impact assessment. In addition to such evaluations, we analyze the agricultural potential of the land in respect of the soil, the climate, crop productivity and available technology, among other factors. Through this approach, we make sure that we grow the most suitable crop in each regionwith the aim of being the lowest cost producer of the sector. We then consolidate our analysis into a land transformation plan, which includes the best land use option and implements best practices such as the “no-till” technology, crop rotations, integrated pest and weed management, balanced fertilization, responsible pesticide usage and water management. All these best practices aim to increase resource efficiency and to decrease the risk of contamination and waste production and are consolidated into an environmental management plan, which includes biodiversity management when applicable. We aim to properly implement our sustainable production model to enhance land productivity and therefore increase land value. With respect to pesticide contamination risks, we are implementing a responsible pesticide use program, which includes personnel training, personnel protection elements, application recommendations, pesticide selection criteria, pesticide handling and storage and after-use pesticide packages management (which are specifically cleaned, collected and stored for recycling purposes under third parties’ programs).

Additionally, in some regions where biodiversity matters are relevant, we are implementing biodiversity management plans, which mainly consists of periodically monitoring flora and fauna, detecting significant variations of their populations, and proposing measures to reduce any potential threats to local species. As a result, we are implementing some practices such as prohibiting hunting on our farms, developing environmental private protection areas (where natural vegetation is protected by implementing sustainable production practices). As environmental matters require specific expertise and an understanding of complex relationships, we are entering into cooperative arrangements and agreements with educational institutions. We are also developing relationships with well recognized environmental non-governmental organizations, such as The Nature Conservancy.

In Brazil, one of our main environmental focuses is compliance with the applicable provisions of the Brazilian Forestry Code (Código Forestal). Accordingly, we analyze and identify all natural areas inside our own farms and inside leased areas, and make a development plan that defines actions for their preservation. Some examples of these activities are the reforestation of Permanent Preservation Areas (Áreas de Preservación Permanente) and Legal Reserve Areas (Áreas de Reserva Legal), for which we are producing seedlings of more than 70 native species to reforest those areas. We are strongly committed to the preservation of forests, and we only develop areas for farming if they were previously used for agricultural purposes or for pasture. We do not operate in massive forests, large wetlands or areas with high biodiversity value. We concern ourselves with the protection of riverbanks and surrounding areas of streams and springs, as they are important for soil conservation and as refuges for native fauna. In that regard, we are implementing periodic monitoring of wildlife and native flora as well. We have a partnership with The Nature Conservancy (“TNC”), an international environmental non-governmental organization, to organize the environmental preservation of areas of ecological importance by acquiring such areas to replace reserve areas on our own land and land we lease, through a reserve compensation scheme developed by TNC and adopted by the regional environmental authorities. This program will allow us to protect larger blocks of critical ecosystems instead of having smaller reserve areas in each farm, while allowing us to use areas in our farms that were previously developed and would have lesser environmental value as reserve areas.

In respect of our industrial processing activities, we focus on energy-efficient processes that increases productivity with minimum waste disposal. At the same time, we constantly promote the re-use of any by-product or residue within the industrial processes when feasible, or in the fields when their economic analysis make sense. A successful example of this approach is the use of manure to produce electricity and the use of biofertilizers to grow crops in our Dairy Farm. Another successful story is the use of all Sugar and Ethanol industrial by-products (vinasse, filter cake and composted ashes) as biofertilizers in our cane fields.

Since November 2017, we are producing renewable electricity from our biodigester built in our Dairy Farm. The biodigester transforms cow manure into biogas with high methane content, which then fuels a cogeneration facility that generates 1.4 MW of Power. The electricity produced is sold to the grid under a long-term contract with an Argentinean federal utility. Additionally, as

this project allows us to reduce GHG emissions, we commenced the feasibility assesment to deliver carbon credits from the biodigester. . We received a grant from Sustainable Energy and Climate Change Initiative from the Inter-American Development Bank (SECCI) in order to carry out the pre-feasibility assessment. We have also received a grant from the “Agencia Nacional de Promoción Científica y Tecnologica”, an agency which promotes technological innovation, to partially fund the investment. In July 2016, we participated of Argentina’s “RenovAr” renewable energy auction and entered into a 20-year contract to supply up to 9,145 MWh per year at an average price of USD 158.92 per MWh plus bonifications. At UMA, we have implemented a pilot plant that produces biogas from vinasse, developed in partnership with Efficiencia, a subsidiary of Companhia Energética de Minas Gerais (“CEMIG”). The technology developed during this project will allow us to generate additional energy from vinasse while maintaining the fertilizer recycling potential of UMA. We are currently replicating this project under a Commercial scale in our Cluster in Mato Grosso do Sul (Brazil). These emission reduction projects could also generate extra income from carbon credits under specific programs.

Social Programs

Apart from complying with local labor regulations, we seek to promote the personal and professional development of our employees by offering them an adequate working environment with proper health and safety protections. We aim to develop a transparent relationship with local authorities. Finally, one of our main goals is to contribute positively to the social development of the communities in which we operate, creating new jobs, preserving the environment, providing training opportunities through our internship program and assisting with social development. In order to implement our social development programs, we analyze the areas in which we operate and give special attention to education and poverty rates, possible alliances with other social actors, and potential synergies with local government programs. In addition to social development programs, we contribute to community organizations in each area where we operate, such as hospitals, schools, daycare centers and fire stations, among others. We also have a voluntary matching program where Adecoagro matches each donation from our employees at a 2:1 ratio.

Education

Our sugarcane and rice operations have a very important economic impact in the communities where we are located, and we have developed a Social Action Program in the various municipalities. In 2005, we started a partnership with Cimientos in Corrientes, Santa Fe and Entre Rios in Argentina, through which we have awarded 45 educational programs in 164 urban and rural schools located close to our rice operations. These programs benefit 22,870 students. Cimientos is a non-profit organization that promotes equal educational opportunities for children and youth from low-income families in Argentina. In 2016 we started another program together with CONCIENCIA (a local NGO) in which we support our employees’ children to complete their education. This new program began in Salta near to Los Guayacanes, and 16 children participated. In 2017 we extended the program to the City of San Salvador, where 18 children participated and between the two establishments we reached a total of 34 children in the program.

Additionally, we have partnered with Fundação Bradesco in Mato Grosso do Sul, Brazil, working with the local municipalities of Angélica and Ivinhema to re-train teachers at their schools, aiming to improve the performance of public schools to a level of regional excellence. We also have partnerships to encourage the habit of reading through the training of teachers of municipal schools as storytellers and investment in libraries.

Nutrition

In Argentina, we work in partnership with Conin Foundation, which fights malnourishment in children, focusing its actions in three main aspects: education, assistance and research. In 2017, we donated nearly 4,5 tons of powdered milk. We also work in partnership with the Argentine Food Bank Network, to whom we are currently donating approximately 10 tons of processed rice. This network operates in 17 cities and is a nonprofit distribution enterprise that serves the community by acquiring donated food and making it available to people who are hungry through a network of community agencies. These agencies include school feeding programs, food pantries, soup kitchens, hospices, substance abuse clinics, after-school programs and other nonprofit organizations. Additionally, we have been contributing food to Solidagro, an alliance between rural corporate institutions and civic organizations that seek to solve famine and malnutrition problems, since 2007. We are also collaborating with selected soup kitchen initiatives such as Caritas Christophersen, San Gregorio Foundation and Mercedes City Soup Kitchen.

Additionally, in 2017 we agreed on a new campaign together with a basketball club in the province of Corrientes, Argentina. The campaign was called “Festejá cada punto vale triple” (Celebrate, each point is worth triple). With this campaign for each point the basketball team scores during this season, Adecoagro will donate 3 kilos of rice to the Conin Foundation centers located within the province of Corrientes. In December 2017, we provided 7.6 tons of rice to these centers.

In Brazil, we support several local schools, kindergartens, homes for the elderly and APAEs (local associations to support seriously deficient in the community) with financial investment and training to improve social management. Because of these initiatives, ABRINQ Foundation as Child Friendly Company certified the Monte Alegre unit.

Internship Program

The purpose of our internship program is to promote the development of highly qualified professionals for the community by providing first-time work experience, good quality training and access to highly technology-oriented operations. We seek to facilitate interns’ future access to the job market while detecting potential key employees. The interns actively participate in the TAG training program, which includes monthly technical meetings, external training and farm tours. In order to accomplish these goals we promote institutional relationships with local and international universities and high schools. Over 331 interns have participated in our program during the last 15 years, of which 94 were subsequently incorporated into our teams.

Material Agreements

For a description of the material agreements relating to our indebtedness, please see “Item 5.-Operating and Financial Review and Prospects-B. Liquidity and Capital Resources-Indebtedness and Financial Instruments.”

Argentina

Consignment Contract with Establecimiento Las Marías

Our subsidiary, Pilaga S.A. entered into a consignment contract dated February 19, 2000, with Establecimiento Las Marias S.A.C.I.F.A. pursuant to which Las Marias was granted exclusive license to sell the products or imports of Pilagá S.A. in Argentina. For its services, Las Marias collects a commission of 9.56%, calculated over the gross amounts of the sales made by Las Marias on behalf of Pilagá S.A., net of commercial discounts, before VAT and any other applicable tax that is applied in any invoicing. The term of the agreement is one year from March 1, 2000, automatically renewable for additional one-year periods.

Brazil

Sugar Sale Agreement

On January 13, 2015, Adecoagro Vale do Ivinhema S.A. entered into a Sugar Sales Agreement with Louis Dreyfus Commodities Suisse S.A. pursuant to which Adecoagro Vale do Ivinhema S.A. a agreed to supply 100,000 metric tons of Brazilian VHP (very high polarization) during 2015/2016 harvest year. This amount of sugar was delivered from May to December 2015 in Paranaguá port. The price was fixed in reference to the NY#11 futures contract price.

On September 5, 2014, Adecoagro Vale do Ivinhema S.A. entered into a Sugar Sales Agreement with Alvean Sugar S.L. (vía Agroglobal S.A.), pursuant to which Adecoagro Vale do Ivinhema S.A. agreed to supply 70,000 metric tons of Brazilian VHP (very high polarization) during 2015/2016 harvest year. This amount of sugar was delivered from May to November 2015 in Paranaguá port. The price was fixed in reference to the NY#11 futures contract price .

On October 21, 2014, Adecoagro Vale do Ivinhema S.A. entered into a Sugar Sales Agreement with Bunge Agritrade S/A (vía Adecoagro Uruguay S.A., previously Agroglobal S.A.), pursuant to which Adecoagro Vale do Ivinhema S.A. agreed to supply 101,500 metric tons of Brazilian VHP (very high polarization) during 2015/2016 harvest year. This amount of sugar was delivered from June to December 2015 in Paranaguá port. The price was fixed in reference to the NY#11 futures contract price .

Electric Energy Agreements

In the beginning of 2009, UMA entered into a 10-year agreement for the sale of energy to CEMIG, under which UMA agreed to provide 9 MW of energy, approximately 46,215 MWh during the harvest period (May to November of each year) at a rate of R$166.69 per megawatt hour. The price of energy under the contract is adjusted annually according to inflation rate and tariff discounts.

Adecoagro Vale do Ivinhema S.A. entered into an agreement for the sale of energy to CCEE. This agreement is a result of a public auction by the Brazilian federal government in August 2008, carries a term of 15 years, and requires Adecoagro Vale do Ivinhema S.A. to supply CCEE with 87,600 MWh annually during the harvest periods each year (April to December), at a rate of R$157.15/MWh. The Price of energy under the contract is adjusted annually according to inflation.

In August 2010, Adecoagro Vale do Ivinhema S.A. participated in a public auction by the Brazilian federal government. As a result of this auction, Adecoagro Vale do Ivinhema S.A. entered into second 15-year agreement with CCEE starting in 2011, for the sale of 131,400 MWh per year at a rate of R$154.25/MWh.

Intellectual Property

As of February 2018, our corporate group owned 22 trademarks registered with the Argentine National Intellectual Property Institute, had 2 trademarks in the process of renovation and had 6 trademarks in the process of registration. Also, Adeco Brasil and UMA owned 16 trademarks registered with the Brazilian National Industrial Property Institute (“INPI”), and had submitted 10 trademark registration requests, all of which are currently being challenged by third parties or were initially denied by INPI. In addition, Adeco Agropecuaria Brasil S.A. had submitted one trademark for registration. Agroglobal S.A. (now Adecoagro Uruguay S.A.) has one trademark registered in Uruguay.

In Argentina, we are required to renew our trademark registrations when they expire at the end of their respective terms. Under the Argentine Trade and Service Marks Law No. 22,362, the term of duration of a registered trademark is 10 years from its issue date, and a trademark may be indefinitely renewed for equal periods thereafter if, within the five-year period prior to each expiration, the trademark was used in the marketing of a product, in the rendering of a service or as the designation of an activity.

In Brazil, title to a trademark is acquired only once its valid registration has been issued by the INPI. During the registration process, the person requesting the trademark merely has an expectation of the right to use the trademark to identify its products or services. Under Law No. 9,279, of May 14, 1996 (the Brazilian Industrial Property Law), the holder of a trademark has the right to its exclusive use throughout Brazil. The term of duration of a registered trademark is 10 years from its issue date, and a trademark may be indefinitely renewed for equal periods thereafter. Within a five-year period from the issue date, the owner has an obligation to use the trademark in the marketing of a product, in the rendering of a service or as the designation of an activity. If the owner does not use the trademark within such five-year period, it may be subject to a forfeiture process, upon request of any third party with legitimate interest in the trademark. The same forfeiture process may occur if the owner fails to use the trademark for any five-year period, continuously. If the trademark is declared forfeited, the trademark rights are terminated.

Insurance

The type and level of insurance coverage we obtain is determined based on consultation with leading insurance brokers. We carry policies with leading U.S., European, and local insurance companies, and we are currently insured against a variety of risks, including losses and damages relating to our plants, equipment and buildings. We believe our level of insurance coverage is customary and appropriate for a company of our size and with respect to our activities. Our insurance currently covers only part of the losses we may incur and does not cover losses on crops due to hail storms, fires or similar risks.

Legal and Administrative Proceedings

In the ordinary course of business, we are subject to certain contingent liabilities with respect to existing or potential claims, lawsuits and other proceedings, including those involving tax, social security, labor lawsuits and other matters. We accrue liabilities when it is probable that future costs will be incurred and such costs can be reasonably estimated. See “Item 8. Financial Information-A. Consolidated Statements and Other Financial Information-Legal and Administrative Proceedings.”

Environmental Regulations and Compliance

Our businesses in the various emerging market countries in which we operate are subject to comprehensive national, state and municipal laws and regulations relating to the preservation and protection of the environment to which those businesses must adhere. These laws and regulations require some of our businesses to obtain permits or licenses that have to be renewed periodically in order to allow us to continue to operate. If such permits or licenses lapse or are not renewed or if we fail to obtain any required environmental licenses and permits, or if we do not comply with any other requirements or obligations established under the applicable environmental laws and regulations, we may be subject to fines or criminal sanctions and might face partial or total suspension of our operations and suspension or cancellation of our environmental licenses and permits. In addition, our businesses which hold debt from banks, and multilateral lenders in particular, are typically required to adhere to environmental standards that exceed those of the country in which the business operates ( e.g. , World Bank standards).

We are currently either in compliance with or are in the process of applying for permits that would put us in compliance with all applicable environmental laws and material environmental licenses and permits. Specifically, the operational license of UMA is currently being renewed. On June 10, 2014, we applied for the renewal of the operational license for the Angélica mill to mill up to 4 million tons of sugarcane per year. On April 24, 2015, we obtained a installation license (licença de instalação) for the Ivinhema mill, to mill up to 5 million tons of sugarcane per year. On July 23, 2015, we obtained the operational license (licença

de operação) from IMASUL authorizing us to mill up to 5 million tons of sugarcane per year. In addition to the installation and operational license, the Ivinhema mill must obtain other permits including licenses for water capture and use of controlled products, among others. Failure to obtain the necessary environmental licenses may prevent us from operating the Ivinhema mill or may subject us to sanctions.

Our operating businesses have the required environmental monitoring, equipment and procedures, and we utilize third-party contractors to conduct regular environmental audits. Our environmental expenses relate to consultants we use to perform environmental impact studies for our development projects and control and monitoring procedures. However, as environmental regulations are expected to become more stringent in some of the countries where we operate, our environmental compliance costs are likely to increase due to the cost of compliance with any future environmental regulations. While we are not aware of any material environmental liabilities related to our ongoing operations, we may be subject to cleanup costs, which we do not expect to be material.

Regulation and Control of Agri-Food Production in Argentina

The National Office of Agricultural Commerce Control (Oficina Nacional de Control Comercial Agropecuario, or “ONCCA”) created on November 27, 1996, as a decentralized entity of the Ministry of Agriculture was the agency responsible for controlling the commercialization and manufacturing of agricultural livestock, meat and dairy products in Argentina.

As of February 25, 2011 the ONCCA was dissolved pursuant to Decree No. 192/2011. The faculties previously held by the ONCCA have been transferred to the Ministry of Agriculture and to a new entity incorporated (Unidad de Coordinacion y Evaluacion de Subsidios al Consumo Interno) by means of Decree No. 193/2011, intended exclusively for the protection and promotion of activities and granting subsidies. As a result, the Ministry of Agriculture is the enforcement authority of the decrees issued by the ONCCA and is in charge of monitoring the agricultural compliance with the commercialization regulations. Furthermore, the new entity integrated by Ministers and officials from the Ministry of Economy, Ministry Agriculture and Industry and the AFIP will be responsible for the administration, allocation and payment of subsidies for wheat, corn and soybean, and will be in charge of the registry for the export of cattle.

Under applicable regulations, all persons involved in the commercialization and manufacturing of grains and dairy products must be registered with the Register of Operators (Registro Unico de Operadores or "RUO"), which provides for registration of any individual or company involved in the trade and industrialization of agri-food products in the markets for grains, livestock and dairy products and their by-products and/or derivatives. This registration must be renewed each year. Grain producers must stock grains at facilities and must keep a record of the grain stock stored at such facilities. Failure to register with the RUO, or cancellation of such registration, will lead to requirements that the operator cease its operating activities and closure its facilities.

On April 1, 2014 the AFIP issued Resolution No. 3,593/14 which established a “Systematic Regristration of Movements and Grains Stocks Regime” (“Régimen de Registración Sistemática de Movimientos y Existencias de Granos”) by which all persons involved in the commercialization and manufacturing of grains and dairy products registered with the RUO must report the stock and stock variations (including locations, transport between the producer´s facilities, etc.) of all grains other agricultural products (other than those to be applied to sowing) held in their own or other third party´s name.

In the event of a violation of any of the applicable regulations, sanctions may be imposed, including fines and suspension or cancellation of the registration, which would result in the immediate cessation of activities and closure of facilities.

C. ORGANIZATIONAL STRUCTURE

Corporate Structure

We are a corporation organized under the laws of the Grand Duchy of Luxembourg under the form of a société anonyme . As of April 20, 2017, we held approximately 100% of the interests in Adecoagro LP S.C.S., a société en commandite simple organized under Luxemburg law with a de minimis remaining interest owned by Adecoagro GP S.à r.l, a société à responsibilitié limitée organized under Luxemburg law and our substantially wholly-owned subsidiary. Adecoagro LP S.C.S. is a holding company with operating subsidiaries owning farmland and facilities throughout Argentina, Brazil and Uruguay. For a diagram of our Organizational structure as of April 20, 2018, please see “Item 4. Information on the Company – A. History and Development of the Company – History.”

As of April 20, 2018, our principal shareholders were Al Gharrafa Investment Company, Stichting Pensioenfonds Zorg en Welzijn, Jennison Associates Bienville Capital Management LLC and EMS Capital LP. See “Item 7. Major Shareholders and Related Party Transactions—A. Major Shareholders.”

D. PROPERTY, PLANTS AND EQUIPMENT

See “—B. Business Overview—Land Transformation—Our Farms”; “—Property, Plant and Equipment.”

Item 4B. Unresolved Staff Comments

Not applicable.

Item 5. Operating and Financial Review and Prospects

Overview

We are engaged in agricultural, manufacturing and land transformation activities. Our agricultural activities consist of harvesting certain agricultural products, including crops (soybeans, corn, wheat, etc.), rough rice, and sugarcane, for sale to third parties and for internal use as inputs in our various manufacturing processes, and producing fluid milk. Our manufacturing activities consist of (i) selling manufactured products, including processed rice, sugar, ethanol and energy, among others, and (ii) providing services, such as grain warehousing and conditioning and handling and drying services, among others. Our 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 to enhance yields and increase the value of the land. Please see also "Risk Factors-Risks Related to Argentina- Argentine law concerning foreign ownership of rural properties may adversely affect our results of operations and future investments in rural properties in Argentina" and "Risk Factors-Risks Related to Brazil- Recent changes in Brazilian rules concerning foreign investment in rural properties may adversely affect our investments."

We are organized into three main lines of business: farming; land transformation; and sugar, ethanol and energy. These lines of business consist of six reportable operating segments, which are evaluated by the chief operating decision-maker based upon their economic characteristics, the nature of the products they offer, their production processes and their type and class of customers and distribution methods. Our farming business is comprised of four reportable operating segments: Crops, Rice, Dairy, and All Other Segments. Each of our Sugar, Ethanol and Energy and Land Transformation lines of business is also a reportable operating segment. Please see – Operating Segments” for a discussion of our six operating reportable segments.

There are significant economic differences between our agricultural and manufacturing activities. Some of our agricultural activities generally do not involve further manufacturing processes, including those within the crops, dairy and All Other Segments. Our other agricultural activities in the rice and sugar, ethanol and energy segments generally involve further manufacturing processes, comprising our manufacturing activities. The table below sets forth our agricultural and manufacturing activities by segment.



Segment	Agricultural Product	Manufactured Product and Services Rendered
Crops	Soybean Corn Wheat Sunflower Cotton	Grain drying and conditioning

Rice	Rough rice	White rice and brown rice

Dairy	Fluid milk	Processed milk, and dairy products

Sugar, Ethanol and Energy	Sugarcane	Sugar, Ethanol and Energy

Manufacturing Activities

The gross profit of our manufacturing activities is a function of our sales of manufactured products and services rendered and the related costs of manufacturing those products or delivering those services. We recognize an amount of revenue representing the actual dollar amount collected or to be collected from our customers. Our principal costs consist of raw materials, labor and social security expenses, maintenance and repairs, depreciation, lubricants and other fuels, among others. We obtain our raw materials principally from our own agricultural activities and, to a lesser extent, from third parties.

Agricultural Activities

Our agricultural activities involve the management of the biological transformation of biological assets into agricultural produce for sale to third parties, or into agricultural products that we use in our manufacturing activities. We measure our biological assets and agricultural produce in accordance with lAS 41 "Agriculture." lAS 41 requires biological assets to be measured on initial recognition and at each balance sheet date at their fair value less cost to sell, with changes in fair value recognized in the statement of income as they occur. As market prices are generally not available for biological assets while they are growing, we

use the present value of expected net cash flows as a valuation technique to determine fair value, as further discussed below in "-Critical Accounting Policies and Estimates." ln addition, agricultural produce at the point of harvest is measured at fair value less cost to sell, which is generally determined by reference to the quoted market price in the relevant market. Consequently, the gains and losses arising on initial recognition and changes in fair value of our biological assets and the initial recognition of our agricultural produce at the point of harvest are accounted for in the statement of income in the line item "lnitial recognition and changes in fair value of biological assets and agricultural produce."

After agricultural produce is harvested, we may hold it in inventory at net realizable value up to the point of sale, which includes market selling price less direct selling expenses, with changes in net realizable value recognized in the statement of income when they occur. When we sell our inventory, we sell at the prevailing market price and we incur direct selling expenses.

We generally recognize the agricultural produce held in inventory at net realizable value with changes recognized in the statement of income as they occur. Therefore, changes in net realizable value represent the difference in value from the last measurement through the date of sale on an aggregated basis.

We consider gains and losses recorded in the line items of the statement of income "lnitial recognition and changes in fair value of biological assets and agricultural produce" and "Changes in net realizable value of agricultural produce after harvest" to be realized only when the related produce or manufactured product is sold to third parties and, therefore, converted into cash or other financial assets. Therefore, "realized" gains or losses mean that the related produce or product has been sold and the proceeds are included in revenues for the year. Please see “ –Critical Accounting Policies and Estimates – Biological Assets and Agricultural Produce” for a discussion of the accounting treatment, financial statement, presentation and disclosure related to our agricultural activities.

Land Transformation

The Land Transformation segment includes two types of operations. The first relates to the acquisition of farmlands or businesses with underdeveloped or underutilized agricultural land (land which we have identified as capable of being transformed into more productive farmland by enhancing yields and increasing its future value). When we acquire a farmland business for an acquisition price below its estimated fair value, we recognize an immediate gain (a "purchase bargain gain"). The land acquired is recognized at its fair value at the acquisition date and is subsequently carried at cost under the cost model in IAS 16.

The second type of operation undertaken within this segment relates to the realization of value through the strategic disposition of assets (i.e. farmland) that may have reached full development potential. Once we believe certain land has reached full growth potential, we may decide to realize such incremental value through the disposition of the land.

The results of these two activities (purchase bargain gains as a result of opportunistic acquisitions of businesses with underdeveloped or underutilized land below fair market value, and gains on dispositions reflecting the ultimate realization of cash value on dispositions of transformed farmlands) are included separately in the Land Transformation segment.

Land transformation activities themselves are not reflected in this segment; rather, they are reflected in all of our other agricultural activities in other segments. The results of our land transformation strategy are realized as a separate activity upon disposition of transformed farmlands and other rural properties.

A. OPERATING RESULTS

Trends and Factors Affecting Our Results of Operations

Our results of operations have been influenced and will continue to be influenced by the following factors:

(i) Effects of Yield Fluctuations

The occurrence of severe adverse weather conditions, especially droughts, hail, floods or frost, are unpredictable and may have a potentially devastating impact on agricultural production and may otherwise adversely affect the supply and prices of the agricultural commodities that we sell and use in our business. The effects of severe adverse weather conditions may also reduce yields at our farms. Yields may also be affected by plague, disease or weed infection and operational problems.

The following table sets forth our average crop, rice and sugarcane yields per hectare for the periods indicated:



	2016/2017	2015/2016	2014/2015	% Change
	Harvest Year (1)	Harvest Year (1)	Harvest Year (1)	2016/2017 -2015/2016		2015/2016 -2014/2015
Corn (2)	5.4	5.8	5.9	(6.9	)%	(1.7	)%
Soybean	2.8	2.8	3.2	—	%	(12.5	)%
Soybean (second harvest)	2.5	2.4	2.5	4.2	%	(4.0	)%
Cotton lint	0.1	—	0.7	—	%	N/A
Wheat (3)	3.0	2.5	2.3	20	%	8.7	%
Sunflower	1.9	1.6	1.8	18.8	%	(11.1	)%
Rice	5.9	5.9	5.1	—	%	15.7	%
Sugarcane (4)	85.1	98.2	93.0	(13.3	)%	5.6	%

(1) This column reflects the full harvest season.

(2) Includes sorghum, chia and peanut.

(3) Includes barley.

(4) Does not consider harvested area for planting activities.

(ii) Inflation

Argentina has faced and continues to face inflationary pressures. From 2011 to date, Argentina experienced increases in inflation as measured by the wholesale price index WPI that reflected the continued growth in the levels of private consumption and economic activity (including exports and public and private sector investment), which applied upward pressure on the demand for goods and services.

During periods of high inflation, effective wages and salaries tend to fall and consumers tend to accelerate their consumption patterns and also eliminate unnecessary expenses. The increase in inflationary risk may erode macroeconomic growth and further limit the availability of financing, causing a negative impact on our operations.

However, the government expects to reduce the current level of inflation promoting monetary stability and introducing a program for the systematic and sustainable lowering of inflation. WPI from last year decreased from 35% to 19%. Inflation may also have a negative impact on our expenses. Although commercial initiatives such as price increases for the services that we provide may be undertaken to counter inflation, we cannot provide any assurances that increased costs as a result of inflation will be offset.

(iii) Effects of Fluctuations in Production Costs

We experience fluctuations in our production costs due to the fluctuation in the costs of (i) fertilizers, (ii) agrochemicals, (iii) seeds, (iv) fuel, (v) farm leases and (vi) labor. The use of advanced technology, however, allows us to increase our efficiency, in large part mitigating the fluctuations in production costs. Some examples of how the implementation of production technology has allowed us to increase our efficiency and reduce our costs include the use of no-till technology (also known as “direct sowing”, which involves farming without the use of tillage, leaving plant residues on the soil to form a protective cover which positively impacts costs, yields and the soil), crop rotation, second harvest in one year, integrated pest management, and balanced fertilization techniques to increase the productive efficiency in our farmland. Increased mechanization of harvesting and planting operations in our sugarcane plantations and utilization of modern, high pressure boilers in our sugar and ethanol mills has also yielded higher rates of energy production per ton of sugarcane milled.

(iv) Effects of Fluctuations in Commodities Prices

Commodity prices have historically experienced substantial fluctuation. For example, between January 1, 2017 and December 31, 2017, sugar prices decreased by 22.3%, according to Intercontinental Exchange of New York (“ICE-NY”) data, and ethanol prices decreased by 5.1%, according to Escola Superior de Agricultura “Luiz de Queiroz” (“ESALQ”) data. Also, based on Chicago Board of Trade (“CBOT”) data, from January 1, 2017 and December 31, 2017, soybean prices decreased 4.5% and corn prices decreased by 0.4%. Commodity price fluctuations impact our statement of income as follows:


•	Initial recognition and changes in the fair value of biological assets and agricultural produce in respect of unharvested biological assets undergoing biological transformation;


•	Changes in net realizable value of agricultural produce for inventory carried at its net realizable value; and


•	Sales of manufactured products and agricultural produce to third parties.

The following graphs show the spot market price of some of our products for the periods indicated:

(iv) Fiscal Year and Harvest Year

Our fiscal year begins on January 1 and ends on December 31 of each year. However, our production is based on the harvest year for each of our crops and rice. A harvest year varies according to the crop or rice plant and to the climate in which it is grown. Due to the geographic diversity of our farms, the planting period for a given crop or rice may start earlier on one farm than on another, causing differences for their respective harvesting periods. The presentation of production volume (tons) and production area (hectares) in this report in respect of the harvest years for each of our crops and rice starts with the first day of the planting period at the first farm to start planting in that harvest year to the last day of the harvesting period of the crop or rice planting on the last farm to finish harvesting that harvest year.

On the other hand, production volumes for dairy and production volume and production area for sugar, ethanol and energy business are presented on a fiscal year basis.

The financial results in respect of all of our products are presented on a fiscal year basis.

(v) Effects of Fluctuations of the Production Area

Our results of operations also depend on the size of the production area. The size of our own and leased area devoted to crop, rice and sugarcane production fluctuates from period to period in connection with the purchase and development of new farmland, the sale of developed farmland, the lease of new farmland and the termination of existing farmland lease agreements. Lease agreements are usually settled following the harvest season, from July to September for crops and rice, and from May to April for sugarcane. The length of the lease agreements are usually one year for crops, one to five years for rice and five to six years for sugarcane. Regarding crops, the production area can be planted and harvested one or two times per year. As an example, wheat can be planted in July and harvested in December. Right after its harvest, soybean can be planted in the same area and harvested in April. As a result, planted and harvested area can exceed the production area during one year. The production area for sugarcane can exceed the harvested area in one year. Grown sugarcane can be left in the fields and then harvested the following year.

The following table sets forth the production area for the periods indicated:



	Year ended December 31,
	2017	2016	2015	Chg (%) 2017-2016		Chg (%) 2016-2015
		Hectares
Crops ⁽¹⁾	145,409	140,080	148,899	3.8	%	(5.9	)%
Rice	39,728	37,580	35,328	5.7	%	6.4	%
Sugar, Ethanol and Energy	137,697	134,591	129,299	6.7	%	4.1	%

(1) Does not include second crop and forage area.

The increase in crop and rice production area in 2017 compared to 2016, was mainly driven by the transformation of underdeveloped hectares and an increase in leased hectares due to higher margins. The increase in sugar, ethanol and energy production area in 2017 is explained by an increase in leased hectares that provide sufficient cane supply for the entire year.

(vi) Effect of Acquisitions and Dispositions

The comparability of our results of operations is also affected by the completion of significant acquisitions and dispositions. Our results of operations for earlier periods that do not include a recently completed acquisition or do include farming operations subsequently disposed of may not be comparable to the results of a more recent period that reflects the results of such acquisition or disposition. During the fiscal year ended December 31, 2017 and 2016, there were no significant acquisitions or dispositions.

(vii) Macroeconomic Developments in Emerging Markets

We generate nearly all of our revenue from the production of food and renewable energy in emerging markets. Therefore, our operating results and financial condition are directly impacted by macroeconomic and fiscal developments, including fluctuations in currency exchange rates, inflation and interest rate fluctuations, in those markets. The emerging markets where we conduct our business (including Argentina, Brazil and Uruguay) remain subject to such fluctuations.

(viii) Effects of Export Taxes on Our Products

Following the economic and financial crisis experienced by Argentina in 2002, the Argentine government increased export taxes on agricultural products. As of today, the only product that remains subject to export taxes is soybean and its derivatives. Soybean was subject to an export tax of 35.0% between 2002 and December 2015, when it was reduced to 30.0%. The government recently announced that beginning in January 2018 the export tax on soybean will be gradually reduced by 0.5% per month until the export tax rate reaches 18.0%.

As local prices are determined taking into consideration the export parity reference, any increase or decrease in export taxes would affect our financial results.

(ix) Effects of Foreign Currency Fluctuations

Each of our Argentine, Brazilian and Uruguayan subsidiaries uses local currency as its functional currency. A significant portion of our operating costs in Argentina are denominated in Argentine Pesos and most of our operating costs in Brazil are denominated in Brazilian Reais. For each of our subsidiaries’ statements of income, foreign currency transactions are translated into the local currency, as such subsidiaries’ functional currency, using the exchange rates prevailing as of the dates of the relevant specific transactions. Exchange differences resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the statement of income under “finance income” or “finance costs,” as applicable. Our Consolidated Financial Statements are presented in U.S. dollars, and foreign exchange differences that arise in the translation process are disclosed in the consolidated statement of comprehensive income.

As of December 31, 2017, the Peso-U.S. dollar exchange rate was Ars..18.62 per U.S. dollar as compared to Ars.15.88 per U.S. dollar as of December 31, 2016. As of December 31, 2017, the Real-U.S. dollar exchange rate was R$3.31 per U.S. dollar as compared to R$3.26 per U.S. dollar as of December 31, 2016. As of December 31, 2017, the Peso Uruguayo -U.S dollar exchange was Uru. 28.33 per U.S dollar as compared to Uru. 27.52 per U.S dollar as of December 31, 2016.

The following graph shows the Argentine Peso-U.S. dollar rate and the Real-U.S. dollar rate of exchange for the periods indicated:

Our principal foreign currency fluctuation risk involves changes in the value of the Brazilian Reais relative to the U.S. dollar. Periodically, we evaluate our exposure and consider opportunities to mitigate the effects of currency fluctuations by entering into currency forward contracts and other hedging instruments.

(x) Seasonality

Our business activities are inherently seasonal. We generally harvest and sell corn, soybean, rice and sunflower between February and August, and wheat from December to January. With the implementation of “continuous harvest”, sugarcane production is more stable during the year; however, the typical harvesting period in Brazil begins between April and May and ends between November and December. Sales of ethanol are generally concentrated during off-season to capture higher seasonal prices. Sales in other business segments, such as in our Dairy segment, tend to be more stable. However, milk sales are generally higher during the fourth quarter, when weather conditions are more favorable for production. As a result of the above factors, there may be significant variations in our results of operations from one quarter to another, since planting activities may be more concentrated in one quarter whereas harvesting activities may be more concentrated in another quarter. In addition, our quarterly results may vary as a result of the effects of fluctuations in commodity prices and production yields and costs related to the “Initial recognition and changes in fair value of biological assets and agricultural produce” line item. See “—Critical Accounting Policies and Estimates-Biological Assets and Agricultural Produce.”

(xi) Land Transformation

Our business model includes the transformation of pasture and unproductive land into land suitable for growing various crops and the transformation of inefficient farms into farms suitable for more efficient uses through the implementation of advanced and sustainable agricultural practices, such as "no-till" technology and crop rotation. During approximately the first three to five years of the land transformation process of any given parcel, we must invest heavily in transforming the land, and, accordingly, crop yields during such period tend to be lower than crop yields once the land is completely transformed. After the transformation process has been completed, the land requires less investment, and crop yields gradually increase. As a result, there may be variations in our results from one season to the next according to the amount of land in the process of transformation.

Our business model also includes the identification, acquisition, development and selective disposition of farmlands or other rural properties that after implementing agricultural best practices and increasing crop yields we believe have the potential to appreciate in terms of their market value. As a part of this strategy, we purchase and sell farms and other rural properties from time to time. Please see also “Item 3. Risk Factors-Risks Related to Argentina-Argentine law concerning foreign ownership of rural properties may adversely affect our results of operations and future investments in rural properties in Argentina” and “Item 3. Risk Factors-Risks Related to Brazil-Recent changes in Brazilian rules concerning foreign investment in rural properties may adversely affect our investments.”

The results included in the Land Transformation segment are related to the acquisition and disposition of farmland businesses and not to the physical transformation of the land. The decision to acquire and/or dispose of a farmland business depends on several market factors that vary from period to period, rendering the results of these activities in one financial period when an acquisition of disposition occurs not directly comparable to the results in other financial periods when no acquisitions or dispositions occurred.

(xii) Capital Expenditures and Other Investments

Our capital expenditures during the last three years consisted mainly of expenses related to (i) acquiring land, (ii) transforming and increasing the productivity of our land, (iii) planting sugarcane and (iv) expanding and upgrading our production facilities. Capital expenditures (including both maintenance and expansion) totaled $149.8 million for the period ended December 31, 2015; $133.2 million for the period ended December 31, 2016 and $199.6 million for the period ended December 31, 2017. The increase in 2017 compared to 2016 is primarily due to: (a) the renewal and expansion of our sugarcane plantation and the purchase of agricultural and industrial equipment, mainly related to the expansion of the nominal crushing capacity in Angélica from 4.7 million tons per year to 5.6 million tons per year; and (b) the construction of our bio-digester, this facility generates electricity by burning biogas extracted from the effluents produced by our seven thousand milking cows. See also “Capital Expenditure Commitments.”

(xiii) Effects of Corporate Taxes on Our Income

We are subject to a variety of taxes on our results of operations. The following table shows the applicable income tax rates in effect for 2017:



	Tax Rate (%)
Argentina ⁽¹⁾	25
Brazil ⁽²⁾	34
Uruguay	25
Spain	25
Luxembourg	26

________________________________________________________________________________________________


(1)	During 2017, the Argentine Goverment introduced changes in the income tax. The income tax rate will be reduced to 30% for the years 2018 and 2019, and to 25% from 2020 onwards. A new tax on dividends is created with a rate of 7% for the years 2018 and 2019, and 13% from 2020 onwards.


(2)	Including the Social Contribution on Net Profit (CSLL).

Critical Accounting Policies and Estimates

We prepare our Consolidated Financial Statements in accordance with IFRS. The critical accounting policies are policies important to the portrayal of a company’s financial condition and operating results, and which require management to make difficult and subjective judgments that are inherently uncertain. Based on this definition, we have identified the following significant accounting policies as critical to the understanding of our Consolidated Financial Statements. The preparation of our Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting periods. The principal area where our management is required to make significant judgments about estimates where actual results could differ materially from such estimates is in the carrying amount of our biological assets. These estimates and judgments are subject to an inherent degree of uncertainty. We believe that the estimates and judgments upon which we rely are reasonable based upon information available to us at the time that these estimates and judgments are made. We continually evaluate our judgments, estimates and assumptions. To the extent there are material differences between these estimates and actual results, our Consolidated Financial Statements will be affected.

The Company’s critical accounting policies and estimates are consistent with those described in Note 33 to our Audited Consolidated Financial Statements.

Biological Assets and Agricultural Produce

Before harvest, our crops are biological assets. Subsequent to harvest, biological transformation ceases and the harvested crops meet the definition of agricultural produce under IAS 41 “Biological Assets.” As prescribed by IAS 41, we measure growing crops which have not attained significant biological growth at cost less any impairment losses, which approximates fair value. Capitalized expenses for growing crops include land preparation expenses and other direct production expenses incurred during the sowing period including costs of labor, fuel, seeds, agrochemical and fertilizer, among others. We measure biological assets (at initial recognition, when the biological asset has attained significant biological growth, and at each subsequent measurement reporting date) and agricultural produce at the point of harvest at fair value less selling costs. The objective of the fair value model under IAS 41 is to recognize gains and losses arising from such measurements gradually over the asset’s life rather than only on sale or realization. IAS 41 prescribes, among other things, the accounting treatment for biological assets during the period of growth, degeneration, production and procreation, and for the initial measurement of agricultural produce at the point of harvest.

We account for agricultural produce after harvest as inventory, as further described below.

The following table sets forth the way in which we value biological assets and agricultural produce for each of our principal products:



	Biological Asset
	No significant biological growth	Significant biological growth	Agricultural Produce	Manufactured Product

Crops	Crop from planting to approximately 60 days following planting	Crop, from approximately 60 days after planting up to the moment of harvest (total period of approximately 3 to 5 months).	Harvested crop (soybean, corn, wheat, etc.)	N/A

Rice	Rice plant from planting to approximately 60 days following planting	Rice plant, from approximately 60 days after planting up to the moment of harvest (total period of approximately 3 to 4 months).	Harvested rough rice	Processed rice (white rice) and rice snacks

Dairy	Dairy cow is considered a biological asset from birth/purchase to death or sale.		Fluid milk	N/A

Cattle	Beef cattle are considered a biological asset from birth/purchase to death or sale.		N/A	N/A

Sugar, ethanol and energy	The produce derived from the sugarcane from planting or after harvest up to approximately 30 days following planting	The produce derived from the sugarcane, from approximately 30 days after planting until harvest (total period of 10 to 14 months)	Sugarcane	Sugar, ethanol and energy

Valuation Criteria	Cost, which approximates fair value less accumulated impairment losses, if any. For dairy and cattle, fair value less estimated cost to sell.	Fair value (using discounted cash flow valuation) less cost to sell.	Net realizable value, except for rough rice and milk which are valued at cost.	Cost

Gains and losses that arise from measuring biological assets at fair value less selling costs and measuring agricultural produce at the point of harvest at fair value less selling costs are recognized in the statement of income in the period in which they arise as “Initial recognition and changes in fair value of biological assets and agricultural produce.” We value our inventories of agricultural produce after harvest at net realizable value, except for rough rice, which is valued at cost.

When an active market exists for biological assets, we use the quoted market price in the most relevant market as a basis to determine the fair value of our biological assets, as in the case of cattle. For other biological assets where there is neither an active market nor market-determined prices during the growth cycle, we determine their fair value through the use of DCF valuation techniques. Therefore, we generally derive the fair value of our growing biological assets from the expected cash flows of the related agricultural produce. The DCF method requires the input of highly subjective assumptions, including observable and unobservable data. Generally, the estimation of the fair value of biological assets is based on models or inputs that are not observable in the market, and the use of unobservable inputs is significant to the overall valuation of the assets. Various factors influence the availability of observable inputs, including, but not limited to, the type of asset and its location, climate changes and the technology used, among others.

Unobservable inputs are determined based on the best information available, for example, by reference to historical information regarding past practices and results, statistical and agronomical information and other analytical techniques. Changes in the assumptions underlying such subjective inputs can materially affect the fair value estimate and impact our results of operations and financial condition from period to period.

The DCF method requires the following significant inputs to project revenues and costs:

Production cycles;

Production area in hectares;

Estimated crop and rice yields;

Estimated sucrose content (Total Recoverable Sugar or TRS) for sugarcane;

Estimated costs of harvesting and other costs to be incurred until the crops and rice reach maturity (mainly costs of pesticides, herbicides and spraying);

Estimated transportation costs;

Market prices; and

Discount rates.

In contrast to biological assets whose fair value is generally determined using the DCF method, we typically determine the fair value of our agricultural produce at the point of harvest using market prices.

Market prices used in the DCF model are determined by reference to observable data in the relevant market (e.g., for crops and sugar). Harvesting costs and other costs are estimated based on historical and statistical data. Yields are estimated by our agronomic engineers based on several factors, including the location of the farmland, 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 our control, including but not limited to extreme or unusual weather conditions, plagues and other diseases. Discount rates reflect current market assessments of the assets involved and the time value of money.

As of December 31, 2017, the impact of a 5% increase (decrease) in estimated yields, with all other variables held constant, would result in an increase (decrease) in the fair value of our plantations less cost to sell of $9.0 million ( for 2016 the fair value was $9.5 million) for sugarcane. As of December 31, 2017, the impact of a 20% increase (decrease) in estimated yields, with all other variables held constant, would result in an increase (decrease) in the fair value of our plantations less cost to sell of $2.7 million (for 2016 this fair value was $2.3 million) for crops and $8.2 million (2016: $6.6 million) for rice.

The key assumptions discussed above are highly sensitive. Reasonable shifts in assumptions including but not limited to increases or decreases in prices, costs and discount rates used would result in a significant increase or decrease to the fair value of biological assets. 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.

The valuation models and their assumptions are reviewed annually, or quarterly if warranted, and, if necessary, adjusted. During the years ended December 31, 2015, 2016 and 2017, we made no changes to the models.

The aggregate gains and losses arising during a period on initial recognition and from the changes in fair value less costs to sell of biological assets is affected by the way we treat our harvesting and production costs for accounting purposes. Since IAS 41 does not provide guidance on the treatment of these costs, we generally capitalize all costs directly involved with the management of biological assets. These costs may include labor, planting, fertilizers, agrochemicals, harvesting, irrigation and feeding, among others. Then, the cost of the biological asset is adjusted periodically by the re-measurement of the biological asset at fair value less cost to sell. For example, before significant biological growth is attained, costs and expenses are capitalized as biological assets, and once biological assets reach significant biological growth we adjust biological assets to fair value less cost to sell. Accordingly, capitalized biological assets are adjusted periodically at fair value less cost to sell. At the point of harvest, we recognize the agricultural produce at fair value less cost to sell. The periodic adjustments in fair value less cost to sell reflect period to period gains or losses. After agricultural produce is harvested, we may hold it in inventory at net realizable value up to the point of sale, which includes market selling price less direct selling expenses, with changes in net realizable value recognized in the statement of income as incurred. When we sell our inventory, we sell at the prevailing market price and we incur direct selling expenses.

We generally recognize the agricultural produce of crops held in inventory at net realizable value with changes recognized in the statement of income as they occur. Therefore, changes in net realizable value represent the difference in value from the last measurement through the date of sale on an aggregated basis.

We consider gains and losses recorded in the line items of the statement of income “Initial recognition and changes in fair value of biological assets and agricultural produce” and “Changes in net realizable value of agricultural produce after harvest” to be realized only when the related produce or manufactured product is sold to third parties and, therefore, converted into cash or other financial assets. Therefore, “realized” gains or losses means that the related produce or product has been sold and the proceeds are included in revenues for the year.

The sale of agricultural produce is revenue as defined in IAS 18. However, IAS 41 does not provide guidance on the presentation of revenues and costs arising from the selling of biological assets and agricultural produce. Due to the lack of guidance in IAS 41 and based on IAS 1, “Presentation of financial statements,” we present, as a matter of accounting policy, our sales of biological assets and agricultural produce and their respective costs within the lines items “Sales of goods and services rendered” and “Cost of goods and services rendered.” See Notes 4 and 5 to our Consolidated Financial Statements for a breakdown of sales and costs for goods sold and services rendered. The sale of agricultural produce and biological assets represents the consideration received or receivable for the sale to third parties based generally on the applicable quoted market prices of the respective produce or biological asset in the relevant markets at the point of sale. At the point of sale, our agricultural produce is measured at net realizable value, which reflects the sale price less the direct cost to sell, and our biological assets are measured at fair value less cost to sell, in each case, using the applicable quoted market prices in the relevant markets.

Based on the foregoing, the profit of our agricultural produce is recognized under the line ítems “Initial recognition and changes in fair value of biological assets and agricultural produce” and “Changes in net realizable value of agricultural produce after harvest.” When the agricultural produce is sold to third parties we do not record any additional profit as the gain or loss had already been recognized.

The profit of our manufactured products is recognized when they are sold. The cost of manufactured products includes, among others, the cost of agricultural produce transferred internally at fair market value (i.e. harvested sugarcane, rough rice, fluid milk, etc).

Operating Segments

IFRS 8 “Operating Segments” requires an entity to report financial and descriptive information about its reportable segments, which are operating segments or aggregations of operating segments that meet specified criteria. Operating segments are components of an entity about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance. The CODM evaluates the business based on the differences in the nature of its operations, products and services. The amount reported for each segment item is the measure reported to the CODM for these purposes.

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

• The Company’s ‘Farming’ business is comprised of four reportable segments:

•

The Company’s ‘Crops’ segment consists of planting, harvesting and sale of grains, oilseeds and fibers (including wheat, corn, soybeans, cotton and sunflowers, among others), and to a lesser extent the provision of grain warehousing/conditioning, handling and drying services to third parties and the purchase and sale of crops produced by third parties. Each underlying crop in this segment does not represent a separate operating segment. Management seeks to maximize the use of the land through the cultivation of one or more type of crops. Types and surface amount of crops cultivated may vary from harvest year to harvest year depending on several factors, some of them out of the Group´s control. Management is focused on the long-term performance of the productive land, and to that extent, the performance is assessed considering the aggregated combination, if any, of crops planted in the land. A single manager is responsible for the management of operating activity of all crops rather than for each individual crop.


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


•	The Company’s ‘Dairy’ segment consists of the production and sale of milk;


•	The Company’s ‘All other segments’ segment consists of the aggregation of the remaining non-reportable operating segments, which do not meet the quantitative thresholds for disclosure and for which the Group’s management does not consider them to be of continuing significance, namely, Coffee and Cattle.

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

• The Company’s ‘Land Transformation’ segment comprises the (i) identification and acquisition of underdeveloped and undermanaged farmland businesses; and (ii) realization of value through the strategic disposition of assets (generating profits).

• The Company’s ‘Corporate’ segment comprises certain other activities of a holding function nature not allocable to the segments

The following table presents selected historical financial and operating data solely for the periods indicated below as it is used for our discussion of results of operations.



	Year ended December 31,
	2017	2016	2015	Chg (%) 2017-2016		Chg (%) 2016-2015
Sales	( In thousands of $)
Farming Business	322,561	272,543	273,692	18.4	%	(0.4	)%
Crops	197,222	142,124	154,741	38.8	%	(8.2	)%
Soybean(1)	85,527	63,797	77,432	34.1	%	(17.6	)%
Corn (2)	86,238	48,502	41,924	77.8	%	15.7	%
Wheat (3)	16,723	18,191	16,750	(8.1	)%	8.6	%
Sunflower	3,163	7,275	12,659	(56.5	)%	(42.5	)%
Cotton Lint	420	1,434	3,317	(70.7	)%	(56.8	)%
Other crops(4)	5,151	2,925	2,659	76.1	%	10	%
Rice(5)	86,479	96,562	84,668	(10.4	)%	14	%
Dairy	37,522	32,897	32,981	14.1	%	(0.3	)%
All other segments (6)	1,338	960	1,302	39.4	%	(26.3	)%
Sugar, Ethanol and Energy Business	610,617	596,692	400,622	2.3	%	48.9	%
Sugar	305,688	330,895	177,801	(7.6	)%	86.1	%
Ethanol	241,650	211,451	176,150	14.3	%	20	%
Energy	62,218	53,995	46,671	15.2	%	15.7	%
Other (7)	1,061	351	—	202.3	%	100%
Total	933,178	869,235	674,314	7.4	%	28.9	%
Land Transformation (8)	—	—	23,980	100%		(100	)%



	2017/2018	2016/2017	2015/2016	2014/2015
	Harvest	Harvest	Harvest	Harvest	Chg (%) 2016/2017-2015/2016		Chg (%) 2015/2016-2014/2015
Production	Year (9)	Year (9)	Year (9)	Year (9)	Chg (%) 2016/2017-2015/2016		Chg (%) 2015/2016-2014/2015
Farming Business
Crops (tons)(9)	71,644	602,836	583,639	627,385	3.3	%	(7	)%
Soybean (tons )	N/A	205,912	237,681	285,914	(13.4	)%	(16.9	)%
Corn (tons) (2)	N/A	271,276	248,269	232,763	9.3	%	6.7	%
Wheat (tons) (3)	71,644	115,338	82,167	84,609	40.4	%	(2.9	)%
Sunflower (tons )	N/A	10,112	15,521	21,762	(34.8	)%	(28.7	)%
Cotton Lint (tons)	N/A	198	—	2,336	N/A		N/A
Rice(10) (tons )	N/A	234,818	220,758	180,149	6.4	%	22.5	%



	Year ended December 31,
	2017	2016	2015	Chg (%) 2017-2016		Chg (%) 2016-2015
Processed rice(12) (tons)	241,574	229,905	176,456	5.1	%	30.3	%
Dairy(13) (thousand liters)	93,168	92,395	88,556	0.8	%	4.3	%
Sugar, Ethanol and Energy Business
Sugar (tons)	567,068	701,060	464,929	(19.1	)%	50.8	%
Ethanol (cubic meters)	434,015	422,395	361,001	2.8	%	17	%
Energy (MWh)	712,425	751,037	553,090	(5.1	)%	35.8	%
Land Transformation Business (hectares traded)	—	—	10,905	0.0%		0.0%



	2017/2018	2016/2017	2015/2016	2014/2015	Chg (%) 2016/2017-2015/2016		Chg (%) 2015/2016-2014/2015
	Harvest	Harvest	Harvest	Harvest
Planted Area	Year (14)	Year	Year	Year
		(Hectares)
Farming Business(15)
Crops	203,165	190,325	178,491	193,683	6.6	%	(7.8	)%
Soybean	89,917	84,434	88,377	96,476	(4.5	)%	(8.4	)%
Corn (2)	64,726	54,653	42,657	40,044	28.1	%	6.5	%
Wheat (3)	36,533	38,009	32,396	37,020	17.3	%	(12.5	)%
Sunflower	2,863	5,413	9,547	12,314	(43.3	)%	(22.5	)%
Cotton	3,132	2,640	—	3,160	N/A		N/A
Forage	5,994	5,177	5,514	4,669	(6.1	)%	18.1	%
Rice	40,279	39,728	37,580	35,328	5.7	%	6.4	%
Total Planted Area	243,444	230,053	216,071	229,011	6.5	%	(5.7	)%
Second Harvest Area	41,718	39,739	32,896	40,115	20.8	%	(18.0	)%
Leased Area	74,578	64,245	57,595	60,056	11.5	%	(4.1	)%
Owned Croppable Area (16)	121,154	120,893	120,065	124,172	0.7	%	(3.3	)%



	Year ended December 31,
	2017	2016	2015	Chg (%) 2017 - 2016		Chg (%) 2016 - 2015
Sugar, Ethanol and Energy Business
Sugarcane plantation	143,617	134,591	129,299	6.7	%	4.1	%
Owned land	9,145	9,145	9,145	—	%	—	%
Leased land	134,472	125,446	120,154	7.2	%	4.4	%


(1)	Includes soybean, soybean oil and soybean meal.


(2)	Includes sorghum, chia and peanuts.


(3)	Includes barley.


(4)	Includes seeds and farming services.


(5)	Sales of processed rice including rough rice purchased from third parties and processed in our own facilities, rice seeds and services.


(6)	All other segments include our cattle business which primarily consists of leasing land to a third party based on the price of beef. See “Item 4. Information on the Company-B. Business Overview-Cattle Business.” in our Form 20-F.

(7) Includes operating leases and other services.

(8) Represents capital gains from the sale of land.

(9) The table reflects the production in respect of harvest years as of December 31.


(10)	Crop production does not include tons of forage produced.


(11)	Expressed in tons of rough rice produced on owned and leased farms. The rough rice we produce, along with additional rough rice we purchase from third parties, is ultimately processed and constitutes the product sold in respect of the rice business.


(12)	Includes rough rice purchased from third parties and processed in our own facilities. Expressed in tons of rough rice (1 ton of processed rice is approximately equivalent to 1.6 tons of rough rice).


(13)	Raw milk produced at our dairy farms.

(14) Represents the planting plan for 2017/2018 campaign. As of December 31, 2017, 84.0% of the planting plan is seeded.


(15)	Includes hectares planted in the second harvest.


(16)	Does not include potential croppable areas being evaluated for transformation and does not include forage area.

Year ended December 31, 2017 as compared to year ended December 31, 2016

The following table sets forth certain financial information with respect to our consolidated results of operations for the years indicated.



	2017		2016		Chg (%) 2017-2016
	(In thousands of $)				Chg (%) 2017-2016
Sales of goods and services rendered	933,178		869,235		7.4	%
Cost of goods sold and services rendered	(766,727	)	(678,581	)	13.0	%
Initial recognition and Changes in fair value of biological assets and agricultural produce	63,220		125,456		(49.6	)%
Changes in net realizable value of agricultural produce after harvest	8,852		(5,841	)	251.5	%
Margin on Manufacturing and Agricultural Activities Before Operating Expenses	238,523		310,269		(23.1	)%
General and administrative expenses	(57,299	)	(50,750	)	(12.9	)%
Selling expenses	(95,399	)	(80,673	)	(18.3	)%
Other operating income, net	39,461		(8,297	)	575.6	%
Profit from Operations Before Financing and Taxation	125,286		170,549		(26.5	)%
Finance income	11,744		7,957		47.6	%
Finance costs	(131,349	)	(165,380	)	20.6	%
Financial results, net	(119,605	)	(157,423	)	24.0	%
Profit Before Income Tax	5,681		13,126		(56.7	)%
Income tax (Benefit) / Expense	6,068		(9,387	)	164.6	%
Profit for the Year	11,749		3,739		214.2	%

Sales of Goods and Services Rendered



Year ended December 31,	Crops	Rice	Dairy	All other segments	Sugar, Ethanol and Energy	Total
	(In thousands of $)
2017	197,222	86,478	37,523	1,336	610,619	933,178
2016	142,124	96,562	32,897	960	596,692	869,235

Sales of manufactured products and services rendered increased 7.4%, from $869.2 million in 2016 to $933.2 million in 2017, primarily as a result of:

•

a $55.1 million increase in our Crops segment mainly driven by: (i) a 101.9% increase in the volume of corn sold, from 294.7 thousand tons in 2016 to 595.1 thousand tons in 2017; (ii) a 15.9% increase in the volume of soybean sold, from 243.8 thousand tons in 2016 to 282.5 thousand tons in 2017; and (iii) a 7.4% increase in soybean prices, from $261.7 per ton in 2016 to $281.1 per ton in 2017. The increase in the volume of corn sold was mainly driven by higher sales of commercialized corn from third parties profiting from arbitrage opportunities, from 59.8 thousand in 2016 to 337.5 thousand tons in 2017. The increase in the volume of soybean sold was mainly due to: (a) higher sales of commercialization of third parties soybean, from 0.8 thousand tons in 2016 to 22.8 thousand tons in 2017; and (b) a 4.2% increase in yields for soybean second harvest, from 2.4 tons/hectare in 2016 to 2.5 tons/hectare in 2017. This increase is partially offset by a 20.1% decrease in the volume of wheat sold, from 129.6 thousand tons in 2016 to 103.6 thousand tons in 2017; mainly due to a 37.9% decrease in wheat production, from 115.3 thousands in 2016 to 71.6 thousands in 2017, caused by unfavorable weather conditions during 2017.

The following table sets forth the breakdown of sales for the years indicated.



	Year ended December 31,				Year ended December 31,				Year ended December 31,
	2017	2016	% Chg		2017	2016	% Chg		2017	2016	% Chg
	(In millions of $)				(In thousands of tons)				(In $ per ton)
Soybean	79.4	63.8	24.5	%	282.5	243.8	15.9	%	281.1	261.7	7.4	%
Corn (1)	86.2	48.5	77.7	%	595.1	294.7	101.9	%	144.9	164.6	(12.0	)%
Wheat (2)	16.7	18.2	(8.2	)%	103.6	129.6	(20.1	)%	161.5	140.4	15.0	%
Others	14.8	11.6	27.6	%
Total	197.2	142.1	38.8	%


(1)	Includes sorghum, pop corn and peanut.


(2)	Includes barley

•

a $13.9 million increase in our Sugar, Ethanol and Energy segment, mainly due to: (i) a 2.9% increase in the price of ethanol, from $534.1 per cubic meter in 2016 to $549.6 per cubic meter in 2017; (ii) a 37.7% increase in the price of energy, from $52.5 per MWh in 2016 to $72.3 in 2017; and (iii) a 2.3% increase in the volume of sugar and ethanol sold, measured in TRS (Total Recoverable Sugar), from 1.57 million tons in 2016 to 1.60 million tons in 2017. The increase in volume of sugar and ethanol sold was due to an inventories sell-off, of 36.4 thousand tons measured in TRS in 2017 compared to an inventories build-up of 76.1 thousand tons measured in TRS in 2016; partially offset by above average rains during the last quarter of 2017, that generated a 7.9% decrease in the sugarcane milled, from 11.1 million tons in 2016 to 10.2 million tons in 2017, which caused disruptions in harvesting operations. The unfavourable weather during 2017 was partially mitigated by improvements in operational efficiency, with a 3.5% increase in daily milling, from 45.1 thousand tons milled per day to 46.6 thousand tons milled per day. The increase in the volume of sugar and ethanol sold, was partially offset by: (a) a 3.5% decrease in the price of sugar, from $385.1 per ton in 2016 to $371.6 per ton in 2017; and (b)16.3% decrease in the volume of energy sold, from 1.0 million MWh in 2016 to 0.9 million MWh in 2017, caused by the decrease in sugarcane milled.

The following figure sets forth the variables that determine our Sugar and Ethanol sales:


(1)	On average, one metric ton of sugarcane contains 140 kilograms of TRS. While a mill can produce either sugar or ethanol, the TRS input requirements differ between these two products. On average, 1.045 kilograms of TRS equivalent are required to produce 1.0 kilogram of sugar, while the amount of TRS required to produce 1 liter of ethanol is 1.691 kilograms

The following figure sets forth the variables that determine our Energy sales:

The following table sets forth the breakdown of sales of manufactured products for the years indicated.



	Year ended December 31,				Year ended December 31,				Year ended December 31,
	2017	2016	Chg %		2017	2016	Chg %		2017	2016	Chg %
	(in millions of $)				(in thousand units)				(in dollars per unit)
Ethanol (M3)	241.7	211.5	14.3	%	439.7	395.9	11.1	%	549.6	534.1	2.9	%
Sugar (tons)	305.7	330.9	(7.6	)%	822.6	859.3	(4.3	)%	371.6	385.1	(3.5	)%
Energy (MWh)	62.2	54.0	15.2	%	860.8	1,028.3	(16.3	)%	72.3	52.5	37.7	%
Others	1.1	0.4	175.0	%
TOTAL	610.6	596.7	2.3	%

•

a $4.6 million increase in our Dairy segment mainly caused by: (i) a 25.0% increase in fluid milk prices from $0.28 per liter in 2016 to $0.35 per liter in 2017 due to unfavorable weather conditions in Argentina that negatively impacted national production; and (ii) a 6.2% increase in the amount of liters of fluid milk sold, from 87.0 million liters in 2016 to 92.3 million liters in 2017. The increase in the amount of volume sold is attributable to a 1.3% increase in the size of the milking cow herd from an average of 6,880 heads in 2016 to an average of 6,967 heads in 2017. The herd is growing as a result of reducing

heifer and cow sales with the objective of supplying cows to the new freestalls (i.e. number 3 and 4) which will start producing during the second half of 2018. In our free-stall production system, cows are confined in barns where they are protected from harsh weather conditions, and as a result, our productivity was not affected by the unfavorable weather conditions.

This was partially offset by:

•

a $10.1 million decrease in our Rice segment, mainly due to a 10.5% decrease in the volume of white rice sold measured in tons of rough rice, from 278.2 thousand tons in 2016 to 248.9 thousand tons in 2017. The decrease in the volume of white rice sold is explained by an inventories build-up of 30.5 thousand tons in 2017 compared to an inventories sell-off of 25.8 thousand tons in 2016, this is due to a commercial strategy to postpone white rice sales to the first half of 2018 in order to capture higher prices and enhance margins. The decrease in the segment was partially offset by a 1.5% increase in the price of white rice sold measured in rough rice, from $271.1 per ton in 2016 to $275.1 per ton in 2017.

The profit of our agricultural produce is recognized under the line ítems “Initial recognition and changes in fair value of biological assets and agricultural produce” and “Changes in net realizable value of agricultural produce after harvest”. When the agricultural produce is sold to third parties, we do not record any additional profit or loss as the gain or loss has already been recognized.

Cost of Goods Sold and Services Rendered



Year ended December 31,	Crops		Rice		Dairy		All other segments		Sugar, Ethanol and Energy		Total
	(In thousands of $)
2017	(196,302	)	(71,087	)	(36,979	)	(853	)	(461,506	)	(766,727	)
2016	(141,731	)	(83,574	)	(32,571	)	(212	)	(420,493	)	(678,581	)

In the case of our agricultural produce sold to third parties (i.e. soybean, corn, wheat and fluid milk), the value of Cost of Goods and Services Rendered is equal to the value of Sales and Services Rendered. The profit of these products is fully recognized under the line items “Initial recognition and changes in fair value of biological assets and agricultural produce” and “Changes in net realizable value of agricultural produce after harvest.” When the agricultural produce is sold to third parties, we do not record any additional profit or loss as the gain or loss has already been recognized.

In the case of our manufactured products sold to third parties (i.e. sugar, ethanol, energy and white rice), the profit is recognized when they are sold. The Cost of Goods and Services Rendered of these products includes, among others, the cost of the agricultural produce (i.e. harvested sugarcane and rough rice), which is the raw material used in the industrial process and is transferred internally from the farm to the industry at fair market value.

Cost of goods sold and services rendered increased 13.0%, from $678.6 million in 2016 to $766.7 million in 2017. This increase was primarily due to:

•

$41.0 million increase in our Sugar, Ethanol and Energy segment, mainly due to: (i) the 2.3% increase in the volume of sugar and ethanol sold measured in TRS and a 7.3% higher unitary cost in dollar terms. Higher unitary cost are due to: (a) a 13.3% decrease in sugarcane yields, from 98.2 tons per hectare in 2016 to 85.1 tons per hectare in 2017; (b) the elimination of the PIS COFINS tax rebate on ethanol sales during 2017, which negatively affected our industrial costs, coupled with a 8.3% increase in the amount of tax to be paid per cubic meter of ethanol sold ; and (c) a more appreciated Brazilian Real during 2017, which increases costs in dollar terms.

Partially offset by:


•	a $12.5 million decrease in our Rice segment, mainly due to the 10.5% decrease in volume sold; which was partially offset by a 4.9% decrease in the unitary cost in dollar terms due to efficiencies gained during 2017

Initial Recognition and Changes in Fair Value of Biological Assets and Agricultural Produce



Year ended December 31,	Crops	Rice	Dairy	All other segments		Sugar, Ethanol and Energy	Total
	(In thousands of $)
2017	17,158	10,236	11,769	267		23,790	63,220
2016	48,790	10,498	5,476	(13	)	60,705	125,456

Initial recognition and changes in fair value of biological assets and agricultural produce decreased 49.6%, from $125.5 million in 2016 to $63.2 million in 2017. The decrease was mainly due to:


•	A $36.9 million decrease in our Sugar, Ethanol and Energy segment from $60.7 million in 2016 (of which $2.9 million were unrealized) to $23.8 million in 2017 (of which $0.3 million were unrealized). This decrease was mainly due to:

–

a $39.5 million decrease in the recognition at fair value less cost to sell of harvested sugarcane at the point of harvest, from $60.4 million in 2016 to $20.9 million in 2017 due to: (i) a 3.5% decrease in sugar prices; and (ii) a 13.3% decrease in sugarcane yields, from 98.2 tons per hectare in 2016 to 85.1 tons per hectare in 2017, due to above than average yields achieved in 2016 as a result of favorable weather conditions.

–

a $2.6 million increase in the recognition at fair value less cost to sell of non-harvested sugarcane, from $0.3 million in 2016 to $2.9 million in the same period in 2017, mainly generated by: (i) 6.7% increase in the sugarcane plantation area, from 134.6 thousand hectares in 2016 to 143.6 thousand hectares in 2017, as a result of our plan to increase milling in the cluster by 30%; and (ii) the decrease in milling during the fourth quarter of 2017 which resulted in a higher volume of unharvested sugarcane to be crushed during 2018.

•

a $31.6 million decrease in our Crops segment from $48.8 million in 2016 (of which $4.4 million were unrealized) to $17.2 million in 2017 (of which $5.8 million were unrealized). This decrease is primarily due to a decrease of $32.9 million in the recognition at fair value less cost to sell of crops at the point of harvest, from $48.1 million in 2016 to $15.2 million in 2017, mainly due to: (i) lower commodities prices, mainly corn, at the moment of harvesting; and (ii) higher production costs due to the appreciation of the Argentine Peso in real terms.

These decreases were partially offset by:


•	a $6.3 million increase in our Dairy segment, mainly due to the increase in the recognition at fair value less cost to sell of fluid milk, from $5.5 million in 2016 (of which $1.3 million were unrealized) to $11.8 million in 2017 (of which $1.5 million were unrealized), mainly due to the 26.2% increase in fluid milk prices.

Changes in Net Realizable Value of Agricultural Produce after Harvest



Year ended December 31,	Crops		Rice	Dairy	All other segments	Sugar, Ethanol and Energy	Total
	(In thousands of $)
2017	8,852		—	—	—	—	8,852
2016	(5,841	)	—	—	—	—	(5,841	)

from the valuation of forward contracts related to agricultural produce in inventory; and (iii) profit from direct exports. Changes in net realizable value of agricultural produce after harvest increased from a loss of $5.8 million in 2016 to a gain of $8.9 million in 2017. This increase is mainly explained by the increase in local soybean prices that impacted positively in the valuation of our inventory, while during 2016 our soybean inventories suffered a negative impact, as soybean prices increased above our forward contracts.

General and Administrative Expenses



Year ended December 31,	Crops		Rice		Dairy		All other segments		Sugar, Ethanol and Energy		Corporate		Total
	(In thousands of $)
2017	(2,981	)	(4,699	)	(1,058	)	(174	)	(26,806	)	(21,581	)	(57,299	)
2016	(2,770	)	(3,373	)	(983	)	(290	)	(22,648	)	(20,686	)	(50,750	)

Our general and administrative expenses increased 12.9%, from $50.8 million in 2016 to $57.3 million in 2017. The increase is mainly explained by the annual average appreciation of the Brazilian Real.

Selling Expenses



Year ended December 31,	Crops		Rice		Dairy		All other segments		Sugar, Ethanol and Energy		Corporate		Total
	(In thousands of $)
2017	(7,501	)	(13,324	)	(711	)	(156	)	(73,664	)	(43	)	(95,399	)
2016	(5,692	)	(11,583	)	(752	)	(49	)	(62,518	)	(79	)	(80,673	)

Selling expenses increased 18.3%, from $80.7 million in 2016 to $95.4 million in 2017, mainly explained by the increase ethanol sales coupled with the appreciation of the Brazilian Real.

Other Operating Income, Net



Year ended December 31,	Crops		Rice	Dairy	All other segments		Sugar, Ethanol and Energy		Corporate		Total
	(In thousands of $)
2017	7,719		724	662	(23	)	30,419		(40	)	39,461
2016	(8,787	)	402	686	8,497		(8,903	)	(192	)	(8,297	)

Other operating income increased from a $8.3 million loss in 2016 to a $39.5 million gain in 2017, primarily due to:


•	a $39.3 million increase in our Sugar, Ethanol & Energy segment mainly explained by the mark-to-market effect of our sugar hedge positions;


•	a $16.5 million increase in our Crops segment due to the mark-to-market effect of our soybean and corn hedge positions.

Partially offset by:


•	a $8.5 million decrease in our All other segments due to the gain proceeding from an arbitration proceeding against Marfrig Argentina claiming unpaid invoices in 2016.

Other operating income, net of our Rice, Dairy, Land Transformation and Corporate segments remained essentially unchanged.

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Financial Results, Net

Our financial results, net improved from a loss of $157.4 million in 2016 to a loss of $119.6 million in 2017. This was mainly due to the $20.8 million loss that was reclassified from Equity to the “Financial Result, net” line item 2017, in comparison with the $85.2 million loss that was reclassified in 2016, as a substantial portion of our debt matured in 2016 (see “Hedge Accounting-Cash Flow Hedge” described on Note 2 to our Consolidated Financial Statements). This was partially offset by: (i) an increase in our FX losses, from a loss of $19.0 million in 2016 to a loss of $ 38.7 million in 2017, due to the 17% and 6% depreciation of the Argentine Peso and the Brazilian Real, respectively in 2017, compared to the 14% depreciation of the Argentine Peso and the 19% appreciation of the Brazilian Real in 2016; and (ii) the prepayment related expenses that correspond the repayment of to existing loans in Brazil, in the amount of $10.8 million.

The following table sets forth the breakdown of financial results for the periods indicated.



	Year ended December 31,
	2017		2016
	(In $ thousand)				% Change
Interest income	11,230		7,671		46.4	%
Interest expense	(52,308	)	(48,198	)	8.5	%
Foreign exchange losses, net	(38,708	)	(19,062	)	103.1	%
Cash flow hedge – transfer from equity	(20,758	)	(85,214	)	(75.6	)%
Loss from interest rate /foreign exchange rate derivative financial instruments	(2,163	)	(5,694	)	(62.0	)%
Taxes	(3,705	)	(2,719	)	36.3	%
Other Expenses	(13,193	)	(4,207	)	213.6	%
Total Financial Results	(119,605	)	(157,423	)	(24.0	)%

Income Tax benefit / (expense)

For the year ended December 31, 2017 , we recognized a consolidated income tax gain of $6.1 million on gain before income taxes of $ 5.7 million . For the year ended December 31, 2016 we recognized a consolidated income tax expense of $9.4 million on loss before income taxes of $13.1 million. In 2017 the benefit was mainly explained by (1) the recognition of previously unrecognised tax losses now recouped for an amount of $7.6 million in Luxembourg, due to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered; (2) non-taxable income in Brazil, which resulted in non recognition of $2.4 million of income tax and (3) a gain of $1.7 million related to the changes of the statutory income tax rate in Argentina (described on Note 2 to our Consolidated Financial Statements). These effects were partially offset by non-deductible expenses in Brazil and unused tax losses recognized in our operations in Argentina for $2.3 million due to a worsened projections derived for lower expected commodities prices. The effective tax rates were 71.5% for the year ended December 31, 2016 due to non-deductible expenses, mainly related to losses from derivatives in Uruguay ($4.1 million).

Profit for the Year

As a result of the foregoing, our net result for the year increased from $3.7 million in 2016 to $11.7 million in 2017 .

101

Year ended December 31, 2016 as compared to year ended December 31, 2015

The following table sets forth certain financial information with respect to our consolidated results of operations for the years indicated.



	2016		2015		Chg (%) 2016 - 2015
	(In thousands of $)				Chg (%) 2016 - 2015
Sales of goods and services rendered	869,235		674,314		28.9	%
Cost of goods sold and services rendered	(678,581	)	(557,786	)	21.7	%
Initial recognition and Changes in fair value of biological assets and agricultural produce	125,456		54,528		130.1	%
Changes in net realizable value of agricultural produce after harvest	(5,841	)	14,691		(139.8	)%
Margin on Manufacturing and Agricultural Activities Before Operating Expenses	310,269		185,747		67.0	%
General and administrative expenses	(50,750	)	(48,425	)	4.8	%
Selling expenses	(80,673	)	(70,268	)	14.8	%
Other operating income, net	(8,297	)	31,066		(126.7	)%
Share of loss of joint ventures	—		(2,685	)	N/A
Profit from Operations Before Financing and Taxation	170,549		95,435		78.7	%
Finance income	7,957		9,150		(13	)%
Finance costs	(165,380	)	(116,890	)	41.5	%
Financial results, net	(157,423	)	(107,740	)	46.1	%
Profit / (Loss) Before Income Tax	13,126		(12,305	)	(206.7	)%
Income tax Expense / (Benefit)	(9,387	)	7,954		(218	)%
Profit / (Loss) for the Year	3,739		(4,351	)	(185.9	)%

Sales of Goods and Services Rendered



Year ended December 31,	Crops	Rice	Dairy	All other segments	Sugar, Ethanol and Energy	Total
	(In thousands of $)
2016	142,124	96,562	32,897	960	596,692	869,235
2015	154,741	84,668	32,981	1,302	400,622	674,314

Sales of goods and services rendered increased 28.9%, from $ 674.3 million in 2015 to $ 869.2 million in 2016, primarily as a result of:

•

a $196.1 million increase in our Sugar, Ethanol and Energy segment, mainly due to: (i) a 23.1% increase in the volume of sugar and ethanol sold, measured in TRS ⁽¹⁾ , from 1.3 million tons in 2015 to 1.6 million tons in 2016; (ii) a 23.2% increase in the price of ethanol, from $433.4 per cubic meter in 2015 to $534.1 per cubic meter in 2016; (iii) a 29.6% increase in the price of sugar, from $297.2 per ton in 2015 to $385.1 per ton in 2016; and (iv) a 66.7% increase in volume of energy sold, from 0.6 million MWh in 2015 to 1.0 million MWh in 2016; partially offset by a 31.6% decrease in energy prices, from $76.8 per MWh in 2015 to $52.5 per MWh in 2016. The increase in volume of sugar and ethanol sold was due to the 33.7% increase in sugarcane milled, from 8.3 million tons in 2015 to 11.1 million tons in 2016; partially offset by (i) a 3.6% decrease in the TRS content in sugarcane, from 132.0 kilograms per ton in 2015 to 127.3 kilograms per ton in 2016; and (ii) an increase in inventories in 2016 of 76.1 thousand tons measured in TRS compared to a decrease in inventories sell off in 2015 of 83.6 thousand tons measured in TRS. The increase in energy sold was due to: (a) an increase in sugarcane milled; (b) a 356.2% increase in energy sold from third parties, from 63.2 thousand MWh in 2015 to 288.3 thousand Mwh in 2016; and (c) a 1.8% increase in the cogeneration efficiency, from 66.4 KWh per ton crushed in 2015 to 67.6 KWh per ton crushed in 2016. The increase in sugarcane milled, is explained by (i) a 30.8% increase in milling days, from 182 days in 2015 to 238 days in 2016, due to the implementation of non-stop harvest season; and (ii) an increase in sugarcane supply. The increase in sugarcane supply was caused by: (a) a 31.1% increase in the harvested area from 82.3 thousand hectares in 2015 to 107.9 thousand hectares in 2016 due to our focus on planting during 2015 to expand our sugarcane plantation and ensure sugarcane supply; (b) a 5.6% increase in sugarcane

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yields from 93.0 tons per hectare in 2015 to 98.2 tons per hectare in 2016 due to improvements in production practices and good weather; and (c) a 1.2% increase in sugarcane purchased to third parties, from 938.5 thousand tons in 2015 to 950.0 thousand tons in 2016.

The following table sets forth the breakdown of sales of manufactured products for the years indicated.



