ADAMA Ltd. Semi-Annual Report 2019
ADAMA LTD.
SEMI-ANNUAL REPORT 2019
ADAMA Ltd. is one of the world's leading crop protection companies. We strive to Create Simplicity
in Agriculture - offering farmers effective products and services that simplify their lives and help
them grow. With one of the most comprehensive and diversified portfolios of differentiated, quality
products, our 7,000 strong team reaches farmers in over 100 countries, providing them with solutions
to control weeds, insects and disease, and improve their yields.
Please see important additional information and further details included in the Annex.
August 2019
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ADAMA Ltd. Semi-Annual Report 2019
Section I Important Notice, Table of Contents and Definitions
The Company’s Board of Directors, Board of Supervisors, directors, supervisors and senior managers
confirm that the content of the Report is true, accurate and complete and contains no false statement,
misleading representation or material omissions, and assume joint and several legal liability arising
therefrom.
Chen Lichtenstein, the person in charge of the Company as well as its legal representative, and Aviram
Lahav, the person leading the accounting function (Chief Financial Officer), hereby state and ensure
the truthfulness, accuracy and completeness of the Financial Report.
All the Company’s directors attended the board meeting for the review of this Report.
The forward looking information described in this Report, such as future plans, development strategy
etc., does not constitute, in any manner whatsoever, a substantial commitment of the Company to
investors. Investors and other relevant people are cautioned to be sufficiently mindful of investment
risks as well as the difference between plans, forecasts and commitments.
The Company has described its possible risks in “X Risks Facing the Company and Countermeasures”
under Section IV herein.
For the Reporting Period, the Company does not plan to distribute cash dividends or bonus shares or
convert capital reserve into share capital.
This Report and its Abstract have been prepared in both Chinese and English. Should there be any
discrepancies between the two versions, the Chinese version shall prevail.
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ADAMA Ltd. Semi-Annual Report 2019
Table of Contents
Section I Important Notice, Table of Contents and Definitions ................................................... 2
Section II Corporate Profile and Financial Results ..................................................................... 5
Section III Business Profile ........................................................................................................... 8
Section IV Performance Discussion and Analysis ...................................................................... 10
Section V Significant Events ....................................................................................................... 30
Section VI Change in Shares and Shareholders......................................................................... 44
Section VII Preference Shares .................................................................................................... 50
Section VIII Directors, Supervisors and Senior Management .................................................. 51
Section IX Corporate Bonds ....................................................................................................... 52
Section X Financial Report ......................................................................................................... 53
Section XI Documents Available for Reference........................................................................ 174
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ADAMA Ltd. Semi-Annual Report 2019
Definitions
Term Definition
Company, the Company ADAMA Ltd.
Adama Agricultural Solutions Ltd., a wholly-owned subsidiary of the
Solutions
Company, incorporated in Israel according to its laws
Board of Directors/Board The Board of Directors of the Company
Board of Supervisors The Board of Supervisors of the Company
ADAMA or Group, the Group The Company and its subsidiaries
CSRC China Securities Regulatory Commission
SZSE Shenzhen Stock Exchange
Reporting Period, this period January 1, 2019 - June 30, 2019
ChemChina China National Chemical Co., Ltd.
China National Agrochemical Co., Ltd., the controlling shareholder of the
CNAC
Company, a wholly-owned subsidiary of ChemChina
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ADAMA Ltd. Semi-Annual Report 2019
Section II Corporate Profile and Financial Results
I Corporate Information
Stock name ADAMA A, ADAMA B Stock code 000553, 200553
Stock exchange Shenzhen Stock Exchange
Company name in Chinese 安道麦股份有限公司
Abbr. 安道麦
Company name in English ADAMA Ltd.
Abbr. ADAMA
Legal representative Chen Lichtenstein
II Contact Information
Board Secretary Securities Affairs Representative Investor Relations Manager
Name Li Zhongxi Liang Jiqin Wang Zhujun
Address 6/F, No.7 Office Building, No.10 Courtyard, Chaoyang Park South Road, Chaoyang District, Beijing
Tel. 010-56718110 010-56718110 010-56718110
Fax 010-59246173 010-59246173 010-59246173
E-mail irchina@adama.com irchina@adama.com irchina@adama.com
III Other Information
1. Ways to Contact the Company
Indicate by tick mark whether any changes occurred to the registered address, office address and their postal codes,
website address and email address of the Company during the Reporting Period.
□ Applicable √ Not applicable
No changes occurred to the said information during the Reporting Period, which can be found in the 2018 Annual
Report.
2. Information Disclosure Media and Place where this Report is Kept
Indicate by tick mark whether any changes occurred to the information disclosure media and the place where this
Report is kept during the Reporting Period.
□ Applicable √ Not applicable
The newspapers designated by the Company for information disclosure, the website designated by the CSRC for
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ADAMA Ltd. Semi-Annual Report 2019
the publication of this Report and the location where this Report is kept did not change during the Reporting Period.
Said information can be found in the 2018 Annual Report.
3. Other Relevant Documents
Indicate by tick mark whether any changes occurred to the relevant documents during the Reporting Period.
□ Applicable √ Not applicable
IV Main Accounting Data and Financial Indexes
Indicate by tick mark whether the Company needs to retroactively adjust or restate any of its accounting data.
√ Yes □ No
Reason for retrospective adjustment or restatement: Business combination under common control.
Same period of last year +/- (%)
Reporting Period
Before adjustment After adjustment After adjustment
Operating revenues (RMB’000) 13,616,032 13,026,258 13,639,073 -0.17%
Net profit attributable to shareholders of
588,638 2,362,781 2,389,167 -75.36%
the Company (RMB’000)
Net profit attributable to shareholders of
the Company excluding non-recurring 430,270 790,296 790,296 -45.56%
profit and loss (RMB’000)
Net cash flow from operating activities
(304,950) 779,518 839,803 -136.31%
(RMB’000)
Basic EPS (RMB/share) 0.2406 0.9658 0.9765 -75.36%
Diluted EPS (RMB/share) N/A N/A N/A N/A
Weighted average return on net assets 2.59% 11.65% 11.53% -8.94%
End of Reporting End of last year +/- (%)
Period Before adjustment After adjustment After adjustment
Total assets (RMB’000) 45,810,089 41,577,798 44,135,063 3.80%
Net assets attributable to shareholders of
22,479,404 21,543,425 22,744,862 -1.17%
the Company (RMB’000)
V Differences in Accounting Data under Domestic and Foreign Accounting Standards
1. Differences in Net Profit and Net Assets Disclosed in Financial Reports Prepared under Chinese and
International Accounting Standards
□ Applicable √ Not applicable
No such differences for the Reporting Period.
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ADAMA Ltd. Semi-Annual Report 2019
2. Differences in Net Profit and Net Assets Disclosed in Financial Reports Prepared under Chinese and
Foreign Accounting Standards
□ Applicable √ Not applicable
No such differences for the Reporting Period.
3. Reason for accounting data differences under Chinese and Foreign Accounting Standards
□ Applicable √ Not applicable
VI Non-Recurring Profit/Loss
√ Applicable □ Not applicable
Unit: RMB’000
Item Reporting Period Note
Gains/losses on the disposal of non-current assets (including the offset part of
115,514
asset impairment provisions)
Government grants recognized through profit or loss (excluding government
grants closely related to business of the Company and given at a fixed quota or 14,854
amount in accordance with government’s uniform standards)
Profit or loss of subsidiaries generated before combination date of a business
38,027
combination involving enterprises under common control
Recovery or reversal of provision for bad debts which is assessed individually
15,748
during the years
Other non-operating income and expenses other than the above -8,431
Less: Income tax effects 17,344
NCI (after tax) -
Total 158,368
Explanation of why the Company classified an item as non-recurring profit/loss according to the definition in the
Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public
- Non-Recurring Profit and Loss, or reclassified any non-recurring profit/loss item given as an example in the said
explanatory announcement to recurrent profit/loss
□ Applicable √ Not applicable
No such cases in the Reporting Period.
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ADAMA Ltd. Semi-Annual Report 2019
Section III Business Profile
I Main Business of the Company during the Reporting Period
Is the Company subject to any disclosure requirements for special industries?
No.
The Company is a corporation incorporated in the People's Republic of China.
ADAMA engages in the development, manufacturing and commercialization of crop protection products, that are
largely off-patent, and is one of the leading companies in the world in this field. The Group provides solutions to
farmers in approximately 100 countries, through approximately 60 subsidiary companies throughout the world.
In 2018, ADAMA was the world’s leading company in off-patent crop protection solutions (by sales), and was
ranked sixth in the world among companies engaged in the field of crop protection. The Group's business model
integrates end-customer access, regulatory expertise, global R&D and production capabilities, thereby providing
ADAMA a significant competitive edge and allowing it to launch new and differentiated products that address
farmers’ needs in key markets.
ADAMA's primary operations are focused on Europe, North America, Latin America, Asia-Pacific (including China)
and India, the Middle-East and Africa. In aggregate, the Group sells its products in approximately 100 countries
across the globe.
ADAMA is focused on the development, manufacturing and commercialization of largely off-patent crop protection
products, which are generally herbicides, insecticides and fungicides, which protect agricultural and other crops
against weeds, insects and disease, respectively. The Group also utilizes its expertise to adapt such products also for
the development, manufacturing and commercialization of similar products for non-agricultural purposes
(Consumer and Professional Solutions).
In addition, ADAMA leverages its core capabilities in the agricultural and chemical fields and operates in several
other non-agricultural areas, none of which, individually, is material for the Group. These activities include primarily,
(a) the manufacturing and marketing of dietary supplements, food colors, texture and flavor enhancers, and food
fortification ingredients; (b) fragrance products for the perfume, cosmetics, body care and detergents industries; (c)
the manufacturing of industrial products and (d) other non-material activities.
Trends, events and key developments in the Group's macro-economic environment may have a material impact on
its business results and development. The effects of these factors may differ depending on the geographic region
and the different products of the Group. Since the Group maintains a broad product portfolio and since it is active
in many geographic regions, the aggregate effect of these factors in any given year, and the course thereof, is not
uniform and may sometimes be mitigated by counterbalancing influences. The activities and results of the Group
are further subject to, and affected by, certain global, localized and other factors, such as: demographic changes;
economic growth and rising standards of living; agricultural commodity prices; significant fluctuations in raw
material costs and global energy prices; development of new crop protection technologies; patent expiry and growth
in volumes of off-patent products; the agricultural market and volatile weather conditions; regulatory changes;
government policies; world ports and monetary policy and the financial market.
Please see important additional information and further details included in the Annex.
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ADAMA Ltd. Semi-Annual Report 2019
II Significant Changes in Main Assets
1. Significant Changes in Main Assets
Main assets Explanations regarding significant change
Stock rights/Equity assets No significant changes
Fixed assets No significant changes
Intangible assets No significant changes
Construction in progress No significant changes
2. Main Assets Overseas
√ Applicable □ Not applicable
Control Proportion of
Specific Scale of the Operation/ measures to Net Profit of overseas Significant
contents of Reason assets Location Management guarantee the assets assets out of impairment
the assets (RMB’000) mode safety of the (RMB’000) total net risk?
assets assets (%)
Acquired
Equity
through major 19,153,146 Israel and Corporate Corporate
investment in 487,920 85% No
assets globally Governance Governance
Solutions
restructuring.
Other
explanations
III Core Competitiveness Analysis
Is the Company subject to any disclosure requirements for special industries?
No.
No significant changes occurred to the core competitiveness of the Company in the Reporting Period.
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ADAMA Ltd. Semi-Annual Report 2019
Section IV Performance Discussion and Analysis
I Overview
Significant precipitation in North America in the first quarter followed by unprecedented flooding in the second
quarter, alongside extreme dry weather in Europe, India and parts of Asia-Pacific, delayed and reduced application
of crop protection products in these regions. Latin America benefited from relatively strong demand in the southern
hemisphere off-season. India’s monsoon season started late in the second quarter, delaying the sowing of several
summer-planted crops.
Crop prices have generally remained subdued in the first half of 2019, with the exception of corn, which continues
to challenge farmer income in most regions, resulting in continued sluggish demand for crop protection products.
The sustained supply-constrained environment, mostly owing to increased environmental focus in China, has seen
continued industry-wide shortages in certain raw materials and intermediates, and resulted in procurement costs
remaining elevated compared to the first half of last year. The Company continues to raise its prices in all regions
and contain its manufacturing and other operating costs to mitigate this impact.
For ADAMA, the extended cold and wet conditions in North America, alongside dry weather in Europe, India and
parts of Asia-Pacific, delayed and reduced application of crop protection products, while continued tight supply
conditions prevented the Company from taking advantage of demand for certain products.
Strong growth in Latin America, led by Brazil, as well as resilient performance in APAC, notably Australia,
alongside the contribution of joiners Bonide and Anpon, partially offset these weather- and supply-related delays.
In China, continued strong demand for the Company’s differentiated, formulated and branded products is supporting
the shift towards sales through its own channels and away from sales of unformulated, technical active ingredients
to intermediaries.
The Company continues to drive growth with new launches of differentiated product throughout all regions. The
continued supportive pricing environment allowed for the raising of prices by an average of 3% across all regions,
passing on some of the impact of the constrained supply and higher procurement costs, while mitigating the impact
of generally softer currencies. In addition, the Company continues to contain its manufacturing and other operating
costs, while recording idleness costs at Jingzhou old site.
Looking toward the second half of the year, the Company expects robust growth, as the southern hemisphere regions,
which are performing strongly, move into their peak season, as the Monsoon season progresses in India, and as
supply constraints start alleviating.
Increasing collaboration activities
The Company continues to advance collaboration opportunities with other ChemChina group entities, as well as
other entities of the Sinochem group, to make the most of its positioning.
Jingzhou Old Site
Following resumption of operations at the Jingzhou old site in late March, the Company is advancing the gradual
ramp-up of production. The new state-of-the-art wastewater treatment facility is operational, and the upgraded
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ADAMA Ltd. Semi-Annual Report 2019
biological-decomposition systems are being acclimated to the improved wastewater quality. As this progresses, the
Company is still experiencing constrained supply in key products manufactured at the site, especially impacting the
Americas, Asia-Pacific, China and India, Middle-East and Africa, constraining sales and gross profit by
approximately $100 million and $35 million, respectively, in the half-year, and recorded approximately $20 million
in related idleness costs during the period, bringing the impact from the disruption on EBITDA to approximately
$50 million and on Net Income to approximately $40 million. In recent weeks, the Ecological Protection Supervision
Team of the central government commenced on-site inspections at many ChemChina’s group companies, including
the Company’s sites in China, as part of its strengthening ongoing environmental and safety focus. ADAMA is
working in full cooperation, in the context of its 3-year relocation and upgrade process which is due to conclude
next year, to identify and rectify any safety or environmental matter.
Notwithstanding that the old site only produces a small number of products for the group, and the fact that ADAMA
has significant production and procurement capabilities elsewhere in China and worldwide ,the suspension has had
a negative impact on the Company’s performance as described above.
Regarding the explanations on the changes of the financial data, please refer to the “II Analysis of Main Business”
of this chapter.
II Analysis of Main Business
See details on the relevant contents of “I. Overview” of “Performance Discussion and Analysis”.
Year-on-year changes of main financial data:
Same period of Reporting Same period of
Reporting
last year Period last year
Period +/-% +/-%
(000’RMB) (000’USD) (000’USD)
(000’RMB)
(Restated) (Restated)
Operating income 13,616,032 13,639,073 -0.17% 2,008,150 2,141,685 -6.24%
Cost of goods sales 9,023,242 9,042,183 -0.21% 1,330,711 1,419,822 -6.28%
Gross Profits 4,592,790 4,596,890 -0.09% 677,439 721,863 -6.15%
Selling and 2,499,774 2,256,991 10.76% 368,715 354,394 4.04%
Distribution
expenses
General and 628,259 523,821 19.94% 92,661 82,258 12.65%
administrative
expenses
R&D expenses 210,699 156,275 34.83% 31,062 24,541 26.57%
Financial Expense 938,196 347,554 169.94% 138,402 54,482 154.03%
Total profits 729,175 3,126,725 -76.68% 107,630 491,559 -78.10%
Income tax expenses 140,537 737,558 -80.95% 20,692 115,912 -82.15%
Net income 588,638 2,389,167 -75.36% 86,938 375,647 -76.86%
EBITDA 2,460,919 4,486,211 -45.14% 362,956 704,994 -48.52%
Net cash flows from (304,950) 839,803 -136.31% (46,757) 131,525 -135.55%
operating activities
Net cash flows used in (1,369,994) (233,651) 486.34% (202,688) (36,605) 453.72%
investing activities
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ADAMA Ltd. Semi-Annual Report 2019
Same period of Reporting Same period of
Reporting
last year Period last year
Period +/-% +/-%
(000’RMB) (000’USD) (000’USD)
(000’RMB)
(Restated) (Restated)
Net cash flows used in 735,633 (2,427,887) -130.30% 109,154 (381,626) -128.60%
financing activities
Net increase (decrease) (964,376) (1,823,328) -47.11% (141,826) (290,777) -51.23%
in cash and cash
equivalents
Note: The significantly higher total profits, net income and EBITDA for the first half of 2018 mainly reflect the
one-time capital gain from the divestment of a portfolio of registrations in connection with the 2017 ChemChina-
Syngenta transaction, which increased Total Profits and EBITDA by USD 314.3 million and Net Income by USD
244.8 million.
Analysis of Financial Highlights
(1) Sales
Regional Sales Performance
Q2 2019 Q2 2018 Change H1 2019 H1 2018 Change
$m $m USD $m $m USD
Europe 267 309 -13.6% 628 702 -10.6%
North America 220 213 +3.5% 400 407 -1.6%
Latin America 196 172 +14.2% 355 311 +14.4%
Asia Pacific 173 167 +3.1% 358 356 +0.7%
Of which China 86 88 -3.0% 179 173 +3.9%
India, Middle East & Africa 146 162 -10.2% 267 270 -1.4%
Total 1,002 1,023 -2.1% 2,008 2,045 -1.8%
Europe: Sales in Europe were impacted by tight supply conditions as well as unseasonably hot weather towards the
end of the second quarter, which constrained sales in key countries.
In Northern Europe, sales continued to be impacted by credit restraint in Ukraine, with the Company proactively
restricting sales to only those customers with a proven ability to pay, as well as by adverse weather conditions in
Germany, reducing crop protection application in all major crops, alongside the tight supply conditions.
In Southern Europe, weak disease pressure in key markets resulted in subdued demand for crop protection products,
while supply-related constraints further impacted sales.
In the second quarter, ADAMA launched MERKUR in France, a differentiated, broad-spectrum three-way
herbicide mixture in an innovative formulation, combating weed seed germination and growth. In addition, the
Company obtained several new product registrations, including MERPLUS, a differentiated fungicide for pome
fruits in Europe and FLUTEPRID, a 3-way combination insecticide-fungicide seed dressing for control of diseases
and pests in grain crops in Russia.
North America. Sales in North America benefited from continued price increases partially offsetting adverse
weather conditions.
Significant and extended precipitation in the first quarter, followed by unprecedented floodings in the second quarter,
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ADAMA Ltd. Semi-Annual Report 2019
posed significant challenges for farmers, delaying the planting season and reducing planted acreage, impacting sales
across key agricultural markets.
In Consumer and Professional Solutions, the Company saw a pleasing contribution from joiner Bonide, despite the
challenging weather conditions which similarly impacted the non-crop market.
BRAZEN, a selective herbicide for grass control in spring wheat and barley in Canada, delivered a strong
performance in its first quarter following its recent launch.
Latin America. Latin America delivered business growth in key countries across the region, alongside continued
price increases, more than offsetting the impact of constrained supply.
The Company continues to grow strongly in Brazil, where robust demand for its corn portfolio overcame supply
shortages in certain products. The Company saw strong performance in the key soybean market, leveraging its
distinctive product offering, including flagship CRONNOS, the triple-action fungicide for rust, while benefiting
from an increase in planted areas.
Noteworthy performance was recorded in the second quarter in Argentina, despite adverse weather conditions.
During the quarter, the Company launched several new products, including BREVIS, a differentiated post-bloom
fruit thinner in apples in Argentina, as well as KADABRA, a broad-spectrum mixture insecticide for vegetables
in Mexico, and UBERTOP an insecticide used mainly for the control of a wide range of pests in tomato and
cabbage in Central America, while the proprietary NIMITZ suite of nematicide products was launched in Peru.
Asia-Pacific. Sales in the region grew, driven by business growth and continued price increases.
The second quarter saw a strong recovery in Australia, as long-awaited rain bolstered the winter crop season
following the severe drought which significantly impacted sales in the country in the first quarter. However, drought
conditions continued to impact the broader Asia-Pacific region in the second quarter, reducing crop protection
application and constraining sales in many countries.
During the quarter, the Company obtained a number of new registrations for differentiated products, including
LEGACY MA-X for controlling a wide range of broadleaf weeds in Australian winter cereals and pasture,
APROPO fungicide for rice in Philippines, and TOPNOTCH to control various diseases in Australian wheat and
barley.
In China, ADAMA continues to see strong demand for its differentiated, formulated and branded products, and
prioritizes the sale of these products through its own channels by rapidly shifting away from selling unformulated,
technical product to intermediaries, and in so doing benefiting from the full product positioning as well as end-to-
end margin. Sales of these formulated, branded products other than those from the Jingzhou old site, grew by more
than 20% in both the quarter and first half.
ADAMA continues to make significant portfolio advances in China, with the launch in the second quarter of
LEIWANG, a combination insecticide to help combat the fall army worm outbreak.
Anpon delivered a solid performance in its first full quarter since joining, compensating for the interruption to
supply resulting from the Jingzhou old site.
India, Middle East & Africa. Sales in India were impacted by the late Monsoon rains, reducing planting areas and
delaying crop protection application, as well as supply constraints in China-sourced products. In the half-year,
growth in the region benefited from a strong performance in Turkey.
(2) Gross Profit
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ADAMA Ltd. Semi-Annual Report 2019
Compared to the first half of last year, procurement costs remained elevated, mostly owing to increased
environmental and safety focus in China that has seen continued industry-wide shortages in certain raw materials
and intermediates. Benefiting from a stronger pricing environment, the Company continued to raise prices, by an
average of 3% across all regions, and contained its manufacturing and other operating costs, which compensated
for a large part of the impact of the constrained supply, higher procurement costs and softer currencies. The Jingzhou
old site disruption constrained H1 gross profit by approximately $35 million.
(3) Operating Expenses
Sales and Marketing expenses increased mainly due to the first-time inclusion of Bonide’s expenses, as well as
the amortization of the written-up value of assets transferred from Syngenta in connection with the 2017
ChemChina-Syngenta transaction (see additional details below), which offset the benefit of expense containment
and softer currencies.
In recent years, the Company conducted various corporate development activities, including mergers and
acquisitions, which resulted in the inclusion within its sales and marketing expenses of various one-time or non-
cash or non-operational items affecting the Company’s reported numbers, mainly as follows:
Amortization of legacy Purchase Price Allocation (PPA) of 2011 acquisition of Solutions: Under PRC GAAP,
since the first combined reporting in Q3 2017 following the combination, the Company has inherited the
historical “legacy” amortization charge that ChemChina previously was incurring in respect of its acquisition of
Solutions in 2011. This amortization is done in a linear manner on a quarterly basis, most of which will be fully
amortized by the end of 2020. Its reported financial impact in the first half of 2019 is USD 19 million, net of tax.
Amortization of Transfer assets received and written-up due to 2017 ChemChina-Syngenta transaction:
The proceeds from the Divestment of crop protection products in connection with the approval by the EU
Commission of the acquisition of Syngenta by ChemChina, net of taxes and transaction expenses, were paid to
Syngenta in return for the transfer of a portfolio of products in Europe of similar nature and economic value.
Since the products acquired from Syngenta are of the same nature, and with the same net economic value as
those divested, the Divestment and Transfer transactions had no net impact on the underlying economic
performance of the Company. Its reported financial impact in the first half of 2019 is USD 19.8 million.
Amortization of acquisition PPA (non-cash): The amortization of non-cash intangible assets created in the
course of acquisitions, has no impact on the ongoing performance of the companies acquired. Its reported
financial impact in the first half of 2019 is USD 2.4 million, net of tax.
General and Administrative expenses: the Company continued to contain expenses and benefited from softer
currencies, which offset the first-time inclusion of expenses of Bonide, while the increase mainly resulted from the
recording of a first half charge in respect of idleness costs at the Jingzhou old site, as it advances its gradual ramp-
up in production.
Research and Development expenses reflect higher spending on strategic research and development projects.
(4) Financial Expenses
Financial expenses alone mainly reflect interest payments on corporate bonds and loans as well as foreign exchange
gains/losses on the bonds and other monetary assets and liabilities before the Company carries out any hedging. The
sharp increase in the first half of 2019 compared with the same period last year is mainly due to the impact of both
the appreciation of the Israeli Shekel, as well as the increase of the higher CPI on the Shekel-denominated CPI-
linked bonds.
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ADAMA Ltd. Semi-Annual Report 2019
Given the global nature of its operational activities and the composition of its assets and liabilities, the Group, in
the ordinary course of its business, uses foreign currency derivatives (forwards and options) to hedge the cash flow
risks associated with existing monetary assets and liabilities that may be affected by exchange rate fluctuations. Net
gains/losses from hedging of those positions are recorded in Gains/Losses from Changes in Fair Value, and are then
transferred to Investment Income upon realization.
The aggregate of Financial Expenses, Gains/Losses from Changes in Fair Value and Investment Income upon
realization (hereinafter as Total Net Financial Expenses and Investment Income), which more comprehensively
reflects financial cost of the Company in supporting its main business and protecting its monetary assets/liabilities,
amounts to USD 84 million for H1 2019 compared with USD 70 million for H1 2018.
The increase in aggregate Net Financial Expenses and Investment Income reflects the higher CPI impact on the
Israeli bonds, as well as higher interest and hedging costs, while the lower expenses in the corresponding periods
last year reflect the benefit of foreign exchange income related to balance sheet positions.
(5) Tax expenses.
Net tax expenses were lower largely due to the lower taxable income, while the higher tax expenses in the prior
periods reflected the non-cash impact of the devaluation of the Brazilian Real, resulting in a lower value of local
currency-denominated non-monetary assets, as well as the tax charge incurred on the capital gain from the
divestment of registrations related to the ChemChina-Syngenta transaction, in the amount of USD 69.5 million.
(6) Cash Flow.
Operating cash flow was lower, reflecting the build-up of working capital and the impact of the partially operational
Jingzhou old site. The higher level of working capital reflects increased trade receivables resulting from the
Company’s strong growth in Q4 2018 and the robust performance in Brazil in the first-half of 2019, alongside
certain reduction in payable days due to a change in supplier mix. Inventory levels were higher due to the missing
of sales resulting from the weather-related challenges as well as credit restraint in eastern Europe, alongside the
build-up of inventory to prepare for the expected growth in the second half of 2019, as well as the first-time addition
of Bonide.
Net cash used in investing activities increased mainly reflecting the acquisition of Bonide, while in the first quarter
of 2018, the Company recorded the one-time proceeds from the divestiture of several products in connection with
the approval by the EU Commission of the acquisition of Syngenta by ChemChina, and outflow of a lesser net
amount for the transfer of a similar portfolio of products.
Net cash provided by Financing Activities includes mainly the increase in borrowing during the period, offset by
interest and dividend payments, as well as payments in respect of bond hedges.
Major changes to the profit structure or sources of the Company in the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
Breakdown of main business:
Unit: RMB’000
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ADAMA Ltd. Semi-Annual Report 2019
YoY YoY YoY
Operating Cost of goods Gross
increase/decrease increase/decrease increase/decrease
revenues sold Margin (%)
of the operating of the cost of of the gross
revenues goods sold margin
Total 13,616,032 9,023,242 33.73% -0.17% -0.21% 0.08%
Classified by industries
Industry of
manufacturing chemical
13,616,032 9,023,242 33.73% -0.17% -0.21% 0.08%
raw materials and
chemical products
Classified by products
Agro 12,302,544 8,012,367 34.87% 0.45% 0.35% 0.19%
Classified by regions
-- -- -- -- -- -- --
III Analysis of Non-Core Business
√ Applicable □ Not applicable
Unit:RMB’000
Proportion in total
Amount Reasons Whether sustained
profit
Mainly from the realization of
Investment income -514,443 -70.55% derivatives. See explanation of No
financial expenses.
Mainly from changes in fair value
Gain/loss from change
884,135 121.25% of derivatives. See explanation of No
of Fair Value
financial expenses.
Asset impairment losses 23,809 3.27% No
Gain or loss from Mainly includes expropriation of
115,514 15.84% No
disposal of assets land.
Non-operating income 10,811 1.48% No
Non-operating loss 16,016 2.20% No
IV Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
Unit: RMB’000
End of same period of last year
End of Reporting Period Change in Reason for significant
(Restated)
percentage change
As a percentage of As a percentage of
Amount Amount (%)
total assets (%) total assets (%)
Cash at bank and on hand 5,425,392 11.84% 6,185,654 14.36% -2.52%
Accounts receivable 7,674,381 16.75% 6,727,731 15.62% 1.13%
Inventories 10,337,924 22.57% 8,482,602 19.70% 2.87%
Investment properties 3,933 0.01% 4,251 0.01% 0.00%
Long term equity 119,251 0.28% 0.01%
135,075 0.29%
investments
Fixed assets 7,167,032 15.65% 6,862,475 15.94% -0.29%
Construction in progress 534,351 1.17% 922,728 2.14% -0.97%
Short-term loans 2,308,286 5.04% 1,135,482 2.64% 2.40%
Long-term loans 673,796 1.47% 320,382 0.74% 0.73%
Derivative financial assets 416,991 0.91% 940,225 2.18% -1.27%
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ADAMA Ltd. Semi-Annual Report 2019
End of same period of last year
End of Reporting Period Change in Reason for significant
(Restated)
percentage change
As a percentage of As a percentage of
Amount Amount (%)
total assets (%) total assets (%)
Intangible assets 5,802,932 12.67% 5,961,296 13.84% -1.17%
Goodwill 4,298,747 9.38% 3,939,153 9.15% 0.23%
Deferred tax assets 767,928 1.68% 628,635 1.46% 0.22%
Accounts payables 4,178,668 9.12% 4,249,085 9.87% -0.75%
Employee benefits 778,018 1.81% 0.18%
912,354 1.99%
payable
Debentures 8,152,990 17.80% 7,548,581 17.53% 0.27%
Derivative financial 1,209,687 2.81% -1.31%
688,267 1.50%
liabilities
Other payables 1,970,641 4.30% 1,593,570 3.70% 0.60%
2. Assets and Liabilities Measured at Fair Value
√ Applicable □ Not applicable
Unit: RMB’000
Profit/loss on fair Cumulative fair Impairment
Purchased in Sold in the
Opening value changes in value changes provided in Closing
Item the Reporting Reporting
balance the Reporting charged to the Reporting balance
Period Period
Period equity Period
Financial assets
Financial assets held for
trading (excluding
46,095 - - - - (13,021) 33,074
derivative financial
assets)
Derivative financial
assets(including long 517,719 (264,908) (164,602) - 374,343 (41,127) 421,425
term)
Other equity
91,559 - 10,086 - - (13,833) 87,812
investments
Total financial assets 655,373 (264,908) (154,516) - 374,343 (67,981) 542,311
Other 106,118 5,590 - - - (4,587) 107,121
Total of above 761,491 (259,318) (154,516) - 374,343 (72,568) 649,432
Financial liabilities 1,451,684 (754,989) - - - - 696,695
Significant changes in the measurement attributes of the main assets in the Reporting Period
□ Yes √ No
3. Restricted Asset Rights as of End of the Reporting Period
At the end of this Reporting Period, restricted assets included RMB 43.572 million - restricted cash, most of which
is as guarantee for bank acceptance bills; RMB 5.926 million - fixed assets, as mortgage for loans; and RMB 143.377
million - other non-current assets, mainly as guarantee for asset securitization and law suits.
