UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 under
the Securities Exchange Act of 1934
For the month of November, 2012
Commission File Number 001-35052
Adecoagro S.A.
(Translation of registrant’s name into English)
13-15 Avenue de la Liberté
L-1931 Luxembourg
R.C.S. Luxembourg B 153 681
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F x Form 40-F ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):¨
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes ¨ No x
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-.
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS AS OF AND FOR THE THREE MONTH PERIOD ENDED SEPTEMBER 30, 2012
This report on Form 6-K is being furnished for the purpose of providing a copy of the registrant’s unaudited condensed consolidated financial statements as of and for the three months ended September 30, 2012 (the “Consolidated Financial Statements”). The Consolidated Financial Statements are presented in U.S. Dollars and prepared in accordance with International Financial Reporting Standards.
The attachment contains forward-looking statements. The registrant desires to qualify for the “safe-harbor” provisions of the Private Securities Litigation Reform Act of 1995, and consequently is hereby filing cautionary statements identifying important factors that could cause the registrant’s actual results to differ materially from those set forth in the attachment.
The registrant’s forward-looking statements are based on the registrant’s current expectations, assumptions, estimates and projections about the registrant and its industry. These forward-looking statements can be identified by words or phrases such as “anticipate,” “believe,” “continue,” “estimate,” “expect,” “intend,” “is/are likely to,” “may,” “plan,” “should,” “would,” or other similar expressions.
The forward-looking statements included in the attached relate to, among others: (i) the registrant’s business prospects and future results of operations; (ii) weather and other natural phenomena; (iii) developments in, or changes to, the laws, regulations and governmental policies governing the registrant’s business, including limitations on ownership of farmland by foreign entities in certain jurisdictions in which the registrant operate, environmental laws and regulations; (iv) the implementation of the registrant’s business strategy, including its development of the Ivinhema mill and other current projects; (v) the registrant’s plans relating to acquisitions, joint ventures, strategic alliances or divestitures; (vi) the implementation of the registrant’s financing strategy and capital expenditure plan; (vii) the maintenance of the registrant’s relationships with customers; (viii) the competitive nature of the industries in which the registrant operates; (ix) the cost and availability of financing; (x) future demand for the commodities the registrant produces; (xi) international prices for commodities; (xii) the condition of the registrant’s land holdings; (xiii) the development of the logistics and infrastructure for transportation of the registrant’s products in the countries where it operates; (xiv) the performance of the South American and world economies; and (xv) the relative value of the Brazilian Real, the Argentine Peso, and the Uruguayan Peso compared to other currencies; as well as other risks included in the registrant’s other filings and submissions with the United States Securities and Exchange Commission.
These forward-looking statements involve various risks and uncertainties. Although the registrant believes that its expectations expressed in these forward-looking statements are reasonable, its expectations may turn out to be incorrect. The registrant’s actual results could be materially different from its expectations. In light of the risks and uncertainties described above, the estimates and forward-looking statements discussed in the attached might not occur, and the registrant’s future results and its performance may differ materially from those expressed in these forward-looking statements due to, inclusive, but not limited to, the factors mentioned above. Because of these uncertainties, you should not make any investment decision based on these estimates and forward-looking statements.
2
The forward-looking statements made in the attached relate only to events or information as of the date on which the statements are made in the attached. The registrant undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date on which the statements are made or to reflect the occurrence of unanticipated events.
3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Adecoagro S.A. | ||
By: | /s/ Carlos A. Boero Hughes | |
Name: | Carlos A. Boero Hughes | |
Title: | Chief Financial Officer and Chief Accounting Officer |
Date: November 13, 2012
Adecoagro S.A.
Condensed Consolidated Interim Financial Statements as of
September 30, 2012 and for the nine-month periods ended
September 30, 2012 and 2011
Report of Independent Registered Public Accounting Firm
To the Shareholders of
Adecoagro S.A.
We have reviewed the accompanying condensed consolidated interim statements of financial position of Adecoagro S.A. and its subsidiaries as of September 30, 2012, and the related condensed consolidated interim statements of income and comprehensive income for each of the three-month and nine-month periods ended September 30, 2012 and 2011 and the condensed consolidated interim statements of changes in shareholders’ equity and of cash flows for the nine-month periods ended September 30, 2012 and 2011. This interim financial information is the responsibility of the Company’s management.
We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should be made to the accompanying condensed consolidated interim financial statements for them to be in conformity with International Accounting Standard 34, ‘Interim Financial Reporting’, as issued by the International Accounting Standards Board.
Buenos Aires, Argentina
November 9, 2012
PRICE WATERHOUSE & CO. S.R.L.
by | /s/ Marcelo de Nicola | |
Marcelo de Nicola (Partner) |
Legal information
Denomination:Adecoagro S.A.
Legal address:13-15 Avenue de la Liberté, L-1931, Luxembourg
Company activity:Agricultural and agro-industrial
Date of registration:June 11, 2010
Expiration of company charter:No term defined
Number of register:B153.681
Capital stock: 122,220,606 common shares (of which 3,251 are treasury shares)
Majority shareholder:Quantum Partners LP
Legal address:1300 Thames St. 5th FL, Baltimore MD 21231-3495, United States of America
Parent company activity:Investing
Capital stock: 25,910,004 common shares
F - 3
Adecoagro S.A.
Condensed Consolidated Interim Statements of Financial Position
as of September 30, 2012 and December 31, 2011
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
Note | September 30, 2012 | December 31, 2011 | ||||||||
(unaudited) | ||||||||||
ASSETS | ||||||||||
Non-Current Assets | ||||||||||
Property, plant and equipment | 6 | 850,656 | 759,696 | |||||||
Investment property | 7 | 16,273 | 27,883 | |||||||
Intangible assets | 8 | 33,780 | 36,755 | |||||||
Biological assets | 9 | 218,048 | 187,973 | |||||||
Investments in joint ventures | 4,930 | 4,299 | ||||||||
Deferred income tax assets | 17 | 35,714 | 37,081 | |||||||
Trade and other receivables | 10 | 38,044 | 15,746 | |||||||
Other assets | 1,343 | 1,408 | ||||||||
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Total Non-Current Assets | 1,198,788 | 1,070,841 | ||||||||
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Current Assets | ||||||||||
Biological assets | 9 | 28,731 | 51,627 | |||||||
Inventories | 11 | 135,544 | 96,147 | |||||||
Trade and other receivables | 10 | 139,245 | 141,181 | |||||||
Derivative financial instruments | 3,314 | 10,353 | ||||||||
Cash and cash equivalents | 12 | 223,368 | 330,546 | |||||||
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Total Current Assets | 530,202 | 629,854 | ||||||||
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TOTAL ASSETS | 1,728,990 | 1,700,695 | ||||||||
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SHAREHOLDERS EQUITY | ||||||||||
Capital and reserves attributable to equity holders of the parent | ||||||||||
Share capital | 13 | 183,331 | 180,800 | |||||||
Share premium | 13 | 940,332 | 926,005 | |||||||
Cumulative translation adjustment | (173,515 | ) | (99,202 | ) | ||||||
Equity-settled compensation | 16,820 | 15,306 | ||||||||
Other reserves | (350 | ) | (526 | ) | ||||||
Treasury shares | (5 | ) | (4 | ) | ||||||
Retained earnings | 41,962 | 57,497 | ||||||||
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Equity attributable to equity holders of the parent | 1,008,575 | 1,079,876 | ||||||||
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Non controlling interest | 69 | 14,993 | ||||||||
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TOTAL SHAREHOLDERS EQUITY | 1,008,644 | 1,094,869 | ||||||||
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LIABILITIES | ||||||||||
Non-Current Liabilities | ||||||||||
Trade and other payables | 15 | 6,705 | 8,418 | |||||||
Borrowings | 16 | 304,953 | 203,409 | |||||||
Deferred income tax liabilities | 17 | 82,697 | 92,989 | |||||||
Payroll and social security liabilities | 18 | 1,446 | 1,431 | |||||||
Provisions for other liabilities | 3,871 | 3,358 | ||||||||
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Total Non-Current Liabilities | 399,672 | 309,605 | ||||||||
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Current Liabilities | ||||||||||
Trade and other payables | 15 | 81,013 | 114,020 | |||||||
Current income tax liabilities | 358 | 872 | ||||||||
Payroll and social security liabilities | 18 | 24,636 | 17,010 | |||||||
Borrowings | 16 | 204,078 | 157,296 | |||||||
Derivative financial instruments | 9,754 | 6,054 | ||||||||
Provisions for other liabilities | 835 | 969 | ||||||||
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Total Current Liabilities | 320,674 | 296,221 | ||||||||
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TOTAL LIABILITIES | 720,346 | 605,826 | ||||||||
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TOTAL SHAREHOLDERS EQUITY AND LIABILITIES | 1,728,990 | 1,700,695 | ||||||||
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The accompanying notes are an integral part of these condensed consolidated interim financial statements.
F - 4
Adecoagro S.A.
Condensed Consolidated Interim Statements of Income
for the three-month and nine-month periods ended September 30, 2012 and 2011
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
Nine-months ended September 30 | Three-months ended September 30 | |||||||||||||||||
Note | 2012 | 2011 | 2012 | 2011 | ||||||||||||||
(unaudited) | ||||||||||||||||||
Sales of manufactured products and services rendered | 20 | 256,151 | 254,783 | 108,499 | 108,605 | |||||||||||||
Cost of manufactured products sold and services rendered | 21 | (185,067 | ) | (158,668 | ) | (69,222 | ) | (62,582 | ) | |||||||||
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Gross Profit from Manufacturing Activities | 71,084 | 96,115 | 39,277 | 46,023 | ||||||||||||||
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Sales of agricultural produce and biological assets | 20 | 177,065 | 141,617 | 59,081 | 52,924 | |||||||||||||
Cost of agricultural produce sold and direct agricultural selling expenses | 21 | (177,065 | ) | (141,617 | ) | (59,081 | ) | (52,924 | ) | |||||||||
Initial recognition and changes in fair value of biological assets and agricultural produce | 18,496 | 98,738 | 179 | 42,769 | ||||||||||||||
Changes in net realizable value of agricultural produce after harvest | 14,430 | 9,404 | 4,537 | 5,335 | ||||||||||||||
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Gross Profit from Agricultural Activities | 32,926 | 108,142 | 4,716 | 48,104 | ||||||||||||||
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Margin on Manufacturing and Agricultural Activities Before Operating Expenses | 104,010 | 204,257 | 43,993 | 94,127 | ||||||||||||||
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General and administrative expenses | 21 | (43,152 | ) | (50,615 | ) | (14,981 | ) | (17,107 | ) | |||||||||
Selling expenses | 21 | (45,244 | ) | (42,372 | ) | (17,256 | ) | (18,298 | ) | |||||||||
Other operating income, net | 23 | 5,633 | 12,826 | (2,728 | ) | 13,130 | ||||||||||||
Share of loss of joint ventures | (1,903 | ) | (337 | ) | (819 | ) | 13 | |||||||||||
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Gain from Operations Before Financing and Taxation | 19,344 | 123,759 | 8,209 | 71,865 | ||||||||||||||
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Finance income | 24 | 9,236 | 5,969 | 2,266 | 5,874 | |||||||||||||
Finance costs | 24 | (49,108 | ) | (49,649 | ) | (10,508 | ) | (38,511 | ) | |||||||||
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Financial results, net | 24 | (39,872 | ) | (43,680 | ) | (8,242 | ) | (32,637 | ) | |||||||||
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(Loss)/Gain Before Income Tax | (20,528 | ) | 80,079 | (33 | ) | 39,228 | ||||||||||||
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Income tax benefit / (charge) | 17 | 4,123 | (21,902 | ) | (2,752 | ) | (9,148 | ) | ||||||||||
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(Loss)/Gain for the Period | (16,405 | ) | 58,177 | (2,785 | ) | 30,080 | ||||||||||||
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Attributable to: | ||||||||||||||||||
Equity holders of the parent | (16,288 | ) | 57,144 | (2,768 | ) | 29,575 | ||||||||||||
Non controlling interest | (117 | ) | 1,033 | (17 | ) | 505 | ||||||||||||
(Loss) / earnings per share attributable to the equity holders of the parent during the period: | ||||||||||||||||||
Basic | (0.135 | ) | 0.479 | (0.023 | ) | 0.245 | ||||||||||||
Diluted | (0.135 | ) | 0.475 | (0.023 | ) | 0.242 |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
F - 5
Adecoagro S.A.