	Year Ended December 31,				Year Ended December 31,				Year Ended December 31,
	2016	2015	Chg %		2016	2015	Chg %		2016	2015	Chg %
	(in million of $)				(in thousand units)				(in dollars per unit)
Ethanol (M3)	211.5	176.2	20.0	%	439.7	395.9	11.1	%	481.0	445.1	8.1	%
Sugar (tons)	330.9	177.8	86.1	%	822.6	859.4	(4.3	)%	402.3	206.9	94.4	%
Energy (MWh)	54.0	46.7	15.6	%	860.8	1,028.3	(16.3	)%	62.7	45.4	38.1	%
Others	0.4	—	N/A
TOTAL	596.7	400.6

•

a $12.6 million decrease in our Crops segment mainly driven by (i) a 1.5% decrease in soybean prices, from $265.7 per ton in 2015 to $261.7 per ton in 2016; a 22.4% decrease in wheat prices, from $181.0 per ton in 2015 to $140.4 per ton in 2016; and a 21.1% decrease in sunflower prices, from $492.2 per ton in 2015 to $388.3 per ton in 2016; and (ii) a 14.1% decrease in the volume of soybean sold, from 283.8 thousand tons in 2015 to 243.8 thousand tons in 2016; and a 27.1% decrease in the volume of sunflower sold, from 25.8 thousand tons in 2015 to 18.8 thousand tons in 2016. These decreases were partially offset by: (a) a 10.1% increase in corn prices, from $149.4 per ton in 2015 to $164.6 per ton in 2016; (b) a 5.1% increase in the volume of corn sold, from 280.4 thousand tons in 2015 to 294.7 thousand tons in 2016; and a 39.7% increase in the volume of wheat sold, from 92.8 thousand tons in 2015 to 129.6 thousand tons in 2016. The decrease in volume sold was mainly due to: (i) a decrease in soybean and sunflower yields, from 3.0 tons per hectare in 2015 to 2.7 tons per hectare in 2016 for soybean, and from 1.8 tons per hectare in 2015 to 1.6 tons per hectare in 2016 for sunflower due to the exceptional yields achieved in 2015 as a consequence of the favorable weather conditions; and (b) a decrease in the area destined to soybean that was switched to corn due to better expected margins and crop rotation. This was partially offset by an inventories sell-off in 2016 in comparison to an inventories build-up in 2015.

The following table sets forth the breakdown of sales for the years indicated.



	Year ended December 31,				Year ended December 31,				Year ended December 31,
	2016	2015	% Chg		2016	2015	% Chg		2016	2015	% Chg
	(In millions of $)				(In thousands of tons)				(In $ per ton)
Soybean	63.8	75.4	(15.4	)%	243.8	283.8	(14.1	)%	261.7	265.7	(1.5	)%
Corn ⁽¹⁾	48.5	41.9	15.8	%	294.7	280.4	5.1	%	164.6	149.4	10.2	%
Wheat ⁽²⁾	18.2	16.8	8.3	%	129.6	92.8	39.7	%	140.4	181.0	(22.4	)%
Others	11.6	20.6	(43.7	)%
Total	142.1	154.7	(8.1	)%

(1) Includes sorghum, popcorn and peanut.

(2) Includes barley

•

a $11.9 million increase in our Rice segment, mainly due to: (i) a 46.7% increase in the volume of white rice sold measured in tons of rough rice, from 201.4 thousand tons in 2015 to 295.4 thousand tons in 2016; and (ii) a 11.4% increase in the sale of by products from $10.5 million in 2015 to $11.7 million in 2016. This increase is explained by: (a) a 15.7% increase in yields, from 5.1 tons per hectare in 2015 to 5.9 tons per hectare in 2016; (b) a 5.3% increase in the area under production from 37.6 thousand hectares to 39.6 thousand hectares; (c) an increase in inventories, measured in tons of rough rice, of 40.6 thousand tons in 2015 compared to a decrease in inventory of 41.9 thousand tons in 2016. The increase in volumes sold was partially offset by a decrease of 22.0% in the price of white rice, from $368.1 per ton of rough rice equivalent in 2015 to $287.2 per ton of rough rice equivalent in 2016.


•	Our Dairy segment remained essentially unchanged, a 18.2% decrease in fluid milk prices from $0.33 per liter in 2015 to $0.27 per liter in 2016 was offset by (i) a 4.4% increase in the amount of liters of fluid milk sold, from 85.7 million liters in 2015 to

103

89.5 million liters in 2016; and (ii) a 325.0% increase in the volume of powder milk sold, from 0.4 thousand tons in 2015 to 1.7 thousand tons in 2016. The increase in the amount of liters sold is attributable to (a) a 3.3% increase in our milking cow herd driven by enhanced reproduction efficiencies at our two free-stall dairy facilities from an average of 6,658 heads in 2015 to an average of 6,880 heads in 2016; and (b) by a 0.8% increase in cow productivity, from 36.4 liters per day per cow in 2015 to 36.7 liters per day per cow in 2016 due to operating efficiencies.

The profit of our agricultural produce is recognized under the line ítems “Initial recognition and changes in fair value of biological assets and agricultural produce” and “Changes in net realizable value of agricultural produce after harvest”. When the agricultural produce is sold to third parties we do not record any additional profit as the gain or loss had already been recognized.

Cost of Goods Sold and Services Rendered



Year ended December 31,	Crops		Rice		Dairy		All other segments		Sugar, Ethanol and Energy		Total
	(In thousands of $)
2016	(141,731	)	(83,574	)	(32,571	)	(212	)	(420,493	)	(678,581	)
2015	(154,287	)	(69,075	)	(33,030	)	(603	)	(300,791	)	(557,786	)

Cost of goods sold and services rendered increased 21.7%, from $557.8 million in 2015 to $678.6 million in 2016. This increase was primarily due to:


•	a $119.7 million increase in our Sugar, Ethanol and Energy segment mainly due to: (i) the 19.4% increase in volume of sugar and energy sold measured in TRS; and (ii) a 16.3% increase in the fair market value of the harvested sugarcane.


•	a $14.5 million increase in our Rice segment mainly due to the 46.7% increase in the volume sold. This was partially offset by (i) a 18.4% decrease in unitary costs, from $340.6 per ton of rough rice equivalent in 2015 to $ 277.8 per ton of rough rice equivalent in 2016, mainly due to the Argentine Peso depreciation and to operational improvements in our rice mills.

Initial Recognition and Changes in Fair Value of Biological Assets and Agricultural Produce



Year ended December 31,	Crops	Rice	Dairy	All other segments		Sugar, Ethanol and Energy	Total
	(In thousands of $)
2016	48,790	10,498	5,476	(13	)	60,705	125,456
2015	11,561	2,822	7,542	(181	)	32,784	54,528

Initial recognition and changes in fair value of biological assets and agricultural produce increased from $54.5 million in 2015 to $125.5 million in 2016, primarily due to:


•	a $37.2 million increase in our Crops segment, from $11.6 million in 2015 (of which $2.2 million were unrealized) to $48.8 million in 2017 (of which $5.8 million represent the unrealized portion). This was mainly due to:


–	a $37.7 million increase in the recognition at fair value less cost to sell of crops at the point of harvest, from a gain of $10.5 million in 2015 to a gain of $48.2 million in 2016, mainly due to the increase in margins as a result of the removal of export taxes and the depreciation of the Argentine Peso, which dilutes our costs in terms of dollars per hectare.


–	This was partially offset by, a $0.5 million decrease in the recognition at fair value less cost to sell for non-harvested crops, from $1.1 million in 2015 to $0.6 million in 2016, explained by lower projected soybean and corn prices.

104


•	a $27.9 million increase in our Sugar, Ethanol and Energy segment, from $32.8 million in 2015 (of which $24.5 million were realized) to $60.7 million in 2017 (of which $60.4 million were realized). This increase was mainly due to:


–	The changes in the recognition at fair value less cost to sell of sugarcane at the point of harvest increased from $24.5 million in 2015 to $60.4 million in 2016 due to higher sugar prices which increased the fair market value of the harvested sugarcane.


–	This was partially offset by a $8.0 million decrease in the recognition at fair value less cost to sell of non-harvested sugarcane, from $8.3 million in 2015 to $0.3 million in 2016, mainly explained by above average expected yields as of December 2015.


•	a $7.7 million increase in our Rice segment, from $2.8 million in 2015 (of which $2.2 million were realized) to $10.5 million in 2016 (of which $8.2 million were realized). This increase was mainly due to :


–	a $7.6 million increase in the recognition at fair value less cost to sell of the rice at the point of harvest, from $2.6 million in 2015 to $10.2 million in 2016 mainly due to: (i) a 15.7% increase in yields; and (ii) the increase in area under production; and (iii) the depreciation of the Argentine Peso which impacts our costs.


•	a $2.1 million decrease in our Dairy segment, from $7.5 million in 2015 (of which $7.5 million were realized) to $5.5 million in 2016 (of which $4.2 million were realized). This decrease was mainly due to:


–	a $3.3 million decrease in the recognition at fair value less cost to sell of fluid milk, from $7.5 million in 2015 to $4.2 million in 2016, mainly due to the 18.2% decrease in fluid milk prices.

Changes in Net Realizable Value of Agricultural Produce after Harvest



Year ended December 31,	Crops		Rice	Dairy	All other segments	Sugar, Ethanol and Energy	Total
	(In thousands of $)
2016	(5,841	)	—	—	—	—	(5,841	)
2015	14,691		—	—	—	—	14,691

Changes in net realizable value of agricultural produce after harvest is mainly composed by: (i) profit or loss from commodity price fluctuations during the period of time the agricultural produce is in inventory, which affects its fair value; (ii) profit or loss from the valuation of forward contracts related to agricultural produce in inventory; and (iii) profit from direct exports. Changes in net realizable value of agricultural produce after harvest increased from $3.4 million in 2014 to $14.7 million in 2015. This increase is mainly explained by the steep depreciation of the Argentine Peso in 2015 that impacted positively on the valuation of our inventories which are recorded in their functional currency, compared to the negative impact of higher soybean prices on our valuation of forward contracts in 2016.

General and Administrative Expenses



Year ended December 31,	Crops		Rice		Dairy		All other segments		Sugar, Ethanol and Energy		Corporate		Total
	(In thousands of $)
2016	(2,770	)	(3,373	)	(983	)	(290	)	(22,648	)	(20,686	)	(50,750	)
2015	(3,987	)	(3,136	)	(1,451	)	(74	)	(18,301	)	(21,476	)	(48,425	)

Our general and administrative expenses increased 5.0%, from $48.4 million in 2015 to $50.8 million in 2016, mainly explained by the appreciation of the Brazilian Real.

105

Selling Expenses



Year ended December 31,	Crops		Rice		Dairy		All other segments		Sugar, Ethanol and Energy		Corporate		Total
	(In thousands of $)
2016	(5,692	)	(11,583	)	(752	)	(49	)	(62,518	)	(79	)	(80,673	)
2015	(5,672	)	(12,592	)	(663	)	(49	)	(50,729	)	(563	)	(70,268	)

Selling expenses increased 14.8%, from $70.3 million in 2015 to $80.7 million in 2016. The $11.8 million increase in our Sugar, Ethanol and Energy segment is mainly explained by the increase in sugar and ethanol sales.

Other Operating Income, Net



Year ended December 31,	Crops		Rice	Dairy		All other segments	Sugar, Ethanol and Energy		Land Transformation	Corporate		Total
	(In thousands of $)
2016	(8,787	)	402	686		8,497	(8,903	)	—	(192	)	(8,297	)
2015	16,422		600	(479	)	6	6,340		7,914	263		31,066

Other operating income, net decreased 126.7% from a $31.1 million gain in 2015 to a $8.3 million loss in 2016, primarily due to:


•	a $25.2 million decrease in our Crops segment mainly explained by the mark-to-market effect of outstanding hedge positions, which was negatively affected by the increase in futures prices during 2016.


•	a $7.9 million decrease in our Land Transformation segment due to the sale in 2015 of “La Cañada”, a 3,399 hectare farm located in the province of San Luis, Argentina, for a total consideration of $12.6 million.


•	a $15.2 million decrease in our Sugar, Ethanol & Energy segment mainly explained by the mark-to-market effect of outstanding hedge positions; which were negatively affected by the increase in sugar futures prices in 2016.

This was partially offset by:


•	a $8.4 million increase in All other segments, that mainly is related to the settlement of an arbitration dispute with Marfrig Argentina SA, subsidiary of Marfrig Alimentos SA. The settlement compensates Adecoagro for unpaid invoices and provides indemnification for early termination of lease agreements for cattle grazing activities.

Share of Loss of Joint Ventures



Year ended December 31,	Crops		Rice	Dairy	All other segments	Sugar, Ethanol and Energy	Corporate	Total
	(In thousands of $)
2016	—		—	—	—	—	—	—
2015	(2,685	)	—	—	—	—	—	(2,685	)

Our share of loss of Joint Ventures totaled a loss of $2.7 million in 2015 to zero in 2016. The result in 2015 is explained by the 50% interest that we hold in CHS AGRO, a joint venture with CHS Inc., dedicated to the processing of confectionary sunflower. In 2016, as the share of losses of the investee equals or exceeds the carrying amount of an investment the Company discontinue applying the equity method, the investment is reduced to zero and does not record additional losses.

106

Financial Results, Net

Net financial losses increased 46.1% from a loss of $107.7 million in 2015 to a loss of $157.4 million in 2016. This was due to: (i) the $32.7 million loss that was reclassified from Equity to the “Financial Result, net” line item in 2015, compared to the $85.2 million loss that was reclassified in the same period in 2016. Please see “Hedge Accounting-Cash Flow Hedge” described on Note 3 to our Consolidated Financial Statements.

The following table sets forth the breakdown of financial results for the years indicated.



	Year ended December 31,
	2016		2015
	(In $ thousand)				% Change
Interest income	7,671		8,201		(6.5	)%
Interest expense	(48,198	)	(49,491	)	(2.6	)%
Foreign exchange losses, net	(19,062	)	(23,423	)	(18.6	)%
Cash flow hedge – transfer from equity	(85,214	)	(32,700	)	160.6	%
Loss from interest rate /foreign exchange rate derivative financial instruments	(5,694	)	(4,437	)	28.3	%
Taxes	(2,719	)	(3,358	)	(19.0	)%
Other Income/(Expenses)	(4,208	)	(2,532	)	66.2	%
Total Financial Results	(157,423	)	(107,740	)	46.1	%

Income Tax (expense) / benefit

For the year ended December 31, 2016, we recognized a consolidated income tax expense of $9.4 million on gain before income taxes of $13.1 million. For the comparable 2015 period, we recognized a consolidated income tax benefit of $8.0 million on loss before income taxes of $12.3 million. The effective tax rates were 71.5% due to nondeductible expenses, mainly related to losses from derivatives in Uruguay and in Brazil. For the year 2015 the asset recognized was higher than the theoretical income tax rate due to the non taxable gains of derivative financial instruments of approximately $17 million in Uruguay.

Profit / (Loss) for the Year

As a result of the foregoing, our net result for the year increased from a loss of $4.3 million in 2015 to a gain of $3.7 million in 2016.

B. LIQUIDITY AND CAPITAL RESOURCES

Our liquidity and capital resources are and will be influenced by a variety of factors, including:


•	our ability to generate cash flows from our operations;


•	the level of our outstanding indebtedness and the interest that we are obligated to pay on such outstanding indebtedness;


•	our capital expenditure requirements, which consist primarily of investments in new farmland, in our operations, in equipment and plant facilities and maintenance costs; and


•	our working capital requirements.

Our principal sources of liquidity have traditionally consisted of shareholders’ contributions, short and long term borrowings and proceeds received from the disposition of transformed farmland or subsidiaries.

We believe that our working capital will be sufficient during the next 12 months to meet our liquidity requirements.

107

Years ended December 31, 2017 , 2016 and 2015

The table below reflects our statements of Cash Flow for the fiscal years ended December 31, 2017 , 2016 and 2015 .



	Year ended December 31,
	2017		2016		2015
	(in thousands of $)
Cash and cash equivalents at the beginning of the year	158,568		198,894		113,795
Effect of exchange rate changes on cash and cash equivalents	(8,337	)	7,969		(27,449	)
Net cash generated from operating activities	237,105		255,401		145,186
Net cash used in investing activities	(188,335	)	(122,014	)	(125,051	)
Net cash used / generated from financing activities	70,194		(181,682	)	92,413
Cash and cash equivalents at the end of the year	269,195		158,568		198,894

Operating Activities

Year ended December 31, 2017

Net cash generated by operating activities was $237.1 million for the year ended December 31, 2017 . During this year, we generated a net income of $11.7 million that included non-cash charges relating primarily to depreciation and amortization of $151.0 million , interest and other financial expenses, net of $53.4 million , $38.7 million gain from derivative financial instruments and forwards, $14.6 million gain from the unrealized portion of “Initial recognition and changes in fair value of biological assets”, $38.7 million foreign exchanges losses, and $20.8 million loss as a result of the reclassification from Equity to Financial Results, net in connection with the cash flow hedge accounting.

In addition, other changes in operating asset and liability balances resulted in a net decrease in cash of $18.7 million, primarily due to an increase the cash collected for the derivative positions. During 2017 income tax paid totaled $2.9 million .

Year ended December 31, 2016

Net cash generated by operating activities was $255.4 million for the year ended December 31, 2016 . During this year, we generated a net income of $3.7 million that included non-cash charges relating primarily to depreciation and amortization of $127.5 million, interest and other financial expenses, net of $44.7 million, $21.7 million loss from derivative financial instruments and forwards, $9.8 million gain from the unrealized portion of “Initial recognition and changes in fair value of biological assets”, $19.1 million foreign exchanges losses, and $85.2 million loss as a result of the reclassification from Equity to Financial Results, net in connection with the cash flow hedge accounting.

In addition, other changes in operating asset and liability balances resulted in a net decrease in cash of $51.5 million, primarily due to an increase in trade and other receivables, an increase in inventories totaling $22.3 million, an increase in biological asset of $23.7 million, and an increase of $17.9 million from derivative financial instruments. These effects were partially offset by an increase of $39.1 million in trade and other payables.

Year ended December 31, 2015

Net cash generated by operating activities was $145.2 million for the year ended December 31, 2015 . During this year, we generated a net loss of $4.4 million that included non-cash charges relating primarily to depreciation and amortization of $104.4 million, interest and other financial expenses, net of $43.8 million, $17.7 million of Gain from derivative financial instruments and forwards, $11.3 million gain from the unrealized portion of “Initial recognition and changes in fair value of biological assets”, $23.4 million of foreign exchange losses; and $32.7 million loss as a result of the reclassification from Equity to Financial Results, net in connection with the cash flow hedge accounting.

In summary, the main drivers for the cash flow generated by operating activities were the profits from operations of our Sugar, Ethanol business and the collections from derivative positions.

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Investing Activities

Year ended December 31, 2017

Net cash used in investing activities totaled $188.3 million in the year ended December 31, 2017 , primarily due to $84.0 million related to the renewal and expansion of our sugarcane plantation; $114.5 million related to purchase of agricultural and industrial equipment. Net inflows from investments activities were related to interest income of $11.2 million .

Year ended December 31, 2016

Net cash used in investing activities totaled $122.0 million in the year ended December 31, 2016 , primarily due to $74.2 million related to the renewal and expansion of our sugarcane plantation; $58.3 million related to purchase of agricultural and industrial equipment. Net inflows from investments activities were related to interest income of $7.7 million.

Year ended December 31, 2015

Net cash used in investing activities totaled $125.1 million in the year ended December 31, 2015 , primarily due to the purchases of property, plant and equipment (mainly acquisitions of machinery, buildings and facilities for the completion of the second phase of Ivinhema mill), totaling $97.7 million; $44.1 million in bearer plants related mainly to the expansion and replacement of our sugarcane plantation area in Mato Grosso do Sul. Net inflows from investing activities were mainly related to the sale of La Cañada farm for an amount of $12.6 million and to the interest income for an amount of $8.2 million.

Financing Activities

Year ended December 31, 2017

Net cash provided by financing activities was $70.2 million in the year ended December 31, 2017 , primarily derived from the issuance of senior notes 2027 for $495.7 million and from the incurrence of a new syndicated long term loan by Rabobank and ING among others lenders in the amounts of $232.4 million and short term loan of $106.7 million , respectively. The main use of proceeds of the notes was the prepayment of long-term debt of our Brazilian subsidiaries. Accordingly, payments of long-term borrowings totaled $602.7 million . Interest paid net totaled $41.6 million and re-purchase of our own shares totaled $38.4 million .

Year ended December 31, 2016

Net cash used in financing activities was $181.7 million in the year ended December 31, 2016 , primarily derived from net payment of borrowings in the amounts of $125.2 million. During this period, interest paid totaled $48.4 million and re-purchases of our own shares totaled $4.8 million.

Year ended December 31, 2015

Net cash provided by financing activities was $92.4 million in the year ended December 31, 2015 primarily derived from the incurrence of new long and short term loans, mainly for our Brazilian operations related to the Sugar and Ethanol cluster development of $299.3 million and $211.0 million, respectively; and from the sale of non-controlling interest in subsidiaries for $22 million. All these effects were partially offset by payments of long and short term borrowings for $165.5 million and $208.3 million, respectively. During this period, interest paid totaled $48.4 million.

Cash and Cash Equivalents

Historically since our cash flows from operations were insufficient to fund our working capital needs and investment plans, we funded our operations with proceeds from short-term and long-term indebtedness and capital contributions from existing and new private investors. In 2011, we raised $421.8 million from an Initial Public Offering (“IPO”) and simultaneous private placement. As of December 31, 2017 , our cash and cash equivalents amounted to $269.2 million .

However, we may need additional cash resources in the future to continue our investment plans. Also, we may need additional cash if we experience a change in business conditions or other developments. We also might need additional cash resources in the future if we find and wish to pursue opportunities for investment, acquisitions, strategic alliances or other similar investments. If we ever determine that our cash requirements exceed our amounts of cash and cash equivalents on hand, we might seek to issue debt or additional equity securities or obtain additional credit facilities or realize the disposition of transformed farmland and/or

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subsidiaries. Any issuance of equity securities could cause dilution for our shareholders. Any incurrence of additional indebtedness could increase our debt service obligations and cause us to become subject to additional restrictive operating and financial covenants, and could require that we pledge collateral to secure those borrowings, if permitted to do so. It is possible that, when we need additional cash resources, financing will not be available to us in amounts or on terms that would be acceptable to us or at all.

Indebtedness and Financial Instruments

The table below illustrates the maturity of our indebtedness (excluding obligations under finance leases) and our exposure to fixed and variable interest rates:



	As of December 31,
	2017	2016
Fixed rate:
Less than 1 year(l)	132,998	67,682
Between 1 and 2 years	35,762	43,630
Between 2 and 3 years	20,097	40,047
Between 3 and 4 years	20,130	21,857
Between 4 and 5 years	16,310	21,116
More than 5 years	495,754	20,239
Total fixed rate:	721,051	214,571
Variable rate:
Less than 1 year(l)	21,833	137,331
Between 1 and 2 years	22,871	150,517
Between 2 and 3 years	17,945	81,947
Between 3 and 4 years	18,215	18,457
Between 4 and 5 years	11,164	18,309
More than 5 years	4,774	14,083
Total variable rate:	96,802	420,644
Total:	817,853	635,215

________________________________________________________________________________________________


(1)	The Company plans to partially rollover its short term debt using new available lines of credit, or on using operating cash flow to cancel such debt.

Borrowings incurred by the Company’s subsidiaries in Brazil are repayable at various dates between January 2018 and April 2024 and bear either fixed interest rates ranging from 2.50% to 9.0% per annum or variable rates based on LIBOR or other specific base-rates plus spreads ranging from 4.13% to 17.52% per annum. At December 31, 2017 LIBOR (six months) was 1.80% (2016: 1.32%).

Borrowings incurred by the Group´s subsidiaries in Argentina are repayable at various dates between January 2018 and September 2024 and bear either fixed interest rates ranging from 6.11% and 7.00% per annum for those borrowings denominated in US dollar, and a fixed interest rate of 9.90% and 28.75% per annum for those borrowings denominated in Argentine Pesos.

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Brazilian Subsidiaries

The main loans of the Company’s Brazilian Subsidiaries identified below are:



Bank	Grant date	Nominal amount		Capital outstanding as of December 31				Maturity date	Annual interest rate
		Nominal amount		2017			2016
		(In millions)		Millions of Reais		Millions of equivalent Dollars	Millions of equivalent Dollars
Banco Do Brasil (1)	October 2012	R$	130.0	R$	91.3	27.6	33.7	November 2022	2.94% with 15% of bonus performance
Itau BBA FINAME Loan (2)	December 2012	R$	45.9	R$	25.2	7.6	9.3	December 2022	2.50%
Itau BBA	March 2013	R$	75.0	R$	-	-	5.8	-	CDI + 3.20%
Banco do Brasil / Itaú BBA Finem Loan (3)	September 2013	R$	273.0	R$	176.5	53.4	67.3	January 2023	6.77%
BNDES Finem Loan (4)	November 2013	R$	215.0	R$	136.9	41.4	50.3	January 2023	3.75%
ING / Rabobank / ABN / HSBC / Credit Agricole / Caixa Geral / Galena (7)	January 2015	US$	160.0		-	-	98.0	-	LIBOR 3M plus 4.40%
ING / Rabobank / Bladex / Credit Agricole / Votorantim / ABN (7)	August 2015	US$	110.0		-	-	110.0	-	LIBOR 3M plus 4.65%
Rabobank (7)	February 2016	US$	40.0		-	-	40.0	-	LIBOR 3M plus 3.50%
Tokyo-Mitsubishi (5)	August 2016	US$	30.0		-	30.0	30.0	August 2019	6.35%
Bradesco (7)	July 2016	R$	90.0		-	-	27.6	-	CDI + 2.10%
Votorantim (6)	July 2016	US$	15.0		-	10.0	15.0	June 2019	LIBOR 3M plus 4.60%


(1)	Collateralized by (i) a first degree mortgage of the Carmen (Santa Agua) farm; (ii) a first degree mortgage of the Sapálio farm; (iii) a first degree mortgage of the Takuare farm; and (iv) liens over the Ivinhema mill and equipment.


(2)	Collateralized by (i) a first degree mortgage of the Carmen (Santa Agua) farm; (ii) a first degree mortgage of the Sapálio farm; (iii) a first degree mortgage of the Takuare farm; and (iv) liens over the Ivinhema mill and equipment.


(3)	Collateralized by (i) a first degree mortgage of the Carmen (Santa Agua) farm; (ii) a first degree mortgage of the Sapálio farm; (iii) a first degree mortgage of the Takuare farm; (iv) liens over the Ivinhema mill and equipment; and (v) power sales contract.


(4)	Collateralized by (i) liens over the Ivinhema mill and equipment; and (ii) power sales contracts.


(5)	Collateralized by sales contracts.


(6)	Collateralized by (i) power sales contract and (ii) sales contracts.


(7)	These loans were prepaid in 2017, with the proceeds of the Senior Notes 2027.

Argentinian Subsidiaries

The principal loan of Adeco Agropecuaria S.A. and Pilaga S.A., our Argentinian Subsidiaries is:



Bank	Grant date	Nominal amount	Capital outstanding as of December 31		Maturity date	Annual interest rate
		Nominal amount	2017	2016
		(In millions)	(In millions)	(In millions)
IDB Tranche A (1)	Feb-09	USD 20	US$3.07	US$6.15	Nov-18	6.11% per annum
IFC Tranche A (2)	Dec-16	USD 25	US$24.67	US$25.00	Sep-21	4.3% plus LIBOR
IFC Tranche B (2)	Dec-16	USD 25	US$24.93	US$25.00	Sep-23	4% plus LIBOR

(1): Collateralized by property, plant and equipment with a net book value of US$ 24.77 million , by a mortgage over (i) Carmen and La Rosa farms which are property of Adeco Agropecuaria S.A. and (ii) El Meridiano farm which is the property of Pilagá S.A.

(2): Collateralized by a US$ 75 million mortgage over Carmen farm, which is property of Adeco Agropecuaria S.A.

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The Company entered into a floating to fix interest rate forward swap, fixing LIBOR at 1.25%, effective May 2012.

The above mentioned loans contain customary financial covenants and restrictions which require us to meet pre-defined financial ratios, among other restrictions, as well as restrictions on the payment of dividends. These financial ratios are measured considering the statutory financial statements of the Argentinian Subsidiaries.

Senior Notes 2027

On September 21, 2017, the Company issued senior notes (the “Notes 2027”) for US$ 500 million, at an annual nominal rate of 6%. The Notes will mature on September 21, 2027. Interest on the Notes is payable semi-annually in arrears on March 21 and September 21 of each year, beginning on March 21, 2018. The total proceeds of the issuance net of expenses was $495.7 million .

During 2017 and 2016 the Company was in compliance with all financial covenants.

Short-term Debt .

As of December 31, 2017 , our short term debt totaled $154.9 million .

We maintain lines of credit with several banks in order to finance our working capital requirements. We believe that we will continue to be able to obtain additional credit to finance our working capital needs in the future based on our past track record and current market conditions.

C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.

We are involved in the genetic improvement and development of new rice varieties in respect of our rice seed business in Argentina. Our efforts are directed to improving all processes related to the selection of better materials. The focus is on obtaining superior seeds with weather yield, industrial performance, commercial quality and culinary parameters, with market demand being the ultimate driver. On the farm level, we aim our research of new varieties and hybrids of rice adapted to local conditions and production parameters. In connection with to these goals, we have entered into agreements with selected research and development institutions such as INTA in Argentina, FLAR and HIAAL in Colombia, EPAGRI, IRGA, BASF and others. Our rice seed research team continuously tests and develops new varieties.

We are currently reinforcing our partnership with HIAAL (Híbridos de Arroz para América Latina or Rice Hybrids for Latam) in order to develop rice hybrid seeds.

Since 2008, we developed and released four new rice varieties to the market. The newest one, named SCS121 CL, was introduced in 2017, and includes the Clearfield® technology, which was developed in collaboration with BASF, and is tolerant to herbicides that control harmful weeds.

We have registered our own varieties of rice seeds with the corresponding Argentine authorities; the National Institute of Seeds (INASE) and the National Registry of Seed Variety Property (RNPC). Regarding intellectual property of our seeds, we operate under the standards of ArPOV (Asociación Argentina de Protección de las Obtenciones Vegetales)

We use our seed varieties in our farms and also sell them to rice producers in Argentina, Brazil, Uruguay and Paraguay.

We are also developing Zero Grade Level technology in our farms, which help us to reduce water consumption and so energy consumption as well. Additionally, we are developing an Irrigation Surveillance methodology based on the use of Drones, from which we expect to improve water management efficiencies and improved rice yield performance. See more details for both cases in “Technology and Best Practices” section.

Regarding our Sugar & Ethanol business, we have effectively implemented state-of-the-art technologies such as high pressure boilers for high cogeneration capacity, full mechanization of agricultural operations with online GPS tracking systems on all

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vehicles (trucks, combines, planters), and concentrated vinasse system among others. In addition to that, we are developing vinasse-to-biogas technology in our Cluster in Mato Grosso do Sul (For more details see “Sugar, Ethanol and Energy” in “Operations and Principal Activities” Section). Currently, we are developing a seedling production method called “MPB” (Muda Pre Brotada or Pre-Sprout Seedling). It briefly consist of making the seedling sprout in a greenhouse and planting them directly on the fields, instead of the traditional planting of billets (sugarcane stalk pieces). Two main goals are pursued through this technique. One is to introduce new promising and healthy varieties quickly. Second goal is to obtain a reduction of planting cost, which is achieved by using much less volume of planting seedling per hectare. In addition, and because of this, more land can be applied to sugarcane for milling, instead of using that sugarcane for seedling purposes.

With regards to our Dairy segment in Argentina, we have successfully adapted and implemented the Free Stall model in our operations. Additionally, we have invested in technology to improve the genetics, health and feeding techniques of our cows in order to enhance our milk production. Currently, we are implementing Sexed Semen Technology in all our cows, which is delivering preliminary promising results. The primary goal is to enhance the production of females from our own herd. This allows us to increase the speed-capacity of organic growth and/or to intensify our cow-genetic selection process. The former being critical to our current Dairy growth project, and the latter being key to improve cow performance (productivity, health, and fertility) (See more details in “Dairy Business” in “Operations and Principal Activities” Section).

In addition to traditional R&D activities, since we are constantly looking to improve efficiencies in each of our businesses, we are also constantly researching and analyzing all the available technologies that could be applied in our operations. In addition, we do not only select the best technologies and techniques, but we are strongly involved in their adaptation to our specific needs and local circumstances. Our internal research group is comprised of interdisciplinary teams (agronomists, veterinarians, industrial engineers, technicians, finance and commercial). The group offers support to all business lines and through different levels, from the optimization of current operations, evaluation of new technologies, development of new products, to the assessment of a whole new production system.

Currently we are actively involved in the local AgTech (Agricultural digital-based Technology) ecosystems to identify any high-potential Startup that would not only be able to provide alternative solutions for our operationsand potentially the market. We are also evaluating potential investment in Startups that fit our business (see “Technology and Best Practices” section)

We do not own any registered patents, industrial models or designs, apart from those described in the first paragraph of this section.

D. TREND INFORMATION

See “Item 5. Operating and Financial Review and Prospects—A. Operating Results—Trends and Factors Affecting Our Results of Operations.”

E. OFF-BALANCE SHEET ARRANGEMENTS

For any of the periods presented, we did not have any off-balance sheet transactions, arrangements or obligations with unconsolidated entities or otherwise that are reasonably likely to have a material effect on our financial condition, results of operations or liquidity.

F. TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

The following table summarizes our significant contractual obligations and commitments as of December 31, 2017 :



	Less than 1 year	Between 1 and 2 years	Between 2 and 5 years	Over 5 Years	Total
	(in millions of $)
Borrowings ⁽¹⁾	198.0	96.9	56.5	797.2	1,148.6
Leases and agricultural partnership	42.4	31.7	57.0	32.8	163.9
Total	240.4	128.6	113.5	830.0	1,312.5

(1) Includes interest

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G. SAFE HARBOR

See section entitled “Forward-Looking Statements” appearing on page iv in this annual report.

Item 6. Directors, Senior Management and Employees

A. DIRECTORS AND SENIOR MANAGEMENT

Board of Directors

The following table sets forth information for our directors as of the date of this annual report:



Name	Position (*)	Date of appointment	Age	Year term expires
Mariano Bosch	Director /CEO	2017	48	2020
Alan Leland Boyce	Director	2016	58	2019
Andrés Velasco Brañes	Director	2016	57	2019
Daniel González	Director	2017	48	2020
James David Anderson	Director	2017	60	2019
Guillaume Van der Linden	Director	2018	58	2021
Walter Marcelo Sánchez	Director/CCO	2016	56	2019
Mark Schachter	Director	2018	38	2021
MarceloVieira	Director	2018	66	2021
Plínio Musetti	Director	2017	64	2020
Ivo Andrés Sarjanovic	Director	2018	53	2021

(*) We expect the board of directors to appoint a new Chairman at its scheduled meeting in May 2018.

Alan Leland Boyce, Guillaume van der Linden, Plínio Musetti, Mark Schachter, Andrés Velasco Brañes, Daniel González , James David Anderson and Ivo Andrés Sarjanovic qualify as independent directors, and the other directors are not independent in accordance with NYSE standards.

A description of the main tasks currently performed by each director as well as a description of each director’s employment history and education follows:

Mariano Bosch. Mr. Bosch co-founded Adecoagro in 2002 and since then has been the Chief Executive Officer and a member of the Company’s board of directors. From 1995 to 2002, Mr. Bosch served as the founder and Chief Executive Officer of BLS Agribusiness, an agricultural consulting, technical management and administration company. Mr. Bosch is also currently a member of the advisory board of Teays River Investments LLC, a farmland investment management firm in North America. Mr. Bosch has over 22 years of experience in agribusiness development and agricultural production. He actively participates in organizations focused on promoting the use of best practices in the sector, such as the Argentine Association of Regional Consortiums for Agricultural Experimentation (AACREA) and the Conservational Production Foundation (Producir Conservando). He graduated with a degree in Agricultural Engineering from the University of Buenos Aires. Mr. Bosch is an Argentine citizen.

Alan Leland Boyce. Mr. Boyce is a co-founder of Adecoagro and has been a member of the Company’s board of directors since 2002. Since 2005, Mr. Boyce has been the Chief Executive Officer of Absalon, a joint venture between Soros and the financial system of Denmark that assists in organizing a standardized mortgage-backed securities market in Mexico. Mr. Boyce is co-founder and Chairman of Materra LLC, a California based farming company with a focus on growing and exporting animal forage. Since 2007, he has also been a consultant for Soros, where he works to implement the Danish mortgage system in the United States. Since 1985, Mr. Boyce has served as the Chief Financial Officer of Boyce Land Co. Inc., a farmland management company that runs 10 farmland limited partnerships in the U.S. Mr. Boyce formerly served as the director of special situations at Soros from 1999 to 2007, where he managed an asset portfolio of the Quantum Fund and had principal operational responsibilities for the bulk of the fund’s investments in South America. Mr. Boyce also served as managing director in charge of fixed-income arbitrage at Bankers Trust from 1986 to 1999, as senior managing director for investment strategy at Countrywide Financial from 2007 to

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2008, and worked at the U.S. Federal Reserve Board from 1982 to 1984. He graduated with a degree in Economics from Pomona College, and has a Master in Business Administration from Stanford University. Mr. Boyce is an American citizen.

Andres Velasco Brañes. Mr. Velasco has been a member of the Company’s board of directors since 2011. Mr. Velasco was the Minister of Finance of Chile between March 2006 and March 2010, and a presidential candidate in Chile in 2013. He was also the president of the Latin American and Caribbean Economic Association from 2005 to 2007. Prior to entering government, Mr. Velasco was Sumitomo-FASID Professor of Development and International Finance at Harvard University’s John F. Kennedy School of Government, an appointment he had held since 2000. From 1993 to 2000, he was Assistant and then Associate Professor of Economics and the director of the Center for Latin American and Caribbean Studies at New York University. Currently Mr. Velasco serves as Professor of Practice in International Development at Columbia University. He also performs consulting services on various economic matters rendering economic advice to an array of clients, including certain of our shareholders. Mr. Velasco holds a Ph.D. in economics from Columbia University and was a postdoctoral fellow in political economy at Harvard University and the Massachusetts Institute of Technology. He received a B.A. in economics and philosophy and an M.A. in international relations from Yale University. Mr. Velasco is a Chilean citizen.

Daniel C. Gonzalez. Mr. Gonzalez has been a member of the Company’s board of directions since April 16, 2014. Mr. Gonzalez holds a degree in Business Administration from the Argentine Catholic University. He served for 14 years in the investment bank Merrill Lynch & Co in Buenos Aires and New York, holding the positions of Head of Mergers and Acquisitions for Latin America and President for the Southern Cone (Argentina, Chile, Peru and Uruguay), among others. While at Merrill Lynch, Mr. Gonzalez played a leading role in several of the most important investment banking transactions in the region and was an active member of the firm’s global fairness opinion committee. He remained as a consultant to Bank of America Merrill Lynch after his departure from the bank. Previously, he was Head of Financial Planning and Investor Relations in Transportadora de Gas del Sur SA. Mr. Gonzalez is currently the Chief Financial Officer of YPF Sociedad Anónima, where he is also a member of its Executive Committee. Mr. González is an Argentine citizen.

James David Anderson. Mr. Anderson currently serves as board member of Green Plains Inc, a vertically integrated ethanol producer based in Omaha, Nebraska. Mr. Anderson served as Chief Executive Officer & President of The Gavilon Group, a leading commodity management firm from October 2015 to February 2016, and previously as Chief Operating Officer Agriculture and COO Fertilizer since March 2010. Mr. Anderson also served United Malt Holdings ("UMH"), a producer of malt for use in the brewing and distilling industries, as Chief Executive Officer and member of the board of directors from September 2006 to February 2010. Prior to that, beginning in April 2003, he served as Chief Operating Officer / Executive Vice President of CT Malt, a joint venture between ConAgra Foods and Tiger Brands of South Africa. Mr. Anderson's experience in the agricultural processing and trading business includes serving as Senior Vice President and then President of ConAgra Grain Companies. His career also includes lead trading positions with Ferruzzi USA and as an Operations Manager for Pillsbury Company. Mr. Anderson has a Bachelor of Arts degree with a Finance emphasis from the University of Wisconsin Platteville. Mr. Anderson is an American citizen.

Guillaume van der Linden Mr. van der Linden has been a member of the Company’s board of directors since 2009. Since 2007, Mr. van der Linden is a senior investment manager at PGGM Vermogensbeheer B.V., responsible for investments in emerging markets credit. From 1993 to 2007, Mr. van der Linden worked for ING Bank in various roles, including in risk management and derivatives trading. From 1988 to 1993, Mr. van der Linden was employed as a management consultant for KPMG and from 1985 to 1988 as a corporate finance analyst for Bank Mees & Hope. Mr. van der Linden graduated with Masters degrees in Economics from Erasmus University Rotterdam and Business Administration from the University of Rochester. Mr. van der Linden is a Dutch citizen.

Walter Marcelo Sanchez. Mr. Sanchez has been a member of the Company’s board of directors since 2014. Mr. Sanchez is a co-founder of Adecoagro and our Chief Commercial Officer for all operations in Argentina, Brazil and Uruguay and a member of Adecoagro’s Senior Management since 2002. He coordinates the Commercial Committee and is responsible for the trading of all commodities produced by Adecoagro. Mr. Sanchez has over 25 years of experience in agricultural business trading and market development. Mr. Sanchez has a degree in Agricultural and Livestock Engineering from the University of Mar del Plata, Argentina. Mr. Sánchez is an Argentine citizen.

Mark Schachter. Mr. Schachter has been a member of the Company’s board of directors since 2009. Mr. Schachter has been a Managing Partner of Elm Park Capital Management since 2010. From 2004 to 2010, he was a Portfolio Manager with HBK Capital Management where he was responsible for the firm’s North American private credit activities. His responsibilities included corporate credit investments with a primary focus on middle-market lending and other special situation investment opportunities. From 2003 to 2004, Mr. Schachter worked for American Capital, a middle-market private equity and mezzanine firm and worked in the investment banking division of Credit Suisse Group from 2001 to 2003. Mr. Schachter received a degree in Business

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Administration from the Ivey Business School at the University of Western Ontario and completed the Program for Leadership Development at Harvard Business School. Mr. Schachter is a Canadian citizen and has permanent American residence.

Marcelo Vieira. Mr. Vieira is the President of Sociedade Rural Brasileira, the main agricultural organization in Brazil and the Vice President of the Brazil Specialty Coffee Association. He is currently a Board Member and was from 2005 to 2014 the Director of Ethanol, Sugar & Energy operations of Adecoagro. He has managed agricultural and agribusiness company for over 40 years, including Usina Monte Alegre, Alfenas Agricola and Alfenas Café. Mr. Vieira holds a degree in Mechanical Engineering from PUC University in Rio de Janeiro and graduate degree in Food Industry Management and Marketing from the University of London’s Imperial College. Mr. Vieira es an Brazilian citizen.

Plínio Musetti. Mr. Musetti has been a member of the Company’s board of directors since 2011 and an observer since 2010. Mr. Musetti is a Managing Partner of Janos Holding responsible for long term equity investments for family offices in Brazil, following his role as Partner of Pragma Patrimonio, since June 2010. From 2008 to 2009, Mr. Musetti served as the Chief Executive Officer of Satipel Industrial S.A., leading the company’s initial public offering process, expansion plan and merger with Duratex S.A. From 2002 to 2008, Mr. Musetti served as a partner at JP Morgan Partners and Chief Executive Officer of Vitopel S.A. (JP Morgan Partners’ portfolio company) where he led its private equity investments in Latin America. From 1992 to 2002, Mr. Musetti served as the Chief Executive Officer of Elevadores Atlas S.A. and Elevadores Atlas Schindler S.A., during which time he led the company’s operational restructuring, initial public offering process and the sale to the Schindler Group. Mr. Musetti has also served as a Director of Diagnósticos de America S.A. from 2002 to 2009. In addition, Mr. Musetti is currently serving as a Board member of Portobello S.A. and RaiaDrogasil S.A. Mr. Musetti graduated in Civil Engineering and Business Administration from Mackenzie University and attended the Program for Management Development at Harvard Business School in 1989. Mr. Musetti is a Brazilian citizen.

Ivo Andrés Sarjanovic. Mr. Sarjanovic served for more than 25 years in Cargill International, starting as trader in the Grain and Oilseeds business. While in Cargill he held between years 2000-2011 the position of Vice-president and Global Trading Manager of Oilseeds in Geneva, coordinating worldwide trading and crushing activities, and between 2007-2011 he was also the Africa and Middle East General Manager of Agriculture. From 2011 to 2014 Mr. Sarjanovic held the position of Vice-president and World Manager of Cargill Sugar Operations, playing a leading role in the radical transformation of the organization that led to the strategic decision to spin-off in 2014 the sugar business of Cargill creating Alvean Sugar SL, a joint venture integrated with Copersucar, Brazil. Mr. Sarjanovic served as the Chief Executive Officer of Alvean until 2017, during which time he led the company to become the biggest sugar trader in the world. Mr. Sarjanovic is currently serving as non-executive Board member of Agflow S.A. and executive Board member of Sophicom, and also lectures at the University of Geneva’s Master in Commodities. Mr. Sarjanovic holds a B.A. in Economic Sciences, major in Accounting, from the National University of Rosario, Argentina. Additionally, he completed executive studies at IMD in Lausanne, at Oxford University and at Harvard Business School, and was a PhD candidate in Economics at New York University. Mr. Sarjanovic is an Argentine/Italian/Swiss citizen.

Executive Officers

The following table shows certain information with respect to our senior management as of the date of this annual report:



Name	Position	Year Designated	Age
Mariano Bosch	Chief Executive Officer & Co-founder	2002	48
Carlos A. Boero Hughes	Chief Financial Officer	2008	52
Emilio F. Gnecco	Chief Legal Officer	2005	42
Walter Marcelo Sanchez	Chief Commercial Officer & Co-founder	2002	56
Renato Junqueira Santos Pereira	Director of Sugar and Ethanol Operations	2014	41
Mario José Ramón Imbrosciano	Director of Business Development	2003	48
Leonardo Berridi	Country Manager for Brazil	2004	58
Ezequiel Garbers	Country Manager for ARG/URU & Co-founder	2004	51

Mariano Bosch. See “—Board of Directors.”

Carlos A. Boero Hughes. Mr. Boero Hughes is our Chief Financial Officer, covering the company’s operations in Argentina, Brazil and Uruguay, and a member of Adecoagro’s Senior Management since 2008. He began working at Adecoagro in August 2008 overseeing our finance and administrative departments. Mr. Boero Hughes has over 25 years of experience in agricultural business and financial markets. Prior to joining us, he was Chief Financial Officer for South America and Co-Chief Executive

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Officer for Noble Group LTD operations in Argentina, Uruguay and Paraguay from October 2006 to July 2008. From 2003 to 2006, he worked at Noble Group LTD as Financial Director for Argentina and Structure Finance Manager for South America. He worked at Citibank N.A. from 1997 to 2003 as Relationship and Product Manager, focused in the agribusiness industry, and at Banco Privado de Inversiones S.A. as Relationship Manager. He also worked for six years at Carlos Romano Boero S.A.I.C., a flour and dairy cow feed mill family company, as Commercial Manager, Local Grain Elevator and Nursery Manager and finally as General Manager. Mr. Boero Hughes holds a degree in Business Administration from the University of Buenos Aires and a Masters in Business Administration from the Argentine Catholic University. He also graduated from INSEAD’s Executive Program in 2007.

Emilio Federico Gnecco. Mr. Gnecco is our Chief Legal Officer for all operations in Argentina, Brazil and Uruguay and a member of Adecoagro’s Senior Management since 2005. He is responsible for all legal and corporate matters and compliance. Before joining us, he was a corporate law associate at the law firm of Marval, O’Farrell & Mairal for more than 8 years, where he specialized in mergers and acquisitions, project finance, structured finance, corporate finance, private equity, joint ventures and corporate law and business contracts in general. Mr. Gnecco was in charge of Adecoagro’s corporate matters including mergers and acquisitions since our inception in 2002. Prior to that, he worked at the National Civil Court of Appeals of the City of Buenos Aires for four years. Mr. Gnecco has a law degree from the University of Buenos Aires, where he graduated with honors.

Walter Marcelo Sanchez. See “—Board of Directors.”

Renato Junqueira Santos Pereira. Renato Junqueira Santos Pereira is the Director of our Sugar, Ethanol & Energy business and has been a member of the senior management team since 2014. He began working at Adecoagro in 2010 as the Operations Manager for our Sugar, Ethanol & Energy business and has vast experience in the Brazilian sugarcane industry. Before joining Adecoagro, he served as the CFO of Moema Group, one of the largest sugarcane clusters in Brazil. His main responsibilities at Moema included designing the optimal capital structure to finance the construction of five greenfield mills, preparing the company for an IPO and coordinating the M&A process which culminated in a $1.5 billion dollar sale to Bunge Ltda. Previously, Mr. Pereira held responsibilities as Mill Director and Agricultural Manager in Moema’s mills. He is an Agricultural Engineer from Universidade de Sao Paulo and holds an MBA from the University of California, Davis.

Mario José Ramón Imbrosciano. Mr. Imbrosciano is the head of our Business Development Department for all operations in Argentina, Brazil and Uruguay where he oversees all new business initiatives, and a member of Adecoagro’s Senior Management since 2003. He has over 20 years of experience in farm management and agriculture production. Prior to joining Adecoagro, Mr. Imbrosciano was the Chief Operating Officer of Beraza Hnos. S.C., a farming company that owns farms in the humid pampas region of Argentina. He was in charge of production, commercialization and logistics for a 60,000 hectare operation. Mr. Imbrosciano has also worked as a private consultant for various clients. Mr. Imbrosciano received a degree in Agricultural Production Engineering from the Argentine Catholic University and holds a Masters in Business Administration from the Instituto de Altos Estudios (IAE) of the Austral University.

Leonardo Raúl Berridi. Mr. Berridi is our Country Manager for Brazil and, prior to the Reorganization, had been Adecoagro’s Country Manager for Brazil since the beginning of its operations in Brazil and a member of Adecoagro’s Senior Management since 2004. He coordinates all of our operations and human resources development activities in Brazil. Mr. Berridi has over 32 years of international experience in agricultural business.Prior to joining us, Mr. Berridi was Vice President of Pago Viejo S.A., a company dedicated to agriculture production and dairy farming in the province of Buenos Aires, Argentina. He also worked for Trans-Continental Tobacco Corporation as Chief Operating Officer of Epasa (Exportadora de Productos Agrarios S.A.), a company dedicated to producing, processing and exporting tobacco in the north east and north west of Argentina, and Production Manager of World Wide Tobacco España S.A. in the Caceres and Zamora provinces in Spain. Mr. Berridi holds a degree in Forestry Engineering from the Universidad Nacional de La Plata.

Ezequiel Garbers. Mr. Garbers is the Country Manager for Argentina and Uruguay and a member of Adecoagro’s Senior Management and the Country Manager since 2002. He coordinates all of our production and human resources development activities in Argentina and Uruguay. Mr. Garbers has over 27 years of experience in agriculture production. Prior to joining Adecoagro, he was the Chief Operating Officer of an agricultural consulting and investment company he co-founded, developing projects both within and outside of Argentina, related to crop production and the cattle and dairy business. Mr. Garbers holds a degree in Agronomic Engineering from the University of Buenos Aires and a Masters in Business Administration from the Instituto de Altos Estudios (IAE) of the Austral University.

Our managers supervise our day-to-day transactions so as to ensure that all of our general strategic objectives are carried out, and they report to our board of directors.

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B. COMPENSATION

Compensation of Directors and Executive Officers

The compensation of the Company’s directors is approved annually at the ordinary general shareholders’ meeting. For 2017, the aggregate compensation earned by our directors amounted to a grant of up to a total of 37,098 restricted stock units and $570 thousand in cash. These figures do not include Mr. Mariano Bosch’s and Mr. Walter Marcelo Sanchez´s compensation in cash nor in restricted units, which they both declined. For year 2018, the aggregate compensation approved to be earned by our directors amounted to a grant of up to a total of 49,455 restricted stock units and $530 thousand in cash. These figures do not include Mr. Mariano Bosch’s and Mr. Walter Marcelo Sanchez´s compensation in cash nor in restricted units, which they both declined.

The aggregate compensation package of our executive officers for year 2017 amounted to $1,542,983 in cash and 193,737 restricted stock units granted to our senior management. These grants were made under the Adecoagro Amended and Restated Restricted Share and Restricted Stock Unit Plan, as amended. See “—E. Share Ownership—Share Options and Restricted Share and Restricted Stock Unit Plan.”Annual cash bonuses are designed to incentivize our named executive officers at a variable level of compensation based on the Company’s financial and operating performance and each executive’s individual performance. Annual executive cash bonuses and stock unit awards are impacted by seniority and individual executive performance. 80% of variable performance is related to achievement of financial targets consisting of Adjusted EBITDA, Net Income, Adjusted Net Cash Flow from Operations, Cash Earnings and Return on Invested Capital. The remaining 20% is based on the achievement of individual objectives and by evaluating each executive’s level of proficiency in the following competencies: general characteristics, teamwork, professional competencies, environmental and social commitment, problem solving and thinking skills and managerial skills. In the past, actual bonus amounts have been determined shortly after fiscal year end. Our Chief Executive Officer presents the final calculation of the annual cash bonuses for our named executives to the Compensation Committee of the board of directors. The Compensation Committee then reviews actual Company and individual performance, and determines the amount payable consistent with the attainment of such individual’s performance based on the above criteria.

We do not pay or set aside any amounts for pension, retirement or other similar benefits for our officers and directors.

C. BOARD PRACTICES

Pursuant to our articles of incorporation, the board of directors must be composed of between three and eleven members. The number of directors is determined and the directors are appointed at the general meeting of shareholders (except in case of a vacancy in the office of a director because of death, retirement, resignation, dismissal, removal or otherwise, the remaining directors may fill such vacancy and appoint a successor in accordance with applicable Luxembourg law).

Currently, the board of directors has eleven members. The directors are appointed by the general meeting of shareholders for a period of up to three years; provided, however, the directors shall be elected on a staggered basis, with one-third of the directors being elected each year and provided further that such three year term may be exceeded by a period up to the annual general meeting held following the third anniversary of the appointment. Directors may be removed with or without cause ( ad nutum ) by the general meeting of shareholders by a simple majority of votes cast at a general meeting of shareholders. The directors are eligible for re-election indefinitely.

There are no agreements with majority shareholders, customers, suppliers or others governing the selection of any of the directors or members of senior management. None of our non-executive directors has a service contract with us that provides for benefits upon termination of employment.

The board of directors is empowered to manage Adecoagro and carry out our operations. The board of directors is vested with the broadest powers to manage the business of the Company and to authorize and/or perform all acts of disposal, management and administration falling within the purposes of Adecoagro and all powers not expressly reserved by Luxembourg law or by our articles of incorporation to the general meeting of shareholders is within the competence of the board of directors.

Accordingly, within the limitations established by Luxembourg law and in particular the Luxembourg law of August 10, 1915 on commercial companies (as amended) and our articles of incorporation, the board of directors can take any action (by resolution or otherwise) it deems necessary, appropriate, convenient or fit to implement the purpose of the Company, including without limitation.


a.	execute any acts or contracts on our behalf aimed at fulfilling our corporate purpose, including those for which a special power of attorney is required;

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b.	carry out any transactions;


c.	agree, establish, authorize and regulate our operations, services and expenses;


d.	delegate special tasks to directors, regulate the formation and operation of committees and fix the remuneration and compensation of expenses of advisors and/or staff with special duties, with a charge to overhead;


e.	appoint, suspend or remove agents or employees, establish their duties, remuneration, and bonuses and grant them the powers that it deems advisable;


f.	grant signature authorization to directors and officers, grant general or special powers of attorney, including those to prosecute;

call regular and special shareholders’ meetings and establish agendas, submit for the shareholders’ approval our inventory, annual report, balance sheet, statement of income and exhibits, propose depreciation, amortization and reserves that it deems advisable, establish the amount of gains and losses, propose the distribution of earnings and submit all this to the shareholders’ meeting for consideration and resolution;


h.	fix the date for the payment of dividends established by the shareholders’ meeting and make their payment; and


i.	make decisions relating to the issuance, subscription or payment of shares pursuant to our articles of incorporation and decision of the regular or special shareholders’ meetings.

As of the date of this annual report, the board of directors has the following four committees: Audit Committee, Compensation Committee, Risk and Commercial Committee and Strategy Committee. On May 13, 2011, the former Risk and Strategy Committee split into the current Risk and Commercial Committee and the Strategy Committee.

We expect that the board of directors will appoint a new Chairman of the Board and resolve on the composition of the Committees in their next meeting scheduled for May 2018.

Audit Committee

The Company’s articles of incorporation provide that the board of directors may set up an audit committee. The board of directors has set up an Audit Committee composed by independent directors and has appointed, pursuant to board resolutions dated April 16, 2014 and March 12, 2017, Mr. Mark Schachter (Chairman), Mr. Plínio Musetti, Mr. Daniel González and Mr. Andrés Velasco Brañes, as members of its audit committee.

The Company’s articles of incorporation provide that the audit committee shall (a) assist the board of directors in fulfilling its oversight responsibilities relating to the integrity of the Company’s financial statements, including periodically reporting to the board of directors on its activity and the adequacy of the Company’s systems of internal controls over financial reporting; (b) make recommendations for the appointment, compensation, retention and oversight of, and consider the independence of, the Company’s external auditors; (c) review material transactions (as defined in the articles) between the Company or its subsidiaries with related parties (other than transactions that were reviewed and approved by the independent members of the board of directors as defined in the articles of the Company) or other governing body of any subsidiary of the Company or through any other procedures as the board of directors may deem substantially equivalent to the foregoing) to determine whether their terms are consistent with market conditions or are otherwise fair to the Company and its subsidiaries; and (d) perform such other duties imposed on it by the laws and regulations of the regulated market(s) on which the shares of the Company are listed, applicable to the Company, as well as any other duties entrusted to it by the board of directors.

In addition, the charter of the audit committee sets forth, among other things, the audit committee’s purpose and responsibilities.

Compensation Committee

The Company has a Compensation Committee that reviews and approves the compensation and benefits of the executive officers and other key employees, and makes recommendations to the board of directors regarding principles for compensation, performance evaluation, and retention strategies. It is responsible for administering our share option plans and our restricted share and restricted stock unit plan for executive officers and other key employees. See “—E. Share Ownership—Share Options and Restricted Share and Restricted Stock Unit Plan.” The committee has the discretion to interpret and amend the Plan, and delegate

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to the Chief Executive Officer the right to award equity-based compensation to executive officers and other key employees. The committee meets at least once a year and as needed on the initiative of the Chief Executive Officer or at the request of one of its members. The members of the Compensation Committee, appointed pursuant to board resolutions dated April 16, 2014, are Mr. Guillaume van der Linden (Chairman) and Mr. Daniel González.

Risk and Commercial Committee

The Company has a Risk and Commercial Committee that has the duty to (i) make such inquiries as are necessary or advisable to understand and evaluate material business risks and risk management processes as they evolve from time to time; (ii) review with the board of directors and management the guidelines and policies to govern the process for assessing and managing risks; (iii) discuss and review with the board of directors management’s efforts to evaluate and manage the Company’s business from a risk perspective; (iv) request input from the board of directors, management and operating staff, as well as from outside resources, as it may deem necessary; (v) discuss with the board of directors and management which elements of enterprise risk are most significant, the prioritization of business risks, and make recommendations as to resource allocation for risk management and risk mitigation strategies and activities; and (vi) oversee the development of plans for risk mitigation in any area which it deems to be a material risk to the Company; and monitor management’s implementation of such plans, and the effectiveness generally of its risk mitigation strategies and activities.

The committee meets at least four times a year and as often as deemed necessary or appropriate in its judgment. The members of the Risk and Commercial Committee appointed by the board meeting held on November 7, 2014 and March 14, 2017 are Mr. Alan Leland Boyce (Chairman), Mr. James David Anderson, Mr. Marcelo Vieira and Mr. Andrés Velasco Brañes.

Strategy Committee

The Company’s Strategy Committee has the duty to: (i) discuss and review with the board management’s identification and setting of strategic goals; including potential acquisitions, joint ventures and strategic alliances and dispositions; (ii) make recommendations to the board of directors as to the means of pursuing strategic goals; and (iii) review with the board management’s progress in implementing its strategic decisions and suggest appropriate modifications to reflect changes in market and business conditions.

The committee meets at least four times a year and as often as deemed necessary or appropriate in its judgment. The members of Strategy Committee appointed by the board meetings held on May 13, 2011, November 11, 2011 and March 14, 2017 are Mr. Guillaume van der Linden, Mr. Plínio Musetti and Mr. James David Anderson.

D. EMPLOYEES

Employees

On December 31, 2017 , we had 7,790 employees, of whom 94% were unionized. Approximately 5% of our workforce is comprised of temporary workers. We comply with all labor laws. Historically, we have had a positive relationship with the trade unions.

The following table sets forth our number of employees by each of our business segments:



	As of December 31,
	2017	2016	2015
Farming and Land Transformation	1,136	1,137	1,087
Sugar, Ethanol and Energy	5,859	6,428	6,262
Administrative	795	761	740
Total	7,790	8,326	8,089

We do not have any severance agreements with our senior executive directors and managers.

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Benefits

The benefits granted to our employees follow the market standard, including health plans and Spanish, English and Portuguese language lessons. In some cases, depending on the working location, we also provide meal, transportation, parking or financial aid for junior employees who are still in college. For senior management, we also provide vehicles.

E. SHARE OWNERSHIP

Share Ownership

The total number of shares of the Company beneficially owned by our directors and executive officers, as of the date of this annual report, was 5,178,718, which represents 4.45% of the total shares of the company. See table in “Item 7. Major Shareholders and Related Party Transactions” for information regarding share ownership by our directors and executive officers.

Share Options and Restricted Share and Restricted Stock Unit Plan

Adecoagro/IFH 2004 Stock Incentive Option Plan and Adecoagro/IFH 2007/2008 Equity Incentive Plan

The Company maintains the Adecoagro/IFH 2004 Incentive Option Plan (formerly, the International Farmland Holdings, LLC 2004 Incentive Option Plan, and referred to herein as the “2004 Plan”) and the Adecoagro/IFH 2007/2008 Equity Incentive Plan (formerly, the International Farmland Holdings, LLC 2007/2008 Equity Incentive Plan, and referred to herein as the “2007/2008 Plan”). The 2004 Plan and the 2007/2008 Plan are collectively referred to herein as the “Option Plans.” Initially, the Option Plans provided for the grant of options to purchase ordinary units of IFH. In connection with the Reorganization, the Option Plans were amended and restated to provide for the grant of options to purchase ordinary shares of the Company, and all then-outstanding options to purchase IFH ordinary units were converted into options to purchase the Company’s ordinary shares.

The number of ordinary shares reserved and available for issuance under the 2004 Plan and the 2007/2008 Plan are 1,641,085 and 1,658,002, respectively. Shares subject to awards that become forfeited, cancelled, expired, withheld upon exercise, reacquired by the Company prior to vesting or otherwise terminated will again be available for future awards under the Option Plans.

Administration and Eligibility

The Option Plans are administered by the Compensation Committee of the Company’s board of directors (the “Committee”). The Committee has general authority to, among other things, select individuals for participation, determine the time and amount of grants, and interpret the plans and awards. The Committee determines the vesting requirements of the awards. The Option Plans require that the exercise price of any future grants shall be no less than the greater of the fair market value of our ordinary shares on the date of grant and the par value per ordinary share.

Individuals eligible to receive options under the 2004 Plan include officers and employees, and under the 2007/2008 Plan include officers, employees, directors, prospective employees and consultants.

Amendment and Termination

The board of directors may amend or terminate the Option Plans in its discretion, and the Committee may amend any outstanding options in its discretion, except participant consent will be needed if a participant’s rights are adversely affected. If not previously terminated by the board of directors, the Option Plans will terminate on the 10th anniversary of its adoption. The 2004 Plan was amended to extend the term to 20 th anniversary of its adoption.

Granted Options

Under the 2004 Plan, as of December 31, 2015, options to purchase 2,061,027 ordinary shares were granted and the weighted average exercise price of all granted options was $6.67. Under the 2007/2008 Plan, as of the same date, options to purchase 1,700,675 ordinary shares were granted, and the weighted average exercise price of all granted options was $13.07.

Outstanding options under the 2004 Plan generally vest in three equal installments on the first three anniversaries of the date of grant, and options under the 2007/2008 Plan generally vest in four equal installments on the first four anniversaries of the date of grant. Vesting under each of the Option Plans is generally subject to the participant’s continued service as of each applicable vesting date, and all options terminate 10 years from the date of grant.

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Adecoagro S.A. Amended and Restated Restricted Share and Restricted Stock Unit Plan

On November 11, 2011, the Board of Directors of the Company approved the amendment and restatement of the Adecoagro S.A. Restricted Share Plan, now known as the Amended and Restated Restricted Share and Restricted Stock Unit Plan (the “Plan).

The Plan provides for awards of restricted shares or restricted stock units to employees, officers, members of the board of directors and other service providers of the Company. The purpose of the Plan is to further align the interests of participants with those of the shareholders by providing participants with long-term incentive compensation opportunities tied to the performance of the Company’s ordinary shares.

On March 17, 2015 the Plan was amended (known as the “Second Amended and Restated Restricted Share and Unit Plan”) to increase the number of common shares available for issuance with respect to which awards may be made by 673,663 additional common shares and to provide for the option to receive restricted units in lieu of cash in connection with the payment of compensation to directors of the Company. Further, on March 15, 2016 and March 14, 2017, the Plan was amended (known as the “Third Amended and Restated Restricted Share and Unit Plan”) by the Board of Directors to increase the number of common shares available for issuance with respect to which awards may be made by an aggregate 990,040 common shares. Currently, the maximum number of common shares with respect to which awards may be made under the Plan is equal to 3,464,741 common shares inclusive of such Shares that are subject to outstanding grants of Awards. The Plan was once again amended by the Board of Directors on March 13, 2018, to increase the number of common shares available for issuance with respect to which awards may be made by 517,917 common shares. To the extent any award under the Plan is canceled, expired, forfeited, surrendered settled in cash, or otherwise terminated without delivery of shares the shares retained by or returned to the Company will again be available for future awards under the Plan. The shares available for issuance as well as outstanding awards under the Plan are subject to adjustment in the event of a reorganization, stock split, merger or similar change. Under the Plan, as of the date of this annual report, 2,715,150 ordinary shares had been issued to directors, senior management and employees.

Administration and Eligibility

The Plan is administered by the Committee. The Committee has general authority to grant awards, determine the recipients of awards and prescribe the terms of awards, as well as authority to interpret and apply the terms of the Plan and individual awards. The Committee determines the amount and the vesting requirements of the awards.

Terms of Awards

A grant of restricted shares represents ordinary shares that are issued subject to vesting requirements and transfer restrictions, as determined by the Committee in its discretion. The vesting requirements may be based on the continued employment or service of the participant for a specified time period or on the attainment of specified business performance goals established by the Committee. Subject to the transfer restrictions and vesting requirements of the award, the participant will have the rights of a stockholder of the Company, including voting rights and the right to receive dividends.

The number of restricted shares or restricted stock units awarded to individuals each year will be based on Company performance. Once awarded, the restricted shares or restricted stock units are subject to a service-based vesting schedule and vest in three equal annual installments on the first three anniversaries of the date of grant, subject only to the participant’s continued service to the Company as of each applicable vesting date. Restricted stock units are payable following the vesting of an award in shares.

Amendment and Termination

The board of directors may amend, modify, suspend or terminate the Plan in its discretion, except participant consent will be needed if participants’ rights are adversely affected. If not previously terminated by the board of directors, the Plan will terminate on the 10th anniversary of its adoption.

Share Options and Restricted Shares

The total number of ordinary and restricted shares to be issued upon exercise of the options to directors and executive officers as a group under our Option Plans is 2,926,424 in the aggregate. The range of exercise prices per ordinary shares under our 2004 Plan is $5.83 to $8.62 (1,492,890 options). The range of exercise prices per ordinary shares under our 2007 Plan is $12.82 to $13.40 (1,433,534 options). Upon the exercise of all options no single beneficiary would own more than 1% of total outstanding shares.

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The total number of restricted stock units to be issued under the Plan to directors and executive officers as a group is 332,368 in the aggregate. Upon receipt of shares under the Plan no single beneficiary would own more than 1% of total outstanding shares.

Item 7. Major Shareholders and Related Party Transactions

A. MAJOR SHAREHOLDERS

The following table sets forth the beneficial ownership of our shares for each person known to us to own beneficially at least 5% of our common shares and our directors and executive officers, based on the information most recently available to the Company, as of April 24, 2018.

As of April 24, 2018, we had 116,671,360 outstanding shares. Beneficial ownership is determined in accordance with the rules and regulations of the SEC. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days from April 24, 2018, including through the exercise of any option, warrant or other right or the conversion of any other security. These shares, however, are not included in the computation of the percentage ownership of any other person.



	Number	Percent
Principal Shareholders:
Al Gharrafa Investment Company (1)	15,983,265	13.7	%
Stichting Pensioenfonds Zorg en Welzijn (2)	15,531,385	13.3	%
EMS Capital LP (3)	8,462,958	7.3	%
Jennison Associates, LLC (3)	6,320,250	5.4	%
GIC Private Limited	6,286,460	5.4	%
Directors and Executive Officers as a Group*	5,178,718	4.45	%

________________________________________________________________________________________________

* No single beneficially owns more than 1% based on the total number of outstanding shares.


(1)	The address of Al Gharrafa Investment Company is C/O Intertrust Corporate Services (Cayman) Limited, 190 Elgin Street, George Town, Grand Cayman, KY1-9005, Cayman Islands.


(2)	The address of Stichting Pensioenfonds Zorg en Welzijn is P.O. BOX 4001 NL-3700 KA Zeist The Netherlands.


(3)	The address of EMS Capital LP is 767 Fifth Avenue 46th floor, New York, NY 10153.


(4)	The address of Jennison Associates LLC is 466 Lexington Avenue, New York, NY 10017.


(5)	The address GIC Private Limited is 168 Robinson Road, Singapores, 068912 , Singapore.

As of April 26, 2018, 93,874,817 shares, representing 80.4% of our outstanding common shares were held by United States record holders.

B. RELATED PARTY TRANSACTIONS

Share Purchase and Sale Agreement and UMA Right of First Offer Agreement

In connection with the Share Purchase and Sale Agreement, dated February 16, 2006. The IFH Parties also entered into a Right of First Offer Agreement with Marcelo Weyland Barbosa Vieira, Paulo Albert Weyland Vieira, Mario Jorge de Lemos Vieira, and Corina de Almeida Leite, each of which is a current indirect shareholder in IFH, (together the “UMA Members”), dated February 16, 2006, whereby the IFH Parties agreed to grant the UMA Members a right of first offer to acquire the shares of UMA, or all or substantially all of the assets of UMA, or the real property or plot of land where the commercial offices of UMA is currently located and which is currently subject to a right-of-way and easement agreement granted to Mario Corina, Alfenas Agrícola Ltda. The rights granted to each of the UMA Members, their permitted affiliates, assignees, successors or heirs under such agreement are only in effect for as long as such entities hold such an equity interest in IFH or any of its affiliates.

Agriculture Partnership Agreements

Some of our agriculture partnership agreements are entered into with certain minority shareholders of the Company, for a total of 9,342.07 hectares. For the years ended December 31, 2017, 2016 and 2015, we recorded other net amount (payables) or

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receivables for payments in advance amounting to $(0.2) million, $(0.5) million and $(0.3) million, respectively, and recognized expenses amounting to $3.3 million, $2.9 million and $2.3 million, respectively, in connection with these agreements.

Registration Rights Agreement

In connection with the Reorganization, we entered into a registration rights agreement providing holders of our issued and outstanding common shares on January 28, 2011 (such holders being hereinafter referred to as the “Existing Investors” and such common shares subject to the agreement being hereinafter referred to as the “Registrable Securities”) with certain rights to require us to register their shares for resale under the Securities Act of 1933, as amended (“Securities Act”). Pursuant to the agreement, if holders of a majority of the Registrable Securities notify us, no earlier than 180 days after the effective date of the registration statement previously filed by us on Form F-1, we are required, subject to certain limitations, to file a registration statement under the Securities Act in order to register the resale of the amount of ordinary shares requested by such holders. The underwriters in such an offering will have the right, subject to certain limitations, to limit the number of shares included in such registration. The Existing Investors have the right to require us to file one such registration. In addition, if we propose to register any of our securities under the Securities Act, Existing Investors are entitled to notice of such registration and are entitled to certain “piggyback” registration rights allowing such holders to include their common shares in such registration, subject to certain restrictions. Furthermore, Existing Investors may require us to register the resale of all or a portion of their shares on a registration statement on Form F-3 once we are eligible to use Form F-3. In an underwritten offering, the underwriters have the right, subject to certain restrictions, to limit the number of Registrable Securities Existing Investors may include.

To see a summary of the balances and transactions with related parties, please see Note 31 to our Consolidated Financial Statements.

Shelf Registration Statement on Form F-3

The Company filed a shelf registration statement on Form F-3 with the U.S. Securities and Exchange Commission (SEC) on September 23, 2013, which was declared effective by the SEC on December 23, 2013. Pursuant to the Shelf Registration Statement, certain shareholders may offer and sell from time to time, in one or more offerings, up to 55,821,281 common shares. The registration of the common shares for disposition by the principal shareholders does not mean that the principal shareholders will actually offer or sell any of the shares. The specifics of future offerings, if any, including the names of participating shareholders, the amount of shares to be offered and the offering price, will be determined at the time of any such offerings and will be described in a prospectus supplement filed at the time of any such offerings.

On March 21, 2016, we completed an underwritten secondary offering of 12.0 million common shares of Adecoagro offered by our shareholders Quantum Partners LP and Geosor Corporation, at a price per share to the public of $11.70 pursuant to the effective shelf registration statement described in the previous paragraph.

Advisory Service Agreement

On November 18, 2014 Adecoagro Vale do Ivinhema S.A., a Brazilian subsidiary of the company, executed an Advisory Service Agreement with Mirante Consultoria Ltda., an affiliate of Mr. Marcelo Vieira (director of the company) for a term of 12 months, and extended for four additional more months. As consideration for the provision of advisory services under the agreement, Adecoagro Vale do Ivinhema S.A. paid Mirante Consultoria Ltda. R$ 59,463 per month, which is equal to an aggregate amount of R$ 951,408 for the term of the agreement.

C. INTERESTS OF EXPERTS AND COUNSEL

Not applicable.

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Item 8. Financial Information

A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION.

See Item 18. Financial Statements and page F-1 through F-78 for our Consolidated Financial Statements.

Legal and Administrative Proceedings

We are subject to several laws, regulations and business practices of the countries in which we operate. In the ordinary course of business, we are subject to certain contingent liabilities with respect to existing or potential claims, lawsuits and other proceedings, including those involving tax, social security, labor lawsuits and other matters. We accrue liabilities when it is probable that future costs will be incurred and such costs can be reasonably estimated. Currently, we are not engaged in any material litigation or arbitration and no material litigation or claims are known to us to be pending or threatened against us which, either alone or on a combined basis, may result in an adverse effect on our business, results of operations, or cash flows.

In Argentina and Brazil we are engaged in several legal proceedings, including tax, social security, labor, civil, environmental, administrative and other proceedings, for which we have established provisions in an aggregate amount of $4.9 million as of December 31, 2017 . In addition, there are currently certain legal proceedings pending in which we are involved for which we have not established provisions. In the opinion of our management, the ultimate disposition of any threatened or pending matters, either individually or on a combined basis, will not have a material adverse effect on our combined financial condition, liquidity, or results of operations other than as described below.

The Brazilian government filed a tax enforcement action against UMA to demand excise taxes (Imposto sobre Produtos Industrializados, or “IPI”), or a federal value-added tax on industrial products, in the amount of approximately $5.5 million. We have obtained a favorable initial decision from the lower court, which accepted our argument on procedural grounds based on the Brazilian government’s loss of its procedural right to demand the IPI debts. Currently, the case is under review by an appellate court following the appeal filed by the Brazilian government. We have not made any provision for this claim based on legal counsel’s view that the risk of an unfavorable decision in this matter is remote. If this proceeding is decided adversely to us, our results of operations and financial condition may be materially adversely affected.

José Valter Laurindo de Castilhos, Companhia Rio de Janeiro Agropecuária Ltda. and other former owners of the Rio de Janeiro and Conquista Farms have filed suit against us for the payment of a supplementary amount of approximately $29.7 million, as well as indemnity for moral and material damages, as a result of the alleged breach of the purchase agreement entered into by the parties. The lower court ruled in our favor, allowing us to keep possession of the Rio de Janeiro Farm. This decision has been appealed by Mr. Castilhos to the Superior Court of Justice (“Superior Tribunal de Justiça”). The Brazilian Superior Court of Justice determined that the case had no merit. This decision can be appealed by Mr. Castilhos. We have not made any provision for this claim based on legal counsel’s view that the risk of an unfavorable decision in this matter is remote. If this proceeding is decided adversely to us, our results of operations and financial condition may be materially adversely affected.

The INCRA conducted an investigation to determine the falsehood of the CCIR delivered to us by the former owner of Rio de Janeiro Farm (the “Farm”) back in January 2005 when we acquired the Farm. The INCRA also conducted an investigation related to the cadeia dominial of the Farm to determine the correct chain of ownership through the successive transfers of ownership of the Farm, in order to confirm that the destaque publico occurred or that the State does not have interest in claiming ownership. No irregularity was found that could jeopardize the acquisition deed or affect the ownership of the Farm.

Dividend Policy

The amount and payment of dividends will be determined by a simple majority vote at a general shareholders’ meeting, typically but not necessarily, based on the recommendation of our board of directors. All shares of our capital stock rank pari passu with respect to the payment of dividends. Pursuant to our articles of incorporation, the board of directors has the power to distribute interim dividends in accordance with applicable Luxembourg law. Dividends may be lawfully declared and paid if our net profits and distributable reserves are sufficient under Luxembourg law.

Under Luxembourg law, at least 5% of our net profits per year must be allocated to the creation of a legal reserve until such reserve has reached an amount equal to 10% of our issued share capital. If the legal reserve subsequently falls below the 10% threshold, at least 5% of the annual net profits again must be allocated toward the reserve. The legal reserve is not available for distribution.

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Adecoagro is a holding company and has no material assets other than its ownership of partnership interests in Adecoagro LP SCS, in turn, is a holding entity with no material assets other than its indirect ownership of shares in operating subsidiaries in foreign countries. If we were to distribute a dividend at some point in the future, we would cause the operating subsidiaries to make distributions to Adecoagro LP SCS, which in turn would make distributions to Adecoagro in an amount sufficient to cover any such dividends.

Our subsidiaries in Argentina and Brazil are subject to certain restrictions on their ability to declare or pay dividends. See “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Indebtedness and Financial Instruments”, and also see “—Risks Related to our Business and Industries—Certain of our subsidiaries have substantial indebtedness which could impair their financial condition and decrease the amount of dividends we receive.

B. SIGNIFICANT CHANGES

Except as otherwise disclosed in this annual report, there has been no undisclosed significant change since the date of the annual Consolidated Financial Statements.

Item 9. The Offer and Listing

A. OFFER AND LISTING DETAILS

Our common shares have been listed on the NYSE under the symbol “AGRO” since January 28, 2011. As of the date of this report, our issued share capital amounts to $183,572,723, represented by 122,381,815 (of which 4,643,396 were treasury shares as of December 31, 2017 ) shares with a nominal value of $1.50 each. All issued shares are fully paid up.

The table below sets forth, for the period indicated, the reported high and low closing prices for our common shares listed on the NYSE.