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ADAMA Ltd. Semi-Annual Report 2019
V Investments Made
1. Overall Condition of the Total Investments Made
√ Applicable □ Not applicable
Investment during the Reporting Investment during the Same Period +/-% YoY
Period (RMB’000) Last Year (RMB’000)
25,350,061 27,502,683 -7.83%
2. Significant Equity Investments Made in the Reporting Period
□ Applicable √ Not applicable
3. Significant Non-Equity Investments Ongoing in the Reporting Period
□ Applicable √ Not applicable
4. Financial Investments
(1) Securities Investments
□ Applicable √ Not applicable
No such cases in the Reporting Period.
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ADAMA Ltd. Semi-Annual Report 2019
(2) Investments in Derivative Financial Instruments
√ Applicable □ Not applicable Unit: RMB’000
The party that Relation Related Type Initial Starting date Expiring Investment Amount Amount sold Impairment Investment Percentage of Gain/loss
operates the with the party investment date amount at purchased during the accrued (if amount at end investment amount during the
investment Company transaction amount beginning of the during the reporting any) of the period divided by net asset reporting
or not? period reporting period at end of the period period
period
Banks No No Option 3,362,968 15/12/2018 16/10/2019 3,362,968 2,443,626 -3,294,221 No 2,512,373 11.18% 147,899
Banks No No Forwards 11,634,236 02/03/2019 28/09/2019 11,634,236 22,906,435 -19,760,262 No 14,780,409 65.75% 342,182
Total 14,997,204 -- -- 14,997,204 25,350,061 -23,054,483 17,292,782 76.93% 490,081
Source of fund for the investment Internal
Litigation-related situations (if applicable) N/A
Date of disclosure of Board approval (if any) December 30, 2017
Date of disclosure of Shareholders’ approval (if N/A
any)
The aforesaid refers to short term hedging currency transactions made with banks.
The Group’s transactions are not traded in the market. The Transactions are between the applicable company in the Group and the applicable
bank until the expiration date of the transaction, therefore no market risk is involved.
Risk and control analysis for the reporting
Regarding credit and liquidity risk, the Group is working with large and substantial banks only and with some of them the Group has ISDA
period (including but not limited to market risk,
agreements.
liquidity risk, credit risk, operational risk, legal
As to operational risk, the Group is working with relevant software, which is its back office for all transactions.
risk, etc.)
No legal risk is involved.
The actions taken in order to further reduce risks are:
The relevant subsidiaries have specific guidelines, under the Group’s policy, which were approved by the subsidiaries' financial
19
ADAMA Ltd. Semi-Annual Report 2019
statements committee of the board, which specifies, inter alia, the hedging policy, the persons that have the authorization to deal with
hedging, the tools, ranges etc. The only subsidiary that has hedging positions in the Group in the period was Solutions and its
subsidiaries.
The relevant subsidiaries apply management designed procedures and controls, which among other things, monitor the working
process and the controls of the hedging transactions and are quarterly reviewed and annually audited.
The controllers of the relevant subsidiaries are involved in the process and are monitoring the hedging accounting treatment.
Every 2-3 years the internal audit of the relevant subsidiaries’ department is auditing the entire procedure.
Market price or fair value change of The aforesaid refers to short time hedging currency transactions made by the relevant subsidiary with banks.
investments during the reporting period. Segregation of duties as follows:
Specific methodology and assumptions should For the fair value evaluation, the relevant subsidiary is usually using external experts. The relevant subsidiary hedges currencies only; the relevant
be disclosed in the analysis of fair value of the transactions are simple (Options and forwards) for short terms. For fair value methodology see section X of this report, note IX. Fair Value. The
investments exchange rates are provided by the accounting department of the relevant subsidiary and all other parameters are provided by the experts.
Explanation for any significant changes in
accounting policies and principles, compared N/A
with last reporting period
The derivative investments carried by the Company are for hedging and narrowing down the risk of market fluctuations. The investments respond
Independent Directors’ opinion on the
to the Company’s routine business demands and are in accordance with the relevant laws and regulations. Additionally, the Company has adopted
investment in derivative financial instruments
Currency Risk Hedging Policy to strengthen the risk management and control which benefit the Company’s ability to protect against market risk.
and related risk controls
The derivative investments do not harm the interests of the Company and its shareholders.
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ADAMA Ltd. Semi-Annual Report 2019
VI Sale of Major Assets and Equity Interests
1. Sale of Major Assets
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Sale of Major Equity Interests
□ Applicable √ Not applicable
VII Main Controlled and Joint Stock Companies
√ Applicable □ Not applicable
List of the stock-participating companies influencing over 10% of the net profits on the major subsidiaries and the
Company
Unit: RMB’000
Name Type Registered Operating Operating
Main services Total assets Net assets Net profit
capital revenues profit
Development,
manufacturing and
marketing of agrochemicals,
intermediate
Solutions Subsidiary 720,085 37,243,089 16,012,275 12,504,993 775,843 616,805
materials for other
industries, food additives
and synthetic aromatic
products, mainly for export
Subsidiaries acquired or disposed during the Reporting Period
√ Applicable □ Not applicable
Company Name Way of Acquirement or Impact on the Business Operation and
Disposal Performance of the Company
Jiangsu Anpon Purchase of Share Equity Anpon's main business has a high degree of synergy
Electrochemical Co., Ltd. with the Company's main business. Significant
synergies are generated by selling Anpon's AgChem
products through ADAMA's China domestic
distribution channels as well as Adama's broad global
network.
Bonide Products, Inc. Purchase of Share Equity Bonide is a US provider of pest-control solutions for
the consumer Home & Garden market. The
21
ADAMA Ltd. Semi-Annual Report 2019
Company Name Way of Acquirement or Impact on the Business Operation and
Disposal Performance of the Company
acquisition allows the Company to bring its advanced
technologies and differentiated portfolio of pest-
control and turf solutions directly to the benefit of the
consumer.
VIII Structured Entities Controlled by the Company
□ Applicable √Not applicable
IX Performance Forecast for January-September 2019
Warning of possible loss or considerable YoY change in the accumulative net profit made during the period-
beginning to the end of the next reporting period, as well as the reasons:
□ Applicable √ Not applicable
X Risks Facing the Company and Countermeasures
The Group believes that it is exposed to several major risk factors, resulting from its economic environment, the
industry and the Group's unique characteristics, as follows (the order below does not indicate priority):
Exchange rate fluctuations
Although the Company reports its consolidated financial statements in RMB, the Company’s material subsidiary
Solutions reports its consolidated financial statements in US dollars, which is its functional currency, while its
operations, sales and purchases of raw materials are carried out in various currencies. Therefore, fluctuations in the
exchange rate of the selling currency against the purchasing currency impact the Company’s results. The Group's
most significant exposures are to the Euro, the Israeli Shekel and the Brazilian Real. The Group has lesser exposures
to other currencies. The strengthening of the US dollar against other currencies in which the Company operates
reduces the dollar value of such sales and vice versa.
On an annual perspective, approximately 27% of the Group’s sales are to the European market and therefore the
impact of long-term trends on the Euro may affect the Company's results and profitability.
Concentration of currency exposure from foreign currency exchange rate fluctuations against assets, including
inventory of finished products in countries of sale, liabilities and cash flow denominated in foreign currencies are
done constantly. High volatility of the exchange rates of these currencies could increase the costs of transactions to
hedge against currency exposure, thereby increasing the Company's financing costs.
The Group uses commonly accepted financial instruments to hedge most of its substantial net balance sheet exposure
to any particular currency. Nonetheless, since as part of these operations the Group hedges against most of its
balance sheet exposure and only against part of its economic exposure, exchange rate volatility might impact the
Group’s results and profitability. As of the date of approval of the financial statements, the Group has hedged most
of its balance sheet exposure for 2019 as it is on the date of publication of this report.
In addition, as the Company’s product sales depend directly on the cyclical nature of the agricultural seasons,
therefore the Company’s income and its exposure to the various currencies is not evenly distributed over the year.
Countries in the northern hemisphere have similar agricultural seasons and therefore, in these countries, the highest
22
ADAMA Ltd. Semi-Annual Report 2019
sales are usually during the first half of the calendar year. During this period, the Company is most exposed to the
Euro and the Polish Zloty. In the southern hemisphere, the seasons are opposite and most of the local sales are
carried out during the second half of the year. During these months, most of the Company's exposure pertains to the
Brazilian Real. The Company has more sales in markets in the northern hemisphere and therefore, the Company's
sales volume during the first half of the year is higher than the sales volume during the second half of the year.
Exposure to Interest rate, Israel CPI and NIS exchange rate fluctuations
The debentures issued by Solutions, the material subsidiary of the Company, are Israeli Shekel based and linked to
the Israel Consumer Price Index (CPI) and therefore an increase in the CPI and an appreciation of the shekel rate
against the dollar might lead to a significant increase in its financing expenses. As of the date of approval of the
financial statements, Solutions hedged most of its exposure to these risks on an ongoing basis, through CPI hedging
and USD-ILS exchange rate hedging transactions.
The Group is exposed to changes in the US dollar LIBOR interest rate as the Group has dollar denominated liabilities,
which bear variable LIBOR interest. The Group prepares a quarterly summary of its exposure to changes in the
LIBOR interest rate and periodically examines hedging the variable interest rate by converting it to a fixed rate. As
of the date of approval of the financial statements, the Group has not carried out hedging for such exposure, since
US dollar interest rates have been relatively stable.
Business operations in emerging markets
The Group conducts business – mainly product sales and raw material procurement – inter alia, in emerging markets
such as Latin America (particularly in Brazil, the largest market, country wise, in which the Group operates), Eastern
Europe, South East Asia and Africa. The Group's activity in emerging markets is exposed to risks typical of those
markets, including: political and regulatory instability; volatile exchange rates; economic and fiscal instability and
frequent revisions of economic legislation; relatively high inflation and interest rates; terrorism or war; restrictions
on import and trade; differing business cultures; uncertainty as to the ability to enforce contractual and intellectual
property rights; foreign currency controls; governmental price controls; restrictions on the withdrawal of money
from the country; barter deals and potential entry of international competitors and accelerated consolidations by
large-scale competitors in these markets. Developments in these regions may have a significant effect on the Group's
operations. Distress to the economies of these markets could impair the ability of the Group's customers to purchase
its products or the ability to market them at international market prices, as well as harm the Group's ability to collect
customer debts, in a way that could have a significant adverse effect on the Group's operating results.
The Group’s operations in multiple regions allows for the diversification of such risks and for the reduction of its
dependency on particular economies. In addition, changes in registration requirements or customers' preferences in
developed western countries, which may limit the use of raw materials purchased from emerging economies, may
require redeployment of the Group's procurement organization, which might negatively affect its profitability for a
certain period.
Operating in a competitive market
The crop protection products industry is highly competitive. Currently, approximately 60% of the industry's global
market is shared by five leading Originator Companies, which are based in Europe or North America, these being
Corteva, Bayer, BASF Syngenta and FMC, which develop, manufacture and market both patent-protected as well
as off-patent products. The Group competes with the original products with the aim of maintaining and increasing
its market share.
The Originator Companies possess resources enabling them to compete aggressively, in the short-to-medium term,
on price and profit margins, so as to protect their market share. Loss of market share or inability to acquire additional
23
ADAMA Ltd. Semi-Annual Report 2019
market share from the Originator Companies can affect the Group's position in the market and adversely affect its
financial results.
Similarly, the Group also competes in the more decentralized off-patent market, with other off-patent companies
and smaller-scale Originator Companies, which have significantly grown in number in recent years and are
materially changing the face of the crop protection products industry, the majority of whom have not yet deployed
global distribution networks, and are only active locally. These companies price their products aggressively and at
times have lower profit margins than the Group, which may harm the volume of the Group's sales and product prices.
The Group's ability to maintain its revenues and profitability from a specific product in the long term is affected by
the number of companies producing and selling comparable off-patent products and the time of their entrance to the
relevant market.
Any delay in developing or obtaining registrations for products and/or delayed penetration into markets and/or
growth of competitors that focus on off-patent active ingredients (whether by the expansion of their product portfolio,
granting registrations to other manufacturers (including manufacturers in China and India) to operate in additional
markets, transforming their distribution network to a global scale or increasing the competition for distribution
access), and/or difficulty in purchasing low cost raw materials, may harm the Group’s sales volumes in this sector,
affect its global position and lead to price erosion.
Decline in scope of agricultural activities; exceptional changes in weather conditions
The scope of agricultural activities may be negatively affected by many exogenous factors, such as extreme weather
conditions, natural disasters, a significant decrease in agricultural commodity prices, government policies and the
economic condition of farmers. A decline in the scope of agricultural activities necessarily would cause a decline
in the demand for the Group’s products, erosion of its prices and collection difficulties, which may have a significant
adverse effect on the Group's results. Extreme weather conditions as well as damages caused by nature have an
impact on the demand for the Group's products. The Group believes that, should a number of such bad seasons
occur in succession, without favorable seasons in the interim, its results may sustain significant harm.
Environmental, health and safety legislation, standards, regulation and exposure
Many aspects of the Group's operations are strictly regulated, including in relation to production and trading, and
particularly in relation to the storage, treatment, manufacturing, transport, usage and disposal of its products, their
ingredients and byproducts, some of which are considered hazardous. The Group's activities involve hazardous
materials. Defective storage or handling of hazardous materials may cause harm to human life or to the environment
in which the Group operates. The regulatory requirements regarding the environment, health and safety could, inter
alia, include soil and groundwater clean-up requirements; as well as restrictions on the volume and type of emissions
the Group is permitted to release into the air, water and soil.
The regulatory requirements applicable to the Group vary from product to product and from market to market, and
tend to become stricter with time. In recent years, both government authorities and environmental protection
organizations have been applying growing pressure, including through investigations and indictments as well as
increasingly stricter legislative proposals and class action suits related to companies and products that may
potentially pollute the environment. Compliance with the foregoing legislative and regulatory requirements and
protection against such legal actions requires the Group to spend considerable financial resources (both in terms of
substantial ongoing costs and in terms of material one-time investments) as well as human resources in order to
meet mandatory environmental standards. In some instances, this may result in delaying the introduction of products
into new markets or in adverse effects on the Group’s profitability. In addition, the toughening, material alteration
or revocation of environmental licenses or permits, or their stipulations, or the inability to obtain such licenses and
permits, may significantly affect the Group's ability to operate its production facilities, which in turn may have a
24
ADAMA Ltd. Semi-Annual Report 2019
material adverse effect on the financial and business results of the Group. The Group may be required to bear
significant civil liability (including due to class actions) or criminal liability (including high penalties and/or high
compensation payments and/or costs of environmental monitoring and rehabilitation), resulting from violation of
environmental, health and safety regulations, while some of the existing legislation may impose obligations on the
Group for strict liability, regardless of proof of negligence or malice.
While the Group invests material sums in adapting its facilities and in constructing special facilities in accordance
with environmental requirements, it is currently unable to assess with any certainty whether these investments
(current and future) and their outcomes may satisfy or meet future requirements, should these be significantly
increased or adjusted. In addition, the Group is unable to predict with any certainty the extent of future costs and
investments it may incur so as to meet the requirements of the environmental authorities in the relevant countries in
which it operates since, inter alia, the Group is unable to estimate the extent of potential pollutions, their length, the
extent of the measures required to be taken by the Group in handling them, the division of responsibility among
other parties and the amounts recoverable from third parties.
Furthermore, the Group may be the target of bodily injury claims and property damage claims caused by exposure
to hazardous materials, which are predominantly covered under the Group’s insurance policies.
Legislative, standard and regulatory changes in product registration
The majority of the substances and products marketed by the Group require registration at various stages of their
development, production, import, utilization and marketing, and are also subject to strict regulatory supervision by
the regulatory authorities in each country. Compliance with the registration requirements that vary from country to
country and which are becoming more stringent with time, involves significant time and costs, and rigorous
compliance with individual registration requirements for each product. Noncompliance with these regulatory
requirements might materially adversely affect the scope of the Group’s expenses, cost structure and profit margins,
as well as penetration of its products in the relevant market, and may even lead to suspension of sales of the relevant
product, and recall of those products already sold, or to legal action. Moreover, to the extent new regulatory
requirements are imposed on existing registered products (requiring additional investment or leading to the existing
registration's revocation) and/or the Group is required to compensate another company for its use of the latter's
product registration data, these might amount to significant sums, considerably increasing the Group's costs and
adversely affecting its results and reputation.
Additionally, the Group believes that, in countries where the Group maintains a competitive edge, any toughening
of registration requirements may actually increase this edge, since this will make it difficult for its competitors to
penetrate the same market, whereas in countries in which the Group possesses a small market share, if any, such
toughening may make further penetration of the Group's products into that market more difficult.
Product liability
Product and producer liability present a risk factor to the Group. Regardless of their prospects or actual results,
product liability lawsuits might involve considerable costs as well as tarnish the Group's reputation, thus impacting
its profits. The Group has a third-party and defective product liability insurance cover. However, there is no certainty
that the scope of insurance cover is sufficient. Any future product liability lawsuit or series of lawsuits could
materially affect the Group’s operations and results, should the Group lose the lawsuit or should its insurance cover
not suffice or apply in a particular instance. In addition, while currently the Group has not encountered any difficulty
renewing such insurance policy, it is possible that it will encounter future difficulties in renewing an insurance
policy for third party liability and defective products on terms acceptable to the Group.
Successful market penetration and product diversification
25
ADAMA Ltd. Semi-Annual Report 2019
The Group’s growth and profit margins are affected, inter alia, by the extent of its success in developing
differentiated products and obtaining registrations for them, so as to enable it to gain market share at the expense of
its competitors. Usually, being the first to launch a certain off-patent product affords the Group continuing advantage,
even after other competitors penetrate the same market. Thus, the Group's revenues and profit margins from a certain
product could be materially affected by its ability to launch such product ahead of the launch of a comparable
product by its competitors.
Should new products fail to meet registration requirements in the different countries or should it take a long period
of time to obtain such registrations, the Group's ability to successfully introduce a new product to the market in
question in the future would be affected, since entry into the market prior to other competitors is important for
successful market penetration. Furthermore, successful market penetration involves, inter alia, product
diversification in order to suit each market's changing needs. Therefore, if the Group fails to adapt its product mix
by developing new products and obtaining the required regulatory approvals, its future ability to penetrate that
market and to maintain its existing market share could be affected. Failure to introduce new products to given
markets and meet Group objectives (given the considerable time and resources invested in their development and
registration) might affect the sales of the product in question in the relevant market, the Group’s results and margins.
Intellectual property rights of the Group and of third parties
The Group's ability to develop off-patent products is dependent, inter alia, on its ability to oppose patents of an
Originator Company or other third parties, or to develop products that do not otherwise infringe intellectual property
rights in a manner that may involve significant legal and other costs. Originator Companies tend to vigorously
defend their products and may attempt to delay the launch of competing off-patent products by registering patents
on slightly different versions of products for which the original patent protection is about to expire or has expired,
with the aim of competing against the off-patent versions of the original product. The Originator Companies may
also change the branding and marketing method of their products. Such actions may increase the Group's costs and
the risk it entails, and harm or even prevent its ability to launch new products.
The Group is also exposed to legal claims that its products or production processes infringe on third-party
intellectual property rights. Such claims may involve time, costs, substantial damages and management resources,
impair the value of the Group's brands and its sales and adversely affect its results. To the best of the Group’s current
knowledge, such lawsuits that were concluded involved non-material amounts.
Furthermore, the Group protects its brands and trade secrets with patents, trademarks and other methods of
intellectual property protection, however these protective means may not be sufficient for safeguarding its
intellectual property. Any unlawful or other unauthorized use of the Group's intellectual property rights could
adversely affect the value of its intellectual property and goodwill. In addition, the Group may be required to take
legal action involving financial costs and resources to safeguard its intellectual property rights.
Fluctuations in raw material inputs and prices, and in sales costs
Significant percentage of the cost of the Groups’ sales derives from raw material costs. Hence, significant increases
or decreases in raw material cost affect the cost of goods sold, which is generally expressed a number of months
following such cost fluctuation. Most of the Group's raw materials are distant derivatives of oil prices and therefore,
extreme increase or decrease in oil prices may affect the costs of raw materials, yet only partially.
To reduce exposure to fluctuations in the prices of raw materials, the Group customarily engages in long-term
purchase contracts for key raw materials, wherever possible. Similarly, the Group acts to adjust its sales prices, if
possible, to reflect the changes in the costs of raw materials.
As of the date of approval of the financial statements, the Group has not engaged in any hedging transactions against
increases in oil and other raw material costs.
26
ADAMA Ltd. Semi-Annual Report 2019
Exposure due to recent developments in the genetically modified seeds market
Any further significant development in the market of genetically modified seeds for agricultural crops, including as
a result of regulatory changes in certain countries currently prohibiting the use of genetically modified seeds, and/or
any significant increase in the sales of genetically modified seeds or Glyphosate and/or to the extent new crop
protection products are developed for further crops that would be widely used (substituting traditional products),
will affect demand for crop protection products, requiring the Group to respond by adapting its product portfolio to
the new demand structure. Consequently, to the extent that the Group fails to adapt its product mix accordingly, this
may reduce demand for its products, erode their sales price and necessarily affect the Group’s results and market
share.
Nevertheless, the fact that the Group itself markets Glyphosate acts to mitigate this exposure (albeit only in terms
of marketing margins).
Operational risks
The Group’s operations, including its manufacturing activities, rely, inter alia, on state-of-the-art computer systems.
The Group continually invests in upgrading and protecting these systems. Any unexpected failure of these systems,
as well as the integration of new systems, could involve substantial costs and adversely affect the Group's operations
until completion of the repair or integration. The potential occurrence of a substantial failure that cannot be repaired
within a reasonable time frame may also affect the Group's operations and its results. Currently, the Group has a
property and loss-of-profit insurance policy.
Data protection and cyber
During its activity, the Group may be exposed to risks and threats, related to the stability of its information
technologies systems, data protection and cyber, which could appear in many different forms (such as service denial,
misleading employees, malfunction, encryption or data erasing and other cyber-attacks via E-mail or malicious
software). An attack on such computerized systems, mainly network based systems may cause the group material
damages and expenses and even partial suspension and disruption of their proper functioning. In order to minimize
the abovementioned risks, the group invests resources in its technological strength and in proper protection of its
systems.
Raw material supply and/or shipping and port services disruptions
Lack of raw materials or other inputs utilized in the manufacture of Group products may prevent the Group from
supplying its products or significantly increase production costs. Moreover, the Group imports raw materials to its
production facilities worldwide, from where it exports the products to its subsidiaries around the world for
formulation and/or commercialization purposes. Disruptions in the supply of raw materials from regular suppliers
may adversely affect operations until an alternative supplier is engaged. If any of the Group's suppliers are unable
to supply raw materials for a prolonged period, including due to ongoing disruptions and/or prolonged strikes and/or
infrastructure defects in the operating of a relevant port, and the Group is unable to engage with an alternative
supplier at similar terms and in accordance with product registration requirements, this may adversely affect the
Group's results, significantly affect its ability to obtain raw materials in general, or obtain them at reasonable prices,
as well as limit its ability to supply products and/or meet customer supply deadlines. These might negatively affect
the Group, its finances and operating results. In order to reduce this risk, it is the Group's practice to occasionally
adjust the volume of its product inventories and at times utilize air freight.
Failed mergers and acquisitions; difficulties in integrating acquired operations
The Group's strategy includes growth through mergers, acquisitions, investments and collaborations designed, in a
calculated manner, to expand its product portfolio and deepen its presence in certain geographical markets.
27
ADAMA Ltd. Semi-Annual Report 2019
Growth through mergers and acquisitions requires assimilation of acquired operations and their effective integration
in the Group, including realization of certain forecasts, profitability, market conditions and competition.
Failure to successfully implement the above and/or non-realization of the said forecasts may result in not achieving
the additional value forecasted, losing customers, exposure to unexpected liabilities, reduced value of the intangible
assets included in the merger or acquisition as well as the loss of professional and skilled human resources.
Production concentration in limited plants
A large portion of the Group’s production operations is concentrated in a small number of locations. Natural
disasters, hostilities, labor disputes, substantial operational malfunction or any other material damage might
significantly affect Group operations, as a result of the difficulty, the time and investment required for relocating
the production operation or any other activity.
International taxation
Most of the Group’s sales are global, through its consolidated subsidiaries worldwide. These individual companies
are assessed in accordance with the tax laws effective in each respective location. The Group’s effective tax rate
could be significantly affected by different classification or attribution of the profits arise from the share of value
earned of the companies in the Group in the various countries, as shall be recognized in each tax jurisdiction;
changes in the characteristics (including regarding the location of control and management) of these companies;
changes in the breakdown of the Group's profits into regions where differing tax rates apply; changes in statutory
tax rates and other legislative changes; changes in assessment of the Group's deferred tax assets or deferred tax
liabilities; changes in determining the areas in which the Group is taxed; and potential changes in the Group's
organizational structure.
Changes in tax regulations and the manner of their implementation, including with regard to the implementation of
BEPS, may lead to a substantial increase in the Group's applicable tax rates and have a material adverse effect on
its financial state, results and cash flows.
The Group’s Financial Statements do not include a material provision for exposure for international taxation, as
stated above.
Risks arising from the Group’s debt
The Group finances its business operations by means of its own equity and loans from external sources (primarily
debentures issued by Solutions and bank credit). The Group's main source for servicing the debt and its operating
expenses is by means of the profits from the Group companies’ operations. Restrictions applying to the Group
companies regarding distribution of dividends to the Group, or the tax rate applicable on these dividends, may affect
the Group's ability to finance its operations and service its debt.
In addition, the Group's Finance Documents require it to meet certain Financial Covenants. Failure to meet these
covenants due to an exogenous event or non-materialization of Group forecasts, and insofar as the financing parties
refuse to extend or update these Financial Covenants as per the Group’s capabilities, may lead the financing parties
to demand the immediate payment of these liabilities (or part thereof).
Exposure to customer credit risks
The Group’s sales to customers usually involve customer credit as is customary in each market. A portion of these
credit lines are insured, while the remainder are exposed to risk, particularly during economic slowdowns in the
relevant markets. The Group’s aggregate credit, however, is diversified among many customers in multiple
countries, mitigating this risk. In addition, in certain regions, particularly in South America, credit days are
particularly long (compared to those extended to customers in regions such as Europe), and on occasion, inter alia,
owing to agricultural seasons or economic downturns in those countries, the Group may encounter difficulty in
collection of customer debts, with the collection period being extended over several years.
28
ADAMA Ltd. Semi-Annual Report 2019
Generally, such issues arise more often in developing countries where the Group is less familiar with its customers,
the collaterals might be in double until actual repayment and the insurance cover of these customers is likely to be
limited. Credit default by any of the customers may negatively impact the Group's cash flow and financial results.
The Group’s working capital and cash flow needs
Similar to other companies operating in the crop protection industry, the Group has substantial cash flow and
working capital requirements in the ordinary course of operations. In view of the Group's growth and considering
its primary growth regions, the Group’s broad product portfolio and the Group’s investments in manufacturing
infrastructures, the Group has significant financing and investment needs. The Group acts continually to improve
the state and management of its working capital. While currently the Group is in compliance with all its financial
covenants, significant deterioration of its operating results may in the future lead the Group to fail to comply with
its financial covenants and fail to meet its financial needs. As a result, the Group's ability to meet its goals and
growth plans, and its ability to meet its financial obligations, may be harmed.
Section V Significant Events
I Annual and Special Meetings of Shareholders Convened during the Reporting Period
1. Meetings of Shareholders Convened during the Reporting Period
Investor Index to disclosed
Meeting Type Convened date Disclosure date
participation information
29
ADAMA Ltd. Semi-Annual Report 2019
ratio
Announcement of the 1st
Interim Shareholders
Meeting in 2019
1st Interim (Announcement
Interim Shareholders
Shareholders 3.84% March 11, 2019 March 12, 2019 Number:2019-13).
Meeting
Meeting in 2019 Disclosed at the website
CNINFO
www.cninfo.com.cn
Announcement of the Annual
Shareholders Meeting
(Announcement
2018 Annual
Annual Shareholders Number:2019-26).
Shareholders 75.42% April 10, 2019 April 11, 2019
Meeting Disclosed at the website
Meeting
CNINFO
www.cninfo.com.cn
Announcement of the 2nd
Interim Shareholders
Meeting in 2019
2nd Interim (Announcement
Interim Shareholders
Shareholders 74.64% May 30, 2019 May 31, 2019 Number:2019-38).
Meeting
Meeting in 2019 Disclosed at the website
CNINFO
www.cninfo.com.cn
2. Special Meetings of Shareholders Convened at Request of Preference Shareholders with Resumed Voting
Rights
□ Applicable √ Not applicable
II Basic Information of the Profit Distribution and Converting Capital Reserve into Share
Capital for the Reporting Period
□ Applicable √ Not applicable
For the Reporting Period, the Company does not plan to distribute cash dividends or bonus shares or convert capital
reserve into share capital.
III Commitments completed by the Company, the shareholders, the actual controllers, the
purchasers, or the other related parties during the reporting period and those which should be
completed but failed during the reporting period
√Applicable □ Not applicable
Note: No commitment that should be completed but failed during the reporting period. For details of the commitments that are under
performing, please refer to the 2018 Annual Report published in the website of CNINFO www.cninfo.com.cn on March 21, 2019. The
following is the commitment which is completed during the reporting period.
30
ADAMA Ltd. Semi-Annual Report 2019
Time of
Commitment Period of
Commitment Commitment maker Contents making Fulfillment
type commitment
commitment
China Cinda Asset
Management Co.,
Ltd., CCB Principle
The committed
Asset Management
The new shares issued in the parties complied
Co., Ltd., Aegon-
non-public offering to raise with the
Commitments industrial Fund Co.,
supporting fund shall not be commitments
made at the Ltd., Penghua Fund Commitment on December January 18,
transferred in any manner during the
time of assets Management Co., share lock-up 25, 2017 2019
within 12 months after the reporting period.
reorganization Ltd., China
initial trading day of the new The shares have
Structural Reform
issued shares. been unlocked on
Fund Co. ,Ltd.,
January 21, 2019.
Caitong Fund
Management Co.,
Ltd.
Executed timely
Yes
or not?
IV Engagement and Disengagement of CPA Firm
Has the semi-annual financial report been audited?
□ Yes √ No
This Semi-Annual Report is unaudited.
V Explanations Given by Board of Directors and Board of Supervisors Regarding “Modified
Auditor’s Report” Issued by CPA Firm for the Reporting Period
□ Applicable √ Not applicable
VI Explanations Given by Board of Directors Regarding “Modified Auditor’s Report” Issued
for Last Year
□ Applicable √ Not applicable
VII Bankruptcy and Restructuring
□ Applicable √ Not applicable
No such cases in the Reporting Period.
VIII Litigation and Arbitration Matters
Significant litigations or arbitrations:
31
ADAMA Ltd. Semi-Annual Report 2019
□ Applicable √ Not applicable
No such cases in the Reporting Period.
Other litigations or arbitrations:
□ Applicable √ Not applicable
No substantial litigation or arbitrations in the Reporting Period.