Condensed Consolidated Interim Statements of Comprehensive Income
for the three-month and nine-month periods ended September 30, 2012 and 2011
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
Nine-months ended September 30 | Three-months ended September 30 | |||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
(unaudited) | ||||||||||||||||
(Loss)/Gain for the period | (16,405 | ) | 58,177 | (2,785 | ) | 30,080 | ||||||||||
Other comprehensive income: | ||||||||||||||||
Exchange differences on translating foreign operations | (73,043 | ) | (102,193 | ) | (10,708 | ) | (133,670 | ) | ||||||||
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Other comprehensive income for the period | (73,043 | ) | (102,193 | ) | (10,708 | ) | (133,670 | ) | ||||||||
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Total comprehensive income for the period | (89,448 | ) | (44,016 | ) | (13,493 | ) | (103,590 | ) | ||||||||
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Attributable to: | ||||||||||||||||
Equity holders of the parent | (88,756 | ) | (43,569 | ) | (13,391 | ) | (101,973 | ) | ||||||||
Non controlling interest | (692 | ) | (447 | ) | (102 | ) | (1,617 | ) |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
F - 6
Adecoagro S.A.
Condensed Consolidated Interim Statements of Changes in Shareholders’ Equity
for the nine-month periods ended September 30, 2012 and 2011
(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 13) | Share Premium | Cumulative Translation Adjustment | Equity-settled Compensation | Other reserves | Treasury shares | Retained Earnings | Subtotal | Non Controlling Interest | Total Shareholders’ Equity | |||||||||||||||||||||||||||||||
Balance at January 1, 2011 | 120,000 | 563,343 | 11,273 | 13,659 | — | — | 257 | 708,532 | 14,570 | 723,102 | ||||||||||||||||||||||||||||||
Gain for the year | — | — | — | — | — | — | 57,144 | 57,144 | 1,033 | 58,177 | ||||||||||||||||||||||||||||||
Other comprehensive income for the year | — | — | (100,713 | ) | — | — | — | — | (100,713 | ) | (1,480 | ) | (102,193 | ) | ||||||||||||||||||||||||||
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Total comprehensive income for the period | — | — | (100,713 | ) | — | — | — | 57,144 | (43,569 | ) | (447 | ) | (44,016 | ) | ||||||||||||||||||||||||||
Net proceeds from IPO and Private placement (Note 13) | 60,104 | 362,926 | — | — | — | — | — | 423,030 | — | 423,030 | ||||||||||||||||||||||||||||||
Employee share options (Note 14): | ||||||||||||||||||||||||||||||||||||||||
- Value of employee services | — | — | — | 678 | — | — | — | 678 | 13 | 691 | ||||||||||||||||||||||||||||||
- Exercised | 4 | 19 | — | (9 | ) | — | — | — | 14 | — | 14 | |||||||||||||||||||||||||||||
- Forfeited | — | — | — | (1,078 | ) | — | — | 1,078 | — | — | — | |||||||||||||||||||||||||||||
Restricted shares (Note 14): | ||||||||||||||||||||||||||||||||||||||||
- Issued | 641 | — | — | — | (631 | ) | — | — | 10 | (10 | ) | — | ||||||||||||||||||||||||||||
- Value of employee services | — | — | — | 2,055 | — | — | — | 2,055 | 38 | 2,093 | ||||||||||||||||||||||||||||||
- Exercised | — | 583 | — | (653 | ) | 79 | — | — | 9 | (9 | ) | — | ||||||||||||||||||||||||||||
Acquisition of non controlling interest (*) | — | (869 | ) | 185 | 62 | — | — | 127 | (495 | ) | 495 | — | ||||||||||||||||||||||||||||
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Balance at September 30, 2011 (unaudited) | 180,749 | 926,002 | (89,255 | ) | 14,714 | (552 | ) | — | 58,606 | 1,090,264 | 14,650 | 1,104,914 | ||||||||||||||||||||||||||||
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(*) | As consequence of new contributions made in International Farmland Holdings LP fully attributable to the Group, non controlling interest was diluted from 2% to 1.57%. |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
F - 7
Adecoagro S.A.
Condensed Consolidated Interim Statements of Changes in Shareholders’ Equity
for the nine-month periods ended September 30, 2012 and 2011
(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 13) | Share Premium | Cumulative Translation Adjustment | Equity-settled Compensation | Other reserves | Treasury shares | Retained Earnings | Subtotal | Non Controlling Interest | Total Shareholders’ Equity | |||||||||||||||||||||||||||||||
Balance at January 1, 2012 | 180,800 | 926,005 | (99,202 | ) | 15,306 | (526 | ) | (4 | ) | 57,497 | 1,079,876 | 14,993 | 1,094,869 | |||||||||||||||||||||||||||
Loss for the year | — | — | — | — | — | — | (16,288 | ) | (16,288 | ) | (117 | ) | (16,405 | ) | ||||||||||||||||||||||||||
Other comprehensive loss for the year | — | — | (72,468 | ) | — | — | — | — | (72,468 | ) | (575 | ) | (73,043 | ) | ||||||||||||||||||||||||||
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Total comprehensive loss for the period | — | — | (72,468 | ) | — | — | — | (16,288 | ) | (88,756 | ) | (692 | ) | (89,448 | ) | |||||||||||||||||||||||||
Employee share options (Note 14): | ||||||||||||||||||||||||||||||||||||||||
- Value of employee services | — | — | — | 205 | — | — | — | 205 | 2 | 207 | ||||||||||||||||||||||||||||||
- Exercised | 49 | 263 | — | (93 | ) | — | — | — | 219 | (2 | ) | 217 | ||||||||||||||||||||||||||||
- Forfeited | — | — | — | (82 | ) | — | — | 82 | — | — | — | |||||||||||||||||||||||||||||
Restricted shares (Note 14): | ||||||||||||||||||||||||||||||||||||||||
- Value of employee services | — | — | — | 2,775 | — | — | — | 2,775 | 24 | 2,799 | ||||||||||||||||||||||||||||||
- Vested | — | 1,347 | — | (1,516 | ) | 181 | — | — | 12 | (12 | ) | — | ||||||||||||||||||||||||||||
- Forfeited | — | — | — | — | 1 | (1 | ) | — | — | — | — | |||||||||||||||||||||||||||||
Acquisition of non controlling interest (Note 13) | 2,482 | 12,717 | (1,845 | ) | 225 | (6 | ) | — | 671 | 14,244 | (14,244 | ) | — | |||||||||||||||||||||||||||
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Balance at September 30, 2012 (unaudited) | 183,331 | 940,332 | (173,515 | ) | 16,820 | (350 | ) | (5 | ) | 41,962 | 1,008,575 | 69 | 1,008,644 | |||||||||||||||||||||||||||
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The accompanying notes are an integral part of these condensed consolidated interim financial statements.
F - 8
Adecoagro S.A.
Condensed Consolidated Interim Statements of Cash Flows
for the nine-month periods ended September 30, 2012 and 2011
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
Note | September 30, 2012 | September 30, 2011 | ||||||||
(unaudited) | (unaudited) | |||||||||
Cash flows from operating activities: | ||||||||||
(Loss)/Gain for the period | (16,405 | ) | 58,177 | |||||||
Adjustments for: | ||||||||||
Income tax (benefit)/charge | 17 | (4,123 | ) | 21,902 | ||||||
Depreciation | 6, 21 | 39,639 | 25,902 | |||||||
Amortization | 8, 21 | 257 | 283 | |||||||
Gain from disposal of other property items | 23 28 | (629 | ) | (203 | ) | |||||
Gain from disposal of subsidiary | 26 | (8,095 | ) | — | ||||||
Equity settled share-based compensation granted | 22 | 3,006 | 2,784 | |||||||
Loss/(gain) from derivative financial instruments and forwards | 23, 24 | 9,366 | (6,936 | ) | ||||||
Interest and other financial expense, net | 24 | 11,702 | 27,177 | |||||||
Initial recognition and changes in fair value of non harvested biological assets (unrealized) | 6,896 | (40,788 | ) | |||||||
Changes in net realizable value of agricultural produce after harvest (unrealized) | (4,564 | ) | (150 | ) | ||||||
Provision and allowances | 1,677 | (3,802 | ) | |||||||
Share of loss from joint venture | 1,903 | 337 | ||||||||
Foreign exchange gains, net | 24 | 19,176 | 8,599 | |||||||
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Subtotal | 59,806 | 93,282 | ||||||||
Changes in operating assets and liabilities: | ||||||||||
Increase in trade and other receivables | (34,050 | ) | (20,015 | ) | ||||||
Increase in inventories | (38,702 | ) | (87,547 | ) | ||||||
Decrease in biological assets | 30,309 | 41,461 | ||||||||
Decrease (increase) in other assets | 67 | (26 | ) | |||||||
Increase in derivative financial instruments | 1,372 | 569 | ||||||||
Increase in trade and other payables | 8,157 | 11,687 | ||||||||
Increase in payroll and social security liabilities | 7,407 | 4,950 | ||||||||
Decrease in provisions for other liabilities | (1,559 | ) | (2 | ) | ||||||
|
|
|
| |||||||
Net cash generated from operating activities before interest and taxes paid | 32,807 | 44,359 | ||||||||
Income tax paid | (5,317 | ) | (13,763 | ) | ||||||
|
|
|
| |||||||
Net cash generated from operating activities | 27,490 | 30,596 | ||||||||
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
F - 9
Adecoagro S.A.
Condensed Consolidated Interim Statements of Cash Flows
for the nine-month periods ended September 30, 2012 and 2011 (Continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
Note | September 30, 2012 | September 30, 2011 | ||||||||
(unaudited) | (unaudited) | |||||||||
Cash flows from investing activities: | ||||||||||
Purchases of property, plant and equipment | (174,128 | ) | (34,453 | ) | ||||||
Purchases of intangible assets | 8 | (192 | ) | (135 | ) | |||||
Purchase of cattle and non current biological assets planting cost | (61,625 | ) | (43,000 | ) | ||||||
Interest received | 24 | 8,945 | 4,423 | |||||||
Proceeds from sale of property, plant and equipment | 718 | 681 | ||||||||
Short-term investments | — | (48,000 | ) | |||||||
Payment of seller financing arising on subsidiaries acquired | (33,485 | ) | (17,964 | ) | ||||||
Investments in joint ventures | (3,000 | ) | — | |||||||
Proceeds from disposal of subsidiaries | 26 | 5,006 | — | |||||||
Proceeds from sale of farmlands | 9,485 | 7,460 | ||||||||
|
|
|
| |||||||
Net cash used in investing activities | (248,276 | ) | (130,988 | ) | ||||||
|
|
|
| |||||||
Cash flows from financing activities: | ||||||||||
Net proceeds from IPO and Private placement | 13 | — | 421,778 | |||||||
Proceeds from equity settled share-based compensation exercised | 218 | — | ||||||||
Proceeds from long-term borrowings | 159,854 | 6,474 | ||||||||
Payments of long-term borrowings | (17,356 | ) | (72,145 | ) | ||||||
Interest paid | (19,145 | ) | (25,556 | ) | ||||||
Net (decrease) increase in short-term borrowings | (2,504 | ) | 14,537 | |||||||
|
|
|
| |||||||
Net cash generated from financing activities | 121,067 | 345,088 | ||||||||
|
|
|
| |||||||
Net (decrease)/increase in cash and cash equivalents | (99,719 | ) | 244,696 | |||||||
|
|
|
| |||||||
Cash and cash equivalents at beginning of period | 330,546 | 70,269 | ||||||||
Effect of exchange rate changes on cash and cash equivalents | (7,459 | ) | (22,535 | ) | ||||||
|
|
|
| |||||||
Cash and cash equivalents at end of period | 223,368 | 292,430 | ||||||||
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
F - 10
Adecoagro S.A.
Notes to the Condensed Consolidated Interim Financial Statements
(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 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 five reportable segments, which are described in detail in Note 5 to these condensed consolidated interim financial statements.
These condensed consolidated interim financial statements have been approved for issue by the Board of Directors on November 9, 2012.