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Full Financial Quarters Since Last Five Years	High	Low
First Quarter 2012	11.05	8.03
Second Quarter 2012	10.81	8.51
Third Quarter 2012	10.80	9.33
Fourth Quarter 2012	9.91	8.05
Fiscal Year Ended December 31, 2012	11.05	8.03
First Quarter 2013	9.56	7.69
Second Quarter 2013	7.94	6.05
Third Quarter 2013	7.65	6.22
Fourth Quarter 2013	8.37	7.46
Fiscal Year Ended December 31, 2013	9.56	6.05
First Quarter 2014	8.16	7.01
Second Quarter 2014	9.95	8.13
Third Quarter 2014	10.25	8.80
Fourth Quarter 2014	9.44	7.83
Fiscal Year Ended December 31, 2014	10.25	7.01
First Quarter 2015	11.10	7.75
Second Quarter 2015	10.57	9.17
Third Quarter 2015	9.46	7.59
Fourth Quarter 2015	12.45	8.11
Fiscal Year Ended December 31, 2015	12.45	7.59
First Quarter 2016	13.23	11.03
Second Quarter 2016	11.64	10.15
Third Quarter 2016	11.41	9.50
Fourth Quarter 2016	11.60	9.86
Fiscal Year Ended December 31, 2016	13.23	9.50
First Quarter 2017	12.71	10.60
Second Quarter 2017	11.70	9.82
Third Quarter 2017	10.80	9.57
Fourth Quarter 2017	11.02	8.55
Fiscal Year Ended December 31, 2017	12.71	8.55



Last 3 Months	High	Low
January 2018	10.56	9.69
February 2018	9.89	8.83
March 2018	8.92	7.33
April 2018 (to April 26, 2018)	8.09	7.52

B. PLAN OF DISTRIBUTION

Not applicable.

C. MARKETS

Our common shares have been listed on the NYSE under the symbol “AGRO” since January 28, 2011. See “—A. Offer and Listing Details.”

D. SELLING SHAREHOLDERS

Not applicable.

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E. DILUTION

Not applicable.

F. EXPENSES OF THE ISSUE

Not applicable.

Item 10. Additional Information

A. SHARE CAPITAL

Not applicable.

B. MEMORANDUM AND ARTICLES OF ASSOCIATION

The following is a summary of some of the terms of our common shares, based in particular on our articles of incorporation and the Luxembourg law of August 10, 1915 on commercial companies as amended.

Adecoagro’s shares are governed by Luxembourg law and its articles of incorporation. More information concerning shareholders’ rights can be found in the Luxembourg law on commercial companies dated August 10, 1915, as amended and the articles of incorporation.

The following is a summary of the rights of the holders of our shares that are material to an investment in our common shares. These rights are set out in our articles of association or are provided by applicable Luxembourg law, and may differ from those typically provided to shareholders of U.S. companies under the corporation laws of some states of the United States. This summary does not contain all information that may be important to you. For more complete information, you should read our updated articles of association, which are attached as an exhibit to this annual report.

General

On October 30, 2010, the members of IFH LLC transferred pro rata approximately 98% of their membership interests in IFH LLC to Adecoagro in exchange for common shares of Adecoagro. In a series of transactions during 2012, we transferred shares of Adecoagro to certain limited partners of IFH in exchange for their residual interest in IFH, increasing our interest in IFH to approximately 100%.

On January 28, 2011, Adecoagro completed the IPO of its shares on the NYSE. The shares are traded under the symbol “AGRO.”

On March 27, 2015, Adecoagro commenced a series of transactions for the purpose of transfering the domicile of Adecoagro LP to Luxembourg. In connection with the Adecoagro LP redomiciliation, Adecoagro merged IFH into Adecoagro LP with Adecoagro LP as the surviving entity and Adecoagro GP S.à r.l., a société à responsibilitié limitée organized under the laws of Luxembourg, became the general partner of Adecoagro LP on April 1, 2015. Also on April 1, 2015, Adecoagro completed the redomiciliation of Adecoagro LP (Delaware) out of Delaware to Luxembourg and Adecoagro LP, without dissolution or liquidation, continued its corporate existence as Adecoagro LP S.C.S., a société en commandite simple organized under Luxembourg law, effective April 2, 2015. For a detailed description of the Adecoagro LP redomiciliation please see “Item 4. Information on the Company—A. History and Development of the Company—History. Since that date the affairs of Adecoagro LP S.C.S. have been governed by its articles of association and Luxembourg law.

Adecoagro is registered with the Luxembourg Registry of Trade and Companies under number B153681. Adecoagro has its registered office at 6 Rue Eugène Ruppert, L-2453, Luxembourg, Grand Duchy of Luxembourg.

The corporate purpose of Adecoagro, as stated in Article 4 of our articles of incorporation (Purpose Object), is the following: The object of Adecoagro is the holding of participations, in any form whatsoever, in Luxembourg and foreign companies, or other entities or enterprises, the acquisition by purchase, subscription, or in any other manner as well as the transfer by sale, exchange

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or otherwise of stock, bonds, debentures, notes and other securities or rights of any kind including interests in partnerships, and the holding, acquisition, disposal, investment in any manner (in), development, licensing or sub licensing of, any patents or other intellectual property rights of any nature or origin as well as the ownership, administration, development and management of its portfolio. Adecoagro may carry out its business through branches in Luxembourg or abroad.

Adecoagro may borrow in any form and proceed to the issuance by private or public means of bonds, convertible bonds and debentures or any other securities or instruments it deems fit.

In a general fashion it may grant assistance (by way of loans, advances, guarantees or securities or otherwise) to companies or other enterprises in which Adecoagro has an interest or which form part of the group of companies to which Adecoagro, belongs or any entity as Adecoagro may deem fit (including up stream or cross stream), take any controlling, management, administrative and/or supervisory measures and carry out any operation which it may deem useful in the accomplishment and development of its purposes.

Finally, Adecoagro can perform all commercial, technical and financial or other operations, connected directly or indirectly in all areas in order to facilitate the accomplishment of its purpose.

Share Capital

As of December 31, 2017 our issued share capital amounted to $183,572,722.50, represented by 122,381,815 shares in issue (of which 4,643,396 were treasury shares) with a nominal value of $1.50 each. All issued shares are fully paid up.

As of December 31, 2017 there were 118,189,329 common shares outstanding.

We have an authorized unissued share capital of $3,000,000,000, including the issued share capital as of December 31, 2017 of $183,572,722.50 and are authorized to issue up to 2,000,000,000 shares of a nominal value of $1.50 each (taking into account the shares issued as of December 31, 2017 ) out of such authorized share capital. Our authorized unissued share capital as of December 31, 2017 is $2,816,427,277.50.

Our articles of incorporation authorize the board of directors to issue shares within the limits of the authorized un-issued share capital at such times and on such terms as the board or its delegates may decide for a period ending on April 20, 2012 (unless it is extended, amended or renewed and we currently intend to seek renewals and/or extensions as required from time to time). Accordingly, the board may issue shares up to the number of authorized un-issued shares pursuant to the above until the latter date against contributions in cash, contributions in kind or by way of incorporation of available reserves at such times and on such terms and conditions, including the issue price, as the board of directors or its delegate(s) may in its or their discretion resolve and the general meeting of shareholders has waived and has authorized the board of directors to waive, suppress or limit, any pre-emptive subscription rights of shareholders provided for by law to the extent it deems such waiver, suppression or limitation advisable for any issue or issues of shares within the authorized share capital. Further, on April 19, 2017 the extraordinary meeting of shareholders adjusted such authorization to 5 years; this is, until April 20, 2021, in line with the amendments to the Luxembourg law of August 10, 1915 on commercial companies as amended.

Our authorized share capital is determined (and may be increased, reduced or extended) by our articles of incorporation, as amended from time to time, by the decision of our shareholders at an extraordinary general shareholders’ meeting with the necessary quorum and majority provided for the amendment of our articles of incorporation. See “—Amendment to the Articles of Incorporation” and “—General Meeting of Shareholders”.

Under Luxembourg law, existing shareholders benefit from a preemptive subscription right on the issuance of shares for cash consideration. However, our shareholders have, in accordance with Luxembourg law, authorized the board to suppress, waive or limit any preemptive subscription rights of shareholders provided by law to the extent the board deems such suppression, waiver or limitation advisable for any issuance or issuances of shares within the scope of our authorized unissued share capital. Such shares may be issued above, at or below market value (down to zero) as well as by way of incorporation of available reserves and premium for a period ending on April 2021 (unless it is extended, amended or renewed and we currently intend to seek renewals and/or extensions as required from time to time). Further, on April 19, 2017 the extraordinary meeting of shareholders adjusted the authorized un-issued share capital and related authorizations to five years; this is, until April 20, 2021, in line with the amendments to the Luxembourg law of August 10, 1915 on commercial companies as amended.

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Form and Transfer of shares

Our shares are issued in registered form only and are freely transferable. Luxembourg law does not impose any limitations on the rights of Luxembourg or non-Luxembourg residents to hold or vote our shares.

Under Luxembourg law, the ownership of registered shares is evidenced by the inscription of the name of the shareholder, the number of shares held by him or her in the register of shares held at the registered office of the Company. Each transfer of shares in the share register shall be effected by written declaration of transfer to be recorded in the register of shares, such declaration to be dated and signed by the transferor and the transferee, or by their duly appointed agents. We may accept and enter into the share register any transfer effected pursuant to an agreement or agreements between the transferor and the transferee, true and complete copies of which have been delivered to us.

We may appoint registrars in different jurisdictions, each of whom may maintain a separate register for the shares entered in such register. We have appointed Computershare as our New York registrar and transfer agent. The holders of our shares may elect to be entered in one of the registers and to be transferred from time to time from one register to another register provided that our board of directors may however impose transfer restrictions for shares that are registered, listed, quoted, dealt in, or have been placed in certain jurisdictions in compliance with the requirements applicable therein. The transfer to the register kept at the Company’s registered office may always be requested by a shareholder.

In addition, our articles of incorporation provide that our shares may be held through a securities settlement system or a professional depository of securities. Shares held in such manner have the same rights and obligations as shares recorded in our shareholder register(s) (subject to complying with certain formalities). Shares held through a securities settlement system or a professional depository of securities may be transferred in accordance with customary procedures for the transfer of securities in book-entry form.

Issuance of Shares

Pursuant to Luxembourg law of August 10, 1915 on commercial companies as amended, the issuance of shares in Adecoagro requires the approval by the general meeting of shareholders at the quorum and majority provided for the amendment of our articles of incorporation. See “—Amendment to the Articles of Incorporation” and “—General Meeting of Shareholders”. The general meeting of shareholders may however approve an authorized unissued share capital and authorize the board of directors to issue shares up to the maximum amount of such authorized unissued share capital for a maximum period of five years. The general meeting may amend, renew or extend such authorized share capital and authorization to the board of directors to issue shares.

We have currently an authorized unissued share capital of $3,000,000,000, including the issued share capital as of December 31, 2017 of $183,572,722.50, and are authorized to issue up to 2,000,000,000 shares of a nominal value of $1.50 each (taking into account the shares already issued) out of such authorized share capital. As of December 31, 2017 the un-issued share capital was $2,816,427,277.50. Our board has been authorized to issue shares within the limits of the authorized un-issued share capital at such times and on such terms as the board or its delegates may decide for a period ending on April 20, 2021 (unless it is extended, amended or renewed and we currently intend to seek renewals and/or extensions as required from time to time). Further, on April 19, 2017 the extraordinary meeting of shareholders adjusted the authorized un-issued share capital and related authorizations to 5 years; until April 20, 2021, in line with the amendments to the Luxembourg law of August 10, 1915 on commercial companies as amended. Accordingly, the board may issue shares up to the total number of authorized un-issued shares until the latter date against contributions in cash, contributions in kind or by way of incorporation of available reserves at such times and on such terms and conditions, including the issue price, as the board of directors or its delegate(s) may in its or their discretion resolve while waiving, suppressing or limiting, any pre-emptive subscription rights of shareholders provided for by law to the extent it deems such waiver, suppression or limitation advisable for any issue or issues of shares within the authorized share capital.

Our articles provide that no fractional shares may be issued.

Our shares have no conversion rights and there are no redemption or sinking fund provisions applicable to our common shares.

Preemptive Rights

Unless limited or cancelled by the board of directors as described above, holders of our shares have a pro rata preemptive right to subscribe for any new shares issued for cash consideration. Our articles provide that, in the event of an increase of the issued share capital by the board of directors within the limits of the authorized un-issued share capital, preemptive rights can be waived, suppressed or limited by the board of directors for a period ending on April 20, 2021. On April 19, 2017 the extraordinary

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meeting of shareholders adjusted such authorization to 5 years; until April 20, 2021, in line with the amendments to the Luxembourg law of August 10, 1915 on commercial companies as amended.

Repurchase of Shares

We cannot subscribe for our own shares.

We may, however, repurchase issued shares or have another person repurchase issued shares for our account, subject in particular to the following conditions:

•

the prior authorization of the general meeting of shareholders (at the quorum and majority for ordinary resolutions), which authorization sets forth the terms and conditions of the proposed repurchase and in particular the maximum number of shares to be repurchased, the duration of the period for which the authorization is given (which may not exceed five years) and, in the case of repurchase for consideration, the minimum and maximum consideration per share, must have been obtained;


•	the repurchase may not reduce our net assets on a non-consolidated basis to a level below the aggregate of the issued share capital and the reserves that we must maintain pursuant to Luxembourg law or its articles of incorporation; and


•	only fully paid up shares may be repurchased.

The general meeting of shareholders has authorized that the Company, and/or any wholly-owned subsidiary (and/or any person acting on their behalf), may purchase, acquire, receive or hold shares in the Company under article 430-15 of the Luxembourg law of August 10, 1915, as amended, from time to time up to 20% of the issued share capital, on the following terms and on such terms as referred to below and as shall further be determined by the board of directors of the Company, such authorization being valid (subject to renewal) for a period of five years from January 10, 2011. Such period was thereafter extended to end on April 20, 2021.

Acquisitions may be made in any manner including without limitation, by tender or other offer(s), buyback program(s), over the stock exchange or in privately negotiated transactions or in any other manner as determined by the board of directors (including derivative transactions or transactions having the same or similar economic effect than an acquisition).

In the case of acquisitions for value:

(i) in the case of acquisitions other than in the circumstances set forth under (ii), for a net purchase price being (x) no less than fifty per cent of the lowest stock price and (y) no more than fifty per cent above the highest stock price, in each case being the closing price, as reported by the New York City edition of the Wall Street Journal, or, if not reported therein, any other authoritative source to be selected by the board of directors of the Company (hereafter, the closing price), over the ten (10) trading days preceding the date of the purchase (or as the case may be the date of the commitment to the transaction);

(ii) in case of a tender offer (or if deemed appropriate by the board of directors, a buyback program),

a. in case of a formal offer being published, for a set net purchase price or a purchase price range, each time within the following parameters: no less than fifty per cent of the lowest stock price and (y) no more than fifty per cent above the highest stock price, in each case being the closing price over the ten (10) trading days preceding the publication date, provided however that if the stock exchange price during the offer period fluctuates by more than 10%, the board of directors may adjust the offer price or range to such fluctuations;

b. in case a public request for sell offers is made, a price range may be set (and revised by the board of directors as deemed appropriate) provided that acquisitions may be made at a price which is no less than fifty per cent of the lowest stock price and (y) no more than fifty per cent above the highest stock price, in each case being the closing price over a period determined by the board of directors provided that such period may not start more than five (5) trading days before the sell offer start date of the relevant offer and may not end after the last day of the relevant sell offer period.

In addition, pursuant to Luxembourg law the board of directors may repurchase shares without the prior approval of the general meeting of shareholders if necessary to prevent serious and imminent harm to us or if the acquisition of shares has been made in view of the distribution thereof to the employees.

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A share repurchase program was approved by the board of directors of the Company on September 12, 2013 to acquire up to 5% of the total outstanding share capital of the Company to be held as treasury shares (the “Share Repurchase Program”). The Share Repurchase Program was implemented in compliance with the authorization granted by the general meeting of shareholders of the Company, any applicable law, rules or regulations described above and the following limits approved by the board of directors of the Company. The Share Repurchase Program was approved for a period of 12 months from September 23, 2014 (the date of its announcement) or until reaching the maximum number of shares authorized under the Share Repurchase Program, whichever occurs first. The Share Repurchase Program was renewed by decision of the Board of Directors on August 11, 2015 and on August 9, 2016 for an additional period of 12 months, ending on September 23, 2017 or until reaching the maximum number of shares authorized under the Program, whichever occurs first. In April 4, 2017, the board of directors amended the Share Repurchase Program to include repurchases under Open Market Transactions, in reliance on the “safe harbour” from liability for manipulation provided by Rule 10b-18 of the Securities Exchange Act and in privately negotiated transactions.

Capital Reduction

The articles of incorporation provide that the issued share capital may be reduced, subject to the approval by the general meeting of shareholders at the quorum and majority provided for the amendment of our articles of incorporation. See “—Amendment to the Articles of Incorporation” and “—General Meeting of Shareholders”.

General Meeting of Shareholders

In accordance with Luxembourg law and our articles of incorporation, any regularly constituted general meeting of shareholders of Adecoagro represents the entire body of shareholders of the Company. It shall have the broadest powers to order, carry out or ratify acts relating to the operations of the Company.

The annual general meeting of shareholders of Adecoagro as well as any other meetings of shareholders shall be held in the Grand Duchy of Luxembourg at such place and time as indicated in the notice of the meeting.

Each of our shares entitles the holder thereof to attend our general meeting of shareholders, either in person or by proxy, to address the general meeting of shareholders, and to exercise voting rights, subject to the provisions of our articles of incorporation. Each share entitles the holder to one vote at a general meeting of shareholders. There is no minimum shareholding required to be able to attend or vote at a general meeting of shareholders.

A shareholder may act at any general meeting of shareholders by appointing another person (who need not be a shareholder) as his proxy, which proxy shall be in writing and comply with such requirements as determined by our board with respect to the attendance to the general meeting, and proxy forms in order to enable shareholders to exercise their right to vote. All proxies must be received by us (or our agents) no later than the day preceding the fifth (5th) working day before the date of the general meeting except if our board of directors decides to change such time frame.

Our articles of incorporation provide that in the case of shares held through the operator of a securities settlement system or depository, a holder of such shares wishing to attend a general meeting of shareholders must receive from such operator or depository a certificate certifying the number of shares recorded in the relevant account on the blocking date and certifying that the shares in the account shall be blocked until the close of the general meeting. Such certificates should be submitted to us no later than the day preceding the fifth working day before the date of the general meeting unless our board fixes a different period.

Our board of directors may determine a date preceding a general meeting as the record date for admission to such general meeting. When convening a general meeting of shareholders, we will publish the convening notice (which must be published at least fifteen days before the meeting) in the Recueil Électronique des Sociétés et Association , and in a Luxembourg newspaper and in the case the shares of the Company are listed on a regulated market, in accordance with the publicity requirements of such regulated market applicable to the Company. If all of the shareholders are present or represented at a general meeting of shareholders, the general meeting may be held without prior notice or publication. These convening notices must contain the agenda of the meeting and set out the conditions for attendance and representation at the meeting.

All materials relating to a general meeting of shareholders (including the notice) will be available at the website of Adecoagro at www.adecoagro.com and will be filed with the SEC on Form 6-K. The information on our website is not incorporated by reference in, and does not constitute a part of, this annual report.

Luxembourg law provides that the board of directors is obliged to convene a general meeting of shareholders if shareholders representing, in the aggregate, 10% of the issued share capital so require in writing with an indication of the agenda. In such case, the general meeting of shareholders must be held within one month of the request. If the requested general meeting of shareholders

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is not held within one month, shareholders representing, in the aggregate, 10% of the issued share capital, may petition the competent president of the district court in Luxembourg to have a court appointee convene the meeting. Luxembourg law provides that shareholders representing, in the aggregate, 10% of the issued share capital may request that additional items be added to the agenda of a general meeting of shareholders. That request must be made by registered mail sent to the registered office at least five days before the holding of the general meeting of shareholders.

Voting Rights

Each share of our shares entitles the holder thereof to one vote at a general meeting of shareholders.

Luxembourg law distinguishes between “ordinary” general meetings of shareholders and “extraordinary” general meetings of shareholders.

Extraordinary general meetings of shareholders are convened to resolve in particular upon an amendment to the articles of incorporation and certain other limited matters including those described below and are generally subject to the quorum and majority requirements described below. All other general meetings of shareholders are ordinary general meetings of shareholders.

Ordinary General Meetings of Shareholders . At an ordinary general meeting of shareholders there is no quorum requirement, and resolutions are adopted by a simple majority of the votes validly cast, irrespective of the number of shares represented. Abstentions are not considered “votes”.

Extraordinary General Meetings of Shareholders . An extraordinary general meeting of shareholders convened for the purpose of in particular (a) an increase or decrease of the authorized or issued share capital, (b) a limitation or exclusion of preemptive rights, (c) approving a legal merger or de-merger of Adecoagro, (d) dissolution of the Company or (e) an amendment of the articles of incorporation must generally have a quorum of at least 50% of our issued share capital except in limited circumstances provided for by Luxembourg law. If such quorum is not reached, the extraordinary general meeting of shareholders may be reconvened, pursuant to appropriate notification procedures, at a later date with no quorum requirement applying.

Irrespective of whether the proposed actions described in the preceding paragraph will be subject to a vote at the first or a subsequent extraordinary general meeting of shareholders, such actions are generally subject to the approval of at least two-thirds of the votes validly cast at such extraordinary general meeting of shareholders (except in limited circumstances provided for by Luxembourg law). Abstentions are not considered “votes”.

Appointment and Removal of Directors . Members of the board of directors may be elected by simple majority of the votes validly cast at any general meeting of shareholders. Under the articles of incorporation, all directors are elected for a period of up to three years with such possible extension as provided therein provided however the directors shall be elected on a staggered basis, with one third (1/3) of the directors being elected each year and provided further that such three year term may be exceeded by a period up to the annual general meeting held following the third anniversary of the appointment. Any director may be removed with or without cause by a simple majority vote at any general meeting of shareholders. The articles of incorporation provide that in case of a vacancy the board of directors may co-opt a director.

Neither Luxembourg law nor our articles of incorporation contain any restrictions as to the voting of our shares by non-Luxembourg residents.

Amendment to the Articles of Incorporation

Luxembourg law requires an extraordinary general meeting of shareholders to resolve upon an amendment to the articles of incorporation. The agenda of the extraordinary general meeting of shareholders must indicate the proposed amendments to the articles of incorporation.

An extraordinary general meeting of shareholders convened for the purpose of amending the articles of incorporation must generally have a quorum of at least 50% of our issued share capital. If such quorum is not reached, the extraordinary general meeting of shareholders may be reconvened at a later date with no quorum according to the appropriate notification procedures. Irrespective of whether the proposed amendment will be subject to a vote at the first or a subsequent extraordinary general meeting of shareholders, the amendment is generally subject to the approval of at least two-thirds of the votes cast at such extraordinary general meeting of shareholders.

Any resolutions to amend the articles of incorporation must be taken before a Luxembourg notary and such amendments must be published in accordance with Luxembourg law.

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Merger and Division

A merger by absorption whereby a Luxembourg company, after its dissolution without liquidation transfers to another company all of its assets and liabilities in exchange for the issuance to the shareholders of the company being acquired of shares in the acquiring company, or a merger effected by transfer of assets to a newly incorporated company, must, in principle, be approved by an extraordinary general meeting of shareholders of the Luxembourg company to be held before a notary. Similarly the de-merger of a Luxembourg company is generally subject to the approval by an extraordinary general meeting of shareholders.

Liquidation

In the event of the liquidation, dissolution or winding-up of Adecoagro, the assets remaining after allowing for the payment of all liabilities will be paid out to the shareholders pro rata to their respective shareholdings. The decision to voluntarily liquidate, dissolve or wind-up require the approval by an extraordinary general meeting of shareholders of the Company to be held before a notary.

No Appraisal Rights

Neither Luxembourg law nor our articles of incorporation provide for any appraisal rights of dissenting shareholders.

Distributions

Subject to Luxembourg law, each share is entitled to participate equally in distributions if and when if declared by the general meeting of shareholders out of funds legally available for such purposes. Pursuant to the articles of incorporation, the general meeting of shareholders may approve distributions and the board of directors may declare interim distribution, to the extent permitted by Luxembourg law.

Declared and unpaid distributions held by us for the account of the shareholders shall not bear interest. Under Luxembourg law, claims for unpaid distributions will lapse in our favor five years after the date such distribution has been declared.

Annual Accounts

Each year the board of directors must prepare annual accounts, that is, an inventory of the assets and liabilities of Adecoagro together with a balance sheet and a profit and loss account. The board of directors must also prepare, each year, consolidated accounts and management reports on the annual accounts and consolidated accounts. The annual accounts, the consolidated accounts, the management report and the auditor’s reports must be available for inspection by shareholders at the registered office of Adecoagro at least 8 calendar days prior to the date of the annual general meeting of shareholders.

The annual accounts and the consolidated accounts, after approval by the annual general meeting of shareholders, will need to be filed with the Luxembourg registry of trade and companies within one month after the approval and no more than seven months after the close of the financial year.

Information Rights

Luxembourg law gives shareholders limited rights to inspect certain corporate records 8 calendar days prior to the date of the annual general meeting of shareholders, including the annual accounts with the list of directors and auditors, the consolidated accounts, the notes to the annual accounts and the consolidated accounts, a list of shareholders whose shares are not fully paid-up, the management reports, the auditor’s report and in case of amendments to the articles, the text of the proposed amendments and the draft of the resulting consolidated articles.

Any registered shareholder is entitled to receive a copy of the annual accounts, the consolidated accounts, the auditor’s reports and the management reports free of charge 8 calendar days prior to the date of the annual general meeting of shareholders upon request.

Under Luxembourg law, it is generally accepted that a shareholder has the right to receive responses to questions concerning items on the agenda for a general meeting of shareholders, if such responses are necessary or useful for a shareholder to make an informed decision concerning such agenda item, unless a response to such questions could be detrimental to our interests.

One or more shareholders representing at least 10% of the share capital or 10% of the votes attached to all existing securities may ask the board of directors written questions on one or more management operations (opérations de gestion) of the company

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and, as the case may be, of subsidiaries it controls. In the latter case, the request must be assessed in view of the interest of the companies included within the consolidation. In the absence of response within a period of one month, these shareholders may apply to the court for the appointment of experts instructed to submit a report on the management operations targeted in the question.

Board of Directors

The management of Adecoagro is vested in a board of directors. Our articles of incorporation provide that the board must comprise at least three members and no more than eleven members. The number of directors is determined and the directors are appointed at the general meeting of shareholders (except in case of a vacancy in the office of a director because of death, retirement, resignation, dismissal, removal or otherwise, the remaining directors may fill such vacancy and appoint a successor in accordance with applicable Luxembourg law).

The directors are appointed for a period of up to three years; provided however the directors shall be elected on a staggered basis, with one-third of the directors being elected each year and provided further that such three year term may be exceeded by a period up to the annual general meeting held following the third anniversary of the appointment. Directors may be removed with or without cause ( ad nutum ) by the general meeting of shareholders by a simple majority of votes cast at a general meeting of shareholders. The directors shall be eligible for re-election indefinitely. The general shareholders’ meeting may dismiss one or more directors at any time, with or without cause by a resolution passed by simple majority vote, irrespective of the number of shares present at such general shareholders’ meeting.

Currently our board has 11 members (see “Item 6. Directors, Senior Management and Employees—A. Directors and Senior Management—Board of Directors”). The board meets as often as required by our interests.

A majority of the members of the board in office (and able to vote) present or represented at a board meeting constitutes a quorum, and resolutions are adopted by the simple majority vote of the board members present or represented (and able to vote). The board may also take decisions by means of resolutions in writing signed by all directors.

Our board may delegate the daily management of the business of Adecoagro, as well as the power to represent Adecoagro in its day to day business, to individual directors or other officers or agents of the Company (with power to sub-delegate). In addition the board of directors may delegate the daily management of the business of Adecoagro, as well as the power to represent Adecoagro in its day to day business to an executive or other committee as it deems fit. The board of directors shall determine the conditions of appointment and dismissal as well as the remuneration and powers of any person or persons so appointed.

Currently the board of directors has appointed the officers listed under “Item 6. Directors, Senior Management and Employees—A. Directors and Senior Management.”

The board of directors may (but shall not be obliged to unless required by law) establish one or more committees (including without limitation an audit committee, a risk and commercial committee, a strategy committee and a compensation committee) and for which it shall, if one or more of such committees are set up, appoint the members (who may be but do not need to be board members), determine the purpose, powers and authorities as well as the procedures and such other rules as may be applicable thereto (subject as to the audit committee as set forth therein).

Currently our board has set up an audit committee. See “Item 6. Directors, Senior Management and Employees—C. Board Practices.” Our board has set up a compensation committee. See “Item 6. Directors, Senior Management and Employees—C. Board Practices.” Our board has set up a risk and commercial committee. See “Item 6. Directors, Senior Management and Employees—C. Board Practices.” Our board has set up a strategy committee. See “Item 6. Directors, Senior Management and Employees—C. Board Practices.”

No director or member of any committee shall, solely as a result of being a director, be prevented from contracting with us, either with regard to his tenure of any office or place of profit or as vendor, purchaser or in any other manner whatsoever, nor shall any contract in which any director or member of any committee is in any way interested be liable to be avoided, in account of his position as director or member of any committee nor shall any director or member of any committee who is so interested be liable to account for us or the shareholders for any remuneration, profit or other benefit realized by the contract by reason of the director or member of any committee holding that office or of the fiduciary relationship thereby established.

Any director or, as the case may be, member of any committee having a direct or indirect interest in a transaction conflicting with our interest, which has to be considered by the board of directors or the relevant committee, as the case may be, shall be obliged to advise the board or the committee thereof and to cause a record of his statement to be included in the minutes of the

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meeting. He may not take part in these deliberations nor in the vote of the resolution. At the next following general meeting or board of directors’ meeting, before any resolution is put to vote, a special report shall be made on any transactions in which any of the directors or members of any committee may have had an interest conflicting with our interest.

No shareholding qualification for directors is required.

Directors and other officers, past and present, are entitled to indemnification from us to the fullest extent permitted by law against liability and all expenses reasonably incurred by him in connection with any claim, action, suit or proceeding in which he is involved by virtue of his being or having been a director. We may purchase and maintain for any director or other officer insurance against any such liability.

No indemnification shall be provided against any liability to us or our shareholders by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office. No indemnification will be provided in the event of a settlement (unless approved by a court of competent jurisdiction or the board), nor will indemnification be provided in proceedings in which that director or officer has been finally adjudicated to have acted in bad faith and not in the interest of the Company.

Transfer Agent and Registrar

The transfer agent and registrar for our common shares is Computershare. The holders of our shares may elect to be entered in one of the registers and to be transferred from time to time from one register to another register provided that our board of directors may however impose transfer restrictions for shares that are registered, listed, quoted, dealt in, or have been placed in certain jurisdictions in compliance with the requirements applicable therein. The transfer to the register kept in Luxembourg may always be requested by a shareholder.

C. MATERIAL CONTRACTS

See “Item 4. Information on the Company—B. Business Overview.”

D. EXCHANGE CONTROLS

In 1991, the Argentine Convertibility Law established a fixed exchange rate according to which the Argentine Central Bank was statutorily obliged to sell U.S. dollars to any individual at a fixed exchange rate of Ps.1.00 per $1.00. In 2001 Argentina experienced a period of severe political, economic and social crisis, and on January 6, 2002, the Argentine congress enacted the Public Emergency Law abandoning more than ten years of fixed Peso-U.S. dollar parity. After devaluing the Peso and setting the official exchange rate at Ps.1.40 per $1.00, on February 11, 2002, the Argentine government allowed the Peso to float. The shortage of U.S. dollars and their heightened demand caused the Peso to further devaluate significantly in the first half of 2002. The Argentine Central Bank may indirectly affect this market through its active participation. Due to the deterioration of the economic and financial situation in Argentina during 2001 and 2002, in addition to the abandonment of the Peso-U.S. dollar parity, the Argentine government established a number of monetary and currency exchange control measures, including a partial freeze on bank deposits, the suspension on payments of its sovereign foreign debt, restrictions on the transfer of funds out of, or into, Argentina, and the creation of the Single Free Foreign Exchange Market (“ Mercado Único y Libre de Cambios ”, or the “FX Market”) through which all purchases and sales of foreign currency must be made. Although since 2003 these restrictions have been progressively eased to some extent, as a consequence of the increase of the demand in Argentina for U.S. dollars and the capital flow out of Argentina, the Argentine government imposed during 2011 some additional restrictions on the transfer of funds from Argentina and reduced the time required to comply with the mandatory transfer of funds into Argentina.

Most foreign exchange restrictions and restrictions on transfer of funds into and out of Argentina that had been enacted since 2011, were lifted by the Macri administration in December 2016, reestablishing Argentine residents’ rights to purchase and remit outside of Argentina foreign currency with no maximum amount and without specific allocation or prior approval.

In December 2015, in line with the economic reforms implemented by the new administration, the Argentine Ministry of Treasury issued Resolution No. 3/2015 which eliminated the requirement to maintain a registered, non-transferable and non-interest bearing deposit by reducing the amount of the deposit from 30% to 0%. Consequently, such deposit is no longer applicable to, among other transactions, foreign financial debts, inflows of funds of non-residents and repatriations by residents. In addition, pursuant to Resolution No. 1-E/2017 dated January 5, 2017, the minimum period of time (120 days) that proceeds from new financial indebtedness (incurred by residents granted by foreign creditors) and portfolio investments of non residents were required to remain in Argentina pursuant to Resolution No. 3/2015 was reduced to zero. The Argentine Ministry of Treasury is entitled to

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modify the percentage of and period that funds must be kept in Argentina when a change in the macroeconomic situation so requires.

In addition, on August 8, 2016, the Argentine Central Bank issued Communication “A” 6037, which repealed most of the restrictions to purchase currency and those relating to the inflow and outflow of funds into and from Argentina (except for the obligation of Argentine exporters of goods and services to repatriate to the FX Market foreign currency proceeds from exportation transactions, such as receivables relating to the exportation of goods, which shall also be settled through the foreign exchange market).

Furthermore, on May 19, 2017, the Central Bank issued Communication ‘‘A’’ 6244, which entered into effect on July 1, 2017 and was amended by Communication ‘‘A’’ 6312 dated August 30, 2017, and pursuant to which new regulations regarding access to the foreign exchange market were established, essentially abrogating all prior regulations on the matter. Pursuant to these regulations:

The principle of a free foreign exchange market is established.

The obligation to carry out any exchange operation through an authorized entity is maintained.

The restrictions regarding hours to operate in the MULC are eliminated.

The obligation of Argentine residents to comply with the ‘‘Survey of foreign assets and liabilities’’ (Communication ‘‘A’’ 6401) is maintained and in force, even if there had been no inflow of funds to the MULC and/or no future access to it for the operations to be declared.

On November 1, 2017, the Argentine executive branch issued Decree No. 893/2017 (complemented by Communication ‘‘A’’ 6363 of the Central Bank dated November 10, 2017) pursuant to which foreign exchange restrictions related to exports of goods and services that continued to be in place (Mercado Único y Libre de Cambios) were eliminated, including the obligation of Argentine residents to transfer to Argentina and sell in the FX Market the proceeds of their exports of goods within the applicable deadline.

For additional information regarding all current foreign exchange restrictions and exchange control regulations in Argentina, investors should consult their legal advisors and read the applicable rules mentioned herein, as well as any amendments and complementary regulations, which are available at the Argentine Ministry of Treasury’s website: www.economia.gob.ar, or the Argentine Central Bank’s website: www.bcra.gob.ar.

E. TAXATION

MATERIAL LUXEMBOURG TAX CONSIDERATIONS FOR HOLDERS OF COMMON SHARES

The following is a summary discussion of certain Luxembourg tax considerations of the acquisition, ownership and disposition of your shares that may be applicable to you if you acquire our shares. This does not purport to be a comprehensive description of all of the tax considerations that may be relevant to any of the Company’s common shares, and does not purport to include tax considerations that arise from rules of general application or that are generally assumed to be known to holders. This discussion is not a complete analysis or listing of all of the possible tax consequences of such transactions and does not address all tax considerations that might be relevant to particular holders in light of their personal circumstances or to persons that are subject to special tax rules.

It is not intended to be, nor should it be construed to be, legal or tax advice. This discussion is based on Luxembourg laws and regulations as they stand on the date of this annual report and is subject to any change in law or regulations or changes in interpretation or application thereof (and which may possibly have a retroactive effect). Prospective investors should therefore consult their own professional advisers as to the effects of state, local or foreign laws and regulations, including Luxembourg tax law and regulations, to which they may be subject.

As used herein, a “Luxembourg individual” means an individual resident in Luxembourg who is subject to personal income tax (impôt sur le revenu) on his or her worldwide income from Luxembourg or foreign sources, and a “Luxembourg corporate holder” means a company (that is, a fully taxable entity within the meaning of Article 159 of the Luxembourg Income Tax Law) resident in Luxembourg subject to corporate income tax (impôt sur le revenu des collectivités) on its worldwide income from Luxembourg or foreign sources. For purposes of this summary, Luxembourg individuals and Luxembourg corporate holders are collectively referred to as “Luxembourg Holders”. A “non-Luxembourg Holder” means any investor in shares of Adecoagro other than a Luxembourg Holder.

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Tax regime applicable to realized capital gains

Luxembourg Holders

Luxembourg resident individual holders

Capital gains realized by Luxembourg resident individuals who do not hold their shares as part of a commercial or industrial business and who hold no more than 10% of the share capital of the Company will only be taxable if they are realized on a sale of shares that takes place before their acquisition or within the first six months following their acquisition.

Luxembourg resident corporate holders

Capital gains realized upon the disposal of shares by a fully taxable resident corporate holder will in principle be subject to corporate income tax and municipal business tax. The combined applicable rate (including an unemployment fund contribution) is 26.01% for the fiscal year ending 2018 for a corporate holder established in Luxembourg-City. An exemption from such taxes may be available to the holder pursuant to article 166 of the Luxembourg Income Tax Law subject to the fulfilment of the conditions set forth therein. The scope of the capital gains exemption can be limited in the cases provided by the Grand Ducal Decree of December 21, 2001.

Non-Luxembourg Holders

An individual who is a non-Luxembourg Holder of shares (and who does not have a permanent establishment, a permanent representative or a fixed place of business in Luxembourg) will only be subject to Luxembourg taxation on capital gains arising upon disposal of such shares if such holder has (together with his or her spouse and underage children) directly or indirectly held more than 10% of the capital of Adecoagro at any time during the past five years, and either (i) such holder has been a resident of Luxembourg for tax purposes for at least 15 years and has become a non-resident within the last five years preceding the realization of the gain, subject to any applicable tax treaty, or (ii) the disposal of shares occurs within six months from their acquisition (or prior to their actual acquisition), subject to any applicable tax treaty.

A corporate non-Luxembourg Holder (that is, an entity within the meaning of Article 159 of the Luxembourg Income Tax Law), which has a permanent establishment, a permanent representative or a fixed place of business in Luxembourg to which shares are attributable, will bear corporate income tax and municipal business tax on a gain realized on a disposal of such shares as set forth above for a Luxembourg corporate holder. However, gains realized on the sale of the shares may benefit from the full exemption provided for by Article 166 of the Luxembourg Income Tax Law and by the Grand Ducal Decree of December 21, 2001 subject in each case to fulfillment of the conditions set out therein.

A corporate non-Luxembourg Holder, which has no permanent establishment in Luxembourg to which the shares are attributable, will bear corporate income tax on a gain realized on a disposal of such shares under the same conditions applicable to an individual non-Luxembourg Holder, as set out above. In principle a corporate non-Luxembourg holders is only subject to taxation under (ii) above and not to taxation under (i) above. This result obtains from the provision that when a corporate Luxembourg holder migrates abroad and becomes a corporate non-Luxembourg holders, at that moment in time such holder is deemed liquidated for Luxembourg tax purposes and taxation applies at the moment in time.

Tax regime applicable to distributions

Withholding tax

Distributions imputed for tax purposes on newly accumulated profits are subject to a withholding tax of 15%. The rate of the withholding tax may be reduced pursuant to double tax avoidance treaty existing between Luxembourg and the country of residence of the relevant holder, subject to the fulfilment of the conditions set forth therein.

No withholding tax applies if the distribution is made to (i) a Luxembourg resident corporate holder (that is, a fully taxable entity within the meaning of Article 159 of the Luxembourg Income Tax Law), (ii) an undertaking of collective character which is resident of a Member State of the European Union and is referred to by article 2 of the Council Directive of 2011/96 concerning the common fiscal regime applicable to parent and subsidiary companies of different member states of November 20, 2011 (the "Parent Subsidiary Directive"), (iii) a corporation or a cooperative company resident in Norway, Iceland or Liechtenstein and subject to a tax comparable to corporate income tax as provided by the Luxembourg Income Tax Law, (iv) an undertaking with a collective character subject to a tax comparable to corporate income tax as provided by the Luxembourg Income Tax Law which is resident in a country that has concluded a tax treaty with Luxembourg, (v) a Luxembourg permanent establishment of one of

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the afore-mentioned categories and (vi) a corporation company resident in Switzerland which is subject to corporate income tax in Switzerland without benefiting from an exemption, provided that at the date of payment, the holder holds or commits to hold directly or through a tax transparent vehicle, during an uninterrupted period of at least twelve months, shares representing at least 10% of the share capital of Adecoagro or acquired for an acquisition price of at least EUR 1,200,000, and provided that the dividend recipient is not excluded to benefit from the Parent Subsidiary Directive under its mandatory general anti-avoidance rule, as implemented in Luxembourg.

Luxembourg Holders

With the exception of a Luxembourg corporate holders benefitting from the exemption referred to above, Luxembourg individual holders, and Luxembourg corporate holders subject to Luxembourg corporation taxes, must include the distributions paid on the shares in their taxable income, 50% of the amount of such dividends being exempted from tax. The applicable withholding tax can, under certain conditions, entitle the relevant Luxembourg Holder to a tax credit.

Net wealth tax

Luxembourg Holders

Luxembourg net wealth tax will not be levied on a Luxembourg Holder with respect to the shares held unless (i) the Luxembourg Holder is a legal entity subject to net wealth tax in Luxembourg; or (ii) the shares are attributable to an enterprise or part thereof which is carried on through a permanent establishment, a fixed place of business or a permanent representative in Luxembourg.

Net wealth tax is levied annually at the rate depending on the amount the net wealth of enterprises resident in Luxembourg or, a reduced rate of 0.05% for the portion of the net wealth exceeding EUR 500 million, as determined for net wealth tax purposes (i.e. 0.5% on an amount up to EUR 500 million and 0.05% on the amount of taxable net wealth exceeding EUR 500 million). The shares may be exempt from net wealth tax subject to the conditions set forth by Paragraph 60 of the Law of October 16, 1934 on the valuation of assets ( Bewertungsgesetz ), as amended.

Non-Luxembourg Holders

Luxembourg net wealth tax will not be levied on a non-Luxembourg Holder with respect to the shares held unless the shares are attributable to an enterprise or part thereof which is carried on through a permanent establishment or a permanent representative in Luxembourg.

United States Federal Income Taxation of the Company

Our business assets and properties are located, and all of our employees and executives are based outside the United States. Our business is directly conducted through operating companies organized under the laws of countries other than the United States. These non-U.S. operating companies are indirectly owned by Adecoagro LP SCS, a holding company which is a societe commandite simple organized under the laws of Luxembourg. As a partnership that is not engaged in a trade or business within the United States within the meaning of section 864 of the Internal Revenue Code, Adecoagro LP SCS is not itself subject to U.S. federal net income taxes. We acquired approximately 98 percent of Adecoagro LP SCS, predecessor company, IFH, prior to undertaking the IPO in exchange for our stock.

Under rules to prevent expatriation of and by U.S. corporations and certain U.S. partnerships under Code section 7874(b), we would be treated as a U.S. domestic corporation if for this purpose (i) we were deemed to have acquired substantially all of the assets constituting the trade or business of a U.S. domestic partnership and (ii) former members of IFH were deemed to own at least 80% of our stock by reason of the transfer of those trade or business assets (ignoring stock issued in the IPO for purposes of the 80% threshold) and (iii) we were found not to conduct substantial business activities in Luxembourg. In that event, we would be subject to U.S. federal net income tax on our worldwide income and dividends we pay to non-U.S. shareholders would be subject to U.S. federal withholding tax at a 30% rate (subject to reduction, to the extent the beneficial owner of the dividend is entitled to claim a reduced rate of withholding under an applicable income tax treaty).

We believe that the restructuring transactions executed prior to or in connection with the IPO should not be subject to section 7874(b). Accordingly, we do not believe that we will be subject to U.S. federal income tax on our worldwide income nor do we anticipate paying dividends subject to U.S. federal withholding tax. However, the relevant rules are unclear in certain respects and there is limited guidance on the application of the rules to acquisitions of partnerships or partnership assets constituting a trade or business. Accordingly, we cannot assure you that the IRS will not seek to assert that we are a U.S. domestic corporation, which

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assertion if successful could materially increase our U.S. federal income tax liability. Prospective holders who are non-United States persons should also note that, in that event, we would be required to withhold tax from any dividends we pay to non-U.S. Holders (subject to any applicable income tax treaties applicable to those non-U.S. Holders).

Shareholders are urged to consult their own tax advisors about the possible application of section 7874. The remainder of this discussion assumes that we are not treated as a U.S. corporation for U.S. federal income tax purposes.

Material U.S. Federal Income Tax Considerations for U.S-. Holders

The following is a discussion of the material U.S. federal income tax considerations relating to the purchase, ownership and disposition of our common shares. This discussion applies only to beneficial owners of common shares that are “U.S. Holders” (as defined below), who have purchased our common shares in the open market and that hold our common shares as “capital assets” for U.S. federal income tax purposes (generally, property held for investment). This discussion is based on the U.S. Internal Revenue Code of 1986, as amended, (the “Code”), final, temporary and proposed Treasury regulations, administrative pronouncements and judicial decisions, all as currently in effect and all of which are subject to change (possibly with retroactive effect) and to differing interpretations.

This discussion does not address all U.S. federal income tax considerations that may be relevant to a particular holder based on its particular circumstances, and you are urged to consult your own tax advisor regarding your specific tax situation. For example, the discussion does not address the tax considerations that may be relevant to U.S. Holders in special tax situations, such as:


•	insurance companies;


•	tax-exempt organizations (including private foundations);


•	brokers or dealers in securities or currencies and traders in securities that elect to mark to market;


•	banks and financial institutions;


•	partnerships or other pass-through entities;


•	real estate investment trusts and regulated investment companies;


•	companies that accumulate earnings to avoid U.S. federal income tax;


•	persons who acquire common shares through the exercise of options or other compensation arrangements;


•	S corporations;


•	accrual-method taxpayers subject to special tax accounting rules under Section 451(b) of the Code;


•	holders whose functional currency for U.S. federal income tax purposes is not the U.S. dollar or that hold shares through non-U.S. brokers of other non-U.S. intermediaries;


•	certain former U.S. citizens or residents or U.S. expatriates;


•	holders that hold our common shares as part of a hedge, straddle or conversion or other integrated transaction; or


•	holders that own, directly, indirectly, or constructively, 10% or more of the total combined voting power of our common shares.

This discussion does not address the alternative minimum tax consequences of owning common shares or the indirect consequences to holders of equity interests in partnerships or other entities that own our common shares. Moreover, this discussion does not address the state, local and foreign tax consequences of owning our common shares, or any aspect of U.S. federal tax law (such as the estate, generation-skipping and gift tax) other than U.S. federal income taxation.

You are a “U.S. Holder” if you are a beneficial owner of our common shares and you are, for U.S. federal income tax purposes:


•	an individual who is a citizen or resident of the United States;


•	a corporation, or any other entity taxable as a corporation, created or organized in or under the laws of the United States or any State thereof, including the District of Columbia;


•	an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or


•	a trust (a) if a court within the United States is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all of its substantial decisions or (b) that has a valid election in effect under applicable Treasury regulations to be treated as a U.S. person for federal income tax purposes.

If a partnership (or an entity or arrangement treated as a partnership for U.S. federal income tax purposes) owns our common shares, the tax treatment of a partner will generally depend upon the status of the partner and upon the activities of the partnership. A partnership that owns our common shares, and partners in such a partnership, should consult their own tax advisors, including the potential impact of recently enacted legislation (P.L. 115-97) commonly referred to as the Tax Cut and Jobs Act (the “Act”).

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You should consult your own tax advisor regarding the U.S. federal, state, local and non-U.S. income and other tax consequences of purchase, ownership and disposition of our common shares in your particular circumstances, including the potential impact of the Act.

Passive Foreign Investment Company (“PFIC”) Rules

U.S. Holders generally will be subject to a special, generally adverse tax regime that would differ in certain material respects from the tax treatment described below if we are, or were to become, a PFIC for U.S. federal income tax purposes.

In general, we will be a PFIC with respect to a U.S. Holder if, for any taxable year in which the U.S. Holder held our common shares, either (i) at least 75% of our gross income for the taxable year is passive income or (ii) at least 50% of the value (determined on the basis of a quarterly average) of our assets is attributable to assets that produce or are held for the production of passive income. For this purpose, passive income generally includes, among other things, dividends, interest, royalties, rents, annuities and gains from assets that produce passive income. If a foreign corporation owns at least 25% by value of the stock of another corporation, the foreign corporation is treated for purposes of the PFIC tests as owning its proportionate share of the assets of the other corporation, and as receiving directly its proportionate share of the other corporation’s income.

Although the determination of whether a corporation is a PFIC is made annually, and thus may be subject to change, we do not believe that we were a PFIC for U.S. federal income tax purposes for our most recently completed taxable year, nor that we will be one for our current taxable year. The remainder of this discussion assumes that we are not a PFIC.

Taxation of Dividends

Distributions with respect to our common shares (other than certain pro rata distributions of common shares) will, to the extent made from our current or accumulated earnings and profits as determined under U.S. federal income tax principles, constitute dividends for U.S. federal income tax purposes. We do not currently maintain calculations of our earnings and profits under U.S. federal income tax principles. Unless and until these calculations are made, distributions should be presumed to be taxable dividends for U.S. federal income tax purposes. As used below, the term “dividend” means a distribution that constitutes a dividend for U.S. federal income tax purposes.

Cash dividends (including amounts withheld on account of foreign taxes) paid with respect to our common shares generally will be includible in the gross income of a U.S. Holder as ordinary income on the day on which the dividends are received by the U.S. Holder. Dividends with respect to our common shares will not be eligible for the dividends received deduction allowed to corporations.

Subject to certain exceptions for short-term and hedged positions, certain non-corporate U.S. Holders, including individuals, may be entitled to preferential rates of taxation with respect to “qualified dividends” paid by qualified foreign corporations. A foreign corporation will be treated as a qualified foreign corporation with respect to dividends paid by that corporation on common shares that are readily tradable on an established securities market in the United States. As our shares are listed on the New York Stock Exchange, we believe dividends paid by us will be eligible for these preferential rates. There can, however, be no assurance that our common shares will be considered readily tradable on an established securities market in the future. Holders should consult their own tax advisors regarding the availability of the preferential rates of taxation with respect to dividends in light of their own particular situations, including related restrictions and special rules.

The amount of any cash dividend paid in foreign currency will equal the U.S. dollar value of the dividend, calculated by reference to the exchange rate in effect on the date the distribution is received, regardless of whether the payment is in fact converted to U.S. dollars at that time. A U.S. Holder should not recognize any foreign currency gain or loss in respect of such distribution if such foreign currency is converted into U.S. dollars on the date received. If the foreign currency is not converted into U.S. dollars on the date received, however, gain or loss may be recognized upon a subsequent sale or other disposition of the foreign currency. Such foreign currency gain or loss, if any, generally will be U.S.-source ordinary income or loss.

Dividends received by U.S. Holders will constitute foreign-source income and will, depending on the U.S. Holder's cricumstances, generally be “passive” or “general” or "foreign branch" income for U.S. foreign tax credit purposes. Subject to limitations under U.S. federal income tax law concerning credits or deductions for foreign taxes and certain exceptions for short-term and hedged positions, a Luxembourg withholding tax imposed on dividends described above under “Material Luxembourg Tax Considerations for Holders of Shares—Tax regime applicable to distributions—Withholding tax” should be treated as a foreign income tax eligible for credit against a U.S. Holder’s U.S. federal income tax liability (or at a U.S. Holder’s election, may be deducted in computing taxable income if the U.S. Holder has elected to deduct all foreign income taxes for the taxable year). Special limitations on foreign tax credits apply to dividends subject to the preferential rate of taxation for qualified dividends. The

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rules with respect to foreign tax credits and deductions are complex and U.S. Holders are urged to consult their independent tax advisors regarding the availability of the foreign tax credit under their particular circumstances.

Taxation of Capital Gains

Gain or loss realized by a U.S. Holder on the sale, exchange or other taxable disposition of common shares will be subject to U.S. federal income taxation as capital gain or loss in an amount equal to the difference between the amount realized (including the gross amount of the proceeds before the deduction of any foreign tax) on the sale or other taxable disposition and such U.S. Holder’s adjusted tax basis in the common shares. Capital gains of certain non-corporate U.S. Holders, including individuals, derived with respect to capital assets held for more than one year generally are eligible for various reduced rates of taxation. The deductibility of capital losses is subject to limitations under the Code.

Capital gain or loss, if any, realized by a U.S. Holder on the sale, exchange or other taxable disposition of a common share generally will be treated as U.S. source income or loss for U.S. foreign tax credit purposes. Consequently, in the case of a disposition of a common share that is subject to Luxembourg or other foreign income tax imposed on the gain, the U.S. Holder may not be able to benefit from the foreign tax credit for that foreign income tax ( i.e. , because the income or loss on the disposition would be U.S. source). Alternatively, the U.S. Holder may take a deduction for the foreign income tax if such holder does not take a credit for any foreign income tax during the taxable year.

Medicare Contribution Tax on Unearned Income

Certain U.S. Holders that are individuals, estates or trusts will be subject to a 3.8% tax on all or a portion of their “net investment income,” which may include all or a portion of their dividend income and net gains from the disposition of common shares. Each U.S. holder that is an individual, estate or trust is urged to consult its tax advisors regarding the applicability of the Medicare tax to its income and gains in respect of its investment in the common shares.

Information Reporting and Backup Withholding

In general, dividends on common shares, and payments of the proceeds of a sale, exchange or other taxable disposition of common shares, paid within the U.S. or through certain U.S. related financial intermediaries to a U.S. Holder are subject to information reporting and may be subject to backup withholding unless the holder is an exempt recipient or, in the case of backup withholding, provides an accurate taxpayer identification number and certifies under penalty of perjury that the holder is a U.S. person and is not subject to backup withholding.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules generally will be allowed as a refund or a credit against a U.S. Holder’s U.S. federal income tax liability, provided that the required information is timely furnished to the IRS.

Certain U.S. Holders who hold interests in “specified foreign financial assets” (as defined in Section 6038D of the Code) are generally required to file an IRS Form 8938 as part of their U.S. federal income tax returns to report their ownership of such specified foreign financial assets, which may include our common shares, if the total value of those assets exceeds certain thresholds. Financial assets that are held through a U.S. financial institution are not subject to this reporting requirement. Investors who fail to report this required information could become subject to substantial penalties. In addition, in the event a U.S. Holder that is required to file IRS Form 8938 does not file such form, the statute of limitations on the assessment and collection of U.S. federal income taxes of such holder for the related tax year may not close until three years after the date that the required information is filed. U.S. Holders are encouraged to consult with their own tax advisors regarding their tax reporting obligations.

F. DIVIDENDS AND PAYING AGENTS

Not applicable.

G. STATEMENT BY EXPERTS

Not applicable.

H. DOCUMENTS ON DISPLAY

We are required to file annual and special reports and other information with the SEC. You may read and copy any documents filed by the Company at the SEC’s public reference room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Please call

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the SEC at 1-800-SEC-0330 for further information on the public reference room. The SEC also maintains a website at http://www.sec.gov which contains reports and other information regarding registrants that file electronically with the SEC.

I. SUBSIDIARY INFORMATION

Not applicable.

Item 11. Quantitative and Qualitative Disclosures About Market Risk

In the normal course of business, we are exposed to commodity price and interest rate risks, primarily related to our crop production activities and changes in exchange rates and interest rates. We manage our exposure to these risks through the use of various financial instruments, none of which are entered into for trading purposes. We have established policies and procedures governing the use of financial instruments, specifically as they relate to the type and volume of such financial instruments. Our use of financial derivative instruments is associated with our core business and is regulated by internal control policies. For further information on our market risks, please see Note 2 to our Consolidated Financial Statements.

Item 12. Description of Securities Other than Equity Securities

A. DEBT SECURITIES

Not applicable.

B. WARRANTS AND RIGHTS

Not applicable.

C. OTHER SECURITIES

Not applicable.

D. AMERICAN DEPOSITORY SHARES

Not applicable.

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PART II

Item 13. Defaults, Dividend Arrearages and Delinquencies

Not applicable.

Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds

Not applicable.

Item 15. Controls and Procedures

a) Disclosure Controls and Procedures

Our company’s management, with the participation of the Chief Executive Officer and Chief Financial Officer, conducted an evaluation pursuant to Rule 13a-15 promulgated under the Securities Exchange Act of 1934, of the effectiveness of our disclosure controls and procedures as of December 31, 2017 . There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based on this evaluation, our company’s Chief Executive Officer and Chief Financial Officer concluded that such disclosure controls and procedures were effective as of December 31, 2017 .

b) Management’s Annual Report on Internal Control over Financial Reporting

The Company’s Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer that: (i) pertains to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets; (ii) provides reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements for external reporting in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorization of the Company’s management and directors; and (iii) provides reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedure may deteriorate. The Company, with the participation of its Chief Executive Officer and Chief Financial Officer, has assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2017 .

We assessed the effectiveness of the Company’s internal controls over financial reporting as of December 31, 2017 . In making this assessment, management used the criteria established in “Internal Control — Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). As a result of this assessment, the Company’s management has determined that the Company’s internal control over financial reporting was effective as of December 31, 2017 .

c) Attestation Report of the Registered Public Accounting Firm

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2017 has been audited by Price Waterhouse & Co S.R.L, an independent registered public accounting firm, our independent auditor, as stated in their report which is included herein at page F-2 of our Consolidated Financial Statements.

d) Changes in internal control over financial reporting

As required by Rule 13a-15(d), under the Exchange Act, our management, including our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of our internal control over financial reporting to determine whether any change occurred during the period covered since the last report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Based on this evaluation, it has been determined that there has been no change during the period

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covered by this annual report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 16.

A. Audit Committee Financial Expert

Our audit committee consists of four independent directors: Mr. Plínio Musetti, Mr. Mark Schachter, Mr. Daniel González and Mr. Andrés Velasco Brañes. Our board of directors has determined that Mr. Mark Schachter has the attributes of an “audit committee financial expert” and is independent within the meaning of this Item 16A and satisfies the financial literacy requirements of the NYSE.

B. Code of Ethics

C. Principal Accountant Fees and Services

The following table sets forth the aggregate fees by categories specified below in connection with certain professional services rendered by Price Waterhouse & Co. S.R.L., a member firm of Price WaterhouseCoopers International Limited Network, an independent registered accounting public firm and our principal external auditors, for the periods indicated. Except as set forth below, we did not pay any other fees to our auditors during the periods indicated below.



	For the year ended December 31,
	(in thousands of $)
	2017	2016
Audit Fees ⁽¹⁾	1,481	1,233
Tax fees ⁽²⁾	38	25
Total	1,519	1,258


(1)	“Audit fees” means the aggregate fees billed for professional services rendered by our principal auditors for the audit of our consolidated financial statements and internal control over financial reporting of the Company, the statutory financial statements of the Company and its subsidiaries, and any other audit services required for the SEC or other regulatory filings.


(2)	"Tax fees" includes fees for permitted tax compliance and tax advisory services rendered by our principal auditors.

During the fiscal year ended December 31, 2017 and 2016 , no non-audit-related services were provided by our principal auditors.

Audit Committee Approval Policies and Procedures

The Audit Committee has adopted pre-approval policies and procedures requiring that all audit and non-audit services performed by our independent auditors must be pre-approved by the Audit Committee. The Audit Committee annually reviews and pre-approves the services that may be provided by the independent auditors without obtaining specific pre-approval from the Audit Committee. Any service proposals submitted by external auditors that are not pre-approved services need to be discussed and approved by the Audit Committee during its meetings. Once the proposed service is approved, we or our subsidiaries formalize the engagement of services.

The Audit Committee or its Chairman, or any member of the Audit Committee to whom such authority is delegated, may approve in advance any permitted audit or permitted non-audit services and fees up to a predetermined amount. The Audit Committee is authorized to establish other policies and procedures for the pre-approval of such services and fees. The Audit Committee approved all of the non-audit services described above and determined that the provision of such services is compatible with maintaining the independence of Price Waterhouse & Co. S.R.L.

D. Exemptions from the Listing Standards for Audit Committees

Not applicable.

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E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers



	(a) Total Number of Shares (Units) Purchased	(b) Average Price Paid per Share	(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number of Shares that may yet be Purchased Under the Plans or Programs
09/1/2013-09/30/2013	55,899	7.52	55,899	6,063,192
10/01/2013-10/31/2013	74,676	7.61	74,676	5,988,516
11/1/2013-11/30/2013	59,273	7.88	59,273	5,929,243
12/1/2013-12/31/2013	464,606	7.84	464,606	5,464,637
1/1/2014-1/31/2014	785,517	7.71	785,517	4,679,120
2/1/2014-2/28/2014	828,883	7.69	828,883	3,850,237
3/1/2014-3/31/2015	74,992	7.84	74,992	3,775,245
8/1/2015-8/31/2014	2,747	7.98	2,747	6,063,192
9/1/2015-9/30/2015	37,052	7.93	37,052	6,026,140
10/1/2015-10/31/2015	448	7.99	448	6,025,692
9/1/2016-9/30/2016	93,939	10.95	93,939	6,063,192
11/1/2016-11/30/2016	38,949	10.79	38,949	6,024,243
12/1/2016-12/31/2016	323,844	10.26	323,844	5,700,399
1/1/2017-1/31/2017	114,079	10.79	114,079	5,586,320
4/1/2017-4/30/2017	73,059	11.14	73,059	5,513,261
5/1/2017-5/31/2017	2,400	10.99	2,400	5,510,861
6/1/2017-6/30/2017	637,240	10.33	637,240	4,708,864
7/1/2017-7/31/2017	164,757	9.94	164,757	4,640,198
8/1/2017-8/31/2017	68,666	9.83	68,666	4,606,332
9/1/2017-9/30/2017	33,866	10.12	33,866	6,027,190
10/1/2017-10/31/2017	54,452	10.47	54,452	5,972,738
11/1/2017-11/30/2017	1,702,545	9.30	1,702,545	4,270,193
12/1/2017-12/31/2017	998,381	10.03	998,381	3,271,812
1/1/2018-1/31/2018	678,186	10.00	678,186	2,593,626
2/1/2018-2/28/2018	718,067	9.31	718,067	1,875,559
4/1/2018-4/26/2018	217,331	7.90	217,331	1,658,228
Total	8,303,854	9.20	8,303,854

The total number of shares purchased set forth above were purchased pursuant to the Company´s Repurchase Program adopted on September 12, 2013. See “Item 10 – Additional Information – Repurchase of Shares”.

F. Change in Registrant’s Certifying Accountant

Not applicable.

G. Corporate Governance

Our corporate governance practices are governed by Luxembourg law (particularly the law of August 10th, 1915 on commercial companies) and our articles of association. As a Luxembourg company listed on the NYSE, we are not required to comply with all of the corporate governance listing standards of the NYSE. We, however, believe that our corporate governance practices meet or exceed, in all material respects, the corporate governance standards that are generally required for controlled companies by the NYSE. The following is a summary of the significant ways that our corporate governance practices differ from the corporate governance standards required for listed U.S. companies by the NYSE (provided that our corporate governance practices may differ in non-material ways from the standards required by the NYSE that are not detailed here):

146

Majority of Independent Directors

Under NYSE standards, U.S. listed companies must have a majority of independent directors. There is no legal obligation under Luxembourg law to have a majority of independent directors on the board of directors.

Non-management Directors’ Meetings

Under NYSE standards, non-management directors must meet at regularly scheduled executive sessions without management present and, if such group includes directors who are not independent, a meeting should be scheduled once per year including only independent directors. Neither Luxembourg law nor our Articles of Association require the holding of such meetings ad we do not have a set policy for these meetings. Our Articles of Association provide, however, that the board shall meet as often as required by the best interest of the Company. For additional information, see “Item 6. Directors, Senior Management and Employees—A. Directors and Senior Management.”

Communication with Non-Management Directors

NYSE-listed companies are required to provide a method for interested parties to communicate directly with the non-management directors as a group. Shareholders may send communications to the Company’s non-management directors by writing to Mr. Plínio Musetti at Rua Amauri, 255 - 17th Floor, Jardim Europa, São Paulo, SP 01448-000, Brazil, telephone: (5511) 3035-1588. Communications will be referred to the Presiding Director for appropriate action. The status of all outstanding concerns addressed to the Presiding Director will be reported to the board of directors as appropriate.

Audit Committee

Under NYSE standards, listed U.S. companies are required to have an audit committee composed of independent directors that satisfies the requirements of Rule 10A-3 promulgated under the Exchange Act of 1934. Our Articles of Association provide that the board of directors may set up an audit committee. The board of directors has set up an Audit Committee and has appointed Mr. Plínio Musetti, Mr. Mark Schachter , Mr. Daniel Gonzalez and Mr. Andres Velasco Brañes as members of its audit committee. In accordance with NYSE standards, we have an audit committee entirely composed of independent directors. For additional information, see “Item 6. Directors, Senior Management and Employees—C. Board Practices”.

Under NYSE standards, all audit committee members of listed U.S. companies are required to be financially literate or must acquire such financial knowledge within a reasonable period and at least one of its members shall have experience in accounting or financial administration. In addition, if a member of the audit committee is simultaneously a member of the audit committee of more than three public companies, and the listed company does not limit the number of audit committees on which its members may serve, then in each case the board must determine whether the simultaneous service would prevent such member from effectively serving on the listed company’s audit committee and shall publicly disclose its decision. No comparable provisions on audit committee membership exist under Luxembourg law or our articles of association.

Standards for Evaluating Director Independence

Under NYSE standards, the board is required, on a case by case basis, to express an opinion with regard to the independence or lack of independence of each individual director. Neither Luxembourg law nor our Articles of Association require the board to express such an opinion. In addition, the definition of “independent” under the rules of the NYSE differs in some non-material respects from the definition contained in our Articles of Association.

Audit Committee Responsibilities

Pursuant to our Articles of Association, the audit committee shall assist the board of directors in fulfilling its oversight responsibilities relating to the integrity of the Company’s financial statements, including periodically reporting to the board of directors on its activity and the adequacy of the Company’s system of internal controls over financial reporting. As per the audit committee charter, as amended, the audit committee shall make recommendations for the appointment, compensation, retention and oversight of, and consider the independence of, the company’s external auditors. The audit committee is required to review material transactions (as defined by the Articles of Association) between us or our subsidiaries with related parties, perform such other duties imposed to it by laws and regulations of the regulated market(s) on which the shares of the Company are listed, and also perform the other duties entrusted to it by the board.

The NYSE requires certain matters to be set forth in the audit committee charter of U.S. listed companies. Our audit committee charter provides for many of the responsibilities that are expected from such bodies under the NYSE standard; however, due to

147

our equity structure and holding company nature, the charter does not contain all such responsibilities, including provisions related to setting hiring policies for employees or former employees of independent auditors.

Nominating/Corporate Governance Committee.

The NYSE requires that a listed U.S. company have a nominating/corporate governance committee of independent directors and a committee charter specifying the purpose, duties and evaluation procedures of the committee. As permitted under Luxembourg law and our Articles of Association, we do not currently have a nominating or corporate governance committee.

Shareholder Voting on Equity Compensation Plans

Under NYSE standards, shareholders of U.S. listed companies must be given the opportunity to vote on equity compensation plans and material revisions thereto, except for employment inducement awards, certain grants, plans and amendments in the context of mergers and acquisitions, and certain specific types of plans. Neither Luxembourg corporate law nor our articles of incorporation require shareholder approval of equity based compensation plans. Luxembourg law only requires approval of the board of directors for the adoption of equity based compensation plans.

Disclosure of Corporate Governance Guidelines

NYSE-listed companies must adopt and disclose corporate governance guidelines. Neither Luxembourg law nor our Articles of Association require the adoption or disclosure of corporate governance guidelines. Our board of directors follows corporate governance guidelines consistent with our equity structure and holding company nature, but we have not codified them and therefore do not disclose them on our website.

Code of Business Conduct and Ethics

Under NYSE standards, listed companies must adopt and disclose a code of business conduct and ethics for directors, officers and employees, and promptly disclose any waivers of the code for directors or executive officers. Neither Luxembourg law nor our Articles of Association require the adoption or disclosure of such a code of conduct.

We have adopted a code of ethics and business conduct that applies to our directors, executive officers and all employees. The text of our code of ethics is posted on our web site at: www.adecoagro.com. And substantially complies with the NYSE´s requirements under the Code of Business Conduct and Ethics.

Chief Executive Officer Certification

A chief executive officer of a U.S. company listed on NYSE must annually certify that he or she is not aware of any violation by the company of NYSE corporate governance standards. In accordance with NYSE rules applicable to foreign private issuers, our chief executive officer is not required to provide NYSE with this annual compliance certification. However, in accordance with NYSE rules applicable to all listed companies, our chief executive officer must promptly notify NYSE in writing after any of our executive officers becomes aware of any noncompliance with any applicable provision of NYSE’s corporate governance standards. In addition, we must submit an executed written affirmation annually and an interim written affirmation each time a change occurs to the board or the audit committee.

H. Mine Safety Disclosure

Not applicable.

PART III


Item 17.	Financial Statements

We have responded to Item 18 in lieu of responding to this item.


Item 18.	Financial Statements.

See pages F-1 through F-78 of this annual report.

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Item 19.	Exhibits



Exhibit Number		Description
1.1		Amended and Restated Articles of Association of Adecoagro S.A. dated April 19,2017.

4.1		Loan Agreement, dated December 19, 2008, between Adeco Agropecuaria S.A., Pilagá S.R.L. and Inter-American Development Bank, previously filed as exhibit 10.1 to the Company’s registration statement on Form F-1 (File No. 333-171683) filed with the Securities and Exchange Commission on January 13, 2011 (“Form F-1”) and incorporated by reference herein.

4.2		First Amendment Offer to Loan Agreement, dated February 20, 2009, between Adeco Agropecuaria S.A., Pilagá S.R.L. and Inter-American Development Bank, previously filed as exhibit 10.2 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.3		Second Amendment Offer to Loan Agreement, dated December 29, 2009, between Adeco Agropecuaria S.A., Pilagá S.R.L. and Inter-American Development Bank, previously filed as exhibit 10.3 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.5		Fourth Amendment Offer to Loan Agreement, dated May 14, 2010, between Adeco Agropecuaria S.A., Pilagá S.R.L. and Inter-American Development Bank, previously filed as exhibit 10.5 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.6		Fifth Amendment Offer to Loan Agreement, dated November 8, 2010, between Adeco Agropecuaria S.A., Pilagá S.R.L. and Inter-American Development Bank, previously filed as exhibit 10.37 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.7		Amendment Offer to Loan Agreement, dated March 24, 2011, between Adeco Agropecuaria S.A., Pilagá S.R.L. and Inter-American Development Bank, previously filed as Exhibit 4.7 to the Company’s annual report on Form 20-F for the year ended December 31, 2011 and incorporated herein by reference.

4.8		Amendment Offer 02/2011 to Loan Agreement, dated November 9, 2011, between Adeco Agropecuaria S.A., Pilagá S.A. and Inter-American Development Bank, previously filed as Exhibit 4.8 to the Company’s annual report on Form 20-F for the year ended December 31, 2011 and incorporated herein by reference.

4.14		English translation of Second Amendment to Financing Agreement BNDES Repasse, dated March 4, 2010, between Angélica Agroenergia Ltda. and a syndicate of banks, previously filed as exhibit 10.11 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.16		Unit Issuance Agreement, dated February 16, 2006, between International Farmland Holdings LLC and Usina Monte Alegre S.A., previously filed as exhibit 10.13 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.17		Share Purchase and Sale Agreement, dated February 16, 2006, between International Farmland Holdings LLC and Usina Monte Alegre S.A., previously filed as exhibit 10.14 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.18		Right of First Offer Agreement, dated February 16, 2006, between International Farmland Holdings LLC and Usina Monte Alegre S.A., previously filed as exhibit 10.15 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.23		English translation of Consignment Contract, dated February 19, 2000, between Molinos Ala S.A. (currently Pilagá S.R.L.) and Establecimiento Las Marías S.A.C.I.F.A., previously filed as exhibit 10.20 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

149



4.24		English translation of Sale Agreement, dated July 8, 2009, between Pilagá S.R.L. and Galicia Warrants S.A., previously filed as exhibit 10.21 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.25		English translation of Mortgage, dated July 8, 2009, between Pilagá S.R.L. and Galicia Warrants S.A., previously filed as exhibit 10.22 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.26		English translation of Reserve Power Agreement, dated February 6, 2009, between Angélica Agroenergia Ltda. and Câmara de Comercialização de Energia Elétrica, previously filed as exhibit 10.23 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.27		English translation of Energy Purchase Contract, dated January 19, 2009, between Usina Monte Alegre Ltda. and Cemig Geração e Transmissão S.A., previously filed as exhibit 10.24 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.28		English translation of Energy Distribution Contract, dated June 3, 2008 between Angélica Agroenergia Ltda. and Empresa Energética do Mato Grosso do Sul., previously filed as exhibit 10.25 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.29		English translation of First Amendment to Energy Distribution Contract, dated April 6, 2009 between Angélica Agroenergia Ltda. and Empresa Energética do Mato Grosso do Sul., previously filed as exhibit 10.26 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.30		English translation of Second Amendment to Energy Distribution Contract, dated May 1, 2010 between Angélica Agroenergia Ltda. and Empresa Energética do Mato Grosso do Sul., previously filed as exhibit 10.27 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.35		Form of Registration Rights Agreement between Adecoagro S.A. and certain shareholders, previously filed as exhibit 10.33 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.39		Stock Subscription Agreement, dated January 6, 2011, between Adecoagro S.A. and Al Gharrafa Investment Company, previously filed as exhibit 10.41 to the Company’s registration statement on Form F-1 and incorporated by reference herein.

4.40		English translation of Promise to Sell, dated December 21, 2010, between Kelizer S.C.A. and Las Mesetas S.A., previously filed as exhibit 4.40 to the Company’s Annual Report on Form 20- for fiscal year-end 2010 and incorporated by reference herein.

4.42		English translation of Stock Purchase Agreement, dated August 19, 2011, between Kadesh Hispania, S.L., Leterton España, S.L. and Simoneta S.A., previously filed as Exhibit 4.42 to the Company’s annual report on Form 20-F for the year ended December 31, 2011 and incorporated herein by reference.

4.43		Indenture dated as of September 21, 2017 by and among Adecoagro S.A., as issuer, Adeco Agropecuaria S.A., Pilaga S.A., Adecoagro Brasil Participações S.A., Adecoagro Vale Do Ivinhema S.A., Usina Monte Alegre Ltda., as Subsidiary guarantors, and The Bank of New York Mellon, as Trustee, Registrar, and Paying Agent.

8.1		Subsidiaries of Adecoagro S.A. as of April 27, 2018.

12.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 .

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12.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 .

13.1		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 .

13.2		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 .

15.1		Consent of Cushman & Wakefield Argentina S.A.

15.2		Consent of Price Waterhouse & Co. S.R.L.

101.INS		XBRL Instance Document.

101.SCH		XBRL Taxonomy Extension Schema Document.

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB		XBRL Taxonomy Extension Label Linkbase Document.

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document.

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SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

Adecoagro S.A.

/s/ Mariano Bosch

Name: Mariano Bosch

Title: Chief Executive Officer

Date: April 27, 2018

152

Adecoagro S.A.

Consolidated Financial Statements as of December 31, 2017 and 2016 and for the years ended December 31, 2017 , 2016 and 2015

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Adecoagro S.A.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated statement of financial position of Adecoagro S.A. and its subsidiaries as of December 31, 2017 and 2016, and the related consolidated statements of income, comprehensive income, of changes in shareholders’ equity and of cash flows for each of the three years in the period ended December 31, 2017, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2017 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Annual Report on Internal Control over Financial Reporting appearing under Item 15. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting 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 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, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements 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. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

F- 2



	Buenos Aires, Argentina.
	April 27, 2018

	/s/ PRICE WATERHOUSE & CO. S.R.L.
	/s/ (Partner)
	Jorge Frederico Zabaleta

We have served as the Company’s auditor since 2008.

F- 3

Legal information

Denomination: Adecoagro S.A.

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

Company activity: Agricultural and agro-industrial

Date of registration: June 11, 2010

Expiration of company charter: No term defined

Number of register (RCS Luxembourg): B153.681

Capital stock: 122,381,815 common shares (of which 4,643,396 are treasury shares)

F- 4

Adecoagro S.A.

Consolidated Statements of Income

for the years ended December 31, 2017 , 2016 and 2015

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



	Note	2017		2016		2015
Sales of goods and services rendered	4	933,178		869,235		674,314
Cost of goods sold and services rendered	5	(766,727	)	(678,581	)	(557,786	)
Initial recognition and changes in fair value of biological assets and agricultural produce	15	63,220		125,456		54,528
Changes in net realizable value of agricultural produce after harvest		8,852		(5,841	)	14,691
Margin on manufacturing and agricultural activities before operating expenses		238,523		310,269		185,747
General and administrative expenses	6	(57,299	)	(50,750	)	(48,425	)
Selling expenses	6	(95,399	)	(80,673	)	(70,268	)
Other operating income, net	8	39,461		(8,297	)	31,066
Share of loss of joint venture	16	—		—		(2,685	)
Profit from operations		125,286		170,549		95,435
Finance income	9	11,744		7,957		9,150
Finance costs	9	(131,349	)	(165,380	)	(116,890	)
Financial results, net	9	(119,605	)	(157,423	)	(107,740	)
Profit / (Loss) before income tax		5,681		13,126		(12,305	)
Income tax benefit / (expense)	10	6,068		(9,387	)	7,954
Profit / (Loss) for the year		11,749		3,739		(4,351	)

Attributable to:
Equity holders of the parent		9,972		2,039		(5,593	)
Non-controlling interest		1,777		1,700		1,242

Earnings / (Loss) per share from operations attributable to the equity holders of the parent during the year:
Basic earnings per share	11	0.083		0.017		(0.046	)
Diluted earnings per share	11	0.082		0.017		(0.046	)

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

F- 5

Adecoagro S.A.

Consolidated Statements of Comprehensive Income

for the years ended December 31, 2017 , 2016 and 2015

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



	2017		2016	2015
Profit / (Loss) for the year	11,749		3,739	(4,351	)
Other comprehensive income:
- Items that may be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations	(15,264	)	39,496	(178,146	)
Cash flow hedge, net of tax (Note 2)	12,608		100,615	(94,851	)
Other comprehensive (loss) / income for the year	(2,656	)	140,111	(272,997	)
Total comprehensive income / (loss) for the year	9,093		143,850	(277,348	)

Attributable to:
Equity holders of the parent	8,399		143,603	(275,077	)
Non-controlling interest	694		247	(2,271	)

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

F- 6

Adecoagro S.A.