IX Punishments and Rectifications
√ Applicable □ Not applicable
Company Person Reason Type of the Conclusion made by Disclosure Index of the disclosure
name punished punishment the authority date
ADAMA ADAMA On January 30 and Punished by (1) An February 13, Announcement on
Ltd. Ltd. 31, 2019, the the administrative 2019; Receiving a Notice Prior to
Provincial environmental penalty of a fine of Administrative Punishment
Environmental protection one million RMB April 2, 2019 (Hearing) and Decision
Inspection Team, authority. yuan for the Notice of Production
together with Company’s Suspension and
personnel from its wastewater Rectification
municipal branch, discharge that (announcement number
conducted an exceeded the 2019-9);
inspection at the maximum Announcement on the
Jingzhou old allowable emission Resumption of Production
production site. limit. at the Old Site in Jingzhou
During such (announcement number
inspection, the (2) Stop 2019-25).
inspectors took production at the Both published in the
several samples, Jingzhou old website of
some of which production site and www.cninfo.com.cn
showed elevated take corrective
levels of water measures.
pollutant, in excess
of discharge
standards
prescribed by the
State in the
production
process.
Please see further information in section XV. below with respect to Social Responsibilities.
Status of Rectification
√ Applicable □ Not applicable
32
ADAMA Ltd. Semi-Annual Report 2019
The Company is deeply committed to environmentally sustainable production, has a strong track record worldwide
of compliance with relevant regulations, and takes seriously any potential instance of exceeding of emissions
thresholds. During the suspension of its production, the Company has been taking specific measures to meet all
rectification requirements of the relevant authorities.
On March 29th, the Notice on Agreeing to the Production Resumption of ADAMA Ltd. was issued by the Bureau,
confirming, “It has been agreed by all experts and representatives at the on-site review organized by the Branch
Team of Municipal Environmental Monitoring Authority that the rectification plan was technically feasible and
your company finished rectification as required, which has justified the resumption of production in your company.”
Therefore, the Bureau agreed to allow the resumption of production at the Company’s old site in Jingzhou.
X Integrity of the Company, its controlling shareholders and actual controller
□ Applicable √ Not applicable
XI Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measures for
Employees
□ Applicable √ Not applicable
To the date of the report, the Company does not have stock incentive plans, ESOP or other staff incentives. It shall
be noted, that a Company’s subsidiary approved in December 2017 and in February 2019 long-term incentive plans
and granted long-term cash rewards to executive officers and employees, which are based on the performance of
the Company's shares (phantom cash incentives).
XII Significant Related Transactions
1. Related Transactions Relevant to Routine Operations
□Applicable √ Not applicable
(1) There are no significant related-party transactions during the reporting period.
(2) Item XII of Section X “Financial Statements” has set out the related parties and the related-party transactions
of the Company.
2. Related Transactions Regarding Purchase or Sales of Assets or Equity Interests
□ Applicable √ Not applicable
The Company purchased 100% of the equity interests in Jiangsu Anpon Electrochemical Co., Ltd. which was a
related-party transaction and announced timely during the Reporting Period. Please refer to the below Item 5 “Other
significant related-party transactions”
3. Related Transactions Regarding Joint Investments in Third Parties
□ Applicable √ Not applicable
The Company was not involved in any significant related-party transaction with joint investments during the
Reporting Period.
33
ADAMA Ltd. Semi-Annual Report 2019
4. Credits and Liabilities with Related Parties
√ Applicable □ Not applicable
Whether exist non-operating credits and liabilities with related parties or not?
□ Yes √ No
The Company was not involved in any non-operating credit and liability with related parties in the Reporting Period.
5. Other significant related-party transactions
√Applicable □ Not applicable
(1) The 1st Interim Shareholders Meeting and the 2nd Interim Shareholders Meeting separately approved the
expected related-party transactions in the ordinary business course of the Company in 2019 and the new
expected related-party transactions in the ordinary course of business in 2019. Please refer to Item X of
Section X “Financial Statements” for details of the related-party transactions in the ordinary business course.
(2) The 12th meeting of the 8th session of the BOD approved the Company to purchase 100% of the equity
interests in Jiangsu Anpon Electrochemical Co., Ltd.
(3) The 2nd Interim Shareholders Meeting approved the Company to sign a Supplemental Financial Services
Agreement with ChemChina Finance Co., Ltd.in a related-party transaction.
The website to disclose the interim announcements on significant related-party transactions:
Disclosure date of the Website to disclose the interim
Name of the interim announcement
interim announcement announcement
Announcement on Expected Related-Party Transactions in the Ordinary
February 22, 2019 www.cninfo.com.cn
Course of Business in 2019 (announcement no. 2019-11)
Announcement on the New Expected Related-Party Transactions in the
April 30, 2019 www.cninfo.com.cn
Ordinary Course of Business in 2019 (announcement no. 2019-31)
Preliminary Announcement on the Intended Acquisition of 100% of the
Equity Interests in Jiangsu Anpon Electrochemical Co., Ltd., in a January 3, 2019 www.cninfo.com.cn
Related-Party Transaction (announcement no. 2019-1)
Announcement on the Acquisition of 100% of the Equity Interests in
Jiangsu Anpon Electrochemical Co., Ltd., in a Related-Party March 21, 2019 www.cninfo.com.cn
Transaction (announcement no. 2019-16)
Progress Announcement on the Acquisition of 100% of the Equity
Interests in Jiangsu Anpon Electrochemical Co., Ltd., in a Related-Party March 30, 2019 www.cninfo.com.cn
Transaction (announcement no. 2019-24)
Announcement on the Signing of Supplemental Financial Services
Agreement in a Related-Party Transaction with ChemChina Finance April 30, 2019 www.cninfo.com.cn
Co., Ltd. (announcement no. 2019-32)
34
ADAMA Ltd. Semi-Annual Report 2019
XIII. Utilization of the Company’s capital by the controlling shareholder or its related parties
for non-operating purposes
□ Applicable √ Not applicable
The Company was not involved in the non-operating utilization of funds by the controlling shareholder and other
related parties during the Reporting Period.
XIV. Significant Contracts and Execution
1. Entrustment, Contracting and Leasing
(1) Entrustment
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(2) Contracting
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(3) Leasing
□Applicable√ Not applicable
No significant leasing in the Reporting Period.
2. Significant Guarantees
□Applicable √ Not applicable
The Company did not provide any significant guarantee during the reporting period.
3. Other Significant Contracts
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XV. Social Responsibilities
1. Information on the Environmental Situation
Is the Company listed as “Key Polluting Entities” by the environmental protection authorities?
Yes
35
ADAMA Ltd. Semi-Annual Report 2019
Name of the Main Pollutant Total Maximum
Number of Layout of
Company Pollutants Way of Emission Emission Discharg Allowable Excessive
Emission Emission
and its and Special Emission Concentration Standards ed Discharged Emission
Points Points
Subsidiaries Pollutants Applied Volume Volume
Comprehens
ive Standard
on
Centralized Discharge of
COD Continuous 2 Discharge Within Limit Waste Water 147 391.3 None
Point (GB8978-
2002) ，
COD<100m
g/L
Comprehens
ive Standard
on
Discharge of
Centralized
Ammonia Waste Water
Continuous 2 Discharge Within Limit 14.8 50 None
Nitrogen (GB8978-
Point
2002),
Ammonia
nitrogen<15
mg/L
ADAMA
Ltd. The total
phosphorou
s of the
wastewater
Discharge discharged
Standards by the old
for site of the
Pollutants Company
from Urban exceeded
Total Centralized
Sewage the
Phosphorou Continuous 2 Discharge Within Limit N/A N/A
Treatment maximum
s Point
Plant (GB allowable
18918 – emission in
2002), total January. For
phosphorous details,
<0.5mg/L please refer
to the
Announcem
ent on
Receiving a
36
ADAMA Ltd. Semi-Annual Report 2019
Name of the Main Pollutant Total Maximum
Number of Layout of
Company Pollutants Way of Emission Emission Discharg Allowable Excessive
Emission Emission
and its and Special Emission Concentration Standards ed Discharged Emission
Points Points
Subsidiaries Pollutants Applied Volume Volume
Notice Prior
to
Administrat
ive
Punishment
(Hearing)
and
Decision
Notice of
Production
Suspension
and
Rectificatio
n
(announcem
ent number
2019-9).
Standard on
Air
Pollution of
Nitrogen Power Plant
Continuous 1 Power Plant Within Limit 261.5 564.7 None
oxide （GB13223
-2011）
NOx
<200mg/m3
Standard on
Air
Pollution of
Power Plant
SO2 Continuous 1 Power Plant Within Limit 151 380 None
（GB13223
-2011）
SO2<200mg
/m3
Standard on
Air
Fume and Pollution of
Continuous 1 Power Plant Within Limit 22.25 80 None
Dust Power Plant
（GB13223
-2011）
37
ADAMA Ltd. Semi-Annual Report 2019
Name of the Main Pollutant Total Maximum
Number of Layout of
Company Pollutants Way of Emission Emission Discharg Allowable Excessive
Emission Emission
and its and Special Emission Concentration Standards ed Discharged Emission
Points Points
Subsidiaries Pollutants Applied Volume Volume
Fume and
Dust<30mg/
m3
Comprehens
ive Standard
on
Centralized Discharge of
COD Continuous 1 Discharge Within Limit Waste Water 105.90 265.69 None
Point (GB8978-
2002) ，
COD<100m
g/L
Water
Quality
Standard for
Sewage
Discharged
Centralized into Urban
Ammonia
Continuous 1 Discharge Within Limit Sewerage 7.53 28.348 None
Jiangsu Nitrogen
Point
Anpon
（GBT
31962-
Electroche
2015）,
mical Co.,
Ammonia
Ltd.
Nitrogen
<45mg/L
Discharge
Standards
for
Pollutants
from Urban
Total Centralized
Sewage
Phosphorou Continuous 1 Discharge Within Limit N/A N/A None
Treatment
s Point
Plant (GB
18918 –
2002), total
phosphorous
<0.5mg/L
Nitrogen Standard on
Continuous 1 Power Plant Within Limit 66.01 114.16 None
oxide Air
38
ADAMA Ltd. Semi-Annual Report 2019
Name of the Main Pollutant Total Maximum
Number of Layout of
Company Pollutants Way of Emission Emission Discharg Allowable Excessive
Emission Emission
and its and Special Emission Concentration Standards ed Discharged Emission
Points Points
Subsidiaries Pollutants Applied Volume Volume
Pollution of
Power Plant
（GB13223
-2011）
NOx
<200mg/m3
Standard on
Air
Pollution of
Power Plant
SO2 Continuous 1 Power Plant Within Limit 36.74 79.91 None
（GB13223
-2011）
SO2<200mg
/m3
Standard on
Air
Pollution of
Power Plant
Fume and
Continuous 1 Power Plant Within Limit （GB13223 3.16 23.64 None
Dust
-2011）
Fume and
Dust<30mg/
m3
(1) Development and Operation of Environmental Facilities
1. Development and Operation of Waste Water Facilities
There are waste water treatment facilities in both the Company and Anpon with the designed capacity of 37,400
tons/day and 11,000 tons/day, respectively. As all the facilities are operating well, COD, ammonia nitrogen,
and total phosphorous discharged after the treatment are within the limit.
2. Development and Operation of Waste Gas Facilities
The exhaust treatment facilities in the coal-based power plants of the Company and Anpon are running well.
Therefore, SO2, Nitrogen oxide and fume and dust discharged after the treatment are within the limit.
3. The Company and Anpon disclose production and pollution information according the Interim Measures on
Environmental Information Disclosure and transfers information of main waste water and air pollutants to the
information platform of the local environmental bureau on a daily basis.
(2) EIA of construction projects and other environmental administrative permits
The Company is currently carrying out environmental impact assessment and preparing environmental impact
for the relocation and upgrading project of pesticide series products which is under construction in the new site
39
ADAMA Ltd. Semi-Annual Report 2019
of Jingzhou in the reporting period.
(3) Contingency plan of environmental accidents
The Company and its relevant subsidiaries have formulated the Contingency Plan for Environmental
Emergencies according to their production facilities and industry features, and then submitted files to the local
environmental protection authorities as record.
(4) Environment self-monitoring plan
ADAMA attributes great importance to protecting the environment, out of a sense of responsibility to society
and the environment and strives to meet the relevant regulatory requirements and to even go beyond mere
compliance, engaging in constant dialogue with stakeholders, including the authorities and the community.
In order to improve the environmental management, track the discharge of various pollutants, evaluate the
impact on the surrounding environment, strengthen the discharge management of pollutants in the production
process, accept the supervision and inspection of environmental authorities and provide reference for pollution
prevention and control, the company and its subsidiary Anpon have formulated a self-monitoring plan, which
conducts regular tests in strict accordance with the requirements.
The major monitored indicators and frequency of the Company and Anpon are as the following:
1. Monitored Indicators
Waste water: COD, NH3-N, PH, SS, Petroleum, TP.
Air Pollutant: SO2, Nitrogen oxide, Fume and Dust.
Noise: Noise at the Site Border
2. Frequency
Boiler emission and waste water discharged from the centralized point: continuous auto monitoring
Manual sampling: SS, Petroleum, TP, once a month.
Noise: once a quarter.
ADAMA continually examines the implications of the environmental laws, taking actions to prevent or mitigate the
environmental risks and to reduce the environmental effects that may result from its activities, and invests extensive
resources to fulfill those legal provisions that are, and are anticipated to, affect it. ADAMA’s plants are subject to
atmospheric emissions regulations, whether by virtue of the stipulations provided in the business licenses or under
the applicable law. Hazardous materials are stored and utilized in the Company's plants, together with infrastructures
and facilities containing fuels and hazardous materials. ADAMA takes actions to prevent soil and water pollution
by these materials and treats them, if revealed. ADAMA’s plants conduct various soil surveys, risk surveys and tests
with regard to treatment of the soil or ground water at the plants.
ADAMA intends to continue investing in environmental protection, to the extent required and beyond this, whether
on its own volition or in compliance with contractual commitments, regulatory or legal standards relating to
environmental protection, so as to realize its best available policy and comply with any legal requirements.
As part of its policy of ecological process improvement, ADAMA also invests in remediation, changes in production
processes, establishment of sewage facilities, as well as in byproduct storage and recycling.
(5) Other environmental information that should be disclosed
No.
40
ADAMA Ltd. Semi-Annual Report 2019
(6) Other related information on environmental protection
At the end of January 2019, preceding the Spring Festival, the Company voluntarily suspended operations at
Sanonda’s old site in Jingzhou, which is in the process of being relocated to a nearby advanced site, due to recording
of higher than permitted levels of wastewater compounds. The Company was subsequently instructed by the local
government not to resume operations before rectification. The Company rectified the discharge levels and resumed
operations at the old site at the beginning of April 2019. For details, please see the announcement published on
www.cninfo.com.cn on February 13, 2019.
Following resumption of operations at the Jingzhou old site in late March, the Company is advancing the gradual
ramp-up of production. The new state-of-the-art wastewater treatment facility is operational, and the upgraded
biological-decomposition systems are being acclimated to the improved wastewater quality. As this progresses, the
Company is experiencing constrained supply in key products manufactured at the site, especially impacting North
America, Latin-America, Asia-Pacific, China, India, Middle-East and Africa, and recorded approximately $20
million in related idleness costs during the half-year.
In recent years, the Company has already invested $125 million in the relocation of the Jingzhou old site, and has
installed advanced production and environmental facilities at a new and already operational site, including an
investment of $16 million in a new, state-of-the-art wastewater facility, which is ready to commence operation.
As the ramp-up of production proceeds, the site continues to remain under inspection of the relevant authorities with
whom the Company is working in close and constant collaboration. In this regard, in recent weeks, the Ecological
Protection Supervision Team of the Central Government commenced on-site inspections at many of ChemChina’s
subsidiaries, including ADAMA, as part of its efforts to strengthen ongoing environmental and safety focus.
ADAMA is working in full cooperation in the context of its 3-year relocation and upgrade process, which is due to
conclude next year, to identify and rectify any safety or environmental issue at Jingzhou.
2. Perform the social responsibility of targeted poverty alleviation
(1) Targeted Poverty Alleviation Planning
The Company actively implements targeted poverty alleviation according to relevant instructions from Jingzhou
Leading Group on Poverty Alleviation.
(2) Half-year Overview
During the reporting period, the employees of the Company visited 20 households below the poverty line in Sanzhou
village and gave 300 RMB to each family.
(3) Performance of Targeted Poverty Alleviation
Measurement
Indicator Number/Progress
unit
I. General condition —— ——
Of which: 1. Capital RMB'0,000 5
II. Itemized investment —— ——
1. Out of poverty by industrial development —— ——
41
ADAMA Ltd. Semi-Annual Report 2019
Measurement
Indicator Number/Progress
unit
Of which: 1.1 type of industrial development out of poverty ——
1.2 number of industrial development out of poverty Unit
1.3 investment amount of industrial development out of
RMB'0,000
poverty
1.4 the number of people out of poverty who were helped to
Number
establish card for archives
2. Out of poverty by transferring employment —— ——
3. Out of poverty by relocating —— ——
4. Out of poverty by education —— ——
5. Out of poverty by improving health —— ——
6. Out of poverty by protecting ecological environment —— ——
7. Subsidy for the poorest —— ——
8. Social poverty alleviation RMB'0,000 5
9. Other items —— ——
III. Received awards(contents and rank) —— ——
(4) Follow-up Plan
The Company will continue to perform its obligation of poverty alleviation based on the requirements of central
and local governments..
XVI. Other Significant Events
□ Applicable √ Not applicable
The Company completed the following two non-significant acquisitions during the reporting period:
On March 19, 2019, the Company entered into an agreement with CNAC and CNAC International Company Limited for the
acquisition of Jiangsu Anpon Electrochemical Co., Ltd. (“Anpon”), a backward-integrated manufacturer of key active ingredients
used in crop protection markets worldwide, most notably Ethephon, Pymetrozine and Buprofezin, as well as intermediates such as
chlor-alkali, with advanced membrane production technology. The above transaction was closed on March 29, 2019.
Significant Events Date of Index of the Disclosed Announcements
Disclosure
March 21, Announcement on the Acquisition of 100% of the Equity Interests in Jiangsu Anpon
Anpon Acquisition 2019 Electrochemical Co., Ltd., in a Related-Party Transaction (Announcement No:
2019-16 ) disclosed at www.cninfo.com.cn.
March 30, Announcement on the Progress of the Acquisition of 100% of the Equity Interests
2019 in Jiangsu Anpon Electrochemical Co., Ltd. (Announcement No: 2019-24)
disclosed at www.cninfo.com.cn.
42
ADAMA Ltd. Semi-Annual Report 2019
In January 2019, the Company, through a subsidiary of Solutions, acquired Bonide Products Inc., a US provider of pest-control
solutions for the consumer Home & Garden use, allowing the Company to bring its advanced technologies and differentiated
portfolio of pest-control directly to the consumers.
Please see key additional information and further details included in the Annex.
XVII. Significant Events of Subsidiaries
□ Applicable √ Not applicable
43
ADAMA Ltd. Semi-Annual Report 2019
Section VI Share Changes and Shareholders’ Profile
I. Changes in shares
1. Changes in shares
Unit: share
Before this change Increase/decrease (+, -) After the change
Issuance Capitalization
Bonus
Amount Proportion of new of public Other Subtotal Amount Proportion
share
shares reserve fund
I. Shares subject to
trading - -
1,915,585,521 78.30% -- -- -- 1,810,887,539 74.02%
Moratorium 104,697,982 104,697,982
(Restricted Shares)
1. State’s shares -- -- -- -- -- -- -- -- --
2. State-owned
legal person’s 1,810,883,039 74.02% -- -- -- -- -- 1,810,883,039 74.02%
shares
3. Shares held
by other -- -- -- - -
104,702,482 4.28% 4,500 0
domestic 104,697,982 104,697,982
investors
Among
which: (1) Shares -- -- -- - -
104,697,982 4.28% 0 0
held by domestic 104,697,982 104,697,982
legal person;
(2) Shares held by
domestic natural 4,500 0 -- -- -- -- -- 4,500 0
person
II. Shares not
subject to trading 530,968,061 21.70% -- -- -- 104,697,982 104,697,982 635,666,043 25.98%
moratorium
Ordinary shares
-- -- --
denominated in 363,918,720 14.87% 104,697,982 104,697,982 468,616,702 19.15%
RMB
Domestically 167,049,341 6.83% 167,049,341 6.83%
44
ADAMA Ltd. Semi-Annual Report 2019
Before this change Increase/decrease (+, -) After the change
Issuance Capitalization
Bonus
Amount Proportion of new of public Other Subtotal Amount Proportion
share
shares reserve fund
listed foreign
shares -- -- -- -- --
III. Total of shares 2,446,553,582 100.00% -- -- -- -- -- 2,446,553,582 100.00%
Reasons for changes in share
□ Applicable √ Not applicable
Approval of share changes
□ Applicable √ Not applicable
The registered status for the change in shares
□ Applicable √ Not applicable
Status of share buyback
□Applicable√Not applicable
Status of share buyback in the way of centralized bidding
□Applicable√Not applicable
Influence of share changes towards financial indexes in the latest year and latest period such as basic EPS and
diluted EPS, and net assets per share belonging to shareholder with ordinary share
□ Applicable √ Not applicable
Other contents that the Company thinks necessary or is asked by securities regulators to be disclosed
□ Applicable √ Not applicable
2. Changes in Restricted Shares
√ Applicable □ Not applicable
45
ADAMA Ltd. Semi-Annual Report 2019
Restricted
Restricted
shares Restricted
shares at the Restricted shares
released shares increased Reason for
Shareholder beginning of at the end of the Released date
during the during the restricting
the reporting reporting period
reporting reporting period
period
period
China Structural Reform Committed not to
33,557,046 33,557,046 0 0 Jan 21, 2019
Fund Co., Ltd. trade
Industrial Bank Co., Ltd, Committed not to Jan 21, 2019
Mixed Securities trade
4,026,800 4,026,800 0 0
Investment Fund, Xingquan
New Vision Investment
Industrial Bank Co., Ltd, Committed not to Jan 21, 2019
Mixed Securities trade
Investment Fund, Aegon- 8,053,736 8,053,736 0 0
Industrial Trend Investment
(LOF)
CCB Principal-ICBC-Avic Committed not to Jan 21, 2019
Trust, Trust Plan of Pooled trade
Funds of CCB Principal
12,885,906 12,885,906 0 0
Private Placement
Investment, Tianqi (2016)
No. 293 of Avic Trust
Caitong Fund Xiangyun Committed not to Jan 21, 2019
No.2 Asset Management 536,912 536,912 0 0 trade
Plan
Caitong Fund Fuchun Committed not to Jan 21, 2019
Chuangyi Private trade
4,697,986 4,697,986 0 0
Placement No.3 Asset
Management Plan
Penghua Fund-CCB-China Committed not to Jan 21, 2019
Life Insurance, Private trade
Placement Portfolio of
Penghua Fund Management 4,697,990 4,697,990 0 0
Co., Ltd Entrusted by China
Life Insurance (Group)
Company
Penghua Fund-Pingan Committed not to Jan 21, 2019
Bank—Huarun Shenguotou 2,684,560 2,684,560 0 0 trade
Trust-Huren Single Trust
China Cinda Asset Committed not to Jan 21, 2019
33,557,046 33,557,046 0 0
Management Co., Ltd. trade
China National 1,810,883,0 Committed not to
0 0 1,810,883,039 August 2, 2020
Agrochemical Co., Ltd. 39 trade
Shares held by a six months after
Jiang Chenggang 4,500 0 0 4,500 supervisor should the expiration of
be locked up. the term
1,915,585,5
Total 104,697,982 0 1,810,887,539 -- --
21
II. Issuance and Listing of Securities
□ Applicable √ Not applicable
46
ADAMA Ltd. Semi-Annual Report 2019
III. Total Number of Shareholders and Their Shareholdings
Unit: share
Total number of preferred
51,819 (the number of ordinary A
Total number of common shareholders share shareholders is 35,774; shareholders that had resumed their
0
at the end of the Reporting Period the number of B share shareholders is voting right at the end of the
16,045)
Reporting Period (if any)
Shareholding of common shareholders holding more than 5% shares or the top 10 shareholders
Increase / Pledged or
Number of
decrease frozen shares
Holding Number of shares held
Nature of Number of of shares
Name of shareholder percentage restricted not subject to
shareholder shares held during
(%) shares held trading Status Number
Reporting
moratorium
Period
State-
China National Agrochemical owned
74.02% 1,810,883,039 - 1,810,883,039 0 - -
Co., Ltd. legal
person
State-
Jingzhou Sanonda Holding Co., owned
4.89% 119,687,202 - - 119,687,202 - -
Ltd. legal
person
State-
China Cinda Asset Management owned
1.37% 33,557,046 - - 33,557,046 - -
Co., Ltd. legal
person
State-
China Structural Reform Fund owned
1.37% 33,557,046 - - 33,557,046 - -
Co., Ltd. legal
person
Portfolio No.503 of National
Others 0.53% 12,999,893 6,799,972 - 12,999,893 - -
Social Security Fund
CCB Principal-ICBC-Avic
Trust, Trust Plan of Pooled
Funds of CCB Principal Private Others 0.53% 12,885,906 - - 12,885,906 - -
Placement Investment, Tianqi
(2016) No. 293 of Avic Trust
Industrial Bank Co., Ltd, Mixed
Securities Investment Fund,
Others 0.33% 8,053,736 - - 8,053,736 - -
Aegon-Industrial Trend
Investment (LOF)
Domestic
Jiang Yun 0.27% 6,500,000 579,927 - 6,500,000 - -
individual
Caitong Fund Fuchun Chuangyi
Private Placement No.3 Asset Others 0.19% 4,697,986 - - 4,697,986 - -
Management Plan
GUOTAI JUNAN Foreign
SECURITIES(HONGKONG) legal 0.19% 4,697,389 -216,755 0 4,697,389 - -
LIMITED person
Strategic investors or the general legal person
due to the placement of new shares become Not applicable
the top 10 shareholders (if any) (note 3)
Explanation on associated relationship or/and Jingzhou Sanonda Holdings Co., Ltd. and CNAC are related parties, and are acting-in-
persons concert parties as prescribed in the Administrative Methods for Acquisition of Listed
47
ADAMA Ltd. Semi-Annual Report 2019
Companies. Sanonda Holding is a controlled subsidiary of CNAC. It is unknown
whether the other shareholders are related parties or acting-in-concert parties as
prescribed in the Administrative Methods for Acquisition of Listed Companies.
Particulars about shares held by top 10 common shareholders not subject to trading moratorium
Number of shares held not subject to trading Type of share
Name of shareholder
moratorium at the end of the Period Type of share Number
Jingzhou Sanonda Holding Co., Ltd. 119,687,202 RMB ordinary share 119,687,202
China Cinda Asset Management Co., Ltd. 33,557,046 RMB ordinary share 33,557,046
China Structural Reform Fund Co., Ltd. 33,557,046 RMB ordinary share 33,557,046
Portfolio No.503 of National Social Security RMB ordinary share
12,999,893 12,999,893
Fund
CCB Principal-ICBC-Avic Trust, Trust Plan RMB ordinary share
of Pooled Funds of CCB Principal Private
12,885,906 12,885,906
Placement Investment, Tianqi (2016) No.
293 of Avic Trust
Industrial Bank Co., Ltd, Mixed Securities RMB ordinary share
Investment Fund, Aegon-Industrial Trend 8,053,736 8,053,736
Investment (LOF)
Jiang Yun 6,500,000 RMB ordinary share 6,500,000
Caitong Fund Fuchun Chuangyi Private
4,697,986 4,697,986
Placement No.3 Asset Management Plan RMB ordinary share
GUOTAI JUNAN Domestically listed
4,697,389 4,697,389
SECURITIES(HONGKONG) LIMITED foreign share
State-owned Assets Administration Bureau RMB ordinary share
4,169,266 4,169,266
of Qichun County
Explanation on associated relationship among
the top ten shareholders of tradable share not
Qichun County Administration of State-Owned Assets held shares of the Company on
subject to trading moratorium, as well as
behalf of the government. It is unknown whether the other shareholders are related
among the top ten shareholders of tradable
parties or acting-in-concert parties as prescribed in the Administrative Methods for
share not subject to trading moratorium and
Acquisition of Listed Companies
top ten shareholders, or explanation on acting-
in-concert
Particular about shareholder participate in the
securities lending and borrowing business (if -
any) (note 4)
Did any top 10 common shareholders or the top 10 common shareholders not subject to trading moratorium of the
Company carry out a promissory buy-back in the Reporting Period?
□ Yes √ No
The top 10 common shareholders or the top 10 common shareholders not subject to trading moratorium of the
48
ADAMA Ltd. Semi-Annual Report 2019
Company had not carried out any agreed buy-back in the Reporting Period.
IV. Change of the Controlling Shareholder or the Actual Controller
Change of the controlling shareholder in the Reporting Period
□ Applicable √ Not applicable
There was no change of the controlling shareholder of the Company in the Reporting Period.
Change of the actual controller in the Reporting Period
□ Applicable √ Not applicable
There was no change of the actual controller of the Company in the Reporting Period.
49
ADAMA Ltd. Semi-Annual Report 2019
Section VII Preference Shares
□ Applicable √ Not applicable
No preference shares in the Reporting Period.
50
ADAMA Ltd. Semi-Annual Report 2019
Section VIII Directors, Supervisors and Senior Management
I Changes in Shareholdings of Directors, Supervisors and Senior Management
□ Applicable √ Not applicable
No such cases in the Reporting Period. For details, see Annual Report 2018.
II Changes in Directors, Supervisors and Senior Management
□Applicable √ Not applicable
No such cases in the Reporting Period. For details, see Annual Report 2018.
51
ADAMA Ltd. Semi-Annual Report 2019
Section IX Corporate Bonds
Are there any corporate bonds publicly offered and listed on the stock exchange, which were undue before the approval
date of this Report or were due but could not be redeemed in full?
No
- 52 -
ADAMA Ltd. Semi-Annual Report 2019
Section X Financial Report
I. Audit report
Was the half-year report audited?
□ Yes √ No
The half-year report was not audited.
II. Financial Statements
Notes to the financial statements are presented in RMB’000.
- 53 -
ADAMA Ltd. Semi-Annual Report 2019
ADAMA Ltd.
(Expressed in RMB '000)
Consolidated Balance Sheet
June 30 December 31
Notes 2019 2018 (Restated)
Current assets
Cash at bank and on hand V.1 5,425,392 6,400,190
Financial assets held for trading V.2 33,074 46,095
Derivative financial assets V.3 416,991 517,726
Bills receivable V.4 54,702 40,569
Accounts receivable V.5 7,674,381 6,573,100
Receivables financing V.6 68,629 73,216
Prepayments V.7 319,471 410,506
Other receivables V.8 929,945 1,079,332
Inventories V.9 10,337,924 9,433,876
Non-current assets due within one year V.20 - 48
Other current assets V.10 715,767 660,806
Total current assets 25,976,276 25,235,464
Non-current assets
Long-term receivable V.11 174,246 157,600
Long-term equity investments V.12 135,075 108,350
Other equity investments V.13 87,812 91,559
Investment properties 3,933 4,094
Fixed assets V.14 7,167,032 7,263,866
Construction in progress V.15 534,351 487,204
Right-of-use assets V.16 554,372 N/A
Intangible assets V.17 5,802,932 5,741,962
Goodwill V.18 4,298,747 4,085,945
Deferred tax assets V.19 767,928 741,737
Other non-current assets V.20 307,385 217,282
Total non-current assets 19,833,813 18,899,599
Total assets 45,810,089 44,135,063
- 54 -
ADAMA Ltd. Semi-Annual Report 2019
ADAMA Ltd.