2. | Basis of preparation |
The information presented in the accompanying nine-month condensed consolidated interim financial statements as of September 30, 2012 and for the nine-month periods ended September 30, 2012 and 2011 is unaudited and in the opinion of management reflect all adjustments necessary to present fairly the financial position of the Group as of September 30, 2012, results of operations and cash flows for the nine months ended September 30, 2012 and 2011. All such adjustments are of a normal recurring nature. In preparing the accompanying condensed consolidated interim financial statements, management has made certain estimates and assumptions that affect reported amounts in the financial statements and disclosures of contingencies. Actual results may differ from those estimates. The results for interim periods are not necessarily indicative of annual results. These condensed consolidated interim financial statements follow the same accounting policies and methods of their application as the Group’s audited December 31, 2011 annual financial statements. Accordingly, they should be read in conjunction with the audited financial statements of the Group as of that date.
These condensed consolidated interim financial statements have been prepared in accordance with IAS 34, ‘Interim financial reporting’. The annual financial statements for the year ended December 31, 2011 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). The condensed consolidated interim financial statements are presented in United States Dollars.
A complete list of standards, amendments and interpretations to existing standards published but not yet effective for the Group is described in Note 2.1 to the annual financial statements. None of those standards became effective for the Group in the nine-month period ended September 30, 2012.
During the nine months ended September 30, 2012, the IASB did not publish new standards that would have a material impact on the Group when they become effective.
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
F - 11
Adecoagro S.A.
Notes to the Condensed Consolidated Interim Financial Statements (continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
2. | Basis of preparation (continued) |
Seasonality of operations
The Group’s business activities are inherently seasonal. The Group generally harvest and sell its grains (corn, soybean, rice and sunflower) between February and June, with the exception of wheat, which is harvested from December to January. Coffee and cotton are different in that while both are typically harvested from June to August, they require a conditioning process which takes about two to three months. Sales in other business segments, such as in Cattle and Dairy business segments, tend to be more stable. However, the raising of cattle and sale of milk is generally higher during the fourth quarter, when the weather is warmer and pasture conditions are more favorable. The sugarcane harvesting period typically begins April/May and ends in November/December. This creates fluctuations in sugarcane inventory, usually peaking in December to cover sales between crop harvests (i.e., January through April). As a result of the above factors, there may be significant variations in the results of operations from one quarter to another, as planting activities may be more concentrated in one quarter whereas harvesting activities may be more concentrated in another quarter. In addition, quarterly results may vary as a result of the effects of fluctuations in commodities prices, production yields and costs on the determination of initial recognition and changes in fair value of biological assets and agricultural produce.
3. | Financial risk management |
Risk management principles and processes
The Group continues to be exposed to several risks arising from financial instruments including price risk, exchange rate risk, interest rate risk, liquidity risk and credit risk. A thorough explanation of the Group´s risks and the Group´s approach to the identification, assessment and mitigation of risks is included in Note 3 to the annual financial statements. There have been no changes to the Group´s exposure and risk management principles and processes since December 31, 2011 and refers readers to the annual financial statements for information.
However, the Group considers that the following tables below provide useful information to understand the Group´s interim results for the nine months ended September 30, 2012. These disclosures do not appear in any particular order of potential materiality or probability of occurrence.
• | Exchange rate risk |
The following tables show the Group’s net monetary position broken down by various currencies for each functional currency in which the Group operates at September 30, 2012. All amounts are shown in US dollars.
September 30, 2012 | ||||||||||||||||||||
Functional currency | ||||||||||||||||||||
Net monetary position (Liability)/ Asset | Argentine Peso | Brazilian Reais | Uruguayan Peso | US Dollar | Total | |||||||||||||||
(unaudited) | ||||||||||||||||||||
Argentine Peso | (12,793 | ) | — | — | — | (12,793 | ) | |||||||||||||
Brazilian Reais | — | (201,387 | ) | — | — | (201,387 | ) | |||||||||||||
US Dollar | (136,368 | ) | (87,326 | ) | 18,236 | 114,211 | (91,247 | ) | ||||||||||||
Uruguayan Peso | — | — | (416 | ) | — | (416 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | (149,161 | ) | (288,713 | ) | 17,820 | 114,211 | (305,843 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
F - 12
Adecoagro S.A.
Notes to the Condensed Consolidated Interim Financial Statements (continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
3. | Financial risk management (continued) |
The Group’s analysis is carried out based on the exposure of each functional currency subsidiary against the US dollar. The Group estimates that, other factors being constant, a 10% devaluation of the respective functional currencies against the US dollar at September 30, 2012 would increaseLoss Before Income Tax for the period, and a 10% revaluation of the respective functional currencies against the US dollar at September 30, 2012 would decreaseLoss Before Income Tax for the period, as described in the tables below:
September 30, 2012 | ||||||||||||||||||||
Functional currency | ||||||||||||||||||||
Net monetary position | Argentine Peso | Brazilian Reais | Uruguayan Peso | US Dollar | Total | |||||||||||||||
(unaudited) | ||||||||||||||||||||
Argentine Peso | n/a | — | — | — | — | |||||||||||||||
Brazilian Reais | — | n/a | n/a | — | — | |||||||||||||||
US Dollar | (13,637 | ) | (8,733 | ) | 1,824 | n/a | (20,546 | ) | ||||||||||||
Uruguayan Peso | — | — | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
(Increase) or decrease in Loss Before Income Tax | (13,637 | ) | (8,733 | ) | 1,824 | — | (20,546 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
• | Interest rate risk |
The following table shows a breakdown of the Group’s fixed-rate and floating-rate borrowings per currency denomination and functional currency of the subsidiary issuing the loans (excluding finance leases) at September 30, 2012 (all amounts are shown in US dollars):
September 30, 2012 | ||||||||||||||||
Functional currency | ||||||||||||||||
Rate per currency denomination | Argentine Peso | Brazilian Reais | Uruguayan Peso | Total | ||||||||||||
(unaudited) | ||||||||||||||||
Fixed rate: | ||||||||||||||||
Argentine Peso | (6,394 | ) | — | — | (6,394 | ) | ||||||||||
Brazilian Reais | — | (65,667 | ) | — | (65,667 | ) | ||||||||||
US Dollar | (75,938 | ) | — | — | (75,938 | ) | ||||||||||
Uruguayan Peso | — | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Subtotal Fixed-rate borrowings | (82,332 | ) | (65,667 | ) | — | (147,999 | ) | |||||||||
|
|
|
|
|
|
|
| |||||||||
Variable rate: | ||||||||||||||||
Brazilian Reais | — | (206,261 | ) | — | (206,261 | ) | ||||||||||
US Dollar | (56,983 | ) | (97,008 | ) | — | (153,991 | ) | |||||||||
|
|
|
|
|
|
|
| |||||||||
Subtotal Variable-rate borrowings | (56,983 | ) | (303,269 | ) | — | (360,252 | ) | |||||||||
|
|
|
|
|
|
|
| |||||||||
Total borrowings as per analysis | (139,315 | ) | (368,936 | ) | — | (508,251 | ) | |||||||||
|
|
|
|
|
|
|
| |||||||||
Finance leases | (688 | ) | (92 | ) | — | (780 | ) | |||||||||
|
|
|
|
|
|
|
| |||||||||
Total borrowings at September 30, 2012 | (140,003 | ) | (369,028 | ) | — | (509,031 | ) | |||||||||
|
|
|
|
|
|
|
|
At September 30, 2012, if interest rates on floating-rate borrowings had been 1% higher (or lower) with all other variables held constant,Loss Before Income Tax for the period would increase (decrease) as follows:
September 30, 2012 | ||||||||||||||||
Functional currency | ||||||||||||||||
Rate per currency denomination | Argentine Peso | Brazilian Reais | Uruguayan Peso | Total | ||||||||||||
(unaudited) | ||||||||||||||||
Variable rate: | ||||||||||||||||
Brazilian Reais | — | (2,063 | ) | — | (2,063 | ) | ||||||||||
US Dollar | (570 | ) | (970 | ) | — | (1,540 | ) | |||||||||
|
|
|
|
|
|
|
| |||||||||
Total effects on Loss Before Income Tax | (570 | ) | (3,033 | ) | — | (3,603 | ) | |||||||||
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
F - 13
Adecoagro S.A.
Notes to the Condensed Consolidated Interim Financial Statements (continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
3. | Financial risk management (continued) |
• | Credit risk |
As of September 30, 2012, 7 banks accounted for more than 91% of the total cash deposited (HSBC, Rabobank, Banco Do Brasil, Bradesco, Citibank, Votorantim, BTG).
• | Derivative financial instruments |
The following table shows the outstanding positions for each type of derivative contract as of September 30, 2012:
• | Futures / Options |
As of September 30, 2012
September 30, 2012 | ||||||||||||||||
Type of derivative contract | Quantities (thousands) (**) | Notional amount | Market Value Asset/ (Liability) | (Loss)/Gain (*) | ||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
Futures: | ||||||||||||||||
Sale | ||||||||||||||||
Corn | 43 | 9,804 | (3,094 | ) | (3,094 | ) | ||||||||||
Soybean | 8 | 3,596 | (16 | ) | (16 | ) | ||||||||||
Wheat | 8 | 1,926 | (577 | ) | (577 | ) | ||||||||||
Cotton | 2 | 2,566 | (84 | ) | 26 | |||||||||||
Sugar | 137 | 66,135 | 1,869 | (5,284 | ) | |||||||||||
Ethanol (thousands m3) | 3 | 1,981 | 46 | (27 | ) | |||||||||||
Coffee | — | 881 | 27 | (144 | ) | |||||||||||
Options: | ||||||||||||||||
Buy put | ||||||||||||||||
Wheat | 6 | 135 | 1 | (102 | ) | |||||||||||
Sugar | 15 | 384 | 358 | (301 | ) | |||||||||||
Buy call | ||||||||||||||||
Soybean | 68 | 445 | 330 | (114 | ) | |||||||||||
Sell call | ||||||||||||||||
Corn | 8 | (125 | ) | (135 | ) | (10 | ) | |||||||||
Sugar | 43 | 805 | (652 | ) | 1,011 | |||||||||||
|
|
|
|
|
| |||||||||||
Total | 88,533 | (1,927 | ) | (8,632 | ) | |||||||||||
|
|
|
|
|
|
(*) | Included in the line item “Gain from commodity derivative financial instruments” of Note 23. |
(**) | All quantities expressed in tons except otherwise indicated. |
Commodity future contract fair values are computed with reference to quoted market prices on future exchanges.
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
F - 14
Adecoagro S.A.
Notes to the Condensed Consolidated Interim Financial Statements (continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
3. | Financial risk management (continued) |
• | Currency forward |
Between January 2012 and September 2012, the Group entered into several currency forward contracts with Brazilian banks in order to hedge the fluctuation of the Brazilian Reais against US Dollar for a total notional amount of US$ 207.7 million, with maturity dates between May 2013 and December 2015. The outstanding contracts resulted in the recognition of a gain amounting to US$ 1.6 million included within “Financial results, net.”
Additionally the Group has a floating-to-fixed interest rate swap. There have been no significant changes to these contracts since December 31, 2011.
4. | Critical accounting estimates and judgments |
The Group’s critical accounting policies are also consistent with those of the audited annual financial statements for the year ended December 31, 2011 described in Note 4.
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 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 on acquisition is initially measured at cost being the excess of the cost of the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. As of the acquisition date, any goodwill acquired is allocated to the cash-generating unit (‘CGU’) expected to benefit from the business combination.
Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. 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.
Farmland businesses may be used for different activities that may generate independent cash flows. When farmland businesses are used for single activities (i.e. crops), these are considered as one CGU. Generally, each separate farmland business within Argentina and Uruguay are treated as single CGUs. Otherwise, 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. For its properties in Brazil, management identified a farmland together with its related mill as separate CGUs.
Based on these criteria, management identified a total amount of forty-three CGUs as of September 30, 2012 and forty-four CGUs as of September 30, 2011
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
F - 15
Adecoagro S.A.
Notes to the Condensed Consolidated Interim Financial Statements (continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
4. | Critical accounting estimates and judgments (continued) |
As of September 30, 2012, due to the fact that there were no impairment indicators, the Group only tested those CGUs with allocated goodwill in Argentina, Brazil and Uruguay. On the contrary, as of September 30, 2011, due to the volatility in the international markets, the Group tested for impairment all CGUs regardless of which CGUs have allocated any goodwill.