Consolidated Statements of Financial Position

as of December 31, 2017 and 2016

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



	Note	2017		2016
ASSETS
Non-Current Assets
Property, plant and equipment, net	12	820,931		802,608
Investment property	13	2,271		2,666
Intangible assets, net	14	17,192		17,252
Biological assets	15	11,276		8,516
Deferred income tax assets	10	43,437		38,586
Trade and other receivables, net	18	22,107		17,412
Other assets		535		566
Total Non-Current Assets		917,749		887,606
Current Assets
Biological assets	15	156,718		136,888
Inventories	19	108,919		111,754
Trade and other receivables, net	18	150,107		157,528
Derivative financial instruments	17	4,483		3,398
Other assets		30		24
Cash and cash equivalents	20	269,195		158,568
Total Current Assets		689,452		568,160
TOTAL ASSETS		1,607,201		1,455,766
SHAREHOLDERS EQUITY
Capital and reserves attributable to equity holders of the parent
Share capital	22	183,573		183,573
Share premium	22	908,934		937,250
Cumulative translation adjustment		(541,545	)	(527,364	)
Equity-settled compensation		17,852		17,218
Cash flow hedge	2	(24,691	)	(37,299	)
Treasury shares		(6,967	)	(1,859	)
Reserve from the sale of non-controlling interests in subsidiaries	21	41,574		41,574
Retained earnings		60,984		50,998
Equity attributable to equity holders of the parent		639,714		664,091
Non-controlling interest		5,417		7,582
TOTAL SHAREHOLDERS EQUITY		645,131		671,673
LIABILITIES
Non-Current Liabilities
Trade and other payables	25	827		1,427
Borrowings	26	663,060		430,304
Deferred income tax liabilities	10	10,457		14,689
Payroll and social liabilities	27	1,240		1,235
Derivatives financial instruments	17	—		662
Provisions for other liabilities	28	4,078		3,299
Total Non-Current Liabilities		679,662		451,616
Current Liabilities
Trade and other payables	25	98,423		92,158
Current income tax liabilities		503		1,387
Payroll and social liabilities	27	27,267		26,844
Borrowings	26	154,898		205,092
Derivative financial instruments	17	552		6,406
Provisions for other liabilities	28	765		590
Total Current Liabilities		282,408		332,477
TOTAL LIABILITIES		962,070		784,093
TOTAL SHAREHOLDERS EQUITY AND LIABILITIES		1,607,201		1,455,766

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

F- 7

Adecoagro S.A.

Consolidated Statements of Changes in Shareholders’ Equity

for the years ended December 31, 2017 , 2016 and 2015

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



	Attributable to equity holders of the parent
	Share capital (Note 22)	Share premium (Note 22)		Cumulative translation adjustment		Equity-settled compensation		Cash flow hedge (*)		Treasury shares		Reserve from the sale of non- controlling interests in subsidiaries	Retained earnings		Subtotal		Non- controlling interest		Total shareholders’ equity
Balance at January 1, 2015	183,573	933,044		(397,560	)	16,735		(43,064	)	(2,840	)	25,508	54,242		769,638		7,589		777,227
Loss for the year	—	—		—		—		—		—		—	(5,593	)	(5,593	)	1,242		(4,351	)
Other comprehensive income:
- Items that may be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations	—	—		(174,637	)	—		—		—		—	—		(174,637	)	(3,509	)	(178,146	)
Cash flow hedge (*)	—	—		—		—		(94,847	)	—		—	—		(94,847	)	(4	)	(94,851	)
Other comprehensive income for the year	—	—		(174,637	)	—		(94,847	)	—		—	—		(269,484	)	(3,513	)	(272,997	)
Total comprehensive income for the year	—	—		(174,637	)	—		(94,847	)	—		—	(5,593	)	(275,077	)	(2,271	)	(277,348	)

Employee share options (Note 23)
- Exercised	—	1,786		—		(603	)	—		316		—	—		1,499		—		1,499
- Forfeited	—	—		—		(146	)	—		—		—	146		—		—		—
Restricted shares (Note 23):
- Value of employee services	—	—		—		4,396		—		—		—	—		4,396		—		4,396
- Vested	—	3,103		—		(3,751	)	—		648		—	—		—		—		—
Purchase of own shares (Note 22)	—	(259	)	—		—		—		(60	)	—	—		(319	)	—		(319	)
Sale of non-controlling interests in subsidiaries (Note 21)	—	—		3,881		—		—		—		16,066	—		19,947		2,017		21,964
Balance at December 31, 2015	183,573	937,674		(568,316	)	16,631		(137,911	)	(1,936	)	41,574	48,795		520,084		7,335		527,419

(*) Net of 49,106 of income tax.

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, 2017 , 2016 and 2015

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



	Attributable to equity holders of the parent
	Share capital (Note 22)	Share premium (Note 22)		Cumulative translation adjustment		Equity-settled compensation		Cash flow hedge (*)		Treasury shares		Reserve from the sale of non- controlling interests in subsidiaries	Retained earnings	Subtotal		Non- controlling interest		Total shareholders’ equity
Balance at January 1, 2016	183,573	937,674		(568,316	)	16,631		(137,911	)	(1,936	)	41,574	48,795	520,084		7,335		527,419
Profit for the year	—	—		—		—		—		—		—	2,039	2,039		1,700		3,739
Other comprehensive income:
- Items that may be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations	—	—		40,952		—		—		—		—	—	40,952		(1,456	)	39,496
Cash flow hedge (*)	—	—		—		—		100,612		—		—	—	100,612		3		100,615
Other comprehensive income for the year	—	—		40,952		—		100,612		—		—	—	141,564		(1,453	)	140,111
Total comprehensive income for the year	—	—		40,952		—		100,612		—		—	2,039	143,603		247		143,850

Employee share options (Note 23):
- Exercised	—	438		—		(140	)	—		82		—	—	380		—		380
- Forfeited	—	—		—		(164	)	—		—		—	164	—		—		—
Restricted shares (Note 23):
- Value of employee services	—	—		—		4,796		—		—		—	—	4,796		—		4,796
- Vested	—	3,225		—		(3,905	)	—		680		—	—	—		—		—
Purchase of own shares (Note 22)	—	(4,087	)	—		—		—		(685	)	—	—	(4,772	)	—		(4,772	)
Balance at December 31, 2016	183,573	937,250		(527,364	)	17,218		(37,299	)	(1,859	)	41,574	50,998	664,091		7,582		671,673

(*) Net of (52,282) of income tax.

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, 2017 , 2016 and 2015

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



	Attributable to equity holders of the parent
	Share capital (Note 22)	Share premium (Note 22)		Cumulative translation adjustment		Equity-settled compensation		Cash flow hedge (*)		Treasury shares		Reserve from the sale of non- controlling interests in subsidiaries	Retained earnings	Subtotal		Non- controlling interest		Total shareholders’ equity
Balance at January 1, 2017	183,573	937,250		(527,364	)	17,218		(37,299	)	(1,859	)	41,574	50,998	664,091		7,582		671,673
Profit for the year	—	—		—		—		—		—		—	9,972	9,972		1,777		11,749
Other comprehensive income:
- Items that may be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations	—	—		(14,181	)	—		—		—		—	—	(14,181	)	(1,083	)	(15,264	)
Cash flow hedge (*)	—	—		—		—		12,608		—		—	—	12,608		—		12,608
Other comprehensive income for the year	—	—		(14,181	)	—		12,608		—		—	—	(1,573	)	(1,083	)	(2,656	)
Total comprehensive income for the year	—	—		(14,181	)	—		12,608		—		—	9,972	8,399		694		9,093

Employee share options (Note 23):
- Exercised	—	50		—		(21	)	—		10		—	—	39		—		39
- Forfeited	—	—		—		(14	)	—		—		—	14	—		—		—
Restricted shares (Note 23):
- Value of employee services	—	—		—		5,552		—		—		—	—	5,552		—		5,552
- Vested	—	4,149		—		(4,883	)	—		734		—	—	—		—		—
Purchase of own shares (Note 22)	—	(32,515	)	—		—		—		(5,852	)	—	—	(38,367	)	—		(38,367	)
Dividends	—	—		—		—		—		—		—	—	—		(2,859	)	(2,859	)
Balance at December 31, 2017	183,573	908,934		(541,545	)	17,852		(24,691	)	(6,967	)	41,574	60,984	639,714		5,417		645,131

(*) Net of 8,715 of income tax.

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

F- 10

Adecoagro S.A.

Consolidated Statements of Cash Flows

for the years ended December 31, 2017 , 2016 and 2015

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



	Note	2017		2016		2015
Cash flows from operating activities:
Profit / (Loss) for the year		11,749		3,739		(4,351	)
Adjustments for:
Income tax (benefit) / expense	10	(6,068	)	9,387		(7,954	)
Depreciation	12	150,071		126,799		103,816
Amortization	14	936		701		585
Gain from disposal of farmlands and other assets	8	—		—		(7,914	)
Loss/(Gain) from the disposal of other property items	8	986		1,255		(721	)
Equity settled share-based compensation granted	7	5,552		4,796		4,396
(Gain) / Loss from derivative financial instruments and forwards	8, 9	(38,679	)	21,745		(17,686	)
Interest and other financial expense, net	9	53,446		44,734		43,822
Initial recognition and changes in fair value of non harvested biological assets (unrealized)	3	(14,645	)	(9,811	)	(11,326	)
Changes in net realizable value of agricultural produce after harvest (unrealized)	3	(2,371	)	90		(4,406	)
Provision and allowances		825		341		(79	)
Share of loss from joint venture	16	—		—		2,685
Foreign exchange losses, net	9	38,708		19,062		23,423
Cash flow hedge – transfer from equity	9	20,758		85,214		32,700
Subtotal		221,268		308,052		156,990
Changes in operating assets and liabilities:
(Increase) in trade and other receivables		(9,476	)	(30,996	)	(2,300	)
(Increase) in inventories		(4,089	)	(22,301	)	(9,275	)
(Increase) in biological assets		(18,013	)	(23,677	)	(20,154	)
Decrease / (Increase) in other assets		2		83		(871	)
Decrease / (Increase) in derivative financial instruments		40,910		(17,892	)	25,880
Increase / (Decrease) in trade and other payables		6,555		39,054		(9,871	)
Increase in payroll and social security liabilities		1,953		3,052		4,996
Increase in provisions for other liabilities		855		1,175		21
Net cash generated from operating activities before taxes paid		239,965		256,550		145,416
Income tax paid		(2,860	)	(1,149	)	(230	)
Net cash generated from operating activities		237,105		255,401		145,186

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

F- 11

Adecoagro S.A.

Consolidated Statements of Cash Flows (Continued)

for the years ended December 31, 2017 , 2016 and 2015

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



	Note	2017		2016		2015
Cash flows from investing activities:
Purchases of property, plant and equipment	12	(198,550	)	(132,392	)	(141,464	)
Purchase of cattle and non current biological assets	15	(1,694	)	(1,713	)	(306	)
Purchases of intangible assets	14	(2,141	)	(1,218	)	(1,203	)
Interest received	9	11,230		7,671		8,201
Proceeds from disposal of other property items		2,820		2,215		1,303
Proceeds from sale of farmland and other assets	21	—		—		12,610
Proceeds from disposal of subsidiaries	21	—		3,423		3,890
Loans to joint venture		—		—		(8,082	)
Net cash used in investing activities		(188,335	)	(122,014	)	(125,051	)

Cash flows from financing activities:
Issuance of senior notes	26	495,678		—		—
Proceeds from long-term borrowings	26	232,433		167,385		299,343
Payments of long-term borrowings	26	(602,700	)	(277,913	)	(165,455	)
Proceeds from short-term borrowings	26	106,730		257,395		211,045
Payments of short-term borrowings	26	(64,787	)	(272,033	)	(208,309	)
Interest paid		(41,612	)	(48,400	)	(48,438	)
Prepayment related expenses		(6,080	)	—		—
Net proceeds from the sale of non-controlling interest in subsidiaries	21	—		—		21,964
Proceeds from equity settled shared-based compensation exercised		39		380		1,259
Payment of derivatives financial instruments		(9,476	)	(3,724	)	(18,676	)
Purchase of own shares		(38,367	)	(4,772	)	(320	)
Dividends paid to non-controlling interest		(1,664	)	—		—
Net cash generated/used from financing activities		70,194		(181,682	)	92,413
Net increase / (decrease) in cash and cash equivalents		118,964		(48,295	)	112,548
Cash and cash equivalents at beginning of year	20	158,568		198,894		113,795
Effect of exchange rate changes on cash and cash equivalents		(8,337	)	7,969		(27,449	)
Cash and cash equivalents at end of year	20	269,195		158,568		198,894

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

F- 12

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


1.	General information

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

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

These consolidated financial statements have been approved for issue by the Board of Directors on March 13, 2018.


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 management of risk.

The principal financial risks are related to raw material price, end-product price, exchange rate, interest rate, liquidity and credit. 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 potential materiality or probability of occurrence.


•	Exchange rate risk

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

A significant majority of the Group’s business activities is conducted in the respective functional currencies of the subsidiaries (primarily the Brazilian Reais and the Argentine Peso). However, the Group may transact in currencies other than the respective functional currencies, mainly the US dollars. As such, these subsidiaries may hold US dollar denominated monetary balances at each year-end as indicated in the tables below.

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

The following tables show the net monetary position of the respective subsidiaries within the Group categorized by functional currency. Non-US dollar amounts are presented in US dollars for purpose of these tables.

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

F- 13

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


2.	Financial risk management (continued)



	2017
	Subsidiaries’ functional currency
Net monetary position (Liability)/ Asset	Argentine Peso		Brazilian Reais		Uruguayan Peso		US Dollar	Total
Argentine Peso	(21,958	)	—		—		—	(21,958	)
Brazilian Reais	—		(17,134	)	—		—	(17,134	)
US Dollar	(204,446	)	(461,966	)	20,451		124,125	(521,836	)
Uruguayan Peso	—		—		(1,101	)	—	(1,101	)
Total	(226,404	)	(479,100	)	19,350		124,125	(562,029	)



	2016
	Subsidiaries’ functional currency
Net monetary position (Liability)/ Asset	Argentine Peso		Brazilian Reais		Uruguayan Peso		US Dollar	Total
Argentine Peso	1,518		—		—		—	1,518
Brazilian Reais	—		(203,070	)	—		—	(203,070	)
US Dollar	(44,088	)	(307,088	)	(7,714	)	78,801	(280,089	)
Uruguayan Peso	—		—		(35	)	—	(35	)
Total	(42,570	)	(510,158	)	(7,749	)	78,801	(481,676	)

The Group’s analysis shown on the tables below is carried out based on the exposure of each functional currency subsidiary against the US dollar. The Group estimated that, other factors being constant, a hypothetical 10% appreciation/depreciation of the US dollar against the respective functional currencies for the years ended December 31, 2017 and 2016 would have decreased/increased the Group’s Profit before income tax for the year. A 10% depreciation of the US dollar against the functional currencies would have an equal and opposite effect on the income statement. A portion of this effect would have been recognized as other comprehensive income since a portion of the Company’s borrowings was used as cash flow hedge of the foreign exchange rate risk of a portion of its highly probable future sales in US dollars (see Hedge Accounting - Cash Flow Hedge below for details).



		Functional currency
Net monetary position		Argentine Peso		Brazilian Reais		Uruguayan Peso		Total
2017	US Dollar	(20,445	)	(46,197	)	2,045		(64,597	)
2016	US Dollar	(4,409	)	(30,709	)	(771	)	(35,889	)

The tables above only consider the effect of a hypothetical appreciation / depreciation of the US dollars on the Group’s net financial position. A hypothetical appreciation / depreciation of the US 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 US dollar.

Hedge Accounting Cash Flow Hedge

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

Principal amounts of long-term borrowings (non-derivative financial instruments) and notional values of foreign currency forward contracts (derivative financial instruments) were designated as hedging instruments. These instruments are exposed to Brazilian Reais/ US dollar foreign currency risks related to operations in Brazil and Argentine Peso/US Dollar in Argentina,

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

F- 14

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


2.	Financial risk management (continued)

respectively. As of December 31, 2017 and 2016 , approximately 24.6% and 18.1% , respectively, of projected sales qualify as highly probable forecast transactions for hedge accounting purposes and were designated as hedged items.

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

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

The Company expects that the cash flows will occur and affect profit or loss between 2018 and 2022 .

For the year ended December 31, 2017 , a total amount before income tax of US$ 530 gain (US$ 67,683 loss in 2016 ) was recognized in other comprehensive income and an amount of US$ 20,758 loss (US$ 85,214 loss in 2016 ) was reclassified from equity to profit or loss within “Financial results, net”.


•	Raw material price risk

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


•	End-product price risk

Prices for commodities products have historically been cyclical, reflecting overall economic conditions and changes in capacity within the industry, which affect the profitability of entities engaged in the agribusiness industry. The Group 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 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

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

F- 15

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


2.	Financial risk management (continued)

committed credit facilities and the ability to close out market positions. The Group's ability to fund its existing and prospective debt requirements is managed by maintaining diversified funding sources with adequate available funding lines from high quality lenders; and reaching to have long-term financial facilities. During 2017 the Company issued a 10 years Note, which improved the maturity of the borrowings (see Note 26).

As of December 31, 2017 , cash and cash equivalents of the Group totaled U$S 269.2 million , which could be used for managing liquidity risk.

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



At December 31, 2017	Less than 1 year	Between 1 and 2 years	Between 2 and 5 years	Over 5 Years	Total
Trade and other payables	85,239	557	49	221	86,066
Borrowings	197,975	96,867	56,486	797,226	1,148,554
Derivative financial instruments	552	—	—	—	552
Total	283,766	97,424	56,535	797,447	1,235,172



At December 31, 2016	Less than 1 year	Between 1 and 2 years	Between 2 and 5 years	Over 5 Years	Total
Trade and other payables	79,715	1,082	19	326	81,142
Borrowings	239,588	218,717	221,036	35,702	715,043
Derivative financial instruments	6,406	662	—	—	7,068
Total	325,709	220,461	221,055	36,028	803,253


•	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 issuing the loans (excluding finance leases). These analyses are performed after giving effect to interest rate swaps.

The analysis for the year ended December 31, 2017 and 2016 is as follows:

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

F- 16

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


2.	Financial risk management (continued)



	2017
	Subsidiaries’ functional currency
Rate per currency denomination	Argentine Peso	Brazilian Reais	Uruguayan Peso	US Dollar	Total
Fixed rate:
Argentine Peso	6,448	—	—	—	6,448
Brazilian Reais	—	96,951	—	—	96,951
US Dollar	68,963	34,675	10,010	504,004	617,652
Subtotal fixed-rate borrowings	75,411	131,626	10,010	504,004	721,051
Variable rate:
Brazilian Reais	—	27,668	—	—	27,668
US Dollar	49,599	19,535	—	—	69,134
Subtotal variable-rate borrowings	49,599	47,203	—	—	96,802
Total borrowings as per analysis	125,010	178,829	10,010	504,004	817,853
Finance leases	105	—	—	—	105
Total borrowings as per statement of financial position	125,115	178,829	10,010	504,004	817,958



	2016
	Subsidiaries’ functional currency
Rate per currency denomination	Argentine Peso	Brazilian Reais	Uruguayan Peso	US Dollar	Total
Fixed rate:
Argentine Peso	1,005	—	—	—	1,005
Brazilian Reais	—	131,495	—	—	131,495
US Dollar	15,065	37,937	29,069	—	82,071
Subtotal fixed-rate borrowings	16,070	169,432	29,069	—	214,571
Variable rate:
Brazilian Reais	—	65,408	—	—	65,408
US Dollar	48,677	306,559	—	—	355,236
Subtotal variable-rate borrowings	48,677	371,967	—	—	420,644
Total borrowings as per analysis	64,747	541,399	29,069	—	635,215
Finance leases	181	—	—	—	181
Total borrowings as per statement of financial position	64,928	541,399	29,069	—	635,396

For the years ended December 31, 2017 and 2016 , 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.



	2017
	Subsidiaries’ functional currency
Rate per currency denomination	Argentine Peso		Brazilian Reais		Uruguayan Peso	US Dollar	Total
Variable rate:
Brazilian Reais	—		(277	)	—	—	(277	)
US Dollar	(496	)	(195	)	—	—	(691	)
Total effects on profit before income tax	(496	)	(472	)	—	—	(968	)

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

F- 17

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


2.	Financial risk management (continued)



	2016
	Subsidiaries’ functional currency
Rate per currency denomination	Argentine Peso		Brazilian Reias		Uruguayan Peso	US Dollar	Total
Variable rate:
Brazilian Reais	—		(654	)	—	—	(654	)
US Dollar	(487	)	(3,066	)	—	—	(3,553	)
Total effects on profit before income tax	(487	)	(3,720	)	—	—	(4,207	)

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


•	Credit risk

The Group’s exposures to credit risk arise in certain agreements in relation to amounts owed for physical product sales, the use of derivative instruments, and the investment of surplus cash balances. The Group is also exposed to political and economic risk events, which may cause non-payment of foreign currency obligations to the Group.

The Group’s policy is to manage credit exposure to trading counterparties within defined trading limits. All of the Group’s significant counterparties are assigned internal credit limits.

The Group sells to a large base of customers. Type and class of customers may differ depending on the Group’s business segments. For the years ended December 31, 2017 and 2016 , more than 97% and 95% , respectively, of the Group’s sales of crops were sold to 111 and 121 well-known customers (both multinational and local) with good credit history with the Group. In the Sugar, Ethanol and Energy segment, sales of ethanol were concentrated in 7 and 35 customers, which represented 100% and 96% of total sales of ethanol for the years ended December 31, 2017 and 2016 , respectively. Approximately 87% and 71% of the Group’s sales of sugar were concentrated in 24 and 20 well-known traders for the years ended December 31, 2017 and 2016 , respectively. The remaining 13% and 29% , which mainly relates to “crystal sugar”, were dispersed among several customers. In 2017 and 2016 , energy sales are 99% and 96% concentrated in 32 major customers. In the dairy segment, 100% and 85% of the sales were concentrated in 29 and 14 well-known customers in 2017 and 2016 , 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 18 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.

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, 2017 and 2016 , the total amount of cash and cash equivalents mainly comprise cash in banks and short-term bank deposits. The Group is authorized to transact with banks rated “BBB+” or higher. As of December 31, 2017 and 2016 , 8 and 4 banks (primarily HSBC, Rabobank, Citibank and Banco do Brasil) accounted for more than 78% and 85% , 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, 2017 , the Group invested in fixed-term bank deposits with mainly two banks (Banco Itau and Santander) 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 accompanying notes are an integral part of these consolidated financial statements.

F- 18

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


2.	Financial risk management (continued)

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 arranged interest rate swaps with HSBC and Itau in Brazil. 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 by 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 debt. During the year ended December 31, 2017 , the strategy was to maintain the gearing ratio within 0.45 to 0.60 , as follows:



	2017	2016
Total debt	817,958	635,396
Total equity	645,131	671,673
Total capital	1,463,089	1,307,069
Gearing ratio	0.56	0.49


•	Derivative financial instruments

As part of its business operations, the Group uses a variety of derivative financial instruments to manage its exposure to the financial risks discussed above. As part of this 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 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 accompanying notes are an integral part of these consolidated financial statements.

F- 19

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


2.	Financial risk management (continued)

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, 2017 :



	2017
Type of derivative contract	Quantities (thousands) (**)		Notional amount		Fair Value Asset/ (Liability)		(Loss)/Gain (*)
Futures:
Sale
Corn	(33	)	(3,198	)	48		361
Soybean	83		19,195		670		(765	)
Wheat	(45	)	(7,083	)	(38	)	(38	)
Sugar	343,874		121,072		3,231		3,808
Options:
Sell put
Sugar	3,572		83		54		(30	)
Total	347,451		130,069		3,965		3,336

As of December 31, 2016 :



	2016
Type of derivative contract	Quantities (thousands) (**)	Notional amount		Fair Value Asset/ (Liability)		(Loss)/Gain (*)
Futures:
Sale
Corn	66	9,436		46		46
Soybean	120	42,330		(1,171	)	(1,170	)
Sugar	17,020	9,144		722		64
Ethanol	6,900	3,978		(40	)	(40	)
Options:
Buy put
Soybean	14	464		644		181
Sugar	70,510	(6,734	)	5,374		352
Sell call
Sugar	54,597	3,058		(3,219	)	(105	)
Sell put
Sugar	14,528	748		(763	)	(1,625	)
Total	163,755	62,424		1,593		(2,297	)

(*) Included in the line item “(Loss) / Gain from commodity derivative financial instruments” of Note 8.

(**) All quantities expressed in tons and m 3 .

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

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

F- 20

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


2.	Financial risk management (continued)


▪	Foreign currency floating-to-fixed interest rate swap

In July 2016 the Group's subsidiary in Brazil, Adecoagro Vale do Ivinhema entered into a Reais 90 million loan with Bradesco. The loan bears interest at a variable rate of CDI (an interbanking floating interest rate in USD) plus 2.1% per year. At same moment and with same bank, the Company entered into a swap operation, which intention is to effectively convert the principal amount and interest rate denominated in Reais, to a principal amount an interest rate denominated in US$, plus a fixed rate of 6,55%. The swap expired on Sep 2017. As of expiration date, the group recognized a gain of US$ 3 included whitin "Financial Results, net.”


▪	Currency forward

During 2017 the Group did not entered into any currency forward contract in Brazil. During the year ended December 31, 2016 the Group entered into several currency forward contracts with Brazilian banks in order to hedge the fluctuation of the Brazilian Reais against the US Dollar for a total aggregate amount of US$ 57.2 million . The currency forward contracts entered in 2016 had maturity dates ranging between March 2016 and April 2017. These contracts resulted in a recognition of a loss of US$ 2.0 million and US$ 5.0 million in 2017 and 2016 , respectively.

During the year ended on December 31, 2017 , the Group entered into several currency forward contracts in order to hedge the fluctuation of the US Dollar against Euro for a total notional amount of US$ 10.5 million . The currency forward contracts maturity date is March 2017. The outstanding contracts resulted in the recognition of a gain amounting to US$ 0.1 million in 2017 .

During the year ended on December 31, 2016 , the Group entered into several currency forward contracts in order to hedge the fluctuation of the US Dollar against Euro for a total notional amount of US$ 10.7 million . The currency forward contracts maturity date is March 2017. The outstanding contracts resulted in the recognition of a gain amounting to US$ 0.6 million in 2016 .

Gains and losses on currency forward contracts are included within “Financial results, net” in the statement of income.

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

F- 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)


3.	Segment information

According to IFRS 8, operating segments are identified based on the ‘management approach’. Operating segments are components of an entity about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance (the Management committee in the case of the Company). This classification is based on the differences in the nature of its operations, products and services. 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 Group operates in three major lines of business, namely, Farming; Sugar, Ethanol and Energy; and Land Transformation. The Coffee and Cattle businesses are presented within “Farming – All Other Segments” because they not meet the quantitive threshold for disclosure.


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

▪

The Group’s ‘Crops’ Segment consists of planting, harvesting and sale of grains, oilseeds and fibers (including wheat, corn, soybeans, cotton and sunflowers, among others), and to a lesser extent the provision of grain warehousing/conditioning and handling and drying services to third parties. Each underlying crop in this segment does not represent a separate operating segment. Management seeks to maximize the use of the land through the cultivation of one or more type of crops. Types and surface amount of crops cultivated may vary from harvest year

to harvest year depending on several factors, some of them out of the Group´s control. Management is focused on the long-term performance of the productive land, and to that extent, the performance is assessed considering the aggregated combination, if any, of crops planted in the land. A single manager is responsible for the management of operating activity of all crops rather than for each individual crop.


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


▪	The Group’s ‘Dairy’ Segment consists of the production and sale of raw milk and other dairy products.


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


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


•	The Group’s ‘Land Transformation’ Segment comprises the (i) identification and acquisition of underdeveloped and undermanaged farmland businesses; and (ii) realization of value through the strategic disposition of assets (generating profits).

The measurement principles for the Group’s segment reporting structure are based on the IFRS principles adopted in the consolidated financial statements.

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

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

F- 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)

Segment analysis for the year ended December 31, 2017



	Farming										Sugar, Ethanol and Energy		Land Transformation	Corporate		Total
	Crops		Rice		Dairy		All other segments		Farming subtotal		Sugar, Ethanol and Energy		Land Transformation	Corporate		Total
Sales of goods and services rendered	197,222		86,478		37,523		1,336		322,559		610,619		—	—		933,178
Cost of goods sold and services rendered	(196,302	)	(71,087	)	(36,979	)	(853	)	(305,221	)	(461,506	)	—	—		(766,727	)
Initial recognition and changes in fair value of biological assets and agricultural produce	17,158		10,236		11,769		267		39,430		23,790		—	—		63,220
Changes in net realizable value of agricultural produce after harvest	8,852		—		—		—		8,852		—		—	—		8,852
Margin on manufacturing and agricultural activities before operating expenses	26,930		25,627		12,313		750		65,620		172,903		—	—		238,523
General and administrative expenses	(2,981	)	(4,699	)	(1,058	)	(174	)	(8,912	)	(26,806	)	—	(21,581	)	(57,299	)
Selling expenses	(7,501	)	(13,324	)	(711	)	(156	)	(21,692	)	(73,664	)	—	(43	)	(95,399	)
Other operating income, net	7,719		724		662		(23	)	9,082		30,419		—	(40	)	39,461
Share of loss of joint ventures	—		—		—		—		—		—		—	—		—
Profit / (loss) from operations before financing and taxation	24,167		8,328		11,206		397		44,098		102,852		—	(21,664	)	125,286

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

Farmlands and farmland improvements, net	59,680		13,688		248		9,346		82,962		26,342		—	—		109,304
Machinery, equipment and other fixed assets, net	21,365		18,851		12,175		341		52,732		390,350		—	—		443,082
Bearer plants, net	252		—		—		1,832		2,084		236,826		—	—		238,910
Work in progress	714		1,940		5,659		—		8,313		21,322		—	—		29,635
Investment property	—		—		—		2,271		2,271		—		—	—		2,271
Goodwill	3,221		1,480		—		1,110		5,811		6,601		—	—		12,412
Biological assets	31,745		29,717		9,338		4,016		74,816		93,178		—	—		167,994
Finished goods	21,146		8,476		—		—		29,622		32,266		—	—		61,888
Raw materials, stocks held by third parties and others	17,958		9,927		1,726		364		29,975		17,056		—	—		47,031
Total segment assets	156,081		84,079		29,146		19,280		288,586		823,941		—	—		1,112,527
Borrowings	69,789		62,790		2,384		3,829		138,792		633,638		—	45,528		817,958
Total segment liabilities	69,789		62,790		2,384		3,829		138,792		633,638		—	45,528		817,958

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

F- 23

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


3.	Segment information (continued)

Segment analysis for the year ended December 31, 2016



	Farming										Sugar, Ethanol and Energy		Land Transformation	Corporate		Total
	Crops		Rice		Dairy		All other segments		Farming subtotal		Sugar, Ethanol and Energy		Land Transformation	Corporate		Total
Sales of goods and services rendered	142,124		96,562		32,897		960		272,543		596,692		—	—		869,235
Cost of goods sold and services rendered	(141,731	)	(83,574	)	(32,571	)	(212	)	(258,088	)	(420,493	)	—	—		(678,581	)
Initial recognition and changes in fair value of biological assets and agricultural produce	48,790		10,498		5,476		(13	)	64,751		60,705		—	—		125,456
Changes in net realizable value of agricultural produce after harvest	(5,841	)	—		—		—		(5,841	)	—		—	—		(5,841	)
Margin on manufacturing and agricultural activities before operating expenses	43,342		23,486		5,802		735		73,365		236,904		—	—		310,269
General and administrative expenses	(2,770	)	(3,373	)	(983	)	(290	)	(7,416	)	(22,648	)	—	(20,686	)	(50,750	)
Selling expenses	(5,692	)	(11,583	)	(752	)	(49	)	(18,076	)	(62,518	)	—	(79	)	(80,673	)
Other operating income, net	(8,787	)	402		686		8,497		798		(8,903	)	—	(192	)	(8,297	)
Share of loss of joint ventures	—		—		—		—		—		—		—	—		—
Profit / (loss) from operations before financing and taxation	26,093		8,932		4,753		8,893		48,671		142,835		—	(20,957	)	170,549

Depreciation and amortization	(1,369	)	(2,766	)	(964	)	(192	)	(5,291	)	(122,209	)	—	—		(127,500	)
Initial recognition and changes in fair value of biological assets and agricultural produce (unrealized)	5,790		2,316		1,319		107		9,532		279		—	—		9,811
Initial recognition and changes in fair value of biological assets and agricultural produce (realized)	43,000		8,182		4,157		(120	)	55,219		60,426		—	—		115,645
Changes in net realizable value of agricultural produce after harvest (unrealized)	(90	)	—		—		—		(90	)	—		—	—		(90	)
Changes in net realizable value of agricultural produce after harvest (realized)	(5,751	)	—		—		—		(5,751	)	—		—	—		(5,751	)

Farmlands and farmland improvements, net	68,224		18,868		168		5,504		92,764		26,734		—	—		119,498
Machinery, equipment and other fixed assets, net	3,892		14,949		7,449		467		26,757		418,543		—	—		445,300
Bearer plants, net	—		—		—		1,860		1,860		214,309		—	—		216,169
Work in progress	1,100		3,274		2,727		—		7,101		14,540		—	—		21,641
Investment property	—		—		—		2,666		2,666		—		—	—		2,666
Goodwill	3,782		1,737		—		1,186		6,705		6,700		—	—		13,405
Biological assets	28,189		25,575		6,827		2,433		63,024		82,380		—	—		145,404
Finished goods	13,415		5,474		—		—		18,889		49,302		—	—		68,191
Raw materials,Stocks held by third parties and others	16,147		6,628		2,060		—		24,835		18,728		—	—		43,563
Total segment assets	134,749		76,505		19,231		14,116		244,601		831,236		—	—		1,075,837
Borrowings	43,878		47,156		616		10,449		102,099		533,297		—	—		635,396
Total segment liabilities	43,878		47,156		616		10,449		102,099		533,297		—	—		635,396

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

F- 24

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


3.	Segment information (continued)

Segment analysis for the year ended December 31, 2015



	Farming										Sugar, Ethanol and Energy		Land Transformation	Corporate		Total
	Crops		Rice		Dairy		All other segments		Farming subtotal		Sugar, Ethanol and Energy		Land Transformation	Corporate		Total
Sales of goods and services rendered	154,741		84,668		32,981		1,302		273,692		400,622		—	—		674,314
Cost of goods sold and services rendered	(154,287	)	(69,075	)	(33,030	)	(603	)	(256,995	)	(300,791	)	—	—		(557,786	)
Initial recognition and changes in fair value of biological assets and agricultural produce	11,561		2,822		7,542		(181	)	21,744		32,784		—	—		54,528
Changes in net realizable value of agricultural produce after harvest	14,691		—		—		—		14,691		—		—	—		14,691
Margin on manufacturing and agricultural activities before operating expenses	26,706		18,415		7,493		518		53,132		132,615		—	—		185,747
General and administrative expenses	(3,987	)	(3,136	)	(1,451	)	(74	)	(8,648	)	(18,301	)	—	(21,476	)	(48,425	)
Selling expenses	(5,672	)	(12,592	)	(663	)	(49	)	(18,976	)	(50,729	)	—	(563	)	(70,268	)
Other operating income, net	16,422		600		(479	)	6		16,549		6,340		7,914	263		31,066
Share of loss of joint ventures	(2,685	)	—		—		—		(2,685	)	—		—	—		(2,685	)
Profit / (loss) from operations before financing and taxation	30,784		3,287		4,900		401		39,372		69,925		7,914	(21,776	)	95,435

Reserve from the sale of non-controlling interests in subsidiaries (see Note 21)	—		—		—		—		—		—		16,066	—		16,066
Depreciation and amortization	(2,427	)	(2,987	)	(1,456	)	(276	)	(7,146	)	(97,255	)	—	—		(104,401	)
Initial recognition and changes in fair value of biological assets and agricultural produce (unrealized)	2,234		587		—		207		3,028		8,298		—	—		11,326
Initial recognition and changes in fair value of biological assets and agricultural produce (realized)	9,327		2,235		7,542		(388	)	18,716		24,486		—	—		43,202
Changes in net realizable value of agricultural produce after harvest (unrealized)	4,406		—		—		—		4,406		—		—	—		4,406
Changes in net realizable value of agricultural produce after harvest (realized)	10,285		—		—		—		10,285		—		—	—		10,285

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 Group’s investment in CHS Agro S.A. is allocated to the ‘Crops’ segment. Therefore, the Group’s share of profit or loss after income taxes and its carrying amount are reported in this segment.

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



	2017	2016
Total reportable assets as per segment information	1,112,527	1,075,837
Intangible assets (excluding goodwill)	4,780	3,847
Deferred income tax assets	43,437	38,586
Trade and other receivables	172,214	174,940
Other assets	565	590
Derivative financial instruments	4,483	3,398
Cash and cash equivalents	269,195	158,568
Total assets as per the statement of financial position	1,607,201	1,455,766

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

F- 25

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


3.	Segment information (continued)



	2017	2016
Total reportable liabilities as per segment information	817,958	635,396
Trade and other payables	99,250	93,585
Deferred income tax liabilities	10,457	14,689
Payroll and social liabilities	28,507	28,079
Provisions for other liabilities	4,843	3,889
Current income tax liabilities	503	1,387
Derivative financial instruments	552	7,068
Total liabilities as per the statement of financial position	962,070	784,093

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

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



	Argentina	Brazil	Uruguay	Total
Property, plant and equipment	103,312	710,523	7,096	820,931
Investment property	2,271	—	—	2,271
Goodwill	5,095	7,317	—	12,412
Non-current portion of biological assets	11,276	—	—	11,276

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

As of and for the year ended December 31, 2016 :



	Argentina		Brazil		Uruguay		Total
Property, plant and equipment	101,513		694,137		6,958		802,608
Investment property	2,666		—		—		2,666
Goodwill	5,980		7,425		—		13,405
Non-current portion of biological assets	8,516		—		—		8,516

Sales of goods and services rendered	164,264		432,468		272,503		869,235
Initial recognition and changes in fair value of biological assets and agricultural produce	62,970		62,556		(70	)	125,456
(Loss) from changes in net realizable value of agricultural produce after harvest	(4,491	)	(958	)	(392	)	(5,841	)

As of and for the year ended December 31, 2015 :

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

F- 26

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


3.	Segment information (continued)



	Argentina	Brazil		Uruguay		Total
Sales of goods and services rendered	166,447	295,456		212,411		674,314
Initial recognition and changes in fair value of biological assets and agricultural produce	16,637	37,097		794		54,528
Gain / (Loss) from changes in net realizable value of agricultural produce after harvest	16,139	(32	)	(1,416	)	14,691


4.	Sales



	2017	2016	2015
Manufactured products and services rendered:
Rice	83,849	94,331	82,797
Ethanol	241,650	211,451	176,150
Sugar	305,688	330,895	177,801
Soybean oil and meal	6,119	—	2,071
Energy	62,218	53,995	46,671
Powder milk	2,713	4,816	1,042
Services	1,144	1,160	1,545
Operating Leases	771	984	1,309
Others	5,273	1,423	1,233
	709,425	699,055	490,619
Agricultural produce and biological assets:
Soybean	79,408	63,797	75,361
Cattle for dairy	3,380	3,059	3,656
Corn	82,482	48,502	41,813
Cotton	420	1,434	3,317
Milk	31,656	24,561	27,906
Wheat	14,835	16,951	16,116
Peanut	3,648	1,703	—
Sunflower	3,163	7,275	12,659
Sorghum	—	—	111
Rice	—	950	—
Barley	1,888	1,240	634
Seeds	727	625	648
Others	2,146	83	1,474
	223,753	170,180	183,695
Total sales	933,178	869,235	674,314

Commitments to sell commodities at a future date

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

The notional amount of these contracts is US$ 63.3 million as of December 31, 2017 ( 2016 : US$ 111.8 million ; 2015 : US$ 62.4 million ) comprised primarily of 27,848 tons of sugar (US$ 9.4 million ), 24,627 m3 of ethanol (US$ 6.3 million ), 408,236 mwh of energy (US$ 30.1 million ), 25,413 tons of soybean (U$S 7.2 million ), 21,835 tons of wheat (US$ 3.6 million ), and 37,391 tons of corn (US$ 5.7 million ) which expire between February 2018 and December 2018.

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

F- 27

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


5.	Cost of goods sold and services rendered

As of December 31, 2017 :



	2017
	Crops		Rice		Dairy	All other segments	Sugar, Ethanol and Energy		Total
Finished goods at the beginning of 2017 (Note 19)	13,117		5,473		—	—	49,601		68,191
Cost of production of manufactured products (Note 6)	5,565		68,969		—	237	378,864		453,635
Purchases	82,842		7,779		2,410	—	93,106		186,137
Agricultural produce	102,734		—		34,569	616	1,015		138,934
Transfer to raw material	(12,998	)	(1,354	)	—	—	—		(14,352	)
Direct agricultural selling expenses	22,940		—		—	—	—		22,940
Tax recoveries (i)	—		—		—	—	(28,478	)	(28,478	)
Changes in net realizable value of agricultural produce after harvest	8,852		—		—	—	—		8,852
Finished goods at the end of December 31, 2017 (Note 19)	(21,146	)	(8,476	)	—	—	(32,266	)	(61,888	)
Exchange differences	(5,604	)	(1,304	)	—	—	(336	)	(7,244	)
Cost of goods sold and services rendered, and direct agricultural selling expenses	196,302		71,087		36,979	853	461,506		766,727

(i) Correspond to the presumed credit of ICMS (Imposto sobre Circulação de Mercadorias e Prestação de Serviços) over the sale values.

As of December 31, 2016 :



	2016
	Crops		Rice		Dairy	All other segments	Sugar, Ethanol and Energy		Total
Finished goods at the beginning of 2016	16,034		6,904		55	—	24,631		47,624
Cost of production of manufactured products (Note 6)	478		61,254		371	206	376,791		439,100
Purchases	25,954		22,303		4,414	—	89,745		142,416
Agricultural produce	110,252		—		27,628	—	—		137,880
Transfer to raw material	(8,603	)	—		—	—	—		(8,603	)
Direct agricultural selling expenses	19,077		—		—	—	—		19,077
Tax recoveries (i)	—		—		—	—	(24,156	)	(24,156	)
Changes in net realizable value of agricultural produce after harvest	(5,841	)	—		—	—	—		(5,841	)
Finished goods at the end of December 31, 2016 (Note 19)	(13,117	)	(5,473	)	—	—	(49,601	)	(68,191	)
Exchange differences	(2,503	)	(1,414	)	103	6	3,083		(725	)
Cost of goods sold and services rendered, and direct agricultural selling expenses	141,731		83,574		32,571	212	420,493		678,581

(i) Correspond to the presumed credit of ICMS (Imposto sobre Circulação de Mercadorias e Prestação de Serviços) over the sale values.

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

F- 28

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


5.	Cost of goods sold and services rendered (continued)

As of December 31, 2015 :



	2015
	Crops		Rice		Dairy		All other segments	Sugar, Ethanol and Energy		Total
Finished goods at the beginning of 2015	21,056		4,656		76		—	50,087		75,875
Cost of production of manufactured products (Note 6)	67		60,445		624		603	273,127		334,866
Purchases	27,625		13,520		920		—	48,610		90,675
Agricultural produce	93,536		—		31,563		—	—		125,099
Transfer to raw material	(6,237	)	—		—		—	—		(6,237	)
Direct agricultural selling expenses	29,179		—		—		—	—		29,179
Tax recoveries (i)	—		—		—		—	(16,196	)	(16,196	)
Changes in net realizable value of agricultural produce after harvest	14,691		—		—		—	—		14,691
Finished goods at the end of December 31, 2015	(16,034	)	(6,904	)	(55	)	—	(24,631	)	(47,624	)
Exchange differences	(9,596	)	(2,642	)	(98	)	—	(30,206	)	(42,542	)
Cost of goods sold and services rendered, and direct agricultural selling expenses	154,287		69,075		33,030		603	300,791		557,786

(i) Correspond to the presumed credit of ICMS (Imposto sobre Circulação de Mercadorias e Prestação de Serviços) over the sale values.

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

F- 29

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


6.	Expenses by nature

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

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

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



	Cost of production of manufactured products (Note 5)						General and Administrative Expenses	Selling Expenses	Total
	Crops	Rice	Dairy	All other segments	Sugar, Ethanol and Energy	Total	General and Administrative Expenses	Selling Expenses	Total
Salaries, social security expenses and employee benefits	—	7,115	—	229	50,243	57,587	33,969	6,724	98,280
Raw materials and consumables	695	3,579	—	—	9,343	13,617	—	—	13,617
Depreciation and amortization	—	836	—	8	119,427	120,271	6,162	778	127,211
Fuel, lubricants and others	—	109	—	—	25,272	25,381	454	242	26,077
Maintenance and repairs	—	1,750	—	—	17,005	18,755	1,189	469	20,413
Freights	—	6,074	—	—	572	6,646	—	33,682	40,328
Export taxes / selling taxes	—	—	—	—	—	—	—	36,808	36,808
Export expenses	—	—	—	—	—	—	—	3,511	3,511
Contractors and services	1,054	—	—	—	6,191	7,245	—	—	7,245
Energy transmission	—	—	—	—	—	—	—	3,312	3,312
Energy power	—	1,342	—	—	1,525	2,867	190	53	3,110
Professional fees	—	51	—	—	352	403	7,519	1,633	9,555
Other taxes	—	93	—	—	1,978	2,071	845	5	2,921
Contingencies	—	—	—	—	—	—	2,174	—	2,174
Lease expense and similar arrangements	—	269	—	—	—	269	1,334	56	1,659
Third parties raw materials	—	6,808	—	—	34,161	40,969	—	—	40,969
Others	6	955	—	—	4,261	5,222	3,463	8,126	16,811
Subtotal	1,755	28,981	—	237	270,330	301,303	57,299	95,399	454,001
Own agricultural produce consumed	3,810	39,988	—	—	108,534	152,332	—	—	152,332
Total	5,565	68,969	—	237	378,864	453,635	57,299	95,399	606,333

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

F- 30

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


6.	Expenses by nature (continued)

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



	Cost of production of manufactured products (Note 5)								General and Administrative Expenses	Selling Expenses	Total
	Crops	Rice	Dairy	All other segments	Sugar, Ethanol and Energy		Total		General and Administrative Expenses	Selling Expenses	Total
Salaries, social security expenses and employee benefits	—	5,590	—	206	54,225		60,021		30,935	5,358	96,314
Raw materials and consumables	468	3,927	—	—	7,025		11,420		—	—	11,420
Depreciation and amortization	—	856	—	—	102,620		103,476		5,006	695	109,177
Fuel, lubricants and others	—	86	—	—	26,307		26,393		450	368	27,211
Maintenance and repairs	—	1,408	—	—	21,641		23,049		931	390	24,370
Freights	—	4,901	14	—	330		5,245		—	29,976	35,221
Export taxes / selling taxes	—	—	—	—	—		—		—	29,375	29,375
Export expenses	—	—	—	—	—		—		—	3,649	3,649
Contractors and services	10	—	39	—	4,374		4,423		—	—	4,423
Energy transmission	—	—	—	—	—		—		—	2,890	2,890
Energy power	—	913	—	—	1,007		1,920		795	211	2,926
Professional fees	—	90	—	—	387		477		5,495	1,105	7,077
Other taxes	—	58	—	—	2,012		2,070		653	8	2,731
Contingencies	—	—	—	—	—		—		1,835	—	1,835
Lease expense and similar arrangements	—	145	—	—	—		145		1,185	51	1,381
Third parties raw materials	—	3,001	—	—	26,552		29,553		—	—	29,553
Tax recoveries	—	—	—	—	(11,527	)	(11,527	)	—	—	(11,527	)
Others	—	1,344	—	—	4,428		5,772		3,465	6,597	15,834
Subtotal	478	22,319	53	206	239,381		262,437		50,750	80,673	393,860
Own agricultural produce consumed	—	38,935	318	—	137,410		176,663		—	—	176,663
Total	478	61,254	371	206	376,791		439,100		50,750	80,673	570,523

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

F- 31

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


6.	Expenses by nature (continued)

Expenses by nature for the year ended December 31, 2015 :



	Cost of production of manufactured products (Note 5)
	Crops	Rice	Dairy	All other segments	Sugar, Ethanol and Energy		Total		General and Administrative Expenses	Selling Expenses	Total
Salaries, social security expenses and employee benefits	—	5,952	—	551	49,454		55,957		28,354	5,053	89,364
Raw materials and consumables	56	3,760	86	—	7,143		11,045		—	—	11,045
Depreciation and amortization	—	1,305	—	—	82,711		84,016		5,762	765	90,543
Fertilizers, agrochemicals and seeds	—	—	—	52	—		52		—	—	52
Fuel, lubricants and others	—	102	—	—	20,034		20,136		468	66	20,670
Maintenance and repairs	—	1,167	—	—	13,934		15,101		937	356	16,394
Freights	9	4,303	38	—	—		4,350		16	20,930	25,296
Export taxes / selling taxes	—	—	—	—	—		—		—	29,110	29,110
Export expenses	—	—	—	—	—		—		—	3,223	3,223
Contractors and services	—	—	82	—	3,297		3,379		—	—	3,379
Energy transmission	—	—	—	—	—		—		—	2,386	2,386
Energy power	—	622	—	—	1,039		1,661		793	27	2,481
Professional fees	—	84	—	—	349		433		6,008	1,257	7,698
Other taxes	—	85	—	—	1,260		1,345		716	—	2,061
Contingencies	—	—	—	—	—		—		1,482	—	1,482
Lease expense and similar arrangements	—	77	—	—	216		293		1,107	43	1,443
Third parties raw materials	—	9,506	—	—	24,182		33,688		—	—	33,688
Tax recoveries	—	—	—	—	(14,395	)	(14,395	)	—	—	(14,395	)
Others	2	691	—	—	5,087		5,780		2,782	7,052	15,614
Subtotal	67	27,654	206	603	194,311		222,841		48,425	70,268	341,534
Own agricultural produce consumed	—	32,791	418	—	78,816		112,025		—	—	112,025
Total	67	60,445	624	603	273,127		334,866		48,425	70,268	453,559


7.	Salaries and social security expenses



	2017	2016	2015
Wages and salaries (i)	132,025	117,423	104,216
Social security costs	30,558	28,849	23,111
Equity-settled share-based compensation	5,552	4,796	4,396
	168,135	151,068	131,723
Number of employees	7,790	8,326	8,089


(i)	Includes US$ 41,172 , US$ 28,475 and US$ 16,708 , capitalized in Property, Plant and Equipment for the years 2017 , 2016 and 2015 , respectively.

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

F- 32

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


8.	Other operating income, net



	2017		2016		2015
Gain from disposal of farmland and other assets (Note 21)	—		—		7,914
Gain /(Loss) from commodity derivative financial instrument	40,842		(16,007	)	22,148
(Loss) /Gain from disposal of other property items	(986	)	(1,255	)	721
Settlement agreement (Note 29)	—		8,489		—
Losses related to energy business	(3,247	)	—		—
Others	2,852		476		283
	39,461		(8,297	)	31,066


9.	Financial results, net



	2017		2016		2015
Finance income:
- Interest income	11,230		7,671		8,201
- Other income	514		286		949
Finance income	11,744		7,957		9,150

Finance costs:
- Interest expense	(52,308	)	(48,198	)	(49,491	)
- Cash flow hedge – transfer from equity (Note 2)	(20,758	)	(85,214	)	(32,700	)
- Foreign exchange losses, net	(38,708	)	(19,062	)	(23,423	)
- Taxes	(3,705	)	(2,719	)	(3,358	)
- Loss from interest rate/foreign exchange rate derivative financial instruments	(2,163	)	(5,694	)	(4,437	)
- Prepayment related expenses (Note 26 - Brazilian subsidiaries)	(10,847	)	—		—
- Other expenses	(2,860	)	(4,493	)	(3,481	)
Finance costs	(131,349	)	(165,380	)	(116,890	)
Total financial results, net	(119,605	)	(157,423	)	(107,740	)


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:



	2017		2016		2015
Current income tax	(13,425	)	(21,505	)	(2,163	)
Deferred income tax	19,493		12,118		10,117
Income tax benefit / (expense)	6,068		(9,387	)	7,954

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

F- 33

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


10.	Taxation (continued)

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



Tax Jurisdiction	Income Tax Rate
Argentina(i)	35	%
Brazil	34	%
Uruguay	25	%
Spain	25	%
Luxembourg	26	%

(i) During 2017, the Argentine Government introduced changes in the income tax. The income tax rate will be reduced to 30% for the years 2018 and 2019, and to 25% from 2020 onwards. A new tax on dividends is created with a rate of 7% for the years 2018 and 2019, and 13% from 2020 onwards.

Deferred tax assets and liabilities of the Group as of December 31, 2017 and 2016 , without taking into consideration the offsetting of balances within the same tax jurisdiction, will be recovered or settled as follows:



	2017		2016
Deferred income tax asset to be recovered after more than 12 months	109,830		96,822
Deferred income tax asset to be recovered within 12 months	20,191		17,504
Deferred income tax assets	130,021		114,326

Deferred income tax liability to be settled after more than 12 months	(90,951	)	(86,573	)
Deferred income tax liability to be settled within 12 months	(6,090	)	(3,856	)
Deferred income tax liability	(97,041	)	(90,429	)
Deferred income tax assets, net	32,980		23,897

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



	2017		2016
Beginning of year	23,897		53,108
Exchange differences	(1,695	)	10,953
Tax (charge) relating to cash flow hedge (i)	(8,715	)	(52,282	)
Income tax benefit	19,493		12,118
End of year	32,980		23,897

(i) Relates to the gain or loss before income tax of cash flow hedge recognized in other comprehensive income amounting to US$ (565) for the year ended December 31, 2017 ( 2016 : US$ (67,683) ); net of the reclassification from Equity to Income Statements of US$ (20,758) for the year ended December 31, 2017 ( 2016 : US$ (85,214) )

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

F- 34

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


10.	Taxation (continued)

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



Deferred income tax liabilities	Property, plant and equipment		Biological assets		Others		Total
At January 1, 2016	55,964		15,963		—		71,927
Charged / (credited) to the statement of income	3,380		(2,752	)	16,787		17,415
Exchange differences	(512	)	911		688		1,087
At December 31, 2016	58,832		14,122		17,475		90,429
Charged / (credited) to the statement of income	23,249		3,707		(15,583	)	11,373
Exchange differences	(4,437	)	(1,057	)	733		(4,761	)
At December 31, 2017	77,644		16,772		2,625		97,041



Deferred income tax assets	Provisions		Tax loss carry forwards		Equity-settled share-based compensation	Biological assets		Others		Total
At January 1, 2016	1,789		107,191		5,620	1,727		8,708		125,035
Charged/(credited) to the statement of income	353		31,074		20	(2,063	)	149		29,533
Tax charge relating to cash flow hedge	—		(52,282	)	—	—		—		(52,282	)
Exchange differences	289		11,135			336		280		12,040
At December 31, 2016	2,431		97,118		5,640	—		9,137		114,326
(Credited) / charged to the statement of income	(705	)	11,907		41	—		19,623		30,866
Tax charge relating to cash flow hedge	—		(8,715	)	—	—		—		(8,715	)
Exchange differences	757		(4,193	)	—	—		(3,020	)	(6,456	)
At December 31, 2017	2,483		96,117		5,681	—		25,740		130,021

Tax loss carry forwards in Argentina and Uruguay generally expire within 5 years . Tax loss carry forwards in Brazil and Luxembourg 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% .

In order to fully realize the deferred tax asset, the Group will need to generate future taxable income in the countries where the tax loss carry forward were incurred. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes that as at December 31, 2017 , it is probable that the Group will realize some portion of the deferred tax assets in Brazil and Argentina.

As of December 31, 2017 , the Group’s tax loss carry forwards and their corresponding jurisdictions are as follows:



Jurisdiction	Tax loss carry forward	Expiration period
Argentina	80,988	5 years
Brazil	195,894	No expiration date.
Uruguay	3,394	5 years
Luxembourg	29,212	No expiration date.

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

F- 35

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


10.	Taxation (continued)

Deferred income tax assets are recognized for tax loss carry-forwards to the extent that the realization of the related tax benefit through future taxable profits is probable. The Group did not recognize deferred income tax assets of US$ 5.6 million in respect of losses amounting to US$ 18.0 million that can be carried forward against future taxable income.

The tax on the Group’s profit before income tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the consolidated entities as follows:



	2017		2016		2015
Tax calculated at the tax rates applicable to profits in the respective countries	(1,937	)	(3,644	)	3,842
Non-deductible items	(1,406	)	(3,304	)	(133	)
Non-deductible items – changes in estimates on previous year	—		(1,182	)	—
Effect of the changes in the statutory income tax rate in Argentina	1,781		—		—
Unused tax losses	(2,265	)	—		—
Tax losses where no deferred tax asset was recognized	(29	)	(569	)	(317	)
Non-taxable income	2,437		—		4,625
Previously unrecognised tax losses now recouped to reduce tax expenses	7,595		—		—
Others	(108	)	(688	)	(63	)
Income tax benefit / (expense)	6,068		(9,387	)	7,954


11.	Earnings per share

(a) Basic

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Group by the weighted average number of shares in issue during the period excluding ordinary shares held as treasury shares (Note 22).



	2017	2016	2015
Profit/(Loss) from operations attributable to equity holders of the Group	9,972	2,039	(5,593	)
Weighted average number of shares in issue (thousands)	120,599	121,421	120,901
Basic earnings / (loss) per share from operations	0.083	0.017	(0.046	)

(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. As of December 31, 2017 , there were 851 thousands ( 2016 : 1,658 thousands ; 2015 : 1,701 thousands ) share options/restricted units outstanding that could potentially have a dilutive impact in the future but were antidilutive for the periods presented.



	2017	2016	2015
Profit / (Loss) from operations attributable to equity holders of the Group	9,972	2,039	(5,593	)
Weighted average number of shares in issue (thousands)	120,599	121,421	120,901
Adjustments for:
- Employee share options and restricted units (thousands)	1,604	1,695	1,445
Weighted average number of shares for diluted earnings per share (thousands)	122,203	123,116	122,346
Diluted earnings / (loss) per share from operations	0.082	0.017	(0.046	)

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

F- 36

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


12.	Property, plant and equipment

Changes in the Group’s property, plant and equipment in 2017 and 2016 were as follows:



	Farmlands		Farmland improvements		Buildings and facilities		Machinery, equipment, furniture and fittings		Bearer plants		Others		Work in progress		Total
At January 1, 2016
Cost	114,527		14,889		267,473		548,037		234,322		13,544		23,113		1,215,905
Accumulated depreciation	—		(9,748	)	(100,005	)	(321,988	)	(77,651	)	(9,624	)	—		(519,016	)
Net book amount	114,527		5,141		167,468		226,049		156,671		3,920		23,113		696,889
At December 31, 2016
Opening net book amount	114,527		5,141		167,468		226,049		156,671		3,920		23,113		696,889
Exchange differences	(6,004	)	(838	)	26,675		46,053		33,169		103		(924	)	98,234
Additions	—		—		7,420		36,190		74,175		1,484		19,454		138,723
Reclassification from investment property (Note 13)	1,335		—		—		—		—		—		—		1,335
Transfers	—		6,856		6,491		6,608		—		8		(19,963	)	—
Disposals	—		—		(1,078	)	(3,125	)	—		(72	)	—		(4,275	)
Reclassification to non-income tax credits (*)	—		—		(1,233	)	(227	)	—		—		(39	)	(1,499	)
Depreciation	—		(1,519	)	(15,688	)	(60,238	)	(47,846	)	(1,508	)	—		(126,799	)
Closing net book amount	109,858		9,640		190,055		251,310		216,169		3,935		21,641		802,608



	Farmlands		Farmland improvements		Buildings and facilities		Machinery, equipment, furniture and fittings		Bearer plants		Others		Work in progress		Total
At December 31, 2016
Cost	109,858		20,907		305,748		633,536		341,666		15,067		21,641		1,448,423
Accumulated depreciation	—		(11,267	)	(115,693	)	(382,226	)	(125,497	)	(11,132	)	—		(645,815	)
Net book amount	109,858		9,640		190,055		251,310		216,169		3,935		21,641		802,608
Year ended December 31, 2017
Opening net book amount	109,858		9,640		190,055		251,310		216,169		3,935		21,641		802,608
Exchange differences	(9,561	)	(1,219	)	(4,473	)	(5,853	)	(4,089	)	(390	)	(2,901	)	(28,486	)
Additions	—		—		15,495		62,101		84,278		2,351		37,856		202,081
Reclassification from investment property	—		—		—		—		—		—		—		—
Transfers	—		2,711		12,963		11,183		—		11		(26,868	)	—
Disposals	—		—		(162	)	(3,913	)	—		(40	)	—		(4,115	)
Reclassification to non-income tax credits (*)	—		—		(205	)	(788	)	—		—		(93	)	(1,086	)
Depreciation	—		(2,125	)	(20,829	)	(67,960	)	(57,448	)	(1,709	)	—		(150,071	)
Closing net book amount	100,297		9,007		192,844		246,080		238,910		4,158		29,635		820,931
At December 31, 2017
Cost	100,297		22,399		329,366		696,266		421,855		16,999		29,635		1,616,817
Accumulated depreciation	—		(13,392	)	(136,522	)	(450,186	)	(182,945	)	(12,841	)	—		(795,886	)
Net book amount	100,297		9,007		192,844		246,080		238,910		4,158		29,635		820,931

(*) 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, 2017 and 2016 , ICMS (Imposto sobre Circulação de Mercadorias e Prestação de Serviços) tax credits were reclassified to trade and other receivables.

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

F- 37

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


12.	Property, plant and equipment (continued)

Depreciation is calculated using the straight-line method to allocated their cost over the estimated usefull lives. Farmlands are not depreciated.



Farmland improvements	5-25 years
Buildings and facilities	20 years
Furniture and fittings	10 years
Computer equipment	3-5 years
Machinery and equipment	4-10 years
Vehicles	4-5 years
Bearer plants	6 years

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each statement of financial position date.

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

During the year ended December 31, 2017 , borrowing costs of US$ 3,660 ( 2016 :US$ 4,654 ) were capitalized as components of the cost of acquisition or construction for qualifying assets.

Certain of the Group’s assets have been pledged as collateral to secure the Group’s borrowings and other payables. The net book value of the pledged assets amounts to US$ 265,099 as of December 31, 2017 ( 2016 : US$ 575,882 ).


13.	Investment property

Changes in the Group’s investment property in 2017 and 2016 were as follows:



	2017		2016
Beginning of the year	2,666		4,796
Reclassification to property, plant and equipment (i)	—		(1,335	)
Exchange difference	(395	)	(795	)
End of the year	2,271		2,666
Cost	2,271		2,666
Accumulated depreciation	—		—
Net book amount	2,271		2,666

(i) Relates to new contracts with third parties.

As of December 31, 2017 , the fair value (level 3) of investment property was US$ 42 million ( 2016 : US$ 45 million ).

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)


14.	Intangible assets

Changes in the Group’s intangible assets in 2017 and 2016 were as follows:



	Goodwill		Software		Others		Total
At January 1, 2016
Cost	13,510		4,044		2,636		20,190
Accumulated amortization	—		(1,844	)	(1,685	)	(3,529	)
Net book amount	13,510		2,200		951		16,661
Year ended December 31, 2016
Opening net book amount	13,510		2,200		951		16,661
Exchange differences	(105	)	186		(7	)	74
Additions	—		1,176		42		1,218
Amortization charge (i)	—		(661	)	(40	)	(701	)
Closing net book amount	13,405		2,901		946		17,252
At December 31, 2016
Cost	13,405		5,406		2,671		21,482
Accumulated amortization	—		(2,505	)	(1,725	)	(4,230	)
Net book amount	13,405		2,901		946		17,252
Year ended December 31, 2017
Opening net book amount	13,405		2,901		946		17,252
Exchange differences	(993	)	(244	)	(10	)	(1,247	)
Additions	—		2,089		34		2,123
Amortization charge (i)	—		(895	)	(41	)	(936	)
Closing net book amount	12,412		3,851		929		17,192
At December 31, 2017
Cost	12,412		7,251		2,695		22,358
Accumulated amortization	—		(3,400	)	(1,766	)	(5,166	)
Net book amount	12,412		3,851		929		17,192


(i)	Amortization charges are included in “General and administrative expenses” and “Selling expenses” for the years ended December 31, 2017 and 2016 , 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- 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)


15.	Biological assets

Changes in the Group’s biological assets in 2017 and 2016 were as follows:



	2017
	Crops (ii)		Rice (ii)		Dairy		All other segments		Sugarcane (ii)		Total
Beginning of the year	28,189		25,575		6,827		2,433		82,380		145,404
Increase due to purchases	—		—		610		1,084		—		1,694
Initial recognition and changes in fair value of biological assets (i)	17,158		10,236		11,769		267		23,790		63,220
Decrease due to harvest / disposals	(102,734	)	(43,842	)	(34,569	)	(616	)	(113,184	)	(294,945	)
Costs incurred during the year	92,034		39,547		26,002		1,478		101,277		260,338
Exchange differences	(2,902	)	(1,799	)	(1,301	)	(630	)	(1,085	)	(7,717	)
End of the year	31,745		29,717		9,338		4,016		93,178		167,994



	2016
	Crops (ii)		Rice (ii)		Dairy		All other segments		Sugarcane (ii)		Total
Beginning of the year	22,536		23,131		6,786		288		59,077		111,818
Increase due to purchases	—		—		—		1,713		—		1,713
Initial recognition and changes in fair value of biological assets (i)	48,790		10,498		5,476		(13	)	60,705		125,456
Decrease due to harvest / disposals	(110,252	)	(38,508	)	(27,946	)	—		(141,645	)	(318,351	)
Costs incurred during the year	68,607		33,839		23,885		558		91,235		218,124
Exchange differences	(1,492	)	(3,385	)	(1,374	)	(113	)	13,008		6,644
End of the year	28,189		25,575		6,827		2,433		82,380		145,404

(i) Biological asset with a production cycle of more than one year (that is dairy and cattle) generated “Initial recognition and changes in fair value of biological assets” amounting to US$ 12,036 for the year ended December 31, 2017 ( 2016 : US$ 5,463 ). In 2017 , an amount of US$ 2,830 ( 2016 : US$ 1,019 ) was attributable to price changes, and an amount of US$ 9,206 ( 2016 : US$ 4,444 ) was attributable to physical changes.

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

Cost of production as of December 31, 2017 :

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

F- 40

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


15.	Biological assets (continued)



	Crops	Rice	Dairy	All other segments	Sugar, Ethanol and Energy	Total
Salaries, social security expenses and employee benefits	3,999	7,312	4,762	386	12,224	28,683
Depreciation and amortization	413	—	—	—	5,989	6,402
Fertilizers, agrochemicals and seeds	35,715	10,647	9	—	31,144	77,515
Fuel, lubricants and others	1,075	666	741	64	3,220	5,766
Maintenance and repairs	1,303	2,419	1,912	220	2,329	8,183
Freights	234	500	128	77	—	939
Contractors and services	29,738	14,706	—	30	4,232	48,706
Feeding expenses	—	—	9,585	174	—	9,759
Veterinary expenses	—	—	1,783	148	—	1,931
Energy power	123	1,954	698	—	—	2,775
Professional fees	180	173	220	19	84	676
Other taxes	1,621	156	7	129	91	2,004
Lease expense and similar arrangements	13,057	138	—	—	40,757	53,952
Others	4,576	876	368	122	1,207	7,149
Subtotal	92,034	39,547	20,213	1,369	101,277	254,440
Own agricultural produce consumed	—	—	5,789	109	—	5,898
Total	92,034	39,547	26,002	1,478	101,277	260,338

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

F- 41

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


15.	Biological assets (continued)

Cost of production as of December 31, 2016 :



	Crops	Rice	Dairy	All other segments	Sugar, Ethanol and Energy	Total
Salaries, social security expenses and employee benefits	3,786	5,820	3,849	214	12,610	26,279
Depreciation and amortization	395	—	—	—	5,880	6,275
Fertilizers, agrochemicals and seeds	24,774	8,047	80	—	24,087	56,988
Fuel, lubricants and others	971	1,527	772	17	3,385	6,672
Maintenance and repairs	1,253	2,811	1,787	92	2,519	8,462
Freights	1,421	479	127	19	—	2,046
Contractors and services	23,769	13,248	—	—	2,651	39,668
Feeding expenses	—	—	9,053	21	—	9,074
Veterinary expenses	—	—	1,624	69	—	1,693
Energy power	119	853	492	—	—	1,464
Professional fees	131	85	169	—	145	530
Other taxes	1,561	131	8	100	116	1,916
Lease expense and similar arrangements	6,965	97	8	—	38,555	45,625
Others	3,462	741	563	26	1,287	6,079
Subtotal	68,607	33,839	18,532	558	91,235	212,771
Own agricultural produce consumed	—	—	5,353	—	—	5,353
Total	68,607	33,839	23,885	558	91,235	218,124

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



	2017	2016
Non-current
Cattle for dairy production (i)	8,989	6,584
Breeding cattle (ii)	1,984	1,533
Other cattle (ii)	303	399
	11,276	8,516
Current
Breeding cattle (iii)	1,729	501
Other cattle (iii)	349	243
Sown land – crops (ii)	31,745	28,189
Sown land – rice (ii)	29,717	25,575
Sown land – sugarcane (ii)	93,178	82,380
	156,718	136,888
Total biological assets	167,994	145,404


(i)	Classified as bearer and mature biological assets.


(ii)	Classified as consumable and immature biological assets.


(iii)	Classified as consumable and mature biological assets.

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

F- 42

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


15.	Biological assets (continued)

The fair value less estimated point of sale costs of agricultural produce at the point of harvest amounted to US$ 113,184 for the year ended December 31, 2017 ( 2016 : US$ 141,645 ).

The following table presents the Group´s biological assets that are measured at fair value at December 31, 2017 and 2016 (see Note 17 to see the description of each fair value level):



	2017				2016
	Level 1	Level 2	Level 3	Total	Level 1	Level 2	Level 3	Total

Cattle for dairy production	—	8,989	—	8,989	—	6,584	—	6,584
Breeding cattle	3,713	—	—	3,713	2,034	—	—	2,034
Other cattle	—	652	—	652	—	642	—	642
Sown land – sugarcane	—	—	93,178	93,178	—	—	82,380	82,380
Sown land – crops	—	—	31,745	31,745	—	—	28,189	28,189
Sown land – rice	—	—	29,717	29,717	—	—	25,575	25,575

There were no transfers between any levels during the year.

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

F- 43

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


15.	Biological assets (continued)

The following significant unobservable inputs were used to measure the Group´s biological assets using the discounted cash flow valuation technique:



Description	Unobservable inputs	Range of unobservable inputs		Relationship of unobservable inputs to fair value
		2017	2016
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: 60-100 tn/ha -Sugarcane TRS: 120-140 kg of sugar/ton of cane -Maintenance costs: 500-700 US$/ha -Harvest costs: 9.0 -14.0 US$/ton of cane -Leasing costs: 11.4-14.4 tn/ha	-Sugarcane yield: 60-100 tn/ha -Sugarcane TRS: 120-140 kg of sugar/ton of cane -Maintenance costs: 500-600 US$/ha -Harvest costs: 9.0 -14.0 US$/ton of cane -Leasing costs: 12.0-14.4 tn/ha	The higher the sugarcane yield, the higher the fair value. The higher the maintenance, harvest and leasing costs per hectare, the lower the fair value. The higher the TRS of sugarcane, the higher the fair value.
Sown land – crops	Crops yield – tonnes per hectare; Commercial Costs – usd per hectare; Production Costs – US$ per hectare.	- Crops yield: 1.5 – 5.1 tn/ha for Wheat, 4.0 – 8.0 tn/ha for Corn, 1.4 - 3.4 tn/ha for Soybean and 2.1-3.5 for Sunflower - Commercial Costs: 50-110 US$/ha for Wheat, 107-300 US$/ha for Corn, 172-176 US$/ha for Soybean and 10-37 US$/ha for Sunflower - Production Costs: 200-540 US$/ha for Wheat, 230-500 US$/ha for Corn, 250-350 US$/ha for Soybean and 230-350 US$/ha for Sunflower	- Crops yield: 2.0 – 2.8 tn/ha for Wheat, 5.4 – 7.7 tn/ha for Corn, 2.7 - 3.8 tn/ha for Soybean and 1.5-2.1 for Sunflower - Commercial Costs: 66-97 US$/ha for Wheat, 150-225 US$/ha for Corn, 70-110 US$/ha for Soybean and 65-90 US$/ha for Sunflower - Production Costs: 170-250 US$/ha for Wheat, 350-550 US$/ha for Corn, 270-400 US$/ha for Soybean and 200-300 US$/ha for Sunflower	The higher the crops yield, the higher the fair value. The higher the commercial and direct costs per hectare, the lower the fair value.
Sown land – rice	Rice yield – tonnes per hectare; Commercial Costs – usd per hectare; Production Costs – US$ per hectare.	-Rice yield: 5.0 -5.9 tn/ha -Commercial Costs: 3-9 US$/ha -Production Costs: 750-1,000 US$/ha	-Rice yield: 5.1 -6.1 tn/ha -Commercial Costs: 8-15 US$/ha -Production Costs: 750-1,000 US$/ha	The higher the rice yield, the higher the fair value. The higher the commercial and direct costs per hectare, the lower the fair value.

As of December 31, 2017 , 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 plantations less cost to sell of US$ 8.6 million for sugarcane, US$ 1.5 million for crops and US$ 3.4 million for rice.

As of December 31, 2016 , 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 plantations less cost to sell of US$ 10.8 million for sugarcane, US$ 1.0 million for crops and US$ 2.7 million for rice.

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

F- 44

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


16.	Investments in joint ventures

The table below lists the Group’s investment in joint ventures for the years ended December 31, 2017 , 2016 and 2015 :



		% of ownership interest held
Name of the entity	Country of incorporation and operation	December 31, 2017		December 31, 2016		December 31, 2015
CHS AGRO S.A. (i)	Argentina	50	%	50	%	50	%

On February 26, 2013, the Group formed CHS AGRO, a joint venture with CHS Inc. CHS Inc. is a leading farmer-owned energy, grains and foods company based in the United States. The Group holds a 50% interest in CHS AGRO. On October 2014, CHS AGRO finished its sunflower processing plant in the city of Pehuajo, Province of Buenos Aires, Argentina.

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



	2017		2016
Assets:
Non-current assets	7,931		17,185
Current assets	8,882		9,316
	16,813		26,501
Liabilities:
Non-current liabilities	22,002		22,000
Current liabilities	19,197		15,273
	41,199		37,273
Net assets of joint venture	(24,386	)	(10,772	)



	2017		2016		2015
Income	14,879		9,390		14,201
Expenses	(22,657	)	(16,048	)	(22,934	)
Loss before income tax	(7,778	)	(6,658	)	(8,733	)

The shares in the joint ventures were not publicly traded for any of the years presented.

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

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

The Group guarantees some financial debt of CHS AGRO for an amount of $9.8 million .

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

F- 45

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


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 derivative financial instruments.

(b) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. 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”.



	Loans and receivables	Assets at fair value through profit or loss	Subtotal financial assets	Non- financial assets	Total
December 31, 2017
Assets as per statement of financial position
Trade and other receivables	68,869	—	68,869	103,345	172,214
Derivative financial instruments	—	4,483	4,483	—	4,483
Cash and cash equivalents	269,195	—	269,195	—	269,195
Total	338,064	4,483	342,547	103,345	445,892



	Liabilities at fair value through profit or loss	Other financial liabilities at amortized cost	Subtotal financial liabilities	Non- financial liabilities	Total
Liabilities as per statement of financial position
Trade and other payables	—	86,066	86,066	13,184	99,250
Borrowings (excluding finance lease liabilities)(i)	—	817,853	817,853	—	817,853
Finance leases	—	105	105	—	105
Derivative financial instruments (i)	552	—	552	—	552
Total	552	904,024	904,576	13,184	917,760

(i) Effective July 1, 2013,the Group formally documented and designated cash flow hedging relationships to hedge the foreign exchange rate risk of a portion of its highly probable future sales in US dollars using a portion of its borrowings denominated in US dollars, currency forwards and foreign currency floating-to-fixed interest rate swaps (see Note 2).

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

F- 46

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


17.	Financial instruments by category (continued)



	Loans and receivables	Assets at fair value through profit or loss	Subtotal financial assets	Non- financial assets	Total
December 31, 2016
Assets as per statement of financial position
Trade and other receivables	79,964	—	79,964	94,976	174,940
Derivative financial instruments	—	3,398	3,398	—	3,398
Cash and cash equivalents	158,568	—	158,568	—	158,568
Total	238,532	3,398	241,930	94,976	336,906



	Liabilities at fair value through profit or loss	Other financial liabilities at amortized cost	Subtotal financial liabilities	Non- financial liabilities	Total
Liabilities as per statement of financial position
Trade and other payables	—	81,142	81,142	12,443	93,585
Borrowings (excluding finance lease liabilities) (i)	—	635,215	635,215	—	635,215
Finance leases	—	181	181	—	181
Derivative financial instruments (i)	7,068	—	7,068	—	7,068
Total	7,068	716,538	723,606	12,443	736,049

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

Because of the short maturities of most trade accounts receivable and payable, other receivables and liabilities, and cash and cash equivalents, their carrying amounts at the closing date do not differ significantly from their respective fair values. The fair value of long-term borrowings is disclosed in Note 26.

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



	Loans and receivables		Assets/ liabilities at fair value through profit or loss		Other financial liabilities at amortized cost		Total
December 31, 2017
Interest income (i)	11,230		—		—		11,230
Interest expense (i)	(41,968	)	—		(10,340	)	(52,308	)
Foreign exchange gains/ (losses) (i)	(15,634	)	(9,402	)	(13,672	)	(38,708	)
Gain from derivative financial instruments(ii)	—		38,679		—		38,679
Net result	(46,372	)	29,277		(24,012	)	(41,107	)

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)


17.	Financial instruments by category (continued)



	Loans and receivables		Assets/ liabilities at fair value through profit or loss		Other financial liabilities at amortized cost		Total
December 31, 2016
Interest income (i)	7,671		—		—		7,671
Interest expense (i)	(39,533	)	—		(8,665	)	(48,198	)
Foreign exchange gains/ (losses) (i)	4,737		(12,288	)	(11,511	)	(19,062	)
Loss from derivative financial instruments(ii)	—		(21,745	)	—		(21,745	)
Net result	(27,125	)	(34,033	)	(20,176	)	(81,334	)


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


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

Determining fair values

IFRS 13 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. All financial instruments recognized at fair value are allocated to one of the valuation hierarchy levels of IFRS 13. This valuation hierarchy provides for three levels. The allocation reflects which of the fair values derive from transactions in the market and where valuation is based on models because market transactions are lacking. The level in the fair value hierarchy 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, 2017 and 2016 , 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, 2017 and 2016 and their allocation to the fair value hierarchy:



		Level 1		Level 2		Total
Assets
Derivative financial instruments	2017	4,463		20		4,483
Derivative financial instruments	2016	2,789		609		3,398

Liabilities
Derivative financial instruments	2017	(498	)	(54	)	(552	)
Derivative financial instruments	2016	(1,196	)	(5,872	)	(7,068	)

There were no transfers within level 1 and 2 during the years ended December 31, 2017 and 2016 .