(Expressed in RMB '000)
Consolidated Balance Sheet (continued)
June 30 December 31
Notes 2019 2018 (Restated)
Current liabilities
Short-term loans V.21 2,308,286 1,122,774
Derivative financial liabilities V.22 688,267 1,451,670
Bills payable V.23 375,777 445,533
Accounts payable V.24 4,178,668 4,627,936
Contract liabilities V.25 917,747 848,402
Employee benefits payable V.26 912,354 944,175
Taxes payable V.27 437,227 616,780
Other payables V.28 1,970,641 1,197,579
Non-current liabilities due within one year V.29 422,208 301,814
Other current liabilities V.30 344,127 578,184
Total current liabilities 12,555,302 12,134,847
Non-current liabilities
Long-term loans V.31 673,796 235,819
Debentures payable V.32 8,152,990 7,649,098
Lease Liabilities V.33 418,814 N/A
Long-term payables 26,419 25,106
Long-term employee benefits payable V.34 644,449 620,646
Provisions V.35 135,924 132,351
Deferred tax liabilities V.19 350,735 392,404
Other non-current liabilities V.36 372,256 199,930
Total non-current liabilities 10,775,383 9,255,354
Total liabilities 23,330,685 21,390,201
Shareholders' equity
Share capital V.37 2,446,554 2,446,554
Capital reserve V.38 12,903,168 13,324,491
Other comprehensive income V.39 972,845 1,090,827
Special reserves 16,798 13,536
Surplus reserve V.40 240,162 240,162
Retained earnings V.41 5,899,877 5,629,292
Total shareholders’ equity 22,479,404 22,744,862
Total liabilities and shareholders’ equity 45,810,089 44,135,063
Chen Lichtenstein Aviram Lahav
Legal representative Chief of accounting work & Chief of accounting organ
These financial statements were approved by the Board of Directors of the Company on August 21, 2019.
The notes on pages 54 to 117 form part of these financial statements.
- 55 -
ADAMA Ltd. Semi-Annual Report 2019
ADAMA Ltd.
(Expressed in RMB '000)
Balance Sheet
June 30 December 31
Notes 2019 2018
Current assets
Cash at bank and on hand XV.1 2,173,167 2,058,253
Accounts receivable XV.2 252,070 692,199
Receivables financing XV.3 46,331 19,917
Prepayments 32,916 10,500
Other receivables XV.4 13,912 31,748
Inventories 107,808 147,975
Other current assets 1,743 1,343
Total current assets 2,627,947 2,961,935
Non-current assets
Long-term equity investments XV.5 16,403,642 15,939,826
Other equity investments 86,059 80,119
Investment properties 3,932 4,094
Fixed assets 932,920 1,012,674
Construction in progress 259,900 188,020
Right-of-use assets 609 -
Intangible assets 172,650 174,997
Deferred tax assets 58,433 48,103
Other non-current assets 110,631 54,060
Total non-current assets 18,028,776 17,501,893
Total assets 20,656,723 20,463,828
Current liabilities
Short-term loans 20,000 20,000
Bills payables 146,595 209,700
Accounts payables 130,843 182,110
Contract liabilities 3,096 9,983
Employee benefits payable 22,236 25,758
Taxes payable 3,032 55,198
Other payables 849,222 187,762
Non-current liabilities due within one year 631 72,000
Total current liabilities 1,175,655 762,511
Non-current liabilities
Long-term employee benefits payable 98,241 100,144
Provisions 16,865 16,454
Other non-current liabilities 171,770 171,770
Total non-current liabilities 286,876 288,368
Total liabilities 1,462,531 1,050,879
Shareholders’ equity
Share capital V.38 2,446,554 2,446,554
Capital reserve 15,463,245 15,414,429
Other comprehensive income 48,217 43,167
Special reserves 14,046 11,564
Surplus reserve V.41 240,162 240,162
Retained earnings 981,968 1,257,073
Total shareholders’ equity 19,194,192 19,412,949
Total liabilities and shareholders’ equity 20,656,723 20,463,828
- 56 -
ADAMA Ltd.
(Expressed in RMB '000)
Consolidated Income Statement
Six months ended June 30
Notes 2019 2018 (Restated)
I. Operating income V.42 13,616,032 13,639,073
Less: Cost of sales V.42 9,023,242 9,042,183
Taxes and surcharges V.43 46,226 60,548
Selling and Distribution expenses V.44 2,499,774 2,256,991
General and administrative expenses V.45 628,259 523,821
Research and Development expenses V.46 210,699 156,275
Financial expenses V.47 938,196 347,554
Including: Interest expense 325,138 306,821
Interest
income 41,534 41,465
Add: Investment income, net V.48 (514,443) 147,053
Including: Income from investment
in associates and
joint ventures 21,724 12,758
Gain (loss) from changes in fair value V.49 884,135 (243,376)
Credit impairment loss V.50 3,347 (6,097)
Asset impairment losses V.51 (23,809) (37,783)
Gain from disposal of assets V.52 115,514 1,997,170
II. Operating profit 734,380 3,108,668
Add: Non-operating income 10,811 26,884
Less: Non-operating expenses V.53 16,016 8,827
III. Total profit 729,175 3,126,725
Less: Income tax expense V.54 140,537 737,558
IV. Net profit 588,638 2,389,167
(1). Classified by nature of operations
(1.1). Continuing operations 588,638 2,389,167
(2). Classified by ownership
(2.1). Shareholders of the Company 588,638 2,389,167
V. Other comprehensive income, net of tax V. 39 (113,471) 505,361
Other comprehensive income (net of tax)
attributable to shareholders of the Company (113,471) 505,361
(1) Items that will not be reclassified to profit or loss: (4,417) 11,106
(1.1) Re-measurement of defined benefit plan liability (13,978) 11,106
(1.2) FV changes in other equity investment 9,561 -
(2) Items that were or will be reclassified to profit or loss (109,054) 494,255
(2.1) Effective portion of gains or loss of cash flow
hedge (151,993) 293,474
(2.2) Translation differences of foreign financial
statements 42,939 200,781
VI. Total comprehensive income for the period attributable to
Shareholders of the Company 475,167 2,894,528
VII. Earnings per share XIV.2
(1) Basic earnings per share (Yuan/share) 0.24 0.98
(2) Diluted earnings per share (Yuan/share) N/A N/A
For business combination under common control in the reporting period, net profit of the acquiree before the business
combination was 38,027 thousand RMB; net profit of the acquiree in the comparative period (six months ended June 30, 2018)
was 22,089 thousand RMB.
- 57 -
ADAMA Ltd.
(Expressed in RMB '000)
Income Statement
Six months ended June 30
Notes 2019 2018
I. Operating income XV.6 735,426 1,666,573
Less: Operating costs XV.6 518,561 1,169,757
Taxes and surcharges 8,910 21,211
Selling and Distribution expenses 43,054 69,533
General and administrative expenses 190,950 85,677
Research and Development expenses 24,464 2,430
Financial expenses (income) (1,254) (20,437)
Including: Interest expense 2,059 4,918
Interest income 14,333 13,035
Add: Credit impairment loss (1,633) (3,073)
Asset Impairment losses (272) (905)
II. Operating Profit (51,164) 334,424
Add: Non-operating income 4,430 975
Less: Non-operating expenses 1,896 123
III. Total profit (48,630) 335,276
Less: Income tax expense (income) (10,841) 52,893
IV. Net profit (37,789) 282,383
Continuing operations (37,789) 282,383
V. Other comprehensive income, net of tax 5,050 (391)
(1) Items that will not be reclassified to profit or loss 5,050 (391)
(1.1) Re-measurement of defined benefit plan liability - (391)
(1.2) FV changes in other equity investment 5,050 -
VI. Total comprehensive income for the period (32,739) 281,992
- 58 -
ADAMA Ltd.
(Expressed in RMB '000)
Consolidated Cash Flow Statement
Six months ended June 30
Notes 2019 2018 (Restated)
I. Cash flows from operating activities:
Cash received from sale of goods and rendering of services 12,817,678 12,600,613
Refund of taxes and surcharges 39,737 16,347
Cash received relating to other operating activities V.56(1) 258,378 260,834
Sub-total of cash inflows from operating activities 13,115,793 12,877,794
Cash paid for goods and services 9,779,321 8,642,298
Cash paid to and on behalf of employees 1,801,614 1,779,363
Payments of taxes and surcharges 465,018 241,030
Cash paid relating to other operating activities V.56(2) 1,374,790 1,375,300
Sub-total of cash outflows from operating activities 13,420,743 12,037,991
Net cash flows from (used in) operating activities V.57(1)a (304,950) 839,803
II. Cash flows from investing activities:
Cash received from disposal of investments 20,173 9,792
Cash received from returns of investments 3,372 -
Net cash received from disposal of fixed assets, intangible
assets and other long-term assets 30,843 2,444,437
Cash received relating to other investing activities V.56(3) 9,327 57
Sub-total of cash inflows from investing activities 63,715 2,454,286
Cash paid to acquire fixed assets, intangible assets and
other long-term assets 606,126 2,678,605
Net cash paid to acquire subsidiaries or other business units V.57(2) 826,805 9,332
Cash paid relating to other investing activities 778 -
Sub-total of cash outflows from investing activities 1,433,709 2,687,937
Net cash flows used in investing activities (1,369,994) (233,651)
III. Cash flows from financing activities:
Cash received from borrowings 1,987,810 396,500
Cash received from other financing activities V.56(4) 61,701 -
Sub-total of cash inflows from financing activities 2,049,511 396,500
Cash repayments of borrowings 463,876 2,497,633
Cash payment for dividends, profit distributions and interest 406,111 294,135
Including: Dividends paid to non-controlling interest 28,936 16,028
Cash paid relating to other financing activities V.56(5) 443,891 32,619
Sub-total of cash outflows from financing activities 1,313,878 2,824,387
Net cash from (used in) financing activities 735,633 (2,427,887)
IV. Effects of foreign exchange rate changes on cash and cash equivalents (25,065) (1,593)
V. Net increase (decrease) in cash and cash equivalents V.57(1)b (964,376) (1,823,328)
Add: Cash and cash equivalents at the beginning of the year 6,346,196 7,979,502
VI. Cash and cash equivalents at the end of the period V.57(3) 5,381,820 6,156,174
- 59 -
ADAMA Ltd.
(Expressed in RMB '000)
Cash Flow Statement
Six months ended June 30
Notes 2019 2018
I. Cash flows from operating activities:
Cash received from sale of goods and rendering of services 1,034,417 1,289,145
Refund of taxes and surcharges 23,042 166
Cash received relating to other operating activities XV.7(1) 18,958 15,192
Sub-total of cash inflows from operating activities 1,076,417 1,304,503
Cash paid for goods and services 535,991 587,656
Cash paid to and on behalf of employees 94,867 91,839
Payments of taxes and surcharges 73,468 57,171
Cash paid relating to other operating activities XV.7(2) 89,570 86,182
Sub-total of cash outflows from operating activities 793,896 822,848
Net cash flows from operating activities XV.8 282,521 481,655
II. Cash flows from investing activities:
Cash received relating to other investing activities 1,808 -
Sub-total of cash inflows from investing activities 1,808 -
Cash paid to acquire fixed assets, intangible assets and
other long-term assets 92,180 48,465
Sub-total of cash outflows from investing activities 92,180 48,465
Net cash flows used in investing activities (90,372) (48,465)
III.Cash flows from financing activities:
Cash received relating to other financing activities XV.7.(3) 11,947 -
Sub-total of cash inflows from financing activities 11,947 -
Cash repayments of borrowings 72,000 96,590
Cash payment for dividends, profit distributions or interest 2,059 4,767
Cash paid relating to other financing activities XV.7.(4) 200 424,313
Sub-total of cash outflows from financing activities 74,259 525,670
Net cash flow used in financing activities (62,312) (525,670)
IV. Effects of foreign exchange rate changes on cash and cash equivalents (2,976) (9,951)
V. Net increase in cash and cash equivalents 126,861 (102,431)
Add: Cash and cash equivalents at the beginning of the year XV.1 2,005,313 1,864,003
VI. Cash and cash equivalents at the end of the period XV.1 2,132,174 1,761,572
- 60 -
ADAMA Ltd.
(Expressed in RMB '000)
Consolidated Statement of Changes in Shareholders’ Equity
For the six months ended June 30, 2019
Attributable to shareholders of the Company
Other
comprehensive Special
Share capital Capital reserve income reserves Surplus reserve Retained earnings Total
I. Balance at December 31, 2018 2,446,554 12,975,456 1,090,952 13,536 240,162 5,513,466 22,280,126
Add: Business combination under common control* - 349,035 (125) - - 115,826 464,736
II. Balance at January 1, 2019 2,446,554 13,324,491 1,090,827 13,536 240,162 5,629,292 22,744,862
III. Changes in equity for the period - (421,323) (117,982) 3,262 - 270,585 (265,458)
1. Total comprehensive income - - (113,471) - - 588,638 475,167
2. Owner’s contributions and reduction - (415,000) - - - - (415,000)
2.1 Consideration for Business combination
under common control - (415,000) - - - - (415,000)
3. Appropriation of profits - (6,323) - - - (322,564) (328,887)
3.1 Distribution to owners - - - - - (293,628) (293,628)
3.2 Distribution to non-controlling interest - - - - - (28,936) (28,936)
3.3 Other - (6,323) - - - - (6,323)
4. Transfers within owners’ equity - - (4,511) - - 4,511 -
4.1 Others - - (4,511) - - 4,511 -
5. Special reserve - - - 3,262 - - 3,262
5.1 Transfer to special reserve - - - 10,646 - - 10,646
5.2 Amount utilized - - - (7,384) - - (7,384)
IV. Balance at June 30, 2019 2,446,554 12,903,168 972,845 16,798 240,162 5,899,877 22,479,404
*See note VI(2) – Change in consolidation scope
- 61 -
ADAMA Ltd.
(Expressed in RMB '000)
Consolidated Statement of Changes in Shareholders’ Equity (continued)
For the six months ended June 30, 2018
Attributable to shareholders of the Company
Other
comprehensive Special
Share capital Capital reserve income reserves Surplus reserve Retained earnings Total
I. Balance at December 31, 2017 2,446,554 12,982,277 (154,701) 9,349 207,823 3,286,711 18,778,013
Add: Changes in accounting policy 50,621 39,481 90,102
Business combination under common
control* - 349,035 32 - - 55,045 404,112
II. Balance at January 1, 2018 2,446,554 13,331,312 (104,048) 9,349 207,823 3,381,237 19,272,227
III. Changes in equity for the period - (9,371) 505,361 4,883 - 2,234,372 2,735,245
1. Total comprehensive income - - 505,361 - - 2,389,167 2,894,528
2. Owner’s contributions and reduction - (9,371) - - - - (9,371)
2.1 Others - (9,371) - - - - (9,371)
3. Appropriation of profits - - - - - (154,795) (154,795)
3.1 Distribution to owners - - - - - (154,133) (154,133)
3.2 Distribution to non-controlling interest - - - - - (16,028) (16,028)
3.3 Other - - - - - 15,366 15,366
4. Special reserve - - - 4,883 - - 4,883
4.1 Transfer to special reserve - - - 11,063 - - 11,063
4.2 Amount utilized - - - (6,180) - - (6,180)
IV. Balance at June 30, 2018 2,446,554 13,321,941 401,313 14,232 207,823 5,615,609 22,007,472
*See note VI(2) – Change in consolidation scope
- 62 -
Statement of Changes in Shareholders’ Equity
For the six months ended June 30, 2019
Attributable to shareholders of the Company
Other
Share Capital comprehensive Special Surplus Retained
capital reserve income reserves reserve earnings Total
I. Balance at December 31, 2018 2,446,554 15,414,429 43,167 11,564 240,162 1,257,073 19,412,949
II. Changes in equity for the period - 48,816 5,050 2,482 - (275,105) (218,757)
1. Total comprehensive income - - 5,050 - - (37,789) (32,739)
2. Owner’s contributions and reduction - 48,816 - - - - 48,816
2.1 Other - 48,816 - - - - 48,816
3. Appropriation of profits - - - - - (237,316) (237,316)
3.1 Transfer to Distribution to shareholders - - - - - (237,316) (237,316)
4. Special reserve - - - 2,482 - - 2,482
4.1 Transfer to special reserve - - - 5,462 - - 5,462
4.2 Amount utilized - - - (2,980) - - (2,980)
Ⅲ. Balance at June 30, 2019 2,446,554 15,463,245 48,217 14,046 240,162 981,968 19,194,192
For the six months ended June 30, 2018
Attributable to shareholders of the Company
Other
Share Capital comprehensive Special Surplus Retained
capital reserve income reserve reserve earnings Total
Balance at December 31, 2017 2,446,554 15,423,034 - 10,040 207,823 1,110,649 19,198,100
Add: Changes in accounting policy 50,621 9,500 60,121
I. Balance at January 1, 2018 2,446,554 15,423,034 50,621 10,040 207,823 1,120,149 19,258,221
II. Changes in equity for the period - (9,371) (391) 3,671 - 128,250 122,159
1. Total comprehensive income - - (391) - - 282,383 281,992
2. Owner’s contributions and reduction - (9,371) - - - - (9,371)
2.1 Others - (9,371) - - - - (9,371)
3. Appropriation of profits - - - - - (154,133) (154,133)
3.1 Dividend to Shareholders - - - - - (154,133) (154,133)
4. Special reserve - - - 3,671 - - 3,671
4.1 Transfer to special reserve - - - 5,215 - - 5,215
4.2 Amount utilized - - - (1,544) - - (1,544)
III. Balance at June 30, 2018 2,446,554 15,413,663 50,230 13,711 207,823 1,248,399 19,380,380
- 63 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
I BASIC CORPORATE INFORMATION
ADAMA Ltd (former name: Hubei Sanonda Co., Ltd., hereinafter the “Company” or the “Group”) is a
company limited by shares established in China with its head office located in Hubei Jingzhou.
During July 2017 a major assets restructuring was successfully completed, with the acquisition of Adama
Agricultural Solutions Ltd (hereinafter: "Solutions"), a wholly-owned subsidiary of China National
Agrochemical Corporation Limited (hereinafter: "CNAC").
Following the completion of the major assets restructuring, Solutions became a wholly owned subsidiary of
the Company. The combination was considered as a business combination under common control.
The Company's parent company is CNAC, and the ultimate holding company is China National Chemical
Corporation (hereinafter - “ChemChina”).
The principal activities of the Company and its subsidiaries (together referred to as the “Group”) are engaged
in development, manufacturing and marketing of agrochemicals, intermediate materials for other industries,
food additives and synthetic aromatic products, mainly for export. For information about the largest
subsidiaries of the Company, refer to Note VII.
The Company’s consolidated financial statements had been approved by the Board of Directors of the
Company on August 21, 2019.
Details of the scope of consolidated financial statements are set out in Note VII "Interest in other entities",
whereas the changes of the scope of consolidation are set out in Note VI "Changes in consolidation scope".
II BASIS OF PREPARATION
1. Basis of preparation
The Group has adopted the Accounting Standards for Business Enterprises issued by the Ministry of Finance
(the "MoF"). In addition, the Group has disclosed relevant financial information in these financial statements
in accordance with Information Disclosure and Presentation Rules for Companies Offering Securities to the
Public No. 15 － General Provisions on Financial Reporting (revised by China Securities Regulatory
Commission (hereinafter "CSRC”) in 2014).
- 64 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
II BASIS OF PREPARATION - (cont’d)
2. Accrual basis and measurement principle
The Group has adopted the accrual basis of accounting. Except for certain financial instruments which are
measured at fair value, deferred tax assets and liabilities, assets and liabilities relating to employee benefits,
provisions, and investments in associated companies and joint ventures, the Group adopts the historical cost
as the principle of measurement in the financial statements. Where assets are impaired, provisions for asset
impairment are made in accordance with relevant requirements.
In the historical cost measurement, assets obtained shall be measured at the amount of cash or cash
equivalents or fair value of the consideration paid. Liabilities shall be measured at the actual amount of cash
or assets received, or the contractual amount in a present obligation, or the prospective amount of cash or
cash equivalents paid to discharge the liabilities.
Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable,
willing market participants in an arm’s length transaction at the measurement date. Fair value measured and
disclosed in the financial statements are determined on this basis whether it is observable or estimated by
valuation techniques.
The following table provides an analysis, grouped into Levels 1 to 3 based on the degree to which the fair
value input is observable and significant to the fair value measurement as a whole:
Level 1 - based on quoted prices (unadjusted) in active markets;
Level 2 - based on valuation techniques for which the lowest level input that is significant to the fair value
measurement is observable (other than quoted prices included within Level 1), either directly or
indirectly;
Level 3 - based on valuation techniques for which the lowest level input that is significant to the fair value
measurement is unobservable.
3. Going concern
The financial statements have been prepared on the going concern basis.
The Group has performed an assessment of the going concern for the following 12 months from June 30,
2019 and have not identified any significant doubtful matter or event on the going concern, as such the
financial statement have been prepared on the going concern basis.
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
1. Statement of compliance
These financial statements are in compliance with the Accounting Standards for Business Enterprises to truly
and completely reflect consolidated and the Company's financial position as at June 30, 2019 and
consolidated and the Company's operating results, changes in shareholders' equity and cash flows for the six
months then ended.
2. Accounting period
The Group has adopted the calendar year as its accounting year, i.e. from 1 January to 31 December.
- 65 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
3. Business cycle
The company takes the period from the acquisition of assets for processing to their realisation in cash or cash
equivalents as a normal operating cycle. The operating cycle for the company is 12 months.
4. Reporting currency
The Company and its domestic subsidiaries choose Renminbi (hereinafter "RMB") as their functional
currency. Functional currencies of overseas subsidiaries are determined on the basis of the principal
economic environment in which the overseas subsidiaries operate. The functional currency of the overseas
subsidiaries is mainly the United States Dollar (hereinafter "USD"). The presentation currency of these
financial statements is Renminbi.
5. Business combinations
5.1 Business combinations involving enterprises under common control
A business combination involving enterprises under common control is a business combination in which all
of the combining enterprises are ultimately controlled by the same party or parties both before and after the
combination, and that control is not transitory. Assets and liabilities obtained shall be measured at their
respective carrying amounts as recorded by the combining entities at the date of the combination. The
difference between the carrying amount of the net assets obtained and the carrying amount of the
consideration paid for the combination is adjusted to the share premium in capital reserve. If the share
premium is not sufficient to absorb the difference, any excess shall be adjusted against retained earnings.
Costs that are directly attributable to the combination are charged to profit or loss in the period in which they
are incurred.
During March 2019, the acquisition of Jiangsu Anpon Electrochemical co. LTD. (Hereinafter – “Anpon”), a
wholly-owned subsidiary of CNAC, was successfully completed. Anpon became a wholly owned subsidiary of the
Company. The combination was considered as a business combination under common control. On March 29,
2019 the entire share capital of Anpon was transferred from CNAC to the Company - (See note VI.2 – Change in
consolidation scope).
5.2 Business combinations not involving enterprises under common control and goodwill.
A business combination not involving enterprises under common control is a business combination in which
all of the combining enterprises are not ultimately controlled by the same party or parties before and after
the combination.
The costs of business combination are the fair value of the assets paid, liabilities incurred or assumed and
equity instruments issued by the acquirer for the purpose of achieving the control rights over the acquiree.
The intermediary costs such as audit, legal services and assessment consulting costs and other related
management costs that are directly attributable to the combination by the acquirer are charged to profit or
loss in the period in which they are incurred. Direct capital issuance costs incurred in respect of equity
instruments or liabilities issued pursuant to the business combination should be charged to the respect equity
instruments or liabilities upon initial recognition of the underlying equity instruments or liabilities.
- 66 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
5. Business combinations - (cont’d)
5.2 Business combinations not involving enterprises under common control and goodwill - (cont’d)
The acquiree’s identifiable assets, liabilities and contingent liabilities acquired by the acquirer in a business
combination, that meet the recognition criteria shall be measured at fair value at the acquisition date. Where
the cost of combination exceeds the acquirer’s interest in the fair value of the acquiree’s identifiable net
assets, the difference is treated as an asset and recognized as goodwill, which is measured at cost on initial
recognition. Where the cost of combination is less than the acquirer’s interest in the fair value of the
acquiree’s identifiable net assets, the remaining difference is recognized immediately in profit or loss for the
current year.
The goodwill raised because of the business combination should be separately disclosed in the consolidated
financial statement and measured by the initial amount less any accumulative impairment provision.
6. Basis for preparation of consolidated financial statements
The scope of consolidation in consolidated financial statements is determined on the basis of control. Control
is achieved when the Company has power over the investee; is exposed, or has rights, to variable returns
from its involvement with the investee; and has the ability to use its power to affect its returns.
For a subsidiary disposed of by the Group, the operating results and cash flows before the date of disposal
(the date when control is lost) are included in consolidated income statement and consolidated statement of
cash flows.
For a subsidiary acquired through a business combination not involving enterprises under common control,
the operating results and cash flows from the acquisition date (the date when control is obtained) are included
in consolidated income statement and consolidated statement of cash flows.
For a subsidiary acquired through a business combination involving enterprises under common control, it
will be fully consolidated into consolidated financial statements from the date on which the subsidiary was
ultimately under common control by the same party or parties.
The significant accounting policies and accounting years adopted by the subsidiaries are determined based
on the uniform accounting policies and accounting years set out by the Company.
All significant intra-group balances, transactions and unrealized profits are eliminated on consolidation.
The portion of subsidiaries' equity that is not attributable to the Company is treated as non-controlling
interests and presented as "non-controlling interests" in the shareholders’ equity in consolidated balance
sheet. The portion of net profits or losses of subsidiaries for the period attributable to non-controlling
interests is presented as "non-controlling interests" in consolidated income statement below the "net profit"
line item. Total comprehensive income attributable to non-controlling shareholders is presented separately
in the consolidated income statement below the total comprehensive income line item.
- 67 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
6. Basis for preparation of consolidated financial statements - (cont’d)
When the amount of loss for the period attributable to the non-controlling shareholders of a subsidiary
exceeds the non-controlling shareholders' portion of the opening balance of owners' equity of the subsidiary,
the excess amount is still allocated against non-controlling interests.
Acquisition of non-controlling interests or disposal of equity interest in a subsidiary that does not result in
the loss of control over the subsidiary is accounted for as equity transactions. The carrying amounts of the
Company's interests and non-controlling interests are adjusted to reflect the changes in their relative interests
in the subsidiary. The difference between the amount by which the non-controlling interests are adjusted and
the fair value of the consideration paid or received is adjusted to capital reserve under owners' equity. If the
capital reserve is not sufficient to absorb the difference, the excess is adjusted against retained earnings.
Other comprehensive income attributed to the non-controlling interest is reattributed to the shareholders of
the company.
A put option issued by the Group to holders of non-controlling interests that is settled in cash or other
financial instrument is recognized as a liability at the present value of the exercise price. The Group’s share
of a subsidiary’s profits includes the share of the holders of the non-controlling interests to which the Group
issued a put option.
When the Group loses control over a subsidiary due to disposal of certain equity interest or other reasons,
any retained interest is re-measured at its fair value at the date when control is lost. The difference between
(i) the aggregate of the consideration received on disposal and the fair value of any retained interest and (ii)
the share of the former subsidiary's net assets cumulatively calculated from the acquisition date according to
the original proportion of ownership interest is recognized as investment income in the period in which
control is lost. Other comprehensive income associated with the disposed subsidiary is reclassified to
investment income in the period in which control is lost.
7. Classification and accounting methods of joint arrangement
Joint arrangement involves by two or more parties jointly control. Joint control is the contractually agreed
sharing of control over an economic activity, and exists only when the strategic financial and operating
decisions relating to the activity require the unanimous consent of the parties sharing control (the ventures).
The Group makes the classification of the joint arrangements according to the rights and obligations in the
joint arrangements to either joint operations or joint ventures.
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have
rights to the net assets of the joint arrangement. Joint ventures are accounted for using the equity method.
8. Cash and cash equivalents
Cash comprises cash on hand and deposits that can be readily withdrawn on demand. Cash equivalents are
the Group's short-term, highly liquid investments that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value.
- 68 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
9. Translation of transactions and financial statements denominated in foreign currencies
9.1 Transactions denominated in foreign currencies
On initial recognition, foreign currency transactions are translated into functional currency using the spot
exchange rate prevailing at the date of transaction.
At the balance sheet date, foreign currency monetary items are translated into functional currency using the
spot exchange rates at the balance sheet date. Exchange differences arising from the differences between the
spot exchange rates prevailing at the balance sheet date and those on initial recognition or at the previous
balance sheet date are recognized in profit or loss for the period, except that (i) exchange differences related
to a specific-purpose borrowing denominated in foreign currency that qualify for capitalization are
capitalized as part of the cost of the qualifying asset during the capitalization period. (ii) exchange differences
related to hedging instruments for the purpose of hedging against foreign currency risks are accounted for
using hedge accounting.
When preparing financial statements involving foreign operations, if there is any foreign currency monetary
items, which in substance forms part of the net investment in the foreign operations, exchange differences
arising from the changes of foreign currency are recorded as other comprehensive income, and will be
reclassified to profit or loss upon disposal of the foreign operations.
Foreign currency non-monetary items measured at historical cost are translated to the amounts in functional
currency at the spot exchange rates on the dates of the transactions and the amounts in functional currency
remain unchanged.
9.2 Translation of financial statements denominated in foreign currency
For the purpose of preparing consolidated financial statements, financial statements of a foreign operation
are translated from the foreign currency into RMB using the following method: assets and liabilities on the
balance sheet are translated at the spot exchange rate prevailing at the balance sheet date; shareholders' equity
items except for retained earnings are translated at the spot exchange rates at the dates on which such items
arose; all items in the income statement as well as items reflecting the distribution of profits are translated at
average rate or at the spot exchange rates on the dates of the transactions; the opening balance of retained
earnings is the translated closing balance of the previous year's retained earnings; the closing balance of
retained earnings is calculated and presented on the basis of each translated income statement and profit
distribution item. The difference between the translated assets and the aggregate of liabilities and
shareholders' equity items is recorded as other comprehensive income. Cash Flows arising from transaction
in foreign currency and the cash flows of a foreign subsidiary are translated at the spot exchange rate on the
date of the cash flow, the effect of exchange rate changes on the cash and cash equivalents is regarded as a
reconciling item and present separately in the statement “effect of foreign exchange rate changes on the cash
and cash equivalents".
The opening balances and the comparative figures of prior year are presented at the translated amounts in
the prior year's financial statements.
On disposal of the Group's entire equity interest in a foreign operation, or upon a loss of control over a
foreign operation due to disposal of certain equity interest in it or other reasons, the Group transfers the
accumulated translation differences, which are attributable to the owners' equity of the Company and
presented under other comprehensive income to profit or loss in the period in which the disposal occurs.
- 69 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
9. Translation of transactions and financial statements denominated in foreign currencies - (cont’d)
9.2 Translation of financial statements denominated in foreign currency - (cont’d)
In case of a disposal or other reason that does not result in the Group losing control over a foreign operation,
the proportionate share of accumulated translation differences are re-attributed to non-controlling interests
and are not recognized in profit and loss. For partial disposals of equity interest in foreign operations, which
are associates or joint ventures, the proportionate share of the accumulated translation differences are
reclassified to profit or loss.
10. Financial instruments
The Group recognizes a financial asset or a financial liability when it becomes a party to the contractual
provisions of the instrument. At initial recognition, the Group measures a financial asset or financial liability
at its fair value plus or minus, in the case of a financial asset or financial liability not at fair value through
profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial asset
or financial liability. At initial recognition, an entity shall measure trade receivables at their transaction price
if the trade receivables do not contain a significant financing component.
10.1 Classification and measurement of financial assets
After initial recognition, an entity shall measure a financial asset at: (a) amortised cost; (b) fair value through
other comprehensive income (“FVTOCI”); or (c) fair value through profit or loss (“FVTPL”).