CGUs tested based on a fair-value-less-costs-to-sell model at September 30, 2012 and 2011:
As of September 30, 2012, the Group identified 10 CGUs in Argentina and Uruguay to be tested based on this model (all CGUs with allocated goodwill). As of September 30, 2011, the Group identified 35 CGUs in Argentina and Uruguay and 2 CGUs in Brazil to be tested based in this model (regardless of any goodwill allocated to them). 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 condensed consolidated interim financial statements.
F - 16
Adecoagro S.A.
Notes to the Condensed Consolidated Interim Financial Statements (continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
4. | Critical accounting estimates and judgments (continued) |
The following table shows only the 10 CGUs (2011: 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, 2012 | September 30, 2011 | ||||||
La Carolina / Crops / Argentina | 149 | 166 | ||||||
La Carolina / Cattle / Argentina | 24 | 27 | ||||||
El Orden / Crops / Argentina | 182 | 203 | ||||||
El Orden / Cattle / Argentina | 30 | 33 | ||||||
La Guarida / Crops / Argentina | 2,179 | 2,434 | ||||||
La Guarida / Cattle / Argentina | 216 | 241 | ||||||
Los Guayacanes / Crops / Argentina | 1,664 | 1,859 | ||||||
Doña Marina / Rice / Argentina | 5,877 | 6,565 | ||||||
Huelen / Crops / Argentina | 6,585 | 2,379 | ||||||
El Colorado / Crops / Argentina | 3,323 | 2,484 | ||||||
El Colorado / Cattle / Argentina | — | 828 | ||||||
|
|
|
| |||||
Closing net book value of goodwill allocated to CGUs tested (Note 8) | 20,229 | 17,219 | ||||||
|
|
|
| |||||
Closing net book value of PPE items and other assets allocated to CGUs tested | 99,413 | 89,079 | ||||||
|
|
|
| |||||
Total assets allocated to CGUs tested | 119,642 | 106,298 | ||||||
|
|
|
|
Based on the testing above, the Group determined that none of the CGUs, with allocated goodwill, were impaired at September 30, 2012.
As of September 30, 2011, property, plant and equipment, investment property, and finite-life intangible assets allocated to the remaining 26 CGUs without allocated goodwill tested had an aggregated net book value of US$ 252,252. None of the CGUs with or without allocated goodwill were impaired at September 30, 2011.
CGUs tested based on a value-in-use model at September 30, 2012 and 2011:
As of September 30, 2012, the Group identified 3 CGUs in Brazil to be tested base on this model (all CGUs with allocated goodwill). As of September 30, 2011, the Group identified 3 CGUs in Argentina and 4 CGUs in Brazil to be tested based on this model (regardless of any goodwill allocated to them). 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, 2012 | September 30, 2011 | ||
Financial projections | Covers 4 years for UMA | Covers 4 years for Angelica and UMA | ||
Covers 8 years for AVI | ||||
Yield average growth rates | 0-3% | 0-3% | ||
Future pricing increases | 3% per annum | Between 3% and 5% | ||
Future cost increases | 3% per annum | Expected USD Inflation | ||
Discount rates | 9.16% | 8.91% | ||
Perpetuity growth rate | 4.5% | 4.5% |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
F - 17
Adecoagro S.A.
Notes to the Condensed Consolidated Interim Financial Statements (continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
4. | Critical accounting estimates and judgments (continued) |
Discount rates are based on the risk-free rate for U.S. government bonds, adjusted for a risk premium to reflect the increased risk of investing in South America and Brazil in particular. The risk premium adjustment is assessed for factors specific to the respective CGUs and reflects the countries that the CGUs operate in.
The following table shows only the 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, 2012 | September 30, 2011 | ||||||
AVI / Sugar, Ethanol and Energy | 7,820 | 8,741 | ||||||
UMA / Sugar, Ethanol and Energy | 2,933 | 3,212 | ||||||
UMA (f.k.a. Alfenas Café Ltda) / Coffee | 1,099 | 1,002 | ||||||
|
|
|
| |||||
Closing net book value of goodwill allocated to CGUs tested (Note 8) | 11,852 | 12,955 | ||||||
|
|
|
| |||||
Closing net book value of PPE items and other assets allocated to CGUs tested | 517,052 | 90,278 | ||||||
|
|
|
| |||||
Total assets allocated to 3 CGUs tested | 528,904 | 103,233 | ||||||
|
|
|
|
Based on the testing above, the Group determined that none of the CGUs, with allocated goodwill, were impaired at September 30, 2012.
As of September 30, 2011, property, plant and equipment and finite-life intangible assets allocated to the remaining 4 CGUs without allocated goodwill tested had an aggregated net book value of US$ 329,317. None of the CGUs with or without allocated goodwill were impaired at September 30, 2011.
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.
5. | Segment information |
The Group operates in three major lines of business, namely, Farming; Sugar, Ethanol and Energy; and Land Transformation.
The Group’s‘Farming’ is further comprised of five reportable segments: Crops, Rice, Dairy, Coffee and Cattle.
The measurement principles for the Group’s segment reporting structure are based on the IFRS principles adopted in the condensed consolidated interim financial statements. Revenue generated and goods and services exchanged between segments are calculated on the basis of market prices.
Total segment assets and liabilities are measured in a manner consistent with that of the condensed consolidated interim financial statements. These assets and liabilities are allocated based on the operations of the segment and the physical location of the asset. The Group’s investment in the joint venture Grupo La Lácteo is allocated to the ‘Dairy’ segment.
The following table presents information with respect to the Group’s reportable segments. Certain other activities of a holding function nature not allocable to the segments are disclosed in the column ‘Corporate’.
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
F - 18
Adecoagro S.A.
Notes to the Condensed Consolidated Interim Financial Statements (continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
5. | Segment information (continued) |
Segment analysis for the nine-month period ended September 30, 2012 (unaudited):
Farming | Sugar, ethanol and energy | Land transformation | Corporate | Total | ||||||||||||||||||||||||||||||||||||
Crops | Rice | Dairy | Coffee | Cattle | Farming subtotal | |||||||||||||||||||||||||||||||||||
Sales of manufactured products and services rendered | 492 | 68,191 | — | — | 3,455 | 72,138 | 184,013 | — | — | 256,151 | ||||||||||||||||||||||||||||||
Cost of manufactured products sold and services rendered | — | (57,755 | ) | — | — | (185 | ) | (57,940 | ) | (127,127 | ) | — | — | (185,067 | ) | |||||||||||||||||||||||||
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| |||||||||||||||||||||
Gross Profit from Manufacturing Activities | 492 | 10,436 | — | — | 3,270 | 14,198 | 56,886 | — | — | 71,084 | ||||||||||||||||||||||||||||||
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| |||||||||||||||||||||
Sales of agricultural produce and biological assets | 156,385 | 1,179 | 14,252 | 4,643 | 417 | 176,876 | 189 | — | — | 177,065 | ||||||||||||||||||||||||||||||
Cost of agricultural produce sold and direct agricultural selling expenses | (156,385 | ) | (1,179 | ) | (14,252 | ) | (4,643 | ) | (417 | ) | (176,876 | ) | �� | (189 | ) | — | — | (177,065 | ) | |||||||||||||||||||||
Initial recognition and changes in fair value of biological assets and agricultural produce | 26,971 | 1,534 | (2 | ) | (3,123 | ) | (217 | ) | 25,163 | (6,667 | ) | — | — | 18,496 | ||||||||||||||||||||||||||
Changes in net realizable value of agricultural produce after harvest | 13,927 | — | — | 503 | — | 14,430 | — | — | — | 14,430 | ||||||||||||||||||||||||||||||
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| |||||||||||||||||||||
Gross Profit from Agricultural Activities | 40,898 | 1,534 | (2 | ) | (2,620 | ) | (217 | ) | 39,593 | (6,667 | ) | — | — | 32,926 | ||||||||||||||||||||||||||
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| |||||||||||||||||||||
Margin on Manufacturing and Agricultural Activities Before Operating Expenses | 41,390 | 11,970 | (2 | ) | (2,620 | ) | 3,053 | 53,791 | 50,219 | — | — | 104,010 | ||||||||||||||||||||||||||||
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| |||||||||||||||||||||
General and administrative expenses | (3,194 | ) | (3,062 | ) | (674 | ) | (814 | ) | (31 | ) | (7,775 | ) | (16,752 | ) | — | (18,625 | ) | (43,152 | ) | |||||||||||||||||||||
Selling expenses | (4,380 | ) | (12,815 | ) | (182 | ) | (236 | ) | (38 | ) | (17,651 | ) | (27,530 | ) | — | (63 | ) | (45,244 | ) | |||||||||||||||||||||
Other operating (loss)/ income, net | (10,410 | ) | 637 | 23 | 2,209 | (11 | ) | (7,552 | ) | 5,294 | 8,095 | (204 | ) | 5,633 | ||||||||||||||||||||||||||
Share of loss of joint ventures | — | — | (1,903 | ) | — | — | (1,903 | ) | — | — | — | (1,903 | ) | |||||||||||||||||||||||||||
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| |||||||||||||||||||||
Gain/ (Loss) from Operations Before Financing and Taxation | 23,406 | (3,270 | ) | (2,738 | ) | (1,461 | ) | 2,973 | 18,910 | 11,231 | 8,095 | (18,892 | ) | 19,344 | ||||||||||||||||||||||||||
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| |||||||||||||||||||||
Depreciation and amortization | 1,366 | 2,901 | 666 | 448 | 152 | 5,533 | 34,363 | — | — | 39,896 | ||||||||||||||||||||||||||||||
Initial recognition and changes in fair value of biological assets (unrealized) | 1,073 | (174 | ) | (1,075 | ) | (2,306 | ) | — | (2,482 | ) | (9,627 | ) | — | — | (12,109 | ) | ||||||||||||||||||||||||
Initial recognition and changes in fair value of agricultural produce (unrealized) | 4,878 | 232 | — | (817 | ) | — | 4,293 | 920 | — | — | 5,213 | |||||||||||||||||||||||||||||
Initial recognition and changes in fair value of biological assets and agricultural produce (realized) | 21,020 | 1,476 | 1,073 | — | (217 | ) | 23,352 | 2,040 | — | — | 25,392 | |||||||||||||||||||||||||||||
Gain from changes in net realizable value of agricultural produce after harvest (unrealized) | 4,411 | — | — | 153 | — | 4,564 | — | — | — | 4,564 | ||||||||||||||||||||||||||||||
Gain from changes in net realizable value of agricultural produce after harvest (realized) | 9,516 | — | — | 350 | — | 9,866 | — | — | — | 9,866 | ||||||||||||||||||||||||||||||
Property, plant and equipment, net | 226,706 | 49,544 | 16,923 | 21,175 | 19,196 | 333,544 | 517,112 | — | — | 850,656 | ||||||||||||||||||||||||||||||
Investment property | — | — | — | — | 16,273 | 16,273 | — | — | — | 16,273 | ||||||||||||||||||||||||||||||
Goodwill | 13,260 | 5,877 | — | 1,099 | 1,100 | 21,336 | 10,746 | — | — | 32,082 | ||||||||||||||||||||||||||||||
Biological assets | 18,563 | 9,898 | 10,816 | 14,955 | 1,197 | 55,429 | 191,350 | — | — | 246,779 | ||||||||||||||||||||||||||||||
Investment in joint ventures | — | — | 4,930 | — | — | 4,930 | — | — | — | 4,930 | ||||||||||||||||||||||||||||||
Inventories | 39,588 | 29,810 | 2,510 | 5,696 | 15 | 77,619 | 57,925 | — | — | 135,544 | ||||||||||||||||||||||||||||||
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| |||||||||||||||||||||
Total segment assets | 298,117 | 95,129 | 35,179 | 42,925 | 37,781 | 509,131 | 777,133 | — | — | 1,286,264 | ||||||||||||||||||||||||||||||
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| |||||||||||||||||||||
Borrowings | 80,383 | 56,001 | 14,000 | 10,506 | — | 160,890 | 348,141 | — | — | 509,031 | ||||||||||||||||||||||||||||||
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| |||||||||||||||||||||
Total segment liabilities | 80,383 | 56,001 | 14,000 | 10,506 | — | 160,890 | 348,141 | — | — | 509,031 | ||||||||||||||||||||||||||||||
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The accompanying notes are an integral part of these condensed consolidated interim financial statements.