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

F- 48

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


17.	Financial instruments by category (continued)

When no quoted prices in an active market are available, fair values (particularly with derivatives) are based on recognized valuation methods. The Group uses a range of valuation models for this purpose, details of which may be obtained from the following table:



Class	Pricing Method	Parameters	Pricing Model	Level	Total

Futures	Quoted price	—	—	1	3,911

Options	Quoted price	—	—	1	54

Foreign-currency interest-rate swaps	Theoretical price	Swap curve; Money market interest-rate curve; Foreign-exchange curve.	Present value method	2	(34	)
					3,931


18.	Trade and other receivables, net



	2017		2016
Non-current
Trade receivables	6,597		1,802
Trade receivables	6,597		1,802
Advances to suppliers	2,363		1,930
Income tax credits	6,955		7,472
Non-income tax credits (i)	1,863		1,853
Judicial deposits	3,191		3,280
Other receivables	1,138		1,075
Non-current portion	22,107		17,412
Current
Trade receivables	43,078		61,546
Receivables from related parties (Note 31)	10,218		8,114
Less: Allowance for trade receivables	(1,002	)	(643	)
Trade receivables – net	52,294		69,017
Prepaid expenses	11,565		8,302
Advances to suppliers	36,497		21,451
Income tax credits	2,046		7,116
Non-income tax credits (i)	38,865		43,572
Cash collateral	380		3,546
Receivables from related parties (Note 31)	176		172
Other receivables	8,284		4,352
Subtotal	97,813		88,511
Current portion	150,107		157,528
Total trade and other receivables, net	172,214		174,940

(i) Includes US$ 1,086 ( 2016 : 1,499 ) reclassified from Property, plant and equipment.

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

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

F- 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)


18.	Trade and other receivables, net (continued)

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



	2017	2016
Currency
US Dollar	50,400	54,012
Argentine Peso	48,911	45,641
Uruguayan Peso	415	762
Brazilian Reais	72,488	74,525
	172,214	174,940

As of December 31, 2017 trade receivables of US$ 5,052 ( 2016 : US$ 14,641 ) were past due but not impaired. The ageing analysis of these receivables indicates that 318 and 5,264 are over 6 months in December 31, 2017 and 2016 , respectively.

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

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

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



	2017		2016		2015
At January 1	643		481		527
Charge of the year	758		387		152
Unused amounts reversed	(133	)	(178	)	(27	)
Used during the year	(193	)	—		(7	)
Exchange differences	(73	)	(47	)	(164	)
At December 31	1,002		643		481

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, 2017 , approximately 89% ( 2016 : 82% ) of the outstanding unimpaired trade receivables (neither past due not impaired) relate to sales to 27 well-known multinational companies with good credit quality standing, including but not limited to Camara de Comercializacao de Energia Electrica CCEE, Louis Dreyfus Commodities Suisse S.A.T, Alimport, Czarnikow Group Limited, Establecimientos Las Marias, Mastellone Hnos.S.A., Bunge Agritrade S.A., ETG Commodities Ltd., among others. Most of these entities or their parent companies are externally credit-rated. The Group reviews these external ratings from credit agencies.

The remaining percentage as of December 31, 2017 and 2016 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.

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

F- 50

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


18.	Trade and other receivables, net (continued)

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



	2017	2016
Raw materials	46,836	42,108
Finished goods (Note 5) (1)	61,888	68,191
Stocks held by third parties	—	1,308
Others	195	147
	108,919	111,754

(1) Finished goods of Crops reportable segment are valued at fair value.


20.	Cash and cash equivalents



	2017	2016
Cash at bank and on hand	118,358	130,001
Short-term bank deposits	150,837	28,567
	269,195	158,568


21.	Disposals

Year ended December 31, 2015

Sale of La Cañada Farm.

In November 2015, the Group completed the sale of “La Cañada”, a 3,399 hectare farm located in the province of San Luis, Argentina, for a total consideration of US$ 12.6 million fully collected as of year-end. This transaction resulted in a gain of US$ 7.9 million included within “Other operating income, net”.

Sale of 49% of interest in Global Acamante S.L.U. Global Calidon S.L.U., Global Carelio S.L.U. and Global Mirabilis S.L.U.

In December, 2015, the Group completed the sale of a 49% interest in Global Acamante S.L.U., Global Calidon S.L.U., Global Carelio S.L.U. and Global Mirabilis S.L.U., companies which main underlying assets are El Orden and La Carolina farms, for an aggregate sale price of US$ 22.0 million , which were fully collected at the time of the transaction.

The sale of the respective equity interests did not result in the loss of control of these companies and therefore. The difference between the net proceeds received and the recognition of the non-controlling interest was registered in Statement of Changes in Shareholders’ Equity under the line item “Reserve from the sale of non-controlling interests in subsidiaries” for an amount of US$ 19.9 million (US$ 16.1 million in the column item “Reserve from the sale of non-controlling interests in subsidiaries” and US$ 3.9 million in the column item “Cumulative Translation Adjustment”) and also an increase in non-controlling interest of US$ 2.0 million .

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

F- 51

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

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 share premium
At January 1, 2015	122,382	1,116,617
Employee share options exercised (Note 23) (1)	—	1,786
Restricted shares and units vested (Note 23)	—	3,103
Purchase of own shares	—	(259	)
At December 31,2015	122,382	1,121,247
Employee share options exercised (Note 23) (1)	—	438
Restricted shares and units vested (Note 23)	—	3,225
Purchase of own shares	—	(4,087	)
At December 31,2016	122,382	1,120,823
Employee share options exercised (Note 23) (1)	—	50
Restricted shares units vested (Note 23)	—	4,149
Purchase of own shares	—	(32,515	)
At December 31,2017	122,382	1,092,507


(1)	Treasury shares were used to settle these options and units.

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 August 11, 2017, the Board of Directors approved the extension of the program for an additional twelve-month period, ending September 20, 2018.

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 not

As of December 31, 2017 , the Company repurchased 6,742,183 shares under this program, of which 2,101,777 have been applied to some exercise of the Company’s stock option plan and restricted stock units plan. In 2017, 2016 and 2015 the Company repurchased shares for an amount of US$ 38,367 ; US$ 4,772 and US$ 320 , respectively. The outstanding treasury shares as of December 31, 2017 totaled 4,643,396 .

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

F- 52

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


23.	Equity-settled share-based payments

The Group has set a “2004 Incentive Option Plan” and a “2007/2008 Equity Incentive Plan” (collectively referred to as “Option Schemes”) under which the Group granted equity-settled options to senior managers and selected employees of the Group's subsidiaries. Additionally, in 2010 the Group has set a “Adecoagro Restricted Share and Restricted Stock Unit Plan” (referred to as “Restricted Share Plan”) under which the Group grants restricted stock units 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. In May 2014 this period was extended for another ten year-period.

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:



	2017			2016			2015
	Average exercise price per share	Options (thousands)		Average exercise price per Share	Options (thousands)		Average exercise price per Share	Options (thousands)
At January 1	6.66	1,641		6.67	1,696		6.71	1,916
Forfeited	—	—		—	—		5.83	(9	)
Exercised	5.83	(7	)	6.96	(55	)	7.11	(211	)
At December 31	6.66	1,634		6.66	1,641		6.67	1,696

Options outstanding at year end under this Plan have the following expiry date and exercise prices:



	Exercise price per share	Shares (in thousands)
Expiry date (i):	Exercise price per share	2017	2016	2015
May 1, 2024	5.83	496	495	495
May 1, 2025	5.83	452	452	461
January 1, 2026	5.83	142	150	174
February 16, 2026	7.11	103	103	103
October 1, 2026	8.62	441	441	463

(i) On May 2014, the Board of directors decided to extend the expired date of the Plan.

The Adecoagro/ IFH 2007/ 2008 Equity Incentive Plan was effectively established in late 2007 and is administered by the Compensation Committee of the Company. Options are exercisable over a ten -year period.

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

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

F- 53

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


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



	2017			2016			2015
	Average exercise price per share	Options (thousands)		Average exercise price per share	Options (thousands)		Average exercise price per share	Options (thousands)
At January 1	13.07	1,658		13.07	1,701		13.07	1,729
Forfeited	13.40	(4	)	12.98	(43	)	13.01	(28	)
Expired	12.82	(803	)	—	—		—	—
At December 31	13.31	851		13.07	1,658		13.07	1,701

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



	Exercise price per share	Shares (in thousands)
Expiry date:	Exercise price per share	2017	2016	2015
From Nov 13, 2017 to Aug 25, 2018	12.82	105	908	937
January 30, 2019	13.40	595	595	608
June 1, 2019	12.82	3	3	3
November 1, 2019	13.40	11	11	11
From Jan 30, 2020 to Sep 1, 2020	13.40	106	110	110
From Jan 30, 2020 to Sep 1, 2020	12.82	31	31	31

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



	Exercisable shares in thousands
2017	2,485
2016	3,299
2015	3,397


(b)	Restricted Stock Unit Plan

The 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 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 2,474,701 . The maximum numbers of ordinary shares is revised annually.

At December 31, 2017 , the Group recognized compensation expense US$ 5.6 million related to the restricted stock units granted under the Restricted Share Plan ( 2016 : US$ 4.8 million ).

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

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

F- 54

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


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

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



Grant Date	Apr 1, 2015		May 15, 2015		Apr 1, 2016		May 15, 2016		Apr 1, 2017		May 15, 2017
Fair value	9.45		8.62		12.63		12.52		11.88		12.14
Possibility of ceasing employment before vesting	5	%	0	%	5	%	0	%	—	%	0	%

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



	Restricted stock units (thousands)		Restricted stock units (thousands)		Restricted stock units (thousands)
	2017		2016		2015
At January 1	1,000		1,018		861
Granted (1)	488		464		626
Forfeited	(29	)	(29	)	(37	)
Vested	(490	)	(453	)	(432	)
At December 31	969		1,000		1,018

(1) Approved by the Board of Directors of March 14, 2017 and the Shareholders Meeting of April 19, 2017


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$ 4,139 as of December 31, 2017 ( 2016 : US$ 4,288 ) 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, 2017 , but the Company has distributable reserves in excess of US$ 922,821 .


25.	Trade and other payables



	2017	2016
Non-current
Payable from acquisition of property, plant and equipment (i)	521	1,042
Other payables	306	385
	827	1,427
Current
Trade payables	82,824	77,325
Advances from customers	6,722	7,758
Amounts due to related parties (Note 31)	628	1,152
Taxes payable	6,462	4,685
Other payables	1,787	1,238
	98,423	92,158
Total trade and other payables	99,250	93,585

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

F- 55

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


25.	Trade and other payables (continued)


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

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


26.	Borrowings



	2017	2016
Non-current
Senior Notes	495,707	—
Bank borrowings	167,315	430,202
Obligations under finance leases	38	102
	663,060	430,304
Current
Senior Notes	8,250	—
Bank overdrafts	6,214	90
Bank borrowings	140,367	204,923
Obligations under finance leases	67	79
	154,898	205,092
Total borrowings	817,958	635,396

As of December 31, 2017 , total bank borrowings include collateralized liabilities of US$ 637,306 ( 2016 : US$ 525,663 ). These loans are mainly collateralized by property, plant and equipment, sugarcane plantations, sugar export contracts and shares of certain subsidiaries of the Group.

Notes 2027

On September 21, 2017, the Company issued senior notes (the “Notes”) for US$ 500 million , at an annual nominal 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, beginning on March 21, 2018. The total proceeds nets of expenses was US$ 495.7 million .

The Notes are fully and unconditionally guaranteed on a senior unsecured basis by certain of our current and future subsidiaries. As of the Issue Date, 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. The Group was in compliance with the related covenants.

The maturity of the Group's borrowings (excluding obligations under finance leases) and the Group's exposure to fixed and variable interest rates is as follows:

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

F- 56

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


26.	Borrowings (continued)



	2017	2016
Fixed rate:
Less than 1 year	132,998	67,682
Between 1 and 2 years	35,762	43,630
Between 2 and 3 years	20,097	40,047
Between 3 and 4 years	20,130	21,857
Between 4 and 5 years	16,310	21,116
More than 5 years	495,754	20,239
	721,051	214,571
Variable rate:
Less than 1 year	21,833	137,331
Between 1 and 2 years	22,871	150,517
Between 2 and 3 years	17,945	81,947
Between 3 and 4 years	18,215	18,457
Between 4 and 5 years	11,164	18,309
More than 5 years	4,774	14,083
	96,802	420,644
	817,853	635,215

Borrowings incurred by the Group’s subsidiaries in Brazil are repayable at various dates between January 2018 and September 2024 and bear either fixed interest rates ranging from 2.5% to 9.0% per annum or variable rates based on LIBOR or other specific base-rates plus spreads ranging from 4.13% to 17.52% per annum. At December 31, 2017 LIBOR (six months) was 1,84% ( 2016 : 1.32% ).

Borrowings incurred by the Group´s subsidiaries in Argentina are repayable at various dates between January 2018 and September 2024 and bear either fixed interest rates ranging from 6.11% and 7.00% per annum for those borrowings denominated in US dollar, and a fixed interest rate ranging from 9.90% and 28.75% per annum for those borrowings denominated in Argentine pesos.

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

F- 57

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


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
		Nominal amount		2017			2016
		(In millions)		Millions of Reais		Millions of equivalent Dollars	Millions of equivalent Dollars
Banco Do Brasil (1)	October 2012	R$	130.0	R$	91.3	27.6	33.7	November 2022	2.94% with 15% of bonus performance
Itau BBA FINAME Loan (2)	December 2012	R$	45.9	R$	25.2	7.6	9.3	December 2022	2.50%
Itau BBA	March 2013	R$	75.0	R$	-	-	5.8	-	CDI + 3.20%
Banco do Brasil / Itaú BBA Finem Loan (3)	September 2013	R$	273.0	R$	176.5	53.4	67.3	January 2023	6.77%
BNDES Finem Loan (4)	November 2013	R$	215.0	R$	136.9	41.4	50.3	January 2023	3.75%
ING / Rabobank / ABN / HSBC / Credit Agricole / Caixa Geral / Galena (7)	January 2015	US$	160.0		-	-	98.0	-	LIBOR 3M plus 4.40%
ING / Rabobank / Bladex / Credit Agricole / Votorantim / ABN (7)	August 2015	US$	110.0		-	-	110.0	-	LIBOR 3M plus 4.65%
Rabobank (7)	February 2016	US$	40.0		-	-	40.0	-	LIBOR 3M plus 3.50%
Tokyo-Mitsubishi (5)	August 2016	US$	30.0		-	30.0	30.0	August 2019	6.35%
Bradesco (7)	July 2016	R$	90.0		-	-	27.6	-	CDI + 2.10%
Votorantim (6)	July 2016	US$	15.0		-	10.0	15.0	June 2019	LIBOR 3M plus 4.60%


(1)	Collateralized by (i) a first degree mortgage of the Carmen (Santa Agua) farm; (ii) a first degree mortgage of the Sapálio farm; (iii) a first degree mortgage of the Takuare farm; and (iv) liens over the Ivinhema mill and equipment.


(2)	Collateralized by (i) a first degree mortgage of the Carmen (Santa Agua) farm; (ii) a first degree mortgage of the Sapálio farm; (iii) a first degree mortgage of the Takuare farm; and (iv) liens over the Ivinhema mill and equipment.


(3)	Collateralized by (i) a first degree mortgage of the Carmen (Santa Agua) farm; (ii) a first degree mortgage of the Sapálio farm; (iii) a first degree mortgage of the Takuare farm; (iv) liens over the Ivinhema mill and equipment; and (v) power sales contract.


(4)	Collateralized by (i) liens over the Ivinhema mill and equipment; and (ii) power sales contracts.


(5)	Collateralized by sales contracts.


(6)	Collateralized by (i) power sales contract and (ii) sales contracts.


(7)	These loans were prepaid in 2017, with the proceeds of the Notes 2027.

The above mentioned loans contain certain customary financial covenants and restrictions which require us to meet pre-defined financial ratios, among other restrictions, as well as restrictions on the payment of dividends. These financial ratios are measured considering the statutory financial statements of the Brazilian Subsidiaries.

During 2017 and 2016 the Group was in compliance with all financial covenants.

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

F- 58

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


26.	Borrowings (continued)

Argentinian Subsidiaries

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



Bank	Grant date	Nominal amount	Capital outstanding as of December 31		Maturity date	Annual interest rate
		Nominal amount	2017	2016
		(In millions)	(In millions)	(In millions)
IDB Tranche A (1)	Feb-09	USD 20	US$3.1	US$6.2	Nov-18	6.11% per annum
IFC Tranche A (2)	Dec-16	USD 25	US$24.67	US$25.00	Sep-21	4.3% plus LIBOR
IFC Tranche B (2)	Dec-16	USD 25	US$24.93	US$25.00	Sep-23	4% plus LIBOR

(2): Collateralized by a US$ 75 million mortgage over Carmen farm, which is property of Adeco Agropecuaria S.A.

The Group entered into a floating to fix interest rate forward swap, fixing LIBOR at 1.25% , effective May 2012.

During 2017 and 2016 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 borrowings, including the notes, subject to fix rate do not significant differ from their fair value.

The breakdown of the Group´s borrowing by currency is included in Note 2 - Interest rate risk.

Evolution of the Group's borrowings as December 31, 2017 and 2016 is as follow:



	2017		2016
Amount at the beginning of the year	635,396		723,339
Issuance of senior notes	495,678		—
Proceeds from long term loans	232,433		167,385
Payments of long term loans	(602,700	)	(277,913	)
Proceeds from short term loans	106,730		257,395
Payments of short term loans	(64,787	)	(272,033	)
Payments of interest	(39,118	)	(45,473	)
Accrued interest	51,005		46,470
Exchange differences and translation, net	(4,588	)	32,583
Others	7,909		3,643
Amount at the end of the year	817,958		635,396

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

F- 59

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

27. Payroll and social security liabilities



	2017	2016
Non-current
Social security payable	1,240	1,235
	1,240	1,235
Current
Salaries payable	6,199	7,351
Social security payable	3,702	3,063
Provision for vacations	12,323	12,109
Provision for bonuses	5,043	4,321
	27,267	26,844
Total payroll and social security liabilities	28,507	28,079


28.	Provisions for other liabilities

The Group is subject to several laws, regulations and business practices of the countries where it operates. In the ordinary course of business, the Group is subject to certain contingent liabilities with respect to existing or potential claims, lawsuits and other proceedings, including those involving tax, labor and social security, administrative and civil and other matters. The Group accrues liabilities when it is probable that future costs will be incurred and it can reasonably estimate them. The Group bases its accruals on up-to-date developments, estimates of the outcomes of the matters and legal counsel experience in contesting, litigating and settling matters. As the scope of the liabilities becomes better defined or more information is available, the Group may be required to change its estimates of future costs, which could have a material effect on its results of operations and financial condition or liquidity.

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



	Labor, legal and other claims		Others		Total
At January 1, 2016	2,293		20		2,313
Additions	3,447		57		3,504
Used during year	(2,174	)	(14	)	(2,188	)
Exchange differences	291		(31	)	260
At December 31, 2016	3,857		32		3,889
Additions	4,750		—		4,750
Used during year	(3,754	)	(25	)	(3,779	)
Exchange differences	(15	)	(2	)	(17	)
At December 31, 2017	4,838		5		4,843

Analysis of total provisions:



	2017	2016
Non current	4,078	3,299
Current	765	590
	4,843	3,889

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$ 21.0 million and US$ 18.2 million as of December 31, 2017 and 2016 , respectively.

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

F- 60

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


29.	Disclosure of leases and similar arrangements

The Group as lessee

Operating leases:

The Group leases land for crop cultivation in Argentina. The leases have an average term of a crop year and are renewable at the option of the lessee for additional periods. Under the lease agreements, rent accrues generally at the time of harvest. Rent is payable at several times during the crop year. Lease expense was US$ 14.0 million for the year ended December 31, 2017 ( 2016 : US$ 6.8 million ; 2015 : US$ 10.8 million ). Lease expense is capitalized as part of biological assets.

The Group also leases various offices and machinery under cancellable operating lease agreements which involve no significant amount.

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



	2017	2016
No later than 1 year	7,841	5,311
Later than 1 year and no later than 5 years	1,234	2,294
	9,075	7,605

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

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

Under these contracts, the Group makes payments based on the market value of sugarcane per hectare (in tons) used by the Group in each harvest, with the market value based on the price of sugarcane published by CONSECANA and a fixed amount of total recoverable sugar per ton. Lease expense was US$ 41.1 million for the year ended December 31, 2017 ( 2016 : US$ 64.90 million ; 2015 : US$ 53.4 million ). Lease expense is included in “Initial recognition and changes in fair value of biological assets and agricultural produce” in the statement of income.

Finance leases:

Most of the leased assets carried in the consolidated statement of financial position as part of a finance lease relate to long-term rental and lease agreements for vehicles, machinery and equipment. Obligations under finance leasing totals US$ 105 and US$ 181 as of December 31, 2017 and 2016 , respectively.

The Group as lessor

Operating leases:

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

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



	2017	2016	2015
Rental income	771	984	1,309

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

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

F- 61

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


29.	Disclosure of leases and similar arrangements (continued)



	2017	2016
No later than 1 year	504	494
Later than 1 year and no later than 5 years	1,014	988
	1,518	1,482

On September 2013, Marfrig Argentina S.A. (“Marfrig Argentina”), the argentine subsidiary of the Brazilian company Marfrig Alimentos S.A. (“Marfrig Alimentos"), unilaterally early terminated the lease agreements for grazing land entered into with the Group on December 2009. The termination of the lease agreements was effective in the fourth quarter of 2013, and on April 2014, the Group filed an arbitration proceeding against Marfrig Argentina and Marfrig Alimentos claiming unpaid invoices for US$ 0.5 million and indemnification for early termination. On September 2016, the Parties settled the arbitration proceedings in the amount of US$ 9 million . As of December 31, 2016 the group collected US$ 7 million and as of the date of this financial statements the group has collected the full amount.

This settlement, net of the unpaid invoices and other expenses resulted in an income of US$ 8.5 million reflected in the line item Other operating income.

Finance leases:

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

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

F- 62

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

30. Group companies

The following table details the subsidiaries that comprised the Group as of December 31, 2017 and 2016 :



			2017		2016
	Activities	Country of incorporation and operation	Ownership percentage held if not 100 %		Ownership percentage held if not 100 %
Details of principal subsidiary undertakings:
Operating companies (unless otherwise stated):
Adeco Agropecuaria S.A.	(a)	Argentina	—		—
Pilagá S.A.	(a)	Argentina	99.94	%	99.94	%
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	—		—
Simoneta S.A.	(a)	Argentina	—		—
Compañía Agroforestal S.M.S.A.	(a)	Argentina	—		—
Energía Agro S.A.U.	(a)	Argentina	—		—
Adeco Agropecuaria Brasil Ltda.	(b)	Brazil	—		—
Adecoagro Vale do Ivinhema Ltda.	(b)	Brazil	—		—
Adecoagro Commodities Ltda.	(b)	Brazil	—		—
Usina Monte Alegre Ltda.	(b)	Brazil	—		—
Adecoagro Energia Ltda.	(b)	Brazil	—		—
Kelizer S.A.	(a)	Uruguay	—		—
Agroglobal S.A. (f.k.a. Adecoagro Uruguay S.A.)	(a)	Uruguay	—		—
Holdings companies:
Adeco Brasil Participações S.A.	—	Brazil	—		—
Adecoagro LP S.C.S.	(d)	Luxembourg	—		—
Adecoagro GP S.a.r.l.	—	Luxembourg	—		—
Ladelux S.C.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 España S.L.U.; Leterton España S.L.U.; Global Asterion S.L.U.; Global Acasto S.L.U.; Global Laertes S.L.U.; Global Seward S.L.U.; Global Pindaro S.L.U.; Global Pileo S.L.U.; Peak Texas S.L.U.; Peak City S.L.U. and 51% controlled subsidiaries (see note 21): 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) The continuer from the merger between Adecoagro LP and International Farmland Holdings LP.

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

F- 63

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

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.


31.	Related-party transactions

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



Related party	Relationship	Description of transaction	Income (loss) included in the statement of income						Balance receivable (payable)/(equity)
Related party	Relationship	Description of transaction	2017		2016		2015		2017		2016

Mario Jorge de Lemos Vieira / Cia Agropecuaria Monte Alegre / Alfenas Agricola Ltda / Marcelo Weyland Barbosa Vieira / Paulo Albert Weyland Vieira	(i)	Cost of manufactured products sold and services rendered (ii)	—		(42	)	(2,304	)			—
		Receivables from related parties (Note 18)	—		—		—		176		172
		Payables (Note 25)	—		—		—		(367	)	(701	)

Directors and senior management	Employment	Compensation selected employees	(7,040	)	(5,213	)	(7,528	)	(17,985	)	(17,355	)

CHS Agro	Joint venture	Receivables from related parties (Note 18) (iii)	—		—		—		10,218		8,114
		Payables (Note 25)	—		—		—		(261	)	(451	)
		Sales of goods	2,487		372		2,201		—		—
		Services	88		87		110		—		—
		Interest income	308		326		74		—		—


(i)	Shareholders of the Company.


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


(iii)	It includes US$ 8 million of a loan that accruing a 3% interest rate per year with the final maturity in 2022.


32.	Critical accounting estimates and judgments

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

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

(a)Impairment testing

At the date of each statement of financial position, the Group reviews the carrying amounts of its property, plant and equipment and finite lived intangible assets to determine whether there is any indication that those assets have suffered an impairment

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

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Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


32.	Critical accounting estimates and judgments (continued)

loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent, if any, of the impairment loss. Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. The Group’s property, plant and equipment items generally do not generate independent cash flows.

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

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

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

Based on these criteria, management identified a total amount of 39 CGUs as of September 30, 2017 and 39 CGUs as of September 30, 2016.

As of September 30, 2017 and 2016, there were no impairment indicators on the Company’s long lived assets. Therefore, the Group only tested those CGUs with allocated goodwill in Argentina, Brazil and Uruguay.

CGUs tested based on a fair-value-less-costs-to-sell model at September 30, 2017 and 2016:

As of September 30, 2017, the Group identified 11 CGUs in Argentina and Uruguay (2016: 11 CGUs) to be tested based on this model (all CGUs with allocated goodwill). Estimating the fair value less costs-to-sell is based on the best information available, and refers to the amount at which the CGU could be bought or sold in a current transaction between willing parties. In calculating the fair value less costs-to-sell, management may be assisted by the work of external advisors. When using this model, the Group applies the “sales comparison approach” as its method of valuing most properties. This method relies on results of sales of similar agricultural properties to estimate the value of the CGU. This approach is based on the theory that the fair value of a property is directly related to the selling prices of similar properties.

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

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

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

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

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

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

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Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


32.	Critical accounting estimates and judgments (continued)

The following table shows only the 11 CGUs (2016: 11 CGUs) where goodwill was allocated at each period end and the corresponding amount of goodwill allocated to each one:



CGU / Operating segment / Country	September 30, 2017	September 30, 2016
La Carolina / Crops / Argentina	35	40
La Carolina / Cattle / Argentina	12	13
El Orden/ Crops / Argentina	53	60
El Orden/ Cattle / Argentina	4	5
La Guarida / Crops / Argentina	358	405
La Guarida / Cattle / Argentina	292	330
Los Guayacanes / Crops / Argentina	452	511
Doña Marina / Rice / Argentina	1,595	1,803
Huelen / Crops / Argentina	1,787	2,020
El Colorado / Crops / Argentina	787	890
El Colorado / Cattle / Argentina	115	130
Closing net book value of goodwill allocated to CGUs tested (Note 14)	5,490	6,207
Closing net book value of PPE items and other assets allocated to CGUs tested	34,668	36,901
Total assets allocated to CGUs tested	40,158	43,108

Based on the testing above, the Group determined that none of the CGUs, with allocated goodwill, were impaired at September 30, 2017 and 2016.

CGUs tested based on a value-in-use model at September 30, 2017 and 2016:

As of September 30, 2017, the Group identified 3 CGUs (2016: 3 CGUs) in Brazil to be tested base on this model (all CGUs with allocated goodwill). In performing the value-in-use calculation, the Group applied pre-tax rates to discount the future pre-tax cash flows. In each case, these key assumptions have been made by management reflecting past experience and are consistent with relevant external sources of information, such as appropriate market data. In calculating value-in-use, management may be assisted by the work of external advisors.

The 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, 2017	September 30, 2016
Financial projections	Covers 4 years for UMA	Covers 4 years for UMA
	Cover 7 years for AVI	Cover 7 years for AVI
Yield average growth rates	0-1%	0-1%
Future pricing increases	3% per annum	3% per annum
Future cost increases	1% per annum	3% per annum
Discount rates	7.6%	6.2%
Perpetuity growth rate	2.0%	2.0%

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

F- 66

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


32.	Critical accounting estimates and judgments (continued)

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



CGU/ Operating segment	September 30, 2017	September 30, 2016
AVI / Sugar, Ethanol and Energy	5,012	4,892
UMA / Sugar, Ethanol and Energy	2,622	2,564
Closing net book value of goodwill allocated to CGUs tested (Note 14)	7,634	7,456
Closing net book value of PPE items and other assets allocated to CGUs tested	719,558	689,857
Total assets allocated to 3 CGUs tested	727,192	697,313

Based on the testing above, the Group determined that none of the CGUs, with allocated goodwill, were impaired at September 30, 2017 and 2016.

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

As of December 31, 2017, the Group determined that there is no indicators of impairment.

(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 unobservable inputs is significant to the overall valuation of the assets. Unobservable inputs are determined based on the best information available, for example by reference to historical information of past practices and results, statistical and agronomical information, and other analytical techniques. Key assumptions include future market prices, estimated yields at the point of harvest, estimated production cycle, future cash flows, future costs of harvesting and other costs, and estimated discount rate.

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

The key assumptions discussed above are highly sensitive. Reasonable shifts in assumptions including but not limited to increases or decreases in prices, costs and discount factors used would result in a significant increase or decrease to the fair value of biological assets. In addition, cash flows are projected over a number of years and based on estimated production. Estimates of production in themselves are dependent on various assumptions, in addition to those described above, including but not limited to several factors such as location, environmental conditions and other restrictions. Changes in these estimates could materially impact on estimated production, and could therefore affect estimates of future cash flows used in the assessment of fair value (see Note 15).

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

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

F- 67

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


32.	Critical accounting estimates and judgments (continued)

(d) 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 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 for details).

33. Summary of significant accounting policies

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


33.1	Basis of preparation and presentation

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

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

The preparation of consolidated financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 32.

(a) Standards, amendments and interpretations to existing standards effective and adopted by the Group in 2017

The following standard, amendments and interpretations to existing standards have been published and were mandatory for the Group as of January 1, 2017:

Disclosure inititative - amendment to IAS 7, which requires the disclosure of changes in liabilities arising from financing activities, see Note 26.

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

Below is a description of the standards, amendments and interpretations issued by the IASB to existing standards that have been issued and are not yet mandatory and which have not been early adopted by the Group:

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

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

F- 68

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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

annual periods beginning on or after January 1, 2018 and earlier application is permitted. The Group has assessed the potential impact IFRS 15 will have on the financial position and results of operations of the Group, and it will not be significant. The standard will be applied prospectively.

In July 2014 the IASB published the final version of IFRS 9 Financial Instrument which replaces earlier versions of IFRS 9 and completes the IASB’s project to replace IAS 39 Financial Instruments: Recognition and Measurement. It includes requirements on the classification and measurement of financial assets and liabilities, as well as an expected credit losses model that replaces the current incurred loss impairment model. The standard is effective for accounting periods beginning on or after January 1, 2018. Early adoption is permitted. The Group has assessed the potential impact IFRS 9 will have on the financial position and results of operations of the Group, and it will not be significant.

In January 2016, the IASB finished its long-standing project on lease accounting and published IFRS 16, ‘Leases’, which replaces the current guidance in IAS 17. This will require far-reaching changes in accounting by lessees in particular. The standard applies to annual periods beginning on or after 1 January 2019, with earlier application permitted if IFRS 15, ‘Revenue from Contracts with Customers’, is also applied. The Group has not yet assessed the potential impact IFRS 16 may have on the financial position and results of operations of the Group.

There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Group.


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.

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

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

Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions – that is, as transactions with the owners in their capacity as owners. The difference between the fair value of any consideration paid

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

F- 69

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


33.2	Scope of consolidation (continued)

and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

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

(d) Joint arrangements

Under IFRS 11, investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and obligations each investor has rather than the legal structure of the joint arrangement.

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

Under the equity method of accounting, interests in joint ventures are initially recognized in the consolidated statement of financial position at cost and adjusted thereafter to recognize the Group’s share of the post-acquisition of profits or losses and movements in other comprehensive income, respectively. When the share of losses of an investee equals or exceeds the carrying amount of an investment the Group discontinue applying the equity method, the investment is reduced to zero and does not record additional losses. If the investee subsequently reports net income, the Group would resume applying the equity method only after its share of that net income equals the share of net losses not recognized during the period the equity method was suspended.

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


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.

(b) Transactions and balances

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

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

F- 70

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


33.4	Foreign currency translation (continued)

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


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


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


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

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

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


33.5	Property, plant and equipment

Property, plant and equipment is recorded at cost, less accumulated depreciation and impairment losses, if any. Historical cost comprises the purchase price and any costs directly attributable to the acquisition. Under the definition of Property plant and equipment is included the bearer plants, such as sugarcane and coffe 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.

The depreciation methods and periods used by the group are disclosed in Note 12.

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


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 cost less accumulated depreciation and any impairment losses if any.


33.7	Leases

The Group classifies its leases at the inception as finance or operating leases. Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases and charged to the statements of income in a straight-line basis over the period of the lease. Finance leases are capitalized at the lease’s inception at the lower of the fair value of the leased property and the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included as “Borrowings”

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

F- 71

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


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 arising on the acquisition of subsidiaries is 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. 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 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

For the purpose of impairment testing, assets are grouped at the lowest levels for which there are separately identifiable cash flows, known as cash-generating units. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset may in the unit. Impairment losses recognized for goodwill cannot be reversed in a subsequent period. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted (see Note 32 (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 and other intangible assets which have finite lives to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent, if any, of the impairment loss. Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, 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.


33.11	Biological assets

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

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

F- 72

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


33.11	Biological assets (continued)

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:

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.

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


•	Growing herd and cattle:

Livestock are measured at fair value less estimated point-of-sale costs, with any changes therein recognized in the statement of income, on initial recognition as well as subsequently at each reporting period. 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.


•	Coffee:

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

F- 73

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


33.11	Biological assets (continued)

The agricultural produce growing on the coffee trees, are biological assets, and are valued at fair value less cost to sell. Projected costs include maintenance, pruning, land leasing, harvesting and coffee treatment. These estimates are discounted at an appropriate discount rate.


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

F- 74

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


33.13	Financial assets (continued)

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.


33.14	Derivative financial instruments and hedging activities

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

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

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

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

Cash flow hedge

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

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

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

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

F- 75

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


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.

An allowance for trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Such evidence includes significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganization, and default or delinquency in payments. Subsequent recoveries of amounts previously written off are credited against selling expenses in the statement of income.


33.16	Cash and cash equivalents

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


33.17	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.


33.18	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.


33.19	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.


33.20	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. 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.

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

F- 76

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


33.20	Current and deferred income tax (continued)

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.

33.21 Revenue Recognition

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

The Group’s agricultural activities comprise growing and selling agricultural produce. In accordance with IAS 41 “Agriculture”, cattle are measured at fair value with changes therein recognized in the statement of income as they arise. Agricultural produce is measured at net realizable value with changes therein recognized in the statement of income as they arise. Therefore, sales of agricultural produce and cattle generally do not generate any separate gains or losses in the statement of income. See Notes 33.11 and 33.12 for additional details.

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 significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, and there is no continuing management involvement with the goods. Transfers of risks and rewards vary depending on the individual terms of the contract of sale.

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 10 -year power agreement for the sale of electricity which expires in 2018. The delivery period starts in May and ends in November of each year. The Group is also a party to two 15 -year power agreements which delivery period starts in March and ends in December of each year, these two agreements will expire in 2024 and 2025, respectively. Prices under all the agreements are adjusted annually for inflation. Revenue related to the sale of electricity under these two agreements is recorded based upon output delivered.


33.22	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”.

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

F- 77

Adecoagro S.A.

Notes to the Consolidated Financial Statements (Continued)

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


33.23	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.


33.24	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.


33.25	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.


33.26	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. Recent developments

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

F- 78

Adecoagro S.A.

société anonyme

Siege social: L-2453 Luxembourg, 6, rue Eugène Ruppert

R.C.S. Luxembourg B153.681

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STATUTS COORDONNES a la date du 19 avril 2017

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FORM, DENOMINATION, DURATION, REGISTERED OFFICE

Article 1. Form, Name

There exists a company in the form of a société anonyme , under the name of Adecoagro S.A. (the "Company").

Article 2. Duration

The Company is established for an undetermined duration. The Company may be dissolved at any time by a resolution of the Shareholders adopted in the manner required for amendment of these Articles of Incorporation.

Article 3. Registered office

3.1 The Company has its registered office in the City of Luxembourg, Grand-Duchy of Luxembourg. It may be transferred to any other place in the Grand Duchy of Luxembourg by means of a resolution of a General Meeting or by a resolution of the Board of Directors in which case the Board of Directors shal1 have the power to amend the Articles accordingly

3.2 The address of the registered office may be transferred within the municipality by decision of the Board of Directors.

3.3 The Company may have offices and branches, both in Luxembourg and abroad.

3.4 In the event that the Board of Directors determines that extraordinary political, economic or social developments have occurred or are imminent that would interfere with the normal activities of the Company at its registered office, or with the ease of communication between such office and persons abroad, the registered office may be temporarily transferred abroad until the complete cessation of these abnormal circumstances; such temporary measures shall have no effect on the nationality of the Company which, notwithstanding the temporary transfer of its registered office, will remain a Luxembourg company. Such temporary measures will be taken and notified to any interested parties by the Board of Directors.

PART I. PURPOSE, OBJECT

Article 4. Purpose, Object

4.1 The object of the Company is the holding of participations, in any form whatsoever, in Luxembourg and foreign companies, or other entities or enterprises, the acquisition by purchase, subscription, or in any other manner as well as the transfer by sale, exchange or otherwise of stock, bonds, debentures, notes and other securities or rights of any kind including interests in partnerships, and the holding, acquisition, disposal, investment in any manner in, development, licensing or sub licensing, of any patents or other intellectual property rights of any nature or origin as well as the ownership, administration, development and management of its portfolio. The Company may carry out its business through branches in Luxembourg or abroad.

4.2 The Company may borrow in any form and proceed to the issue by private or public of bonds, convertible bonds and debentures or any other securities or instruments it deems fit.

4.3 In a general fashion it may grant assistance (by way of loans, advances, guarantees or securities or otherwise) to companies or other enterprises in which the Company has an interest or which form part of the group of companies to which the Company belongs or any entity as the Company may deem fit (including up stream or cross stream), take any controlling, management, administrative and/or supervisory measures and carry out any operation which it may deem useful in the accomplishment and development of its purposes.

4.4 Finally, the Company can perform all commercial, technical and financial or other operations, connected directly or indirectly in all areas in order to facilitate the accomplishment of its purpose.

PART II. SHARE CAPITAL - SHARES

Article 5. Share capital

5.1. The Company has an issued share capital of one hundred and eighty-three million five hundred and seventy-two thousand seven hundred and twenty-two US Dollars and fifty cents (USD 183,572,722.50) represented by a total of one hundred and twenty-two million three hundred and eighty-one thousand eight hundred and fifteen (122,381,815) fully paid Shares, each with a nominal value of one US Dollar and fifty cents (USD1.5), with such rights and obligations as set forth in the present Articles.

5.1.1 The Company has an authorized share capital of three billion US Dollars (USD3,000,000,000), including the issued share capital, represented by two billion (2,000,000,000) shares, each with a nominal value of one US Dollar and fifty cents (USD1.5). The Company's authorized share capital (and any authorization granted to the Board of Directors in relation thereto) shal1 be valid from 20th April 2016 and until the 20th April 2021. The Board of Directors, or any delegate(s) duly appointed by the Board of Directors, may from time to time issue shares within the limits of the authorized share capital against contributions in cash, contributions in kind or by way of incorporation of available reserves at such times and on such terms and conditions, including the issue price, as the Board of Directors or its delegate(s) may in its or their discretion resolve and the General Shareholder's Meeting waived and has authorized the Board of Directors to waive, suppress or limit, any pre-emptive subscription rights of shareholders provided for by law to the extent it deems such waiver, suppression or limitation advisable for any issue or issues of shares within the authorized share capital.

5.1.2 The issued and the authorised un-issued share capital of the Company may be increased or reduced one or several times by a resolution of the General Meeting of Shareholders adopted in compliance with the quorum and majority rules set by these Articles of Incorporation or, as the case may be, by law for any amendment of these Articles of Incorporation.

5.2 The Company may not issue fractional Shares. The Board of Directors shall be authorised at its discretion to provide for the payment of cash or the issuance of scrip in lieu of any fraction of a Share.

5.3 The Company or its subsidiaries may proceed to the purchase or repurchase of its own Shares and may hold Shares in treasury, each time within the limits laid down by law.

5.4 Any Share premium shall be freely distributable in accordance with the provision of these Articles.

Article 6. Securities in registered form only

6.1 Shares

6.1.1 Shares of the Company are in registered form only.

6.1.2 A register of Shares will be kept by the Company and will be available for inspection by any registered shareholder. Ownership of registered Shares will be established by inscription in the said register or in the event separate registrars have been appointed pursuant to Article 6.1.3, such separate register. Without prejudice to the conditions for transfer by book entry in the case provided for in Article 6.1.7 of the present Articles, a transfer of registered Shares shall be carried out by means of a declaration of transfer entered in the relevant register, dated and signed by the transferor and the transferee or by their duly authorised representatives. The Company may accept and enter in the relevant register a transfer on the basis of correspondence or other documents recording the agreement between the transferor and the transferee.

6.1.3 The Company may appoint registrars in different jurisdictions who will each maintain a separate register for the registered shares entered therein and the holders of shares may elect to be entered in one of the registers and to be transferred from time to time from one register to another register. The Board of Directors may however impose transfer restrictions for Shares that are registered, listed, quoted, dealt in, or have been placed in certain jurisdictions in compliance with the requirements applicable therein. The transfer to the register kept at the Company's registered office may always be requested.

6.1.4 Subject to the provisions of Article 6.1.7, the Company may consider the person in whose name the registered Shares are registered in the register(s) of Shareholders as the full owner of such registered Shares. The Company shall be completely free from any responsibility in dealing with such registered Shares towards third parties and shall be justified in considering any right, interest or claims of such third parties in or upon such registered shares to be non-existent, subject, however, to any right which such third party might have to demand the registration or change in registration of registered Shares. In the event that a holder of registered shares does not provide an address to which all notices or announcements from the Company may be sent, the Company may permit a notice to this effect to be entered into the register(s) of Shareholders and such holder's address will be deemed to be at the registered office of the Company or such other address as may be so entered by the Company from time to time, until a different address shall be provided to the Company by such holder. The holder may, at any time, change his address as entered in the register(s) of Shareholders by means of written notification to the Company or the relevant registrar.

6.1.5 The Board may decide that no entry shall be made in the register of Shareholders and no notice of a transfer shall be recognised by the Company or a registrar during the period starting on the fifth (5) business day before the date of a General Meeting and ending at the close of that General Meeting, unless the Board sets a shorter time limit.

6.1.6 All communications and notices to be given to a registered Shareholder shall be deemed validly made to the latest address communicated by the Shareholder to the Company.

6.1.7 Where Shares are recorded in the register of Shareholders on behalf of one or more persons in the name of a securities settlement system or the operator of such a system or in the name of a professional securities depositary or any other depositary (such systems, professionals or other depositaries being referred to hereinafter as "Depositaries") or of a sub depositary designated by one or more Depositaries, the Company- subject to having received from the Depositary with whom those Shares are kept in account a certificate in proper form - will permit those persons to exercise the rights attaching to those Shares, including admission to and voting at General Meetings. The Board of Directors may determine the formal requirements with which such certificates must comply. Notwithstanding the foregoing, the Company will make dividend payments and any other payments in cash, Shares or other securities only to the Depositary or sub-depositary recorded in the register or in accordance with its instructions, and such payment will effect full discharge of the Company's obligations.

6.1.8 Upon the written request of a Shareholder, registered nominative Share certificate(s) recording the entry of such Shareholder in the register of Shareholders may be issued in such denominations as the Board of Directors shall prescribe to the requesting Shareholder and, in the case provided for in Article 6.1.7 of the present Articles and upon request, to the Depositaries or sub-depositaries recorded in the register(s). The certificates so issued shall be in such form and shall bear such legends and such numbers of identification as shall be determined by the Board of Directors. Such certificates shall be signed manually or by facsimile by two (2) Board Members. Lost, stolen or mutilated certificates will be replaced by the Company upon such evidence, undertakings and indemnities as may be deemed satisfactory to the Company, provided that mutilated share certificates shall be delivered before new certificates are remitted.

6.1.9 The Shares are indivisible vis-à-vis the Company which will recognise only one holder per Share. In case a Share is held by more than one person, the persons claiming ownership of the Share will be required to name a single proxy to represent the Share vis-à-vis the Company. The Company has the right to suspend the exercise of all rights attached to such Share until one person has been so appointed. The same rule shall apply in the case of a conflict between an usufructuary and a bare owner or between a pledgor and a pledgee.

6.2 Other Securities

6.2.1 Securities (other than Shares which are covered by article 6.1) of the Company are in registered form only unless otherwise provided for in the terms and conditions of the Securities.

6.2.2 The provisions of article 6.1 shall apply mutatis mutandis.

Article 7. Shares - Voting Rights

Subject as set forth in the present Articles, each Share shall be entitled to one vote at all General Meetings of Shareholders.

PART III. MANAGEMENT OF THE COMPANY

Article 8. Management of the Company- Board of Directors

8.1 The Company shall be managed by a Board of Directors which is vested with the broadest powers to manage the business of the Company and to authorise and/or perform all acts of disposal, management and administration falling within the purposes of the Company.

8.2 All powers not expressly reserved by the law or by the Articles of the Company to the General Meeting shall be within the competence of the Board of Directors.

8.3 Except as otherwise provided herein or by law, the Board of Directors of the Company is authorised to take such action (by resolution or otherwise) and to adopt such provisions as shall be necessary, appropriate, convenient or deemed fit to implement the purpose of the Company.

Article 9. Composition of the Board of Directors

9.1 The Company shall be managed by a Board of Directors composed of a minimum of three (3) Directors and a maximum of eleven (11) (unless otherwise provided for herein) who may but do not need to be Shareholders of the Company.

9.2 The Directors are appointed by the General Meeting of Shareholders for a period of up to three (3) years; provided however the Directors shall be elected on a staggered basis, with one third (1/3) of the Directors being elected each year and provided further that such three year term may be exceeded by a period up to the annual general meeting held following the third anniversary of the appointment. The Directors may be removed with or without cause (ad nutum) by the General Meeting of Shareholders by a simple majority vote of votes cast at a General Meeting of Shareholders. The Directors shall be eligible for re-election indefinitively.

9.3 In the event of a vacancy in the office of a Director because of death, retirement, resignation, dismissal, removal or otherwise, the remaining Directors may fill such vacancy and appoint a successor in accordance with applicable law.

Article 10. Chairman

10.1 The Board of Directors shall, to the extent required by law and otherwise may, appoint the chairman of the Board of Directors amongst its members (the "Chairman"). The Chairman shall preside over all meetings of the Board of Directors and of Shareholders including class meetings. In the absence of the Chairman of the Board, a chairman determined ad hoc, shall chair the relevant meeting.

10.2 In case of a tie the Chairman (or any other Board member) shall not have a casting vote.

Article 11. Board Proceedings

11.1 The Board of Directors shall meet upon call by (or on behalf of) the Chairman or any two Directors. The Board of Directors shall meet as often as required by the interest of the Company.

11.2 Notice of any meeting of the Board of Directors must be given by letter, cable, telegram, telephone, facsimile transmission, telex or e-mail advice to each Director, two (2) days before the meeting, except in the case of an emergency, in which event a twenty four (24) hours notice shall be sufficient. No convening notice shall be required for meetings held pursuant to a schedule previously approved by the Board and communicated to all Board members. A meeting of the Board may also be validly held without convening notice to the extent the Directors present or represented do not object and those Directors not present or represented have waived the convening notice in writing, by fax or email.

11.3 Meetings of the Board of Directors may be held physically or, in all circumstances, by way of conference call (or similar means of communication which permit the participants to communicate with each other).

11.4 Any Director may act at any meeting of the Board of Directors by appointing in writing by letter or by cable, telegram, facsimile transmission or e-mail another Director as his proxy. A Director may represent more than one of the other Directors.

11.5 The Board of Directors may deliberate and act validly only if the majority of the Board members (able to vote) are present or represented. Decisions shall be taken by a simple majority of the votes validly cast by the Board members present or represented (and able to vote).

11.6 Meetings of the Board of Directors may be validly held at any time and in all circumstances by means of telephonic conference call, videoconference or any other means, which permit the participants to communicate with each other. A Director attending in such manner shall be deemed present at the meeting for as long as he is connected.

11.7 The Board of Directors may also in all circumstances with unanimous consent pass resolutions by circular means and written resolutions signed by all members of the Board will be as valid and effective as if passed at a meeting duly convened and held. Such signatures may appear on a single document or multiple copies of an identical resolution and may be evidenced by letters, cables, facsimile transmission, or e-mail.

11.8 The minutes of any meeting of the Board of Directors (or copies or extracts of such minutes which may be produced in judicial proceedings or otherwise) shall be signed by the Chairman, the chairman (ad hoc) of the relevant meeting or by any two (2) Directors or as resolved at the relevant Board meeting or any subsequent Board meeting.

Article 12. Delegation of power, committees, secretary

12.1 The Board may delegate the daily management of the business of the Company, as well as the power to represent the Company in its day to day business, to individual Directors or other officers or agents of the Company (with power to sub-delegate). In addition the Board of Directors may delegate the daily management of the business of the Company, as well as the power to represent the Company in its day to day business to an executive or other committee as it deems fit. The Board of Directors shall determine the conditions of appointment and dismissal as well as the remuneration and powers of any person or persons so appointed.

12.2 The Board of Directors may (but shal1 not be obliged to unless required by law) establish one or more committees (including without limitation an audit committee, a risk and commercial committee, a strategy committee, and a compensation committee) and for which it shal1, if one or more of such committees are set up, appoint the members (who may be but do not need to be Board members), determine the purpose, powers and authorities as we/1 as the procedures and such other rules as may be applicable thereto (subject as to the audit committee as set forth below)

12.2.1 Audit Committee: in the case the Board of Directors decides to set up an audit committee (the "Audit Committee"), such Audit Committee shall be composed of at least three (3) members and the Board of Directors shall appoint one of the members of the Audit Committee as the chairperson of the Audit Committee. The Audit Committee shall (a) assist the Board of Directors in fulfilling its oversight responsibilities relating to the integrity of the Company's financial statements, including periodically reporting to the Board of Directors on its activity and the adequacy of the Company's systems of internal controls over financial reporting; (b) make recommendations for the appointment, compensation, retention and oversight of, and consider the independence of, the Company's external auditors; (e) review Material Transactions between the Company or its subsidiaries with Related Parties (other than transactions that were reviewed and approved by the independent members of the Board of Directors (if any) or other governing body of any subsidiary of the Company or through any other procedures as the Board of Directors may deem substantially equivalent to the foregoing) to determine whether their terms are consistent with market conditions or are otherwise fair to the Company and its subsidiaries; and (d) perform such other duties imposed to it by the laws and regulations of the Regulated Market(s) on which the shares of the Company are listed applicable to the Company, as well as any other duties entrusted to it by the Board of Directors. The Board of Directors shall allocate to the Audit Committee the necessary resources and authority to fulfil its functions.

12.2.2 Compensation Committee: in the case the Board of Directors decides to set up an compensation committee (the "Compensation Committee"), such Compensation Committee shall review and approve the compensation and benefits of the executive officers and other key employees of the Company and its group, and make recommendations to the Board of Directors regarding principles for compensation, performance evaluation, and retention strategies. The Compensation Committee (if any) shall be responsible for designing and administering the Company's equity-based incentive plans of the Company and its group.

12.2.3 Risk and Commercial Committee: in the case the Board of Directors decides to set up a risk and commercial committee (the "Risk and Commercial Committee'), such Risk and Commercial Committee shal1 assist the Board of Directors in fulfilling its oversight responsibilities with regard to (i) evaluating the risks inherent in the business of the Company and its group and the control processes with respect to such risks; (ii) the assessment and review of credit, market, commercial, fiduciary, liquidity, reputational and operational risks; and (iii) to review the implementation of commercial decisions undertaken by the Company with respect of the foregoing.

12.2.4 Strategy Committee: in the case the Board of Directors decides to set up a strategy committee (the "Strategy Committee'), such Strategy Committee shal1 assist the Board of Directors in fulfilling its oversight responsibilities with regard to (i) maintaining a cooperative, interactive strategic planning process with executive officers, including for (a) the identification, review and setting of strategic goals, and (b) the review of potential acquisitions, joint ventures and strategic alliances and dispositions; (ii) the making of recommendations as to the means of pursuing strategic goals; and (iii) the review and implementation of strategic decisions and the Company's overal1 development plan.

12.3 The Board of Directors may appoint a secretary of the Company who may but does not need to be a member of the Board of Directors and determine his responsibilities, powers and authorities.

Article 13. Binding Signature

The Company will be bound by the sole signature of the Chairman or the joint signature of any two (2) Director or by the sole or joint signatures of any persons to whom such signatory power shall have been delegated by the Board of Directors. For the avoidance of doubt, for acts regarding the daily management of the Company the Company will be bound by the sole signature of the administrateur délégué ("Chief Executive Officer" or "CEO") or any person or persons to whom such signatory power shall be delegated by the Board of Directors.

Article 14. Board Compensation. Indemnification

14.1 The compensation of the Board of Directors will be decided by the General Meeting.

14.2 The Directors are not held personally liable for the indebtedness or other obligations of the Company. As agents of the Company, they are responsible for the performance of their duties. Subject to the exceptions and limitations listed in article 14.3, every person who is, or has been, a Director or officer of the Company shall be indemnified by the Company to the fullest extent permitted by law against liability and against all expenses reasonably incurred or paid by him in connection with any claim, action, suit or proceeding which he becomes involved as a party or otherwise by virtue of his being or having been such Director or officer and against amounts paid or incurred by him in the settlement thereof. The words "claim", "action", "suit" or "proceeding" shall apply to all claims, actions, suits or proceedings (civil, criminal or otherwise including appeals) actual or threatened and the words "liability" and "expenses" shall include without limitation attorneys' fees, costs, judgments, amounts paid in settlement and other liabilities.

14.3 No indemnification shall be provided to any Director or officer:

14.3.1 Against any liability to the Company or its shareholders by reason of wilful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office;

14.3.2 With respect to any matter as to which he shall have been finally adjudicated to have acted in bad faith and not in the interest of the Company; or

14.3.3 In the event of a settlement, unless the settlement has been approved by a court of competent jurisdiction or by the Board of Directors.

14.4 The right of indemnification herein provided shall be severable, shall not affect any other rights to which any Director or officer may now or hereafter be entitled, shall continue as to a person who has ceased to be such Director or officer and shall inure to the benefit of the heirs, executors and administrators of such a person. Nothing contained herein shall affect any rights to indemnification to which corporate personnel, including directors and officers, may be entitled by contract or otherwise under law.

14.5 Expenses in connection with the preparation and representation of a defence of any claim, action, suit or proceeding of the character described in this Article shall be advanced by the Company prior to final disposition thereof upon receipt of any undertaking by or on behalf of the officer or director, to repay such amount if it is ultimately determined that he is not entitled to indemnification under this article.

Article 15. Conflicts of Interest

15.1 No contract or other transaction between the Company and any other company or firm shal1 be affected or invalidated by the fact that any one or more of the Directors, member of any committee or officers of the Company is interested in, or is a director, associate, officer, agent, adviser or employee of such other company or firm. Any Director, member of any committee or officer who serves as a director, officer or employee or otherwise of any company or firm with which the Company shal1 contract or otherwise engage in business shal1 not, by reason of such affiliation with such other company or firm only, be prevented from considering and voting or acting upon any matters with respect to such contract or other business.

15.2 In the event a Director or a member of any committee has a direct or indirect financial interest conflicting with that of the Company in a transaction which has to be considered by the Board of Directors or the committee, such Director or member of any committee sha1l indicate such conflict of interest to the Board or, as the case may be, the committee and sha1l not deliberate or vote on the relevant matter. Any conflict of interest arising at Board or at Committee level shal1 be reported to respectively the next General Meeting of Shareholders or the Board of Directors' meeting before any resolution as and to the extent required by law.

PART IV. GENERAL MEETINGS OF SHAREHOLDERS

Article 16. General Meetings of Shareholders

16.1 Any regularly constituted General Meeting of Shareholders of the Company shal1 represent the entire body of Shareholders of the Company. It shall have the broadest powers to order, carry out or ratify acts relating to the operations of the Company.

16.2 Bond holders are not entitled to attend the General Meeting.

16.3 The annual general meeting of Shareholders as wel1 as any other meetings of Shareholders shal1 be held in the Grand Duchy of Luxembourg at such place and time as indicated in the notice of the meeting.

16.4 General Meetings shall be convened in accordance with the provisions of law and in the case the Shares of the Company are listed on a Regulated Market, in accordance with the publicity requirements of such Regulated Market applicable to the Company. If all of the Shareholders are present or represented at a general meeting of Shareholders, the General Meeting may be held without prior notice or publication.

16.5 In case the shares of the Company are not listed in any Regulated Market, all Shareholders recorded in the share register on the date of the General Meeting are entitled to be admitted in the General Meeting; provided, however, that in case the Shares of the Company are listed on a Regulated Market, the Board of Directors may determine a date preceding the General Meeting as the record date for admission to the General Meeting (the "Record Date").

16.6 Where, in accordance with the provisions of Article 6.1.7 of the present Articles, Shares are recorded in the register(s) of Shareholders in the name of a Depositary or sub-depositary of the former, the certificates provided for in Article 6.1.7 must be received by the Company (or its agents as set forth in the convening notice) no later than the day preceding the fifth (5th) working day before the date of the General Meeting unless the Board fixes a different period. Such certificates must (unless otherwise required by applicable law) certify the fact that the Shares in the account shall be blocked until the close of the General Meeting. All proxies must be received by the Company (or its agents) by the same deadline provided that the Board of Directors may, if it deems so advisable amend these periods of time for all Shareholders and admit Shareholders (or their proxies) who have provided the appropriate documents to the Company (or its agents as aforesaid) to the General Meeting, irrespective of these time limits.

16.7 The Board of Directors shall adopt all other regulations and rules concerning the attendance to the General Meeting, and availability of access cards, proxy forms and/or voting forms in order to enable Shareholders to exercise their right to vote.

16.8 Any Shareholder may be represented at a General Meeting by appointing as his or her proxy another person, who need not be a Shareholder.

Article 17. Majority and quorum at the General Meeting

17.1 At any General Meeting of Shareholders other than a General Meeting convened for the purpose of amending the Company's Articles of incorporation or voting on resolutions whose adoption is subject to the quorum and majority requirements for amendments of the Articles of Incorporation, no presence quorum is required and resolutions shall be adopted, irrespective of the number of Shares represented, by a simple majority of votes validly cast.

17.2 At any extraordinary General Meeting of Shareholders for the purpose of amending the Company's Articles of Incorporation or voting on resolutions whose adoption is subject to the quorum and majority requirements for amendments of the Articles of Incorporation, the quorum shall be at least one half of the issued share capital of the Company. If the said quorum is not present, a second Meeting may be convened at which there shall be no quorum requirement. In order for the proposed resolutions to be adopted at such a General Meeting, and save as otherwise provided by law, a two thirds (2/3) majority of the votes validly cast at any such General Meeting.

PART V. AMENDMENT OF ARTICLES

Article 18. Amendments of Articles

The Articles of Incorporation may be amended from time to time by a resolution of the General Meeting of Shareholders to the quorum and voting requirements provided by the laws of Luxembourg and as may otherwise be provided herein.

PART VI. ACCOUNTING YEAR, AUDITOR

Article 19. Accounting Year

The accounting year of the Company shall begin on first of January and shall terminate on thirty-first of December of each year.

Article 20. Auditor

The Company's annual accounts shall be audited by one or more independent auditors, appointed by the General Meeting at the Board of Directors' recommendation (or if so resolved by the Board of Directors, the recommendation of the Audit Committee, if any). The General Shareholders' Meeting shall determine the number of independent auditors and the term of their office, which shall not exceed one (1) year. They may be reappointed and dismissed at any time by the General Shareholders' Meeting at the Board of Directors' recommendation (or if so resolved by the Board of Directors, the recommendation of the Audit Committee, if any).

PART VII. DISTRIBUTIONS, WINDING UP

Article 21. Distributions

21.1 From the annual net profits of the Company, five per cent (5%) shall be allocated to an un-distributable reserve required by law. This allocation shall cease to be required as soon and as long as such reserve amounts to ten per cent (10%) of the issued share capital of the Company.

21.2 The General Meeting of Shareholders, upon recommendation of the Board of Directors, will determine how the remainder of the annual net profits will be disposed of, including by way of stock dividend.

21.3 Interim distributions may be declared and paid (including by way of staggered payments) by the Board of Directors subject to observing the terms and conditions provided by law either by way of a cash distribution or by way of an in kind distribution.

21.4 In the event it is decided by the General Meeting, or in the case interim distributions declared by the Board, that a distribution be paid in Shares or other securities of the Company, the Board of Directors may exclude from such offer such Shareholders he deems necessary or advisable due to legal or practical problems in any territory or for any other reasons as the Board may determine.

Article 22. Liquidation

22.1 In the event of the dissolution of the Company for whatever reason or whatever time, the liquidation will be performed by liquidators or by the Board of Directors then in office who will be endowed with the powers provided by articles 144 et seq. of the Luxembourg law of 1oth August 1915 on commercial companies. Once all debts, charges and liquidation expenses have been met, any balance resulting shall be paid to the holders of Shares in the Company in accordance with the provisions of these Articles.

PART VIII. SOLE SHAREHOLDER, DEFINITIONS, APPLICABLE LAW

Article 23. Sole Shareholder

lf, and as long as one Shareholder holds al/ the Shares of the Company, the Company shal1 exist as a single Shareholder company pursuant to the provisions of Company Law. In the event the Company has on/y one Shareholder, the Company may at the option of the so/e Shareholder, be managed by one Director as provided for by law and all provisions in the present Articles referring to the Board of Directors shal1 be deemed to refer to the so/e Director (mutatis mutandis) who shal1 have all such powers as provided for by /aw and as set forth in the present Articles with respect to the Board of Directors

Article 24. Definitions



Affiliate	Means, in relation to a person or entity, a person that directly or indirectly through one or more intermediaries, Controls, is Controlled by, or is under common Control with, such person or entity. The term "Affiliated with" has a meaning correlative to the foregoing.
Articles or Articles of Incorporation	Means the present articles of incorporation of the Company as amended from time to time.
Board or Board of Directors	Means the Board of Directors ( conseil d'administration ) of the Company.
Control	Means, in relation to a person or entity, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such person or entity, whether through ownership of voting securities, by contract or otherwise.
Director	Means a member of the Board of Directors or as the case may be, the sole Director of the Company.
General Meeting	Means the general meeting of Shareholders.
independent members of the Board of Directors	Means a Director who: (i) is not employed, and has not been employed within the five years immediately prior to the ordinary General Meeting at which the candidates to the Board of Directors will be voted upon, by the Company or any of its subsidiaries in an executive capacity; (ii) does not receive consulting, advisory or other compensatory fees from the Company or any of its subsidiaries (other than fees received as member of the Board of Directors or any committee thereof and fees received as member of the board of directors or other governing body, or any committee thereof, of any of the Company's subsidiaries); (iii) does not Control the Company; (iv) has not (and does not Control a business entity that has) a material business relationship with the Company, any of its subsidiaries, or the person that directly or indirectly Controls the Company, if such material business relationship would be reasonably expected to adversely affect the director's ability to properly discharge its duties; (v) does not Control, and is not, and has not been within the five-year period immediately prior to the ordinary shareholders' meeting at which the candidates to the Board of Directors will be voted upon, employed by, a (present or former) internal or external auditor of the Company, any of its subsidiaries or the person that directly or indirectly Controls the Company; and (vi) is not a spouse, parent, sibling or relative up to the third degree of, and does not share a home with, any person above described from (i) to (iv).
Material Transactions	Means (i) any transaction (x) with an individual value equal to or greater than ten million United States Dollars (USD 10,000,000); (y) with an individual value lower than ten million United States Dollars (USD 10,000,000), when the aggregate sum of any series of transactions of such lower value reflected in the financial statements of the four fiscal quarters of the Company preceding the date of determination (excluding any transactions that were reviewed and approved by any of the Audit Committee (if any), the Board of Directors or the independent members of the Board of Directors or other governing body of any subsidiary of the Company, or through any other procedures as the Board of Directors may deem substantially equivalent to the foregoing), exceeds 1.5% of the Company's consolidated net sales made in the fiscal year preceding the year on which the determination is made; or (ii) any corporate reorganization transaction (including a merger, a spin-off or a bulk transfer of a business) involving the Company or any of its subsidiaries for the benefit of, or involving, a Related Party.
Regulated Market	Means any official stock exchange or securities exchange market in the European Union, the United States of America or elsewhere.
Related Party	Means, in relation to the Company or its direct or indirect subsidiaries, any of the following persons: (i) a member of the Board of Directors or of the board of directors or other governing body of any of the Company's subsidiaries; (ii) any member of the board of directors or other governing body of an entity that Controls the Company; (iii) any Affiliate of the Company (other than the Company's subsidiaries); (iv) any entity Controlled by any member of the Board of Directors, or of the board of directors or other governing body of any subsidiary of the Company; and (v) any spouses, parents, siblings or relatives up to the third degree of, and any persons that share a home with, any person referred to in (i) or (ii).
Shareholder	Means a duly registered holder of Shares of the Company.
Shares	Means the shares (actions) of the Company.

Article 25. Applicable law

For anything not dealt with in the present Articles of Incorporation, the Shareholders refer to the relevant legislation.

Execution Version

ADECOAGRO S.A.

as Issuer

ADECO AGROPECUARIA S.A.

PILAGÁ S.A.

ADECOAGRO BRASIL PARTICIPAÇÕES S.A.

ADECOAGRO VALE DO IVINHEMA S.A.

USINA MONTE ALEGRE LTDA.

as Subsidiary Guarantors

and

THE BANK OF NEW YORK MELLON
as Trustee , Registrar , Transfer Agent
and Paying Agent

INDENTURE
Dated as of September 21 , 2017

U.S.$500,000,000
6.000% SENIOR NOTES DUE 2027

TABLE OF CONTENTS



	Page
Article 1 Definitions and Incorporation by Reference	1
Section 1.01 Definitions	1
Section 1.02 [Reserved]	26
Section 1.03 Rules of Construction	26
Article 2 The Notes	27
Section 2.01 Form and Dating	28
Section 2.02 Execution and Authentication	28
Section 2.03 Registrar and Paying Agent	28
Section 2.04 Paying Agent to Hold Money in Trust	29
Section 2.05 Holders Lists	30
Section 2.06 Transfer and Exchange	30
Section 2.07 Replacement Notes	30
Section 2.08 Outstanding Note	31
Section 2.09 Temporary Notes	31
Section 2.10 Cancellation	31
Section 2.11 CUSIP Numbers and ISINs	32
Section 2.12 Issuance of Additional Notes	32
Article 3 Redemption	33
Section 3.01 Notices to Trustee	33
Section 3.02 Notice of Redemption	33
Section 3.03 Effect of Notice of Redemption	34
Section 3.04 Deposit of Redemption Price	34
Section 3.05 Optional Redemption	34
Section 3.06 Optional Tax Redemption	35
Section 3.07 Open Market Purchases	36
Article 4 Covenants	36
Section 4.01 Performance of Obligations under the Notes	37
Section 4.02 Reports	37
Section 4.03 Limitation on Indebtedness	38



Section 4.04 Limitation on Restricted Payments	41
Section 4.05 Limitation on Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries	45
Section 4.06 Limitation on Sales of Assets	48
Section 4.07 Limitation on Transactions with Affiliates	49
Section 4.08 Repurchases at the Option of the Holders Upon Change of Control Repurchase Event	51
Section 4.09 Limitation on Liens	52
Section 4.10 Limitation on Sale and Leaseback Transactions	52
Section 4.11 Maintenance of Corporate Existence	53
Section 4.12 Maintenance of Properties	53
Section 4.13 Compliance with Applicable Laws	53
Section 4.14 Permitted Lines of Business	53
Section 4.15 Payment of Taxes and Other Claims	53
Section 4.16 Appointment of the Trustee	53
Section 4.17 Maintenance of Books and Records	53
Section 4.18 Maintenance of Office or Agency in the State of New York	54
Section 4.19 Statement as to Compliance; Notices of Certain Events	54
Section 4.20 Singapore Listing	54
Section 4.21 Additional Amounts	55
Section 4.22 Guarantees by Significant Subsidiaries	57
Section 4.23 Payments and Paying Agents	58
Section 4.24 Ranking	59
Section 4.26 Further Actions	59
Article 5 Consolidation, Merger, Conveyance, Sale or Lease	59
Section 5.01 Consolidation, Merger, Conveyance, Sale or Lease	59
Article 6 Defaults and Remedies	61
Section 6.01 Events of Default	61
Section 6.02 Other Remedies	64
Section 6.03 Collection Suit by Trustee	64
Section 6.04 Trustee May File Proofs of Claim	64
Section 6.05 Priorities	65
Section 6.06 Undertaking for Costs	65
Section 6.07 Waiver of Stay or Extension Laws	65



Article 7 Trustee	65
Section 7.01 Duties of Trustee	66
Section 7.02 Rights of Trustee	67
Section 7.03 Individual Rights of Trustee	69
Section 7.04 Trustee’s Disclaimer	69
Section 7.05 Notice of Defaults	69
Section 7.06 Compensation and Indemnity	69
Section 7.07 Replacement of Trustee	70
Section 7.08 Successor Trustee by Merger	71
Section 7.09 Eligibility; Disqualification	71
Section 7.10 [Reserved]	72
Section 7.11 Appointment of Co‑Trustee	72
Article 8 Discharge of Indenture; Defeasance	73
Section 8.01 Satisfaction and Discharge of Liability on Notes	73
Section 8.02 Application of Trust Money	74
Section 8.03 Repayment to Company	74
Section 8.04 Reinstatement	74
Section 8.05 Defeasance	74
Article 9 Amendments	76
Section 9.01 Without Consent of Holders	76
Section 9.02 With Consent of Holders	77
Section 9.03 Revocation and Effect of Consents and Waivers	78
Section 9.04 Notation on or Exchange of Notes	78
Section 9.05 Trustee to Sign Amendments	78
Article 10 Note Guarantees	79
Section 10.01 Guarantees	79
Section 10.02 Guarantee Unconditional	79
Section 10.03 Discharge; Reinstatement	80
Section 10.04 Waiver by the Subsidiary Guarantors	80
Section 10.05 Subrogation and Contribution	80
Section 10.06 Stay of Acceleration	80
Section 10.07 Limitation on Amount of Guarantee	80

iii



Section 10.08 Execution and Delivery of Guarantee	81
Section 10.09 Release of Subsidiary Guarantor	81
Article 11 Release of Covenants	81
Section 11.01 Release of Covenants	82
Article 12 Miscellaneous	83
Section 12.01 Notices	83
Section 12.02 [Reserved]	84
Section 12.03 Certificate and Opinion as to Conditions Precedent	84
Section 12.04 Statements Required in Certificate or Opinion	84
Section 12.05 When Notes Disregarded	85
Section 12.06 Rules by Trustee, Paying Agents and Registrar	85
Section 12.07 Legal Holidays	85
Section 12.08 Governing Law	85
Section 12.09 Successors	85
Section 12.10 Multiple Originals	85
Section 12.11 Table of Contents; Headings	86
Section 12.12 Consent to Jurisdiction; Appointment of Agent to Accept Service of Process	86
Section 12.13 Waiver of Jury Trial	87
Section 12.14 Regarding the Paying Agent	87
Section 12.15 FATCA	88

Rule 144A/Regulation S Appendix

Exhibit 1 to Rule 144A/Regulation S Appendix Form of Note

Exhibit 2 to Rule 144A/Regulation S Appendix Form of Regulation S Transfer Certificate

Exhibit 3 to Rule 144A/Regulation S Appendix Form of Rule 144A Transfer Certificate

Exhibit A Form of Additional Note Guarantee

Exhibit B Form of Offer Letter

EXECUTION VERSION

INDENTURE dated as of September 21, 2017 among ADECOAGRO S.A. a joint stock corporation ( société anonyme ) incorporated under the laws of the Grand Duchy of Luxembourg (the “Issuer” or the “Company”); ADECO AGROPECUARIA S.A., a corporation ( sociedad anónima ) incorporated under the laws of Argentina, upon and as from acceptance of the Offer Letter (as defined below) under its terms; PILAGÁ S.A., a corporation ( sociedad anónima ) incorporated under the laws of Argentina, upon and as from acceptance of the Offer Letter under its terms; ADECOAGRO BRASIL PARTICIPAÇÕES S.A., a corporation ( sociedade por ações ) incorporated under the laws of Brazil; ADECOAGRO VALE DO IVINHEMA S.A., a company ( sociedade por ações ) incorporated under the laws of Brazil; and USINA MONTE ALEGRE LTDA., a limited liability company organized under the laws of Brazil; and THE BANK OF NEW YORK MELLON, a New York banking corporation, as trustee (the “Trustee”), registrar (the “Registrar”), paying agent (the “Paying Agent”) and transfer agent (the “Transfer Agent”).

Each party agrees as follows for the benefit of the other parties and for the equal and ratable benefit of the Holders of the Company’s U.S.$500,000,000 aggregate principal amount of 6.000% Senior Notes due 2027 (the “Initial Notes”), and any Additional Notes (as defined below), of substantially the tenor hereinafter set forth:

Article 1
Definitions and Incorporation by Reference

SECTION 1.01 Definitions .

“Acceptance Letter” has the meaning ascribed to such term in the Offer Letter.

“Acquired Indebtedness” means Indebtedness of a Person existing at the time the Person merges with or into or becomes a Subsidiary and not Incurred in connection with, or in contemplation of, the Person merging with or into or becoming a Subsidiary.

“Additional Amounts” has the meaning given to it in Section 4.21.

“Additional Assets” means:

(1) any property or assets (other than Indebtedness and Capital Stock) to be used by the Company or a Restricted Subsidiary in a Related Business;

(2) the Capital Stock of a Person that becomes a Restricted Subsidiary as a result of the acquisition of such Capital Stock by the Company or another Restricted Subsidiary; or

(3) Capital Stock constituting a minority interest in any Person that at such time is a Restricted Subsidiary;

provided, however , that any such Restricted Subsidiary described in clause (2) or (3) above is primarily engaged in a Related Business.

“Additional Notes” has the meaning given to it in Section 2.12.

“Adjusted Treasury Rate” means, with respect to any redemption date, (1) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated “H. 15(519)” or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded United States Treasury securities adjusted to constant maturity under the caption “Treasury Constant Maturities” for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after the Maturity Date of the Notes, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue shall be determined and the Adjusted Treasury Rate shall be interpolated or extrapolated from such yields on a straight line basis, rounding to the nearest month) or (2) if such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per year equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date, in each case calculated on the third Business Day immediately preceding the redemption date.

“Advance Transaction” means an advance from a financial institution involving either (a) a foreign exchange contract (ACC – Adiantamento sobre Contrato de Câmbio) or (b) an export contract (ACE – Adiantamento sobre Cambiais Entregues). For the avoidance of doubt, Advance Transactions will not be deemed to be transactions secured by receivables.

“Affiliate Transaction” has the meaning given to it in Section 4.07.

“Affiliates” of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, “control,” when used with respect to any Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“Appendix” has the meaning given to it in Section 2.01.

“Applicable Premium” means with respect to a Note at any redemption date, the greater of (1) 1.0% of the principal amount of such Note on such redemption date and (2) the excess, if any, of (A) an amount equal to the present value at such redemption date of (i) the redemption price of such Note on September 21, 2022 (such redemption price being described in Section 3.05 exclusive of any accrued interest) plus (ii) all required remaining scheduled interest payments due on such Note (assuming that the interest rate per annum on the Notes applicable on the date on which the notice of redemption was given was in effect for the entire period) through September 21, 2022 (but excluding accrued and unpaid interest to the redemption date), in each case, computed using a discount rate equal to the Adjusted Treasury Rate plus 0.500%, over (B) the principal amount of such Note on such redemption date.

“Argentina” means the Republic of Argentina.

“Argentine Subsidiary Guarantors” means Adeco Agropecuaria S.A. and Pilagá S.A.

“Asset Disposition” means any sale, lease, transfer or other disposition (or series of related sales, leases, transfers or dispositions) by the Company or any Restricted Subsidiary outside the ordinary course of business, including any disposition by means of a merger, consolidation, or similar transaction (each referred to for the purposes of this definition as a “disposition”), of:

(1) any shares of Capital Stock of a Restricted Subsidiary (other than directors’ qualifying shares or shares required by applicable law to be held by a Person other than the Company or a Restricted Subsidiary);

(2) all or substantially all the assets of any division or line of business of the Company or any Restricted Subsidiary; or

(3) any other assets of the Company or any Restricted Subsidiary outside of the ordinary course of business of the Company or such Restricted Subsidiary,

provided , however , that Asset Disposition will not include:

(a) a disposition by a Restricted Subsidiary to the Company or another Restricted Subsidiary or by the Company to a Restricted Subsidiary;

(b) a Permitted Investment or a Restricted Payment that does not violate Section 4.04;

(c) the disposition of assets in any fiscal year of the Company with a Fair Market Value not to exceed U.S.$10.0 million in the aggregate (or the equivalent thereof at the time of determination)(with unused amounts in any fiscal year being carried over to the next succeeding fiscal year, provided that such disposition shall not exceed U.S.$20.0 million in any fiscal year);

(d) a disposition of obsolete equipment or other obsolete assets or other property which is no longer useful for the Company or any Restricted Subsidiary in the ordinary course of business;

(e) the disposition of all or substantially all of the assets of the Company in a manner permitted under Article 5;

(f) the disposition of assets in a Sale-Leaseback Transaction, in a manner permitted under Section 4.10;

(g) the Incurrence of any Lien permitted under Section 4.09;

(h) the issuance of Disqualified Stock permitted under Section 4.03;

(i) any surrender or waiver of contract rights pursuant to a settlement, release, recovery on or surrender of contract, tort or other claims of any kind;

(j) sales, transfers or other dispositions of assets for non-cash consideration at least equal to the Fair Market Value (as certificated in an

Officer’s Certificate) of such assets, to the extent that such non-cash consideration would constitute Additional Assets;

(k) the disposition of any shares of Capital Stock of an Unrestricted Subsidiary;

(l) the sale or other disposition of Temporary Cash Investments; or

(m) any sale of farmland as part of the Company’s land transformation business directly, or indirectly through the sale of any shares of Capital Stock of a Restricted Subsidiary holding any such farmland; provided , that all or substantially all of such Restricted Subsidiary’s assets consist of farmland.

“Asset Sale Offer” has the meaning given to it in Section 4.06(1).

“Attributable Debt” in respect of a Sale and Leaseback Transaction means, as at the time of determination, the present value (discounted at the interest rate implicit in the Sale and Leaseback Transaction) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale and Leaseback Transaction (including any period for which such lease has been extended).

“Bankruptcy Custodian” means any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law.

“Bankruptcy Law” means Title 11, U.S. Code or any similar U.S. federal or state law or non-U.S. law for the relief of debtors.

“Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act.

“Board of Directors” means, with respect to any Person, the board of directors of such Person or any committee thereof duly authorized to act on behalf of the board of directors of such Person, or similar governing body of such Person, including any managing partner or similar entity of such Person.

“Brazil” means The Federative Republic of Brazil and any branch of power, ministry, department, authority or statutory corporation or other entity (including a trust) owned or controlled directly or indirectly by it or any of the foregoing or created by law as a public entity.