10.1.1 Financial assets at amortised cost
A financial asset is measured at amortised cost if both of the following conditions are met:
(a) the financial asset is held within a business model whose objective is to hold financial assets in order to
collect contractual cash flows; and (b) the contractual terms of the financial asset give rise on specified dates
to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Such financial assets are subsequently measured at amortised cost, using effective interest method. Gains or
losses upon impairment and derecognition are recognized in profit or loss.
10.1.1.1 Effective interest method and amortised cost
Effective interest method represents the method for calculating the amortized costs and interest income or
expense of each period in accordance with the effective interest rate of financial assets or financial liabilities
(inclusive of a set of financial assets or financial liabilities). Effective interest rate represents the rate that
discounts the future cash flow over the expected subsisting period or shorter period, if appropriate, of the
financial asset or financial liability to the current carrying value of such financial asset or financial liability.
When calculating the effective interest rate, the Group will consider the anticipated future cash flow (not
considering the future credit loss) on the basis of all contract clauses of financial assets or financial liabilities,
as well as consider all kinds of charges which are an integral part of the effective interest rate, including
transaction fees and discount or premium paid or received between both parties of financial asset or financial
liability contract.
- 70 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
10. Financial instruments - (cont’d)
10.1 Classification and measurement of financial assets - (cont’d)
10.1.2 Financial assets at FVTOCI
A financial asset is measured at fair value through other comprehensive income if both of the following
conditions are met: (a) the financial asset is held within a business model whose objective is achieved by
both collecting contractual cash flows and selling financial assets and (b) the contractual terms of the
financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on
the principal amount outstanding.
A gain or loss on a financial asset measured at fair value through other comprehensive income is recognized
in other comprehensive income, except for impairment gains or losses, foreign exchange gains and losses
and interest calculated using the effective interest method, until the financial asset is derecognized or
reclassified. When the financial asset is derecognized the cumulative gain or loss previously recognized in
other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment.
10.1.3 Financial assets at FVTPL
Financial assets at FVTPL are either those that are classified as financial assets at FVTPL or designated as
financial assets at FVTPL.
A financial asset is measured at FVTPL unless it is measured at amortised cost or at FVTOCI.
The Group may, at initial recognition, irrevocably designate a financial asset as measured at FVTPL if doing
so eliminates or significantly reduces a measurement or recognition inconsistency (sometimes referred to as
an ‘accounting mismatch’) that would otherwise arise from measuring assets or liabilities or recognizing the
gains and losses on them on different bases.
A gain or loss on a financial asset that is measured at FVTPL is recognized in profit or loss unless it is part
of a hedging relationship. Dividends are recognized in profit or loss.
10.1.4 Designated financial assets at FVTOCI
At initial recognition, the Group makes an irrevocable election to designate to FVTOCI an investment in an
equity instrument that is not held for trading.
When a non-trading equity instrument investment is designated as a financial asset that is measured at fair
value through other comprehensive income, the changes in the fair value of the financial asset are recognised
in other comprehensive income. Upon realization the accumulated gains or losses from other comprehensive
income are transferred from other comprehensive income and included in retained earnings. During the
period in which the Group holds these non-trading investment instruments, the right to receive dividends in
the Group has been established, and the economic benefits related to dividends are likely to flow into the
Group, and when the amount of dividends can be reliably measured, the dividend income is recognized in
the current profit and loss.
- 71 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
10. Financial instruments - (cont’d)
10.2 Impairment of financial assets
The Group recognizes a loss allowance for expected credit losses on financial assets that are classified to
amortised cost and FVTOCI.
The Group always measures the loss allowance at an amount equal to lifetime expected credit losses for trade
receivables.
For financial assets other than trade receivables, the Group initially measure the loss allowance for that
financial instrument at an amount equal to 12-month expected credit losses. At each balance sheet date, if the
credit risk on that financial instrument has increased significantly since initial recognition, the Group
measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit
losses. The Group recognizes in profit or loss, as an impairment gain or loss, the amount of expected credit
losses (or reversal) that is required to adjust the loss allowance to the amount that is required to be recognized.
10.2.1 Significant increases in credit risk
At each balance sheet date, the Group assesses whether the credit risk on a financial instrument has increased
significantly since initial recognition.
The Group mainly considers the following list of information in assessing changes in credit risk:
(a) significant changes in internal price indicators of credit risk as a result of a change in credit risk since
inception.
(b) significant changes in external market indicators of credit risk for a particular financial instrument or
similar financial instruments with the same expected life.
(c) a significant change in the debtors’ ability to meet its debt obligations.
(d) an actual or expected significant change in the operating results of the debtor.
(e) significant increases in credit risk on other financial instruments of the same debtor.
(f) an actual or expected significant adverse change in the regulatory, economic, or technological
environment of the debtor.
(g) significant changes in the value of the collateral supporting the obligation or in the quality of third-
party guarantees or credit enhancements, which are expected to reduce the debtor’s economic
incentive to make scheduled contractual payments or to otherwise have an effect on the probability
of a default occurring.
(h) significant changes that are expected to reduce the receivable’s economic incentive to make
scheduled contractual payments.
(i) significant changes in the expected performance and behaviour of the debtor.
(j) past due information.
The Group assumes that the credit risk on a financial instrument has not increased significantly since initial
recognition if the financial instrument is determined to have low credit risk at the reporting date.
- 72 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
10. Financial instruments - (cont’d)
10.2 Impairment of financial assets - (cont’d)
10.2.2 Credit-impaired financial asset
A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated
future cash flows of that financial asset have occurred. Evidence that a financial asset is credit-impaired
include observable data about the following events:
(a) significant financial difficulty of the issuer or the receivable;
(b) a breach of contract, such as a default or past due event;
(c) the lender(s) of the receivable, for economic or contractual reasons relating to the receivable’s financial
difficulty, having granted to the receivable a concession(s) that the lender(s) would not otherwise
consider;
(d) it is becoming probable that the receivable will enter bankruptcy or other financial reorganization;
10.2.3 Recognition of expected credit losses
For the purpose of determining significant increases in credit risk and recognizing a loss allowance on a
collective basis, financial instruments are grouped on the basis of shared credit risk. Examples of shared
credit risk characteristics may include, but are not limited to, the:(a) instrument type; (b) credit risk ratings;
(c) collateral type; (d) industry; (e) geographical location of the debtor; and (f) the value of collateral relative
to the financial asset if it has an impact on the probability of a default occurring.
Expected credit losses of financial instruments are determined as the present value of the difference between:
(a) the contractual cash flows that are due to an entity under the contract; and (b) the cash flows that the entity
expects to receive.
For a financial asset that is credit-impaired at the reporting date, an entity shall measure the expected credit
losses as the difference between the asset’s gross carrying amount and the present value of estimated future
cash flows discounted at the financial asset’s original effective interest rate. Any adjustment is recognized in
profit or loss as an impairment gain or loss.
The Group measures expected credit losses of a financial instrument in a way that reflects:
(a) an unbiased and probability-weighted amount that is determined by evaluating a range of possible
outcomes;
(b) the time value of money; and
(c) reasonable and supportable information that is available without undue cost or effort at the reporting
date about past events, current conditions and forecasts of future economic conditions.
10.2.4 Written-off of financial assets
The Group directly reduces the gross carrying amount of a financial asset when the entity has no reasonable
expectations of recovering a financial asset in its entirety or a portion thereof. A write-off constitutes a
derecognition event.
- 73 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
10. Financial instruments - (cont’d)
10.3 Transfer of financial asset
The Group derecognizes a financial asset if one of the following conditions is satisfied: (i) the contractual
rights to the cash flows from the financial asset expire; or (ii) the financial asset has been transferred and
substantially all the risks and rewards of ownership of the financial asset is transferred to the transferee; or
(iii) although the financial asset has been transferred, the Group neither transfers nor retains substantially all
the risks and rewards of ownership of the financial asset but has not retained control of the financial asset.
If the Group neither transfers nor retains substantially all the risks and rewards of ownership of a financial
asset, and it retains control of the financial asset, it recognizes the financial asset to the extent of its continuing
involvement in the transferred financial asset and recognizes an associated liability. The extent of the Group’s
continuing involvement in the transferred asset is the extent to which it is exposed to changes in the value of
the transferred asset.
When the company is derecognizing a financial asset in its entirety, except for equity instrument designated
to FVTOCI, the difference between (i) the carrying amount of the financial asset transferred; and (ii) the sum
of the consideration received from the transfer is recognized in profit or loss.
10.4 Classification and measurement of financial liabilities
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the
substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
All financial liabilities are subsequently measured at FVTPL or other financial liabilities.
Financial liabilities are classified as at FVTPL when the financial liability is (i) held for trading or (ii) it is
designated as at FVTPL. The financial liability other than derivative financial liabilities are stated as
liabilities held for trading.
Other financial liabilities are subsequently measured at amortized cost by using effective interest method.
Gain or loss arising from derecognition or amortization is recognized in current profit or loss.
- 74 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
10. Financial instruments - (cont’d)
10.5 Derecognition of financial liabilities
Financial liabilities are derecognized in full or in part only when the present obligation is discharged in full
or in part. An agreement entered into force between the Group (debtor) and a creditor to replace the original
financial liabilities with new financial liabilities with substantially different terms, derecognize the original
financial liabilities as well as recognize the new financial liabilities. When financial liabilities is derecognized
in full or in part, the difference between the carrying amount of the financial liabilities derecognized and the
consideration paid (including transferred non-cash assets or new financial liability) is recognized in profit or
loss for the current period.
10.6 Derivatives
Derivative financial instruments include forward exchange contracts, currency swaps and foreign exchange
options, etc. Derivatives are initially measured at fair value at the date when the derivative contracts are
entered into and are subsequently re-measured at fair value. The resulting gain or loss is recognized in profit
or loss unless the derivative is designated and highly effective as a hedging instrument, in which case the
timing of the recognition in profit or loss depends on the nature of the hedge relationship (Note III 28.1).
10.7 Offsetting financial assets and financial liabilities
Financial assets and financial liabilities shall be presented separately in the balance sheet and shall not be
offset, except for circumstances where the Group has a legal right that is currently enforceable to offset the
recognized financial assets and financial liabilities, and intends either to settle on a net basis, or to realize the
financial asset and settle the financial liability simultaneously, a financial asset and a financial liability shall
be offset and the net amount is presented in the balance sheet.
10.8 Equity instruments
The consideration received from the issuance of equity instruments net of transaction costs is recognized in
shareholders’ equity. Consideration and transaction costs paid by the Company for repurchasing self-issued
equity instruments are deducted from shareholders’ equity.
When the Company repurchases its own shares, those shares are treated as treasury shares. All expenditures
relating to the repurchase are recorded in the cost of the treasury shares, with the transaction entering into the
share capital. Treasury shares are excluded from profit distributions and are stated as a deduction under
shareholders’ equity in the balance sheet.
- 75 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
11. Receivable
Receivables are assessed for impairment on a collective group and/or on an individual basis as follows:
Expected credit losses in respect of a receivable is measured at an amount equal to lifetime expected credit
losses. The assessment is made collectively for account receivables, where receivables share similar credit
risk characteristics based on geographical location, using the expected credit losses model including inter-
alia aging analysis, historical loss experiences adjusted by the observable factors reflecting current and
expected future economic conditions. The ratio of the collective provision for non-overdue account
receivables is between 0%-1.4%.
When credit risk on a receivable has increased significantly since initial recognition, the group records
specific provision or collective provision, which is determined for groups of similar assets in countries in
which there are large number of customers with immaterial balances.
In assessing whether the credit risk on a receivable has increased significantly since initial recognition, the
Group compares the risk of a default occurring on the receivable at the reporting date with the risk of a
default occurring on the receivable at the date of initial recognition and considers both quantitative and
qualitative information that is reasonable and supportable, including observable data that comes to the
attention of the Group about loss events such as a significant decline in the solvency of an individual debtor
or the portfolio of debtors, and significant changes in the financial condition that have an adverse effect on
the debtor.
12. Inventories
12.1 Categories of inventories and initial measurement
The Group's inventories mainly include raw materials, work in progress, semi-finished goods, finished goods
and reusable materials. Reusable materials include low-value consumables, packaging materials and other
materials, which can be used repeatedly but do not meet the definition of fixed assets.
Inventories are initially measured at cost. Cost of inventories comprises all costs of purchase, costs of
conversion and other expenditures incurred in bringing the inventories to their present location and condition
including direct labor costs and an appropriate allocation of production overheads.
12.2 Valuation method of inventories upon delivery
The actual cost of inventories upon delivery is calculated using the weighted average method.
12.3 Basis for determining net realizable value of inventories and provision methods for decline in value of
inventories
At the balance sheet date, inventories are measured at the lower of cost and net realizable value. If the net
realizable value is below the cost of inventories, a provision for decline in value of inventories is made. Net
realizable value is the estimated selling price in the ordinary course of business less the estimated costs of
completion, the estimated costs necessary to make the sale and relevant taxes.
After the provision for decline in value of inventories is made, if the circumstances that previously caused
inventories to be written down below cost no longer exist so that the net realizable value of inventories is
higher than their carrying amount, the original provision for decline in value is reversed and the reversal is
included in profit or loss for the period.
12.4 The perpetual inventory system is maintained for stock system.
- 76 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
13. Long-term equity investments
Long-term equity investments include investments in subsidiaries, joint ventures and associates.
Subsidiaries are the companies that are controlled by the Company. Associates are the companies over which
the Group has significant influence. Joint ventures are joint arrangements over which the Group has joint
control along with other investors and has rights to the net assets of the joint arrangement.
The Company accounts for the investment in subsidiaries at historical cost in the Company's financial
statements. Investments in associates and joint ventures are accounted for under equity method.
13.1 Determination of investment cost
For a long-term equity investment acquired through a business combination involving enterprises under
common control, the investment cost of the long-term equity investment is the share of the carrying amount
of the shareholders' equity of the acquiree attributable to the ultimate controlling party at the date of
combination. For a long-term equity investment acquired through business combination not involving
enterprises under common control, the investment cost of the long-term equity investment is the cost of
acquisition. For a business combination not involving enterprises under common control achieved in stages
that involves multiple exchange transactions, the initial investment cost is carried at the aggregate of the
carrying amount of the acquirer’s previously held equity interest in the acquiree and the new investment cost
incurred on the acquisition date.
Regarding the long-term equity investment acquired otherwise than through a business combination, if the
long-term equity investment is acquired by cash, the historical cost is determined based on the amount of
cash paid and payable; if the long-term equity investment is acquired through the issuance of equity
instruments, the historical cost is determined based on the fair value of the equity instruments issued.
- 77 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
13. Long-term equity investments - (cont’d)
13.2 Subsequent measurement and recognition of profit or loss
If the long-term equity investment is accounted for at cost, it should be measured at historical cost less
accumulated impairment losses. Dividend declared by the investee should be accounted for as investment
income.
Under the equity method, where the initial investment cost of a long-term equity investment exceeds the
Group’s share of the fair value of the investee’s identifiable net assets at the time of acquisition, no
adjustment is made to the initial investment cost. Where the initial investment cost is less than the Group’s
share of the fair value of the investee’s identifiable net assets at the time of acquisition, the difference is
recognized in profit or loss for the period, and the cost of the long-term equity investment is adjusted
accordingly.
Under the equity method, the Group recognizes its share of the net profit or loss and other comprehensive
income of the investee for the period as investment income or loss and other comprehensive income for the
period. The Group recognizes its share of the investee’s net profit or loss based on the fair value of the
investee’s individual separately identifiable assets, etc. at the acquisition date after making appropriate
adjustments to be confirmed with the Group's accounting policies and accounting period. The Group
discontinues recognizing its share of net losses of the investee after the carrying amount of the long-term
equity investment together with any long-term interests that in substance form part of its net investment in
the investee is reduced to zero. If the Group has incurred obligations to assume additional losses of the
investee, a provision is recognized according to the expected obligation, and recorded as investment loss for
the period.
13.3 Basis for determining control, joint control and significant influence over investee
Control is achieved when the Company has power over the investee; is exposed, or has rights, to variable
returns from its involvement with the investee; and has the ability to use its power to affect its returns.
Joint control is the contractually agreed sharing of control over an economic activity, and exists only when
the strategic financial and operating policy decisions relating to the activity require the unanimous consent
of the parties sharing control.
Significant influence is the power to participate in the financial and operating policy decisions of the investee
but is not control or joint control over those policies.
When determining whether an investing enterprise is able to exercise control or significant influence over
an investee, the effect of potential voting rights of the investee (for example, warrants and convertible debts)
held by the investing enterprises or other parties that are currently exercisable or convertible shall be
considered.
13.4 Methods of impairment assessment and determining the provision for impairment loss
If the recoverable amounts of the investments to subsidiaries, joint ventures and associates are less than their
carrying amounts, an impairment loss should be recognized to reduce the carrying amounts to the recoverable
amounts (Note III 20).
13.5 The disposal of long-term equity investment
On disposal of a long term equity investment, the difference between the proceeds actually received and
receivable and the carrying amount is recognized in profit or loss for the period.
- 78 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
14. Investment properties
Investment property refers to real estate held to earn rentals or for capital appreciation, or both, including
leased land use rights, land use rights held and provided for transferring after appreciation and leased
constructions, etc.
Investment property is initially measured at cost. Subsequent expenditures related to an investment property
shall be included in cost of investment property only when the economic benefits associated with the asset
will likely flow to the Group and its cost can be measured reliably. All other subsequent expenditures on
investment property shall be included in profit or loss for the current period when incurred.
The Group adopts cost method for subsequent measurement of investment property, which is depreciated or
amortized using the same policy as that for buildings and land use rights.
When an investment property is sold, transferred, retired or damaged, the amount of proceeds on disposal of
the property net of the carrying amount and related taxes and surcharges is recognized in profit or loss for
the current period.
15. Fixed assets
15.1 Recognition criteria for fixed assets
Fixed assets include land owned by the Group and buildings, machinery and equipment, transportation
vehicles, office equipment and others.
Fixed assets are tangible assets that are held for use in the production or supply of goods or for administrative
purposes, and have useful lives of more than one accounting year. A fixed asset is recognized only when it
is probable that economic benefits associated with the asset will flow to the Group and the cost of the asset
can be reliably measured. Purchased or constructed fixed assets are initially measured at cost when acquired.
Subsequent expenditures incurred for the fixed asset are included in the cost of the fixed asset and if it is
probable that economic benefits associated with the asset will flow to the Group and the subsequent
expenditures can be measured reliably. Other subsequent expenditures are recognized in profit or loss in the
period in which they are incurred.
- 79 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
15. Fixed assets - (cont’d)
15.2 Depreciation of each category of fixed assets
Fixed asset is depreciated based on the cost of fixed asset recognized less expected net residual value over
its useful life using the straight-line method since the month subsequent to the one in which it is ready for
intended use. Depreciation is calculated based on the carrying amount of the fixed asset after impairment
over the estimated remaining useful life of the asset.
The Group reviews the useful life and estimated net residual value of a fixed asset and the depreciation
method applied at least once at each financial year-end, and account for any change as a change in an
accounting estimate.
The estimated useful life, estimated net residual value and annual depreciation rate of each category of fixed
assets are as follows:
Residual Annual
Useful life value depreciation rate
Category Depreciation (years) (%) (%)
Buildings the straight-line method 15-50 0-4 1.9-6.7
Machinery and equipment the straight-line method 3-22 0-4 4.4-33.3
Office and other equipment the straight-line method 3-17 0-4 5.6-33.3
Motor vehicles the straight-line method 5-9 0-2 10.9-20.0
Land owned by the Group is not depreciated.
15.3 Other explanations
If a fixed asset is upon disposal or no future economic benefits are expected to be generated from its use or
disposal, the fixed asset is derecognized. When a fixed asset is sold, transferred, retired or damaged, the
amount of any proceeds on disposal of the asset net of the carrying amount and related taxes is recognized
in profit or loss for the period.
The difference between recoverable amounts of the fixed assets under the carrying amount is referred to as
impairment loss (Note III 20).
16. Construction in progress
Construction in progress is measured at its actual costs. The actual costs include various construction,
installation costs, borrowing costs capitalized and other expenditures incurred until such time as the relevant
assets are completed and ready for its intended use. When the asset concerned is ready for its intended use,
the cost of the asset is transferred to fixed assets and depreciated starting from the following month.
The difference between recoverable amounts of the construction in progress under the carrying amount is
referred to as impairment loss (Note III 20).
- 80 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
17. Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying asset are
capitalized when expenditures for such asset and borrowing costs are incurred and activities relating to the
acquisition, construction or production of the asset that are necessary to prepare the asset for its intended use
or sale have commenced. Capitalization of borrowing costs ceases when the qualifying asset being acquired,
constructed or produced becomes ready for its intended use or sale. Borrowing costs incurred subsequently
should be charged to profit or loss. Capitalization of borrowing costs is suspended during periods in which
the acquisition, construction or production of a qualifying asset is suspended abnormally and when the
suspension is for a continuous period of more than 3 months. Capitalization is suspended until the acquisition,
construction or production of the asset is resumed.
Where funds are borrowed under a specific-purpose borrowing, the amount of interest to be capitalized is
the actual interest expenses incurred on that borrowing for the period less any bank interest earned from
depositing the borrowed funds before being used on the asset or any investment income on the temporary
investment of those funds.
Where funds are borrowed under general-purpose borrowings, the Group determines the amount of interest
to be capitalized on such borrowings by applying a capitalization rate to the weighted average of the excess
of cumulative expenditures on the asset over the amounts of specific-purpose borrowings. The capitalization
rate is the weighted average of the interest rates applicable to the general-purpose borrowings.
During the capitalization period, exchange differences on foreign currency specific-purpose borrowing are
fully capitalized whereas exchange differences on foreign currency general-purpose borrowing is charged to
profit or loss.
18. Intangible assets
18.1 Valuation methods, useful life, impairment test
The Group’s intangible assets include product registration assets, intangible assets upon purchase of products,
marketing rights and rights to use trademarks, land use rights and software. Intangible assets are stated at the
balance sheet at cost less accumulated amortization and impairment losses.
When an intangible asset with a finite useful life is available for use, its original cost less any accumulated
impairment losses is amortized over its estimated useful life using the straight-line method. An intangible
asset with an indefinite useful life is not amortized.
For an intangible asset with a finite useful life, the Group reviews the useful life and amortization method at
the end of the year, and makes adjustments when necessary.
The respective amortization periods for such intangible assets are as follows:
Item Amortization period (years)
Land use rights 49-50 years
Product registration 8 years
Intangible assets on purchase of products 7-11, 20 years
Tradename and trademarks 4-10, 30 years
Software 3-5 years
Customer relations 5-10 years
The difference between recoverable amounts of the intangible assets under the carrying amount is referred
to as impairment loss (see Note III 20).
- 81 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
18. Intangible assets - (cont’d)
18.2 Research and development expenditure
Internal research and development project expenditures were classified into research expenditures and
development expenditures depending on its nature and the greater uncertainty whether the research activities
becoming to intangible assets.
Expenditure during the research phase is recognized as an expense in the period in which it is incurred.
Expenditure during the development phase that meets all of the following conditions at the same time is
recognized as intangible asset:
- It is technically feasible to complete the intangible asset so that it will be available for use or sale;
- The Group has the intention to complete the intangible asset and use or sell it;
- The Group can demonstrate the ways in which the intangible asset will generate economic benefits;
- The availability of adequate technical, financial and other resources to complete the development and the
ability to use or sell the intangible asset;
- The expenditure attributable to the intangible asset during its development phase can be reliably
measured.
Expenditures that do not meet all of the above conditions at the same time are recognized in profit or loss
when incurred. If the expenditures cannot be distinguished between the research phase and development
phase, the Group recognizes all of them in profit or loss for the period. Expenditures that have previously
been recognized in the profit or loss would not be recognized as an asset in subsequent years. Those
expenditures capitalized during the development stage are recognized as development costs incurred and
will be transferred to intangible asset when the underlying project is ready for an intended use.
19. Goodwill
The initial cost of goodwill represents the excess of cost of acquisition over the acquirer’s interest in the fair
value of the identifiable net assets of the acquiree under a business combination not involving enterprises
under common control.
Goodwill is not amortized and is stated in the balance sheet at cost less accumulated impairment losses (see
Note III 20). On disposal of an asset group or a set of asset groups, any attributable goodwill is written off
and included in the calculation of the profit or loss on disposal.
20. Impairment of long-term assets
The Company assesses at each balance sheet date whether there is any indication that the fixed assets,
construction in progress, right of use assets, intangible assets with finite useful lives, investment properties
measured at historical cost, investments in subsidiaries, joint ventures and associates may be impaired. If
there is any indication that such assets may be impaired, recoverable amounts are estimated for such assets.
The recoverable amount of an asset is the higher of its fair value less costs to sell and the present value of the
future cash flow estimated to be derived from the asset. The Group estimates the recoverable amount on an
individual basis. If it is not possible to estimate the recoverable amount of the individual asset, the Group
determines the recoverable amount of the asset group to which the asset belongs. Identification of an asset
group is based on whether major cash inflows generated by the asset group are largely independent of the
cash inflows from other assets or asset groups.
- 82 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
20. Impairment of long-term assets - (cont’d)
Goodwill arising from a business combination is tested for impairment at least at each year end, irrespective
of whether there is any indication that the asset may be impaired. For the purpose of impairment testing, the
carrying amount of goodwill acquired in a business combination is allocated from the acquisition date on a
reasonable basis to each of the related asset groups; if it is impossible to allocate to the related asset groups,
it is allocated to each of the related set of asset groups. Each of the related asset groups or set of asset groups
is an asset group or set of asset group that is able to benefit from the synergies of the business combination
and shall not be larger than a reportable segment determined by the Group. If the carrying amount of the
asset group or set of asset groups is higher than its recoverable amount, the amount of the impairment loss
first reduced by the carrying amount of the goodwill allocated to the asset group or set of asset groups, and
then the carrying amount of other assets (other than the goodwill) within the asset group or set of asset groups,
pro rata based on the carrying amount of each asset.
Once the impairment loss of such assets is recognized, it will not be reversed in any subsequent period.
21. Employee benefits
21.1 Short-term employee benefits
Employee wages or salaries, bonuses, social security contributions, measured on a non-discounted basis, and
the expense is recorded when the related service is provided. A provision for short-term employee benefits
in respect of cash bonuses is recognized in the amount expected to be paid where the Group has a current
legal or constructive obligation to pay the said amount for services provided by the employee in the past and
the amount can be estimated reliably.
21.2 Post-employment benefits
Post-employment benefits are classified into defined contribution plans and defined benefit plans.
A defined contribution plan is a post-employment benefit plan under which the Group pays contributions to
a separate entity and has no legal or constructive obligation to pay further amounts. Obligations for
contributions to defined contribution plans are recognized as an expense in profit or loss in the periods during
which related services are rendered by employees.
Defined benefit plans of the Group are post-employment benefit plans other than defined contribution plans.
In accordance with the projected unit credit method, the Group measures the obligations under defined
benefit plans using unbiased and mutually compatible actuarial assumptions to estimate related demographic
variables and financial variables, and discount obligations under the defined benefit plans to determine the
present value of the defined benefit liability. The discount rate used is the yield on the reporting date on
highly-rated corporate debentures denominated in the same currency, that have maturity dates approximating
the terms of the Group’s obligation.
The Group attributes benefit obligations under a defined benefit plan to periods of service provided by
respective employees. Service cost and interest expense on the defined benefit liability are charged to profit
or loss and remeasurements of the defined benefit liability are recognized in other comprehensive income.
- 83 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
21. Employee benefits - (cont’d)
21.3 Termination benefits
When the Group terminates the employment with employees or provides compensation under an offer to
encourage employees to accept voluntary redundancy, a provision is recognized with a corresponding
expense in profit or loss at the earlier of the following dates:
- When the Group cannot unilaterally withdraw the offer of termination benefits because of an employee
termination plan or a curtailment proposal.
- When the Group has a formal detailed restructuring plan involving the payment of termination benefits
and has raised a valid expectation in those affected that it will carry out the restructuring by starting to
implement that plan or announcing its main features to those affected by it.
If the benefits are payable more than 12 months after the end of the reporting period, they are discounted to
their present value. The discount rate used is the yield on the reporting date on highly-rated corporate
debentures denominated in the same currency, that have maturity dates approximating the terms of the
Group’s obligation.
21.4 Other long-term employee benefits
The Group’s net obligation for long-term employee benefits, which are not attributable to post-employment
benefit plans, is for the amount of the future benefit to which employees are entitled for services that were
provided during the current and prior periods.
The amount of these benefits is discounted to its present value and the fair value of the assets related to these
obligations is deducted therefrom. The discount rate used is the yield on the reporting date on highly-rated
corporate debentures denominated in the same currency, that have maturity dates approximating the terms
of the Group’s obligation.
22. Share-based payment
Share-based payment refers to the transaction in order to acquire the service offered by the employees or
other parties that grants equity instruments or liabilities on the basis of the equity instruments. Share-based
payment classified into equity-settled share-based payment and cash-settled share-based payment.
22.1 Cash-settled share-based payment
The cash-settled share-based payment should be measured according to the fair value of the liabilities
recognized based on the shares or other equity instrument undertaken by the Company. For cash-settled
share-based payment made in return for the rendering of employee services that cannot be exercised until
the services are fully provided during the vesting period or specified performance targets are met, on each
balance sheet date within the vesting period, the services acquired in the current period shall, based on the
best estimate of the number of exercisable instruments, be recognized in relevant expenses and the
corresponding liabilities at the fair value of the liability incurred by the Company.
On each balance sheet date and the settlement date before the settlement of the relevant liabilities, the
Company should re-measure the fair value of the liabilities and the changes should be included in the current
period profit and loss.
- 84 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
23. Provisions
Provisions are recognized when the Group has a present obligation related to a contingency, it is probable
that an outflow of economic benefits will be required to settle the obligation, and the amount of the obligation
can be measured reliably.
The amount recognized as a provision is the best estimate of the consideration required to settle the present
obligation at the settlement date, taking into account factors pertaining to a contingency such as the risks,
uncertainties and time value of money. Where the effect of the time value of money is material, the amount
of the provision is determined by discounting the related future cash outflows. The increase in the provision
due to passage of time is recognized as interest expense.
If all or part of the provision settlements is reimbursed by third parties, when the realization of income is
virtually certain, then the related asset should be recognized. However, the amount of related asset
recognized should not be exceeding the respective provision amount.
At the balance sheet date, the amount of provision should be re-assessed to reflect the best estimation then.
24. Revenue
Revenue of the Group is mainly from sale of goods.
The Group recognizes revenue when transferring goods to a customer, at the amount of the transaction price.
Goods are considered transferred when the customer obtains control of the goods. Transaction price is the
amount of consideration to which an entity expects to be entitled in exchange for transferring goods to a
customer, excluding amounts collected on behalf of third parties.
Significant financing component
For a contract with a significant financing component, the Group recognize revenue at an amount that reflects
the price that a customer would have paid for the goods if the customer had paid cash for those goods at
receipt. The difference between the amount of consideration and the cash selling price of the goods, is
amortized in the contract period using effective interest rate. The Group does not adjust the amount of
consideration for the effects of a significant financing component if the Group expects, at contract inception,
that the period between when the entity transfers a good to a customer and when the customer pays for that
good will be one year or less.
Sale with a right of return
For sale with a right of return, the Group recognizes revenue at the amount of consideration to which the
Group expects to be entitled (ie excluding the products expected to be returned). For any amounts received
(or receivable) for which an entity does not expect to be entitled, the entity shall not recognize revenue when
it transfers products to customers but shall recognize those amounts received (or receivable) as a refund
liability. An asset recognized for the Group’s right to recover products from a customer on settling a refund
liability shall initially be measured by reference to the former carrying amount of the product less any
expected costs to recover those products.