F - 19
Adecoagro S.A.
Notes to the Condensed Consolidated Interim Financial Statements (continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
5. | Segment information (continued) |
Segment analysis for the nine-month period ended September 30, 2011 (unaudited):
Farming | Sugar, ethanol and energy | Land transformation | Corporate | Total | ||||||||||||||||||||||||||||||||||||
Crops | Rice | Dairy | Coffee | Cattle | Farming subtotal | |||||||||||||||||||||||||||||||||||
Sales of manufactured products and services rendered | 287 | 56,431 | — | 713 | 3,473 | 60,904 | 193,879 | — | — | 254,783 | ||||||||||||||||||||||||||||||
Cost of manufactured products sold and services rendered | — | (47,946 | ) | — | (629 | ) | (370 | ) | (48,945 | ) | (109,723 | ) | — | — | (158,668 | ) | ||||||||||||||||||||||||
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| |||||||||||||||||||||
Gross Profit from Manufacturing Activities | 287 | 8,485 | — | 84 | 3,103 | 11,959 | 84,156 | — | — | 96,115 | ||||||||||||||||||||||||||||||
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| |||||||||||||||||||||
Sales of agricultural produce and biological assets | 118,757 | 665 | 14,173 | 7,504 | 518 | 141,617 | — | — | — | 141,617 | ||||||||||||||||||||||||||||||
Cost of agricultural produce sold and direct agricultural selling expenses | (118,757 | ) | (665 | ) | (14,173 | ) | (7,504 | ) | (518 | ) | (141,617 | ) | — | — | — | (141,617 | ) | |||||||||||||||||||||||
Initial recognition and changes in fair value of biological assets and agricultural produce | 38,732 | 8,230 | 5,394 | 5,178 | 214 | 57,748 | 40,990 | — | — | 98,738 | ||||||||||||||||||||||||||||||
Changes in net realizable value of agricultural produce after harvest | 10,039 | — | — | (635 | ) | — | 9,404 | — | — | — | 9,404 | |||||||||||||||||||||||||||||
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| |||||||||||||||||||||
Gross Profit/ (Loss) from Agricultural Activities | 48,771 | 8,230 | 5,394 | 4,543 | 214 | 67,152 | 40,990 | — | — | 108,142 | ||||||||||||||||||||||||||||||
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| |||||||||||||||||||||
Margin on Manufacturing and Agricultural Activities Before Operating Expenses | 49,058 | 16,715 | 5,394 | 4,627 | 3,317 | 79,111 | 125,146 | — | — | 204,257 | ||||||||||||||||||||||||||||||
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| |||||||||||||||||||||
General and administrative expenses | (6,233 | ) | (5,296 | ) | (968 | ) | (889 | ) | (242 | ) | (13,628 | ) | (16,453 | ) | — | (20,534 | ) | (50,615 | ) | |||||||||||||||||||||
Selling expenses | (1,595 | ) | (9,545 | ) | (315 | ) | (312 | ) | (41 | ) | (11,808 | ) | (30,564 | ) | — | — | (42,372 | ) | ||||||||||||||||||||||
Other operating income, net | 3,101 | 238 | — | 2,231 | (2 | ) | 5,568 | 6,937 | — | 321 | 12,826 | |||||||||||||||||||||||||||||
Share of loss of joint ventures | — | — | (337 | ) | — | — | (337 | ) | — | — | — | (337 | ) | |||||||||||||||||||||||||||
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| |||||||||||||||||||||
Gain/ (Loss) from Operations Before Financing and Taxation | 44,331 | 2,112 | 3,774 | 5,657 | 3,032 | 58,906 | 85,066 | — | (20,213 | ) | 123,759 | |||||||||||||||||||||||||||||
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| |||||||||||||||||||||
Depreciation and amortization | 940 | 2,233 | 401 | 411 | 162 | 4,147 | 22,038 | — | — | 26,185 | ||||||||||||||||||||||||||||||
Initial recognition and changes in fair value of biological assets (unrealized) | — | — | 1,521 | 2,238 | — | 3,759 | 20,218 | — | — | 23,977 | ||||||||||||||||||||||||||||||
Initial recognition and changes in fair value of agricultural produce (unrealized) | 6,795 | 2,835 | — | 2,940 | — | 12,570 | 4,241 | — | — | 16,811 | ||||||||||||||||||||||||||||||
Initial recognition and changes in fair value of biological assets and agricultural produce (realized) | 31,937 | 5,395 | 3,873 | — | 214 | 41,419 | 16,531 | — | — | 57,950 | ||||||||||||||||||||||||||||||
Gain from changes in net realizable value of agricultural produce after harvest (unrealized) | — | — | — | 150 | — | 150 | — | — | — | 150 | ||||||||||||||||||||||||||||||
Gain from changes in net realizable value of agricultural produce after harvest (realized) | 10,039 | — | — | (785 | ) | — | 9,254 | — | — | — | 9,254 | |||||||||||||||||||||||||||||
As of December 31, 2011: | ||||||||||||||||||||||||||||||||||||||||
Property, plant and equipment, net | 236,031 | 45,134 | 9,437 | 22,558 | 21,030 | 334,190 | 425,506 | — | — | 759,696 | ||||||||||||||||||||||||||||||
Investment property | 9,828 | — | — | — | 18,055 | 27,883 | — | — | — | 27,883 | ||||||||||||||||||||||||||||||
Goodwill | 14,656 | 6,414 | — | 990 | 1,193 | 23,253 | 11,633 | — | — | 34,886 | ||||||||||||||||||||||||||||||
Biological assets | 28,300 | 23,167 | 9,338 | 18,369 | 1,501 | 80,675 | 158,925 | — | — | 239,600 | ||||||||||||||||||||||||||||||
Investment in joint ventures | — | — | 4,299 | — | — | 4,299 | — | — | — | 4,299 | ||||||||||||||||||||||||||||||
Inventories | 37,343 | 12,667 | 1,070 | 2,509 | 45 | 53,634 | 42,513 | — | — | 96,147 | ||||||||||||||||||||||||||||||
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| |||||||||||||||||||||
Total segment assets | 326,158 | 87,382 | 24,144 | 44,426 | 41,824 | 523,934 | 638,577 | — | — | 1,162,511 | ||||||||||||||||||||||||||||||
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| |||||||||||||||||||||
Borrowings | 83,019 | 55,567 | 13,892 | 11,937 | — | 164,415 | 196,290 | — | — | 360,705 | ||||||||||||||||||||||||||||||
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| |||||||||||||||||||||
Total segment liabilities | 83,019 | 55,567 | 13,892 | 11,937 | — | 164,415 | 196,290 | — | — | 360,705 | ||||||||||||||||||||||||||||||
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The accompanying notes are an integral part of these condensed consolidated interim financial statements.
F - 20
Adecoagro S.A.
Notes to the Condensed Consolidated Interim Financial Statements (continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
6. | Property, plant and equipment |
Changes in the Group’s property, plant and equipment in the nine-month periods ended September 30, 2012 and 2011 were as follows:
Farmlands | Farmland improvements | Buildings and facilities | Machinery, equipment, furniture and fittings | Computer equipment | Vehicles | Work in progress | Total | |||||||||||||||||||||||||
Nine-month period ended September 30, 2011 | ||||||||||||||||||||||||||||||||
Opening net book amount. | 305,412 | 245 | 165,248 | 239,910 | 1,602 | 1,103 | 38,472 | 751,992 | ||||||||||||||||||||||||
Exchange differences | (20,458 | ) | (20 | ) | (15,333 | ) | (22,317 | ) | (117 | ) | (47 | ) | (2,831 | ) | (61,123 | ) | ||||||||||||||||
Additions | — | 142 | 639 | 7,052 | 291 | 277 | 27,710 | 36,111 | ||||||||||||||||||||||||
Acquisition of subsidiaries | 30,853 | 241 | 77 | 170 | — | 56 | — | 31,397 | ||||||||||||||||||||||||
Transfers | — | 621 | 11,948 | 5,683 | 116 | — | (18,368 | ) | — | |||||||||||||||||||||||
Disposals | — | — | (31 | ) | (407 | ) | (1 | ) | (39 | ) | — | (478 | ) | |||||||||||||||||||
Reclassification to non-income tax credits (*) | — | — | — | (1,852 | ) | — | — | — | (1,852 | ) | ||||||||||||||||||||||
Depreciation charge | — | (215 | ) | (6,713 | ) | (19,055 | ) | (464 | ) | (283 | ) | — | (26,730 | ) | ||||||||||||||||||
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| |||||||||||||||||
Closing net book amount | 315,807 | 1,014 | 155,835 | 209,184 | 1,427 | 1,067 | 44,983 | 729,317 | ||||||||||||||||||||||||
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| |||||||||||||||||
At September 30, 2011 (unaudited) | ||||||||||||||||||||||||||||||||
Cost | 315,807 | 4,053 | 190,659 | 318,976 | 3,163 | 3,108 | 44,983 | 880,749 | ||||||||||||||||||||||||
Accumulated depreciation | — | (3,039 | ) | (34,824 | ) | (109,792 | ) | (1,736 | ) | (2,041 | ) | — | (151,432 | ) | ||||||||||||||||||
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| |||||||||||||||||
Net book amount | 315,807 | 1,014 | 155,835 | 209,184 | 1,427 | 1,067 | 44,983 | 729,317 | ||||||||||||||||||||||||
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| |||||||||||||||||
Nine-month period ended September 30, 2012 | ||||||||||||||||||||||||||||||||
Opening net book amount | 313,685 | 930 | 153,617 | 204,441 | 1,474 | 993 | 84,556 | 759,696 | ||||||||||||||||||||||||
Exchange differences | (25,110 | ) | (92 | ) | (12,714 | ) | (15,486 | ) | (116 | ) | (203 | ) | (7,438 | ) | (61,159 | ) | ||||||||||||||||
Additions | — | 8 | 649 | 17,337 | 572 | 1,585 | 164,678 | 184,829 | ||||||||||||||||||||||||
Transfers | — | 329 | 11,482 | 15,678 | 27 | — | (27,516 | ) | — | |||||||||||||||||||||||
Disposals | — | — | (85 | ) | (800 | ) | (5 | ) | (15 | ) | — | (905 | ) | |||||||||||||||||||
Disposal from subsidiary | (1,118 | ) | — | (17 | ) | (1 | ) | — | — | — | (1,136 | ) | ||||||||||||||||||||
Transfers from investment property | 9,625 | — | — | — | — | — | — | 9,625 | ||||||||||||||||||||||||
Reclassification to non-income tax credits (*) | — | — | — | (655 | ) | — | — | — | (655 | ) | ||||||||||||||||||||||
Depreciation charge | — | (325 | ) | (12,722 | ) | (25,711 | ) | (467 | ) | (414 | ) | — | (39,639 | ) | ||||||||||||||||||
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| |||||||||||||||||
Closing net book amount | 297,082 | 850 | 140,210 | 194,803 | 1,485 | 1,946 | 214,280 | 850,656 | ||||||||||||||||||||||||
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| |||||||||||||||||
At September 30, 2012 (unaudited) | ||||||||||||||||||||||||||||||||
Cost | 297,082 | 4,313 | 190,020 | 335,734 | 3,833 | 4,489 | 214,280 | 1,049,751 | ||||||||||||||||||||||||
Accumulated depreciation | — | (3,463 | ) | (49,810 | ) | (140,931 | ) | (2,348 | ) | (2,543 | ) | — | (199,095 | ) | ||||||||||||||||||
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| |||||||||||||||||
Net book amount | 297,082 | 850 | 140,210 | 194,803 | 1,485 | 1,946 | 214,280 | 850,656 | ||||||||||||||||||||||||
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The accompanying notes are an integral part of these condensed consolidated interim financial statements.
F - 21
Adecoagro S.A.