“Brazilian Subsidiary Guarantors” means Adecoagro Brasil Participações S.A., Adecoagro Vale do Ivinhema S.A. and Usina Monte Alegre Ltda.

“Business Day” means each day that is not a Saturday, Sunday or other day on which banking institutions in the City of New York, Buenos Aires, São Paulo or Luxembourg are authorized or required by law to close.

“Capital Stock” of any Person means any and all quotas, shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however

designated) equity of such Person, including any Preferred Stock and partnership interests, but excluding any debt securities convertible into such equity.

“Capitalized Lease Obligation” means, with respect to any Person, any lease of any property which, in conformity with IFRS, is required to be capitalized on the balance sheet of such Person, and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be prepaid by the lessee without payment of a penalty.

“Change of Control” means:

(a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) acquiring or controlling:


(i)	more than 50% of the voting power of the Voting Stock of the Company; or


(ii)	the right to appoint and/or remove all or the majority of the members of the Company’s Board of Directors or other governing body, in each case whether obtained directly or indirectly, and whether obtained by ownership of share capital, the possession of voting power, contract or otherwise; or

(b) the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation) in one or a series of related transactions, of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole to any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan), unless holders of a majority of the aggregate voting power of the Voting Stock of the Company and its Restricted Subsidiaries, immediately prior to such transaction, hold securities of the surviving or transferee “person” or “group” that represent, immediately after such transaction, at least a majority of the aggregate voting power of the Voting Stock of the surviving “person” or “group.”

“Change of Control Offer” has the meaning given to it in Section 4.08.

“Change of Control Payment” has the meaning given to it in Section 4.08.

“Change of Control Payment Date” has the meaning given to it in Section 4.08.

“Change of Control Repurchase Event” has the meaning given to it in Section 5.01.

“Clearstream” means Clearstream Banking S.A., société anonyme , Luxembourg.

“Code” means the Internal Revenue Code of 1986, as amended.

“Company” means Adecoagro S.A. and its successors under this Indenture.

“Comparable Treasury Issue” means, with respect to any redemption date, the United States Treasury security selected by the Quotation Agent as having a maturity comparable to September 21, 2022, that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of a maturity comparable to September 21, 2022.

“Comparable Treasury Price” means, with respect to any redemption date, if clause (2) of the Adjusted Treasury Rate is applicable, the average of three, or such lesser number as is obtained by the Quotation Agent, Reference Treasury Dealer Quotations for such redemption date.

“Consolidated Adjusted Net Income” means, for any period, the Consolidated Net Income plus any non-cash finance costs resulting from foreign exchange losses for such period plus the consolidated gain (loss) from the sale of non-controlling interests in subsidiaries for such period (without duplication to the extent already included in the Consolidated Net Income for such period).

“Consolidated EBITDA” means, for any period, the amount equal to the sum of Consolidated Net Income for such period plus, to the extent deducted in calculating such Consolidated Net Income:

(1) consolidated net interest expense for such period;

(2) consolidated income taxes for such period;

(3) consolidated depreciation and amortization for such period;

(4) consolidated net foreign exchange for such period;

(5) consolidated other net financial expenses for such period;

(6) consolidated profit (loss) from discontinued operations for such period; and

(7) consolidated gain (loss) from the sale of non-controlling interests in Subsidiaries for such period.

Notwithstanding the foregoing, any of the items described in clauses (1) through (6) above of any consolidated Subsidiary of the Company or a joint venture will be added to Consolidated Net Income to compute Consolidated EBITDA only to the extent (and in the same proportion) that the net income (loss) of such Subsidiary or joint venture was included in calculating Consolidated Net Income in such period.

“Consolidated Net Income” means, for any period, the aggregate net profit (or loss) of the Company for such period determined on a consolidated basis in conformity with IFRS; provided that the net profit (or loss) of any Person that is not a Restricted Subsidiary will be included only to the extent of the amount of dividends or distributions paid in cash by such Person to the Company or a Restricted Subsidiary (without duplication to the extent already included in the consolidated net profit (or loss) of the Company for such period).

“Consolidated Net Indebtedness” means consolidated Indebtedness of the Company and its Restricted Subsidiaries, as set forth on the most recent consolidated quarterly balance sheet of the Company and its Restricted Subsidiaries, minus the sum of cash, Temporary Cash Investments and marketable securities (except for any Capital Stock in any Person) on the date of determination; provided that , for purposes of this definition only, Indebtedness of the Company and its Restricted Subsidiaries shall be calculated by applying IFRS in effect on the Issue Date to classify Capitalized Lease Obligations.

“Consolidated Net Revenues” means the total net sales or goods and services rendered of the Company and its Restricted Subsidiaries on a consolidated basis for the most recent twelve month period; all calculated (i) based on the consolidated income statements of the Company for the fiscal quarter most recently ended for which internal financial statements are available, (ii) in accordance with IFRS and (iii) on a pro forma basis to give effect to any acquisition or disposition of companies, divisions, lines of businesses or operations by the Company and its Restricted Subsidiaries subsequent to such date and on or prior to the date of determination.

“Consolidated Secured Indebtedness Ratio” means, as of any date of determination, the ratio of (1) Consolidated Total Indebtedness of the Company and its Restricted Subsidiaries that is secured by Liens (but excluding any such Indebtedness secured by Liens pursuant to clause (11) of the definition of “Permitted Liens”) to (2) Consolidated Total Indebtedness of the Company and its Restricted Subsidiaries, in each case with such pro forma adjustments to Consolidated Total Indebtedness as are appropriate and consistent with the pro forma adjustment provisions set forth in the definition of Net Debt to EBITDA Ratio.

“Consolidated Total Assets” means the total assets of the Company and its Restricted Subsidiaries, based (i) on the balance sheet for the fiscal quarter most recently ended for which internal financial statements are available, (ii) in accordance with IFRS and (iii) on a pro forma basis to give effect to any acquisition or disposition of companies, divisions, lines of businesses or operations by the Company and its Restricted Subsidiaries subsequent to such date and on or prior to the date of determination.

“Consolidated Total Indebtedness” means consolidated Indebtedness of the Company and its Restricted Subsidiaries, as set forth on the most recent consolidated quarterly balance sheet of the Company and its Restricted Subsidiaries.

“Control” means, with respect to any Person, possession, directly or indirectly, of (a) at least a majority of all voting shares of Capital Stock of such Person, (b) the voting power to elect or cause the election of at least a majority of the board of directors of such Person and (c) the power to direct or cause the direction of the management or policies of a Person, whether through

the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.

“Corporate Trust Office” means the principal corporate trust office of the Trustee in New York City, New York, which at the date hereof is 101 Barclay Street, 7E, New York City, New York 10286, Attention: Global Structured Finance, or such other office at such address as the Trustee may designate from time to time by notice to the Holders and the Company, or the principal corporate trust office of any successor Trustee (at such other address as such successor Trustee may designate from time to time by notice to the Holders and the Company).

“Covenant Suspension Event” has the meaning set forth in Section 11.01(a)(ii).

“Default” means any event which is an Event of Default or which, after notice or passage of time or both, would be an Event of Default.

“Depositary” means, with respect to the Notes issuable or issued in whole or in part in the form of one or more Global Notes, the Person designated in Section 2.03 hereof as Depositary by the Company pursuant to this Indenture, until a successor shall have been appointed and become such and, thereafter, “Depositary” shall mean or include such Person.

“Disqualified Stock” means, with respect to any Person, any Capital Stock that by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable or exercisable) or upon the happening of any event:

(1) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise;

(2) is convertible or exchangeable for Indebtedness or Disqualified Stock; or

(3) is redeemable at the option of the holder thereof, in whole or in part,

in each case on or prior to the 91st day after the Stated Maturity of the Notes; provided , however , that any Capital Stock that would not constitute Disqualified Stock but for provisions thereof giving holders thereof the right to require such Person to repurchase or redeem such Capital Stock upon the occurrence of an “asset sale” or “change of control” occurring prior to the 91st day after the Stated Maturity of the Notes shall not constitute Disqualified Stock if the “asset sale” or “change of control” provisions applicable to such Capital Stock are not more favorable to the holders of such Capital Stock than the comparable provisions of this Indenture.

“DTC” means The Depository Trust Company.

“Eligible Equity Offering” means the issuance and sale for cash of Capital Stock (other than Disqualified Stock) of the Company to any Person (other than a Restricted Subsidiary) pursuant to a public offering in accordance with applicable laws, rules and regulations.

“Euroclear” means Euroclear Bank, S.A./N.V.

“Event of Default” has the meaning given to it in Section 6.01.

“Exchange Act” means the United States Securities and Exchange Act of 1934, as amended.

“Fair Market Value” of any property, asset, share of Capital Stock, other security, Investment or other item means, on any date, the fair market value of such property, asset, share of Capital Stock, other security, Investment or other item on that date as determined in good faith by the management of the Company.

“Fitch” means Fitch Ratings Inc. and its successors.

“Global Notes” has the meaning given to it in the Appendix.

“Good Faith Contest” means the contest of liability for taxes or other claims set forth in Section 4.15 if such liability is diligently contested in good faith by appropriate proceedings timely instituted and adequate provisions are established if required by and in accordance with IFRS or other generally accepted accounting principles, as applicable.

“Guarantee” means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness or other obligation of any other Person and any obligation, direct or indirect, contingent or otherwise, of any Person:

(i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation of such other Person (whether arising by virtue of partnership arrangements, or by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise); or

(ii) entered into for purposes of assuring in any other manner the obligee of such Indebtedness or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part),

provided, however , that the term “Guarantee” shall not include endorsements for collection or deposit in the ordinary course of business. The term “Guarantee” used as a verb has a correlative meaning. The term “Guarantor” shall mean any Person Guaranteeing any obligation.

“Hedging Obligations” of any Person means the obligations of such Person under any agreement relating to any swap, option, forward sale, forward purchase, index transaction, cap transaction, floor transaction, collar transaction or any other similar transaction, in each case, for purposes of hedging or capping against inflation, interest rates, currency or commodities price fluctuations.

“Holder” means the Person in whose name a Note is registered on the Registrar’s books.

“IFRS” means International Financial Reporting Standards as issued by the International Accounting Standards Board.

“Incur” means issue, assume, Guarantee, incur or otherwise become liable for Indebtedness or Capital Stock; provided, however , that any Indebtedness or Capital Stock of a Person existing at the time such Person is merged or consolidated with the Company or becomes a Subsidiary of the Company (whether by merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Person at the time of such merger or consolidation or at the time it becomes a Subsidiary of the Company. The term “Incurrence” when used as a noun shall have a correlative meaning. Neither the accretion of principal of a non-interest bearing or other discount security nor the capitalization of interest on Indebtedness shall be deemed the Incurrence of Indebtedness.

“Indebtedness” means, with respect to any Person on any date of determination (without duplication):

(1) the principal in respect of indebtedness of such Person for borrowed money;

(2) the principal and premium, if any, in respect of obligations of such Person evidenced by bonds, debentures, notes or other similar instruments;

(3) all obligations of such Person to pay the deferred and unpaid purchase price of property (except trade payables and contingent obligations to pay earn-outs), which purchase price is due more than six months after the date of placing such property in service or taking delivery and title thereto;

(4) all reimbursement obligations of such Person in respect of the face amount of letters of credit or other similar instruments (other than obligations with respect to letters of credit securing obligations (other than obligations described in clauses (1) through (3) above) entered into in the ordinary course of business of such Person, such as import tax credits and import transactions, to the extent such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the third business day following receipt by such Person of a demand for reimbursement following payment on the letter of credit);

(5) the amount of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Stock (but excluding, in each case, any accrued dividends);

(6) all Capitalized Lease Obligations and all Attributable Debt of such Person;

(7) all Indebtedness of other Persons secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person;

provided, however , that the amount of Indebtedness of such Person shall be the lesser of:

(a) the Fair Market Value of such asset at such date of determination; and

(b) the amount of such Indebtedness of such other Persons;

(8) to the extent not otherwise included in this definition, all Hedging Obligations of such Person; and

(9) all obligations of the type referred to in clauses (1) through (8) above of other Persons that is Guaranteed by such Person to the extent so Guaranteed;

if and to the extent any of the preceding items (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of the specified Person prepared in accordance with IFRS.

For the avoidance of doubt, “Indebtedness” shall not include (1) any obligations to any Person with respect to “ Programa de Recuperação Fiscal—REFIS ,” “ Programa Especial de Parcelamento de Impostos—REFIS Estadual ” and “ Programa de Parcelamento Especial—PAES ” or any other tax payment agreement entered into with any Brazilian or Argentine governmental entity, (2) any advances made by or on behalf of customers for products already shipped but not yet invoiced by the Company or any Restricted Subsidiary in the ordinary course of business and (3) any amounts owed by the Company or any Restricted Subsidiary for the purchase of crops, sugarcane or other agricultural inputs or the lease of land in the ordinary course of business.

“Indenture” means this Indenture, including upon acceptance, the Offer Letter, each as amended or supplemented from time to time.

“Initial Lien” has the meaning given to it in Section 4.09.

“Initial Notes” has the meaning set forth in the second introductory paragraph of this Indenture.

“Interest Payment Date” means each March 21 and September 21 of each year, commencing on March 21, 2018.

“Investment” in any Person means any direct or indirect advance, loan (other than advances to customers or suppliers in the ordinary course of business that are recorded as accounts receivable, prepaid expenses or deposits on the balance sheet of the applicable lender) or other extension of credit (including by way of Guarantee or similar arrangement) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition of Capital Stock, Indebtedness or other similar instruments issued by, such Person. For purposes of the definition of “Unrestricted Subsidiary” and Section 4.04:

(1) Investment shall include the portion (proportionate to the Company’s equity interest in such Subsidiary) of the Fair Market Value of the net assets of any Subsidiary of the Company at the time that such Subsidiary is designated an Unrestricted Subsidiary; provided, however, that, upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue to have a permanent “Investment” in an Unrestricted Subsidiary in an amount (if positive) equal to:

(a) the Company’s Investment in such Subsidiary at the time of such redesignation, minus

(b) the portion (proportionate to the Company’s equity interest in such Subsidiary) of the Fair Market Value of the net assets of such Subsidiary at the time of such redesignation; and

(2) any property transferred to or from an Unrestricted Subsidiary shall be valued at its Fair Market Value at the time of such transfer.

“Investment Grade Rating” means a rating equal to or higher than (a) BBB-, by Fitch or S&P and (b) Baa3, by Moody’s.

“Issue Date” means September 21, 2017.

“Legal Holiday” means a Saturday, a Sunday or a day on which banking institutions are not required by law to be open in the City of New York, Buenos Aires, São Paulo or Luxembourg.

“Lien” means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof).

“Luxembourg” means the Grand Duchy of Luxembourg.

“Material Adverse Effect” means (a) anything that could reasonably be expected to have a material adverse effect on the condition (financial or otherwise), business, properties, results of operations or prospects of the Company and its Subsidiaries taken as a whole, or (b) the ability of the Company and the Subsidiary Guarantors to perform any of their respective obligations under this Indenture.

“Maturity Date” means September 21, 2027.

“Minimum Withholding Level” has the meaning given to it in Section 3.06.

“Moody’s” means Moody’s Investors Service, Inc. and its successors.

“Net Available Cash” from an Asset Disposition means cash payments received (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise and proceeds from the sale or other disposition of any

securities received as consideration, but only as and when received, but excluding any other consideration received in the form of assumption by the acquiring Person of Indebtedness or other obligations relating to the properties or assets that are the subject of such Asset Disposition or received in any other non-cash form) therefrom, in each case minus:

(1) all legal fees and expenses, title and recording tax expenses, commissions and other fees and expenses Incurred, and all federal, state, provincial, foreign and local taxes required to be paid or accrued as a liability in accordance with IFRS, as a consequence of such Asset Disposition;

(2) all payments, including any prepayment premiums or penalties, made on any Indebtedness that is secured by any assets subject to such Asset Disposition, in accordance with the terms of any Lien upon or other security agreement of any kind with respect to such assets, or which must by its terms, or in order to obtain a necessary consent to such Asset Disposition, or by applicable law be repaid out of the proceeds from such Asset Disposition;

(3) all distributions and other payments required to be made to minority interest holders in Subsidiaries or joint ventures as a result of such Asset Disposition; and

(4) appropriate amounts to be provided by the seller as a reserve, in accordance with IFRS, against any liabilities associated with the property or other assets disposed of in such Asset Disposition and retained by the Company or any Restricted Subsidiary after such Asset Disposition.

“Net Cash Proceeds” with respect to any issuance or sale of Capital Stock or sale or other disposition of any Investment, means the cash proceeds of such issuance or sale net of attorneys’ fees, accountants’ fees, underwriters’ or placement agents’ fees, discounts or commissions and brokerage, consultant and other fees and expenses actually Incurred in connection with such issuance or sale and net of taxes paid or payable in connection with such issuance, sale or disposition.

“Net Debt to EBITDA Ratio” means at any date (i) Consolidated Net Indebtedness divided by (ii) Consolidated EBITDA for the period of four consecutive fiscal quarters ending on or most recently prior to such date for which financial statements are available; provided, however , that:

(a) if since the beginning of such period the Company or any Restricted Subsidiary shall have made any Asset Disposition, the Consolidated EBITDA for such period shall be reduced by an amount equal to the Consolidated EBITDA directly attributable to the assets that are the subject of such Asset Disposition for such period; provided that pro forma effect shall be given to the proceeds applied of the Asset Disposition as if the event had occurred on the first day of such period;

(b) if since the beginning of such period the Company or any Restricted Subsidiary (by merger or otherwise) shall have made an Investment in any

Person that is merged with or into the Company or any Restricted Subsidiary (or any Person that becomes a Restricted Subsidiary) or an acquisition of assets, including any acquisition of assets occurring in connection with a transaction causing a calculation to be made hereunder, Consolidated EBITDA for such period shall be calculated after giving pro forma effect thereto (including the Incurrence of any Indebtedness) as if such Investment or acquisition occurred on the first day of such period;

(c) if since the beginning of such period any Person (that subsequently became a Restricted Subsidiary or was merged with or into the Company or any Restricted Subsidiary since the beginning of such period) shall have made any Asset Disposition or any Investment or acquisition of assets that would have required an adjustment pursuant to clause (a) or (b) above if made by the Company or a Restricted Subsidiary during such period, Consolidated EBITDA for such period shall be calculated after giving pro forma effect thereto as if such Asset Disposition, Investment or acquisition of assets occurred on the first day of such period; and

(d) pro forma effect shall be given to any Indebtedness Incurred (or repaid) since the most recently consolidated quarterly balance sheet of the Company.

To the extent that pro forma effect is to be given, such pro forma calculation will be (i) based upon the most recent four full fiscal quarters for which the relevant financial information is available and (ii) determined in good faith by a financial or accounting officer of the Company.

“Note Guarantee” means any Note Guarantee by Adeco Agropecuaria S.A., Adecoagro Brasil Participações S.A., Adecoagro Vale do Ivinhema S.A., Pilagá S.A., Usina Monte Alegre Ltda. or a Significant Subsidiary of the Company’s obligations with respect to the Notes, executed pursuant to the provisions of this Indenture.

“Notes” has the meaning given to it in the Preamble hereto.

“Notes Register” has the meaning given to it in Section 2.03.

“Offer Letter” means an offer to be issued and delivered by the Company, the Brazilian Subsidiary Guarantors and the Trustee, to the Argentine Subsidiary Guarantors for the consent and acceptance of this Indenture and the notation on the Notes relating to the Note Guarantees pursuant to the terms hereof (substantially in the form attached hereto as Exhibit B), upon which acceptance, and satisfaction of all other conditions precedent herein, this Indenture and the notation on the Notes relating to the Note Guarantees shall become effective and the Argentine Subsidiary Guarantors will be bound by the terms therein.

“Offering Memorandum” means the offering memorandum for the U.S.$500,000,000 6.000% Senior Notes due 2027 of the Company, dated September 14, 2017.

“Officer” means, with respect to a Person, any officer appointed according to the applicable law and the bylaws of such Person.

“Officer’s Certificate” means a certificate signed by any of the chief executive officer, the chief operating officer, the chief financial officer, the chief accounting officer, the treasurer, a director, the general counsel or any vice president (or any equivalent of the foregoing) of such Person.

“Opinion of Counsel” means a written opinion from legal counsel who may be an employee of or counsel to the Company, which opinion shall be reasonably satisfactory to the Trustee.

“Paying Agent” means The Bank of New York Mellon acting in such capacity and any other paying agent appointed by the Company to act as such.

“Payment Default” has the meaning given to it in Section 6.01(5)(A).

“Permitted Financial Institution” means any of (i) Itau BBA USA Securities, Inc., J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC or any of their respective affiliates, or (ii) any other financial institution, or any of its respective affiliates, regulated by the Argentine Central Bank, the Brazilian Central Bank or the United States Federal Reserve.

“Permitted Investment” means:

(1) an Investment by the Company or any Restricted Subsidiary in the Company or any Restricted Subsidiary;

(2) an Investment by the Company or any Restricted Subsidiary in another Person if as a result of such Investment such other Person is merged or consolidated with or into, or transfers or conveys all or substantially all its assets to, the Company or a Restricted Subsidiary or becomes a Restricted Subsidiary;

(3) Temporary Cash Investments;

(4) any Investment acquired from a Person which is merged with or into the Company or any Restricted Subsidiary, or any Investment of any Person existing at the time such Person becomes a Restricted Subsidiary and, in either such case, is not created as a result of or in connection with or in anticipation of any such transaction;

(5) stocks, obligations or securities received in settlement of (or foreclosure with respect to) debts created in the ordinary course of business and owing to the Company or any Restricted Subsidiary or in satisfaction of judgments or in satisfaction of judgments or pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of a debtor;

(6) any Investment existing on, or made pursuant to written agreements existing on, the Issue Date or an Investment consisting of an extension, modification or renewal of any Investment in existence on the Issue Date; provided that such Investment does not increase the aggregate amount of the Investment so extended, modified or renewed except by an amount equal to any premium or other reasonable amount paid in respect of the underlying obligations and fees and expenses incurred in connection with such replacement, refinancing or refunding;

(7) Hedging Obligations permitted in Section 4.03(2)(f);

(8) Guarantees of Indebtedness permitted in Section 4.03;

(9) Investments which are made exclusively with Capital Stock of the Company (other than Disqualified Stock);

(10) any acquisition and holding of (a) Brazilian federal and state tax credits acquired solely to pay amounts owed by the Company to Brazilian tax authorities and (b) discounted obligations of any Brazilian governmental authority acquired solely to pay tax amounts owed by the Company to such Brazilian governmental authority;

(11) Investments made as a result of the receipt of non-cash consideration from an Asset Disposition that was made in compliance with Section 4.06;

(12) receivables owing to the Company or any of its Restricted Subsidiaries, if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided that such trade terms may include such trade terms as the Company or such Restricted Subsidiary deems reasonable under the circumstances;

(13) any advance, loan or extension of credit arising in connection with the purchase of inventory, equipment or supplies in the ordinary course of business;

(14) loans and advances pursuant to any employee, officer or director compensation or benefit plans, customary indemnifications or arrangements entered into the ordinary course of business; provided , however , that such loans and advances do not exceed U.S.$2.0 million at any time outstanding in one or a series of related transactions;

(15) Investments in connection with pledges, deposits, payments or performance bonds made or given in the ordinary course of business in connection with or to secure statutory, regulatory or similar obligations, including obligations under health, safety or environmental obligations;

(16) repurchases of the Notes and the related Note Guarantees;

(17) Investments in one or more Permitted Joint Ventures having an aggregate Fair Market Value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (17) that are at the time outstanding, that does not exceed the greater of (i) U.S.$275.0 million (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value) and (ii) 18.0% of Consolidated Total Assets;

(18) Investments by the Company or any of its Restricted Subsidiaries having an aggregate Fair Market Value not to exceed 50% of the proceeds received from any sale of farmland as part of the Company’s land transformation business directly, or indirectly through the sale of any shares of Capital Stock of a Restricted Subsidiary holding any such farmland, in each case, made after the Issue Date; and

(19) additional Investments by the Company or any of its Restricted Subsidiaries having an aggregate Fair Market Value, taken together with all other Investments made pursuant to this clause (19) that are at the time outstanding, not to exceed U.S.$75.0 million or 5% of Consolidated Total Assets at the time of such Investment (with the Fair Market Value of each Investment being measured at the time made and without giving effect to subsequent changes in value).

“Permitted Joint Venture” means a joint venture in a Related Business between the Company or any Restricted Subsidiary and any other Person.

“Permitted Liens” means:

(1) Liens which secure only Indebtedness owing by any Restricted Subsidiary to the Company and/or by the Company to one or more Restricted Subsidiaries;

(2) Liens on any property or assets acquired from a Person which is merged with or into the Company or any Restricted Subsidiary, or any Liens on the property or assets of any Person or other entity existing at the time such Person or other entity becomes a Restricted Subsidiary and, in either such case, is not created as a result of or in connection with or in anticipation of any such transaction; provided that such Liens may not extend to any other property owned by the Company or any Restricted Subsidiary;

(3) Liens securing Acquired Indebtedness Incurred in accordance with Section 4.03 not incurred in connection with, or in anticipation or contemplation of, the relevant acquisition, merger or consolidation; provided that (a) such Liens secured such Acquired Indebtedness at the time of and prior to the Incurrence of such Acquired Indebtedness by the Company or a Restricted Subsidiary and were not granted in connection with, or in

anticipation of the Incurrence of such Acquired Indebtedness by the Company or a Restricted Subsidiary; and (b) such Liens do not extend to or cover any property of the Company or any Restricted Subsidiary other than the property that secured the Acquired Indebtedness prior to the time such Indebtedness became Acquired Indebtedness of the Company or a Restricted Subsidiary and are no more favorable to the lienholders than the Liens securing the Acquired Indebtedness prior to the Incurrence of such Acquired Indebtedness by the Company or a Restricted Subsidiary;

(4) any Lien on any property or assets existing at the time of acquisition thereof and which is not created as a result of or in connection with or in anticipation of such acquisition; provided that such Liens may not extend to any other property owned by the Company or any Restricted Subsidiary;

(5) Liens for taxes, assessments, governmental charges, levies or claims which are not yet due or thereafter can be paid without penalty or are being contested in good faith by appropriate proceedings or the period within which such proceedings may be initiated has not expired;

(6) pledges or deposits in connection with workers’ compensation laws, unemployment insurance laws or similar legislation, any deposit to secure appeal bonds in proceedings being contested in good faith to which the Company or any Restricted Subsidiary is a party, good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which the Company or any Restricted Subsidiary is a party or deposits for the payment of rent, in each case made in the ordinary course of business;

(7) any Lien in favor of issuers of surety or performance bonds or letters of credit issued pursuant to the request of and for the account of the Company or any Restricted Subsidiary;

(8) Liens imposed by law, such as carriers’, warehousemen’s and mechanics’ Liens and other similar Liens, on the property or assets of the Company or any Restricted Subsidiary arising in the ordinary course of business and securing payment of obligations that are not yet due or are being contested in good faith by appropriate proceedings;

(9) minor easements, rights of way, restrictions, defects or irregularities in title and other similar charges or encumbrances not interfering in any material respect with the business of the Company or any Restricted Subsidiary, and any leases and subleases of real property that do not interfere with the ordinary conduct of the business of the Company or any Restricted Subsidiary, and which are made on customary and usual terms applicable to similar properties;

(10) Liens arising solely by virtue of any statutory or common law provision or general terms and conditions of the account bank or depository relating to bankers’ liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a creditor depository institution; provided, however, that such deposit account is not a dedicated cash collateral account and is not intended by the Company or any Restricted Subsidiary to provide collateral to such depository institution;

(11) Liens granted to secure borrowing from, directly or indirectly, (i) Banco Nacional de Desenvolvimento Econômico e Social—BNDES (including loans from Financiadora de Estudos e Projetos—FINEP ) or any other Brazilian or Argentine governmental development bank (including, without limitation, Fundo de Desenvolvimento do Centro Oeste – FDCO ), credit agency or other entity, or (ii) the International Finance Corporation or any other international or multilateral development bank, government- sponsored agency, export-import bank or official export-import credit insurer;

(12) judgment Liens not giving rise to an Event of Default so long as such Lien is bonded in accordance with applicable law and any appropriate legal proceedings which may have been duly initiated for the review of such judgment have not been finally terminated or the period within which such proceedings may be initiated has not expired;

(13) Liens on property, equipment or assets (including Capital Stock) of any Person that secure Indebtedness Incurred for the purpose of financing all or any part of the purchase price or cost of construction or improvement of such property, equipment or asset and which attach within 365 days after the date of such purchase or the completion of construction or improvement; provided that to the extent that the property or asset acquired is Capital Stock, the Lien also may encumber other property or assets of the Person acquired;

(14) Liens in existence on the Issue Date;

(15) any Lien securing Hedging Obligations so long as such Hedging Obligations are entered into for bona fide, non-speculative purposes, or securing letters of credit that support such Hedging Obligations;

(16) any Lien on the inventory or receivables and related assets of the Company or any Restricted Subsidiary securing the obligations of such Person under any credit facility, lines of credit or working capital facility or in connection with any structured export or import financing or other trade transaction; provided that the aggregate amount of receivables securing Indebtedness will not exceed (i) with respect to transactions secured by receivables from export sales, 80% of such Person’s consolidated gross revenues from export sales for the most recently concluded period of four consecutive fiscal quarters; or (ii) with respect to transactions secured by

receivables from domestic sales, 80% of such Person’s consolidated gross revenues from domestic sales for the most recently concluded period of four consecutive fiscal quarters; provided, further, that Advance Transactions will not be deemed transaction secured by receivables for the purpose of the above calculation;

(17) any Lien securing taxes, assessments and other governmental charges, the payment of which are not yet due or are being contested in good faith by appropriate proceedings and for which such reserves or other appropriate provisions, if any, have been established as required by IFRS;

(18) any Lien under mandatory law relating to taxes, social security charges or employee payments;

(19) any extension, renewal or replacement (or successive extensions, renewals or replacements), in whole or in part, of any Lien referred to in the clauses (2), (3), (4), (10), (12), (13) or (14) above or of any Indebtedness secured thereby, provided that the principal amount of Indebtedness secured by any such extension, renewal or replacement shall not exceed the principal amount of Indebtedness so secured at the time it was initially incurred (plus premiums, interest and reasonable expenses incurred in connection therewith), and that such extension, renewal or replacement Lien shall be limited to all or part of the property which secured the Lien extended, renewed or replaced (plus improvements on or additions to such property), provided further that this clause (19) shall not apply to any Indebtedness secured by Liens referred to in clause (14) that is repaid or retired with the proceeds from, or concurrently with, the issuance of the Notes; and

(20) other Liens securing Indebtedness, provided that, at the time of incurrence and after giving pro forma effect to the incurrence thereof, the Consolidated Secured Indebtedness Ratio would be no greater than 33%.

“Person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.

“Preferred Stock,” as applied to the Capital Stock of any Person, means Capital Stock of any class or classes (however designated) that is preferred as to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over shares of Capital Stock of any other class of such Person.

“Process Agent” has the meaning given to it in Section 12.12(b).

“Protected Purchaser” means a purchaser of a Note, or of an interest therein, who (a) gives value, (b) does not have notice of any adverse claim to the Note, and (c) obtains control of the Note.

“Purchase Money Indebtedness” means Indebtedness:

(1) consisting of the deferred purchase price of an asset, conditional sale obligations, obligations under any title retention agreement and other purchase money obligations; or

(2) Incurred to finance all or any part of the purchase price, or other cost of construction or improvement, of any property;

provided , however , that the aggregate principal amount of such Indebtedness does not exceed the lesser of the Fair Market Value of such asset or property or such purchase price or cost, including any Refinancing of such Indebtedness that does not increase the aggregate principal amount (or accreted amount, if less) of such Indebtedness at the time it was initially incurred (or if issued with original issue discount, the aggregate accreted value at the time of Refinancing), plus, in either case, premiums, interest and reasonable expenses incurred in connection therewith.

“Quotation Agent” means the Reference Treasury Dealer selected by the Company.

“Rating Agency” means any of Fitch, Moody’s and S&P; or if Fitch, Moody’s or S&P are not making ratings of the Notes publicly available, an internationally recognized U.S. rating agency or agencies, as the case may be, selected by the Company, which will be substituted for Fitch, Moody’s or S&P, as the case may be.

“Rating Decline” means that at any time within 90 days (which period shall be extended so long as the rating of the Notes is under publicly announced consideration for possible down grade by either Rating Agency) after the earlier of the date of public notice of a Change of Control and of the Company’s intention or that of any Person to effect a Change of Control, (i) in the event the Notes are assigned an Investment Grade Rating by at least two of the Rating Agencies prior to such public notice, the rating of the Notes by at least two of the Rating Agencies shall be below an Investment Grade Rating; (ii) in the event the Notes are assigned an Investment Grade Rating by one Rating Agency and rated below an Investment Grade Rating by at least one other Rating Agency, the rating of the Notes by at least two of the Rating Agencies shall be decreased by one or more categories and both be below an Investment Grade Rating; or (iii) in the event the Notes are rated below an Investment Grade Rating by at least two of the Rating Agencies prior to such public notice, the rating of the Notes by at least two of the Rating Agencies shall be decreased by one or more categories; provided that, in each case, any such Rating Decline is in whole or in part in connection with a Change of Control.

“Record Date” means each March 20 and September 20 of each year.

“Reference Treasury Dealer” means J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and their respective successors and assigns, and any other nationally recognized investment banking firms selected by the Company that are primary U.S. Government securities dealers.

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as calculated by the Quotation Agent, of the

bid and asked prices for the Comparable Treasury Issue, expressed in each case as a percentage of its principal amount, quoted in writing to the Quotation Agent by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day immediately preceding such redemption date.

“Refinance” means, in respect of any Indebtedness, to refinance, extend (including pursuant to any defeasance or discharge mechanism), renew, refund, repay, replace, prepay, redeem, defease or retire, or to issue other Indebtedness in exchange or replacement for, such Indebtedness. “Refinanced” and “Refinancing” shall have correlative meanings.

“Refinancing Indebtedness” means Indebtedness that is Incurred to Refinance any Indebtedness of the Company or any Restricted Subsidiary existing on the Issue Date or Incurred in compliance with this Indenture (including Indebtedness that Refinances Refinancing Indebtedness); provided , however , that:

(1) the Refinancing Indebtedness has a Stated Maturity no earlier than (i) the Stated Maturity of the Indebtedness being Refinanced or (ii) the 91st day after the Maturity Date of the Notes;

(2) such Refinancing Indebtedness is Incurred in an aggregate principal amount (or if issued with original issue discount, an aggregate issue price) that is equal to or less than the aggregate principal amount of the Indebtedness being Refinanced when it was initially incurred (or if issued with original issue discount, the aggregate accreted value at the time of Refinancing), plus, in either case, premiums, interest and reasonable expenses incurred in connection therewith; and

(3) if the Indebtedness being Refinanced is Subordinated Obligations, such Refinancing Indebtedness is subordinated in right of payment to the Notes at least to the same extent as the Indebtedness being Refinanced;

provided , further , that Refinancing Indebtedness shall not include Indebtedness of the Company or a Restricted Subsidiary that Refinances Indebtedness of an Unrestricted Subsidiary.

“Registrar” means an office or agency, authorized by the Company, where Notes may be presented for registration of transfer or for exchange; provided that the Trustee shall initially be appointed as the Registrar.

“Related Business” means any business conducted by the Company and the Restricted Subsidiaries on the Issue Date and any business related, ancillary or complementary thereto.

“Relevant Date” has the meaning given to it in Section 4.21.

“Relevant Jurisdiction” has the meaning set forth for such term in Section 4.21.

“Restricted Payment” has the meaning given to it in Section 4.04.

“Restricted Subsidiary” means any Subsidiary of the Company other than an Unrestricted Subsidiary.

“Reversion Date” has the meaning given to it in Section 11.01(b).

“S&P” means Standard & Poor’s Ratings Group, a division of McGraw Hill Inc., and its successors.

“Sale and Leaseback Transaction” means any arrangement with any Person (other than the Company or a Restricted Subsidiary), or to which any such Person is a party, providing for the leasing to the Company or a Restricted Subsidiary for a period of more than three years of any property or assets which property or assets have been or are to be sold or transferred by the Company or such Restricted Subsidiary to such Person or to any other Person (other than the Company or a Restricted Subsidiary) to which funds have been or are to be advanced by such Person on the security of the leased property or assets.

“SEC” means the U.S. Securities and Exchange Commission.

“Securities Act” means the United States Securities Act of 1933, as amended.

“Senior Indebtedness” means all unsubordinated Indebtedness of the Company or any Restricted Subsidiary, whether outstanding on the Issue Date or Incurred thereafter.

“Share Repurchase Program” means a program for the repurchase of the Capital Stock of the Company approved by its Board of Directors.

“Significant Subsidiary” means any Restricted Subsidiary of the Company which at the time of determination would be a “significant subsidiary” of the Company within the meaning of Rule 1-02(w) of Regulation S-X under the Securities Act in effect on the Issue Date.

“Similar Business” means any business conducted or proposed to be conducted by the Company and its Restricted Subsidiaries on the Issue Date and any business that is similar, reasonably related, incidental or ancillary thereto, which, for the avoidance of doubt, includes, but is not limited to, cattle raising and/or slaughtering, chicken raising and/or processing and distribution, and lemon farming and processing.

“Singapore Stock Exchange” has the meaning given to it in Section 4.20(a).

“Stated Maturity” means, with respect to any Indebtedness, the date specified in such Indebtedness as the fixed date on which the final payment of principal of such Indebtedness is due and payable, including, with respect to any principal amount which is then due and payable pursuant to any mandatory redemption provision, the date specified for the payment thereof (but excluding any provision providing for the repurchase of any such Indebtedness upon the happening of any contingency unless such contingency has occurred).

“Subordinated Obligation” means any Indebtedness that is subordinate or junior in right of payment to the Notes and Note Guarantees pursuant to a written agreement.

“Subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which more than 50% of the outstanding Voting Stock is owned, directly or indirectly, by such Person and one or more Subsidiaries of such Person (or a combination thereof).

“Subsidiary Guarantors” means Adeco Agropecuaria S.A., Adecoagro Brasil Participações S.A., Adecoagro Vale do Ivinhema S.A., Pilagá S.A., Usina Monte Alegre Ltda. and any Significant Subsidiary that has provided a Note Guarantee.

“Successor Company” has the meaning given to it in Section 5.01(a)(i).

“Suspended Covenants” means Sections 4.03, 4.04, 4.05, 4.06, 4.07, 4.10 and 5.01(c).

“Suspension Period” has the meaning given to it in Section 11.01(b).

“Temporary Cash Investments” means any of the following:

(1) (x) U.S. Government Obligations or certificates representing an ownership interest in U.S. Government Obligations or (y) marketable general obligations issued or unconditionally guaranteed by Argentina, the Argentine Central Bank, Brazil or the Brazilian Central Bank, in each case with maturities not exceeding one year from the date of acquisition;

(2) investments in time deposit accounts, certificates of deposit and money market deposits (collectively, “Deposit Accounts”) issued by a bank or trust company that is organized under the laws of the United States, any state thereof, Argentina, Brazil or any foreign country recognized by the United States having capital, surplus and undivided profits aggregating in excess of U.S.$500.0 million (or the foreign currency equivalent thereof) and whose long-term debt is rated “A” (or such similar equivalent rating, including similar equivalent ratings in foreign countries) or higher by at least one nationally recognized statistical rating organization (as defined in Rule 436 under the Securities Act);

(3) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clause (1) above entered into with a bank meeting the qualifications described in clause (2) above;

(4) investments in commercial paper maturing not more than 90 days after the date of acquisition issued by a corporation (other than an Affiliate of the Company) organized and in existence under the laws of the United States, Argentina, Brazil or any other foreign country recognized by the United States with a rating at the time as of which any investment therein is made of “P-1” (or higher) according to Moody’s or “A-1” (or higher)

according to S&P (or such similar equivalent rating, including similar equivalent ratings in foreign countries);

(5) investments in securities with maturities of twelve months or less from the date of acquisition issued or fully Guaranteed by any state, commonwealth or territory of the United States, or by any political subdivision or taxing authority thereof, and rated at least “A” by S&P or “A” by Moody’s (or such similar equivalent rating);

(6) certificates of deposit, banker’s acceptances and time deposits issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any Argentine, Brazilian or United States office of any Permitted Financial Institution; and

(7) (x) investments in money market funds substantially all the assets of which are comprised of investments of the types described in clauses (1) through (6) above or (y) fondos comunes de inversión (Argentine funds focused primarily on in-country cash management investments) that have a local rating of at least “A-bf.ar” by Moody’s or the equivalent by Fitch or S&P (or their respective affiliates in Argentina, including without limitation, Fix Scr S.A.).

“Transfer Agent” has the meaning given to it in the Preamble hereto.

“Transfer Restricted Notes” means Notes that bear or are required to bear the Restricted Notes Legend (as defined in Section 2.1(6) of the Appendix ).

“Trustee” means the party named as such in this Indenture until a successor replaces it and, thereafter, means the successor.

“Trust Officer” means any officer in the corporate trust department of the Trustee, having direct responsibility for the administration of this Indenture and also means any officer to whom any corporate trust matter is referred because of such person’s knowledge of and familiarity with the particular subject.

“United States” means United States of America.

“Unrestricted Subsidiary” means:

(1) any Subsidiary of the Company that at the time of determination shall be designated an Unrestricted Subsidiary by the management of the Company in the manner provided below; and

(2) any Subsidiary of an Unrestricted Subsidiary.

The management of the Company may designate any Restricted Subsidiary of the Company (including any newly acquired or newly formed Subsidiary of the Company) to be an

Unrestricted Subsidiary pursuant to clause (1) above unless such Subsidiary or any of its Subsidiaries owns any Capital Stock or Indebtedness of, or owns or holds any Lien on any property of, the Company or any Restricted Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so designated; provided, however, that either:

(a) the Subsidiary to be so designated has total consolidated assets of U.S.$1,000 or less; or

(b) if such Subsidiary has consolidated assets greater than U.S.$1,000, then such Investment and designation would be permitted under Section 4.04.

The management of the Company may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided, however, that immediately after giving effect to such designation:

(i) such designation shall be deemed an Incurrence of Indebtedness by a Restricted Subsidiary and such designation shall only be permitted if such Indebtedness is permitted under Section 4.03; and

(ii) no Event of Default shall have occurred and be continuing.

Any such designation of a Subsidiary as a Restricted Subsidiary, and any such designation of a Subsidiary as an Unrestricted Subsidiary pursuant to clause (1) above, by the management of the Company shall be evidenced to the Trustee by promptly filing with the Trustee an Officer’s Certificate certifying that such designation complied with the foregoing provisions.

“U.S. Bankruptcy Code” means the United States Bankruptcy Reform Act of 1978, as amended, and codified as 11 U.S.C. §§101 et seq .

“U.S. dollar” or “U.S.$” means the lawful currency of the United States.

“U.S. Government Obligations” means direct obligations (or certificates representing an ownership interest in such obligations) of the United States (including any agency or instrumentality thereof) for the payment of which the full faith and credit of the United States is pledged and that are not callable or redeemable at the issuer’s option.

“Voting Stock” of a Person means all classes of Capital Stock or other interests (including partnership interests) of such Person then outstanding that are entitled (without regard to the occurrence of any contingency) to vote in the election of the directors of such Person, but excluding such classes of Capital Stock or other interests that are entitled, as a group in a separate cast, to appoint one director of such Person as representative of the minority shareholders.

SECTION 1.02 [Reserved] .

SECTION 1.03 Rules of Construction . Unless the context otherwise requires:

(a) a term has the meaning assigned to it;

(b) (i) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with IFRS, (ii) except as otherwise herein expressly provided, the term IFRS, with respect to any computation required or permitted hereunder, shall mean IFRS as of the date of such computation, and (iii) except as otherwise herein expressly provided, all ratios and computations based on IFRS contained in this Indenture should be computed in conformity with IFRS;

(d) “including” means including without limitation;

(e) words in the singular include the plural and words in the plural include the singular;

(f) unsecured Indebtedness shall not be deemed to be subordinate or junior to secured Indebtedness merely by virtue of its nature as unsecured Indebtedness;

(g) the principal amount of any non‑interest bearing or other discount security at any date shall be the principal amount thereof that would be shown on a balance sheet of the Company dated such date prepared in accordance with IFRS;

(h) the principal amount of any Preferred Stock shall be (a) the maximum liquidation value of such Preferred Stock or (b) the maximum mandatory redemption or mandatory repurchase price with respect to such Preferred Stock, whichever is greater;

(i) all references to the date the Initial Notes were originally issued shall refer to the Issue Date;

(j) unless context requires otherwise, the words “hereof,” “herein” and “hereunder” and words of similar import when used in this Indenture shall refer to this Indenture as a whole and not to any particular provision of this Indenture;

(k) unless otherwise stated, any agreement, contract or document defined or referred to herein shall mean such agreement, contract or document and all schedules, exhibits and attachments thereto as in effect as of the date hereof, as the same may thereafter be amended, supplemented or otherwise modified from time to time; and

(l) all references in this Indenture and the Notes to interest in respect of any Note shall be deemed to include all Additional Amounts, if any, in respect of such Note, unless the context otherwise requires, and express mention of the payment of Additional Amounts in any provision hereof or thereof shall not be construed, without more, as excluding reference to Additional Amounts in those provisions hereof or thereof where such express mention is not made.

Article 2
The Notes

SECTION 2.01 Form and Dating . Provisions relating to the Notes are set forth in the Rule 144A/Regulation S Appendix attached hereto (the “Appendix”), which is hereby incorporated in, and expressly made part of, this Indenture. The Initial Notes and the Trustee’s certificate of authentication shall be substantially in the form of Exhibit 1 to the Appendix , which is hereby incorporated in, and expressly made a part of, this Indenture. The Notes may have notations, legends or endorsements required by law, stock exchange rule, agreements to which the Company is subject, if any, or usage ( provided that any such notation, legend or endorsement is in a form acceptable to the Company). Each Note shall be dated the date of its authentication. The Notes will be fully and unconditionally guaranteed by each Subsidiary Guarantor in Article 10. The terms of the Initial Notes set forth in the and Exhibit 1 are part of the terms of this Indenture.

SECTION 2.02 Execution and Authentication . An Officer of the Company shall sign the Notes for the Company and an Officer of each Brazilian Subsidiary Guarantor shall sign the notation in the Notes relating to each Note Guarantee. An Officer of each of the Argentine Subsidiary Guarantors shall sign the acceptance to the Offer Letter, and upon such acceptance of the Offer Letter, and satisfaction of all other conditions precedent herein and therein, each Argentine Subsidiary Guarantor shall be bound by the notation in the Notes relating to each Note Guarantee. Each such signature may be by manual or facsimile signature of such Officer.

If an Officer whose signature is on a Note no longer holds that office at the time the Trustee authenticates the Note, the Note shall be valid nevertheless.

A Note shall not be valid until a Trust Officer manually signs the certificate of authentication on the Note. The signature shall be conclusive evidence that the Note has been authenticated under this Indenture.

On the Issue Date, the Trustee shall authenticate and deliver U.S.$500,000,000 aggregate principal amount of 6.000% Senior Notes due 2027 and, at any time and from time to time thereafter, the Trustee shall authenticate and deliver Notes for original issue, in each case upon an Issuer Order. Such written order shall specify the aggregate principal amount of the Notes to be authenticated and the date on which the original issue of Notes is to be authenticated.

The Trustee may appoint an authenticating agent reasonably acceptable to the Company to authenticate the Notes. Unless limited by the terms of such appointment, an authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as any Registrar, Paying Agent or agent for service of notices and demands.

SECTION 2.03 Registrar and Paying Agent . The Company shall ensure the maintenance of the Registrar and the Paying Agent. The Registrar shall keep a register of the Notes and of their transfer and exchange. A register of the Notes (the “Notes Register”) will be held at the registered office of the Company. For this purpose, the Registrar should send to the Company as soon as practicable after any change to the register held with the Registrar a copy of such register or the information to enable the update of the Notes Register kept at the registered office of the Company.

The Company may have one or more co‑registrars and one or more additional paying agents. The term “Paying Agent” includes the Paying Agent and any additional paying agent and the term “Registrar” includes any additional Registrar or co‑registrar.

The Company shall enter into an appropriate agency agreement with any Registrar, Paying Agent or co‑registrar not a party to this Indenture. Such agreement shall implement the provisions of this Indenture that relate to such agent. The Company shall notify the Trustee of the name and address of any such agent. If the Company fails to maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be entitled to appropriate compensation therefor pursuant to Section 7.06. The Company or any Restricted Subsidiary may act as Paying Agent, Registrar, co‑registrar or Transfer Agent.

The Company initially appoints (i) the Trustee as Registrar, Transfer Agent and Paying Agent in connection with the Notes and (ii) DTC as Depositary with respect to the Notes.

SECTION 2.04 Paying Agent to Hold Money in Trust . By 10:00 A.M., New York time, on the Business Day prior to each Interest Payment Date, redemption date, purchase date, Change of Control Payment Date or Maturity Date on any Notes, the Company shall deposit with the Paying Agent in immediately available funds a sum sufficient to pay such principal and interest when so becoming due on any such Interest Payment Date, redemption date, purchase date, Change of Control Payment Date or Maturity Date on any Notes. The Company shall require each Paying Agent (other than the Trustee) to agree in writing that such Paying Agent shall hold in trust, for the benefit of Holders or the Trustee, all money held by such Paying Agent for the payment of principal and interest on the Notes and shall notify the Trustee of any default by the Company in making any such payment. The Paying Agent shall arrange with all other Paying Agents for the payment, from funds furnished by the Company to the Paying Agent pursuant to this Indenture, of the principal, premium and interest (including Additional Amounts, if any) on the Notes. The Paying Agents will hold in trust, for the benefit of the Holders or the Trustee, all money held by such Paying Agent for the payment of principal, premium or interest on the Notes. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee and to account for any funds disbursed by it. Upon complying with this Section 2.04, the Paying Agent shall have no further liability for the money delivered to the Trustee.

The receipt by the Paying Agent or the Trustee from the Company of each payment of principal, interest and/or other amounts due in respect of the Notes in the manner specified herein and on the date on which such amount of principal, interest and/or other amounts are then due, shall satisfy the obligations of the Company herein and under the Notes to make such payment to the Holders on the due date thereof.

So long as any of the Notes remain outstanding, the Company will appoint and maintain one or more agents in New York City to whom the Notes may be presented for payment. So long as the Notes are listed on the Singapore Stock Exchange and the rules of such exchange so require, the Company will also appoint and maintain one or more paying agents in Singapore to whom payments of principal on definitive Notes may be made by presenting and surrendering such Notes at the office of such Singapore paying agent, such Singapore paying agent to have the same duties and rights conferred to a Paying Agent.

SECTION 2.05 Holders Lists . The Trustee, as Registrar, shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of the Holders. If the Trustee is not the Registrar, the Company shall furnish to the Trustee, in writing at least two Business Day before each Interest Payment Date and at such other times as the Trustee may reasonably request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders.

SECTION 2.06 Transfer and Exchange . The Notes shall be issued in registered form and shall be transferable only as provided in the Appendix to this Indenture. The Company or the Trustee may require payment of a sum sufficient to pay all taxes, assessments or other governmental charges in connection with any transfer or exchange pursuant to the terms of this Indenture (other than any such transfer taxes, assessments or similar governmental charge payable upon exchange or transfer pursuant to Sections 4.08 and 9.04). The Company shall not be required to make, and the Registrar need not register, transfers or exchanges of Notes selected and delivered for redemption or any Notes for a period of 15 days before an Interest Payment Date.

Prior to the due presentation for registration of transfer of any Note, the Company, the Trustee, the Paying Agents, the Registrar or any co‑registrar may deem and treat the person in whose name a Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest (and Additional Amounts, if any) on such Note and for all other purposes whatsoever, whether or not presentation of such Note is overdue, and none of the Company, the Trustee, any Paying Agent, the Registrar or any co‑registrar shall be affected by notice to the contrary.

All Notes issued upon any transfer or exchange pursuant to the terms of this Indenture shall evidence the same debt and shall be entitled to the same benefits under this Indenture as the Notes surrendered upon such transfer or exchange.

The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Note (including any transfers between or among participants in DTC or beneficial owners of interests in any Global Notes) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by the terms of, this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

None of the Trustee, the Registrar, the Transfer Agent or any Paying Agent shall have any responsibility for any actions taken or not taken by the Company or the Depositary.

SECTION 2.07 Replacement Notes . If (a) any mutilated Note is surrendered to the Company, a Registrar, or the Trustee, or (b) the Company, a Registrar and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Note, and, unless otherwise agreed by the Company, the Registrar and the Trustee, there is delivered to the Company, the Registrar and the Trustee such security or indemnity as may be required by them to save each of them harmless, then, in the absence of notice to the Company, the Registrar or the Trustee that such Note has been acquired by a Protected Purchaser, the Company shall execute and the Trustee shall

authenticate and deliver, in exchange for any such mutilated Note or in lieu of any such destroyed, lost or stolen Note, a new Note of like tenor and principal amount, bearing a number not contemporaneously outstanding.

In case any such mutilated, destroyed, lost or stolen Note has become due and payable, or has been called for redemption by the Company pursuant to Article 3 of this Indenture, the Company in its discretion (but subject to any conversion rights) may, instead of issuing a new Note, pay or redeem such Note, as the case may be.

Upon the issuance of any new Note under this Section 2.07, the Company or the Trustee may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expense (including the fees and expenses of the Trustee or the Registrar) in connection therewith.

Every replacement Note is an additional obligation of the Company.

The provisions of this Section 2.07 are exclusive and, to the extent lawful, shall preclude all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes.

SECTION 2.08 Outstanding Notes . Notes outstanding at any time are all Notes authenticated by the Trustee except for those canceled by it pursuant to Section 2.10 hereof, those delivered to the Trustee for cancellation or surrendered for transfer or exchange and those described in this Section 2.08 as not outstanding. Except as set forth in Article 9 and Section 12.05, a Note does not cease to be outstanding because the Company or an Affiliate of the Company holds the Note.

If a Note is replaced pursuant to Section 2.07, it ceases to be outstanding unless the Trustee and the Company receive proof satisfactory to them that the replaced Note is held by a Protected Purchaser.

If any Paying Agent segregates and holds in trust, in accordance with this Indenture, on a redemption date or the Maturity Date money sufficient to pay all principal, premium, interest and Additional Amounts (if any) payable on that date with respect to the Notes (or portions thereof) to be redeemed or maturing, as the case may be, then on and after that date, such Notes (or portions thereof) will cease to be outstanding and interest on them will cease to accrue.

SECTION 2.09 Temporary Notes . Until definitive Notes are ready for delivery, the Company may prepare and execute and the Trustee shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of definitive Notes but may have variations that the Company considers appropriate for temporary Notes. Without unreasonable delay, the Company shall prepare and execute and the Trustee shall authenticate definitive Notes and deliver them in exchange for temporary Notes.

SECTION 2.10 Cancellation . The Company at any time may deliver Notes to the Registrar for cancellation, along with a written notice to the Trustee advising it of the cancellation.

The Registrar shall forward to the Trustee any Notes surrendered to it for registration of transfer, exchange or payment. The Trustee and no one else shall cancel and dispose of (subject to the record retention requirements of the Exchange Act) all Notes surrendered for registration of transfer, exchange, payment or cancellation in accordance with its procedures for the disposition of canceled securities and upon the written request of the Company deliver a certificate of such disposition to the Company unless the Company timely directs the Trustee in writing to deliver canceled Notes to the Company, provided that such canceled Notes have not been previously disposed of by the Trustee. The Company may not issue new Notes to replace Notes it has redeemed, paid or delivered to the Trustee for cancellation.

SECTION 2.11 CUSIP Numbers and ISINs . The Company in issuing the Notes may use “CUSIP” numbers and “ISINs” (if then generally in use) or similar numbers and, if so, the Trustee shall use “CUSIP” numbers, “ISINs” or similar numbers in notices of redemption as a convenience to Holders; provided , however , that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption shall not be affected by any defect in or omission of such numbers. The Company shall promptly notify the Trustee, in writing, of any change in any “CUSIP” or “ISIN” numbers.

SECTION 2.12 Issuance of Additional Notes . The Company shall be entitled, subject to its compliance with Section 4.03 and the other terms of this Indenture, to issue Additional Notes under this Indenture which shall have identical terms as the Initial Notes issued on the Issue Date, except that the issue price, issue date and date from which interest accrues may differ. Such Additional Notes may be issued in one or more series and with the same or different CUSIP number; provided, however , that unless such Additional Notes are issued under a separate CUSIP, such Additional Notes must be fungible with the Notes for U.S. federal income tax purposes. The Initial Notes and the Additional Notes, if any, shall be treated as a single class for all purposes under this Indenture, including waivers, amendments, redemptions and offers to purchase. Any Additional Notes shall be part of the same issue as the Initial Notes and shall vote on all matters with the Holders.

With respect to any Additional Notes, the Company shall set forth in an Officer’s Certificate, a copy of which shall be delivered to the Trustee, the following information:

(a) the aggregate principal amount of such Additional Notes to be authenticated and delivered pursuant to this Indenture;

(b) the issue price, the issue date and the CUSIP and ISIN numbers, if any, of such Additional Notes; and

(c) whether such Additional Notes shall be Transfer Restricted Notes and issued in the form of Initial Notes as set forth in the Appendix to this Indenture.

The Trustee shall have the right to decline to authenticate and deliver any Additional Notes under this Section 2.12 if the Trustee, determines that such action may not lawfully be taken

by the Company or if the Trustee in good faith by its board of directors or board of trustee, executive committee, or a trust committee of directors or trustees or Trust Officers shall determine that such action would expose the Trustee to personal liability to existing Holders of Notes.

Article 3

Redemption

SECTION 3.01 Notices to Trustee . If the Company elects to redeem Notes pursuant to Section 3.05 or Section 3.06 hereof, it shall notify the Trustee in writing of the redemption date and the principal amount of Notes to be redeemed, as hereinafter provided.

The Company shall give each notice to the Trustee provided for in this Section 3.01 at least 35 days but not more than 60 days before the redemption date (unless a shorter period shall be acceptable to the Trustee). In the case of a redemption under Section 3.05 or Section 3.06, such notice shall be accompanied by an Officer’s Certificate and an Opinion of Counsel from the Company to the effect that such redemption will comply with the conditions set forth in this Article 3 of this Indenture.

SECTION 3.02 Notice of Redemption . At least 30 days but not more than 60 days before a date for redemption of Notes, the Company shall mail a notice of redemption by first‑class mail to each Holder to be redeemed at such Holder’s address as set forth in the Register. Notice of any redemption may, at the Company’s discretion, be subject to one or more conditions precedent, including, but not limited to, completion of an Eligible Equity Offering and/or satisfaction of a financing or change of control.

The notice shall identify the Notes to be redeemed and shall state:

(a) the redemption date;

(b) the redemption price;

(d) that, unless the Company defaults in making such redemption payment, interest on Notes called for redemption ceases to accrue on the redeemed Notes on and after the redemption date;

(e) the paragraph of the Notes pursuant to which the Notes called for redemption are being redeemed;

(f) the “CUSIP” or “ISIN” number, if any, and

(g) that no representation is made as to the correctness or accuracy of the CUSIP or ISIN numbers, if any, listed in such notice or printed on the Notes.

At the Company’s request, delivered at least 35 days prior to the date such notice of redemption is to be given to the Holder(s) (unless a shorter period shall be acceptable to the Trustee), the Trustee or any Paying Agent shall give the notice of redemption in the Company’s name and at the Company’s expense. In such event, the Company shall provide the Trustee or such Paying Agent with the information required by this Section 3.02.

SECTION 3.03 Effect of Notice of Redemption . Once notice of redemption is mailed, Notes called for redemption become due and payable on the redemption date and at the redemption price stated in the notice and, on and after such redemption date, the Notes redeemed shall cease to bear interest. Upon surrender to a Paying Agent, such Notes shall be paid at the redemption price stated in the notice, plus accrued and unpaid interest to, but not including, the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the related Interest Payment Date). Failure to give notice or any defect in the notice to any Holder shall not affect the validity of the notice to any other Holder.

SECTION 3.04 Deposit of Redemption Price . No later than 10:00AM New York time one Business Day prior to the redemption date, the Company shall deposit with the Paying Agent money sufficient to pay the redemption price of and accrued and unpaid interest on all Notes to be redeemed on that date other than Notes or portions of Notes called for redemption which have been delivered by the Company to the Trustee for cancellation.

SECTION 3.05 Optional Redemption . Except as set forth below, the Company will not be entitled to redeem the Notes at its option.

Prior to September 21, 2022, the Company may, at its option, redeem all of the Notes at any time or part of the Notes from time to time at a redemption price equal to 100% of the principal amount of the Notes plus the Applicable Premium as of, and accrued and unpaid interest to, but excluding, the redemption date (subject to the right of Holders of the Notes on the relevant Record Date to receive interest due on the relevant Interest Payment Date).

On and after September 21, 2022, the Company may, at its option, redeem all of the Notes at any time or part of the Notes from time to time at the following redemption prices (expressed as a percentage of principal amount), plus accrued and unpaid interest to, but excluding, the redemption date (subject to the right of Holders of the Notes on the relevant Record Date to receive interest due on the relevant Interest Payment Date), if redeemed during the twelve-month period commencing on September 21 of the years set forth below:



	Redemption Price
Period
2022	103.000%
2023	102.000%
2024	101.000%
2025 and thereafter	100.000%

At any time prior to September 21, 2022, the Company may at its option on one or more occasions redeem Notes in an aggregate principal amount not to exceed 35% of the aggregate principal amount of the outstanding Notes (including any Additional Notes) at a redemption price (expressed as a percentage of principal amount) of 106.000%, plus accrued and unpaid interest to, but excluding, the redemption date, with the Net Cash Proceeds from one or more Eligible Equity Offerings; provided, however , that:

(1) at least 65% of such aggregate principal amount of Notes remains outstanding immediately after the occurrence of each such redemption (including any Additional Notes); and

(2) the Company gives notice of such redemption not more than 90 days after the consummation of the related Eligible Equity Offering.

If the Company is redeeming less than all the Notes at any time, the Trustee will select Notes on a pro rata basis, by lot or by such other method as the Trustee in its sole discretion shall deem to be fair and appropriate, unless otherwise required by law or applicable stock exchange or depositary requirements.

The Company will redeem Notes of U.S.$1,000 in whole and not in part. The Company will cause notices of redemption to be mailed by first class mail at least 30 but not more than 60 days before the redemption date to each Holder to be redeemed at its registered address.

If any Note is to be redeemed in part only, the notice of redemption that relates to that Note will state the portion of the principal amount thereof to be redeemed. The Company will issue a new Note in a principal amount equal to the unredeemed portion of the original Note in the name of the Holder upon cancellation of the original Note. Notes called for redemption become due on the date fixed for redemption. On and after the redemption date, interest ceases to accrue on Notes or portions of them called for redemption.

SECTION 3.06 Optional Tax Redemption . If as a result of any change in or amendment to the laws (or any rules or regulations thereunder) of a Relevant Jurisdiction, or any amendment to or change in an official interpretation, administration or application of such laws, treaties, rules, or regulations (including a holding by a court of competent jurisdiction), which change or amendment becomes effective or, in the case of a change in official position, is announced on or after the later of the Issue Date and the date a Relevant Jurisdiction becomes a Relevant Jurisdiction, (i) the Company or any successor has or will become obligated to pay any Additional Amounts as described above under Section 4.21 or (ii) any Subsidiary Guarantor or any successor has or will become obligated to pay Additional Amounts as described above under Section 4.21 in excess of the Additional Amounts (A) such Brazilian Subsidiary Guarantor or any such successor would be obligated to pay if payments were subject to withholding or deduction at a rate of 15% or a rate of 25% in case the Holder of the Notes is resident in a tax haven jurisdiction for Brazilian-tax purposes (i.e., countries which do not impose any income tax or which impose it at a maximum rate lower than 17% or where the laws impose restrictions on the disclosure of ownership composition or securities ownership) or (B) such Argentine Subsidiary Guarantor or any such successor would be obligated to pay if payments were subject to withholding or deduction at a rate of 35% or such other reduced rate as would be applicable as of the Issue Date depending on the

nationality, residence and/or identity of the Holder or beneficial owner for Argentine tax purposes (the rates in (ii), the “Minimum Withholding Level”), the Company, such Subsidiary Guarantor or any such successor may, at its option, redeem all, but not less than all, of the Notes, at a redemption price equal to 100% of their principal amount, together with interest accrued to the date fixed for redemption, upon publication of irrevocable notice of redemption not less than 30 days nor more than 90 days prior to the date fixed for redemption. No notice of such redemption may be given earlier than 90 days prior to the earliest date on which such Additional Amounts would first be paid were a payment then due. Notwithstanding the foregoing, the Company, a Subsidiary Guarantor or any successor shall not have the right to so redeem the Notes unless: (i) it or the applicable Subsidiary Guarantor, as the case may be, has taken reasonable measures to avoid the obligation to pay Additional Amounts or, in the case of an applicable Subsidiary Guarantor, Additional Amounts in excess of the Additional Amounts payable at the Minimum Withholding Level (provided, however, for this purpose reasonable measures shall not include the Company, any Subsidiary Guarantor or any successor moving or changing jurisdiction); and (ii) it or such Subsidiary Guarantor, as the case may be, has complied with all necessary regulations to legally effect such redemption.

In the event that the Company, a Subsidiary Guarantor or any successor elects to so redeem the Notes, it will deliver to the Trustee:

(1) a certificate, signed in the name of the Company by two of its executive officers or by its attorney in fact in accordance with its bylaws or any successor, stating that the Company, a Subsidiary Guarantor or any successor, as the case may be, is entitled to redeem the Notes pursuant to their terms and setting forth a statement of facts showing that the condition or conditions precedent to the right of the Company or any successor to so redeem have occurred or been satisfied; and

(2) an Opinion of Counsel to the effect that the Company or any successor has or will become obligated to pay Additional Amounts or, in the case of a Subsidiary Guarantor or any successor to such Subsidiary Guarantor, has or will become obligated to pay Additional Amounts in excess of the Additional Amounts payable at the Minimum Withholding Level, as a result of the change or amendment, that the Company, such Subsidiary Guarantor, or any successor, as the case may be, cannot avoid payment of such Additional Amounts or excess Additional Amounts by taking reasonable measures available to it and that all governmental requirements necessary for the Company, such Subsidiary Guarantor or any successor to effect the redemption have been complied with.

SECTION 3.07 Open Market Purchases . The Company or any of its Affiliates may purchase Notes in the market or in negotiated transactions at any time (in any manner and at any price); provided that any such purchased Notes will not be resold, except in compliance with applicable requirements or exemptions under the relevant securities laws. Any Notes redeemed or repurchased by the Company or any Affiliate may, at the option of the Company, continue to be outstanding or be cancelled.

Article 4

Covenants

SECTION 4.01 Performance of Obligations under the Notes . The Company shall duly and punctually pay the principal of and premium, if any, and interest and Additional Amounts, if any, on the Notes in accordance with the terms of the Notes and this Indenture. Each Subsidiary Guarantor shall duly and punctually pay any amounts owed by it under its Note Guarantee in accordance with the terms of the Notes and this Indenture. The principal and interest shall be considered paid on each of the dates due if on such date the Trustee or the Paying Agents hold in accordance with this Indenture money sufficient to pay all principal and interest then due.

SECTION 4.02 Reports . If at any point the Company is no longer subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, so long as any Notes are “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act, the Company will furnish to the Holders of the Notes and to prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.

If at any point the Company is no longer subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company will furnish or cause to be furnished to the Trustee in English (for distribution only to the Holders of Notes):

• within 90 days after the end of the first, second and third quarters of the Company’s fiscal year (commencing with the quarter ending immediately following the Company no longer being subject to such reporting requirements), quarterly unaudited consolidated financial statements (including the notes thereto) prepared in accordance with IFRS of the Company for such period; and

• within 120 days after the end of the fiscal year of the Company (commencing with the first fiscal year ending immediately following the Company no longer being subject to such reporting requirements), annual audited consolidated financial statements (including the notes thereto) prepared in accordance with IFRS of the Company for such fiscal year and a report on such annual financial statements by the Company’s certified independent accountants.

Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee’s receipt of such reports shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company’s or any other Person’s compliance with any of its covenants under this Indenture or the Notes (as to which the Trustee is entitled to rely exclusively on Officers’ Certificates).

The Trustee shall not be obligated to monitor or confirm, on a continuing basis or otherwise, the Company’s or any other Person’s compliance with the covenants described above or with respect to any reports or other documents filed under this Indenture; provided, however, that nothing herein shall relieve the Trustee of any obligations to monitor the Company’s timely delivery of all reports and certificates described in this Section 4.02.

SECTION 4.03 Limitation on Indebtedness . (1) The Company will not, and will not permit any Restricted Subsidiary to, Incur any Indebtedness; provided, however , that the Company or any Restricted Subsidiary may Incur Indebtedness if, on the date of such incurrence and after giving effect thereto and the application of the proceeds therefrom, the Net Debt to EBITDA Ratio would be no greater than 3.25 to 1.0.

(2) Notwithstanding clause (1) above, the Company or any Restricted Subsidiary may Incur the following Indebtedness:

(a) intercompany Indebtedness between or among the Company and any Restricted Subsidiary or between or among Restricted Subsidiaries; provided , however , that:

(i) if the Company or any Subsidiary Guarantor is the obligor on such Indebtedness Incurred and the obligee is a Person other than the Company or a Subsidiary Guarantor, such Indebtedness must be expressly subordinated in right of payment to the Notes; and

(ii) any subsequent issuance or transfer of Capital Stock or any other event that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary and any sale or other transfer of any such Indebtedness to a Person that is neither the Company nor a Restricted Subsidiary will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (a) at the time such event occurs;

(b) Indebtedness:

(i) represented by the Notes (other than any Additional Notes) and the Note Guarantees (including in respect of any Additional Notes);

(ii) outstanding on the Issue Date;

(iii) consisting of Refinancing Indebtedness Incurred in respect of any Indebtedness described in this clause (b) or the foregoing clause (1); or

(iv) consisting of Guarantees of any Indebtedness permitted under this Indenture;

(c)

(i) Indebtedness of a Restricted Subsidiary Incurred and outstanding on or prior to the date on which such Restricted Subsidiary was acquired by the Company (other than Indebtedness Incurred as consideration for, or to provide all or any portion of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Restricted Subsidiary became a

Restricted Subsidiary of, or was otherwise acquired by, the Company); provided , however , that on the date that such Restricted Subsidiary is acquired by the Company, (A) the Company would have been able to Incur U.S.$1.00 of additional Indebtedness pursuant to clause (1) above or (B) the Company would have a Net Debt to EBITDA Ratio not greater than the Net Debt to EBITDA Ratio prior to such incurrence, in each case after giving effect to the Incurrence of such Indebtedness pursuant to this subclause (i); and

(i) Refinancing Indebtedness Incurred by the Company or a Restricted Subsidiary in respect of Indebtedness Incurred pursuant to this clause (c);

(d) Indebtedness in respect of bankers’ acceptances, deposits, promissory notes, letters of credit, self-insurance obligations, completion guarantees, performance, surety, appeal or similar bonds and Guarantees provided by the Company or any Restricted Subsidiary in the ordinary course of its business securing the performance of contractual or license obligations of the Company or any Restricted Subsidiary or Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims or payment obligations with self-insurance or similar requirements in the ordinary course of business;

(e) Purchase Money Indebtedness (including Capital Stock) and Capitalized Lease Obligations in an aggregate principal amount not to exceed at one time outstanding the greater of (i) U.S.$15.0 million and (ii) 1.0% of the Company’s Consolidated Total Assets, and Refinancing Indebtedness Incurred in respect of Indebtedness Incurred pursuant to this clause (e);

(f) Hedging Obligations of the Company or any Restricted Subsidiary (entered into for non-speculative purposes) in the ordinary course of business or directly related to Indebtedness permitted to be Incurred by the Company or any Restricted Subsidiary pursuant to this Indenture and Refinancing Indebtedness Incurred by the Company or a Restricted Subsidiary in respect of Indebtedness Incurred pursuant to this clause (f);

(g) Indebtedness arising from agreements providing for indemnification, adjustment of purchase price or similar obligations, or guarantees or letters of credit, surety bonds or performance bonds securing any obligations of the Company or any Restricted Subsidiary pursuant to such agreements, in any case Incurred in connection with the disposition of any business, assets or Subsidiary (other than guarantees of Indebtedness Incurred by any Person acquiring all or any portion of such business, assets or Subsidiary for the purpose of financing such acquisition), so long as the amount does not exceed the gross proceeds (including non-cash proceeds) actually received by the

Company or any Restricted Subsidiary thereof in connection with such disposition;

(h) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; provided, however , that such Indebtedness is extinguished within five Business Days of its Incurrence;

(i) Indebtedness to the extent that the net proceeds thereof are promptly deposited to defease or to satisfy and discharge the Notes in accordance with this Indenture;

(j) Indebtedness consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply agreements in the ordinary course of business;

(k) Indebtedness under one or more lines of credit or working capital facilities in an amount not to exceed the greater of U.S.$100.00 million and (ii) 7% of the Company’s Consolidated Total Assets;

(l) Indebtedness of the Company or any Restricted Subsidiary for taxes levied, assessments due and other governmental charges required to be paid as a matter of law or regulation in the ordinary course of business; and

(m) Indebtedness in an aggregate principal amount at any time outstanding not to exceed the greater of (i) U.S.$200.0 million and (ii) 14% of the Company’s Consolidated Total Assets (or the equivalent amount thereof at the time of determination).

For purposes of determining compliance with this covenant:

(i) in the event that an item of Indebtedness meets the criteria of more than one of the types of Indebtedness described above, including clause (1) above, the Company, in its sole discretion, may classify, and from time to time may reclassify, such item of Indebtedness in one of the types of Indebtedness described above, including clause (1) above; and

(ii) the Company will be entitled to divide and classify, and from time to time may reclassify, an item of Indebtedness in more than one of the types of Indebtedness described above, including clause (1) above.

Notwithstanding any other provision of this covenant, neither the Company nor any Restricted Subsidiary shall, with respect to any outstanding Indebtedness Incurred, be deemed to be in violation of this covenant solely as a result of fluctuations in the exchange rates of currencies.

For purposes of determining compliance with any U.S. dollar-denominated restriction on the Incurrence of Indebtedness, the U.S. dollar-equivalent principal amount of Indebtedness

denominated in a foreign currency shall be calculated based on the relevant currency exchange rate determined on the date of Incurrence, in the case of term Indebtedness, or first committed, in the case of revolving credit Indebtedness, provided that if such Indebtedness is Incurred to refinance other Indebtedness denominated in a non-U.S. currency, and such refinancing would cause the applicable U.S. dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such U.S. dollar-denominated restriction will be deemed not to have been exceeded so long as the principal amount of such Refinancing Indebtedness does not exceed the principal amount of such Indebtedness being refinanced. The principal amount of any Indebtedness Incurred to Refinance other Indebtedness, if Incurred in a different currency from the Indebtedness being Refinanced, shall be calculated based on the currency exchange rate applicable to the currencies in which such Refinancing Indebtedness is denominated calculated based on the relevant currency exchange rates as calculated in the first sentence of this paragraph.

The accrual of interest, the accretion or amortization of original issue discount, the payment of regularly scheduled interest in the form of additional Indebtedness of the same instrument will not be deemed to be an Incurrence of Indebtedness for purposes of this covenant; provided that any such outstanding additional Indebtedness in respect of Indebtedness Incurred pursuant to any provision of clause (2) above will be counted as Indebtedness outstanding for purposes of any future Incurrence of Indebtedness pursuant to clause (1) above.

SECTION 4.04 Limitation on Restricted Payments . (1) The Company will not, and will not permit any Restricted Subsidiary, directly or indirectly, to:

(a) declare or pay any dividend or make any distribution on or in respect of its Capital Stock (including any payment in connection with any merger or consolidation involving the Company or any Restricted Subsidiary of the Company) except dividends or distributions payable solely in the form of its Capital Stock (other than Disqualified Stock) and except dividends or distributions payable to the Company or any Restricted Subsidiary (and, if such Restricted Subsidiary has shareholders other than the Company or any other Restricted Subsidiary, to its other shareholders on a pro rata basis);

(b) purchase, redeem, retire or otherwise acquire for value any Capital Stock of the Company held by Persons other than the Company or another Restricted Subsidiary (other than a purchase, redemption, retirement or other acquisition for value that would constitute a Permitted Investment);

(c) purchase, repurchase, redeem, defease or otherwise acquire or retire for value, prior to scheduled maturity, scheduled repayment or scheduled sinking fund payment, any Subordinated Obligations (other than the purchase, repurchase, redemption, defeasance or other acquisition of Subordinated Obligations made in anticipation of satisfying a sinking fund obligation, a principal installment or a final maturity, in each case, due within one year of the date of such purchase, repurchase, redemption, defeasance or other acquisition); or

(d) make any Investment (other than a Permitted Investment) in any Person;

(the actions described in clauses (a) through (d) above being herein referred to as “Restricted Payments” and each, a “Restricted Payment”), if at the time the Company or such Restricted Subsidiary makes such Restricted Payment:

(i) an Event of Default will have occurred and be continuing;

(ii) the Company is not able to Incur at least U.S.$1.00 of additional Indebtedness pursuant to clause (1) of Section 4.03; or

(iii) the aggregate amount of such Restricted Payment and all other Restricted Payments made subsequent to the Issue Date would exceed the sum of, without duplication:

(A) 50% of the aggregate amount of Consolidated Adjusted Net Income accrued during the period (treated as one accounting period) beginning on January 1, 2017 and ending on the last day of the most recent fiscal quarter for which financial statements are available prior to the date of such Restricted Payment (or, in case such Consolidated Adjusted Net Income will be a loss, minus 100% of such loss); plus

(B) the aggregate Net Cash Proceeds, and the Fair Market Value of any property, received by the Company from the issue or sale of its Capital Stock (other than Disqualified Stock) or other capital contributions subsequent to the Issue Date (other than Net Cash Proceeds received from an issuance or sale of such Capital Stock to a Restricted Subsidiary of the Company); plus


(C)	(1) the amount of a Guarantee of the Company or any Restricted Subsidiary upon the unconditional release in full of the Company or such Restricted Subsidiary from such Guarantee if such Guarantee was previously treated as a Restricted Payment; and

(2) in the event that the Company or any Restricted Subsidiary makes an Investment in a Person that, as a result of or in connection with such Investment, becomes a Restricted Subsidiary, an amount equal to the Company’s or such Restricted Subsidiary’s existing Investment in such Person;

provided that any amount added pursuant to clauses (1) and (2) of this clause (C) shall not exceed the amount of such Investment or Guarantee, respectively, previously made and treated as a Restricted Payment; provided, however , that no amount will be included under

this clause (C) to the extent it is already included in Consolidated Adjusted Net Income; plus

(D) the amount by which Indebtedness of the Company or any Restricted Subsidiary is reduced on the Company’s balance sheet or the balance sheet of any Restricted Subsidiary, in each case, upon the conversion or exchange (other than for Indebtedness held by the Company or any Restricted Subsidiary) subsequent to the Issue Date of any such Indebtedness for Capital Stock (other than Disqualified Stock) of the Company (less the amount of any cash or the Fair Market Value of other property distributed by the Company or any Restricted Subsidiary upon such conversion or exchange); plus

(E) the amount equal to the net reduction of Investments (other than Permitted Investments) made by the Company or any Restricted Subsidiary in any Person resulting from repurchases or redemptions of such Investment by such Person, proceeds realized upon the sale of such Investment, repayments of loans or advances or other transfers of assets (including by way of dividend or distribution) by such Person to the Company or any Restricted Subsidiary; provided that any amount added pursuant to this clause (E) shall not exceed the amount of such Investment previously made and treated as a Restricted Payment; provided, further, that no amount will be included under this clause (E) to the extent it is already included in Consolidated Adjusted Net Income; plus

(F) 100% of any dividends received by the Company or any of its Restricted Subsidiaries from an Unrestricted Subsidiary; provided, however, that no amount will be included under this clause (F) to the extent it is already included in Consolidated Adjusted Net Income; plus

(G) U.S.$35.0 million (or the equivalent in other currencies).