- 85 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
25. Government grants
Government grants are transfer of monetary assets and non-monetary assets from the government to the
Group at no consideration, including tax returns, financial subsidies and so on. A government grant is
recognized only when the Group can comply with the conditions attached to the grant and the Group will
receive the grant.
If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount received
or receivable. If a government grant is in the form of a non-monetary asset, it is measured at fair value. If
the fair value cannot be reliably determined, it is measured at a nominal amount.
Government grants are either related to assets or income.
(1) The basis of judgment and accounting method of the government grants related to assets
Government grants obtained for acquiring long-term assets are government grants related to assets. A
government grant related to an asset is offset with the cost of the relevant asset.
(2) The basis of judgment and accounting method of the government grants related to income
For a government grant related to income, if the grant is a compensation for related expenses or losses to be
incurred in subsequent periods, the grant is recognized as deferred income, and recognized in profit or loss
over the periods in which the related costs are recognized. If the grant is a compensation for related expenses
or losses already incurred, the grant is recognized immediately in profit or loss for the period.
Government grants related to the Group’s normal course of business are offset with related costs and
expenses. Government grants related that are irrelevant with the Groups’s normal course of business are
included in non-operating gains.
26. Current and deferred tax
The income tax expenses include current income tax and deferred income tax.
26.1 Current income tax
At the balance sheet date, current income tax liabilities (or assets) for the current and prior periods are
measured at the amount expected to be paid (or recovered) according to the requirements of tax laws.
26.2 Deferred tax assets and deferred tax liabilities
Temporary differences are differences between the carrying amounts of certain assets or liabilities and their
tax base.
All taxable temporary differences are recognized as related deferred tax liabilities. Deferred tax assets are
recognized to the extent that it is probable that future taxable profits will be available against which the
deductible losses and tax credits can be utilized.
- 86 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
26. Current and deferred tax - (cont’d)
26.2 Deferred tax assets and deferred tax liabilities - (cont’d)
For deductible losses and tax credits that can be carried forward, deferred tax assets are recognized to the
extent that it is probable that future taxable profits will be available against which the deductible losses and
tax credits can be utilized. However, for deductible temporary differences associated with the initial
recognition of goodwill and the initial recognition of an asset or liability arising from a transaction (not a
business combination) that affects neither the accounting profit nor taxable profits (or deductible losses) at
the time of transaction, no deferred tax asset or liability is recognized.
At the balance sheet date, deferred tax assets and liabilities are measured at the tax rates, according to tax
laws, that are expected to apply in the period in which the asset is realized or the liability is settled.
Deferred tax liabilities are recognized for taxable temporary differences associated with investments in
subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the
timing of the reversal of the temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future.
The Group may be required to pay additional tax in case of distribution of dividends by the Group companies.
This additional tax was not included in the financial statements, since the policy of the Group is not to
distribute in the foreseeable future a dividend which creates a significant additional tax liability.
Except for those current income tax and deferred tax charged to comprehensive income or shareholders’
equity in respect of transactions or events which have been directly recognized in other comprehensive
income or shareholders’ equity, and deferred tax recognized on business combinations, all other current
income tax and deferred tax items are charged to profit or loss in the current period.
At the balance sheet date, the carrying amount of deferred tax assets is reviewed and reduced if it is no longer
probable that sufficient taxable profits will be available in the future to allow the benefit of deferred tax
assets to be utilized. Such reduction is reversed when it becomes probable that sufficient taxable profits will
be available.
26.3 Offset of income tax
When the Group has a legal right to settle current tax assets and liabilities on a net basis, and tax assets and
tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or
different taxable entities which intend to realize the assets and liabilities simultaneously, current tax assets
and liabilities are offset and presented on a net basis.
When the Group has a legal right to settle deferred tax assets and liabilities on a net basis which relates to
income taxes levied by the same taxation authority, on either the same taxable entity or different taxable
entities which intend either to settle current tax assets and liabilities on a net basis or to realize the assets and
liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or
liabilities are expected to be reversed, deferred tax assets and deferred tax liabilities are offset and presented
on a net basis.
- 87 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
27. Leases
Lease is a contract, that conveys the right to use an asset for a period of time in exchange for consideration.
27.1 Determining whether an arrangement contains a lease
On the inception date of the lease, the Group determines whether the arrangement is a lease or contains a
lease, while assessing if it conveys the right to control the use of an identified asset for a period of time in
exchange for consideration. In its assessment of whether an arrangement conveys the right to control the
use of an identified asset, the Group assesses whether it has the following two rights throughout the lease
term:
(a) The right to obtain substantially all the economic benefits from use of the identified asset; and
(b) The right to direct the identified asset’s use.
An arrangement does not contain a lease if an asset is leased for a period of less than 12 months, or to lease of
asset with low economic value.
27.2 Initial recognition of leased assets and lease liabilities
Upon initial recognition, the Group recognizes a liability at the present value of future lease payments
(exclude certain variable lease payments, as detailed in note III 27.4), and concurrently the Group
recognizes a right-of-use asset at the same amount, adjusted for any prepaid lease payments paid at the
lease date or before, plus initial direct costs incurred in respect of the lease.
When the interest rate implicit in the lease is not readily determinable, the incremental borrowing rate of
the lessee is used.
The Group presents right-of-use assets separately from other assets in the balance sheet.
27.3 The lease term
The lease term is the non-cancellable period of the lease plus periods covered by an extension or
termination option, if it is reasonably certain that the lessee will exercise or not exercise the option,
respectively.
If there is a change in the lease term, or in the assessment of an option to purchase the underlying asset, the
Group remeasures the lease liability, on the basis of the revised lease term and the revised discount rate
and adjust the right-of-use assets accordingly.
27.4 Variable lease payments
Variable lease payments that depend on an index or a rate, are initially measured using the index or rate
existing at the commencement of the lease. When the cash flows of future lease payments change as the
result of a change in an index or a rate, the balance of the liability is adjusted with a correspondence
change in the right-of-use asset.
Other variable lease payments that are not included in the measurement of the lease liability are recognized
in profit or loss in the period in which the condition that triggers payment occurs.
- 88 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
27. Leases (cont’d)
27.5 Subsequent measurement
After lease commencement, a right-of-use asset is measured on a cost basis less accumulated depreciation
and accumulated impairment losses and is adjusted for re-measurements of the lease liability. The asset is
depreciated on a straight-line basis over the useful life or contractual lease period, whichever earlier.
The Group applies ASBE8 Impairment of Assets, to determine whether the right-of-use asset is impaired
and to account for any impairment loss identified.
A lease liability is measured after the lease commencement date at amortized cost using the effective
interest method.
28. Other significant accounting policies and accounting estimates
28.1 Hedging
The Group uses derivative financial instruments to hedge its risks related to foreign currency and inflation
risks and derivatives that are not used for hedging.
Hedge accounting
The Group makes an assessment, both at the inception of the hedge relationship as well as on an ongoing
basis, whether the hedge is expected to be effective in offsetting the changes in the fair value of cash flows
that can be attributed to the hedged risk during the period for which the hedge is designated.
An effective hedge exists when all of the below conditions are met:
There is an economic relationship between the hedged item and the hedging instrument;
the effect of credit risk does not dominate the value changes that result from that economic relationship;
the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged
item that the entity actually hedges and the quantity of the hedging instrument that the entity actually
uses to hedge that quantity of hedged item.
On the commencement date of the accounting hedge, the Group formally documents the relationship between the
hedging instrument and hedged item, including the Group’s risk management objectives and strategy in executing
the hedge transaction, together with the methods that will be used by the Group to assess the effectiveness of the
hedging relationship.
With respect to a cash-flow hedge, a forecasted transaction that constitutes a hedged item must be highly
probable and must give rise to exposure to changes in cash flows that could ultimately affect profit or loss.
Measurement of derivative financial instruments
Derivative financial instruments are recognized initially at fair value; attributable transaction costs are
recognized in profit or loss as incurred.
- 89 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
28. Other significant accounting policies and accounting estimates - (cont’d)
28.1 Hedging (cont’d)
Cash-flow hedges
Subsequent to the initial recognition, changes in the fair value of derivatives used to hedge cash flows are
recognized through other comprehensive income directly in a hedging reserve, with respect to the part of the
hedge that is effective. Regarding the portion of the hedge that is not effective, the changes in fair value are
recognized in profit and loss. The amount accumulated in the hedging reserve is reclassified to profit and
loss in the period in which the hedged cash flows impact profit or loss and is presented in the same line item
in the statement of income as the hedged item.
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or
exercised, the hedge accounting is discontinued. The cumulative gain or loss previously recognized in a
hedging reserve through other comprehensive income remains in the reserve until the forecasted transaction
occurs or is no longer expected to occur. If the forecasted transaction is no longer expected to occur, the
cumulative gain or loss in respect of the hedging instrument in the hedging reserve is reclassified to profit
or loss.
Economic hedge
Hedge accounting is not applied with respect to derivative instruments used to economically hedge financial
assets and liabilities denominated in foreign currency or CPI linked. Changes in the fair value of such
derivatives are recognized in profit or loss as gain (loss) from changes in fair value or investment income.
Derivatives that are not used for hedging
Changes in the fair value of derivatives that are not used for hedging are recognized in profit or loss as gain
(loss) from changes in fair value or investment income.
28.2 Securitization of assets
Details of the securitization of asset agreements and accounting policy are set out in Note V.5 - Account
receivables
28.3 Segment reporting
Reportable segments are identified based on operating segments which are determined based on the structure
of the Group’s internal organization, management requirements and internal reporting system.
- 90 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
28. Other significant accounting policies and accounting estimates - (cont’d)
28.3 Segment reporting - (cont’d)
Two or more operating segments may be aggregated into a single operating segment if the segments have
similar economic characteristics and are same or similar in respect of the nature of each product and service,
the nature of production processes, the type or class of customers for the products and services, the methods
used to distribute the products or provide the services, and the nature of the regulatory environment.
Inter-segment revenues are measured on the basis of actual transaction price for such transactions for segment
reporting. Segment accounting policies are consistent with those for the consolidated financial statements.
28.4 Profit distributions to shareholders
Dividends which are approved after the balance sheet date are not recognized as a liability at the balance
sheet date but are disclosed in the notes separately.
29. Changes in significant accounting policies and accounting estimates
29.1 Changes in significant accounting policies
Process for
The contents and reasons for the changes of accounting policies management
approval
The Group began to adopt revised Accounting Standards for Business Enterprises 21 Leases The accounting
(“New lease standard”), promulgated by Ministry of Finance in 2018, from January 1, 2019. The policy change
revised accounting policies for leases are presents in Note III.27 was approved
by the board of
For existing contracts at the initial application date, the Group elects not to directors
re-assess whether they are, or contain leases. Contracts that are signed or modified after the date meeting in
of initial application, the Group assess whether they are, or contain leases, according to the 28.4.2019
definition of lease in the new lease standards.
The Group adjusts all relevant financial accounts at the initial application date, for the accumulated
impact from the new lease standards, with no retrospective adjustments for comparative numbers.
The Group elected to apply the transitional provision of recognizing a right-of-use asset at the
same amount of the lease liability, adjusted for any prepaid or accrued lease payments that were
recognized as an asset or liability before the date of initial application, and therefore, the
implementation of the standard does not affect retained earnings balance at the date of initial
application.
- 91 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
29. Changes in significant accounting policies and accounting estimates - (cont’d)
29.1 Changes in significant accounting policies - (cont’d)
Process for
The contents and reasons for the changes of accounting policies
management
approval
For operating leases before the initial application date, the Group adopts the simplifying
approaches below for each lease:
- When determining lease liabilities, the same discount rate will be used for leases with similar
characteristics;
- For leases with options to extend or terminate, the Group determines the lease term based on
the actual exercise of options before the initial application date and other most updated
information;
- As a substitute of impairment test for right-of-use assets, the Group applies ASBE13
Contingencies, to assess if the contract containing a lease is a loss contract and adjust the
right of-use assets based on the loss incurred at the initial application date.
- For lease modifications before the initial application date, the Group makes accounting
treatments based on the final lease arrangements after the lease modification.
On January 1, 2019, as a result of the implementation of the standard, the lease liabilities increased
by 506,862 thousands RMB, and right-of-use assets by 506,862 thousands RMB. For operating
leases before the initial application date, the Group measures the lease liability at the present value
of the lease payments, with the incremental borrowing rate as the discount rate. The borrowing
rates are between 1.9% to 6.1%.
In preparation of 2019 interim financial report, the Group began to adopt the Notice on Revising
the Format of 2019 Financial Statements for General Enterprises (CaiKuai [2019] No.6, The accounting
hereinafter “CaiKuai No.6”) promulgated by Ministry of Finance on April 30, 2019. CaiKuai No.6 policy change
revised accounts in balance sheets, income statements, statements of cash flows and statements of was approved
changes in shareholders’ equity, including: by the board of
directors
- “Notes and accounts receivable” is split into “Notes receivable” and “Accounts receivable”; meeting in
- “Notes and accounts payable” is split into “Notes payable” and “Accounts payable”; 21.8.2019
- Newly added “Receivables financing” and “Special reserve”;
- Make clear or revise the contents presented within the accounts of “Other receivables”, “Non-
current assets due within one year”, “Other payables”, “Deferred income”, “Other equity
instruments”, “Research and Development expenses”, “Interest income” and “Interest
expenses” as subitems of “Finance expenses”, “Other income”, “Non-operating income”,
“Non-operating expenses”, and “Capital injected by holders of other equity instruments”.
- Added disclosure requirements for provision of loss allowance, for loan commitments and
financial guarantee contracts;
- Added “Gain from derecognition of financial assets at amortized cost” as a subitem of
“Investment income”;
- Adjusted the sequence of some items within the income statements;
- Make clear of the items in the cash flow statements, for the cash flows related to government
grants.
The above modifications were retrospectively adjusted for comparative numbers. There is no
significant impact to the Company’s financial statements from implementation Caikuai No.6.
- 92 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
29. Changes in significant accounting policies and accounting estimates - (cont’d)
29.1 Changes in significant accounting policies - (cont’d)
Summary of impacts to assets and liabilities from adoption of new lease standard, as at January 1, 2019:
Impact from
December 31, adoption of new January 1,
Items 2018 leases standard 2019
Fixed assets 7,263,866 (6,917) 7,256,949
Right-of-use assets N/A 513,780 513,780
Total non-current assets 18,899,599 506,863 19,406,462
Total assets 44,135,063 506,863 44,641,926
Non-current liabilities due within one year 301,814 120,584 422,398
Other payables 1,197,579 (4,327) 1,193,252
Total current liabilities 12,134,847 116,257 12,251,104
Lease liabilities N/A 390,606 390,606
Total non-current liabilities 9,255,354 390,606 9,645,960
Total liabilities 21,390,201 506,863 21,897,064
29.2 Changes in significant accounting estimates
There are no significant changes in accounting estimates in the reporting period.
- 93 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
30. Significant accounting estimates and judgments
The preparation of the financial statements requires management to make estimates and assumptions that
affect the application of accounting policies and the reported amounts of assets, liabilities, income and
expenses. Actual results may differ from these estimates. Estimates as well as underlying assumptions and
uncertainties involved are reviewed on an ongoing basis. Revisions to accounting estimates are recognized
in the period in which the estimate is revised and in any future periods affected.
Notes V.34, Note VIII, Note IX and Note XIII contain information about the assumptions and their risk
factors relating to post-employment benefits – defined benefit plans, fair value of financial instruments and
share-based payments. Other key sources of estimation uncertainty are as follows:
30.1 Impairment of trade receivables
As described in Note III.11, trade receivables are reviewed at each balance sheet date to determine whether
credit risk on a receivable has increased significantly since initial recognition, lifetime expected losses is
accrued for impairment provision. Evidence of impairment includes observable data that comes to the
attention of the Group about loss events such as a significant decline in the solvency of an individual debtor
or the portfolio of debtors, and significant changes in the financial condition that have an adverse effect on
the debtor. If there is objective evidence of a recovery in the value of receivables which can be related
objectively to an event occurring after the impairment was recognized, the previously recognized impairment
loss is reversed.
30.2 Provision for impairment of inventories
As described in Note III.12, the net realisable value of inventories is under management’s regular review,
and as a result, provision for impairment of inventories is recognized for the excess of inventories’ carrying
amounts over their net realisable value. When making estimates of net realisable value, the Group takes into
consideration the use of inventories held on hand and other information available to form the underlying
assumptions, including the inventories’ market prices and the Group’s historical operating costs. The actual
selling price, the costs of completion and the costs necessary to make the sale and relevant taxes may vary
based on the changes in market conditions and product saleability, manufacturing technology and the actual
use of the inventories, resulting in the changes in provision for impairment of inventories. The net profit or
loss may then be affected in the period when the impairment of inventories is adjusted.
- 94 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
30. Significant accounting estimates and judgments - (cont’d)
30.3 Impairment of assets other than inventories and financial assets
As described in Note III.20, if impairment indication exists, assets other than inventories and financial assets
are assessed at balance sheet date to determine whether the carrying amount exceeds the recoverable
amount of the assets. If any such case exists, an impairment loss is recognized.
The recoverable amount of an asset (or an asset group) is the greater of its fair value less costs to sell and its
present value of expected future cash flows. Since a market price of the asset (or the asset group) cannot be
obtained reliably, the fair value of the asset cannot be estimated reliably, the recoverable amount is calculated
based on the present value of estimated future cash flows. In assessing the present value of estimated future
cash flows, significant judgements are exercised over the asset’s production, selling price, related operating
expenses and discount rate to calculate the present value. All relevant materials which can be obtained are
used for estimation of the recoverable amount, including the estimation of the production, selling price and
related operating expenses based on reasonable and supportable assumptions.
30.4 Depreciation and amortisation of assets such as fixed assets and intangible assets
As described in Note III.15 and III.18, assets such as fixed assets and intangible assets are depreciated and
amortised over their useful lives after taking into account residual value. The estimated useful lives of the
assets are regularly reviewed to determine the depreciation and amortisation costs charged in each reporting
period. The useful lives of the assets are determined based on historical experience of similar assets and the
estimated technical changes. If there have been significant changes in the factors used to determine the
depreciation or amortisation, the rate of depreciation or amortisation is revised prospectively.
30.5 Income taxes and deferred income tax
The Company and Group companies are assessed for income tax purposes in a large number of jurisdictions
and, therefore, Company management is required to use considerable judgment in determining the total
provision for taxes and attribution of income.
When assessing whether there will be sufficient future taxable profits available against which the deductible
temporary differences can be utilised, the Group recognizes deferred tax assets to the extent that it is probable
that future taxable profits will be available against which the deductible temporary differences can be utilised,
using tax rates that would apply in the period when the asset would be utilised. In determining the amount of
deferred tax assets, the Group makes reasonable judgements and estimates about the timing and amount of
taxable profits to be utilised in the following periods, and of the tax rates applicable in the future according
to the existing tax policies and other relevant regulations. If the actual timing and amount of future taxable
profits or the actual applicable tax rates differ from the estimates made by management, the differences affect
the amount of tax expenses.
- 95 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
30. Significant accounting estimates and judgments - (cont’d)
30.6 Contingent liabilities
When assessing the possible outcomes of legal claims filed against the Company and its investee companies,
the company positions are based on the opinions of their legal advisors. These assessments by the legal
advisors are based on their professional judgment, considering the stage of the proceedings and the legal
experience accumulated regarding the various matters. Since the results of the claims will be determined by
the courts, the outcomes could be different from the assessments.
In addition to the said claims, the Group is exposed to unasserted claims, inter alia, where there is doubt as
to interpretation of the agreement and/or legal provision and/or the manner of their implementation. This
exposure is brought to the Company’s attention in several ways, among others, by means of contacts made
to Company personnel. In assessing the risk deriving from the unasserted claims, the Company relies on
internal assessments by the parties dealing with these matters and by management, who weigh assessment of
the prospects of a claim being filed, and the chances of its success, if filed. The assessment is based on
experience gained with respect to the filing of claims and the analysis of the details of each claim. By their
nature, in view of the preliminary stage of the clarification of the legal claim, the actual outcome could be
different from the assessment made before the claim was filed.
30.7 Employee benefits
The Group’s liabilities for long-term post-employment and other benefits are calculated according to the
estimated future amount of the benefit to which the employee will be entitled in consideration for his services
during the current period and prior periods. The benefit is stated at present value net of the fair value of the
plan’s assets, based on actuarial assumptions. Changes in the actuarial assumptions could lead to material
changes in the book value of the liabilities and in the operating results.
30.8 Derivative financial instruments
The Group enters into transactions in derivative financial instruments for the purpose of hedging risks related
to foreign currency and inflationary risks. The derivatives are recorded at their fair value. The fair value of
derivative financial instruments is based on quotes from financial institutions. The reasonableness of the
quotes is examined by discounting the future cash flows, based on the terms and length of the period to
maturity of each contract, while using market interest rates of a similar instrument as of the measurement
date. Changes in the assumptions and the calculation model could lead to material changes in the fair value
of the assets and liabilities and in the results.
- 96 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
IV. Taxation
1. Main types of taxes and corresponding tax rates:
The income tax rate in China is 25% (2018: 25%). The subsidiaries outside of China are assessed based on
the tax laws in the country of their residence.
Set forth below are the tax rates outside China relevant to the subsidiaries with significant sales to third party:
Name of subsidiary Location 2019
ADAMA agriculture solutions Ltd. Israel 23.0%
ADAMA Makhteshim Ltd. Israel 7.5%
ADAMA Agan Ltd. Israel 16.0%
ADAMA Brasil S/A Brazil 34.0%
Makhteshim Agan of North America Inc. U.S. 24.7%
ADAMA India Private Ltd India 34.9%
ADAMA Deutschland GmbH Germany 32.5%
Control Solutions Inc. U.S. 24.0%
Adama Australia Pty Ltd Australia 30.0%
ADAMA France S.A.S France 30.5%
ADAMA Northern Europe B.V. Netherlands 25.0%
ADAMA Italia S.R.L. Italy 27.9%
Alligare Inc. U.S. 27.5%
The VAT rate of the Group's subsidiaries is in the range between 2.5% to 27%.
- 97 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
IV. Taxation - (cont’d)
1. Main types of taxes and corresponding tax rates - (cont’d)
(1) Benefits from Hi-Tech Certificate
The Company, was jointly approved as new and high-tech enterprise, by the Hubei Provincial Department
of Science and Technology, Department of Finance of Hubei Province, Hubei Provincial Office of the State
Administration of Taxation and Hubei Local Taxation Bureau, and the applicable income tax rate from 2017
to 2019 is 15%.
(2) Benefits under the Law for the Encouragement of Capital Investments
Industrial enterprises of subsidiaries in Israel are preferred enterprise under the Israeli Law for the
Encouragement of Capital Investments, 1959, according to which preferred enterprise in Development Area
A, will be subject to tax rate of 7.5%, the tax rate applicable to preferred enterprises located in other areas is
16%.
Should a dividend be distributed from the historic tax-exempt income, the subsidiaries will be liable for tax
on the income from which the dividend was distributed at a rate of 25%. No tax shall apply to dividend
distributed out of preferred income to shareholder who is Israel resident company. On dividend distributed
out of preferred income to foreign shareholder subject to double taxation treaties, tax of 20% shall apply.
(3) Benefits under the Law for the Encouragement of Industry (Taxes), 1969
Under the Israeli Law for the Encouragement of Industry (Taxes) 1969, Solutions is an Industrial Holding
Company and some of the subsidiaries in Israel are “Industrial Companies”. The main benefit under this law
is the filing of consolidated income tax returns (Solutions files a consolidated income tax return with Adama
Makhteshim and Adama Agan) and amortization of know-how over 8 years.
- 98 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements
1. Cash at Bank and On Hand
June 30 December 31
2019 2018 (Restated)
Cash on hand 7,770 1,380
Deposits in banks 5,374,050 6,344,816
Other cash and bank 43,572 53,994
5,425,392 6,400,190
Including cash and bank placed outside China 2,862,309 3,873,638
As at June 30, 2019, restricted cash and bank balances was 43,572 thousand RMB (as at December 31, 2018-
53,994 thousand RMB) mainly including deposits that guarantee bank acceptance drafts.
2. Financial assets held for trading
June 30 December 31
2019 2018 (Restated)
Debt instruments 15,365 22,108
Other 17,709 23,987
33,074 46,095
3. Derivative financial assets
June 30 December 31
2019 2018 (Restated)
Economic hedge 392,098 389,068
Accounting hedge derivatives 24,893 128,658
416,991 517,726
4. Bills Receivable
June 30 December 31
2019 2018 (Restated)
Post-dated checks receivable 20,597 31,935
Bank acceptance draft 34,105 8,634
54,702 40,569
All bills receivables are due within 1 year.
- 99 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
5. Accounts Receivable
a. By category
June 30, 2019
Provision for bad and
Book value doubtful debts
Carrying
Amount Percentage (%) Amount Percentage (%) amount
Account receivables assessed
individually for impairment 510,505 6 350,809 69 159,696
Account receivables assessed
collectively for impairment 7,597,460 94 82,775 1 7,514,685
8,107,965 100 433,584 5 7,674,381
December 31, 2018 (Restated)
Provision for bad and
Book value doubtful debts
Carrying
Amount Percentage (%) Amount Percentage (%) amount
Account receivables assessed
individually for impairment 458,217 7 335,873 73 122,343
Account receivables assessed
collectively for impairment 6,548,131 93 97,375 1 6,450,757
7,006,348 100 433,248 6 6,573,100
b. Aging analysis
June 30, 2019
Within 1 year (inclusive) 7,672,012
Over 1 year but within 2 years 139,094
Over 2 years but within 3 years 58,648
Over 3 years but within 4 years 82,014
Over 4 years but within 5 years 36,023
Over 5 years 120,174
8,107,965
- 100 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
5. Accounts Receivable – (cont'd)
c. Addition, written-back and written-off of provision for bad and doubtful debts during the period
Addition of provision for bad and doubtful debts during the period
Lifetime expected credit Lifetime expected
loss (credit losses has credit loss (credit losses
not occurred) has occurred) Total
January 1, 2019 52,575 380,673 433,248
First time consolidation - 2,131 2,131
Addition during the period, net - 30,763 30,763
Write back during the period (16,379) (17,740) (34,119)
Write-off during the period - (2,749) (2,749)
Exchange rate effect 52 4,258 4,310
Balance as of June 30, 2019 36,248 397,336 433,584
d. Five largest accounts receivable at June 30, 2019:
Proportion of Accounts Allowance of doubtful
Name Closing balance receivable (%) debts
Party 1 136,339 2 -
Party 2 105,107 1 -
Party 3 94,513 1 -
Party 4 88,099 1 -
Party 5 84,387 1 -
Total 508,445 6 -
e. Derecognition of accounts receivable due to transfer of financial assets
Certain subsidiaries of the group entered into a securitization transaction with Rabobank International for
sale of trade receivables (hereinafter – “the Securitization Program” and/or “the Securitization
Transaction”).
Pursuant to the Securitization Program, the companies will sell their trade receivables debts, in various
different currencies, to a foreign company that was set up for this purpose and that is not owned by the
Adama Ltd. (hereinafter – “the Acquiring Company”). Acquisition of the trade receivables by the Acquiring
Company is financed by a U.S. company, Nieuw Amsterdam Receivables Corporation for the Rabobank
International Group.
The trade receivables included as part of the Securitization Transaction are trade receivables that meet the
criteria provided in the agreement.
Every year the credit facility is re approved in accordance with the Securitization Program. As at the date of
the report, the Securitization Agreement was approved up to July 16, 2019. Subsequent to the report date,
the Securitization Agreement was extended up to July 16, 2020.
- 101 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
5. Accounts Receivable – (cont'd)
e. Derecognition of accounts receivable due to transfer of financial assets - (cont'd)
The maximum scope of the securitization is adjusted for the seasonal changes in the scope of the Company’s
activities, as follows: during the months March through June the maximum scope of the securitization is
$350 million (as of June 30, 2019 - 2,406 million RMB), during the months July through September the
maximum scope of the securitization is $300 million (as of June 30, 2019 - 2,062 million RMB) and during
the months October through February the maximum scope of the securitization is $250 million (as of June
30, 2019 - 1,719 million RMB). The proceeds received from those customers whose debts were sold are used
for acquisition of new trade receivables.
The price at which the trade receivables debts are sold is the amount of the debt sold less a discount calculated
based on, among other things, the expected length of the period between the date of sale of the trade
receivable and its anticipated repayment date. In the month following acquisition of the debt, the Acquiring
Company pays in cash most of the debt while the remainder is recorded as a subordinated note that is paid
after collection of the debt sold. If the customer does not pay its debt on the anticipated repayment date, the
Company bears interest up to the earlier of the date on which the debt is actually repaid or the date on which
debt collection is transferred to the insurance company (the actual costs are not significant and are not
expected to be significant).
The Acquiring Company bears 95% of the credit risk in respect of the customers whose debts were sold and
will not have a right of recourse to the Company in respect of the amounts paid in cash, except regarding
debts with respect to which a commercial dispute arises between the companies and their customers, that is,
a dispute the source of which is a claim of non-fulfillment of an obligation of the seller in the supply
agreement covering the product, such as: a failure to supply the correct product, a defect in the product,
delinquency in the supply date, and the like.
The Acquiring Company appointed a policy manager who will manage for it the credit risk involved with
the trade receivables sold, including an undertaking with an insurance company.
Pursuant to the Receivables Servicing Agreement, the Group subsidiaries handle collection of the trade
receivables as part of the Securitization Transaction for the benefit of the Acquiring Company.
As part of the agreement, Solutions is committed to comply with certain financial covenants, mainly the ratio
of the liabilities to equity and profit ratios. As of June 30, 2019, Solutions was in compliance with the
financial covenants.
The accounting treatment of sale of the trade receivables included as part of the Securitization Program is:
The Company is not controlling the Acquiring Company, therefore the Acquiring Company is not
consolidated in the financial statements.
The Company continues to recognize the trade receivables included in the Securitization Program based on
the extent of its continuing involvement therein.
In respect of the part of the trade receivables included in the securitization Program with respect to which
cash proceeds were not yet received, however regarding which the Company has transferred the credit risk,
a subordinated note is recorded.
The continuing involvement and subordinated note recorded in the balance sheet as part of the “other
receivables” line item.
- 102 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
5. Accounts Receivable – (cont'd)
e. Derecognition of accounts receivable due to transfer of financial assets - (cont'd)
The loss from sale of the trade receivables is recorded at the time of sale in the statement of income in the
“financing expenses” line item.
In the fourth quarter of 2016, a subsidiary in Brazil (hereinafter - “the subsidiary”) entered into a 3 years
securitization transaction with Rabobank Brazil for sale of trade receivables. Under the agreement, the
subsidiary will sell its trade receivables to a securitization structure (hereinafter - “the entity”) that was
formed for this purpose where the subsidiary has subordinate rights of 5% of the entity's capital.
The maximum securitization scope amounts to BRL 200 million (as of June 30, 2019 - 359 million RMB).
On the date of the sale of the trade receivables, the entity pays the full amount which is the debt amount sold
net of discount calculated, among others, over the expected length of the period between the date of sale of
the customer receivable and its anticipated repayment date.
The entity bears 90% of the credit risk in respect of the customers whose debts were sold such that the entity
has the right of recourse of 10% of the unpaid amount. The subsidiary should make a pledged deposit equal
to the amount the entity’s right of recourse.
The subsidiary handles the collection of receivables included in the securitization for the entity.