Notes to the Condensed Consolidated Interim Financial Statements (continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
6. | Property, plant and equipment (continued) |
(*) | Brazilian federal tax law allows entities to take a percentage of the total cost of the assets purchased as a tax credit. The procedure adopted initially was to recognize such credits proportionally to the depreciation of these fixed assets on a monthly basis. During 2009, the Group elected to change the procedure to recognize these federal tax credits separately when the assets is purchased and, as permitted, the tax credits already “embedded” within the cost of the assets were reclassified to tax credit (See Note 10). |
An amount of US$ 35,133 and US$ 21,721 of depreciation charges are included in “Cost of manufactured products sold and services rendered” for the nine-month periods ended September 30, 2012 and 2011, respectively. An amount of US$ 4,027 and US$ 3,199 of depreciation charges are included in “General and administrative expenses” for the nine-month periods ended September 30, 2012 and 2011, respectively. An amount of US$ 479 and US$ 982 of depreciation charges are included in “Selling expenses” for the nine-month periods ended September 30, 2012 and 2011, respectively. An amount of US$ nil and US$ 828 of depreciation charge were not charged in the result of the period and were capitalized in “Inventories”.
As of September 30, 2012, borrowing costs of US$ 10,701 (September 30, 2011: US$ 1,137) were capitalized as components of the cost of acquisition or construction of qualifying assets.
Certain of the Group’s assets have been pledged as collateral to secure the Group’s borrowings and other payables. The net book value of the pledged assets amounts to US$ 309,490 as of September 30, 2012.
As of September 30, 2012, included within property, plant and equipment balances are US$ 995 related to the net book value of assets under finance leases.
7. | Investment property |
Changes in the Group’s investment property in the nine-month periods ended September 30, 2012 and 2011 were as follows:
September 30, 2012 | September 30, 2011 | |||||||
Beginning of the year | 27,883 | 21,417 | ||||||
Acquisition of subsidiaries | — | 9,670 | ||||||
Transfers (i) | (9,625 | ) | — | |||||
Exchange difference | (1,985 | ) | (1,376 | ) | ||||
|
|
|
| |||||
End of the period | 16,273 | 29,711 | ||||||
|
|
|
| |||||
Cost | 16,273 | 29,711 | ||||||
Accumulated depreciation | — | — | ||||||
|
|
|
| |||||
Net book amount | �� | 16,273 | 29,711 | |||||
|
|
|
|
The following amounts have been recognized in the statement of income in the line “Sales of manufactured products and services rendered”:
September 30, 2012 | September 30, 2011 | |||||||
Rental income | 3,784 | 3,473 |
(i) | Transferred to property, plant and equipment in the nine-month period ended September 30, 2012. Relates to finalization of contracts with third parties. |
As of September 30, 2012, the fair value of investment property was US$ 67.5 million (2011: US$ 86.6 million).
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
F - 22
Adecoagro S.A.
Notes to the Condensed Consolidated Interim Financial Statements (continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
8. | Intangible assets |
Changes in the Group’s intangible assets in the nine-month periods ended September 30, 2012 and 2011 were as follows:
Goodwill | Trademarks | Software | Total | |||||||||||||
Nine-month period ended September 30, 2011 | ||||||||||||||||
Opening net book amount | 26,494 | 1,884 | 275 | 28,653 | ||||||||||||
Exchange differences | (2,011 | ) | (75 | ) | (37 | ) | (2,123 | ) | ||||||||
Additions | — | — | 135 | 135 | ||||||||||||
Acquisition of subsidiaries | 5,691 | — | — | 5,691 | ||||||||||||
Disposals | — | (1 | ) | — | (1 | ) | ||||||||||
Amortization charge (i) (Note 21) | — | (160 | ) | (123 | ) | (283 | ) | |||||||||
|
|
|
|
|
|
|
| |||||||||
Closing net book amount | 30,174 | 1,648 | 250 | 32,072 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
At September 30, 2011(unaudited) | ||||||||||||||||
Cost | 30,174 | 2,697 | 765 | 33,636 | ||||||||||||
Accumulated amortization | — | (1,049 | ) | (515 | ) | (1,564 | ) | |||||||||
|
|
|
|
|
|
|
| |||||||||
Net book amount | 30,174 | 1,648 | 250 | 32,072 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Nine-month period ended September 30, 2012 | ||||||||||||||||
Opening net book amount | 34,886 | 1,592 | 277 | 36,755 | ||||||||||||
Exchange differences | (2,804 | ) | (53 | ) | (53 | ) | (2,910 | ) | ||||||||
Additions | — | — | 192 | 192 | ||||||||||||
Amortization charge (ii) (Note 21) | — | (129 | ) | (128 | ) | (257 | ) | |||||||||
|
|
|
|
|
|
|
| |||||||||
Closing net book amount | 32,082 | 1,410 | 288 | 33,780 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
At September 30, 2012 (unaudited) | ||||||||||||||||
Cost | 32,082 | 1,539 | 416 | 34,037 | ||||||||||||
Accumulated amortization | — | (129 | ) | (128 | ) | (257 | ) | |||||||||
|
|
|
|
|
|
|
| |||||||||
Net book amount | 32,082 | 1,410 | 288 | 33,780 | ||||||||||||
|
|
|
|
|
|
|
|
(i) | For the nine-month period ended September 30, 2011 an amount of US$ 123 and US$ 160 of amortization charges are included in “General and administrative expenses” and “Selling expenses”, respectively. There were no impairment charges for any of the periods presented. |
(ii) | For the nine-month period ended September 30, 2012 an amount of US$ 128 and US$ 129 of amortization charges are included in “General and administrative expenses” and “Selling expenses”, respectively. There were no impairment charges for any of the periods presented. |
The Group tests annually whether goodwill has suffered any impairment. The last impairment test of goodwill was performed as of September 30, 2012 (see Note 4).
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
F - 23
Adecoagro S.A.
Notes to the Condensed Consolidated Interim Financial Statements (continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
9. | Biological assets |
Changes in the Group’s biological assets in the nine-month periods ended September 30, 2012 and 2011 were as follows:
September 30, 2012 | September 30, 2011 | |||||||
(unaudited) | (unaudited) | |||||||
Beginning of the period | 239,600 | 186,757 | ||||||
Increase due to purchases | 1,561 | 1,106 | ||||||
Acquisition of Subsidiaries | — | 1,495 | ||||||
Initial recognition and changes in fair value of biological assets (i) | 18,496 | 98,738 | ||||||
Decrease due to harvest | (260,630 | ) | (290,345 | ) | ||||
Decrease due to sales | (1,556 | ) | (1,732 | ) | ||||
Costs incurred during the period | 266,547 | 234,560 | ||||||
Exchange differences | (17,239 | ) | (19,063 | ) | ||||
|
|
|
| |||||
End of the period | 246,779 | 211,516 | ||||||
|
|
|
|
(i) | Biological assets with a production cycle of more than one year (that is, sugarcane, coffee, dairy and cattle) generated “Initial recognition and changes in fair value of biological assets” amounting to US$ (10,009) loss for the nine-month period ended September 30, 2012 (September 30, 2011: US$ 51,776 gain). In 2012, an amount of US$ (19,528) loss (2011: US$ 71,907 gain) was attributable to price changes, and an amount of US$ 9,519 gain (2011: US$ (20,131) loss) was attributable to physical changes. |
Biological assets as of September 30, 2012 and December 31, 2011 were as follows:
September 30, 2012 | December 31, 2011 | |||||||
(unaudited) | ||||||||
Non-current | ||||||||
Cattle for dairy production | 10,816 | 9,338 | ||||||
Other cattle | 927 | 1,341 | ||||||
Sown land – coffee | 14,955 | 18,369 | ||||||
Sown land – sugarcane | 191,350 | 158,925 | ||||||
|
|
|
| |||||
218,048 | 187,973 | |||||||
|
|
|
| |||||
Current | ||||||||
Other cattle | 270 | 160 | ||||||
Sown land – crops | 18,563 | 28,300 | ||||||
Sown land – rice | 9,898 | 23,167 | ||||||
|
|
|
| |||||
28,731 | 51,627 | |||||||
|
|
|
| |||||
Total biological assets | 246,779 | 239,600 | ||||||
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
F - 24
Adecoagro S.A.
Notes to the Condensed Consolidated Interim Financial Statements (continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
10. | Trade and other receivables |
September 30, 2012 | December 31, 2011 | |||||||
(unaudited) | ||||||||
Non current | ||||||||
Receivables from related parties (Note 25) | 63 | 63 | ||||||
|
|
|
| |||||
Trade receivables | 63 | 63 | ||||||
|
|
|
| |||||
Advances to suppliers | 12,034 | 2,719 | ||||||
Income tax credits | 6,208 | 3,682 | ||||||
Non-income tax credits (i) | 13,520 | 6,988 | ||||||
Receivable from disposal of subsidiary (Note 26) | 2,066 | — | ||||||
Cash collateral | 1,428 | 1,469 | ||||||
Other receivables | 2,725 | 825 | ||||||
|
|
|
| |||||
Non current portion | 38,044 | 15,746 | ||||||
|
|
|
| |||||
Current | ||||||||
Trade receivables | 34,990 | 38,178 | ||||||
Receivables from related parties (Note 25) | 1,629 | 4,846 | ||||||
Less: Allowance for trade receivables | (781 | ) | (1,622 | ) | ||||
|
|
|
| |||||
Trade receivables | 35,838 | 41,402 | ||||||
|
|
|
| |||||
Prepaid expenses | 14,501 | 12,102 | ||||||
Advances to suppliers | 18,831 | 11,872 | ||||||
Income tax credits | 4,002 | 2,522 | ||||||
Non-income tax credits (i) | 44,889 | 45,659 | ||||||
Cash collateral | 605 | 1,792 | ||||||
Receivable from disposal of subsidiary (Note 26) | 2,325 | — | ||||||
Receivable from disposal of farmland | 9,128 | 18,090 | ||||||
Other receivables | 9,126 | 7,742 | ||||||
|
|
|
| |||||
Subtotal | 103,407 | 99,779 | ||||||
|
|
|
| |||||
Current portion | 139,245 | 141,181 | ||||||
|
|
|
| |||||
Total trade and other receivables | 177,289 | 156,927 | ||||||
|
|
|
|
(i) | Includes US$ 655 and US$ 3,021 reclassified from property, plant and equipment as of September 30, 2012 and December 31, 2011, respectively. |
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 condensed consolidated interim financial statements.
F - 25
Adecoagro S.A.
Notes to the Condensed Consolidated Interim Financial Statements (continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
10. | Trade and other receivables (continued) |
The carrying amounts of the Group’s trade and other receivables are denominated in the following currencies (expressed in US dollars):
September 30, 2012 | December 31, 2011 | |||||||
(unaudited) | ||||||||
Currency | ||||||||
US Dollar | 46,804 | 51,338 | ||||||
Argentine Peso | 50,917 | 42,163 | ||||||
Uruguayan Peso | 1,317 | 803 | ||||||
Brazilian Reais | 78,251 | 62,622 | ||||||
|
|
|
| |||||
177,289 | 156,927 | |||||||
|
|
|
|
As of September 30, 2012 trade receivables of US$ 4,867 (December 31, 2011: US$ 18,938) were past due but not impaired. The ageing analysis of these receivables is as follows:
September 30, 2012 | December 31, 2011 | |||||||
(unaudited) | ||||||||
Up to 3 months | 4,749 | 17,996 | ||||||
3 to 6 months | 59 | 914 | ||||||
Over 6 months | 59 | 28 | ||||||
|
|
|
| |||||
4,867 | 18,938 | |||||||
|
|
|
|
The creation and release of allowance for trade receivables have been included in ‘Selling expenses’ in the statement of income. Amounts charged to the allowance account are generally written off, when there is no expectation of recovering additional cash.
The other classes within other receivables do not contain impaired assets.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above. The Group holds mortgages as collateral for the sale of “La Macarena” farmland.
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
F - 26
Adecoagro S.A.
Notes to the Condensed Consolidated Interim Financial Statements (continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
11. | Inventories |
September 30, 2012 | December 31, 2011 | |||||||
(unaudited) | ||||||||
Raw materials | 37,576 | 31,539 | ||||||
Finished goods. | 74,044 | 60,067 | ||||||
Stocks held by third parties | 23,563 | 4,528 | ||||||
Others | 361 | 13 | ||||||
|
|
|
| |||||
135,544 | 96,147 | |||||||
|
|
|
|
The cost of inventories recognized as expense and included in “Cost of manufactured products sold and services rendered” amounted to US$ 186,285 for the nine-month period ended September 30, 2012. The cost of inventories recognized as expense and included in “Cost of agricultural produce sold and direct agricultural selling expenses” amounted to US$ 135,235 for the nine-month period ended September 30, 2012.