The provisions of Section 4.04 above shall not prohibit:

(a) any Restricted Payment in exchange for, or out of the proceeds of the substantially concurrent issuance or sale of, Capital Stock of the Company (other than Disqualified Stock and other than Capital Stock issued or sold to a Restricted Subsidiary of the Company); provided, however, that (x) such Restricted Payment will be excluded in the calculation of the amount of Restricted Payments pursuant to clause (1)(d)(iii) above and (y) the Net Cash Proceeds from such sale of Capital Stock, to the extent such Net Cash Proceeds are used for such Restricted Payment will be excluded from clause (1)(d)(iii)(B) of this covenant;

(b) any purchase, repurchase, redemption, defeasance or other acquisition or retirement for value of Subordinated Obligations made in exchange for, or out of the proceeds of the substantially concurrent sale of, Subordinated Obligations that is permitted to be Incurred pursuant to the covenant described under Section 4.03; provided, however, that such purchase, repurchase, redemption, defeasance or other acquisition or retirement for value will be excluded in the calculation of the amount of Restricted Payments pursuant to clause (1)(d)(iii) above;

(c) any purchase, repurchase, redemption, defeasance or other acquisition or retirement for value of Subordinated Obligations owed to the Company or any of its Restricted Subsidiaries, the incurrence of which was permitted under clause (2)(a) of the covenant described under Section 4.03; provided, however, that such purchase, repurchase, redemption, defeasance or other acquisition or retirement for value will be excluded in the calculation of the amount of Restricted Payments pursuant to clause (1)(d)(iii) above;

(d) so long as no Default has occurred and is continuing, any purchase or redemption of Subordinated Obligations at a purchase price of up to 101% of the principal amount thereof (together with accrued and unpaid interest) in the event of the occurrence of a Change of Control; provided , however , that prior to such purchase or redemption, the Company (or a third party to the extent permitted by this Indenture) has made the Change of Control Offer described under Section 4.08 and has purchased all Notes validly tendered and not withdrawn pursuant thereto; and provided further that any such purchase shall not be included in the calculation of the amount of Restricted Payments pursuant to clause (1)(d)(iii) above;

(e) dividends paid or distributions made after the date of declaration thereof if at such date of declaration such dividend or distribution would have complied with this covenant; provided , however , that the payment or declaration, but not both the payment and the declaration, of such dividend will be included in the calculation of the amount of Restricted Payments pursuant to clause (1)(d)(iii) above;

(f) so long as no Default has occurred and is continuing, any purchase or redemption of Subordinated Obligations from Net Available Cash; provided that the Company has complied with the covenant described under Section 4.06; provided, further , that such purchase or redemption shall be included in the calculation of the amount of Restricted Payments pursuant to clause (1)(d)(iii) above;

(g) the purchase, redemption or other acquisition or retirement for value of Capital Stock of the Company pursuant to the Company’s Share Repurchase Program, the aggregate of which shall not exceed 5% of the outstanding Capital Stock of the Company in any twelve-month period

starting on September 24 of any year; provided, however, that such payment shall be excluded in the calculation of the amount of Restricted Payments pursuant to clause (1)(d)(iii) above;

(h) repurchases of Capital Stock deemed to occur upon the exercise of stock options, warrants or other convertible securities if such Capital Stock represents a portion of the exercise price thereof and cash payments in lieu of the issuance of fractional shares; provided, however, that such repurchases shall be excluded from calculations of the amount of Restricted Payments pursuant to clause (1)(d)(iii) above;

(i) payments of dividends on Disqualified Stock issued pursuant to the covenant described under Section 4.03; provided, however, that such payments shall be excluded from the calculation of the amount of Restricted Payments pursuant to clause (1)(d)(iii) above;

(j) any Restricted Payments made with the Capital Stock of an Unrestricted Subsidiary (or from the proceeds of a sale thereof); provided, however, that such payments shall be excluded in the calculation of the amount of Restricted Payments pursuant to clause (1)(d)(iii) above; and

(k) other Restricted Payments in an aggregate amount not to exceed U.S.$35.0 million since the Issue Date; provided, however , that such payments shall be excluded in the calculation of the amount of Restricted Payments pursuant to clause (1)(d)(iii) above.

The amount of all Restricted Payments (other than cash) shall be the Fair Market Value on the date of such Restricted Payment of the asset(s) or securities proposed to be paid, transferred, issued, purchased, repurchased, redeemed, retired, defeased or otherwise acquired by the Company or such Restricted Subsidiary, as the case may be, pursuant to such Restricted Payment.

SECTION 4.05 Limitation on Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries . The Company will not and will not permit any Restricted Subsidiary to directly or indirectly, create or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to:

(1) pay dividends or make any other distributions on the Capital Stock of the Restricted Subsidiary owned by the Company to the Company or any Restricted Subsidiary;

(2) pay any Indebtedness owed to the Company or any Restricted Subsidiary;

(3) make loans or advances to the Company or any Restricted Subsidiary; or

(4) transfer any of its properties or assets to the Company or any Restricted Subsidiary.

However, the preceding restrictions will not apply to encumbrances or restrictions:

(i) existing under or by reason of applicable law or governmental rule, regulation or order;

(ii) existing with respect to any Person, or on any property or assets acquired from a Person which is acquired by or merged with or into the Company or any Restricted Subsidiary, or by reason of any Liens on the property or assets, or relating to the Indebtedness, of any Person or other entity existing at the time such Person or other entity becomes a Restricted Subsidiary, or restriction relating to Indebtedness of any such Person and, in any such case, is not created as a result of or in connection with or in anticipation of any such transaction; provided that such Liens and any extensions, renewals, replacements or refinancing thereof may not extend to any other property owned by the Company or any Restricted Subsidiary; provided further that the encumbrances and restrictions in the extension, renewal, replacement or refinancing are, taken as a whole, no less favorable in any material respect to the Holders of the Notes than the encumbrances or restrictions being extended, renewed, replaced or refinanced;

(iii) on any property or assets existing at the time of acquisition thereof and which are not created as a result of or in connection with or in anticipation of such acquisition; provided that such encumbrances and restrictions and any extensions, renewals, replacements or refinancing thereof may not extend to any other property owned by the Company or any Restricted Subsidiary; provided further that the encumbrances and restrictions in the extension, renewal, replacement or refinancing are, taken as a whole, no less favorable in any material respect to the Holders of the Notes than the encumbrances or restrictions being extended, renewed, replaced or refinanced;

(iv) in the case of clause (4) above:

(a) that exist by virtue of any transfer of, agreement to transfer, option or right with respect to, or Lien on, any property or assets of the Company or any Restricted Subsidiary not otherwise prohibited by this Indenture;

(b) that restrict in a customary manner the subletting, assignment or transfer of any property or asset that is subject to a lease, license or similar contract, or the assignment or transfer of any such lease, license or other contract or contractual right; or

(c) imposed by Purchase Money Indebtedness for property acquired in the ordinary course of business or by Capitalized Lease Obligations permitted under this Indenture on the property so acquired, but only to the extent that such encumbrances or restrictions restrict the transfer of the property;

(v) imposed by the standard loan documentation in connection with loans from (i) Banco Nacional de Desenvolvimento Econômico e Social—BNDES (including loans from Financiadora de Estudos e Projetos— FINEP ) or any other Brazilian or Argentine governmental development bank (including, without limitation, Fundo de Desenvolvimento do Centro Oeste – FDCO ), credit agency or other entity, or (ii) the International Finance Corporation or any other international or multilateral development bank, government sponsored agency, export-import bank or official export-import credit insurer to any Restricted Subsidiary;

(vi) imposed by any agreement governing Indebtedness of the Company or any Restricted Subsidiary that is permitted to be Incurred by the covenant described under Section 4.03; provided that the encumbrance or restriction is customary in comparable financings and will not materially affect the Company’s ability to pay interest or principal, when due, on the Notes;

(vii) existing by reason of Liens that secure Indebtedness otherwise permitted to be incurred under the provisions of the covenant described under Section 4.09 above and that limit the right of the debtor to dispose of the assets subject to such Liens;

(viii) imposed with respect to a Restricted Subsidiary pursuant to an agreement entered into for the sale or disposition of all or substantially all the Capital Stock or assets of such Restricted Subsidiary pending the closing of such sale or disposition;

(ix) with respect to a Restricted Subsidiary and imposed pursuant to a customary provision in a joint venture or other similar agreement with respect to such Restricted Subsidiary that was entered into in the ordinary course of business;

(x) required pursuant to this Indenture; or

(xi) existing on the Issue Date and any amendments, extensions, renewals, replacements or refinancing thereof; provided that the encumbrances and restrictions in the extension, renewal, replacement or refinancing are, taken as a whole, no less favorable in any material respect to the Holders of the Notes than the encumbrances or restrictions being extended, renewed, replaced or refinanced.

SECTION 4.06 Limitation on Sales of Assets . The Company will not, and will not permit any Restricted Subsidiary to, make any Asset Disposition unless the following conditions are met:

(a) The Asset Disposition is for Fair Market Value;

(b) At least 50% of the consideration consists of (i) cash or Temporary Cash Investments or (ii) Additional Assets received at closing. (For purposes of this clause (b), the assumption by the purchasers of Indebtedness or other obligations (other than Subordinated Obligations) of the Company or a Restricted Subsidiary pursuant to a customary novation agreement, and instruments or securities received by the Company or any of its Restricted Subsidiaries from the purchasers that are converted into cash or Temporary Cash Investments within 365 days of the closing shall be considered to be cash received at closing);

(c) Within 365 days after the receipt of any Net Available Cash from an Asset Disposition, the Net Available Cash may be used:


(i)	to permanently repay Indebtedness, other than Subordinated Obligations, of the Company or any Restricted Subsidiary, in each case owing to a Person other than the Company, any Restricted Subsidiary or an Affiliate of the Company; or

(ii)

to acquire (or within such 365-day period, the Company shall have made a good faith determination to acquire or make capital expenditures, which acquisition shall be consummated, or capital expenditure shall be made prior to the second anniversary of such Asset Disposition) (i) all or substantially all of the assets of a Related Business, or a majority of the Voting Stock of another Person that thereupon becomes a Restricted Subsidiary engaged in a Related Business, or to make capital expenditures or otherwise acquire long-term assets that are to be used in a Related Business; or (ii) Additional Assets for the Company or its Restricted Subsidiaries; or


(iii)	any combination of (i) and (ii);

(d) The Net Available Cash of an Asset Disposition not applied (or determined by the Company to be applied) pursuant to paragraph (c) above within 365 days of the Asset Disposition shall constitute “Excess Proceeds.” Excess Proceeds of less than U.S.$25.0 million (or the equivalent thereof at the time of determination) will be carried forward and accumulated. When accumulated Excess Proceeds equals or exceeds U.S.$25.0 million, the Company shall, within 30 days, make an Asset Sale Offer (as defined in clause (2) below) to purchase Notes having a principal amount equal to:


(i)	the accumulated Excess Proceeds, multiplied by


(ii)	a fraction (x) the numerator of which is equal to the then outstanding principal amount of the Notes and (y) the denominator of which is equal to the then outstanding principal amount of the Notes and all pari passu Indebtedness similarly required to be repaid, redeemed or tendered for in connection with the Asset Disposition, rounded down to the nearest U.S.$1,000.

Upon completion of the Asset Sale Offer, Excess Proceeds will be reset at zero and the Company shall be entitled to use any remaining proceeds for any corporate purposes to the extent permitted under this Indenture.

(1) (a) In the event of an Asset Disposition that requires the purchase of Notes pursuant to clause (1)(d) above, the Company will make an offer (an “Asset Sale Offer”) to purchase Notes (and any other pari passu Indebtedness similarly required to be repaid, redeemed or tendered for in connection with the Asset Disposition), at a purchase price, in U.S. dollars, of 100% of their principal amount (or such lesser amount required in the case of any other Senior Indebtedness) plus accrued and unpaid interest (including Additional Amounts, if any) thereon, to, but excluding, the date of purchase and (b) if the aggregate purchase price of the Notes (and any other such Indebtedness) tendered pursuant to the Asset Sale Offer exceeds the Net Available Cash allotted to their purchase, the Company shall select the Notes and other Senior Indebtedness to be purchased on a pro rata basis but in round denominations, which in the case of the Notes will be denominations of U.S.$1,000 or multiples thereof; provided that after a purchase from a Holder in part, such Holder shall hold U.S.$150,000 in principal amount of Notes or a multiple of U.S.$1,000 in excess thereof.

(1) The Company will comply, to the extent applicable, with the requirements of Section 14(e)-1 of the Exchange Act and any other applicable securities laws or regulations in connection with any repurchase of Notes pursuant to this covenant. To the extent that the provisions of any applicable securities laws or regulations conflict with provisions of this covenant, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this covenant by virtue thereof.

SECTION 4.07 Limitation on Transactions with Affiliates . The Company will not, and will not permit any Restricted Subsidiary to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate (each, an “Affiliate Transaction”), unless:


(a)	the Affiliate Transaction is on terms that are no less favorable to the Company or the relevant Restricted Subsidiary, taken as a whole, than those that would have been obtained

in a comparable arm’s-length transaction by the Company or such Restricted Subsidiary with a Person that is not an Affiliate; and


(b)	the Company delivers to the Trustee prior to entering into such Affiliate Transaction:

(i) with respect of any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of U.S.$10.0 million, an Officer’s Certificate stating that such Affiliate Transaction complies with this covenant; and

(ii) with respect of any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of U.S.$25.0 million, an opinion as to the fairness to the Company or such Restricted Subsidiary of such Affiliate Transaction from a financial point of view issued by an independent international investment banking, auditing, valuation or consulting firm of recognized standing.

The following items will not be deemed to be Affiliate Transactions and, therefore, will not be subject to the provisions of the prior paragraph:

(i) transactions between or among the Company and any Restricted Subsidiary or between two or more Restricted Subsidiaries;

(ii) the payment of reasonable and customary regular fees to directors of the Company who are not employees of the Company or its Restricted Subsidiaries;

(iii) transactions or payments (including loans and advances) pursuant to an employee, officer or director compensation or benefit plan, customary indemnifications or arrangements entered into in the ordinary course of business, on market terms and consistent with past practice or industry norms;

(iv) any agreement in effect as of the Issue Date or any amendment, supplement, restatement, replacement, renewal, extension, refinancing thereof or thereto (so long as the renewed or replaced agreement, when taken as a whole, is not materially more disadvantageous to the Holders than such original agreement in effect on the Issue Date) or any transaction contemplated thereby;

(v) any issuance or sale of Capital Stock of the Company (other than Disqualified Stock);

(vi) Permitted Investments and Restricted Payments that are permitted by the provisions of the covenant described under Section 4.04;

(vii) the provision of administrative services to any joint venture or Unrestricted Subsidiary on substantially the same terms provided to or by Restricted Subsidiaries;

(viii) any Sale and Leaseback Transaction otherwise permitted under the caption Section 4.10 if such transaction is on market terms; and

(ix) (A) transactions with customers, clients, distributors, suppliers or purchasers or sellers of goods or services, in each case in the ordinary course of business and on market terms, or (B) transactions with joint ventures or other similar arrangements entered into in the ordinary course of business, on market terms and consistent with past practice or industry norms.

SECTION 4.08 Repurchases at the Option of the Holders Upon Change of Control Repurchase Event . If a Change of Control Repurchase Event occurs, each Holder of Notes will have the right to require the Company to repurchase all or any part (in integral multiples of U.S.$1,000) of that Holder’s Notes pursuant to a Change of Control Offer (as defined below) on the terms set forth in this Indenture. No such purchase in part shall reduce the outstanding principal amount of the Notes held by any Holder to below U.S.$150,000. In the Change of Control Offer, the Company will offer a “Change of Control Payment” in U.S. dollars equal to 101% of the aggregate principal amount of Notes repurchased plus accrued and unpaid interest and Additional Amounts, if any, on the Notes repurchased, to the date of purchase (subject to the right of the Holders of record on the relevant Record Date to receive interest and Additional Amounts, if any, on the relevant Interest Payment Date).

No later than 30 days following a Change of Control Repurchase Event, the Company will make a “Change of Control Offer” by notice to each Holder of Notes by mailing and publishing such notice in accordance with the provision set out under Section 3.02 below (a copy of which will be delivered to the Trustee), describing the transaction or transactions that constitute the Change of Control Repurchase Event and offering to repurchase Notes on the date specified in the notice (the “Change of Control Payment Date”), which date will be no earlier than 30 days and no later than 60 days from the date such notice is mailed, pursuant to the procedures required by this Indenture and described in such notice.

The Company will comply, to the extent applicable, with the requirements of Section 14(e)-1 of the Exchange Act and any other applicable securities laws or regulations in connection with the repurchase of Notes pursuant to this covenant. To the extent that the provisions of any applicable securities laws or regulations conflict with provisions of this covenant, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this covenant by virtue of its compliance with such securities laws or regulations.

The provisions described above that require the Company to make a Change of Control Offer following a Change of Control Repurchase Event will be applicable whether or not any other provisions of this Indenture are applicable (other than as set forth below). Except as described above with respect to a Change of Control Repurchase Event, this Indenture does not contain provisions that permit the Holders of the Notes to require that the Company repurchase or redeem the Notes in the event of a takeover, recapitalization or similar transaction.

The Company will not be required to make a Change of Control Offer upon a Change of Control Repurchase Event if (i) a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements, set forth in this Indenture, that are applicable to a Change of Control Offer made by the Company and such third party purchases all

Notes properly tendered and not withdrawn under the Change of Control Offer or (ii) notice of redemption for all outstanding Notes has been given pursuant to this Indenture as described above, unless and until there is a default in payment of the applicable redemption price. Notwithstanding anything to the contrary contained herein, the Company may make a Change of Control Offer in advance of a Change of Control and conditioned upon the consummation of such Change of Control, if a definitive agreement is in place for the Change of Control at the time the offer to purchase is made.

In the event that the Holders of not less than 90% of the aggregate principal amount of the outstanding Notes accept a Change of Control Offer and the Company or a third party purchases all the Notes held by such Holders, the Company will have the right, on not less than 30 no more than 60 days’ prior written notice, given not more than 30 days following the purchase pursuant to the Change of Control Offer described above, to redeem all of the Notes that remain outstanding following such purchase at the purchase price equal to that in the Change of Control Offer plus, to the extent not included in the Change of Control Offer payment, accrued and unpaid interest and additional amounts, if any, on the Notes that remain outstanding, to, but excluding, the date of redemption.

SECTION 4.09 Limitation on Liens . The Company will not, and will not permit any Restricted Subsidiary to, issue or assume any Indebtedness secured by a Lien (the “Initial Lien”) upon any property or assets of the Company or any Restricted Subsidiary (other than the Capital Stock of any Unrestricted Subsidiary) without effectively providing that the Notes (together with, if the Company so determines, any other Indebtedness or obligations then existing or thereafter created) shall be secured equally and ratably with (or prior to) such Indebtedness so long as such Indebtedness shall be so secured; provided, however, that any Lien created for the benefit of the Holders of the Notes (and, if applicable, Holders of such other Indebtedness or obligations) pursuant to the foregoing shall provide by its terms that such Lien will be automatically and unconditionally released and discharged upon release and discharge of the Initial Lien; except that the foregoing provisions shall not apply to (without duplication) any Permitted Lien.

SECTION 4.10 Limitation on Sale and Leaseback Transactions . The Company will not and will not permit any Restricted Subsidiary to enter into any Sale and Leaseback Transaction unless:


(a)	either the Company or such Restricted Subsidiary would be entitled:

(i) pursuant to Section 4.03 above, to Incur Indebtedness in a principal amount equal to or exceeding the Attributable Debt in respect of such Sale and Leaseback Transaction; and

(ii) pursuant to Section 4.09 above, to Incur a Lien to secure such Indebtedness;


(b)	the net proceeds received by the Company or such Restricted Subsidiary in connection with such Sale and Leaseback Transaction are at least equal to the Fair Market Value (as determined by the Board of Directors of the Company) of such property; and


(c)	the Company or such Restricted Subsidiary applies the proceeds of such Sale and Leaseback Transaction in compliance with Section 4.06.

SECTION 4.11 Maintenance of Corporate Existence . Subject to Article 5 hereof, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and shall use its reasonable efforts to do or cause to be done all things necessary to preserve and keep in full force and effect its rights (charter and statutory) and franchises; provided , however , that the Company shall not be required to preserve any such right or franchise if the failure to do so does not, and would not reasonably be expected to have a Material Adverse Effect.

SECTION 4.12 Maintenance of Properties . The Company shall cause all properties used or useful in the conduct of its business or the business of any Subsidiary Guarantor to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and shall cause to be made all necessary repairs, renewals and replacements, thereof, all as in the judgment of the Company may be necessary so that the business carried on in connection therewith may be properly conducted at all times; provided , however , that nothing in this Section 4.12 shall prevent the Company from discontinuing the operation or maintenance of any of such properties or the supply of equipment if such discontinuance is, in the judgment of the Company, desirable in the conduct of its business or the business of any Subsidiary Guarantor and would not reasonably be expected to have a Material Adverse Effect.

SECTION 4.13 Compliance with Applicable Laws . The Company shall, and shall cause each Subsidiary Guarantor to, comply with all laws, rules, regulations and orders of any governmental authority applicable to it or its property, except where the failure to do so, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.

SECTION 4.14 Permitted Lines of Business . The Company and its Restricted Subsidiaries will not engage in any business other than a Similar Business.

SECTION 4.15 Payment of Taxes and Other Claims . The Company shall, and shall cause each Subsidiary Guarantor to, pay and discharge (a) all taxes, assessments and governmental charges or levies imposed upon it, or upon its income or profits, or upon any of its properties before they shall become delinquent and (b) all lawful claims (including claims for labor, materials and supplies) which, if unpaid, would reasonably be expected to give rise to a Lien upon any of its properties, unless in each of clause (a) and clause (b), such taxes, assessments, governmental charges or levies or lawful claims are then the subject of a Good Faith Contest or except where nonpayment thereof would not have a Material Adverse Effect.

SECTION 4.16 Appointment of the Trustee . The Company, whenever necessary to avoid or fill a vacancy in the office of Trustee, shall appoint in the manner provided in Section 7.07, a successor Trustee, so that there shall at all times be a Trustee with respect to the Notes.

SECTION 4.17 Maintenance of Books and Records . The Company shall keep, and shall cause each Subsidiary Guarantor to keep, proper books of record and account in which

full, true and correct entries shall be made of all dealings and transactions in relation to its business and activities.

SECTION 4.18 Maintenance of Office or Agency in the State of New York . The Company shall ensure the maintenance in the State of New York an office or agency where Notes may be presented or surrendered for payment, where Notes may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to ensure the maintenance of any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office, and, in such event, the Trustee shall act as the Company’s agent to receive all such presentations, surrenders, notices and demands.

The Company may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided , however , that no such designation or rescission shall in any manner relieve either the Company of its obligation to maintain an office or agency in the State of New York for such purposes. The Company shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.

SECTION 4.19 Statement as to Compliance; Notices of Certain Events . The Company will deliver to the Trustee within 120 days of the end of each fiscal year of the Company (i.e. April 30 of each year), a certificate, from its principal executive officer, principal financial officer or principal accounting officer, stating whether or not to the best knowledge of the signer thereof the Company is in compliance (without regard to periods of grace or notice requirements) with all conditions and covenants under this Indenture, and if the Company shall not be in compliance, specifying such non‑compliance and the nature and status thereof of which such signer may have knowledge.

The Company shall, and shall cause the Restricted Subsidiaries to, so long as any of the Notes are outstanding, deliver to the Trustee, within ten Business Days after obtaining actual knowledge thereof, written notice in the form of an Officer’s Certificate, of any Default that has occurred and is still continuing, of the status thereof and what action the Company is taking or proposing to take with respect thereof.

SECTION 4.20 Singapore Listing . (a) The Company will each use commercially reasonable efforts to obtain and maintain listing of the Notes on the Singapore Exchange Securities Trading Limited (the “Singapore Stock Exchange”). So long as the Notes are listed on the Singapore Stock Exchange and the rules of such exchange so require, transfers or exchange of definitive Notes may be made by presenting and surrendering such Notes at, and obtaining new definitive Notes from, the office of a Singapore paying agent to be appointed by the Company, such Singapore paying agent to have the same duties and rights conferred to a Paying Agent. The Notes will be traded in a minimum board lot size of U.S.$200,000 as long as the Notes are listed on the Singapore Stock Exchange.

SECTION 4.21 Additional Amounts . All payments by the Company in respect of the Notes or the Subsidiary Guarantors in respect of the Note Guarantees shall be made without withholding or deduction for or on account of any present or future taxes, duties, assessments, or other governmental charges of whatever nature imposed or levied by or on behalf of any jurisdiction in which the Company or Subsidiary Guarantors are organized or are resident for tax purposes, or any other jurisdiction through which any payments under the Notes are made by or on behalf of the Company or the Subsidiary Guarantors, or any political subdivision thereof, having power to tax (a “Relevant Jurisdiction”), unless the Company or the Subsidiary Guarantors are required by law to deduct or withhold such taxes, duties, assessments, or governmental charges. In such event, the Company or the Subsidiary Guarantors will make such deduction or withholding, make payment of the amount so withheld to the appropriate governmental or other authority and pay such additional amounts as may be necessary to ensure that the net amounts receivable by Holders of Notes after such withholding or deduction shall equal the respective amounts of principal and interest which would have been receivable in respect of the Notes in the absence of such withholding or deduction (“Additional Amounts”). However, no such Additional Amounts shall be payable:

• to, or to a third party on behalf of, a Holder or beneficial owner who is liable for any present or future taxes, duties, assessments or governmental charges in respect of a Note by reason of the existence of any present or former connection between such Holder or beneficial owner (or between a fiduciary, settlor, beneficiary, member or shareholder of such holder or beneficial owner, if such Holder or beneficial owner is an estate, a trust, a partnership, a limited liability company or a corporation) and the Relevant Jurisdiction, including, without limitation, such Holder or beneficial owner (or such fiduciary, settlor, beneficiary, member or shareholder) being or having been a citizen or resident thereof or being or having been engaged in a trade or business or present therein or having, or having had, a permanent establishment therein, other than the mere holding of the Note or enforcement of rights and the receipt of payments with respect to the Note;

• in respect of Notes presented (if presentation is required) more than 30 days after the Relevant Date (as defined below) except to the extent that the Holder of such Note would have been entitled to such Additional Amounts, on surrender of such Note for payment on the last day of such period of 30 days;

• in respect of any tax, duty, assessment or other governmental charge imposed on a Note presented for payment by or on behalf of a Holder or beneficial owner who would have been able to avoid that withholding or deduction by presenting the relevant Note to another paying agent in a member state of the European Union;

• in relation with the application of Luxembourg law of December 23, 2005, as amended from time to time, introducing a 20% withholding tax on certain interest payments made for the immediate benefit of individuals resident in Luxembourg;

• in respect of any tax, duty, assessment or other governmental charge imposed or withheld pursuant to Sections 1471 through 1474 of the Code, as of the date of this Indenture (or any amended or successor version), current or future U.S. Treasury Regulations issued thereunder or any official interpretation thereof, any agreement entered into pursuant to Section 1471(b) of the

Code, any intergovernmental agreement entered into in connection with the implementation of such Sections of the Code or any fiscal or governmental regulations, rules or practices adopted pursuant to such intergovernmental agreement;

• to, or to a third party on behalf of, a Holder or beneficial owner who is liable for any present or future taxes, duties, assessments or other governmental charges by reason of such Holder’s or a beneficial owner’s failure to comply with any certification, identification or other reporting requirement concerning the nationality, residence, identity or connection with the Relevant Jurisdiction, if (1) compliance is required by the Relevant Jurisdiction as a precondition to exemption from, or reduction in the rate of, the tax, duty, assessment or other governmental charge and (2) the Company has given at least 30 days’ notice that Holders or beneficial owners will be required to comply with such certification, identification or other requirement;

• in respect of any estate, inheritance, gift, sales, transfer, capital gains, excise or personal property or similar tax, duty, assessment or governmental charge;

• in respect of any tax, duty, assessment or other governmental charge which is payable other than by deduction or withholding from payments of principal of or interest on the Note or by direct payment by the Company or the Subsidiary Guarantors in respect of claims made against the Company or the Subsidiary Guarantors; or

• in respect of any combination of the above.

In addition, no Additional Amounts shall be paid with respect to any payment on a Note to a Holder who is a fiduciary, a partnership, a limited liability company or other than the sole beneficial owner of that payment to the extent that payment would be required by the laws of the Relevant Jurisdiction to be included in the income, for tax purposes, of a beneficiary or settlor with respect to the fiduciary, a member of that partnership, an interest Holder in a limited liability company or a beneficial owner who would not have been entitled to the Additional Amounts had that beneficiary, settlor, member or beneficial owner been the Holder.

“Relevant Date” means, with respect to any payment on a Note, whichever is the later of: (i) the date on which such payment first becomes due; and (ii) if the full amount payable has not been received by the Trustee on or prior to such due date, the date on which notice is given to the Holders that the full amount has been received by the Trustee. The Notes are subject in all cases to any tax, fiscal or other law or regulation or administrative or judicial interpretation. Except as specifically provided above, neither the Company nor the Subsidiary Guarantors shall be required to make a payment with respect to any tax, duty, assessment or governmental charge imposed by any government or a political subdivision or taxing authority thereof or therein.

In the event that Additional Amounts actually paid with respect to the Notes described above are based on rates of deduction or withholding of withholding taxes in excess of the appropriate rate applicable to the Holder or a beneficial owner of such Notes, and, as a result thereof such Holder or beneficial owner is entitled to make claim for a refund or credit of such excess from the authority imposing such withholding tax, then such Holder or beneficial owner shall, by accepting such Notes,

be deemed to have assigned and transferred all right, title, and interest to any such claim for a refund or credit of such excess to the Company or, as the case may be, the Subsidiary Guarantors.

Any reference in this Indenture or the Notes to principal, interest or any other amount payable in respect of the Notes by the Company or the Note Guarantees by the Subsidiary Guarantors will be deemed also to refer to any Additional Amount, unless the context requires otherwise, that may be payable with respect to that amount under the obligations referred to in this Section 4.21.

The Company or the relevant Subsidiary Guarantor, as the case may be, shall use reasonable efforts to furnish to the Trustee the official receipts (or a certified copy of the official receipts) evidencing payment of any tax. Copies of such receipts shall be made available to Holders of the Notes by the Trustee upon written request.

The Company and each Subsidiary Guarantor shall promptly pay when due any present or future stamp, court or documentary taxes or any other excise or property taxes, charges or similar levies, and any penalties, additions to tax or interest due with respect thereto, that may be imposed in any jurisdiction from the execution, issue, delivery or registration of the Notes, this Indenture or any other document or instrument referred to herein or therein, or in connection with any enforcement action, excluding any such taxes, charges or similar levies imposed by any jurisdiction outside of Luxembourg or the jurisdiction of incorporation of such Subsidiary Guarantor other than those resulting from, or required to be paid in connection with, the enforcement of the Notes following the occurrence of any Default or Event of Default.

SECTION 4.22 Guarantees by Significant Subsidiaries . If, after the Issue Date, the Company or any Subsidiary Guarantor acquires or creates a Significant Subsidiary or (ii) if, as of the end of any fiscal year after the Issue Date, any Person (other than a Subsidiary Guarantor) is a Significant Subsidiary (based on the audited financial statements of the Company delivered to the Trustee pursuant to the covenant described in Section 4.02), within 15 Business Days of such acquisition, creation or delivery of financial statements, as applicable, the Company will cause such Significant Subsidiary to:


(A)	execute and deliver to the Trustee a supplemental indenture in the form attached as an exhibit to this Indenture pursuant to which such Significant Subsidiary shall, subject to applicable legal limitations, unconditionally guarantee all of the Company’s obligations under the Notes and this Indenture; and

(B)

deliver to the Trustee one or more opinions of counsel that (a) such supplemental indenture has been duly authorized, executed and delivered by such Significant Subsidiary, (b) such supplemental indenture constitutes a valid and legally binding obligation of such Significant Subsidiary in accordance with its terms and (c) all conditions precedent to the execution of such supplemental indenture have been satisfied.

Notwithstanding the foregoing,

(1)

such Significant Subsidiary will not be required to guarantee the Company’s obligations under the Notes and this Indenture if (a) the Company and the other Subsidiary Guarantors at the time of determination would directly (i) hold at least 75% of the Company’s Consolidated Total Assets on a consolidated basis as of the most recent quarterly balance sheet and (ii) generate revenues of at least 75% of the Company’s Consolidated Net Revenue on a consolidated basis for the twelve-month period ending on the date of the Company’s most recent quarterly consolidated statement of income; or (b) such Significant Subsidiary is not permitted to do so under local law or due to a contractual restriction or because of the existence of minority shareholders; and

(2)

any such Significant Subsidiary’s guarantee of the Company’s obligations under the Notes and this Indenture will be limited to the maximum amount that (i) would not render such Significant Subsidiary’s obligations subject to avoidance under applicable law, including applicable fraudulent conveyance laws, or (ii) would not result in a breach or violation by such Significant Subsidiary of any then-existing agreement to which it is party.

SECTION 4.23 Payments and Paying Agents . (a) Whenever the Company shall appoint a Paying Agent other than The Bank of New York Mellon with respect to the Notes, it will cause such Paying Agent to execute and deliver to the Trustee an instrument in which such agent shall agree with the Trustee, subject to the provisions of this Section 4.23:

(i) that it will hold all sums received by it as such agent for the payment of the principal of or interest, as the case may be, on any Notes (whether such sums have been paid to it by or on behalf of the Company or by any other obligor on the Notes) in trust for the benefit of the Holders;

(ii) that it will give the Trustee notice of any failure by the Company (or by any other obligor on the Notes) to make any payment of the principal of or interest on any Notes, as the case may be (including Additional Amounts) and any other payments to be made by or on behalf of the Company under this Indenture or the Notes when the same shall be due and payable; and

(iii) that it will pay any such sums so held in trust by it to the Trustee upon the Trustee’s written request at any time during the continuance of the failure referred to in clause (ii) above.

(b) The Trustee shall arrange with the Paying Agent for the payment, from funds furnished by the Company to the Trustee pursuant to this Indenture, of the principal of and interest and other amounts due on the Notes (including Additional Amounts) and of the compensation of such Paying Agent for its services as such.

(c) Anything in this Section 4.23 to the contrary notwithstanding, the Company may at any time, for the purpose of obtaining a satisfaction and discharge with respect to

any Notes hereunder, or for any other reason, pay or cause to be paid to the Trustee all sums held in trust for such Notes by the Company or the Paying Agent hereunder as required by this Section 4.23, such sums to be held by the Trustee upon the trusts herein contained.

(d) Anything in this Section 4.23 to the contrary notwithstanding, the agreements to hold sums in trust as provided in this Section are subject to the provisions of Section 8.02.

(e) The Company agrees to indemnify the Holders and the Trustee (which for purposes of this Section 4.23(e) shall be deemed to include its directors, officers, agents and employees) against any failure on the part of the Paying Agent to pay, in accordance with the terms hereof, any sum due in respect of the Notes on the applicable payment date.

SECTION 4.24 Ranking . The Company and each Subsidiary Guarantor shall ensure that the Notes and the Note Guarantees, respectively, will constitute general senior unconditional and unsubordinated obligations of the Company and such Subsidiary Guarantor, respectively, and will rank at least equally to all other present and future senior unsecured obligations of the Company and such Subsidiary Guarantor, respectively (other than obligations preferred by statute or by operation of law).

SECTION 4.25 Further Actions

Article 5

Consolidation, Merger, Conveyance, Sale or Lease

SECTION 5.01 Consolidation, Merger, Conveyance, Sale or Lease . The Company will not consolidate with or merge into another Person or sell, convey, transfer, or otherwise dispose of or lease all or substantially all of its assets (determined on a consolidated basis) to any Person unless:

(a) (i) the Company is the continuing Person or (i) the resulting, surviving or transferee Person (the “Successor Company”) is organized and existing under the laws of Argentina, Brazil, the United States of America, any state thereof or the District of Columbia or any other country member of the Organization for Economic Co-operation and Development (OECD) and expressly assumes by supplemental indenture, executed and delivered to the Trustee, in form as set forth in this Indenture or as otherwise satisfactory to the Trustee, all of the obligations of the Company under this Indenture and the Note Guarantees;

(b) immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing;

(c) immediately after giving effect to such transaction, the Company or the Successor Company (i) could Incur at least U.S.$1.00 of Indebtedness under clause (1) of the covenant described under Section 4.03 above or (ii) would have a Net Debt to EBITDA Ratio less than or equal to that of the Company immediately prior to such transaction;

(d) each Subsidiary Guarantor (unless it is the other party to the transactions above, in which case clause (a) above shall apply) shall have by supplemental indenture confirmed that its Note Guarantee shall apply to such Person’s obligations in respect of this Indenture and the Notes unless such Subsidiary Guarantor’s then existing Note Guarantee remains in full force and effect; and

(e) the Company has delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture comply with this Indenture and that all conditions precedent therein relating to such transaction have been complied with.

None of the Subsidiary Guarantors shall, and the Company will not cause or permit any Subsidiary Guarantor to, consolidate with or merge with or into, or convey, transfer or lease, in one transaction or a series of transactions, all or substantially all of its assets to any Person (other than the Company or any Restricted Subsidiary) unless:

(1) (x) the resulting, surviving or transferee Person (if not such Subsidiary Guarantor) shall be a Person organized and existing under the laws of the jurisdiction under which such Subsidiary Guarantor was organized or under the laws of Argentina or Brazil, or any political subdivision thereof, the United States of America or any state thereof or the District of Columbia or any other country member of the Organization for Economic Co-operation and Development (OECD), and (y) such Person shall expressly assume, by supplemental indenture, all the obligations of such Subsidiary Guarantor, if any, under such Note Guarantee;

(2) immediately after giving effect to such transaction or transactions on a pro forma basis (and treating any Indebtedness which becomes an obligation of the resulting, surviving or transferee Person as a result of such transaction as having been issued by such Person at the time of such transaction), no Default or Event of Default shall have occurred and be continuing; and

(3) the Company delivers to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such guarantee agreement, if any, complies with this Indenture;

provided, however , that the provisions of this paragraph shall not apply if such Subsidiary Guarantor is released from its Note Guarantee pursuant to clause (i) or (ii) of Section 10.09(f) as a result of such sale, disposition, consolidation, amalgamation or merger.

Notwithstanding the restriction described in clause (b) and (c) of the first paragraph of this Section 5.01 or clause (2) of the second paragraph of this Section 5.01, any Restricted Subsidiary may consolidate with, merge into or transfer all or part of its properties and assets to the Company, the Company may merge into a Restricted Subsidiary for the purpose of reincorporating the Company in another jurisdiction, and any Restricted Subsidiary may consolidate with, merge into or transfer all or part of its properties and assets to another Restricted Subsidiary.

Article 6
Defaults and Remedies

SECTION 6.01 Events of Default . An “Event of Default” with respect to the Notes is defined in this Indenture as being a:


(1)	default for 30 days in payment of any interest or Additional Amounts on the Notes when the same becomes due and payable;


(2)	default in payment of principal of or premium, if any, on the Notes when the same becomes due and payable, upon optional redemption, upon required purchase, upon declaration of acceleration or otherwise;


(3)	failure by the Company to comply with the provisions described under Article 5;

(4)

default in the performance, or breach, of any other covenant or obligation of the Company or any Restricted Subsidiary in this Indenture and continuance of such default or breach for a period of 60 consecutive days after written notice specifying such default or breach is given to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in aggregate principal amount of the Notes;


(5)	default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness by the Company or any Restricted Subsidiary (or the payment of which is Guaranteed by the Company or any Restricted Subsidiary) whether such Indebtedness or Guarantee now exists, or is created after the Issue Date, if that default:


(A)	is caused by a failure to pay principal of or interest or premium (or Additional Amounts) on such Indebtedness within any applicable grace period (a “Payment Default”); or


(B)	results in the acceleration of such Indebtedness prior to its Stated Maturity,

and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates U.S.$40.0 million (or its equivalent in other currencies at the time of determination) or more;


(6)	any final judgment or order for the payment of money in excess of U.S.$40.0 million (or its equivalent in other currencies at the time of determination) is rendered against the Company or any Significant Subsidiary and such judgment or order is not paid (whether in full or if there is a failure to pay

installments in accordance with the terms of the judgment aggregating in excess of U.S.$40.0 million) or otherwise discharged and remains unstayed for a period of 60 days after such judgment becomes final and non- appealable;

(7)

any involuntary case or other proceeding is commenced against the Company or any Significant Subsidiary with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect seeking the appointment of a trustee, receiver, administrador judicial , liquidator, custodian or other similar official of it or any substantial part of its assets, and such involuntary case or other proceeding remains undismissed and unstayed for a period of 60 days; or a non-appealable final order for relief is entered against the Company or any Significant Subsidiary under relevant bankruptcy laws as now or hereafter in effect;

(8)

the Company or any Significant Subsidiary (i) commences a voluntary case or other proceeding seeking liquidation, reorganization concurso preventivo , recuperação judicial or extrajudicial or seeks approval of its creditors for an acuerdo preventivo extrajudicial or files for courts endorsement of any such acuerdo preventivo extrajudicial or other relief with respect to itself or its debts under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consents to the entry of an order for relief in an involuntary case under any such law, (ii) consents to the appointment of or taking possession by a receiver, síndico , administrador judicial , liquidator, assignee, custodian, trustee, sequestrator or similar official of the Company or any Significant Subsidiary or for all or substantially all of the assets of the Company or any such Significant Subsidiary or (iii) effects any general assignment for the benefit of creditors;


(9)	any Note Guarantee ceases to be in full force and effect, other than in accordance with the terms of this Indenture, or the Company or any Subsidiary Guarantor denies or disaffirms its obligations under the Notes; or

(10)

all or substantially all of the assets and revenues of the Company and its Restricted Subsidiaries, taken as a whole, is condemned, seized or otherwise appropriated by any Person acting under the authority of any national, regional or local government or the Company or any Significant Subsidiary is prevented by any such Person from exercising normal control over all or substantially all of the assets and revenues of the Company and its Restricted Subsidiaries, taken as a whole.

The Company will deliver to the Trustee, within ten Business Days after obtaining actual knowledge thereof, written notice of any Default or Event of Default that has occurred and is still continuing, its status and what action the Company is taking or proposing to take in respect thereof. The Trustee may withhold notice to the Holders of the Notes of any Default or Event of

Default (except in payment of principal of, or interest or premium (and Additional Amounts), if any, on the Notes) if the Trustee in good faith determines that it is in the interest of the Holders of the Notes to do so. If an Event of Default (other than an Event of Default specified in Section 6.01(7) or (8)) with respect to the Notes specified therein shall have happened and be continuing, either the Trustee or the Holders of at least 25% in aggregate principal amount of the Notes, by written notice to the Company (and to the Trustee if notice is given by the Holders), may declare the principal amount of (and interest on) all the Notes to be due and payable immediately. If an Event of Default specified in Section 6.01(7) or (8) shall have happened, the principal amount of all the Notes will be immediately due and payable without notice or any other act on the part of the Trustee or any Holder of the Notes. However, if the Company cures all Defaults (except the nonpayment of principal of and accrued interest or premium (and Additional Amounts) on Notes at maturity or which shall become due by acceleration) and certain other conditions are met, including the deposit with the Trustee of a sum sufficient to pay all sums paid or advanced by the Trustee and the reasonable fees, expenses, disbursements and advances of the Trustee, its agents and counsel incurred in connection with such Event of Default, such declaration may be rescinded and annulled by the Holders of not less than a majority in aggregate principal amount of the Notes. In addition, past Defaults with respect to the Notes may be waived by the Holders of not less than a majority in aggregate principal amount of the Notes except (i) a Default in the payment of principal of (or premium, if any) or interest or premium (and Additional Amounts), if any, on any Note or (ii) in respect of a provision of this Indenture which cannot be amended without the consent of the Holder of each outstanding Note affected thereby.

Subject to the provisions of this Indenture relating to the duties of the Trustee, the Trustee will be under no obligation to exercise any of its rights or powers under this Indenture at the request or direction of any of the Holders of the Notes, unless such Holders shall have offered to the Trustee security or indemnity satisfactory to the Trustee. Subject to such provision for indemnification, the Holders of a majority in principal amount of the Notes will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee with respect to the Notes, provided that the Trustee is offered indemnity or security satisfactory to it; provided, further that the Trustee shall have the right to decline to follow any such direction if the Trustee shall determine that the action so directed conflicts with any law or the provisions of this Indenture if the Trustee shall determine that such action would be prejudicial to Holders of the Notes not taking part in such direction or if the Trustee determines in good faith that such action would involve the Trustee in personal liability.

No Holder of any Note shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy thereunder, unless:


(1)	such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Notes;


(2)	the Holders of not less than 25% in principal amount of the outstanding Notes shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee thereunder;


(3)	such Holder or Holders have offered to the Trustee indemnity reasonably satisfactory to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request;


(4)	the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and


(5)	no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the outstanding Notes,

it being understood and intended that no one or more of such Holders shall have any right in any manner whatsoever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other of such Holders, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner therein provided and for the equal and ratable benefit of all such Holders.

Notwithstanding any other provision of this Indenture, the Holder of any Note shall have the right, which is absolute and unconditional, to receive payment of the principal of (and premium, if any) and interest (and Additional Amounts), if any, on such Note and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder.

The Trustee shall not be deemed to have notice of any Default or Event of Default (other than a payment default) unless written notice of any event which is in fact such a default is received by a Trust Officer at the Corporate Trust Office of the Trustee, and such notice references the Notes and this Indenture.

SECTION 6.02 Other Remedies . If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal of or interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture.

The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative.

SECTION 6.03 Collection Suit by Trustee . If an Event of Default specified in Section 6.01(1) or (2) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company for the whole amount then due and owing (together with interest on any unpaid interest to the extent lawful) and the amounts provided for in Section 7.06.

SECTION 6.04 Trustee May File Proofs of Claim . The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and the Holders allowed in any judicial proceedings relative to the Company,

their creditors or their property and, unless prohibited by law or applicable regulations, may vote on behalf of the Holders in any election of a trustee in bankruptcy or other Person performing similar functions, and any Bankruptcy Custodian in any such judicial proceeding is hereby authorized by each Holder to make payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and its counsel, and any other amounts due the Trustee under Section 7.06.

SECTION 6.05 Priorities . If the Trustee collects any money or property pursuant to this Article 6, it shall pay out the money or property in the following order:

FIRST: to the Trustee for amounts due under Section 7.06;

SECOND: to Holders for amounts due and unpaid on the Notes for principal and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal and interest, respectively; and

THIRD: to the Company .

The Trustee may fix a record date and payment date for any payment to Holders pursuant to this Section 6.05 and shall promptly notify the Company thereof. At least 15 days before such record date, the Company shall mail to each Holder and the Trustee a notice that states the record date, the payment date and amount to be paid.

SECTION 6.06 Undertaking for Costs . In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 6.06 does not apply to a suit by the Trustee, a suit by a Holder pursuant to this Section 6.06 or a suit by Holders of more than 10% in principal amount of the Notes.

SECTION 6.07 Waiver of Stay or Extension Laws . The Company (to the extent it may lawfully do so) shall not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and shall not hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law had been enacted.

Article 7
Trustee

SECTION 7.01 Duties of Trustee . (a) Except during the continuance of an Event of Default:

(i) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

(ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. Notwithstanding the foregoing, the Trustee shall examine such certificates and opinions to determine whether or not they conform to the requirements of this Indenture (but need not, and is under no obligation to, confirm or investigate the accuracy of mathematical calculations or other facts stated therein).

(b) Following the occurrence and continuance of an Event of Default, the Trustee shall exercise such of the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent Person would exercise or use under the circumstances in the conduct of such Person’s own affairs. Except during the continuance of an Event of Default, (i) the Trustee and Paying Agent undertake to perform such duties and only such duties as are specifically set forth in this Indenture and no implied covenants or obligations shall be read into this Indenture against the Trustee or the Paying Agent; and (ii) in the absence of bad faith on the part of the Trustee or the Paying Agent, the Trustee or the Paying Agent may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee or the Paying Agent and conforming to the requirements of this Indenture. However, in the case of any certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee or the Paying Agent, the Trustee and the Paying Agent shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of the mathematical calculations or other facts stated therein).

(c) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that:

(i) this Section 7.01(c) does not limit the effect of Section 7.01(a);

(ii) the Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and

(iii) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to this Indenture.

(d) Every provision of this Indenture that in any way relates to the Trustee is subject to Sections 7.01(a), (b) and (c).

(e) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company.

(f) Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.

(g) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers, if it shall have reasonable grounds to believe that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.

(h) Every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 7.01.

SECTION 7.02 Rights of Trustee . (a) Subject to Section 7.01 hereof, the Trustee may conclusively rely and shall be fully protected in acting or refraining from acting on any document believed by it in good faith to be genuine and to have been signed or presented by the proper person. The Trustee need not investigate any fact or matter stated in the document but may, in its discretion, make such further inquiry or investigation into such facts or matters as it may see fit and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney at the sole cost of the Company and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation.

(a) Before the Trustee acts or refrains from acting, it may require an Officer’s Certificate and/or an Opinion of Counsel. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on the Officer’s Certificate or Opinion of Counsel.

(b) The Trustee may act through agents and shall not be responsible for the misconduct or gross negligence of any agent appointed with due care.

(c) The Trustee shall not be liable for any action it takes or omits to take in good faith which it reasonably believes to be authorized or within its rights or powers; provided , however , that the Trustee’s conduct does not constitute willful misconduct or negligence.

(d) The Trustee may consult with counsel appointed with due care and the advice or Opinion of Counsel of such counsel with respect to legal matters relating to this Indenture and the Notes shall be full and complete authorization and protection from liability in respect of any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or such opinion of such counsel.

(e) In no event shall the Trustee be responsible or liable for special, indirect, punitive or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.

(f) The Trustee shall not be deemed to have notice of any Default or Event of Default (other than a payment default under Sections 6.01(1) or (2)) unless a Trust Officer of the Trustee has written notice of any event which is in fact such a default is received by the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Notes and this Indenture.

(g) The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and the Paying Agent and each agent, custodian and other Person employed to act hereunder.

(h) The Trustee may require that the Company delivers a certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture.

(i) In no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes, or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services; it being understood that the Trustee shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.

(j) Any request, direction, order or demand of the Company mentioned herein shall be sufficiently evidenced by an Officer’s Certificate of the Company (unless other evidence in respect thereof be herein specifically prescribed); and any resolution of the Board of Directors of the Company may be evidenced to the Trustee or the Paying Agent by copies thereof certified by the Secretary or an Assistant Secretary (or equivalent Officer) of the Company.

(k) The Trustee and the Paying Agent shall be under no obligation to exercise any of the trusts or powers vested in it by this Indenture at the request, order or direction of any of the Holders pursuant to the provisions of this Indenture, unless such Holders shall have offered to the Trustee or the Paying Agent security or indemnity satisfactory to the Trustee against the costs, expenses and liabilities that might be incurred thereby.

(l) The permissive rights of the Trustee enumerated herein shall not be construed as duties of the Trustee.

SECTION 7.03 Individual Rights of Trustee . The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or their Affiliates with the same rights it would have if it were not Trustee. Any Paying Agent, Registrar, co‑registrar or co‑paying agent may do the same with like rights. However, the Trustee must comply with Section 7.09 and 7.10.

SECTION 7.04 Trustee’s Disclaimer . The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture, the Notes or the Note Guarantees, it shall not be accountable for the Company’s use of the proceeds from the Notes, and it shall not be responsible for any statement of the Company in this Indenture or in any document issued in connection with the sale of the Notes or in the Notes other than the Trustee’s certificate of authentication.

SECTION 7.05 Notice of Defaults . If a Default or Event of Default occurs and is continuing and if it is known to the Trustee, the Trustee shall deliver to each Holder notice of the Default within 90 days after it occurs. Except in the case of a Default or Event of Default in payment of principal of, or interest or premium (and Additional Amounts), if any, on any Note (including payments pursuant to the mandatory redemption provisions of, or interest, if any, on the Notes), the Trustee may withhold the notice if and so long as the Trustee determines in good faith that withholding the notice is in the interests of Holders. The Trustee shall not be charged with knowledge of any Default or Event of Default other than a Default under Section 6.01(1) or 6.01(2) hereof unless a Trust Officer in the Corporate Trust Office of the Trustee shall have received written notice thereof from the Company or a Holder, expressly referencing this Indenture and the Notes.

SECTION 7.06 Compensation and Indemnity . The Company agrees to pay to the Trustee, the Registrar, the Transfer Agent and the Paying Agent from time to time such compensation for its services hereunder as the parties may from time to time agree in writing in a signed fee letter. The Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust. Except as otherwise expressly provided herein, the Company agrees to reimburse each of the Trustee, the Registrar, the Transfer Agent, the Paying Agent and the other agent parties hereunder upon its request for all reasonable expenses, disbursements and advances incurred or made by any of them in accordance with any provision of this Indenture (including the compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its willful misconduct, negligence or bad faith. Each of the Company and each Subsidiary Guarantor, jointly and severally, shall indemnify each of the Trustee or any predecessor Trustee (which for purposes of this Section 7.06 shall be deemed to include its directors, officers, agents and employees), the Registrar, the Transfer Agent, the Paying Agent and the other agent parties hereunder against any and all loss, liability or expense (including taxes (other than taxes based upon, measured by or determined by the income of the Trustee) and reasonable and documented attorneys’ fees and expenses) incurred by it in connection with the administration of this trust and/or the performance of its duties hereunder, including the reasonable costs and expenses of defending itself against any claim (whether asserted by the Company, any Holder or any other Person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, or in connection with enforcing the provisions of this Section 7.06, except to the extent that such loss, damage, claim, liability or expense is due to its

own willful misconduct, negligence or bad faith. The Trustee, the Registrar, the Transfer Agent, the Paying Agents or the other agent parties hereunder, as applicable, shall notify the Company promptly of any claim for which it may seek indemnity. Failure by the Trustee, the Registrar, the Transfer Agent, and the Paying Agent or the other agent parties hereunder to so notify the Company shall not relieve the Company of its obligations hereunder. The Company shall defend the claim and the Trustee, the Registrar, the Transfer Agent, the Paying Agent or the other agent parties hereunder may have separate counsel and the Company shall pay the reasonable and documented fees and expenses of such counsel; provided that the Company shall not be required to pay such fees and expenses if it assumes such indemnified party’s defense and, in such indemnified party’s reasonable judgment, there is no conflict of interest between the Company and such parties in connection with such defense. In no event shall the Company be liable for fees and expenses of more than one counsel (in addition to any local counsel) separate from its own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstance. The Company does not need to pay for any settlement made without its consent, which consent shall not be unreasonably withheld.

To secure the Company’s obligations in this Section 7.06, the Trustee shall have a lien prior to the Notes on all money or property held or collected by the Trustee in any capacity other than money or property held in trust to pay principal of and interest and Additional Amounts, if any, on particular Notes.

The Company agrees to pay by wire transfer the fees and expenses of the Trustee, each Paying Agent and their respective counsel in connection with the negotiation, execution and delivery of this Indenture within three Business Days of receipt of invoices for such fees and expenses.

The Company’s indemnity and payment obligations pursuant to this Section 7.06 shall survive the discharge of this Indenture, final payment on the Notes or the resignation or removal of the Trustee or the other agent parties hereunder. When the Trustee incurs expenses after the occurrence of an Event of Default specified in Section 6.01(6) or (7) with respect to the Company, the expenses are intended to constitute expenses of administration under the U.S. Bankruptcy Code.

SECTION 7.07 Replacement of Trustee . The Trustee may resign at any time by giving thirty (30) days written notice to the Company. The Holders of a majority in principal amount of the Notes may remove the Trustee by so notifying the Trustee and shall appoint a successor Trustee. The Company shall remove the Trustee if:

(a) the Trustee fails to comply with Section 7.09;

(b) the Trustee is adjudged bankrupt or insolvent;

(d) the Trustee otherwise becomes incapable of acting

Furthermore, so long as no Event of Default has occurred and is continuing, the Company may, in its discretion, remove the Trustee at any time.

If the Trustee resigns, is removed by the Company or by the Holders of a majority in principal amount of the Notes and such Holders do not reasonably promptly appoint a successor Trustee, or if a vacancy exists in the office of Trustee for any reason (the Trustee in such event being referred to herein as the “retiring Trustee”), the Company shall promptly appoint a successor Trustee; provided such successor Trustee complies, at the time of such appointment, with Section 7.09 hereof.

A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Holders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided for in Section 7.06.

If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company or the Holders of 10% in principal amount of the Notes may, at the expense of the Company, petition any court of competent jurisdiction for the appointment of a successor Trustee at the expense of the Company.

If the Trustee fails to comply with Section 7.09, any Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of another successor Trustee.

Notwithstanding the replacement of the Trustee pursuant to this Section 7.07, the Company’s obligations under Section 7.06 shall continue for the benefit of the retiring Trustee.

SECTION 7.08 Successor Trustee by Merger . If the Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation, without the execution or filing of any paper with any party hereto or any further act on the part of any of the parties hereto except where an instrument of transfer or assignment is required by law to effect such succession, shall be the successor Trustee.

In case at the time such successor or successors by merger, conversion or consolidation to the Trustee shall succeed to the trusts created by this Indenture any of the Notes shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver such Notes so authenticated; and in case at that time any of the Notes shall not have been authenticated, any successor to the Trustee may authenticate such Notes either in the name of any predecessor hereunder or in the name of the successor to the Trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Notes or in this Indenture provided that the certificate of the Trustee shall have.

SECTION 7.09 Eligibility; Disqualification . The Trustee shall (i) be a licensed bank or trust company having a corporate trust department (or a branch, Subsidiary or

other Affiliate thereof) organized and doing business under the laws of the United States or any state thereof and authorized under such laws to exercise corporate trust powers in the United States, (ii) have a combined capital and surplus of at least U.S.$50,000,000 as set forth in its most recent published annual report of condition and (iii) not be affiliated (as that term is defined in Rule 405 under the Securities Act) with the Issuer.

SECTION 7.10 [Reserved] .

SECTION 7.11 Appointment of Co‑Trustee . (a) Notwithstanding any other provisions of this Indenture, the Trustee shall have the power and may execute and deliver all instruments necessary to appoint one or more Persons to act as a co‑trustee or co‑trustees, or separate trustee or separate trustees, and to vest in such Person or Persons, in such capacity and for the benefit of the Holders, subject to the other provisions of this Section 7.11, such powers, duties, obligations and rights as the Trustee may consider necessary or desirable. No co‑trustee or separate trustee hereunder shall be required to meet the terms of eligibility as a successor trustee under Section 7.09 and no notice to Holders of the appointment of any co‑trustee or separate trustee shall be required under Section 7.07 hereof.

(a) Every separate trustee and co‑trustee shall, to the extent permitted by law, be appointed and act subject to the following provisions and conditions:

(i) all rights, powers, duties and obligations conferred or imposed upon the Trustee shall be conferred or imposed upon and exercised or performed by the Trustee and such separate trustee or co‑trustee jointly (it being understood that such separate trustee or co‑trustee is not authorized to act separately without the Trustee joining in such act), except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed the Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations shall be exercised and performed singly by such separate trustee or co‑trustee, but solely at the direction of the Trustee;

(ii) no trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder; and

(iii) the Trustee may at any time accept the resignation of or remove any separate trustee or co‑trustee.

(c) Any notice, request or other writing given to the Trustee shall be deemed to have been given to each of the then separate trustees and co‑trustees, as effectively as if given to each of them. Every instrument appointing any separate trustee or co‑trustee shall refer to this Indenture and the conditions of this Article 7. Each separate trustee and co‑trustee, upon its acceptance of the trusts conferred, shall be vested with the estates or property specified in its instrument of appointment, either jointly with the Trustee or separately, as may be provided therein, subject to all the provisions of this Indenture, specifically including every provision of this Indenture relating to the conduct of, affecting the liability of, or affording protection or rights (including the

rights to compensation, reimbursement and indemnification hereunder) to, the Trustee. Every such instrument shall be filed with the Trustee.

(d) Any separate trustee or co‑trustee may at any time constitute the Trustee its agent or attorney‑in‑fact with full power and authority, to the extent not prohibited by law, to do any lawful act under or in respect of this Indenture on its behalf and in its name. If any separate trustee or co‑trustee shall die, become incapable of acting, resign or be removed, all of its estates, properties, rights, remedies and trusts shall vest in and be exercised by the Trustee, to the extent permitted by law, without the appointment of a new or successor trustee.

Article 8
Discharge of Indenture; Defeasance

SECTION 8.01 Satisfaction and Discharge of Liability on Notes . This Indenture will be discharged and (together with all Note Guarantees) will cease to be of further effect as to all Notes issued thereunder, when:


i.	(a) all Notes that have been authenticated, except lost, stolen or destroyed Notes that have been replaced or paid and Notes for whose payment money has been deposited in trust and thereafter repaid to the Company, have been delivered to the Trustee for cancellation; or

(b) all Notes that have not been delivered to the Trustee for cancellation (i) have become due and payable, (ii) will become due and payable at their Stated Maturity within one year or (iii) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of a redemption by the Trustee and, in each case, the Company or any Restricted Subsidiary has irrevocably deposited or caused to be deposited with the Trustee as funds in trust solely for the benefit of the Holders, cash in U.S. dollars and/or U.S. Government Obligations, in amounts as will be sufficient without consideration of any reinvestment of interest, to pay and discharge the entire Indebtedness on the Notes not delivered to the Trustee for cancellation for principal, premium and Additional Amounts, if any, and accrued interest to the date of maturity or redemption;


1.	no Default or Event of Default has occurred and is continuing on the date of the deposit or will occur as a result of the deposit and the deposit will not result in a breach or violation of, or constitute a default under, any other material instrument to which the Company or any Significant Subsidiary is a party or by which the Company or any Significant Subsidiary is bound;


2.	the Company or any Restricted Subsidiary has paid or caused to be paid all other sums payable by it under this Indenture; and


3.	the Company has delivered irrevocable instructions to the Trustee under this Indenture to apply the deposited money toward the payment of the Notes at maturity or the redemption date, as the case may be.

In addition, the Company must deliver an Officer’s Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied.

Notwithstanding this Section 8.01, this Article 8 and the Company’s obligations in Sections 2.03, 2.04, 2.06, 2.07, 7.06 and 7.07 shall survive until the Notes have been paid in full. Thereafter, Section 8.03 and the Company’s obligations in Sections 7.06 and 8.04 shall survive.

SECTION 8.02 Application of Trust Money . The Trustee shall hold in trust U.S. dollars or U.S. Government Obligations deposited with it pursuant to this Article 8. It shall apply the deposited money and the U.S. dollars from U.S. Government Obligations through the Paying Agents and in accordance with this Indenture to the payment of principal of and interest and Additional Amounts, if any, on the Notes.

SECTION 8.03 Repayment to Company . The Trustee and the Paying Agents shall promptly turn over to the Company upon written request any excess money or securities held by them at any time.

Subject to any applicable abandoned property law, the Trustee and the Paying Agents shall pay to the Company upon request any money held by them for the payment of principal, premium, if any, interest and Additional Amounts, if any, that remains unclaimed for two years, and, thereafter, Holders entitled to the money must look only to the Company and not to the Trustee or any of the Paying Agents for payment as general creditors.

SECTION 8.04 Reinstatement . If the Trustee or any of the Paying Agents are unable to apply any U.S. dollars or U.S. Government Obligations in accordance with this Article 8 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company’s obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to this Article 8 until such time as the Trustee or such Paying Agent is permitted to apply all such U.S. dollars or U.S. Government Obligations in accordance with this Article 8; provided , however , that, if the Company has made any payment of interest or Additional Amounts, if any, on or principal of any Notes because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the U.S. dollars held by the Trustee or such Paying Agent.

SECTION 8.05 Defeasance . The Company and the Subsidiary Guarantors, at the Company’s option, at any time may elect to have either Section 8.05(a) or Section 8.05(b) applied to all outstanding Notes and the Note Guarantees upon compliance with the conditions set forth in this Section 8.05:

(a) Upon the Company’s election of the “legal defeasance” option applicable to this Section 8.05(a), and subject to the satisfaction of the conditions set forth in Section 8.05(c), the Company and the Subsidiary Guarantors, as applicable, will be discharged from any and all obligations in respect of the Notes and the Note Guarantees (except in each case for certain obligations, including to register the transfer or exchange of Notes, replace stolen, lost or mutilated Notes, maintain paying agencies and hold moneys for payment in trust). Subject to compliance with this Section 8.05, the Company may exercise its option under this Section 8.05(a) notwithstanding the prior exercise of its option under Section 8.05(b). If the Company and the Subsidiary Guarantors exercise the “legal defeasance” option, any payment on the Notes may not be accelerated due to an Event of Default with respect thereto.

(b) Upon the Company’s election of the “covenant defeasance” option applicable to this Section 8.05(b), and subject to the satisfaction of the conditions set forth in Section 8.05(c) hereof, the Company and the Subsidiary Guarantors, as applicable, need not comply with the covenants set forth in Sections 4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.17, 4.19, 4.20, 4.21, 4.22, 4.24 and 4.25 and Sections 6.01(3), (4), (5), (6) and (9) will no longer constitute Events of Default.

(c) In order to exercise the options set forth in Section 8.05(a) or Section 8.05(b) above the Company must irrevocably deposit with the Trustee, in trust, (1) money, (2) in certain cases, U.S. Government Obligations which through the payment of interest and principal in respect thereof in accordance with their terms will provide money in an amount, or (3) a combination thereof, in each case, sufficient to pay and discharge the principal of, interest and Additional Amounts, if any, on the outstanding Notes on the dates such payments are due, in accordance with the terms of the Notes, to, but excluding, the redemption date irrevocably designated by the Company pursuant to the final sentence of this Section 8.05(c) on the day on which payments are due and payable in accordance with the terms of this Indenture and of the Notes; and no Event of Default (including by reason of such deposit) with respect to the Notes shall have occurred and be continuing (a) on the date of such deposit and, (b) in the case of legal defeasance only, during the period ending on the 91st day after such date. The defeasance options set forth in Section 8.05(a) or Section 8.05(b) above will become effective only if the Company delivers to the Trustee: (i) an opinion of recognized U.S. counsel independent of the Company to the effect that the beneficial owners of the Notes will not recognize income, gain or loss for federal income tax purposes as a result of such deposit, defeasance and discharge of certain obligations, which in the case of Section 8.05(a) must be based on a change in law or a ruling by the U.S. Internal Revenue Service; and (ii) an Opinion of Counsel and an Officer’s Certificate as to compliance with all conditions precedent provided for in this Indenture relating to the satisfaction and discharge of the Notes. If the Company has deposited or caused to be deposited money or U.S. Government Obligations to pay or discharge the principal of (and premium, if any) and interest, if any, on the outstanding Notes to and including a redemption date on which all of the outstanding Notes are to be redeemed, such redemption date shall be irrevocably designated by the Company on or prior to the date of deposit of such money

or U.S. Government Obligations, and such designation shall be accompanied by an irrevocable request from the Company that the Trustee give notice of such redemption in the name of and at the expense of the Company not less than 30 nor more than 60 days prior to such redemption date in accordance with this Indenture.

Article 9

Amendments

SECTION 9.01 Without Consent of Holders . Notwithstanding Section 9.02, without the consent of any Holder of the Notes, the Company, the Trustee and, if applicable, the Subsidiary Guarantors may amend or supplement this Indenture, the Notes or any Note Guarantees:


1.	to cure any ambiguity, defect or inconsistency, in a manner that is not materially adverse to the interests of the Holders of the Notes;


2.	to provide for uncertificated Notes in addition to or in place of certificated Notes; provided that uncertificated Notes are issued in registered form for purposes of Section 163(f) of the United States Internal Revenue Code of 1986, as amended (the “Code”), or in a manner such that the uncertificated Notes are described in Section 163(f)(2)(B) of the Code;


3.	to provide for the assumption of the Company or a Subsidiary Guarantor’s obligations to Holders of Notes and Note Guarantees in the case of a merger or consolidation or sale of all or substantially all of the Company’s or such Subsidiary Guarantor’s assets, as applicable;


4.	to make any change (i) that would provide any additional rights or benefits to the Holders of Notes or (ii) that does not adversely affect the legal rights under this Indenture of any such Holder in any material respect;


5.	to conform the text of this Indenture, the Note Guarantees or the Notes to any provision of the Section “Description of the Notes” of the Offering Memorandum;


6.	to provide for the issuance of Additional Notes in accordance with the limitations set forth in this Indenture; or


7.	to allow any existing Subsidiary Guarantor or a new Subsidiary Guarantor to execute a supplemental Indenture or an offer letter (as required by applicable law in the jurisdiction of a Subsidiary Guarantor) with respect to a Note Guarantee and/or a Note Guarantee with respect to the Notes.

The Trustee shall receive an Officer’s Certificate and Opinion of Counsel stating that all conditions precedent to any modification of this Indenture, have been met and that such modification is authorized and permitted under this Indenture.

After any amendment described herein becomes effective, the Company will mail to the Holders of the Notes a notice in accordance with the procedure set forth in Section 12.01 briefly describing such amendment. However, the failure to give notice to all Holders of the Notes, or any defect therein, will not impair or affect the validity of the amendment under this Section 9.01.

SECTION 9.02 With Consent of Holders . The Company, the Subsidiary Guarantors and the Trustee, with the consent of the Holders of a majority in aggregate in principal amount of the outstanding Notes, may modify this Indenture or any supplemental indenture or the rights of the Holders of the Notes; provided that no such modification shall without the consent of the Holder of each outstanding Note affected thereby (with respect to any Notes held by a non-consenting Holder):


(a)	reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver;


(b)	reduce the principal of or change the stated maturity of any Note or reduce the amount payable upon redemption of any Note or change the time at which any Note may be redeemed;


(c)	reduce the rate of or extend the time for payment of interest on any Notes;


(d)	make any Notes payable in money other than that stated in the Notes;


(e)	make any change in the provisions of this Indenture relating to waivers of past Defaults or the rights of Holders of the Notes to receive payments of principal of, or interest or premium on, the Notes;

(f)

amend, change or modify the obligation of the Company to make and consummate an Asset Sale Offer with respect to any Asset Sale in accordance with the covenant described under Section 4.06 after the obligation to make such Asset Sale Offer has arisen; or the obligation of the Company to make and consummate a Change of Control Offer in the event of a Change of Control Repurchase Event in accordance with the covenant described under Section 4.08 after such Change of Control Repurchase Event has occurred, including, in each case, amending, changing or modifying any definition relating thereto;


(g)	reduce any premium and Additional Amounts with respect to any Note; or


(h)	amend or modify any payment provision of the Note Guarantees or the Notes by the Company or any Subsidiary Guarantor that would adversely affect Holders of the Notes.

Notes owned by the Company, the Subsidiary Guarantors or any of their Affiliates shall be deemed not to be outstanding for, among other purposes, consenting to any such modification.

It shall not be necessary for the consent of the Holders under this Section 9.02 to approve the particular form of any proposed amendment, but it shall be sufficient if such consent approves the substance thereof.

After an amendment under this Section 9.02 becomes effective, the Company shall mail to Holders a notice briefly describing such amendment. The failure to give such notice to all Holders, or any defect therein, shall not impair or affect the validity of an amendment under this Section 9.02.

SECTION 9.03 Revocation and Effect of Consents and Waivers . (a) A consent to an amendment or a waiver by a Holder of a Note shall bind the Holder and every subsequent Holder of that Note or portion of the Note that evidences the same debt as the consenting Holder’s Note, even if notation of the consent or waiver is not made on the Note. However, any such Holder or subsequent Holder may revoke the consent or waiver as to such Holder’s Note or portion of the Note if the Trustee receives the notice of revocation before the earlier of (i) the date the right to deliver a consent or waiver expires and (ii) the date the amendment or waiver become effective. After an amendment or waiver becomes effective, it shall bind every Holder. An amendment or waiver becomes effective upon the execution of such amendment or waiver by the Trustee.

(a) The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to give their consent or take any other action described above or required or permitted to be taken pursuant to this Indenture. If a record date is fixed, then notwithstanding Section 9.03(a), those Persons who were Holders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to give such consent or to revoke any consent previously given or to take any such action, whether or not such Persons continue to be Holders after such record date. No such consent shall be valid or effective for more than 120 days after such record date.

SECTION 9.04 Notation on or Exchange of Notes . If an amendment changes the terms of a Note, the Trustee may require the Holder of that Note to deliver it to the Trustee. The Trustee may place an appropriate notation on that Note regarding the changed terms and return it to the Holder. Alternatively, if the Company or the Trustee so determines, the Company in exchange for that Note shall issue and the Trustee shall authenticate a new Note that reflects the changed terms. Failure to make the appropriate notation or to issue a new Note shall not affect the validity of such amendment.

SECTION 9.05 Trustee to Sign Amendments . The Trustee shall sign any amendment authorized pursuant to this Article 9 if the amendment does not adversely affect the rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee may but need not sign it. In signing such amendment the Trustee shall be entitled to receive indemnity reasonably satisfactory to it and to receive, and (subject to Section 7.01) shall be fully protected in relying

upon, in addition to the documents required by Section 12.03, an Officer’s Certificate and an Opinion of Counsel each stating that such amendment is authorized or permitted by this Indenture.

Article 10
Note Guarantees

SECTION 10.01 Guarantees . Subject to the provisions of this Article 10, the Subsidiary Guarantors hereby irrevocably and unconditionally guarantee, jointly and severally with all subsequent Subsidiary Guarantors, if any, on an unsecured basis, the full and punctual payment (whether at Stated Maturity, upon redemption, purchase pursuant to an offer to purchase or acceleration, or otherwise) of the principal of, premium, if any, and interest on, and all other amounts payable under, each Note, and the full and punctual payment of all other amounts payable by the Company under this Indenture.

SECTION 10.02 Guarantee Unconditional . The obligations of any Subsidiary Guarantor hereunder are unconditional and absolute and, without limiting the generality of the foregoing, will not be released, discharged or otherwise affected by:

(a) any extension, renewal, settlement, compromise, waiver or release in respect of any obligation of the Company under this Indenture or any Note, by operation of law or otherwise;

(b) any modification or amendment of or supplement to this Indenture or any Note;

(c) any change in the corporate existence, structure or ownership of the Company, or any insolvency, bankruptcy, reorganization or other similar proceeding affecting the Company or its assets or any resulting release or discharge of any obligation of the Company contained in this Indenture or any Note;

(d) the existence of any claim, set‑off or other rights which the Subsidiary Guarantor may have at any time against the Company, the Trustee or any other Person, whether in connection with this Indenture or any unrelated transactions; provided that nothing herein prevents the assertion of any such claim by separate suit or compulsory counterclaim;

(e) any invalidity or unenforceability relating to or against the Company for any reason of this Indenture or any Note, or any provision of applicable law or regulation purporting to prohibit the payment by the Company of the principal of or any interest on any Note or any other amount payable by the Company under this Indenture; or

(f) any other act or omission to act or delay of any kind by the Company, the Trustee or any other Person or any other circumstance whatsoever which might, but for the provisions of this paragraph, constitute a legal or equitable discharge of or defense to such Subsidiary Guarantors’ obligations hereunder.

SECTION 10.03 Discharge; Reinstatement . The Subsidiary Guarantors’ obligations hereunder will remain in full force and effect until the principal of, premium, if any, and interest on the Notes and all other amounts payable by the Company under this Indenture have been paid in full. If at any time any payment of the principal of, premium, if any, or interest on any Note or any other amount payable by the Company under this Indenture is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of the Company or otherwise, the Subsidiary Guarantors’ obligations hereunder with respect to such payment will be reinstated as though such payment had been due but not made at such time.

SECTION 10.04 Waiver by the Subsidiary Guarantors . The Subsidiary Guarantors irrevocably waive acceptance hereof, presentment, demand, protest and any notice not provided for herein, as well as any requirement that at any time any action be taken by any Person against the Company or any other Person.

SECTION 10.05 Subrogation and Contribution . Upon making any payment with respect to any obligation of the Company under the Note Guarantee, the Subsidiary Guarantor making such payment will be subrogated to the rights of the payee against the Company with respect to such obligation; provided that such Subsidiary Guarantor may not enforce either any right of subrogation, or any right to receive payment in the nature of contribution, or otherwise, from any other Subsidiary Guarantor, if any, with respect to such payment so long as any amount payable by the Company hereunder or under the Notes remains unpaid.

SECTION 10.06 Stay of Acceleration . If acceleration of the time for payment of any amount payable by the Company under this Indenture or the Notes is stayed upon the insolvency, bankruptcy or reorganization of the Company, all such amounts otherwise subject to acceleration under the terms of this Indenture are nonetheless payable by the Subsidiary Guarantors hereunder forthwith on demand by the Trustee or the Holders.

SECTION 10.07 Limitation on Amount of Guarantee . Notwithstanding anything to the contrary in this Note Guarantee, each Subsidiary Guarantor and, by its acceptance of Notes, each Holder hereby confirms that it is the intention of all of them that the guarantee of the Subsidiary Guarantors not constitute a fraudulent conveyance under applicable fraudulent conveyance provisions of the laws of Argentina, the laws of Brazil, the U.S. Bankruptcy Code or any comparable provision of state law. To effectuate that intention, the Trustee, the Holders and the Subsidiary Guarantors hereby irrevocably agree that the obligations of each Subsidiary Guarantor under its guarantee are limited to the maximum amount that would not render the Subsidiary Guarantors’ obligations subject to avoidance under applicable fraudulent conveyance provisions of the laws of Argentina, the laws of Brazil or the U.S. Bankruptcy Code or any comparable provision of state law.

The Trustee, the Holders and the Subsidiary Guarantors further hereby irrevocably agree that the obligations of each Subsidiary Guarantor under its guarantee are limited to the maximum amount that (1) would not render each Subsidiary Guarantor’s obligations subject to avoidance under applicable law, including applicable fraudulent conveyance laws or (2) would not result in a breach or violation by such Subsidiary Guarantor of any agreement to which such

Subsidiary Guarantor is a party and entered into prior to the date that the Subsidiary Guarantor constituted a Significant Subsidiary.

SECTION 10.08 Execution and Delivery of Guarantee . The execution by the Brazilian Subsidiary Guarantors of this Indenture and the execution by the Argentine Subsidiary Guarantors of the Acceptance Letter evidences the guarantee of the Subsidiary Guarantors, whether or not the person signing as an officer of each Subsidiary Guarantor still holds that office at the time of the authentication of any Note. The delivery of any Note by the Trustee after authentication constitutes due delivery of the guarantee set forth in this Note Guarantee on behalf of the Subsidiary Guarantor.