The subsidiary does not control the entity and therefore the entity is not consolidated in the group's financial
statements.
The subsidiary continues to recognize the trade receivables sold to the entity based on the extent of its
continuing involvement therein (10% right of recourse) and also recognizes an associated liability in the
same amount.
The loss from the sale of the trade receivables is recorded at the time of sale in the statement of income in
the “financing expenses” category.
June 30 December 31
2019 2018 (Restated)
Accounts receivables derecognized 2,527,285 2,541,443
Continuing involvement 112,986 129,893
Subordinated note in respect of trade receivables 343,027 622,362
Liability in respect of trade receivables 249,332 35,572
Six months ended June 30
2019 2018
Loss in respect of sale of trade receivables 33,129 32,186
- 103 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
6. Receivables financing
June 30 December 31
2019 2018 (Restated)
Bank acceptance draft 68,629 73,216
68,629 73,216
As at June 30, 2019, bank acceptance endorsed but not yet due amounts to 381,812 thousands RMB.
7. Prepayments
(1) The aging analysis of prepayments is as follows:
June 30 December 31 2018
2019 (Restated)
Amount Percentage(%) Amount Percentage(%)
Within 1 year (inclusive) 312,411 98 401,674 98
Over 1 year but within 2 years (inclusive) 2,969 1 3,810 1
Over 2 years but within 3 years (inclusive) 984 - 1,840 -
Over 3 years 3,107 1 3,182 1
319,471 100 410,506 100
(2) Total of five largest prepayments by debtor at the end of the period:
Amount Percentage of prepayments (%)
June 30, 2019 111,119 35
- 104 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
8. Other Receivables
(1) Other receivables by nature
June 30 December 31
2019 2018 (Restated)
Dividends receivable - 5,245
Others 929,945 1,074,087
929,945 1,079,332
a. Other receivables by categories
June 30 December 31
2019 2018 (Restated)
Trade receivables as part of securitization transactions
not yet eliminated 112,986 129,893
Subordinated note in respect of trade receivables 343,027 622,362
Financial institutions 61,522 98,837
Receivables in respect of disposal of fixed assets 145,861 28,551
Other 281,381 214,512
Sub total 944,777 1,094,155
Provision for doubtful debts - other receivables (14,832) (14,823)
929,945 1,079,332
b. Other receivables by aging
June 30
2019
Within 1 year (inclusive) 907,590
Over 1 year but within 2 years 5,630
Over 2 years but within 3 years 6,648
Over 3 years but within 4 years 17,797
Over 4 years but within 5 years 28
Over 5 years 7,084
944,777
- 105 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
8. Other Receivables - (cont'd)
(2) Additions, recovery or reversal and written-off of provision for bad and doubtful debts during the
period:
Six months ended
June 30, 2019
Balance as of January 1 2019, 14,823
Addition during the period 9
Written back during the period -
Write-off during the period -
Balance as of June 30, 2019 14,832
(3) Five largest other receivables at June 30 2019:
Closing Proportion of other Allowance of
Name balance receivables (%) doubtful debts
Party 1 343,027 36 -
Party 2 135,308 14 -
Party 3 61,522 7 -
Party 4 24,103 3 -
Party 5 21,407 2 -
Total 585,367 62 -
9. Inventories
(1) Inventories by category:
June 30, 2019
Provision for
Book value impairment Carrying amount
Raw materials 3,170,206 17,952 3,152,254
Work in progress 499,233 4,160 495,073
Finished goods 6,554,951 152,794 6,402,157
Others 297,983 9,543 288,440
10,522,373 184,449 10,337,924
December 31, 2018
Provision for
Book value impairment Carrying amount
Raw materials 3,321,193 20,232 3,300,961
Work in progress 577,964 1,576 576,388
Finished goods 5,452,653 158,053 5,294,600
Others 272,441 10,514 261,927
9,624,251 190,375 9,433,876
- 106 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
9. Inventories - (cont'd)
(2) Provision for impairment of inventories:
For the six months ended June 30, 2019
Reversal or
January 1, 2019 Provision write-off Other* June 30, 2019
Raw material 20,232 4,329 (4,994) (1,615) 17,952
Work in progress 1,576 - (16) 2,600 4,160
Finished goods 158,053 29,577 (43,680) 8,844 152,794
Others 10,514 447 (450) (968) 9,543
190,375 34,353 (49,140) 8,861 184,449
* Includes amount of 8,766 RMB related to first time consolidation.
10. Other Current Assets
June 30 December 31
2019 2018 (Restated)
Deductible VAT 476,327 476,706
Current tax assets 199,690 142,412
Others 39,750 41,688
715,767 660,806
11. Long-Term Receivables
June 30 December 31
2019 2018 (Restated)
Long term account receivables from sale of goods 174,246 157,600
174,246 157,600
- 107 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
12. Long-Term Equity Investments
(1) Long-term equity investments by category:
June 30 December 31
2019 2018 (Restated)
Investments in joint ventures 95,258 68,584
Investments in associates 39,817 39,766
135,075 108,350
(2) Movements of long-term equity investments for the period are as follows:
Investment Translation
income differences of Balance at the end of
January 1 2019 (loss) foreign operations Other the period
Joint ventures
Company A 62,696 11,462 (81) 4,344 78,421
Company B 4,598 440 15 - 5,053
Company C 1,290 - 23 - 1,313
Company D - 9,838 201 432 10,471
Sub-total 68,584 21,740 158 4,776 95,258
Associates
Company E 39,766 (16) 67 - 39,817
Sub total Sub-total 39,766 (16) 67 - 39,817
108,350 21,724 225 4,776 135,075
13. Other equity investments
June 30 December 31
2019 2018 (Restated)
Company A 85,493 79,554
Company B - 9,574
Company C 1,709 1,709
Company D 564 564
Other 46 158
87,812 91,559
Other equity investments are non-core businesses that are intended to be held in the foreseeable future. For the
six months period ended at June 30, 2019 the company did not recognize dividend income from other equity
investments.
- 108 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
14. Fixed assets
Land & Machinery & Office & other
Buildings equipment Motor vehicles equipment Total
Cost
Balance as at January 1, 2019 3,225,214 13,689,164 101,078 321,424 17,336,880
Purchases 16,709 96,525 14,652 20,861 148,747
Transfer from construction in progress 4,895 145,033 27 1,295 151,250
Disposals (62,726) (2,735) (4,885) (6,686) (77,032)
Currency translation adjustment 5,187 21,843 513 767 28,310
First time consolidation 85,831 39,307 96 1,956 127,190
Balance as at June 30, 2019 3,275,110 13,989,137 111,481 339,617 17,715,345
Accumulated depreciation
Balance as at January 1, 2019 (1,476,951) (7,961,572) (51,531) (242,697) (9,732,751)
Charge for the period (76,064) (313,835) (7,905) (15,837) (413,641)
Disposals 11,106 2,261 4,233 6,584 24,184
Currency translation adjustment (2,371) (13,346) (208) (658) (16,583)
First time consolidation (39,354) (29,094) (96) (1,956) (70,500)
Balance as at June 30, 2019 (1,583,634) (8,315,586) (55,507) (254,564) (10,209,291)
Provision for impairment
Balance as at January 1, 2019 (68,702) (278,223) (8) (247) (347,180)
Disposals 8,204 - - - 8,204
Currency translation adjustment 85 (131) - - (46)
Balance as at June 30, 2019 (60,413) (278,354) (8) (247) (399,022)
Carrying amounts
As at June 30, 2019 1,631,063 5,395,197 55,966 84,806 7,167,032
As at January 1, 2019 1,679,561 5,449,369 49,539 78,480 7,256,949
The lands reported as fixed assets are owned by the group subsidiaries and are located outside of China.
- 109 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
15. Construction in Progress
(1) Construction in progress
June 30 December 31
2019 2018 (Restated)
Provision for Provision for
Book value impairment Carrying amount Book value impairment Carrying amount
534,351 - 534,351 487,204 - 487,204
(2) Details and Movements of major construction projects in progress during the six months ended
June 30, 2019
Currency Transfer Actual cost Project
January translation to fixed June 30, to budget progress Source of
Budget 1, 2019 Additions differences assets 2019 (%) (%) funds
Project A 1,509,420 120,412 50,039 - - 170,451 11 11 Internal finance
Project B 505,643 1,220 5,009 - - 6,229 1 1 Internal finance
Project C 157,951 58,177 1,095 - (947) 58,325 37 37 Internal finance
Project D 79,747 42,476 947 84 - 43,507 55 55 Internal finance
Project E 45,373 2,457 2,821 43 - 5,321 12 12 Internal finance
Project F 44,760 13,818 6,178 - - 19,996 45 45 Internal finance
Project G 34,374 31,358 800 (378) (31,780) - 94 100 Internal finance
Project H 27,800 16,593 3,512 - - 20,105 72 72 Internal finance
16. Right-of-use assets
Land & Machinery & Office & other
Buildings equipment Motor vehicles equipment Total
Cost
Balance as at January 1, 2019 353,708 43,058 118,378 2,795 517,939
Additions 82,350 - 36,857 68 119,275
Disposals (2,071) (94) (5,412) - (7,577)
Currency translation adjustment 956 70 754 4 1,784
Balance as at June 30, 2019 434,943 43,034 150,577 2,867 631,421
Accumulated depreciation
Balance as at January 1, 2019 (3,198) (961) - - (4,159)
Charge for the period (37,434) (1,087) (36,418) (590) (75,529)
Disposals 705 75 2,862 - 3,642
Currency translation adjustment (492) (16) (487) (8) (1,003)
Balance as at June 30, 2019 (40,419) (1,989) (34,043) (598) (77,049)
Provision for impairment
Balance as at January 1, 2019 - - - - -
Balance as at June 30, 2019 - - - - -
Carrying amounts
As at June 30, 2019 394,524 41,045 116,534 2,269 554,372
As at January 1, 2019 350,510 42,097 118,378 2,795 513,780
- 110 -
ADAMA LTD.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
17. Intangible Assets
Intangible assets
Product on Purchase of Tradename and Customers
registration Products Software trademarks relations Land use rights (1) Others(2) Total
Costs
Balance as at January 1, 2019 9,721,455 4,121,559 648,478 460,640 192,177 346,967 307,692 15,798,968
Purchases 217,375 - 36,655 - - - 3,322 257,352
Currency translation adjustment 20,156 6,906 1,586 1,547 816 41 598 31,650
Disposal - - (1,593) (366) - - - (1,959)
First time consolidation 8,057 - 4,248 260,390 200,392 - - 473,087
Balance as at June 30, 2019 9,967,043 4,128,465 689,374 722,211 393,385 347,008 311,612 16,559,098
Accumulated amortization
Balance as at January 1, 2019 (6,864,532) (1,863,482) (439,696) (406,082) (159,323) (58,211) (125,596) (9,916,922)
Charge for the period (387,491) (200,553) (30,623) (10,766) (16,933) (3,750) (19,903) (670,019)
Currency translation adjustment (17,326) (5,910) (1,186) (917) (638) (19) (548) (26,544)
Disposal - - 1,593 292 - - - 1,885
First time consolidation - - (4,248) - - - - (4,248)
Balance as at June 30, 2019 (7,269,349) (2,069,945) (474,160) (417,473) (176,894) (61,980) (146,047) (10,615,848)
Provision for impairment
Balance as at January 1, 2019 (84,026) (51,337) - - - - (4,721) (140,084)
Charge for the period - - - - - - - -
Currency translation adjustment (148) (86) - - - - - (234)
Disposal - - - - - - - -
Balance as at June 30, 2019 (84,174) (51,423) - - - - (4,721) (140,318)
Carrying amount
As at June 30, 2019 2,613,520 2,007,097 215,214 304,738 216,491 285,028 160,844 5,802,932
As at January 1, 2019 2,772,897 2,206,740 208,782 54,558 32,854 288,756 177,375 5,741,962
(1) Include land parcel in Israel that has not yet been registered in the name of the Group subsidiaries at the Land Registry Office, mostly due to registration procedures or technical problems.
(2) Mainly non-compete.
- 111 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
18. Goodwill
Changes in goodwill
The Group identified two cash generating units ("CGU"), Crop Protection (Agro) and Other (Non Agro) units.
Operations are allocated into either one of the two cash generating units according to their business.
At the end of the year, or more frequently whether indicators for impairment exists, the Group estimates the
recoverable amount of Agro and Non Agro units, which are the cash generating units of the Group that contain
goodwill.
For the purpose of evaluating the groups Goodwill, the Group used a comparable trading multiple analysis in order
to benchmark each of its CGU’s valuation against that of the markets peer companies.
As of December 31, 2018 the fair value of the cash generating units to which the goodwill relates exceeds its
carrying amount.
As at the reporting period, there were no indicators for impairment.
Currency
January 1, translation Balance at
2019 Additions adjustment June 30, 2019
Book value 4,085,945 205,615 7,187 4,298,747
Impairment provision - - - -
Carrying amount 4,085,945 205,615 7,187 4,298,747
19. Deferred Tax Assets and Deferred Tax Liabilities
(1) Deferred tax assets without taking into consideration of the offsetting of balances within the same
tax jurisdiction
June 30 December 31
2019 2018 (Restated)
Deductible Deductible
temporary Deferred tax temporary Deferred tax
differences assets differences assets
Deferred tax assets
Deferred tax assets in respect of
carry forward losses 513,109 81,116 576,498 82,516
Deferred tax assets in respect of
inventories 1,610,875 437,698 1,651,046 442,237
Deferred tax assets in respect of
employee benefits 774,387 102,548 660,472 101,026
Other deferred tax asset 1,531,144 385,821 1,236,811 340,984
4,429,515 1,007,183 4,124,827 966,763
- 112 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
19. Deferred Tax Assets and Deferred Tax Liabilities - (cont’d)
(2) Deferred tax liabilities without taking into consideration of the offsetting of balances within the
same tax jurisdiction
June 30 December 31
2019 2018 (Restated)
Taxable Taxable
temporary Deferred tax temporary Deferred tax
differences liabilities differences liabilities
Deferred tax liabilities
Deferred tax liabilities in respect of
fixed assets and intangible assets 3,687,112 589,990 3,886,541 617,430
3,687,112 589,990 3,886,541 617,430
(3) Deferred tax assets and deferred tax liabilities presented on a net basis after offsetting
June 30 December 31
2019 2018 (Restated)
The offset
amount of Deferred tax The offset amount
deferred tax assets or of deferred tax Deferred tax assets
assets and liabilities after assets and or liabilities after
liabilities offset liabilities offset
Presented as:
Deferred tax assets 239,255 767,928 225,026 741,737
Deferred tax liabilities 239,255 350,735 225,026 392,404
(4) Details of unrecognized deferred tax assets
June 30 December 31
2019 2018 (Restated)
Deductible temporary differences 83,488 82,886
Deductible losses carry forward 165,813 162,186
249,301 245,072
(5) Expiration of deductible tax losses carry forward for unrecognized deferred tax assets
June 30 December 31
2019 2018 (Restated)
2019 - -
2020 15,936 15,909
2021 13,541 13,537
2022 1,382 1,380
After 2022 134,954 131,360
165,813 162,186
- 113 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
19. Deferred Tax Assets and Deferred Tax Liabilities - (cont'd)
(6) Unrecognized deferred tax liabilities
When calculating the deferred taxes, taxes that would have applied in the event of realizing investments
in subsidiaries were not taken into account since it is the Company’s intention to hold these investments
and not realize them.
20. Other Non-Current Assets
June 30 December 31
2019 2018 (Restated)
Asset related to securitization deposit 66,960 62,395
Advances in respect of non-current assets 94,027 55,282
Judicial deposits 59,597 51,906
Call option in respect of business combination 15,097 11,880
Long term loan - 48
Others 71,704 35,819
Sub total 307,385 217,330
Due within one year - (48)
307,385 217,282
21. Short-Term Loans
Short-term loans by category:
June 30 December 31
2019 2018 (Restated)
Guaranteed loans 589,000 570,000
Unsecured loans 1,719,286 552,774
2,308,286 1,122,774
Details of the guarantees are set out in note X.5(3) Related parties and related party transactions.
22. Derivative financial liabilities
June 30 December 31
2019 2018 (Restated)
Economic hedge 604,265 1,430,497
Accounting hedge derivatives 84,002 21,173
688,267 1,451,670
- 114 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
23. Bills Payables
June 30 December 31
2019 2018 (Restated)
Post-dated checks payables 224,438 235,833
Note payables draft 151,339 209,700
375,777 445,533
As at June 30, 2019, none of the bills payable are overdue.
24. Accounts payables
June 30 December 31
2019 2018 (Restated)
Within 1 year (including 1 year) 4,143,156 4,587,719
1-2 years (including 2 years) 13,705 12,545
2-3 years (including 3 years) 12,087 16,749
Over 3 years 9,720 10,923
4,178,668 4,627,936
There are no significant accounts payables ageing over one year.
25. Contract liabilities
June 30 December 31
2019 2018 (Restated)
Rebates 717,368 525,982
Advances from customers 200,379 322,420
917,747 848,402
26. Employee Benefits Payable
June 30 December 31
2019 2018 (Restated)
Short-term employee benefits 470,752 608,839
Share based payment (See note XIII) 79,249 -
Post-employment benefits-defined contribution plans 21,511 18,050
Other benefits within one year 308,237 277,191
879,749 904,080
Current maturities 32,605 40,095
912,354 944,175
- 115 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
27. Taxes Payable
June 30 December 31
2019 2018 (Restated)
Corporate income tax 236,055 407,457
VAT 177,130 186,939
Others 24,042 22,384
437,227 616,780
28. Other Payable
June 30 December 31
2019 2018 (Restated)
Dividends payable (See note 41) 238,066 750
Interest payable 53,458 46,258
Other payable 1,679,117 1,150,571
1,970,641 1,197,579
(1) Interest payable
June 30 December 31
2019 2018 (Restated)
Accrued interest in respect of debenture 34,745 33,698
Accrued interest in respect of bank loans 11,199 2,430
Accrued interest in respect of other liabilities 7,514 10,130
53,458 46,258
As at 30 June, 2019, the Group did not have any overdue interest.
(2) Other payable
June 30 December 31
2019 2018 (Restated)
Accrued expenses 631,540 640,507
Payables in respect of business combination under common
control 415,000 -
Liability in respect of securitization transactions 249,332 35,572
Payables in respect of intangible assets 128,880 131,396
Financial institutions 4,668 44,336
Other payables 249,697 298,760
1,679,117 1,150,571
As at June 30, 2019, the Group did not have any significant overdue other payables.
- 116 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
29. Non-Current Liabilities Due Within One Year
Non-current liabilities due within one year by category are as follows:
June 30 December 31
2019 2018 (Restated)
Long-term loans due within one year 282,110 301,629
Lease liabilities due within one year 140,098 -
Long-term payables due within one year - 185
422,208 301,814
30. Other Current Liabilities
June 30 December 31
2019 2018 (Restated)
Put options to holders of non-controlling interests 169,661 404,463
Provision in respect of returns 161,899 149,686
Provision in respect of claims 12,175 23,644
Others 392 391
344,127 578,184
- 117 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
31. Long-Term Loans
Long-term loans by category
June 30 December 31 2018 (Restated)
2019 Interest range 2018 Interest range
Long term loans
Loan secured by tangible assets
other than monetary assets 529 5.5% 741 5.5%
Guaranteed loans - - 72,000 4.5%
Unsecured loans 955,377 1.7%-6.1% 464,707 5.1%-6.1%
Total Long term loans 955,906 537,448
Less: Long term loans due within 1 year (282,110) (301,629)
Long term loans, net 673,796 235,819
For the maturity analysis, see note VIII (c)
The long-term loans were mortgaged by fixed assets with carrying amounts of 5,926 thousand RMB as at June
30, 2019. Details of the guarantees are set out in note X(5) Related parties and related party transactions.
32. Debentures Payable
June 30 December 31
2019 2018 (Restated)
Debentures Series B 8,152,990 7,649,098
June 30
2019
First year (current maturities) -
Second year 479,588
Third year 479,588
Fourth year 479,588
Fifth year and thereafter 6,714,226
8,152,990
- 118 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
32. Debentures Payable - (cont'd)
Movements of debentures payable:
For the six months ended June 30, 2019
Balance at Issuance Amortization CPI and Repayment Currency
Face value Face value January 1, during the of discounts or exchange rate during the translation Balance at
in RMB NIS Issuance date Maturity period Issuance amount 2019 period premium effect period adjustment June 30, 2019
Debentures Series B 2,673,640 1,650,000 4.12.2006 November 2020-2036 3,043,742 3,471,674 - 115 218,737 - 8,765 3,699,291
Debentures Series B 843,846 513,527 16.1.2012 November 2020-2036 842,579 1,018,314 - 4,972 64,547 - 2,632 1,090,465
Debentures Series B 995,516 600,000 7.1.2013 November 2020-2036 1,120,339 1,277,399 - 2,197 80,564 - 3,251 1,363,411
Debentures Series B 832,778 533,330 1.2.2015 November 2020-2036 1,047,439 1,210,195 - (1,377) 76,338 - 3,032 1,288,188
Debentures Series B 418,172 266,665 1-6.2015 November 2020-2036 556,941 671,516 - (3,859) 42,337 - 1,641 711,635
7,649,098 - 2,048 482,523 - 19,321 8,152,990
Series B debentures issued by Solutions, in the amount of NIS 3,563.5 million par value, are linked to the Israeli CPI and bear interest at base annual rate of 5.15%. The
debenture principal is to be repaid in 17 equal payments in the years 2020 through 2036.
- 119 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
33. Lease liabilities
June 30
2019 Interest range
Lease liabilities 558,912 1.9% - 6.1%
Less: Lease liabilities due within one year (140,098)
Long term lease liabilities, net 418,814
34. Long-Term Employee Benefits Payable
Post-employment benefit plans – defined benefit plan and early retirement
June 30 December 31
2019 2018 (Restated)
Total present value of obligation 577,191 533,574
Less: fair value of plan's assets (93,585) (87,492)
Post-employment benefits -Net liability arising from defined benefit plan 483,606 446,082
Termination benefits 92,186 104,781
Share based payment (See note XIII) 51,540 61,961
Other long-term employee benefits 49,722 47,917
Total long-term employee benefits, net 677,054 660,741
Including: Long-term employee benefits payable due within one year 32,605 40,095
644,449 620,646
(1) Movement in the net liability and assets in respect of defined benefit plans, early retirement and
their components
Defined benefit obligation Fair value of
and early retirement plan's assets Total
2019 2018 2019 2018 2019 2018
Balance as at January 1, 638,355 703,679 87,492 97,614 550,863 606,065
Expense/income recognized
in profit and loss:
Current service cost 11,429 10,928 - - 11,429 10,928
Past service cost - (757) - - - (757)
Interest costs 10,931 10,078 1,749 1,490 9,182 8,588
Changes in exchange rates 22,709 (26,394) 4,265 (4,783) 18,444 (21,611)
Actuarial gain (losses) due to early retirement 707 (366) - - 707 (366)
Included in other comprehensive
income:
Actuarial gain (losses) as a result
of changes in actuarial
assumptions 17,515 (13,723) 1,953 (1,643) 15,562 (12,080)
Foreign currency translation
differences in respect of foreign
operations 1,359 6,242 350 925 1,009 5,317
Additional movements:
Benefits paid (33,628) (31,779) (5,404) (6,145) (28,224) (25,634)
Contributions paid by the Group - - 3,180 3,229 (3,180) (3,229)
Balance as at June 30, 669,377 657,908 93,585 90,687 575,792 567,221
- 120 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
34. Long-Term Employee Benefits Payable - (cont'd)
Post-employment benefit plans – defined benefit plan and early retirement - (cont'd)
(2) Actuarial assumptions and sensitivity analysis
The principal actuarial assumptions at the reporting date for defined benefit plan
June 30 December 31
2019 2018 (Restated)
Discount rate (%)* 0.7%-3.5% 1.4%-3.5%
*According to the demographic and the benefit components
The assumptions regarding the future mortality rate are based on published statistical data and acceptable
mortality rates.
Possible reasonable changes as of the date of the report in the discount rate, assuming the other assumptions
remain unchanged, would have affected the defined benefit obligation as follows:
As of June 30, 2019
Increase of 1% Decrease of 1%
Discount rate (44,360) 54,443
35. Provisions
June 30 December 31
2019 2018 (Restated)
Liabilities in respect of contingencies* 96,592 92,542
Other 39,332 39,809
135,924 132,351
* Liabilities in respect of contingencies includes obligations of pending litigations, where an outflow of
resources had been reliably estimated.
- 121 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
36. Other Non-Current Liabilities
June 30 December 31
2019 2018 (Restated)
Put options to holders of non- controlling interests 189,782 -
Long term transactions in derivatives 8,428 14
Deferred income 2,276 28,146
Long term loans - others 171,770 171,770
372,256 199,930
37. Share Capital
Balance at Issuance of new Cancellations of Balance at
January 1, 2019 shares shares June 30, 2019
Share capital 2,446,554 - - 2,446,554
38. Capital Reserve
Balance at Additions during Reductions during Balance at
January 1, 2019 the period the period* June 30, 2019
Share premiums 12,965,177 - (415,000) 12,550,177
Other capital reserve 359,314 - (6,323) 352,991
13,324,491 - (421,323) 12,903,168
* Mainly due to consideration of business combination under common, see note VI.2 - change in
consolidation scope.
- 122 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
39. Other Comprehensive Income
Attributable to shareholders of the company
Balance at Before tax Less: transfer to Less: Income Net –of-tax Less: transfer to Balance at
January 1, 2019 amount profit or loss tax expenses amount retained earnings June 30, 2019
Items that will not be reclassified to profit or loss 66,516 (5,110) - (693) (4,417) 4,511 57,588
Re-measurement of changes in liabilities under
defined benefit plans 15,895 (15,562) - (1,584) (13,978) - 1,917
Changes in fair value of other equity investment 50,621 10,452 - 891 9,561 4,511 55,671
Items that may be reclassified to profit or loss 1,024,311 14,988 145,239 (21,197) (109,054) - 915,257
Effective portion of gain or loss of cash flow hedge 93,385 (27,951) 145,239 (21,197) (151,993) - (58,608)
Translation difference of foreign financial statements 930,926 42,939 - - 42,939 - 973,865
1,090,827 9,878 145,239 (21,890) (113,471) 4,511 972,845
- 123 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
40. Surplus reserve
Additions Reductions
Balance at during the during the Balance at
January 1, 2019 period period June 30, 2019
Statutory surplus reserve 236,348 - - 236,348
Discretional surplus reserve 3,814 - - 3,814
240,162 - - 240,162
41. Retained Earnings
2019 2018
Retained earnings as at December 31 of preceding year 5,513,466 3,286,711
Changes in accounting policy - 39,481
Adjustment for business combination under common control (Note 1) 115,826 55,045
Retained earnings as at January 1 5,629,292 3,381,237
Net profits for the period attributable to shareholders of the Company 588,638 2,389,167
Dividends to non-controlling Interest (28,936) (16,028)
Dividend to the shareholders of the company (Note 2) (293,628) (154,133)
Other 4,511 15,366
Retained earnings as at June 30 5,899,877 5,615,609
Note 1:
During the reporting period the acquisition of Jiangsu Anpon Electrochemical co. LTD., a wholly-owned
subsidiary of CNAC, was successfully completed. Anpon became a wholly owned subsidiary of the Company.
The combination was considered as a business combination under common control (See note VI.2 – Change in
consolidation scope).
Note 2:
A.On March 19, 2019, after obtaining the approval of the 12th meeting of the company's 8th Board of
Directors, the Company declared RMB 0.97 (including tax) per 10 shares as cash dividend to all
shareholders, resulting in a total cash dividend of 237,316 thousands RMB (including tax), and zero shares
as share dividend, as well as no reserve transferred to equity capital. The proposal was approved by the
Company’s shareholders at the 2nd interim shareholders’ meeting held on May 30, 2019.
B. On May 31, 2019, as part of Anpon’s acquisition agreement’s terms, and after obtaining the approval of
Anpon’s former sole shareholder, Anpon paid a cash dividend to its former sole shareholder, CNAC
International, in a total of 56,312 thousands RMB (including tax), and zero shares as share dividend, as well
as no reserve transferred to equity capital.