12. | Cash and cash equivalents |
September 30, 2012 | December 31, 2011 | |||||||
(unaudited) | ||||||||
Cash at bank and on hand | 141,137 | 238,902 | ||||||
Short-term bank deposits | 82,231 | 91,644 | ||||||
|
|
|
| |||||
223,368 | 330,546 | |||||||
|
|
|
|
13. | Shareholders’ contributions |
Number of shares (thousands) | Share capital and share premium | |||||||
At January 1, 2011 (1) | 80,000 | 683,343 | ||||||
Issue of shares—Initial Public Offering and private placement | 40,069 | 423,030 | ||||||
Employee share options exercised (Note 14) | 3 | 23 | ||||||
Restricted shares issued (Note 14) | 373 | 641 | ||||||
Restricted shares vested (Note 14) | 54 | 583 | ||||||
Exchange of shares | — | (869 | ) | |||||
At September 30, 2011 | 120,499 | 1,106,751 | ||||||
At January 1, 2012 | 120,533 | 1,106,805 | ||||||
Employee share options exercised (Note 14) | 32 | 312 | ||||||
Restricted shares vested (Note 14) | — | 1,347 | ||||||
Exchange of shares | 1,655 | 15,199 | ||||||
At September 30, 2012 | 122,220 | 1,123,663 |
(1) | The Extraordinary General Meeting of Adecoagro’s shareholders held on January 24, 2011 approved the reverse split of Adecoagro’s common shares, changing the nominal value of Adecoagro’s common shares from US$ 1 to US$ 1.5. Therefore, Adecoagro reduced total shares outstanding as of that date from 119,999,997 shares to 79,999,985 shares. |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
F - 27
Adecoagro S.A.
Notes to the Condensed Consolidated Interim Financial Statements (continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
13. | Shareholders’ contributions (continued) |
During 2012, the Company issued 1,654,808 shares to certain limited partners of International Farmland Holdings LP (“IFH”) in exchange for their residual interest, totaling 1.36% interest in IFH. After this exchange, the Company holds 100% of IFH interest.
14. | Equity-settled share-based payments |
The Group has set a “2004 Incentive Option Plan” and a “2007/2008 Equity Incentive Plan” (collectively referred to as “Option Schemes”) under which the Group grants equity-settled options to senior managers and selected employees of the Group´s subsidiaries. Additionally, in 2010 the Group has set a “Adecoagro 2010 Restricted Share Plan” (referred to as “Restricted Share Plan”) under which the Group grants restricted shares to senior and medium management and key employees of the Group’s subsidiaries.
(a) Option Schemes
For the nine-month periods ended September 30, 2012 and 2011 the Group incurred US$ 0.2 million and US$ 0.7 million respectively, related to the options granted under the Option Schemes.
Movements in the number of equity-settled options outstanding and their related weighted average exercise prices under plans are as follows:
2004 Incentive Option Plan
September 30, 2012 | September 30, 2011 | |||||||||||||||
Average exercise price per share | Options (thousands) | Average exercise price per share | Options (thousands) | |||||||||||||
At January 1 | 6.68 | 2,134 | 6.67 | 2,176 | ||||||||||||
Granted | — | — | — | — | ||||||||||||
Forfeited | 8.62 | (2 | ) | — | — | |||||||||||
Exercised | 6.71 | (32 | ) | 5.83 | (3 | ) | ||||||||||
Expired | — | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
At September 30 | 6.68 | 2,100 | 6.67 | 2,173 | ||||||||||||
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
F - 28
Adecoagro S.A.
Notes to the Condensed Consolidated Interim Financial Statements (continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
14. | Equity-settled share-based payments (continued) |
2007/2008 Equity Incentive Plan
September 30, 2012 | September 30, 2011 | |||||||||||||||
Average exercise price per share | Options (thousands) | Average exercise price per share | Options (thousands) | |||||||||||||
At January 1 | 13.06 | 2,038 | 13.05 | 2,113 | ||||||||||||
Granted | — | — | — | — | ||||||||||||
Forfeited | 13.06 | (24 | ) | 12.88 | (52 | ) | ||||||||||
Exercised | — | — | — | — | ||||||||||||
Expired | — | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
At September 30 | 13.06 | 2,014 | 13.06 | 2,061 | ||||||||||||
|
|
|
|
|
|
|
|
Options outstanding under the plans have the following expiry date and exercise prices:
2004 Incentive Option Plan
Exercise price per share | Shares (in thousands) | |||||||||||
Expiry date: | September 30, 2012 | September 30, 2011 | ||||||||||
May 1, 2014 | 5.83 | 674 | 674 | |||||||||
May 1, 2015 | 5.83 | 553 | 556 | |||||||||
May 1, 2016 | 5.83 | 173 | 226 | |||||||||
February 16, 2016 | 7.11 | 110 | 110 | |||||||||
October 1, 2016 | 8.62 | 590 | 607 | |||||||||
|
|
|
| |||||||||
2,100 | 2,173 | |||||||||||
|
|
|
|
2007/2008 Equity Incentive Plan
Exercise price per share | Shares (in thousands) | |||||||||||
Expiry date: | September 30, 2012 | September 30, 2011 | ||||||||||
Dec 1, 2017 | 12.82 | 1,138 | 1,151 | |||||||||
Jan 30, 2019 | 13.40 | 687 | 700 | |||||||||
Nov 1, 2019 | 13.40 | 8 | 18 | |||||||||
Jan 30, 2020 | 12.82 | 28 | 35 | |||||||||
Jan 30, 2020 | 13.40 | 71 | 76 | |||||||||
Jun 30, 2020 | 13.40 | 22 | 22 | |||||||||
Sep 1, 2020 | 13.40 | 44 | 44 | |||||||||
Sep 1, 2020 | 12.82 | 15 | 15 | |||||||||
|
|
|
| |||||||||
2,013 | 2,061 | |||||||||||
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
F - 29
Adecoagro S.A.
Notes to the Condensed Consolidated Interim Financial Statements (continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
14. | Equity-settled share-based payments (continued) |
The following table shows the exercisable shares at period end under both the Adecoagro/ IFH 2004 Incentive Option Plan and the Adecoagro/ IFH 2007/ 2008 Equity Incentive Plan:
Exercisable shares in thousands | ||||
September 30, 2012 | 3,847 | |||
September 30, 2011 | 3,435 |
(b) Restricted Share and Restricted Stock Unit Plan
For the nine-month periods ended September 30, 2012 and 2011 the Group recognized compensation expense US$ 2.8 million and US$ 2.1 million respectively, related to the restricted shares granted under the Restricted Share and Restricted Stock Unit Plan.
Key grant-date fair value and other assumptions under the Restricted Share and Restricted Stock Unit Plan are detailed below:
Grant Date | April 1, 2011 | April 1, 2011 | May 13, 2011 | April 1, 2012 | May 15, 2012 | |||||||||||||||
Fair value | 12.69 | 12.69 | 12.36 | 9.81 | 9.33 | |||||||||||||||
Possibility of ceasing employment before vesting | 2.6 | % | 3.55 | % | 0 | % | 5 | % | 0 | % |
Movements in the number of restricted shares and units outstanding under the Restricted Share and Restricted Stock Unit Plan are as follows:
Restricted shares (thousands) | Restricted stock units (thousands) | |||||||
2012 | 2012 | |||||||
At January 1, 2012 | 356 | — | ||||||
Granted (1) | — | 515 | ||||||
Forfeited | (1 | ) | — | |||||
Vested | (121 | ) | — | |||||
|
|
|
| |||||
At September 30, 2012 | 234 | 515 | ||||||
|
|
|
|
(1) | Approved by the Board of Directors of March 27, 2012 and the Shareholders Meeting of April 18, 2012. |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
F - 30
Adecoagro S.A.
Notes to the Condensed Consolidated Interim Financial Statements (continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
15. | Trade and other payables |
September 30, 2012 | December 31, 2011 | |||||||
(unaudited) | ||||||||
Non-current | ||||||||
Payable from acquisition of property, plant and equipment (i) | 3,126 | 3,646 | ||||||
Taxes payable | 2,088 | 1,547 | ||||||
Other payables | 526 | 885 | ||||||
Escrows arising on business combinations | 965 | 2,340 | ||||||
|
|
|
| |||||
6,705 | 8,418 | |||||||
|
|
|
| |||||
Current | ||||||||
Trade payables | 67,399 | 68,672 | ||||||
Payable from acquisition of property, plant and equipment (i) | 530 | — | ||||||
Payable from acquisition of subsidiary | — | 35,730 | ||||||
Advances from customers | 6,195 | 1,721 | ||||||
Amounts due to related parties (Note 25) | 418 | 318 | ||||||
Taxes payable | 3,712 | 4,989 | ||||||
Escrows arising on business combinations | 1,485 | — | ||||||
Other payables | 1,274 | 2,590 | ||||||
|
|
|
| |||||
81,013 | 114,020 | |||||||
|
|
|
| |||||
Total trade and other payables | 87,718 | 122,438 | ||||||
|
|
|
|
(i) | These trade payables are mainly collateralized by property, plant and equipment of the Group. |
16. | Borrowings |
September 30, 2012 | December 31, 2011 | |||||||
(unaudited) | ||||||||
Non-current | ||||||||
Syndicated loan (*) | 2,500 | 10,000 | ||||||
BNDES loan (*) | 41,849 | 52,627 | ||||||
IDB facility (*) | 61,789 | 69,401 | ||||||
Banco do Brazil Loan (*) | 34,323 | 23,070 | ||||||
ABC Brazil Loan | 9,529 | 1,350 | ||||||
Rabobank Loan | 35,866 | 2,004 | ||||||
Other bank borrowings | 118,637 | 44,878 | ||||||
Obligations under finance leases | 460 | 79 | ||||||
|
|
|
| |||||
304,953 | 203,409 | |||||||
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
F - 31
Adecoagro S.A.
Notes to the Condensed Consolidated Interim Financial Statements (continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
16. | Borrowings (continued) |
September 30, 2012 | December 31, 2011 | |||||||
(unaudited) | ||||||||
Current | ||||||||
Syndicated loan (*) | 10,034 | 10,112 | ||||||
BNDES loan (*) | 9,636 | 10,396 | ||||||
IDB facility (*) | 16,155 | 8,349 | ||||||
Banco do Brazil Loan (*) | 8,812 | 2,836 | ||||||
ABC Brazil Loan | 9,298 | 2,397 | ||||||
Rabobank Loan | 15,769 | 2,205 | ||||||
Pine Bank Loan | 4,523 | 11,428 | ||||||
Other bank borrowings | 128,768 | 102,719 | ||||||
Bank overdrafts | 763 | 6,735 | ||||||
Obligations under finance leases | 320 | 119 | ||||||
|
|
|
| |||||
204,078 | 157,296 | |||||||
|
|
|
| |||||
Total borrowings | 509,031 | 360,705 | ||||||
|
|
|
|
(*) | The Group was in compliance with the related covenants under the respective loan agreements. |
As of September 30, 2012, total bank borrowings include collateralized liabilities of US$ 446,882 (December 31, 2011: US$ 297,472). These loans are mainly collateralized by property, plant and equipment and shares of certain subsidiaries of the Group.
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:
September 30, 2012 | December 31, 2011 | |||||||
(unaudited) | ||||||||
Fixed rate: | ||||||||
Less than 1 year | 81,209 | 70,007 | ||||||
Between 1 and 2 years | 16,515 | 25,554 | ||||||
Between 2 and 3 years | 11,474 | 12,426 | ||||||
Between 3 and 4 years | 10,073 | 8,902 | ||||||
Between 4 and 5 years | 8,625 | 7,551 | ||||||
More than 5 years | 20,103 | 22,866 | ||||||
|
|
|
| |||||
147,999 | 147,306 | |||||||
|
|
|
| |||||
Variable rate: | ||||||||
Less than 1 year | 122,549 | 87,170 | ||||||
Between 1 and 2 years | 69,052 | 40,353 | ||||||
Between 2 and 3 years | 76,756 | 24,756 | ||||||
Between 3 and 4 years | 68,725 | 23,507 | ||||||
Between 4 and 5 years | 17,979 | 23,369 | ||||||
More than 5 years | 5,191 | 14,046 | ||||||
|
|
|
| |||||
360,252 | 213,201 | |||||||
|
|
|
| |||||
508,251 | 360,507 | |||||||
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
F - 32
Adecoagro S.A.