SECTION 10.09 Release of Subsidiary Guarantor . The guarantee of a Subsidiary Guarantor will terminate upon:

(a) a sale or disposition (including by way of consolidation or merger) of all or a portion of the Capital Stock of such Subsidiary Guarantor following which such Subsidiary Guarantor is no longer a Subsidiary of the Company;

(b) a sale or disposition (including by way of consolidation or merger) of all or substantially all of the assets of such Subsidiary Guarantor to a Person that is not the Company or a Restricted Subsidiary;

(d) the designation of such Subsidiary Guarantor as an Unrestricted Subsidiary; or

(e) such Subsidiary Guarantor ceasing to be a Significant Subsidiary; provided that the Company and the other Subsidiary Guarantors at the time of determination would directly (i) hold at least 75% of the Company’s Consolidated Total Assets on a consolidated basis as of the most recent quarterly balance sheet and (ii) generate revenues of at least 75% of the Company’s Consolidated Net Revenue on a consolidated basis for the twelve‑month period ending on the date of the Company’s most recent quarterly consolidated statement of income,

provided that any such transaction is carried out pursuant to, and in accordance with, all other applicable provisions of this Indenture.

Upon delivery by the Company to the Trustee of an Officer’s Certificate and an Opinion of Counsel to the foregoing effect, the Trustee will execute any documents reasonably requested by the Company in writing in order to evidence the release of such Subsidiary Guarantor from its obligations under its guarantee.

Article 11

Release of Covenants

SECTION 11.01 Release of Covenants . (a) If on any date following the Issue Date:

(i) (1) the Notes have been assigned an Investment Grade Rating by any two Rating Agencies; and

(ii) no Default shall have occurred and be continuing (each of (1)(a) and (1)(b) under this Section 11.01, a “Covenant Suspension Event”),

then, beginning on that day and subject to the provisions of Section 11.01(b), the Suspended Covenants will automatically, without any notice of any kind, be suspended (and the Company and its Subsidiaries will have no obligation or liability whatsoever with respect to such covenants).

(b) If, during any period in which the Suspended Covenants are suspended (the “Suspension Period”), the Notes cease to have an Investment Grade Rating by two Rating Agencies (the “Reversion Date”), the Suspended Covenants will thereafter be reinstated and be applicable pursuant to the terms of this Indenture (including in connection with performing any calculation or assessment to determine compliance with the terms of this Indenture), unless and until the Notes subsequently attain an Investment Grade Rating by any two Rating Agencies (in which event the Suspended Covenants will again be suspended for such time that the Notes maintain an Investment Grade Rating by any two Rating Agencies); provided, however , that no Default or breach or violation of any kind will be deemed to exist under this Indenture, the Notes or any Note Guarantee with respect to the Suspended Covenants (whether during the period when the Suspended Covenants were suspended or thereafter) based on, and none of the Company or any of its Restricted Subsidiaries will bear any liability (whether during the period when the Suspended Covenants were suspended or thereafter) for, any actions taken or events occurring after the Notes attain an Investment Grade Rating by any two Rating Agencies and before any reinstatement of the Suspended Covenants as provided above, or any actions taken at any time (whether during the period when the Suspended Covenants were suspended or thereafter) pursuant to any contractual obligation arising prior to the reinstatement, regardless of whether those actions or events would have been permitted if the applicable Suspended Covenant had remained in effect during such period.

On the Reversion Date, all Indebtedness Incurred during the Suspension Period will be classified to have been Incurred pursuant to Section 4.03(1) or one of the clauses set forth in Section 4.03(2)(b) thereto (to the extent such Indebtedness would be permitted to be Incurred thereunder as of the Reversion Date and after giving effect to the Indebtedness Incurred prior to the Suspension Period and outstanding on the Reversion Date). To the extent such Indebtedness would not be permitted to be Incurred pursuant to Section 4.03, such Indebtedness will be deemed to have been outstanding on the Issue Date, so that it is classified as permitted under Section 4.03(2)(b)(ii).

The Company shall give the Trustee written notice of any Covenant Suspension Event and in any event not later than five Business Days after such Covenant Suspension Event has occurred. In the absence of such notice, the Trustee shall assume the Suspended Covenants apply and are in full force and effect. The Company shall give the Trustee written notice of any occurrence of a Reversion Date not later than five Business Days after such Reversion Date. After

any such notice of the occurrence of a Reversion Date, the Trustee shall assume the Suspended Covenants apply and are in full force and effect.

Article 12

Miscellaneous

SECTION 12.01 Notices . (a) Any notice or communication to the Company, any Subsidiary Guarantor, the Trustee, the Registrar, the Transfer Agent or the Paying Agent shall be in writing in English or a certified translation, and delivered in person, sent by facsimile, electronic mail, or mailed by first‑class mail addressed as follows:

if to the Company or any Subsidiary Guarantor:

Adecoagro S.A.
Fondo de la Legua 936,
B1640EDO, Martinez,
Provincia de Buenos Aires, Argentina
Attention: Mariano Bosch and Emilio Gnecco
Facsimile: +54 11 4836-8639
Email: mbosch@adecoagro.com ; egnecco@adecoagro.com

if to the Trustee or the Paying Agent:

The Bank of New York Mellon
101 Barclay Street, 7E
New York, New York 10286
United States
Attention: Global Structured Finance
Facsimile: (212) 815‑2830
Email: peter.lopez@bnymellon.com

The Trustee agrees to accept and act upon instructions or directions pursuant to this Indenture sent by e‑mail, facsimile transmission or other similar electronic methods. If the party elects to give the Trustee e‑mail or facsimile instructions (or instructions by a similar electronic method) and the Trustee in its discretion elects to act upon such instructions, the Trustee’s understanding of such instructions shall be deemed controlling. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reliance upon and compliance with such instructions notwithstanding such instructions conflict or are inconsistent with a subsequent written instruction. The party providing electronic instructions agrees to assume all risks arising out of the use of such electronic methods to submit instructions and directions to the Trustee, including without limitation the risk of the Trustee acting on unauthorized instructions, and the risk or interception and misuse by third parties.

The Trustee may rely upon and comply with instructions or directions sent via unsecured facsimile or email transmission and the Trustee shall not be liable for any loss, liability

or expense of any kind incurred by the Company or the Holders due to the Trustee’s reliance upon and compliance with instructions or directions given by unsecured facsimile or email transmission, provided , however , that such losses have not arisen from the negligence or willful misconduct of the Trustee, it being understood that the failure of the Trustee to verify or confirm that the person providing the instructions or directions, is, in fact, an authorized person does not constitute negligence or willful misconduct.

Notwithstanding anything to the contrary contained herein, as long as the Notes are in the form of Global Notes, notice to the Holders may be made electronically in accordance with procedures of the Depositary.

The Company, any Subsidiary Guarantor, the Trustee or the Paying Agents by notice to the other may designate additional or different addresses for subsequent notices or communications.

(a) (i) Any notice or communication mailed to a Holder shall be mailed to the Holder at the Holder’s address as it appears on the Notes Register. A notice shall be deemed to have been given to a Holder upon the mailing by first class mail, postage prepaid, of such notice to such Holder at its registered addresses as recorded in the Notes Register not later than the latest date, and not earlier than the earliest date, prescribed in the Notes for the giving of such notice. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it.

(i) Failure to mail a notice or communication to a Holder or any defect in a notice or communication to a Holder shall not affect the sufficiency of such notice or communication with respect to other Holders.

SECTION 12.02 [Reserved] .

SECTION 12.03 Certificate and Opinion as to Conditions Precedent . Upon any request or application by the Company to the Trustee to take or refrain from taking any action under this Indenture, the Company shall furnish to the Trustee:

(a) an Officer’s Certificate in form and substance reasonably satisfactory to the Trustee stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to taking the proposed action or to refraining from taking the proposed action have been complied with; and

(b) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee stating that, in the opinion of such counsel, all such conditions precedent have been complied with.

SECTION 12.04 Statements Required in Certificate or Opinion . Each certificate or opinion with respect to compliance with a covenant or condition provided for in this Indenture shall include:

(a) a statement that the individual making such certificate or opinion has read such covenant or condition;

(b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

(c) a statement that, in the opinion of such individual, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been complied with; and

(d) a statement as to whether or not, in the opinion of such individual, such covenant or condition has been complied with.

SECTION 12.05 When Notes Disregarded . In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Company or by any Person directly or indirectly Controlling or Controlled by or under direct or indirect common Control with the Company shall be disregarded and deemed not to be outstanding, except that, for the purpose of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes which a Trust Officer of the Trustee actually knows are so owned shall be so disregarded. Also, subject to the foregoing, only Notes outstanding at the time shall be considered in any such determination.

SECTION 12.06 Rules by Trustee, Paying Agents and Registrar . The Trustee may make reasonable rules for action by or a meeting of Holders. The Registrar and the Paying Agents may make reasonable rules for their functions.

SECTION 12.07 Legal Holidays . If a payment date is a Legal Holiday, payment shall be made on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. If a regular record date is a Legal Holiday, the record date shall not be affected.

SECTION 12.08 Governing Law . THIS INDENTURE, THE NOTES AND THE NOTE GUARANTEES SHALL BE CONSTRUED IN ACCORDANCE WITH, AND THIS INDENTURE, THE NOTES AND THE NOTE GUARANTEES AND ALL MATTERS ARISING OUT OF OR RELATING IN ANY WAY WHATSOEVER TO THIS INDENTURE, THE NOTES AND THE NOTE GUARANTEES (WHETHER IN CONTRACT, TORT OR OTHERWISE) SHALL BE GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK. For the avoidance of doubt, articles 84 to 94.8 (both inclusive) of the Luxembourg law dated 10 August 1915 on commercial companies, as amended, are excluded and shall not apply to the Notes or this Indenture.

SECTION 12.09 Successors . All agreements of the Company and any Subsidiary Guarantor in this Indenture, the Notes and the Note Guarantees shall bind their successors. All agreements of the Trustee in this Indenture shall bind their successors.

SECTION 12.10 Multiple Originals . The parties may sign any number of copies of this Indenture, the Offer Letter and the Acceptance Letter. Each signed copy of this

Indenture, the Offer Letter and the Acceptance Letter shall be an original, but all of them together represent the same agreement. One signed copy is enough to prove this Indenture.

SECTION 12.11 Table of Contents; Headings . The table of contents and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof.

SECTION 12.12 Consent to Jurisdiction; Appointment of Agent to Accept Service of Process . (a) Each of the Company and each Subsidiary Guarantor irrevocably consents and agrees, for the benefit of the Holders from time to time of the Notes and the Trustee, that any legal action, suit or proceeding against it with respect to its obligations, liabilities or any other matter arising out of or in connection with this Indenture, the Notes or the Note Guarantees may be brought in the courts of the State of New York or the courts of the United States located in the Borough of Manhattan, New York City, New York and, until amounts due and to become due in respect of the Notes have been paid, hereby irrevocably consent and submit to the non‑exclusive jurisdiction of each such court in personam, generally and unconditionally with respect to any action, suit or proceeding for itself and in respect of its properties, assets and revenues.

(a) The Company has validly and effectively appointed C T Corporation System, (the “Process Agent”), with offices on the date hereof at 111 Eighth Avenue, New York, New York 10011, as its authorized agent upon which process may be served in any action, suit or proceeding referred to in Section 12.12(a). If for any reason such agent hereunder shall cease to be available to act as such, the Company agrees to designate a new agent in the Borough of Manhattan, New York City, New York on the terms and for the purposes of this Section 12.12 reasonably satisfactory to the Trustee. The Company further hereby irrevocably consents and agrees to the service of any and all legal process, summons, notices and documents in any such action, suit or proceeding against the Company by serving a copy thereof upon the relevant agent for service of process referred to in this Section 12.12 (whether or not the appointment of such agent shall for any reason prove to be ineffective or such agent shall accept or acknowledge such service) or by mailing copies thereof by registered or certified air mail, postage prepaid, to the Company at its address specified in or designated pursuant to this Indenture. The Company agrees that the failure of any such designee, appointee and agent to give any notice of such service to it shall not impair or affect in any way the validity of such service or any judgment rendered in any action or proceeding based thereon. Nothing herein shall in any way be deemed to limit the ability of the Holders and the Trustee to serve any such legal process, summons, notices and documents in any other manner permitted by applicable law or to obtain jurisdiction over the Company or bring actions, suits or proceedings against the Company in such other jurisdictions, and in such manner, as may be permitted by applicable law. The Company irrevocably and unconditionally waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions, suits or proceedings arising out of or in connection with this Indenture brought in the courts of the State of New York or the courts of the United States located in the Borough of Manhattan, New York City, New York and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

If for the purpose of obtaining judgment in any court it is necessary to convert a sum due hereunder to a Holder from U.S. dollars into another currency, the Company has agreed, and each Holder by holding such Note will be deemed to have agreed, to the fullest extent that it may effectively do so, that the rate of exchange used shall be that at which in accordance with normal banking procedures such Holder could purchase U.S. dollars with such other currency in New York City, New York on the day two Business Days preceding the day on which final judgment is given.

The obligation of the Company in respect of any sum payable by it to a Holder shall, notwithstanding any judgment in a currency (the “judgment currency”) other than U.S. dollars, be discharged only to the extent that on the Business Day following receipt by such Holder of any sum adjudged to be so due in the judgment currency, such Holder may in accordance with normal banking procedures purchase U.S. dollars with the judgment currency; if the amount of U.S. dollars so purchased is less than the sum originally due to such Holder in the judgment currency (determined in the manner set forth in the preceding paragraph), each of the Company and the Subsidiary Guarantors agrees, as a separate obligation and notwithstanding any such judgment, to indemnify such Holder against such loss, and if the amount of the U.S. dollars so purchased exceeds the sum originally due to such Holder, such Holder agrees to remit to the Company such excess, provided that such Holder shall have no obligation to remit any such excess as long as the Company shall have failed to pay such Holder any obligations due and payable under such Note, in which case such excess may be applied to such obligations of the Company under such Note in accordance with the terms thereof.

(b) The provisions of this Section 12.12 shall survive any termination of this Indenture, in whole or in part.

SECTION 12.13 Waiver of Jury Trial . EACH OF THE COMPANY, EACH SUBSIDIARY GUARANTOR AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR THE TRANSACTION CONTEMPLATED HEREBY

SECTION 12.14 Regarding the Paying Agent . (a) Each payment in full of principal, Applicable Premium, redemption amount, Additional Amounts, interest or any other amounts payable under this Indenture in respect of any Notes made by or on behalf of the Company to or to the order of the Paying Agent in the manner provided herein or in the Notes on the date due shall be valid and effective to satisfy and discharge the obligation of the Company to make payment of principal, Applicable Premium, redemption amount, Additional Amounts interest or any other amounts payable under this Indenture and the Notes on such date, provided , however , that the liability of the Paying Agent hereunder shall not exceed any amounts paid to it by the Company, or held by it, on behalf of the Holders hereunder; and provided further that, in the event that there is a default by the Paying Agent in any payment of principal, Applicable Premium, redemption amount, Additional Amounts, interest or any other amounts payable in respect of any Note in accordance with the terms hereof, the Company shall pay on demand such further amounts as will result in the receipt by the Holders of such amounts as would have been received by them had no such default occurred.

(a) The Company undertakes to indemnify each of the Paying Agents and their affiliates against all losses, liabilities, including any and all tax liabilities, which, for the avoidance of doubt, shall include Argentine, Brazilian and U.S. taxes and associated penalties, costs, claims, actions, damages, expenses or demands which any of them may incur or which may be made against any of them as a result of or in connection with the appointment of or the exercise of the powers and duties by any Paying Agent or its affiliates under this Indenture except as may result from its own negligence, willful misconduct or bad faith or that of its directors, officers or employees or any of them.

(b) The Company acknowledges that the Paying Agent makes no representations as to the interpretation or characterization of the transactions herein undertaken for tax or any other purpose, in any jurisdiction. Each of the Company and each Subsidiary Guarantor represents that it has fully satisfied itself as to any tax impact of this Indenture before agreeing to the terms herein, and is responsible for any and all federal, state, local, income, franchise, withholding, value added, sales, use, transfer, stamp or other taxes imposed by any jurisdiction in respect of this Indenture or the Notes.

(c) The Company agrees to pay any and all stamp and other documentary taxes or duties which may be payable in connection with the execution, delivery, performance and enforcement of this Indenture by the Paying Agent.

SECTION 12.15 FATCA . The Company hereby covenants with The Bank of New York Mellon that it will provide The Bank of New York Mellon with such information as it may have in its possession that The Bank of New York Mellon reasonably determines is necessary to enable the determination of whether any payments hereunder are subject to any withholding or deduction pursuant to an agreement described in Section 1471(b) of the Code or otherwise imposed pursuant to Sections 1471 through 1474 of the Code and any regulations , or agreements thereunder or official interpretations thereof or any intergovernmental agreement between the United States and another jurisdiction facilitating the implementation thereof (or any law implementing such an intergovernmental agreement). The Bank of New York Mellon shall be entitled to deduct FATCA Withholding Tax, and shall have no obligation to gross-up any payment hereunder or to pay any additional amount as a result of such FATCA Withholding Tax. As used herein, “ FATCA Withholding Tax ” shall mean any withholding or deduction pursuant to an agreement described in Section 1471(b) of the Code or otherwise imposed pursuant to Sections 1471 through 1474 of the Code (or any regulations or agreements thereunder or official interpretations thereof) or any intergovernmental agreement between the United States and another jurisdiction facilitating the implementation thereof (or any law implementing such an intergovernmental agreement).

IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed as of the date first written above.



	ADECOAGRO S.A.


	By:
		Name:
		Title:

Indenture



	ADECOAGRO BRASIL PARTICIPAÇÕES S.A.


	By:
		Title:



	ADECOAGRO VALE DO IVINHEMA S.A.


	By:
		Title:



	USINA MONTE ALEGRE LTDA.


	By:
		Title:



	THE BANK OF NEW YORK MELLON,
	as Trustee, Registrar Transfer Agent and Paying
	Agent


	By:
		Title:

RULE 144A/REGULATION S APPENDIX

PROVISIONS RELATING TO INITIAL NOTES

1. Definitions

For the purposes of this Appendix the following terms shall have the meanings indicated below. Other terms used in this Appendix and not defined herein shall have the meanings assigned to them in the Indenture.

“Distribution Compliance Period” means, in respect of any Regulation S Global Notes, the 40 consecutive days beginning on and including the later of (a) the day on which any Notes represented thereby are offered to persons other than distributors (as defined in Regulation S under the Securities Act) pursuant to Regulation S and (b) the issue date for such Notes.

“Global Note” means any Regulation S Global Note or Restricted Global Note issued in fully registered book‑entry form to DTC (or its nominee), as depositary for the beneficial owners thereof, which shall be substantially in the form set forth in Exhibit 1 to this Appendix .

“Issuer Order” means a written request or order signed in the name of the Company by its chief executive officer or its chief operating officer, or in the case of authentication of the Notes, two Officers of the Company and delivered to the Trustee.

“Non‑U.S. Person” has meaning given to it in Regulation S.

“Notes” means the (1) U.S.$500,000,000 aggregate principal amount of 6.000% Senior Notes due 2027 issued on the Issue Date and (2) Additional Notes, if any, issued in a transaction exempt from the registration requirements of the Securities Act.

“QIB” means a “qualified institutional buyer” as defined in Rule 144A under the Securities Act.

“Regulation S Global Note” means a single, permanent Global Note in definitive, fully registered book‑entry form sold outside of the United States in reliance on Regulation S.

“Restricted Global Note” means a single, permanent Global Note in definitive, fully registered form without interest coupon, constituting a Restricted Note.

“Restricted Note” means a Note that constitutes a “restricted security” within the meaning of Rule 144(a)(3) under the Securities Act; provided , however , that the Trustee shall be entitled to request and conclusively rely on an Opinion of Counsel with respect to whether any Note constitutes a Restricted Note.

“Restricted Notes Legend” has the meaning set forth in Section 2.1(6).

A-1

“Securities Custodian” means the custodian with respect to a Global Note (as appointed by DTC), or any successor Person thereto and shall initially be The Bank of New York Mellon.

2. The Notes

2.1 Form and Registration .

(1) Form and Registration . The certificates representing the Notes shall be issued in fully registered form without interest coupons.

(2) Regulation S Global Note. Notes offered and sold in reliance on Regulation S under the Securities Act shall initially be represented by one or more Regulation S Global Notes, which shall be deposited with the Trustee as custodian for, and registered in the name of a nominee of, DTC for the accounts of Euroclear and Clearstream (as indirect participants in DTC).

(3) Restricted Global Note . Notes sold in reliance on Rule 144A under the Securities Act shall be represented by one or more Restricted Global Notes and shall be deposited with the Trustee as custodian for, and registered in the name of a nominee of, DTC. Each Global Note shall be subject to certain restrictions on transfer, set forth in Section 2.3 and 2.4 of this Appendix .

(4) Ownership . Ownership of beneficial interests in a Global Note shall be limited to persons who have accounts with DTC or Euroclear and Clearstream, as indirect participants in DTC (“participants”), or persons who hold interests through participants. Ownership of beneficial interests in a Global Note shall be shown on, and the transfer of that ownership shall be effected only through, records maintained by DTC or its nominee (with respect to interests of participants) and the records of participants (with respect to interests of persons other than participants). QIBs may hold their interests in a Restricted Global Note, directly through DTC, if they are participants in such system, or indirectly through organizations which are participants in such system.

Investors may hold their interests in a Regulation S Global Note, directly through Euroclear or Clearstream, if they are participants in such systems, or indirectly through organizations that are participants in such systems.

So long as DTC or its nominee is the registered owner or Holder of a Global Note, DTC or such nominee, as the case may be, shall be considered the sole owner or Holder of the Notes represented by such Global Note for all purposes under the Indenture. No beneficial owner of an interest in a Global Note shall be able to transfer that interest except in accordance with DTC’s applicable procedures, in addition to those provided for under the Indenture. Payments made with respect to a Global Note shall be made to DTC or its nominee, as the registered owner thereof. None of the Company, the Trustee or any Paying Agent shall have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in a Global Note or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests.

A-2

The Company expects that DTC or its nominee, upon receipt of any payment in respect of a Global Note, shall credit participants’ accounts with payments in amounts proportionate to their respective beneficial interests in such Global Note as shown on its records. The Company also expects that payments by participants to owners of beneficial interests in such Global Note held through such participants shall be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers registered in the names of nominees for such customers. Such payments shall be the responsibility of such participants.

(5) Limitation on Obligations . Although DTC, Euroclear and Clearstream are expected to follow the procedures set forth in the Indenture in order to facilitate transfers of interests in a Global Note among participants of DTC, Euroclear and Clearstream, as the case may be, they are under no obligation to perform or continue to perform such procedures, and such procedures may be discontinued at any time. None of the Company, the Trustee or any Paying Agent shall have any responsibility for the performance by DTC, Euroclear or Clearstream or their respective participants or indirect participants of their respective obligations under the rules and procedures governing their operations.

(6) Successors; Definitive Notes . If (i) DTC is at any time unwilling or unable to continue as a Depositary for the Global Notes and a successor Depositary or clearing agency is not appointed by the Company within 90 days, or (ii) an Event of Default has occurred and is continuing and the Registrar and the Company has received a written request from a beneficial owner of Notes to issue its proportionate interest in the Global Note, the Company shall issue certificated Notes which may bear the Restricted Notes Legend set forth in Exhibit 1 to this Appendix (the “Restricted Notes Legend”) to all beneficial owners, in exchange for their beneficial interests in Global Notes. Holders of an interest in a Global Note may receive certificated Notes, which may bear the legend set forth in Exhibit 1 to this Appendix , in accordance with DTC’s rules and procedures in addition to those provided for under the Indenture; provided , however , that if the Company is issuing certificated Notes pursuant to Section 2.1(6)(ii) , the Company shall only be required to issue certificated Notes to the beneficial owners of the Notes who request certificated Notes.

(7) Certificated Notes . Except as provided in this Section 2.1 or Section 2.3 , owners of beneficial interests in Restricted Global Notes shall not be entitled to receive physical delivery of certificated Notes. The registered Holder of a Global Note shall be entitled to grant proxies and otherwise authorize any Person, including DTC and Persons that may hold interests through DTC to take any action which a Holder is entitled to take under the Indenture or the Notes. In the event of transfer of a Restricted Global Note to the beneficial owners thereof in the form of certificated Notes, the Company shall promptly make available to the Trustee a reasonable supply of certificated Notes in definitive, fully registered form without interest coupons.

So long as the Notes are listed on the Singapore Stock Exchange and the rules of such exchange so require, transfers or exchanges of Notes in definitive form may be made by presenting and surrendering such Notes at, and obtaining new definitive Notes from, the office of a Singapore paying agent, to be appointed by the Issuer. Such Singapore paying agent will have the same duties and rights conferred to a Paying Agent. With respect to a partial transfer of a definitive Note, a new definitive Note in respect of the balance of the principal amount of the definitive Note

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that was not transferred will be delivered at the office of such Singapore paying agent. In the event that any Global Notes are exchanged for definitive Notes, announcement of such exchange shall be made through the Singapore Stock Exchange and such announcement shall include all material information with respect to the delivery of the definitive Notes.

2.2 Authentication . The Trustee shall authenticate and deliver: (1) on the Issue Date, an aggregate principal amount of U.S.$500,000,000 of the Company’s 6.000% Senior Notes due 2027, and (2) any Additional Notes for an original issue in an aggregate principal amount specified in the written order of the Company pursuant to Section 2.02 of the Indenture. Such order shall specify the amount of the Notes to be authenticated and the date on which the original issue of Notes is to be authenticated and, in the case of any issuance of Additional Notes pursuant to Section 2.12 of the Indenture, shall certify that such issuance is in compliance with Section 4.03 of the Indenture.

2.3 Global Notes .

(1) Any Global Note (i) shall represent, and shall be denominated in an aggregate amount equal to the aggregate principal amount of, all of the outstanding Notes of such series, (ii) shall be registered in the name of DTC or its nominee, (iii) shall be delivered by the Trustee to DTC or pursuant to DTC’s instruction and (iv) shall bear a legend substantially to the following effect:

THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY. THIS NOTE IS EXCHANGEABLE FOR NOTES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE (OTHER THAN A TRANSFER OF THIS NOTE AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.

UNLESS THIS GLOBAL NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY DEFINITIVE NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

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(2) The Global Notes initially shall (i) be registered in the name of DTC or its nominee, (ii) be delivered to the Trustee and/or the Registrar as custodian for DTC and (iii) bear legends as set forth above.

Members of, or participants in, DTC, Euroclear or Clearstream shall have no rights under the Indenture with respect to any Global Note held on their behalf by DTC or the Trustee as its custodian, or under the Global Note, and DTC may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of the Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by DTC or impair, as between DTC and its participants, the operation of customary practices governing the exercise of the rights of a Holder of any Note.

(3) Interests of beneficial owners in the Global Notes may only be transferred or exchanged for certificated Notes in accordance with the rules and procedures of DTC, Euroclear and Clearstream and the provisions of the Indenture, including this Appendix . In addition, certificated Notes shall be transferred to all beneficial owners, in exchange for their beneficial interests in Global Notes if (i) DTC is at any time unwilling or unable to continue as a Depositary for the Global Notes and a successor Depositary or clearing agency is not appointed by the Company within 90 days, or (ii) an Event of Default has occurred and is continuing and the Registrar has received a written request from a beneficial owner of Notes to issue its proportionate interest in the Global Note.

Transfers between participants in DTC shall be effected in accordance with DTC’s procedures, and shall be settled in same‑day funds. Transfers between participants in Euroclear and Clearstream shall be effected in the ordinary way in accordance with their respective rules and operating procedures. Transactions settled through DTC shall settle on a T+2 basis. Transactions settled through Euroclear and Clearstream shall settle on a T+3 basis.

The Company expects that DTC shall take any action permitted to be taken by a Holder (including the presentation of Notes for exchange) only at the direction of one or more participants to whose account the interest in a Global Note is credited and only in respect of such portion of the Notes as to which such participant or participants has or have given such direction. However, if there is an Event of Default under the Notes, DTC may exchange the applicable Global Notes for certificated Notes which it shall distribute to its participants and which may bear the Restricted Notes Legend as set forth in Exhibit 1 to this Appendix .

Subject to compliance with the transfer restrictions applicable to the Global Notes, cross‑market transfers between the participants in DTC, on the one hand, and Euroclear or Clearstream participants, on the other hand, shall be effected through DTC in accordance with DTC’s rules on behalf of each of Euroclear or Clearstream by its common depositary; however, such cross‑market transactions shall require delivery of instructions to Euroclear or Clearstream by the counterparty in such system in accordance with the rules and procedures and within the established deadlines (Brussels, Belgium time) of such system. Euroclear or Clearstream shall, if the transaction meets its settlement requirements, deliver instructions to its common depositary to take action to effect final settlement on its behalf by delivering or receiving interests in the Global

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Notes in DTC, and making or receiving payment in accordance with normal procedures for same‑day funds settlement applicable to DTC. Euroclear participants and Clearstream participants may not deliver instructions directly to the common depositaries for Euroclear or Clearstream.

Because of time zone differences, the securities account of a Euroclear or Clearstream participant purchasing an interest in a Global Note from a participant in DTC shall be credited, and any such crediting shall be reported to the relevant Euroclear or Clearstream participant, during the securities settlement processing day (which must be a business day for Euroclear and Clearstream) immediately following the settlement date of DTC. Cash received in Euroclear or Clearstream as a result of sales of interests in a Global Note by or through a Euroclear or Clearstream participant to a participant in DTC shall be received with value on the settlement date of DTC but shall be available in the relevant Euroclear or Clearstream cash account only as of the business day for Euroclear or Clearstream following DTC’s settlement date.

(4) In connection with any transfer or exchange of a portion of the beneficial interest in any Global Note to beneficial owners pursuant to Section 2.3(3) the Registrar shall (if one or more definitive Notes are to be issued) reflect on its books and records the date and a decrease in the principal amount of the Global Note in an amount equal to the principal amount of the beneficial interest in the Global Note to be transferred, and the Company shall execute, and the Trustee shall authenticate and deliver, one or more definitive Notes of like tenor and principal amount of authorized denominations.

(5) Any beneficial interest in one of the Global Notes that is transferred to a person who takes delivery in the form of an interest in the other corresponding Global Note will, upon transfer, cease to be an interest in such Global Note and become an interest in the other corresponding Global Note and, accordingly, will thereafter be subject to all transfer restrictions, if any, and other procedures applicable to beneficial interest in such other corresponding Global Note for as long as it remains such an interest.

(6) In connection with the transfer of Global Notes as an entirety to beneficial owners pursuant to Section 2.3(3) , the Global Notes shall be deemed to be surrendered to the Trustee for cancellation, and the Company shall execute, and the Trustee shall authenticate and deliver, to each beneficial owner identified by DTC, Euroclear or Clearstream in exchange for its beneficial interest in the Global Notes, an equal aggregate principal amount at maturity of definitive Notes of authorized denominations.

(7) Any definitive Note constituting a Restricted Note delivered in exchange for an interest in a Global Note pursuant to this Section 2.3 shall bear the Restricted Notes Legend set forth in Exhibit 1 to this Appendix .

(8) The registered Holder of any Global Note may grant proxies and otherwise authorize any person, including participants in DTC and persons that may hold interests through participants in DTC to take any action which a Holder is entitled to take under the Indenture or the Notes.

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2.4 Special Transfer Provisions .

The following provisions shall apply with respect to the Notes:

(1) Transfers to Non‑U.S. Persons . The following provisions shall apply with respect to the registration of any proposed transfer of a Note or an Additional Note to any Non‑U.S. Person:

(a) the Registrar shall register the transfer of any Note or any Additional Note, whether or not such Note bears the Restricted Notes Legend, if the proposed transferor has delivered to the Registrar a certificate substantially in the form of Exhibit 2 to this Appendix ;

(b) if the proposed transferee is a participant in DTC and the Notes to be transferred consist of definitive Notes which after transfer are to be evidenced by an interest in a Regulation S Global Note upon receipt by the Registrar of (i) written instructions given in accordance with DTC’s and the Registrar’s procedures and (ii) the appropriate certificate, if any, required by Section 2.4(1)(a) , together with any required legal opinions and certifications, the Registrar shall register the transfer and reflect on its books and records the date and an increase in the principal amount of the Regulation S Global Note in an amount equal to the principal amount of definitive Notes to be transferred, and the Trustee and/or the Registrar shall cancel the definitive Notes so transferred or decrease the principal amount of such definitive Note, as the case may be;

(c) if the proposed transferor is a participant in DTC seeking to transfer an interest in a Global Note, upon receipt by the Registrar of (i) written instructions given in accordance with DTC’s and the Registrar’s procedures and (ii) the appropriate certificate, if any, required by Section 2.4(1)(a) , together with any required legal opinions and certifications, the Registrar shall register the transfer and reflect on its books and records the date and (i) a decrease in the principal amount of the Global Note from which such interests are to be transferred in an amount equal to the principal amount of the Notes to be transferred and (ii) an increase in the principal amount of the Regulation S Global Note in an amount equal to the principal amount of the Global Note to be transferred.

(2) Transfers to QIBs . The following provisions shall apply with respect to the registration of any proposed transfer of an Note or an Additional Note to a QIB (excluding Non‑U.S. Persons):

(a) if the Note to be transferred consists of (i) a definitive Note, the Registrar shall register the transfer if such transfer is being made by a proposed transferor who has delivered to the Trustee a certificate substantially in the form set forth in Exhibit 3 to this Appendix or (ii) an interest in the Restricted Global Note, the transfer of such interest may be effected only through the book entry system maintained by DTC;

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(b) if the Note to be transferred consists of a definitive Note, upon receipt by the Registrar of instructions given in accordance with DTC’s and the Registrar’s procedures therefor, the Registrar shall reflect on its books and records the date and an increase in the principal amount of the Restricted Global Note in an amount equal to the principal amount of the definitive Note, to be transferred, and the Trustee shall cancel the definitive Note so transferred; and

(c) if the proposed transferor is a participant in DTC seeking to transfer an interest in a Global Note, upon receipt by the Registrar of written instructions given in accordance with DTC’s and the Registrar’s procedures, the Registrar shall register the transfer and reflect on its books and records the date and (i) a decrease in the principal amount of the Global Note from which interests are to be transferred in an amount equal to the principal amount of the Notes to be transferred and (ii) an increase in the principal amount of the Restricted Global Note in an amount equal to the principal amount of the Global Note to be transferred.

(3) Restricted Notes Legend . Upon the registration of transfer, exchange or replacement of Notes not bearing the Restricted Notes Legend, the Registrar shall deliver Notes that do not bear the Restricted Notes Legend. Upon the registration of transfer, exchange or replacement of Notes bearing the Restricted Notes Legend, the Registrar shall deliver only Notes that bear the Restricted Notes Legend unless either (i) the circumstances contemplated by Section 2.4(1)(a) exist, (ii) there is delivered to the Registrar an Opinion of Counsel reasonably satisfactory to the Company, the Registrar and the Trustee to the effect that neither such legend nor the related restrictions on transfer are required in order to maintain compliance with the provisions of the Securities Act or (iii) such Note has been sold pursuant to an effective registration statement under the Securities Act.

(4) Notes Purchased by the Company . In order to insure the availability of Rule 144(k) under the Securities Act, all Notes which are purchased or otherwise acquired by the Company or any of their Affiliates may not be resold or otherwise transferred.

(5) Other Transfers . If a Holder proposes to transfer a Note constituting a Restricted Note pursuant to any exemption from the registration requirements of the Securities Act other than as provided for by Section 2.4(1) , the Registrar shall only register such transfer or exchange if such transferor delivers an Opinion of Counsel reasonably satisfactory to the Company, the Registrar and the Trustee that such transfer is in compliance with the Securities Act and the terms of the Indenture; provided , however , that the Company may, based upon the opinion of its counsel, instruct the Registrar by an Issuer Order not to register such transfer in any case where the proposed transferee is not a QIB or a Non‑U.S. Person.

(6) General . By its acceptance of any Note (or any beneficial interest in any Global Note) bearing the Restricted Notes Legend, each Holder of such a Note or holder of such beneficial interest acknowledges the restrictions on transfer of such Note set forth in the Indenture and in the Restricted Notes Legend and agrees that it will transfer such Note only as provided in the Indenture. The Registrar shall not register a transfer of any Note unless such transfer complies with the restrictions on transfer of such Note set forth in the Indenture.

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The Registrar shall retain copies of all letters, notices and other written communications received pursuant to this Section 2.4 . The Company shall have the right to inspect and make copies of all such letters, notices or other written communications at any reasonable time upon the giving of reasonable prior written notice to the Registrar.

(7) Transfers Prior to the Expiration of the Distribution Compliance Period . If the owner of an interest in a Regulation S Global Note wishes to transfer such interest (or any portion thereof) to a QIB pursuant to Rule 144A prior to the expiration of the Distribution Compliance Period thereof, upon receipt by the Registrar of (a) instructions from the Holder of the Regulation S Global Note directing the Registrar to credit or cause to be credited a beneficial interest in the Restricted Global Note equal to the principal amount of the beneficial interest in the Regulation S Global Note to be transferred, and (b) a certificate in the form of Exhibit 2 to this Appendix duly executed by the transferor, the Registrar, in accordance with the rules and procedures of DTC shall increase the Restricted Global Note and decrease the Regulation S Global Note by such amount in accordance with the foregoing.

2.5 Cancellation or Adjustment of Global Note .

At such time as all beneficial interests in a Global Note have either been exchanged for certificated Notes, redeemed, purchased or canceled, such Global Note shall be returned to DTC for cancellation or retained and canceled by the Trustee. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for certificated Notes, redeemed, purchased or canceled, the principal amount of Notes represented by such Global Note shall be reduced and an adjustment shall be made on the books and records of the Trustee (if it is then the Securities Custodian for such Global Note) with respect to such Global Note, by the Trustee or the Securities Custodian, to reflect such reduction.

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EXHIBIT 1
to
RULE 144A/REGULATION S APPENDIX

[FORM OF FACE OF NOTE]

[Global Notes Legend]

UNLESS THIS GLOBAL NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY DEFINITIVE NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

[Restricted Notes Legend]

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THIS NOTE, AGREES FOR THE BENEFIT OF ADECOAGRO S.A. (THE “COMPANY”) THAT THIS NOTE OR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1) TO THE COMPANY, (2) SO LONG AS THIS NOTE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”), TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A) IN ACCORDANCE WITH RULE 144A, (3) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (4) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT (IF AVAILABLE) OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND IN EACH OF SUCH CASES IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR OTHER

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APPLICABLE JURISDICTION. THE HOLDER HEREOF, BY PURCHASING THIS NOTE, REPRESENTS AND AGREES THAT IT SHALL NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO ABOVE.

THE FOREGOING LEGEND MAY BE REMOVED FROM THIS NOTE ONLY AT THE OPTION OF THE COMPANY.

[Regulation S Notes Legend]

THE FOREGOING LEGEND MAY BE REMOVED FROM THIS NOTE AFTER 40 DAYS BEGINNING ON AND INCLUDING THE LATER OF THE DATE ON WHICH THE NOTES ARE OFFERED TO PERSONS OTHER THAN DISTRIBUTORS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT) AND (B) THE ISSUE DATE OF THE NOTES.”

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No. _____ U.S.$ __________

6.000% Senior Notes due 2027

CUSIP No. 144A: 00676L AA4/ Reg. S: L00849 AA4

ISIN No. 144A: US00676LAA44/ Reg. S: USL00849AA47

ADECOAGRO S.A., a joint stock corporation ( société anonyme ) incorporated under the laws of the Grand Duchy of Luxembourg, promises to pay to __________, or its registered assigns, the principal sum [of __________ dollars][listed on the Schedule of Increases or Decreases in Global Note attached hereto] on September 21, 2027.

Interest Payment Dates: March 21 and September 21 of each year, commencing on March 21, 2018.

Record Dates: March 20 and September 20

Additional provisions of this Note are set forth on the other side of this Note.

¹ If the Note is to be issued in global form, add the Schedule of Increases or Decreases in Global Note.

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IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.



	ADECOAGRO S.A.


	By:
		Name:
		Title:

Dated: September 21, 2017.

TRUSTEE’S CERTIFICATE OF
AUTHENTICATION

The Bank of New York Mellon
as Trustee, certifies

that this is one of
the Notes referred
to in the Indenture.



By
	Authorized Signatory

Dated: September 21, 2017

[FORM OF REVERSE SIDE OF NOTE]

6.000% Senior Note due 2027

1. Interest

ADECOAGRO S.A., a joint stock corporation ( société anonyme ) incorporated under the laws of the Grand Duchy of Luxembourg (such company, and its successors and assigns under the Indenture hereinafter referred to as the “Company”), promises to pay interest on the principal amount of this Note at the rate per annum shown above.

The Company will pay interest semi-annually on March 21 and September 21 of each year, commencing on March 21, 2018 to the Paying Agent, which shall in turn distribute the interest in accordance with the Indenture. The Notes shall bear interest at the rate per annum of 6.000% from September 21, 2017, the date of issuance, or from the most recent Interest Payment Date to which interest has been paid or provided for. Interest on the Notes shall be computed on the basis of a 360-day year of twelve 30-day months.

2. Method of Payment

The Company will pay interest on the Notes (except defaulted interest) to the Persons who are registered Holders at the close of business on March 20 or September 20 (each a “Record Date” whether or not such date is a Business Day) next preceding the Interest Payment Date even if Notes are canceled after the Record Date and on or before the Interest Payment Date. Holders must surrender Notes to a Paying Agent to collect principal payments. The Company will pay principal, premium, interest and Additional Amounts, if any, in money of the United States that at the time of payment is legal tender for payment of public and private debts. Payments in respect of the Notes represented by a Global Note (including principal, premium, interest and Additional Amounts, if any) will be made by wire transfer of immediately available funds to the accounts specified by DTC. The Company will make all payments in respect of a certificated Note (including principal, premium, interest and Additional Amounts, if any) at the office or agency of the Paying Agent or the Trustee, unless the Company elects to make such payments by mailing a check to the registered address of, or by wire transfer to, each Holder thereof; provided, however, that payments on a certificated Note will be made by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agents to such effect designating such account no later than 30 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion).

If the Company elects to make payments directly to the Holders, payment shall be made by wire transfer or in the form of a check mailed to the address of each such Holder as it appears on the register maintained by the Registrar and Paying Agents. However, the final payment on any Note in definitive, fully registered form shall be made only upon presentation and surrender of such Note at the offices of the Paying Agents on the payment date.

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If the due date for any payment in respect of any Note is not a business day at the place in which such payment is due to be paid, the Holder thereof will not be entitled to payment of the amount due until the next succeeding business day at such place, and will not be entitled to any further interest or other payment as a result of any such delay.

3. Registrar and Paying Agents

Initially, The Bank of New York Mellon will act as Paying Agent, Trustee and Registrar. The Company may appoint and change any Paying Agent, Registrar or co-registrar without notice. The Company or any Restricted Subsidiary may act as Paying Agent, Registrar, co-registrar or Transfer Agent. So long as the Notes are listed on the Singapore Stock Exchange for trading on the Singapore Stock Exchange and the rules of the Singapore Stock Exchange so require, at least one paying agent in Singapore will be appointed and maintained where the Notes may be presented or surrendered for payment or redemption, in the event that the Global Note is exchanged for individual definitive Notes.

4. Indenture

The Company issued the Notes under an Indenture dated as of September 21, 2017 (the “Indenture”), among the Company, as issuer, Adeco Agropecuaria S.A., Pilagá S.A., Adecoagro Brasil Participações S.A., Adecoagro Vale do Ivinhema S.A. and Usina Monte Alegre Ltda., as subsidiary guarantors, and The Bank of New York Mellon, as the Trustee, Registrar, Paying Agent and transfer agent. The terms of the Notes include those stated in the Indenture. Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The Notes are subject to all such terms, and Holders are referred to the Indenture for a statement of those terms.

The Notes are general obligations of the Company. The Company shall be entitled, subject to its compliance with Section 4.03 of the Indenture, to issue Additional Notes pursuant to Section 2.12 of the Indenture. The Notes issued on the Issue Date, any Additional Notes and Notes issued in exchange therefor will be treated as a single class for all purposes under the Indenture. The Indenture contains covenants that limit the ability of the Company and its subsidiaries to incur additional indebtedness; pay dividends or distributions on, or redeem or repurchase capital stock; make investments; issue or sell capital stock of subsidiaries; engage in transactions with Affiliates; create liens on assets; transfer or sell assets; guarantee indebtedness; restrict dividends or other payments of subsidiaries; consolidate, merge or transfer all or substantially all of its assets and the assets of its subsidiaries; and engage in sale/leaseback transactions. These covenants are subject to important exceptions and qualifications.

To the extent of any conflict between the terms of the Notes and the Indenture, the applicable terms of the Indenture shall govern.

5. Optional Redemption; Notice of Redemption

Except as set forth below, the Company will not be entitled to redeem the Notes at its option.

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	Redemption Price
Period
2022	103.000%
2023	102.000%
2024	101.000%
2025 and thereafter	100.000

(1) at least 65% of such aggregate principal amount of Notes remains outstanding immediately after the occurrence of each such redemption (including any Additional Notes); and

(2) the Company gives notice of such redemption not more than 90 days after the consummation of the related Eligible Equity Offering.

The Company will redeem Notes of U.S.$1,000 or less in whole and not in part. The Company will cause notices of redemption to be mailed by first class mail at least 30 but not more than 60 days before the redemption date to each Holder to be redeemed at its registered address.

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Notice of such redemption to each Holder must be given in accordance with the provisions set forth in Section 3.02 of the Indenture not less than 30 days nor more than 60 days prior to the redemption date.

The Company shall give each notice to the Trustee provided for in Section 3.01 of the Indenture at least 35 days but not more than 60 days before the redemption date (unless a shorter period shall be acceptable to the Trustee). In the case of a redemption under Section 3.05 or Section 3.06 of the Indenture, such notice shall be accompanied by an Officer’s Certificate and an Opinion of Counsel from the Company to the effect that such redemption will comply with the conditions set forth in this Article 3 of the Indenture.

Unless the Company defaults in payment of the redemption price, on and after the redemption date interest will cease to accrue on the Notes.

6. Put Provisions

If a Change of Control Repurchase Event occurs, each Holder of Notes will have the right to require the Company to repurchase all or any part (in integral multiples of U.S.$1,000) of that Holder’s Notes pursuant to a Change of Control Offer (as defined below) on the terms set forth in the Indenture. No such purchase in part shall reduce the outstanding principal amount of the Notes held by any Holder to below U.S.$150,000. In the Change of Control Offer, the Company will offer a “Change of Control Payment” in U.S. dollars equal to 101% of the aggregate principal amount of Notes repurchased plus accrued and unpaid interest and Additional Amounts, if any, on the Notes repurchased, to the date of purchase (subject to the right of the Holders of record on the relevant Record Date to receive interest and Additional Amounts, if any, on the relevant Interest Payment Date).

7. Guarantee

The payment by the Company of the principal of, and premium and interest on, the Notes will be fully and unconditionally guaranteed on a joint and several basis by each Subsidiary Guarantor, if any, to the extent set forth in the Indenture.

8. Denominations; Transfer; Exchange

The Notes shall be issued in registered form in denominations of U.S.$150,000 and integral multiples of U.S.$1,000 in excess thereof and shall be issued as one or more Global Notes. A Holder may transfer or exchange Notes in accordance with the Indenture. The Notes may be transferred, combined or divided without payment of any charge other than taxes or other governmental charges.

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The Registrar may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Notes selected for redemption or any Notes for a period of 15 days before a selection of Notes to be redeemed or 15 days before an Interest Payment Date.

9. Persons Deemed Owners

The registered Holder of this Note may be treated as the owner of it for all purposes. Payment shall be made to the person in whose name a Note is registered at the close of business on the applicable record date.

10. Unclaimed Money

If money for the payment of principal, premium or interest or Additional Amounts, if any, remains unclaimed for two years, the Trustee or the relevant Paying Agent shall pay the money back to the Company at its request unless an applicable abandoned property law designates another Person. After any such payment, Holders entitled to the money must look only to the Company and not to the Trustee or any Paying Agents for payment as general creditors.

11. Discharge; Defeasance

Subject to certain conditions set forth in Article 8 in the Indenture, the Company shall be entitled to terminate some or all of its obligations under the Notes and the Indenture if the Company deposits with the Trustee cash or U.S. Government Obligations for the payment of principal and interest on the Notes upon redemption or maturity, as the case may be.

12. Amendment, Waiver

Subject to certain exceptions set forth in the Indenture, (a) the Indenture and the Notes may be amended without notice to any Holder but with the written consent of the Holders of at least a majority in aggregate principal amount of the outstanding Notes, and (b) any default or noncompliance with any provisions may be waived, with the written consent of the Holders of a majority in aggregate principal amount of the outstanding Notes.

Subject to certain exceptions set forth in the Indenture, without the consent of any Holder, the Company, the Subsidiary Guarantors, if applicable, and the Trustee shall be entitled to amend the Indenture, the Notes or the Note Guarantees (i) to cure any ambiguity, defect or inconsistency; (ii) to provide for uncertificated Notes in addition to or in place of certificated Notes; provided that uncertificated Notes are issued in registered form for purposes of Section 163(f) of the United States Internal Revenue Code of 1986, as amended (the “Code”), or in a manner such that the uncertificated Notes are described in Section 163(f)(2)(B) of the Code; (iii) to provide for the assumption of the Company or a Subsidiary Guarantor’s obligations to holders of Notes and Note Guarantees in the case of a merger or consolidation or sale of all or substantially all of the Company’s or such Subsidiary Guarantor’s assets, as applicable; (iv) to make any change (a) that would provide any additional rights or benefits to the Holders of Notes or (b) that would not adversely affect the legal rights under

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the Indenture of any such holder in any material respect; (v) to conform the text of the Indenture, the Note Guarantees or the Notes to any provision of the section entitled “Description of the Notes” of the Offering Memorandum; (vi) to provide for the issuance of additional Notes in accordance with the limitations set forth in the Indenture; or (vii) to allow any existing Subsidiary Guarantor or a new Subsidiary Guarantor to execute a supplemental Indenture with respect to a Note Guarantee and/or a Note Guarantee with respect to the Notes.

13. Defaults and Remedies

Under the Indenture, Events of Default include (a) default for 30 days in payment of any interest or Additional Amounts on the Notes; (b) default in payment of principal of or premium, if any, on the Notes, upon optional redemption, upon required purchase, upon declaration of acceleration, or otherwise; (c) failure by the Company to comply with Section 5.01 of the Indenture; (d) failure by the Company or any of its Restricted Subsidiary to comply with other agreements in the Indenture and such non-compliance continues for a period of 60 consecutive days after written notice specifying such default or breach is given to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in aggregate principal amount of the Notes; (e) certain accelerations of other Indebtedness of the Company; (f) certain events of bankruptcy or insolvency with respect to the Company or any Significant Subsidiary; (g) the Note Guarantees cease to be in full force and effect other than in accordance with the terms of the Indenture, or the Company or any Subsidiary Guarantor denies or disaffirms its obligations under the Notes; and (h) seizure, condemnation or other appropriation of all or substantially all of the assets and revenues of the Company and its Restricted Subsidiaries taken as a whole.

If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the Notes, by written notice to the Company (and to the Trustee if notice is given by the Holders), may declare all the Notes to be due and payable immediately. Certain events of bankruptcy or insolvency are Events of Default which will result in the Notes being due and payable immediately upon the occurrence of such Events of Default.

Holders may not enforce the Indenture or the Notes except as provided in the Indenture. The Trustee may refuse to enforce the Indenture or the Notes unless it receives indemnity or security reasonably satisfactory to it. Subject to certain limitations, Holders of a majority in principal amount of the Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing Default (except a Default in payment of principal or interest) if it determines that withholding notice is in the interests of the Holders.

14. Trustee Dealings with the Company

The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with and collect obligations owed to it by the Company or their Affiliates and may otherwise deal with the Company or their Affiliates with the same rights it would have if it were not Trustee.

15. No Recourse Against Others

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A director, officer, employee or shareholder, as such, of the Company or the Trustee, and a director, officer or employee of any Subsidiary of the Company, shall not have any liability for any obligations of the Company or any Subsidiary of the Company under the Notes or the Indenture or any Note Guarantee or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Note, each Holder waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Notes.

16. Authentication

This Note shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication.

17. Abbreviations

Customary abbreviations may be used in the name of a Holder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act).

18. CUSIP Numbers and ISINs

Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers or ISINs to be printed on the Notes and has directed the Trustee to use CUSIP numbers or ISINs in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.

19. Governing Law; Consent to Jurisdiction and Service of Process .

THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. For the avoidance of doubt, articles 84 to 94.8 (both inclusive) of the Luxembourg law dated 10 August 1915 on commercial companies, as amended, are excluded and shall not apply to this Note.

The Company has consented to the jurisdiction of the courts of the State of New York and the United States courts located in the Borough of Manhattan, New York City, New York with respect to any action that may be brought in connection with the Indenture or the Notes and has validly and effectively appointed C T Corporation System as agent for service of process.

The Company will furnish to any Holder upon written request and without charge to the Holder a copy of the Indenture which has in it the text of this Note in larger type. Requests may be made to:

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Adecoagro S.A.
Fondo de la Legua 936,
B1640EDO, Martinez,
Provincia de Buenos Aires, Argentina
Attention: Mariano Bosch and Emilio Gnecco
Facsimile: +54 11 4836-8639

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[FORM OF] NOTATION ON NOTE RELATING TO NOTE GUARANTEE

For value received, by execution hereof, each of the undersigned hereby, and upon and as from acceptance of the Offer Letter, each of the Argentine Subsidiary Guarantors, unconditionally guarantees to the Holder of this Note, the cash payments in United States Dollars of principal and interest on this Note (and including Additional Amounts payable thereon, if any) in the amounts and at the times when due, together with interest on the overdue principal and interest, if any, on this Note, if lawful, and the payment or performance of all other obligations of the Company under the Indenture or the Notes, to the Holder of this Note and the Trustee, all in accordance with and subject to the terms and conditions of this Note and the Indenture. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Indenture, dated as of September 21, 2017 among the Company as issuer, Adeco Agropecuaria S.A., Pilagá S.A., Adecoagro Brasil Participações S.A., Adecoagro Vale do Ivinhema S.A. and Usina Monte Alegre Ltda., as subsidiary guarantors (the “Subsidiary Guarantors”), and The Bank of New York Mellon, as the Trustee, Registrar, Paying Agent and Transfer Agent.

Payments hereunder shall be made solely and exclusively in United States dollars.

The obligations of each of the undersigned and each of the Argentine Subsidiary Guarantors to the Holders and to the Trustee are expressly set forth in Article 10 of the Indenture and reference is hereby made to Article 10 of the Indenture for the precise terms thereof. This Note Guarantee constitutes a direct, general and unconditional obligation of the undersigned and the Argentine Subsidiary Guarantors which will at all times rank at least pari passu with all other present and future senior unsecured obligations of the undersigned and the Argentine Subsidiary Guarantors, except for such obligations as may be preferred by mandatory provisions of law.

IN WITNESS WHEREOF, the Company has caused this endorsement with respect to the U.S.$ 6.000% Senior Notes Due 2027 of ADECOAGRO S.A. to be duly executed.



Dated:

		[NAME OF SUBSIDIARY GUARANTOR]

	By:
		Name:
		Title:

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[FORM OF] ASSIGNMENT FORM

To assign this Note, fill in the form below:

I or we assign and transfer this Note to

(Insert assignee’s soc. sec. or tax I.D. no.)

(Print or type assignee’s name, address and zip code)

and irrevocably appoint

agent to transfer this Note on the books of the Company. The agent may substitute another to act for him or her.



			Your Signature:
Date:
			(Sign exactly as your name appears on the other side of this Note)



¹ Signature guaranteed by:


By:


1.	The signature must be guaranteed by an institution which is a member of one of the following recognized signature guaranty programs: (i) the Securities Transfer Agent Medallion Program (STAMP); (ii) the New York Stock Exchange Medallion Program (MSP); (iii) the Stock Exchange Medallion Program (SEMP); or (iv) such other guaranty program acceptable to the Trustee.

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[TO BE ATTACHED TO GLOBAL NOTES]

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE

The initial principal amount of this Global Note is U.S.$[_____]. The following increases or decreases in this Global Note have been made:



Date of Exchange	Amount of decrease in principal amount of this Global Note	Amount of increase in principal amount of this Global Note	Principal amount of this Global Note following such decrease or increase	Signature of authorized officer of Trustee or Securities Custodian

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[FORM OF] OPTION OF HOLDER TO ELECT PURCHASE

If you elect to have this Note purchased by the Issuer pursuant to Section 4.06 or Section 4.08 of the Indenture, check the appropriate box below:

If you elect to have only part of this Note purchased by the Issuer pursuant to Section 4.06 ☐ or Section 4.08 ☐ of the Indenture, state the amount (in minimum denominations of U.S.$150,000 and integral multiples of U.S.$1,000 in excess thereof) you elect to have purchased:



U.S.$______________________
Dated:	Your Name: __________________________________ (Print your name exactly as it appears on the face of this Note)
	Your Signature: _______________________________ (Sign exactly as your name appears on the face of this Note)
	Signature Guarantee: _____________________________

Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Registrar, which requirements include membership or participation in the Note Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

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EXHIBIT 2
to
RULE 144A/REGULATION S APPENDIX

FORM OF CERTIFICATE TO BE DELIVERED
IN CONNECTION WITH TRANSFERS
PURSUANT TO REGULATION S

[Date]

Adecoagro S.A.
Fondo de la Legua 936,
B1640EDO, Martinez,
Provincia de Buenos Aires, Argentina
Attention: Mariano Bosch and Emilio Gnecco
Facsimile: +54 11 4836-8639

The Bank of New York Mellon
101 Barclay Street, 7E
New York, New York 10286
United States
Attention: Global Structured Finance
Facsimile: (212) 815‑2830


Re:	ADECOAGRO S.A. (the “Issuer”) 6.000% Senior Notes due 2027 (the “Notes”) CUSIP: L00849 AA4 ISIN: USL00849AA7

Ladies and Gentlemen:

In connection with our proposed transfer of U.S.$ aggregate principal amount of Notes, we confirm that such transfer has been effected pursuant to and in accordance with Regulation S under the U.S. Securities Act of 1933, as amended (the “Securities Act”), and, accordingly, we represent that:

(1) the offer of the Notes was not made to a person in the United States;

(2) either (a) at the time the buy offer was originated, the transferee was outside the United States or we and any person acting on our behalf reasonably believed that the transferee was outside the United States, or (b) the transaction was executed in, on or through the facilities of a designated off‑shore securities market and neither we nor any person acting on our behalf knows that the transaction has been pre‑arranged with a buyer in the United States;

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(3) no directed selling efforts have been made in the United States in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S, as applicable;

(4) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act;

(5) we have advised the transferee of the transfer restrictions applicable to the Notes;

(6) if the circumstances set forth in Rule 904(c) under the Securities Act are applicable, we have complied with the additional conditions therein, including (if applicable) sending a confirmation or other notice stating that the Notes may be offered and sold during the restricted period specified in Rule 903(c)(2) or (3), as applicable, in accordance with the provisions of Regulation S; pursuant to registration of the Notes under the Securities Act; or pursuant to an available exemption from the registration requirements under the Securities Act; and

(7) if the sale is made during a restricted period and the provisions of Rule 903(c)(3) are applicable thereto, we confirm that such sale has been made in accordance with such provisions.

You and the Issuer are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Terms used in this certificate have the meanings set forth in Regulation S.



	Very truly yours,


	[Name of Transferor]

	By:
		Authorized Signature



Signature Guarantee: ¹


1.	Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

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EXHIBIT 3
to
RULE 144A/REGULATION S APPENDIX

FORM OF TRANSFER CERTIFICATE FOR
TRANSFER OF RESTRICTED GLOBAL NOTE
BEARING A RESTRICTED NOTES LEGEND

[Date]

Adecoagro S.A.
Fondo de la Legua 936,
B1640EDO, Martinez,
Provincia de Buenos Aires, Argentina
Attention: Mariano Bosch and Emilio Gnecco
Facsimile: +54 11 4836-8639

The Bank of New York Mellon
101 Barclay Street, 7E
New York, New York 10286
United States
Attention: Global Structured Finance
Facsimile: (212) 815‑2830


Re:	ADECOAGRO S.A. (the “Issuer”) 6.000% Senior Notes due 2027 (the “Notes”) CUSIP: 00676L AA4 ISIN: US00676LAA44

Ladies and Gentlemen:

Reference is hereby made to the Indenture dated as of September 21, 2017 in regard of the Notes among Adecoagro S.A., as issuer, Adeco Agropecuaria S.A., Pilagá S.A., Adecoagro Brasil Participações S.A., Adecoagro Vale do Ivinhema S.A. and Usina Monte Alegre Ltda., as subsidiary guarantors (the “Subsidiary Guarantors”), and The Bank of New York Mellon, as the Trustee, Registrar, Paying Agent and transfer agent. Capitalized terms used but not defined herein will have the meaning given them in the Indenture.

This letter relates to U.S.$ aggregate principal amount of the Notes which are held in the form of a beneficial interest in the Regulation S Global Note (CUSIP No. CUSIP: L00849 AA4; ISIN: USL00849AA7) with DTC, Euroclear or Clearstream, as applicable in the name of the undersigned certificated form.

The undersigned has requested transfer of such Notes to a Person who will take delivery thereof in the form of a beneficial interest in the Restricted Global Note (CUSIP: 00676L AA4; ISIN: US00676LAA44). In connection with such transfer, the undersigned does

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hereby confirm that such transfer has been effected in accordance with the transfer restrictions set forth in the Indenture and on the Notes and pursuant to and in accordance with Rule 144A under the U.S. Securities Act of 1933, as amended, and accordingly, the undersigned represents that:

1. the Notes are being transferred to a transferee that the undersigned reasonably believes is purchasing the Notes for its own account or one or more accounts with respect to which the transferee exercises sole investment discretion; and

2. the undersigned reasonably believes that transferee and any such account is a “qualified institutional buyer” within the meaning of Rule 144A, in a transaction meeting the requirements of Rule 144A and in accordance with any applicable securities laws of any state of the United States or any other jurisdiction.



	[NAME OF TRANSFEROR]


	By:
		Name:
		Title:



Dated:



Signature Guarantee:

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EXHIBIT A

Form of Additional Note Guarantee

THIS NOTE GUARANTEE, dated as of [ ], 20[ ] (this “Note Guarantee”), is made by the signatory hereto (the “Guarantor”) pursuant to Section 4.22 of that certain Indenture, dated as of September 21, 2017 (as amended, modified, extended, renewed, replaced, restated or supplemented from time to time, the “Indenture”), by and among Adecoagro S.A., as issuer, Adeco Agropecuaria S.A., Pilagá S.A., Adecoagro Brasil Participações S.A., Adecoagro Vale do Ivinhema S.A. and Usina Monte Alegre Ltda., as subsidiary guarantors (the “Subsidiary Guarantors”), and The Bank of New York Mellon, as the Trustee, Registrar, Paying Agent and Transfer Agent. Capitalized terms not otherwise defined herein have the meanings assigned to them in the Indenture.

Section 1 . The Guarantor by its signature below acknowledges that it is a Subsidiary Guarantor under and as defined in the Indenture with the same force and effect as if originally named therein as a Subsidiary Guarantor and the Guarantor hereby agrees to all the terms and provisions of the Indenture applicable to it as a Subsidiary Guarantor. The terms of Article 10 of the Indenture are hereby incorporated by reference.

Section 2 . The Guarantor hereby unconditionally and irrevocably guarantees, jointly and severally with all current and subsequent Subsidiary Guarantors, if any, on an unsecured basis, the full and punctual payment (whether at Stated Maturity, upon redemption, purchase pursuant to an offer to purchase or acceleration, or otherwise) of the principal of, premium, if any, and interest on, and all other amounts payable under, each Note, and the full and punctual payment of all other amounts payable by the Company under the Indenture. Notwithstanding anything to the contrary in this Note Guarantee, the guarantee by this Guarantor hereunder will be limited to the amount of Indebtedness Incurred and outstanding.

Section 3 . The obligations of the Guarantor hereunder are unconditional and absolute and, without limiting the generality of the foregoing, will not be released, discharged or otherwise affected by:

(a) any extension, renewal, settlement, compromise, waiver or release in respect of any obligation of the Company under the Indenture or any Note, by operation of law or otherwise;

(b) any modification or amendment of or supplement to the Indenture or any Note;

(d) the existence of any claim, set‑off or other rights which the Guarantor may have at any time against the Company, the Trustee or any other Person, whether

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in connection with the Indenture or any unrelated transactions; provided that nothing herein prevents the assertion of any such claim by separate suit or compulsory counterclaim;

(e) any invalidity or unenforceability relating to or against the Company for any reason of the Indenture or any Note, or any provision of applicable law or regulation purporting to prohibit the payment by the Company of the principal of or any interest on any Note or any other amount payable by the Company under the Indenture; or

Section 4 . The Guarantor’s obligations hereunder will remain in full force and effect until the principal of, premium, if any, and interest on the Notes and all other amounts payable by the Company under the Indenture have been paid in full. If at any time any payment of the principal of, premium, if any, or interest on any Note or any other amount payable by the Company under the Indenture is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of the Company or otherwise, the Guarantor’s obligations hereunder with respect to such payment will be reinstated as though such payment had been due but not made at such time.

Section 5 . The Guarantor irrevocably waives acceptance hereof, presentment, demand, protest and any notice not provided for herein, as well as any requirement that at any time any action be taken by any Person against the Company or any other Person.

Section 6 . Upon making any payment with respect to any obligation of the Company under this Note Guarantee, the Guarantor making such payment will be subrogated to the rights of the payee against the Company with respect to such obligation; provided that the Guarantor may not enforce either any right of subrogation, or any right to receive payment in the nature of contribution, or otherwise, from any other Guarantor, if any, with respect to such payment so long as any amount payable by the Company hereunder or under the Notes remains unpaid.

Section 7 . If acceleration of the time for payment of any amount payable by the Company under the Indenture or the Notes is stayed upon the insolvency, bankruptcy or reorganization of the Company, all such amounts otherwise subject to acceleration under the terms of the Indenture are nonetheless payable by the Guarantor hereunder forthwith on demand by the Trustee or the Holders.

Section 8 . Notwithstanding anything to the contrary in this Note Guarantee, the Guarantor and, by its acceptance of Notes, each Holder hereby confirms that it is the intention of all of them that the guarantee of the Guarantor not constitute a fraudulent conveyance under applicable fraudulent conveyance provisions of the laws of Argentina, the laws of Brazil, the United States Bankruptcy Code or any comparable provision of state law. To effectuate that intention, the Trustee, the Holders and the Guarantor hereby irrevocably agree that the obligations of the Guarantor

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under this Note Guarantee are limited to the maximum amount that would not render the Guarantor’s obligations subject to avoidance under applicable fraudulent conveyance provisions of the laws of Argentina, the laws of Brazil, the U.S. Bankruptcy Code or any comparable provision of state law.

The Trustee, the Holders and the Guarantor further hereby irrevocably agree that the obligations of the Guarantor under this Note Guarantee are limited to the maximum amount that (1) would not render the Guarantor’s obligations subject to avoidance under applicable law, including applicable fraudulent conveyance laws or (2) would not result in a breach or violation by the Guarantor of any agreement to which the Guarantor is a party and entered into prior to the date that the Guarantor constituted a Significant Subsidiary.

Section 9 . The Guarantor agrees that, as between it, on the one hand, and the Holders and the Trustee, on the other hand, (i) the maturity of the obligations Guaranteed hereby may be accelerated as provided in Article 6 of the Indenture for the purposes of this Note Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations Guaranteed hereby, and (ii) in the event of any declaration of acceleration of such obligations as provided in Article 6 of the Indenture, such obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantor for the purposes of Section 10.01 of the Indenture and this Note Guarantee.

Section 10 . The Guarantor also agrees to pay any and all costs and expenses (including reasonable attorneys’ fees and expenses) incurred by the Trustee or any Holder in enforcing any rights under Section 10.01 of the Indenture or this Note Guarantee.

Section 11 . This Note Guarantee will be binding upon the Guarantor and its successors and assigns and will inure to the benefit of the successors and assigns of the Trustee and the Holders and, in the event of any transfer or assignment of rights by any Holder or the Trustee, the rights and privileges herein conferred upon that party will automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions hereof.

Section 12 . THIS NOTE GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

Section 13 . All communications and notices hereunder shall be in writing and given as provided in Section 12.01 of the Indenture. All communications and notices hereunder to the Guarantor shall be given to it in care of the Company at the address provided in Section 12.01 of the Indenture.

Section 14 . In the event any one or more of the provisions contained in this Note Guarantee or in the Indenture should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties shall endeavor in good‑faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

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Section 15 . Delivery of an executed signature page to this Note Guarantee by facsimile transmission shall be as effective as delivery of a manually executed counterpart of this Note Guarantee.

Section 16 . The rules of construction specified in Section 1.03 of the Indenture shall be applicable to this Note Guarantee.

Section 17 . (a) The Guarantor irrevocably consents and agrees, for the benefit of the Holders from time to time of the Notes and the Trustee, that any legal action, suit or proceeding against it with respect to its obligations, liabilities or any other matter arising out of or in connection with this Note Guarantee, the Indenture or the Notes may be brought in the courts of the State of New York or the courts of the United States located in the Borough of Manhattan, New York City, New York and, until amounts due and to become due in respect of the Notes have been paid, hereby irrevocably consents and submits to the non‑exclusive jurisdiction of each such court in personam , generally and unconditionally with respect to any action, suit or proceeding for itself and in respect of its properties, assets and revenues.

(b) The Guarantor has validly and effectively appointed C T Corporation System, with offices on the date hereof at 111 Eighth Avenue, New York, New York 10011, as its authorized agent upon which process may be served in any action, suit or proceeding referred to in Section 17(a) . If for any reason such agent hereunder shall cease to be available to act as such, the Guarantor agrees to designate a new agent in the Borough of Manhattan, New York City, New York on the terms and for the purposes of this Section 17 . The Guarantor further hereby irrevocably consents and agrees to the service of any and all legal process, summons, notices and documents in any such action, suit or proceeding against the Guarantor by serving a copy thereof upon the relevant agent for service of process referred to in this Section 17 (whether or not the appointment of such agent shall for any reason prove to be ineffective or such agent shall accept or acknowledge such service) or by mailing copies thereof by registered or certified air mail, postage prepaid, in care of the Company at its address specified in or designated pursuant to the Indenture. The Guarantor agrees that the failure of any such designee, appointee and agent to give any notice of such service to it shall not impair or affect in any way the validity of such service or any judgment rendered in any action or proceeding based thereon. Nothing herein shall in any way be deemed to limit the ability of the Holders and the Trustee to serve any such legal process, summons, notices and documents in any other manner permitted by applicable law or to obtain jurisdiction over the Guarantor or bring actions, suits or proceedings against the Guarantor in such other jurisdictions, and in such manner, as may be permitted by applicable law. The Guarantor irrevocably and unconditionally waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions, suits or proceedings arising out of or in connection with this Note Guarantee or the Indenture brought in the courts of the State of New York or the courts of the United States located in the Borough of Manhattan, New York City, New York and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

[Signature Page Follows]

A-35

IN WITNESS WHEREOF, the undersigned has caused this Note Guarantee to be duly executed and delivered by its proper and duly authorized officer as of the date first above written.



	Guarantor:


	[Name of Guarantor]

	By:
		Name:
		Title:

EXHIBIT B

Form of Offer Letter

September [ ], 2017

Messrs.

Adeco Agropecuaria S.A.

Avenida Fondo de la Legua 936

B1640EDO, Martinez

Provincia de Buenos Aires, Argentina

Pilagá S.A.

Avenida Fondo de la Legua 936

B1640EDO, Martinez

Provincia de Buenos Aires, Argentina

Ref.: Offer Letter No. ADECO01/2017. Adecoagro S.A. U.S.$.500,000,000 6.000% Senior Notes due 2027.

Dear Sirs:

We make reference to that certain indenture dated September [ ], 2017 by and among the Company, the Subsidiary Guarantors and the Trustee (the “ Indenture ”). Capitalized terms used and not otherwise defined herein shall have the meanings assigned to such terms in the Indenture.

The undersigned, in the capacity described in the signature page hereof, hereby irrevocably offer (this “ Offer No ADECO01/2017 ”) to Adeco Agropecuaria S.A. and Pilagá S.A. (the “ Argentine Subsidiary Guarantors ”) to join and enter into the Indenture and agree to be bound by the terms thereof and the terms of the notation on the Notes relating to the Note Guarantees (the “ Notation ”), all on the terms and conditions set forth in the Indenture and the Notes attached hereto as Annex I (the “ Terms and Conditions ”).

This Offer No ADECO01/2017 shall be deemed accepted upon execution and delivery by the Argentine Subsidiary Guarantors to the Trustee, with copy to all the other parties undersigned below, of an acceptance letter substantially in the form attached hereto as Annex II not later than 6:00 p.m. (New York time) on September [ ], 2017 (the “ Acceptance Letter ” and when such Acceptance Letter is duly executed and delivered, the “ Acceptance ”).

Upon Acceptance of this Offer No ADECO01/2017, as provided in the immediately preceding paragraph, the Indenture and the Notation shall be binding upon and inure to the benefit of the parties thereof and its respective successors and assigns.

THIS OFFER NO ADECO01/2017 SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

ANY LEGAL ACTION OR PROCEEDING BY OR AGAINST ANY PARTY HERETO WITH RESPECT TO OR ARISING OUT OF THIS OFFER NO ADECO01/2017 SHALL BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR THE COURTS OF THE UNITED STATES LOCATED IN THE BOROUGH OF MANHATTAN, NEW YORK CITY, NEW YORK, AND EACH OF THE PARTIES HERETO (AND ANY ASSIGNS) HEREBY IRREVOCABLY CONSENTS AND SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF EACH SUCH COURT IN PERSONAM, GENERALLY AND UNCONDITIONALLY WITH RESPECT TO ANY ACTION, SUIT OR PROCEEDING FOR ITSELF IN RESPECT OF ITS PROPERTIES, ASSETS AND REVENUES.

[ signature page follows ]

Very truly yours,



	ADECOAGRO S.A.


	By:
		Name:
		Title:

Indenture



	ADECOAGRO BRASIL PARTICIPAÇÕES S.A.


	By:
		Title:



	ADECOAGRO VALE DO IVINHEMA S.A.


	By:
		Title:



	USINA MONTE ALEGRE LTDA.


	By:
		Title:



	THE BANK OF NEW YORK MELLON,
	as Trustee, Registrar Transfer Agent and Paying
	Agent


	By:
		Title:

ANNEX I

Terms and Conditions

[TO BE INSERTED AN EXECUTED COPY OF THE INDENTURE AND THE NOTATION]

ANNEX II

Form of Acceptance

September [ ], 2017

Messrs.

The Bank of New York Mellon

101 Barclay Street, 7E

New York, New York 10286

United States

Attention: Global Structured Finance

c/c

[ALL SIGNATORIES TO THE OFFER LETTER]

Ref. : Offer Letter N° ADECO01/2017. Adecoagro S.A. U.S.$.500,000,000 6.000% Senior Notes due 2027.

Dear Sirs,

We accept your one and only offer letter N° ADECO01/2017 dated on September [ ], 2017 and the terms and conditions attached to said offer.

Best regards,



Adeco Agropecuaria S.A.

By:
Name:
Title:



Pilagá S.A.

By:
Name:
Title:

Exhibit 8.1

Subsidiaries of Adecoagro S.A.



Majority Owned Subsidiaries:

	Name	Place of Incorporation
1	Adecoagro GP S.à r.l.	Luxembourg
2	Adecoagro LP S.C.S	Luxembourg
3	Kadesh Hispania S.L.U.	Spain
4	Leterton España S.L.U.	Spain
5	Global Calidon S.L.	Spain
6	Global Acamante S.L.	Spain
7	Global Mirabilis S.L.	Spain
8	Global Carelio S.L.	Spain
9	Global Asterion S.L.U.	Spain
10	Global Pindaro S.L.U.	Spain
11	Global Acasto S.L.U.	Spain
12	Global Pileo S.L.U.	Spain
13	Global Anceo S.L.	Spain
14	Global Laertes S.L.U.	Spain
15	Global Seward S.L.U.	Spain
16	Peak Texas S.L.U.	Spain
17	Peak City S.L.U.	Spain
18	Global Hisingen S.L.	Spain
19	Global Neimoidia S.L.U.	Spain
20	Adeco Agropecuaria S.A.	Argentina
21	Pilagá S.A.	Argentina
22	Cavok S.A.	Argentina
23	Establecimientos El Orden S.A.	Argentina
24	Agro Invest S.A.	Argentina
25	Forsalta S.A.	Argentina
26	Bañado del Salado S.A.	Argentina
27	Dinaluca S.A.	Argentina
28	Compañía Agroforestal de Servicios y Mandatos S.A.	Argentina
29	Simoneta S.A.	Argentina
30	Ladelux S.A.	Uruguay
31	Kelizer S.A.	Uruguay
32	Adecoagro Uruguay S.A. (previously Agroglobal S.A. )	Uruguay
33	Adecoagro Brasil Participações S.A.	Brazil
34	Adeco Agropecuária Brasil Ltda.	Brazil
35	Usina Monte Alegre Ltda.	Brazil
36	Adecoagro Vale do Ivinhema S.A.	Brazil
37	Adecoagro Commodities Ltda.	Brazil
38	Adecoagro Energia Ltda.	Brazil

1 /2



Non consolidated Affiliated Entities

	Name	Place of Incorporation
1	CHS Agro S.A.	Argentina
2	Avicola del Plata S.A.	Argentina

2 /2

Exhibit 12.1

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. §1350)

I, Mariano Bosch, certify that:


1.	I have reviewed this annual report on Form 20-F of Adecoagro, S.A. for the fiscal year ended December 31, 2017 ;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;


4.	The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the company and have:


(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c)	Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d)	Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and


5.	The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):


(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and


(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date: April 27, 2018




	/s/ Mariano Bosch
	Mariano Bosch
	Chief Executive Officer

Exhibit 12.2

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. §1350)

I, Carlos A. Boero Hughes, certify that:


1.	I have reviewed this annual report on Form 20-F of Adecoagro S.A. for the fiscal year ended December 31, 2017 ;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;


4.	The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the company and have:


(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c)	Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d)	Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and


5.	The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):


(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and


(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date: April 27, 2018




	/s/ Carlos A. Boero Hughes
	Carlos A. Boero Hughes
	Chief Financial Officer

Exhibit 13.1

Officer Certifications

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each of the undersigned officers of Adecoagro S.A., a corporation organized under the form of a société anonyme under the laws of the Grand Duchy of Luxembourg (the “Company”), does hereby certify to such officer’s knowledge that:

The annual report on Form 20-F for the fiscal year ended December 31, 2017 (the “Form 20-F”) of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 20-F fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: April 27, 2018



	/s/ Mariano Bosch
	Name: Mariano Bosch
	Title: Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Exhibit 13.2

Officer Certifications

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Dated: April 27, 2018



	/s/ Carlos A, Boero Hughes
	Name: Carlos A. Boero Hughes
	Title: Chief Financial Officer

Exhibit 15.1

CONSENT OF CUSHMAN & WAKEFIELD ARGENTINA S.A.

We hereby consent to the use of our name in the Annual Report on Form F-20 of Adecoagro S.A. for the year ended December 31, 2017 and any amendments thereto (the “Annual Report”) and the references to and information contained in the Cushman & Wakefield Argentina S.A. Appraisal of Real Property report dated September 30, 2017 prepared for Adecoagro S.A., wherever appearing in the Annual Report, including but not limited to our company under the heading “Item 4 – Information about the Company” in the Annual Report.

Dated: April 26, 2018



	Cushman & Wakefield Argentina S.A.

	By:	/s/ Julio C. Speroni
	Name:	Julio C. Speroni
	Title:	Valuation Manager

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 333-173327 and 333-217141) and Form F-3 (No. 333-191325) of Adecoagro S.A. of our report dated April 27, 2018 relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in this Form 20-F.

Buenos Aires, Argentina.

April 27, 2018.



/s/ PRICE WATERHOUSE & CO. S.R.L.

/s/	(Partner)
Jorge Frederico Zabaleta