Notes to the Condensed Consolidated Interim Financial Statements (continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
16. | Borrowings (continued) |
The carrying amounts of the Group’s borrowings are denominated in the following currencies (expressed in US dollars):
September 30, 2012 | December 31, 2011 | |||||||
(unaudited) | ||||||||
Currency | ||||||||
Argentine Peso | 7,082 | 6,739 | ||||||
US Dollar | 229,929 | 199,657 | ||||||
Uruguayan Peso | — | — | ||||||
Brazilian Reais | 272,020 | 154,309 | ||||||
|
|
|
| |||||
509,031 | 360,705 | |||||||
|
|
|
|
17. | Taxation |
Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.
September 30, 2012 | September 30, 2011 | |||||||
(unaudited) | (unaudited) | |||||||
Current income tax | (621 | ) | (13,457 | ) | ||||
Deferred income tax | 4,744 | (8,445 | ) | |||||
|
|
|
| |||||
Income tax benefit / (charge) | 4,123 | (21,902 | ) | |||||
|
|
|
|
There has been no change in the statutory tax rates in the countries where the Group operates since December 31, 2011.
The gross movement on the deferred income tax account is as follows:
September 30, 2012 | September 30, 2011 | |||||||
(unaudited) | (unaudited) | |||||||
Beginning of period | 55,908 | 44,032 | ||||||
Exchange differences | (4,106 | ) | (3,322 | ) | ||||
Acquisition of subsidiaries | — | 14,001 | ||||||
IPO deductible expenses directly charged to equity | (75 | ) | (1,252 | ) | ||||
Deferred income tax (benefit) / charge | (4,744 | ) | 8,445 | |||||
|
|
|
| |||||
End of period | 46,983 | 61,904 | ||||||
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
F - 33
Adecoagro S.A.
Notes to the Condensed Consolidated Interim Financial Statements (continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
17. | Taxation (continued) |
The income tax on the Group’s profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the consolidated entities as follows:
September 30, 2012 | September 30, 2011 | |||||||
(unaudited) | (unaudited) | |||||||
Tax calculated at the tax rates applicable to profits in the respective countries | (8,329 | ) | 27,425 | |||||
Non-deductible items | 3,103 | 1,085 | ||||||
Unused tax losses, net | 945 | (6,776 | ) | |||||
Others | 158 | 168 | ||||||
|
|
|
| |||||
Income tax (benefit) / charge | (4,123 | ) | 21,902 | |||||
|
|
|
|
18. | Payroll and social security liabilities |
September 30, 2012 | December 31, 2011 | |||||||
(unaudited) | ||||||||
Non-current | ||||||||
Social security payable | 1,446 | 1,431 | ||||||
|
|
|
| |||||
1,446 | 1,431 | |||||||
|
|
|
| |||||
Current | ||||||||
Salaries payable | 9,455 | 3,174 | ||||||
Social security payable | 2,978 | 2,758 | ||||||
Provision for vacations | 9,060 | 7,100 | ||||||
Provision for bonuses | 3,143 | 3,978 | ||||||
|
|
|
| |||||
24,636 | 17,010 | |||||||
|
|
|
| |||||
Total payroll and social security liabilities | 26,082 | 18,441 | ||||||
|
|
|
|
19. | Provisions for other liabilities |
The Group is subject to several laws, regulations and business practices of the countries where it operates. In the ordinary course of business, the Group is subject to certain contingent liabilities with respect to existing or potential claims, lawsuits and other proceedings, including those involving tax, labor and social security, administrative and civil and other matters. The Group accrues liabilities when it is probable that future costs will be incurred and it can reasonably estimate them. The Group bases its accruals on up-to-date developments, estimates of the outcomes of the matters and legal counsel experience in contesting, litigating and settling matters. As the scope of the liabilities becomes better defined or more information is available, the Group may be required to change its estimates of future costs, which could have a material effect on its results of operations and financial condition or liquidity. There have been no material changes to claimed amounts and current proceedings since December 31, 2011.
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
F - 34
Adecoagro S.A.
Notes to the Condensed Consolidated Interim Financial Statements (continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
20. | Sales |
September 30, 2012 | September 30, 2011 | |||||||
(unaudited) | (unaudited) | |||||||
Sales of manufactured products and services rendered: | ||||||||
Ethanol | 82,525 | 73,416 | ||||||
Sugar | 83,213 | 96,047 | ||||||
Rice | 65,434 | 55,985 | ||||||
Energy | 18,275 | 24,252 | ||||||
Operating leases | 3,784 | 3,485 | ||||||
Coffee | — | 713 | ||||||
Services | 2,889 | 708 | ||||||
Others | 31 | 177 | ||||||
|
|
|
| |||||
256,151 | 254,783 | |||||||
|
|
|
| |||||
Sales of agricultural produce and biological assets: | ||||||||
Soybean | 59,061 | 51,288 | ||||||
Corn | 49,122 | 37,072 | ||||||
Cotton | 8,193 | 4,320 | ||||||
Milk | 13,098 | 12,952 | ||||||
Wheat | 28,657 | 17,532 | ||||||
Coffee | 4,643 | 7,504 | ||||||
Sunflower | 6,666 | 6,634 | ||||||
Barley | 3,100 | 689 | ||||||
Seeds | 1,889 | 728 | ||||||
Sorghum | 782 | 999 | ||||||
Cattle for dairy production | 1,154 | 1,221 | ||||||
Other cattle | 403 | 511 | ||||||
Others | 297 | 167 | ||||||
|
|
|
| |||||
177,065 | 141,617 | |||||||
|
|
|
| |||||
Total sales | 433,216 | 396,400 | ||||||
|
|
|
|
Commitments to sell commodities at a future date
The Group entered into contracts to sell non financial instruments, mainly, sugar, soybean, corn and coffee 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$ 99.6 million as of September 30, 2012 (2011: US$ 40.8 million) comprised primarily of 61,888 tons of sugar (US$ 28.8 million), 67,670 tons of soybean (US$ 23.9 million), 147,541 tons of corn (US$ 27.9 million) and 47,190 tons of wheat (US$ 9.0 million) which expire between October 2012 and June 2013.
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
F - 35
Adecoagro S.A.
Notes to the Condensed Consolidated Interim Financial Statements (continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
21. | Expenses by nature |
The following table provides the additional disclosure required on the nature of expenses and their relationship to the function within the Group:
September 30, 2012 | September 30, 2011 | |||||||
(unaudited) | (unaudited) | |||||||
Cost of agricultural produce and biological assets sold | 149,904 | 103,495 | ||||||
Raw materials and consumables used in manufacturing activities | 113,237 | 125,470 | ||||||
Services | 13,894 | 13,137 | ||||||
Salaries and social security expenses (Note 22) | 45,095 | 41,707 | ||||||
Depreciation and amortization | 39,896 | 26,185 | ||||||
Taxes (*) | 1,940 | 1,367 | ||||||
Maintenance and repairs | 7,837 | 9,346 | ||||||
Lease expense and similar arrangements (**) | 2,297 | 1,835 | ||||||
Freights | 27,061 | 24,268 | ||||||
Export taxes / selling taxes | 28,101 | 22,471 | ||||||
Fuel and lubricants | 4,881 | 5,872 | ||||||
Others | 16,385 | 18,119 | ||||||
|
|
|
| |||||
Total expenses by nature | 450,528 | 393,272 | ||||||
|
|
|
|
(*) | Excludes export taxes and selling taxes. |
(**) | Relates to various cancellable operating lease agreements for office and machinery equipment. |
For the nine-month period ended September 30, 2012, an amount of US$ 185,067 is included as “Cost of manufactured products sold and services rendered” (September 30, 2011: US$ 158,668); an amount of US$ 177,065 is included as “Cost of agricultural produce sold and direct agricultural selling expenses” (September 30, 2011: US$ 141,617); an amount of US$ 43,152 is included in “General and administrative expenses” (September 30, 2011: US$ 50,615); and an amount of US$ 45,244 is included in “Selling expenses” as described above (September 30, 2011: US$ 42,372).
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
F - 36
Adecoagro S.A.
Notes to the Condensed Consolidated Interim Financial Statements (continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
22. | Salaries and social security expenses |
September 30, 2012 | September 30, 2011 | |||||||
(unaudited) | (unaudited) | |||||||
Wages and salaries | 31,664 | 30,182 | ||||||
Social security costs | 10,425 | 8,741 | ||||||
Equity-settled share-based compensation | 3,006 | 2,784 | ||||||
|
|
|
| |||||
45,095 | 41,707 | |||||||
|
|
|
| |||||
Number of employees | 6,939 | 6,030 | ||||||
|
|
|
|
23. | Other operating income, net |
September 30, 2012 | September 30, 2011 | |||||||
(unaudited) | (unaudited) | |||||||
Gain from the sale of subsidiaries | 8,095 | — | ||||||
Gain from commodity derivative financial instruments | (1,577 | ) | 16,180 | |||||
Loss from onerous contracts – forwards | (2,025 | ) | (5,540 | ) | ||||
(Loss) / Gain from disposal of other property items | 629 | 203 | ||||||
Others | 511 | 1,983 | ||||||
|
|
|
| |||||
5,633 | 12,826 | |||||||
|
|
|
|
24. | Financial results, net |
September 30, 2012 | September 30, 2011 | |||||||
(unaudited) | (unaudited) | |||||||
Finance income: | ||||||||
- Interest income | 8,945 | 4,423 | ||||||
- Other income | 291 | 1,546 | ||||||
|
|
|
| |||||
Finance income | 9,236 | 5,969 | ||||||
|
|
|
| |||||
Finance costs: | ||||||||
- Interest expense | (19,343 | ) | (26,952 | ) | ||||
- Foreign exchange losses, net | (19,176 | ) | (8,599 | ) | ||||
- Loss from interest rate/foreign exchange rate derivative financial instruments | (5,764 | ) | (3,704 | ) | ||||
- Taxes | (3,230 | ) | (4,200 | ) | ||||
- Other expenses | (1,595 | ) | (6,194 | ) | ||||
|
|
|
| |||||
Finance costs | (49,108 | ) | (49,649 | ) | ||||
|
|
|
| |||||
Total financial results, net | (39,872 | ) | (43,680 | ) | ||||
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
F - 37
Adecoagro S.A.
Notes to the Condensed Consolidated Interim Financial Statements (continued)
(All amounts in US$ thousands, except shares and per share data and as otherwise indicated)
25. | Related-party transactions |
The following is a summary of the balances and transactions with related parties:
Related party | Relationship | Description of | Income (loss) included in the statement of income | Balance receivable (payable) | ||||||||||||||||
September 30, 2012 | September 30, 2011 | September 30, 2012 | December 31, 2011 | |||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||
Grupo La Lácteo | Joint venture | Sales of goods | 7,463 | 12,952 | — | — | ||||||||||||||
Purchases of goods | (51 | ) | — | — | — | |||||||||||||||
Interest income | 300 | — | — | — | ||||||||||||||||
Receivables from related parties (Note 10) | — | — | 1,692 | 4,909 | ||||||||||||||||
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) | (3,555 | ) | (2,922 | ) | — | — | ||||||||||||
Payables (Note 15) | — | — | (418 | ) | (318 | ) | ||||||||||||||
Ospraie | (i) | Consent fee (iii) | — | (3,000 | ) | — | — | |||||||||||||
Management and selected employees | Employment | Compensation selected employees | (5,422 | ) | (4,705 | ) | (16,820 | ) | (15,306 | ) |
(i) | Shareholder of the Company. |
(ii) | Relates to agriculture partnership agreements (“parceria”). |
(iii) | One-time cost related to the agreement entered into with Ospraie to waive certain rights following the completion of initial public offering. |
26. | Disposal of subsidiary |
In June 2012, the Group completed the sale of Agrícola Ganadera San José, a wholly owned subsidiary for a sale price of US$ 9.3 million. This subsidiary was mainly comprised of farmland businesses. This transaction resulted in a net gain of US$ 8 million included under the line item “Other operating income, net” in the statement of income. The Group received US$ 5 million in cash in July 2012 and the balance will be received in two equal installments plus interest in June 2013 and 2014.
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
F - 38