- 124 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
42. Operating Income and Cost of Sales
Six months ended June 30 Six months ended June 30
2019 2018 (Restated)
Income Cost of sales Income Cost of sales
Principal activities 13,579,047 8,999,083 13,606,947 9,030,648
Other businesses 36,985 24,159 32,126 11,535
13,616,032 9,023,242 13,639,073 9,042,183
43. Taxes and Surcharges
Six months ended June 30
2019 2018 (Restated)
Tax on turnover 8,285 17,620
Others 37,941 42,928
46,226 60,548
44. Selling and Distribution Expenses
Six months ended June 30
2019 2018 (Restated)
Salaries and related expense 811,280 736,594
Depreciation and amortization 703,980 541,154
Transportation and Commissions 372,574 382,703
Advertising and sales promotion 178,645 156,329
Warehouse expenses 75,558 67,991
Registration 74,483 48,757
Travel expenses 68,795 65,566
Insurance 41,668 34,252
Professional services 38,998 32,447
Others 133,793 191,198
2,499,774 2,256,991
45. General and Administrative Expenses
Six months ended June 30
2018 (Restate
2019 d)
Salaries and related expenses 248,290 264,555
Idleness expenses* 155,214 26,851
Professional services 64,171 62,853
Depreciation and amortization 45,283 32,378
IT systems 41,929 33,554
Office rent, maintenance and expenses 25,925 38,446
Other 47,447 65,184
628,259 523,821
* See note XI - Commitments and contingencies (environmental protection)
- 125 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
46. Research and development expenses
Six months ended June 30
2018 (Restate
2019 d)
Salaries and related expenses 90,220 68,187
Field trial 33,143 27,133
Professional services 27,519 24,557
Depreciation and amortization 18,826 7,330
Materials 14,860 2,983
Office rent, maintenance and expenses 4,316 3,720
Other 21,815 22,365
210,699 156,275
47. Financial Expenses, net
Six months ended June 30
2018 (Restate
2019 d)
Interest expenses on debentures and loans 349,941 306,821
CPI expense in respect of debentures 96,329 64,891
Loss in respect of sale of trade receivables 33,129 32,186
Interest expense in respect of post-employment benefits and early
retirement, net 9,182 8,588
Revaluation of put option, net (14,954) 8,027
Interest income from customers, banks and others (41,104) (41,465)
Exchange rate differences, net 481,676 (31,995)
Other expenses 23,997 501
938,196 347,554
48. Investment income, net
Six months ended June 30
2018 (Restate
2019 d)
Investment income (expenses) from disposal of derivatives (536,167) 134,295
Income from long-term equity investments accounted for using
the equity method 21,724 12,758
(514,443) 147,053
49. Gain (loss) from Changes in Fair Value
Six months ended June 30
2018 (Restate
2019 d)
Gain (loss) from changes in fair value of derivative financial
instruments 881,007 (242,567)
Others 3,128 (809)
884,135 (243,376)
- 126 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
50. Credit impairment loss
Six months ended June 30
2018 (Restate
2019 d)
Bills receivable and accounts receivable 3,356 (5,625)
Other receivables (9) (472)
3,347 (6,097)
51. Asset impairment Losses
Six months ended June 30
2019 2018 (Restated)
Inventories (19,371) (36,214)
Fixed assets - (420)
Intangible asset - (911)
Other (4,438) (238)
(23,809) (37,783)
52. Gain from Disposal of Assets
Six months ended June 30 Included in
2018 (Restate non-recurring
2019 d) items
Gain from disposal of fixed assets 115,730 74 115,730
Gain (loss) from disposal of intangible assets (216) 1,997,096 (216)
115,514 1,997,170 115,514
53. Non-Operating Expenses
Six months ended June 30 Included in
2018 (Restate non-recurring
2019 d) items
Donation expenses 4,512 4,267 4,512
Other 11,504 4,560 9,223
16,016 8,827 13,735
- 127 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
54. Income Tax Expenses
Six months ended June 30
2018 (Restate
2019 d)
Current year 192,289 301,718
Deferred tax expenses (income) (54,959) 439,377
Adjustments for previous years, net 3,207 (3,537)
140,537 737,558
(1) Reconciliation between income tax expense and accounting profit is as follows:
Six months
ended June 30
2019
Profit before taxes 729,175
Statutory tax in china 25%
Tax calculated according to statutory tax in china 182,294
Tax benefits from Approved Enterprises (29,962)
Difference between measurement basis of income for financial statement
and for tax purposes 870
Taxable income and temporary differences at other tax rate (6,378)
Taxes in respect of prior years 3,207
Temporary differences and losses in the report year for which deferred
taxes were not created 897
Non-deductible expenses and other differences (5,907)
Neutralization of tax calculated in respect of the Company’s share in
results of equity accounted investees (6,304)
Effect of change in tax rate in respect of deferred taxes 442
Creation and reversal of deferred taxes for tax losses and temporary
differences from previous years 1,378
Income tax expenses 140,537
55. Other comprehensive income
Details of the Other comprehensive income are set out in Note V.39
- 128 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
56. Notes to items in the cash flow statements
(1) Other cash received relevant to operating activities
Six months ended June 30
2018 (Restate
2019 d)
Derivatives transactions 44,546 -
Interest income 29,257 24,455
Government subsidies 363 1,077
Financial institutions - 135,686
Deferred income - 96,946
Others 184,212 2,670
258,378 260,834
(2) Other cash paid relevant to operating activities
Six months ended June 30
2019 2018 (Restated)
Transportation and Commissions 345,943 346,724
Advertising and sales promotion 159,574 150,410
Professional services 141,127 137,374
Registration 75,194 55,229
Derivatives transactions 54,030 128,503
Financial institutions 39,402 23,511
Insurance 29,015 24,935
Others 530,505 508,614
Net cash flow from operating activities 1,374,790 1,375,300
(3) Other cash received relevant to investment activities
Six months ended June 30
2019 2018 (Restated)
Proceeds from loan to affiliate company 7,491 -
Investment grant 1,808 -
Other 28 57
9,327 57
(4) Other cash received relevant to financing activities
Six months ended June 30
2019 2018 (Restated)
Cash received in respect of hedging transactions on debentures 41,144 -
Deposit for issuing bills payable 20,557 -
61,701 -
- 129 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
56. Notes to items in the cash flow statements - (cont'd)
(5) Other cash paid relevant to financing activities
Six months ended June 30
2018 (Restate
2019 d)
Payment in respect of hedging transactions on debentures 325,474 -
Repayment of lease liability 74,182 N/A
Realization of call option 35,625 -
Deposit for issuing bills payable 8,610 24,880
Other - 7,739
443,891 32,619
57. Supplementary Information on Cash Flow Statement
(1) Supplementary information on Cash Flow Statement
a. Reconciliation of net profit to cash flows from operating activities:
Six months ended June 30
2018 (Restate
2019 d)
Net profit 588,638 2,389,167
Add: Impairment provisions for assets 23,809 37,783
Credit impairment loss (3,347) 6,097
Depreciation of fixed assets and investment property 413,802 362,473
Amortization of right-of-use asset 75,529 N/A
Amortization of intangible asset 670,019 558,415
Gains on disposal of fixed assets, intangible assets, and other
long-term assets, net (115,514) (1,997,170)
Loss (gain) from changes in fair value (884,135) 243,376
Financial expenses 806,091 (65,692)
Investment income, net 900,426 (147,053)
Decrease (increase) in deferred tax assets (50,833) 234,072
Increase (decrease) in deferred tax liabilities (4,126) 205,528
Decrease (increase) in inventories, net (777,827) (812,551)
Increase in operating receivables (1,263,516) (1,132,939)
Increase in operating payables (751,460) 913,650
Others 67,494 44,647
Net cash flow from operating activities (304,950) 839,803
b. Net increase in cash and cash equivalents
Six months ended June 30
2019 2018 (Restated)
Closing balance of cash 5,381,820 6,156,174
Less: Opening balance of cash 6,346,196 7,979,502
Net increase in cash and cash equivalents (964,376) (1,823,328)
- 130 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
57. Supplementary Information on Cash Flow Statement - (cont'd)
(2) Information on acquisition or disposal of subsidiaries and other business units
Six months
ended June 30
2019
Cash paid for business combination 829,866
Less: Cash and cash equivalents of the acquiree at the date of
acquisition 3,061
Net cash paid to acquire a subsidiary 826,805
(3) Details of cash and cash equivalents
June 30 January 1
2019 2019
Cash on hand 7,770 1,380
Bank deposits available on demand without restrictions 5,374,050 6,344,816
5,381,820 6,346,196
58. Assets with Restricted Ownership or Right of Use
June 30
2019 Reason
Cash 43,572 Pledged
Fixed assets 5,926 Mortgaged
Other non-current assets 143,377 Guarantees
192,875
- 131 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
59. Foreign currencies denominated items
(1) Foreign currencies denominated items
As at June 30, 2019
Foreign currency at
the end of the RMB at the end of
period Exchange rate the period
Cash and bank balances
EUR 44,867 7.8211 350,912
USD 39,168 6.8747 269,271
PLN 139,196 1.8413 256,303
ILS 95,191 1.9278 183,513
BRL 67,765 1.7939 121,565
ZAR 93,084 0.4862 45,256
CAD 7,366 5.2533 38,698
OTHER 428,761
1,694,279
Bills and Accounts receivable
BRL 473,150 1.7939 848,799
EUR 98,888 7.8211 773,417
RON 195,232 1.6530 322,712
CAD 53,926 5.2533 283,286
USD 38,492 6.8747 264,621
TRY 215,656 1.1922 257,100
HUF 7,005,697 0.0242 169,537
OTHER 537,333
3,456,805
Other receivables
EUR 43,605 7.8211 341,041
ILS 112,700 1.9278 217,268
UAH 397,776 0.2627 104,509
PLN 45,520 1.8413 83,817
BRL 32,582 1.7939 58,449
OTHER 111,019
916,103
Other current assets
ILS 79,886 1.9278 154,007
BRL 49,041 1.7939 87,976
EUR 8,195 7.8211 64,093
ARS 279,831 0.1619 45,304
UAH 162,465 0.2627 42,685
OTHER 87,371
481,436
Long-term receivables
BRL 97,131 1.7939 174,246
174,246
- 132 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
59. Foreign currencies denominated items - (cont'd)
(1) Foreign currencies denominated items - (cont'd)
As at June 30, 2019
Foreign currency at
the end of the RMB at the end of
period Exchange rate the period
Other non-current assets
BRL 71,133 1.7939 127,608
OTHER 4,311
131,919
Short-term loans
TRY 143,038 1.1922 170,527
BRL 30,018 1.7939 53,850
UAH 336,992 0.2627 88,539
OTHER 275
313,191
Bills and Accounts payable
ILS 324,374 1.9278 625,343
EUR 51,263 7.8211 400,933
BRL 77,024 1.7939 138,175
USD 15,105 6.8747 103,842
OTHER 75,436
1,343,729
Other payables
BRL 58,468 1.7939 104,887
UAH 315,719 0.2627 82,950
ILS 29,398 1.9278 56,675
ILS CPI 18,023 1.9278 34,745
PLN 7,493 1.8413 13,798
OTHER 32,556
325,611
Contract liabilities
EUR 36,126 7.8211 282,549
BRL 45,029 1.7939 80,778
USD 1,536 6.8747 10,559
OTHER 125,755
499,641
- 133 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
59. Foreign currencies denominated items - (cont'd)
(1) Foreign currencies denominated items - (cont'd)
As at June 30, 2019
Foreign currency at RMB at the end of
the end of the period Exchange rate the period
Non-current liabilities due within one year
EUR 12,757 7.8211 99,773
ILS CPI 14,506 1.9278 27,966
ILS 3,028 1.9278 5,837
BRL 1,031 1.7939 1,849
OTHER 29,596
TOTAL 165,021
Other current liabilities
EUR 5,783 7.8211 45,229
ILS 5,281 1.9278 10,181
BRL 2,514 1.7939 4,510
OTHER 19,304
79,224
Long-term loan
EUR 35,599 7.8211 278,425
BRL 57 1.7939 103
278,528
Debentures payable
ILS CPI 4,229,066 1.9278 8,152,989
8,152,989
Provision and Long-term payables
BRL 41,659 1.7939 74,734
OTHER 27,723
102,457
Other non-current liabilities
EUR 8,290 7.8211 64,841
ILS CPI 24,245 1.9278 46,740
USD 4,470 6.8747 30,732
GBP 1,148 8.7342 10,031
OTHER 33,477
185,821
- 134 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
59. Foreign currencies denominated items - (cont'd)
(2) Major foreign operations
Registration &
Principal place of Functional The basis of selecting functional
Name of the Subsidiary business Business nature currency currency
ADAMA France S.A.S FRANCE Distribution USD The main currency that represent
the principal economic
environment
ADAMA Brasil S/A BRAZIL Manufacturing; USD The main currency that represent
Distribution; Registration the principal economic
environment
ADAMA Deutschland GERMANY Distribution; Registration USD The main currency that represent
GmbH the principal economic
environment
ADAMA India Private Ltd. INDIA Manufacturing INR The main currency that represent
Distribution; Registration the principal economic
environment
Makhteshim Agan of North UNITED STATES Manufacturing; USD
America Inc. Distribution; Registration The main currency that represent
the principal economic
environment
Control Solutions Inc. UNITED STATES Manufacturing; USD
Distribution; Registration The main currency that represent
the principal economic
environment
ADAMA Agan Ltd. ISRAEL Manufacturing; USD The main currency that represent
Distribution; Registration the principal economic
environment
ADAMA Makhteshim Ltd. ISRAEL Manufacturing; USD The main currency that represent
Distribution; Registration the principal economic
environment
ADAMA Australia Pty AUSTRALIA Distribution AUD The main currency that represent
Limited the principal economic
environment
ADAMA Italia SRL ITALY Distribution USD The main currency that represent the
principal economic environment
ADAMA Northern NETHERLANDS Distribution USD The main currency that represent the
Europe B.V. principal economic environment
Alligare LLC UNITED STATES Manufacturing; USD The main currency that represent the
Distribution; principal economic environment
Registration
- 135 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
VI. Change in consolidation Scope
1. Business combinations involving enterprises not under common control
(1) Business combinations involving enterprises not under common control during current period
Acquisition Basis of From acquisition date till period
Name of Cost of Proportion of
Time of Acquisition Acquisition acquisition end
the equity equity
equity method date date
Company investment investment Revenue Net profit
investment determination
Bonide 07.01.2019 829,866 100% Stock 07.01.2019 Obtained 271,550 24,574
Products purchase control
INC.
(2) Acquisition cost and goodwill
Acquisition costs Bonide Products INC.
Cash 829,866
Total acquisition cost 829,866
Less: share of the fair value of the identifiable net assets acquired 638,786
Currency translation differences (14,535)
Goodwill / Amount of acquisition cost less than share of the fair value
205,615
of the identifiable net assets acquired
In January 2019, the Company, through a subsidiary of Solutions, acquired Bonide Products Inc., a US
provider of pest-control solutions for the consumer Home & Garden use, allowing the Company to bring
its advanced technologies and differentiated portfolio of pest-control directly to the consumers.
Bonide was purchased for a consideration of approximately 830 million RMB. As of January 7, 2019
(hereinafter: “date of the business combination”), control has been achieved and the Group consolidates
the results of Bonide in its consolidated financial statements. Upon the consolidation of Bonide, the
identified tangible assets, identifiable intangible assets and identifiable liabilities were included in the
consolidated statement of financial position as of the date of the business combination at their fair value
based on the information held by the management of the Company and the management of Bonide on the
date close to the date of acquisition, and based, inter alia, on external consultants in this matter.
The initial accounting treatment for the acquisition of the operations, as presented in these interim
financial statements, is accounted for using provisional amounts (as this term is defined in ASBE 20
Business combination). Until the date of approval of the interim financial statements, the Group has not
yet completed the initial important treatment of Bonide's business combination, including the estimation
of the fair value of the acquired assets and the goodwill. Therefore, some of the fair value data are still
provisional and may be subject to changes affecting the data as included in these financial statements.
- 136 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
VI. Change in consolidation Scope - (cont'd)
1. Business combinations involving enterprises not under common control- (cont'd)
(3) Identifiable assets and liabilities of the acquiree, at acquisition date
Bonide
Fair value at Book value at
acquisition date acquisition date
Assets:
Cash and bank balances 3,061 3,061
Bills and Accounts receivable 104,362 104,362
Prepayments 11,750 11,750
Inventories 111,959 109,777
Fixed assets 56,690 56,690
Intangible assets 468,839 1,510
Liabilities:
Bills and Accounts payable 24,062 24,062
Other payables 82,434 82,434
Deferred tax liabilities 11,379 -
Net assets 638,786 180,654
Less: Non-controlling interests - -
Net assets acquired 638,786 180,654
- 137 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
VI. Change in consolidation Scope (cont'd)
2. Business combinations under common control
(1) Business combinations involving enterprises under common control in current period
Name of the Equity Basis of judgement as Acquisition Basis of Beginning of the Year till Revenue of Net profit of
Company Proportion business combination date determining acquisition date set out as comparative comparative
obtained involving enterprises under acquisition follows period period
from common control date Revenue Net profit/loss
combinati
on
Jiangsu Anpon 100% Both of the combining March 29th, Obtained 393,990 37,830 761,329 26,162
Electrochemical enterprises are ultimately 2019 control
co. LTD. controlled by China
National Agrochemical
Corporation, and the control
is not transitory.
(2) Acquisition cost
Acquisition costs Jiangsu Anpon Electrochemical co. LTD.
Cash 415,000
(3) Carrying Value of acquiree’s financial position at acquisition date and prior year end
Jiangsu Anpon Electrochemical co. LTD.
Acquisition date Prior year end
Assets:
Cash and bank balances 131,663 167,101
Bills receivable 42,437 53,299
Accounts receivable 146,770 101,522
Prepayments 45,596 55,218
Other receivables 15,660 27,606
Inventories 193,483 191,811
Other current assets - 31
Fixed assets 603,205 628,268
Construction in progress 61,693 59,397
Intangible assets 64,115 64,574
Deferred tax assets 8,556 8,040
Other non-current assets 20,315 15,219
Liabilities:
Short-term borrowings 500,000 550,000
Accounts payable 102,429 99,487
Employee benefits payable 12,855 18,829
Taxes payable 12,997 14,150
Other payables 171,318 131,818
Contractual liability 21,321 26,730
Long-term employee benefits payable 40,266 40,284
Provision 21,858 21,858
Net assets 450,449 468,930
Less: Non-controlling interests - -
Net assets acquired 450,449 468,930
- 138 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
VII. Interest in Other Entities
1. Interests in subsidiaries
Composition of the largest subsidiaries of the Group in respect of assets and operating income
Registration & Method of
Principal place of obtaining the
Name of the Subsidiary business Business nature Direct Indirect subsidiary
ADAMA France S.A.S FRANCE Distribution 100% Established
ADAMA Brasil S/A BRAZIL Manufacturing; Distribution; 100% Purchased
Registration
ADAMA Deutschland GmbH GERMANY Distribution; Registration; 100% Established
ADAMA India Private Ltd. INDIA Manufacturing; 100% Established
Distribution; Registration
Makhteshim Agan of North America UNITED STATES Manufacturing; Distribution; 100% Established
Inc. Registration
Control Solutions Inc. UNITED STATES Manufacturing; Distribution; 67% Purchased
Registration
ADAMA Agan Ltd. ISRAEL Manufacturing; Distribution; 100% Restructure
Registration
ADAMA Makhteshim Ltd. ISRAEL Manufacturing; Distribution; 100% Restructure
Registration
ADAMA Australia Pty Limited AUSTRALIA Distribution 100% Purchased
ADAM Italia SRL ITALY Distribution 100% Established
ADAMA Northern Europe B.V. NETHERLANDS Distribution 55% Purchased
Manufacturing; Distribution;
Alligare LLC UNITED STATES 100% Purchased
Registration
Jiangsu Anpon Electrochemical co. Manufacturing; Distribution
CHINA 100% Purchased
Ltd..
2. Interests in joint ventures or associates
June 30 December 31
2019 2018
Joint ventures 95,258 68,584
Associates 39,817 39,766
135,075 108,350
3. Summarized financial information of joint ventures and associates
June 30, 2019 and six June 30, 2018 and six
months then ended months then ended
Joint ventures:
Total carrying amount 95,258 80,913
The Group's share of the following items:
Net profit 21,740 12,758
Other comprehensive income 158 (761)
Total comprehensive income 21,898 11,997
Associates:
Total carrying amount 39,817 38,338
The Group's share of the following items:
Net profit (16) -
Other comprehensive income 67 478
Total comprehensive income 51 478
- 139 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
VIII. Risk Related to Financial Instruments
A. General
The Group has extensive international operations, and, therefore, it is exposed to credit risks, liquidity risks
and market risks (including currency risk, interest risk and other price risk). In order to reduce the exposure
to these risks, the Group uses financial derivatives instruments, including forward transactions and options
(hereinafter - “derivatives”).
Transactions in derivatives are undertaken with major financial institutions, and therefore, in the opinion of
Group Management the credit risk in respect thereof is low.
This note provides information on the Group’s exposure to each of the above risks, the Group’s objectives,
policies and processes regarding the measurement and management of the risk. Additional quantitative
disclosure is included throughout the consolidated financial statements.
The Board of Directors has overall responsibility for establishing and monitoring the framework of the Group's
risk management policy. The Finance Committee is responsible for establishing and monitoring the Group's
actual risk management policy. The Chief Financial Officer reports to the Finance Committee on a regular
basis regarding these risks.
The Group’s risk management policy, established to identify and analyze the risks facing the Group, to set
appropriate risk limits and controls, and to monitor risks and adherence to limits. The policy and methods for
managing the risks are reviewed regularly, in order to reflect changes in market conditions and the Group's
activities. The Group, through training, and management standards and procedures, aims to develop a
disciplined and constructive control environment in which all the employees understand their roles and
obligations.
B. Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails
to meet its contractual obligations, and derives mainly from trade receivables and other receivables as well as
from cash and deposits in financial institutions.
Accounts and other receivables
The Group’s revenues are derived from a large number of widely dispersed customers in many countries.
Customers include multi-national companies and manufacturing companies, as well as distributors,
agriculturists, agents and agrochemical manufacturers who purchase the products either as finished goods or
as intermediate products for their own requirements.
The Company entered into an agreement for the sale of trade receivables in a securitization transaction, for
details see note V.5e.
In April 2018, a two-years agreement with an international insurance company was renewed. The amount of
the insurance coverage was fixed at $150 million cumulative per year. The indemnification is limited to about
90% of the debt.
The Group’s exposure to credit risk is influenced mainly by the personal characterization of each customer,
and by the demographic characterization of the customer’s base, including the risk of insolvency of the
industry and geographic region in which the customer operates. No single customer accounted for greater than
5% of total accounts receivable.
- 140 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
VIII. Risk Related to Financial Instruments - (cont’d)
B. Credit risk - (cont’d)
The Company management has prescribed a credit policy, whereby the Company performs current ongoing
credit evaluations of existing and new customers, and every new customer is examined thoroughly regarding
the quality of his credit, before offering him the Group’s customary shipping and payment terms. The
examination made by the Group includes an outside credit rating, if any, and in many cases, receipt of
documents from an insurance company. A credit limit is prescribed for each customer, outstanding amount of
the accounts receivable balance. These limits are examined annually. Customers that do not meet the Group’s
criteria for credit quality may do business with the Group on the basis of a prepayment or against furnishing
of appropriate collateral.
Most of the Group’s customers have been doing business with it for many years. In monitoring customer credit
risk, the customers were grouped according to a characterization of their credit, based on geographical location,
industry, aging of receivables, maturity, and existence of past financial difficulties. Customers defined as “high
risk” are classified to the restricted customer list and are supervised by management. In certain countries,
mainly, Brazil, customers are required to provide property collaterals (such as agricultural lands and equipment)
against execution of the sales, the value of which is examined on a current ongoing basis by the Company. In
these countries, in a case of expected credit risk, the Company records a provision for the amount of the debt
less the value of the collaterals provided and acts to realize the collaterals.
The Group closely monitors the economic situation in Eastern Europe and South America where necessary it
operates to limit its exposure to customers in countries having significantly unstable economies.
The Group recognizes an impairment provision, which reflects its assessment regarding the credit risk of
account receivables. Other receivables and investments on a lifetime expected credit loss basis. See also notes
Ⅲ.10 and Ⅲ.11.
Cash and deposits in banks
The Company holds cash and deposits in banks with a high credit rating. These banks are also required to
comply with capital adequacy or maintain a level of security based on different situations.
Guarantees
The Company’s policy is to provide financial guarantees only to investee companies.
Aging of receivables and expected credit risk
Presented below is the aging of the past due trade receivables:
June 30, 2019
Past due by less than 90 days 452,611
Past due by more than 90 days 614,452
1,067,063
- 141 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
VIII. Risk Related to Financial Instruments - (cont’d)
B. Credit risk - (cont’d)
The company measure the provision for credit losses on a collective group basis, where receivables share
similar credit risk characteristics based on geographical locations. The examination for expected credit losses
is performed using model including aging analysis and historical loss experiences, and adjusted by the
observable factors reflecting current and expected future economic conditions.
When credit risk on a receivable has increased significantly since initial recognition, the group records specific
provision or general provision which is determined in countries in which there are large number of customers
with immaterial balances.
The Group has credit risk exposures for accounts receivables amounted to RMB 7,478,332 thousand relate to
category of "Lifetime expected credit losses (credit losses has not occurred)" and amounted to RMB 629,633
thousand related to category of "Lifetime expected credit losses (credit losses occurred)". The Group has credit
risk exposures for other receivables amounted to RMB 14,832 thousand related to category of "Lifetime
expected credit losses (credit losses occurred)". The credit risk exposures for all remaining balance of financial
assets at amortised cost and financial assets at FVTOCI are related to "12-month expected credit losses".
C. Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting its financial obligation when they
come due. The Group's approach to managing its liquidity risk is to assure, to the extent possible, an adequate
degree of liquidity for meeting its obligations timely, under ordinary conditions and under pressure conditions,
without sustaining unwanted losses or hurting its reputation.
The cash-flow forecast is determined both at the level of the various entities as well as of the consolidated
level. The Company examines the current forecasts of its liquidity requirements in order to ascertain that there
is sufficient cash for the operating needs, including the amounts required in order to comply with the financial
liabilities, while taking strict care that at all times there will be unused credit frameworks so that the Company
will not exceed the credit frameworks granted to it and the financial covenants with which it is required to
comply with. These forecasts take into consideration matters such as the Company’s plans to use debt for
financing its activities, compliance with required financial covenants, compliance with certain liquidity ratios
and compliance with external requirements such as laws or regulation.
The surplus cash held by the Group subsidiaries, which is not required for financing the current ongoing
operations, is invested in short-term interest-bearing investment channels.
- 142 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
VIII. Risk Related to Financial Instruments - (cont’d)
C. Liquidity risk - (cont’d)
(1) Presented below are the contractual maturities of the financial liabilities at undiscounted amounts,
including estimated interest payments:
As at June 30, 2019
Third- Fifth year Contractual Carrying
First year Second year Fourth year and above Cash flow amount
Non-derivative financial
liabilities
Short-term loans 2,348,647 - - - 2,348,647 2,308,286
Bills payables 375,777 - - - 375,777 375,777
Accounts payables 4,178,668 - - - 4,178,668 4,178,668
Other payables 1,970,641 - - - 1,970,641 1,970,641
Other current liabilities 169,661 - - - 169,661 169,661
Debentures payable 388,469 894,158 1,713,635 9,207,224 12,203,486 8,152,990
Long-term loans 299,840 259,049 338,696 124,532 1,022,117 955,906
Long-term payables 1,871 1,771 3,097 27,497 34,236 26,419
Lease Liabilities 159,114 127,997 154,965 253,713 695,789 558,912
Other non-current liabilities 2,061 2,061 61,036 307,733 372,891 361,552
Derivative financial liabilities
Foreign currency derivatives 688,267 8,428 - - 696,695 696,695
10,583,016 1,293,464 2,271,429 9,920,699 24,068,608 19,755,507
D. Market risks
Market risk is the risk that changes in market prices, such as foreign exchange rates, CPI, interest rates and
prices of capital instruments, will affect the Group’s revenues or the value of its holdings in its financial
instruments. The objective of market risk management is to manage and monitor the exposure to market risks
within acceptable parameters, while optimizing the return.
During the ordinary course of business, the Group purchases and sells derivatives and assumes financial
liabilities for the purpose of managing market risks.
(1) CPI and foreign currency risks
Currency risk
The Group is exposed to currency risk from its sales, purchases, expenses and loans denominated in currencies
that differ from the Group’s functional currency. The main exposure is in Euro, Brazilian real, USD and in
NIS. In addition, there are smaller exposures to various currencies such as the British pound, Polish zloty,
Australian dollar, Indian rupee, Argentine peso, Canadian dollar, South African Rand, Ukraine Hryunia, the
Turkish lira and Chinese Yuan Renminbi.
The Group uses foreign currency derivatives – forward transactions and currency options – in order to hedge
the cash flows risk, which derive from existing monetary assets and liabilities and anticipated sales and
purchases, which may be affected by exchange rate fluctuations.
- 143 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
VIII. Risk Related to Financial Instruments - (cont’d)
D. Market risks - (cont’d)
(1) CPI and foreign currency risks - (cont’d)
The Group hedged a part of the estimated currency exposure to anticipate sales and purchases for the
subsequent year. Likewise, the Group hedges most of its monetary assets and liabilities denominated in a
non- U.S. dollar currency. The Group uses foreign currency derivatives to hedge its currency risk, mostly with
maturity dates of less than one year from the reporting date.
Solutions debentures are linked to the NIS-CPI and, therefore, an increase in the NIS-CPI, as well as changes
in the NIS exchange rate, could cause significant exposure with respect to the subsidiary functional currency
– the U.S. dollar. As of the approval date of the financial statements, the subsidiary had hedged most of its
exposure deriving from issuance of the debentures, in options and forward contracts.
(A) The Group’s exposure to NIS-CPI and foreign currency risk, except in respect of derivative financial
instruments is as follows:
June 30, 2019
Total assets Total liabilities
In US Dollar 1,150,413 957,089
In Euro 1,603,215 1,156,183
In Brazilian real 1,435,424 386,614
CPI-linked NIS - 8,262,440
In New Israeli Shekel 603,170 702,162
Denominated in or linked to other foreign currency 4,108,457 734,333
8,900,679 12,198,821
(B) The exposure to CPI and foreign currency risk in respect of derivatives is as follows:
June 30, 2019
Currency/ Currency/ Average USD RMB
linkage linkage expiration thousands thousands
receivable payable date Par value Par value Fair value
Forward foreign currency USD EUR 2020/03/02 470,368 3,233,637 (265,914)
Contracts and call options USD PLN 2019/08/08 50,048 344,065 (5,679)
USD BRL 2019/08/20 192,904 1,326,158 (9,528)
USD GBP 2019/09/08 16,283 111,939 2,186
USD ZAR 2019/07/29 13,620 93,633 (120)
ILS USD 2019/09/07 1,361,025 9,356,636 12,402
USD OTHER 411,176 2,826,714 (23,986)
CPI forward contracts CPI ILS 2020/01/13 602,916 4,144,870 15,370
- 144 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
VIII. Risk Related to Financial Instruments - (cont’d)
D. Market risks - (cont’d)
(1) CPI and foreign currency risks - (cont’d)
(C) Sensitivity analysis
The appreciation or depreciation of the Dollar against the following currencies as of June 30, 2019 and
the increase or decrease in the CPI would increase (decrease) the equity and profit or loss by the amounts
presented below. This analysis assumes that all the remaining variables, among others interest rates,
remains constant.
June 30, 2019
Decrease of 5% Increase of 5%
Equity Profit (loss) Equity Profit (loss)
New Israeli shekel 82,193 60,274 (26,182) (4,263)
British pound (284) 734 284 (734)
Euro (143,085) (10,232) 148,893 12,183
Brazilian real (17,312) 19,903 10,571 (23,001)
Polish zloty (6,167) (1,593) 6,167 1,593
South African Rand (313) 352 313 (352)
Chinese Yuan Renminbi (18,403) (18,403) 18,403 18,403
CPI-linked NIS 205,520 205,520 (193,406) (193,406)
(2) Interest rate risks
The Group has exposure to changes in the variable interest rate. The Group has different assets and
liabilities in different countries which bear interest according to the economic environment in each country.
Most of the loans, other than the debentures, bear Dollar Libor interest. As a result, most of the variable
interest exposure of those loans is to the Libor interest. Due to market conditions, the variable interest
rates on cash are relatively low.
The Company prepares a quarterly summary of exposure to a change in the Libor interest rate. As at the
approval date of the financial statements, the Company had not hedged this exposure.
- 145 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
VIII. Risk Related to Financial Instruments - (cont’d)
D. Market risks - (cont’d)
(2) Interest rate risks - (cont’d)
(A) Type of interest
The interest rate profile of the Group’s interest-bearing financial instruments was as follows:
June 30, 2019
Fixed-rate instruments – unlinked to the CPI
Financial assets
Cash at banks 1,275,887
Other non-current assets 1,086
Financial liabilities
Long-term loans 529
Long-term payables 20,790
Other non-current liabilities 171,770
1,083,884
Fixed-rate instruments – linked to the CPI
Financial liabilities
Debentures payable 8,152,990
Variable-rate instruments
Financial assets
Cash at banks 233,602
Financial assets at fair value through profit or loss 33,074
Other non-current assets 46,067
Financial liabilities
Short-term loans and credit from banks 2,308,286
Long-term loans(1) 955,377
(2,950,920)
(1) Including long-term loans current maturities.
(B) Sensitivity analysis of cash flows regarding variable-interest instruments
A change of 5% in the interest rates on the reporting date would increase or reduce equity and profit or loss
by the amounts presented below. This analysis assumes that all the remaining variables, among others
exchange rates, remained fixed.
Profit or loss Equity
Increase in Decrease in Increase in Decrease in
interest interest interest interest
As at June 30, 2019 2,118 (2,134) 2,118 (2,134)
146
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
IX. Fair Value
The fair value of forward contracts on foreign currency is based on their listed market price, if available. In the
absence of market prices, the fair value is estimated based on the discounted difference between the stated
forward price in the contract and the current forward price for the residual period until redemption, using an
appropriate interest rate.
The fair value of foreign currency options is based on bank quotes. The reasonableness of the quotes is evaluated
through discounting future cash flow estimates, based on the conditions and duration to maturity of each contract,
using the market interest rates of a similar instrument at the measurement date and in accordance with the Black
& Scholes model.
1. Financial instruments measured at fair value for disclosure purposes only
The carrying amount of certain financial assets and liabilities, including cash at bank and on hand, bills and
accounts receivable, receivables financing, other receivables, derivatives financial assets, short-term loans, bills
and accounts payable and other payable, are the same or proximate to their fair value.
The following table details the carrying amount in the books and the fair value of groups of non-current financial
instruments presented in the financial statements not in accordance with their fair values:
June 30, 2019
Carrying amount Fair value
Financial assets
Other non-current assets (a – Level 2) 54,331 55,243
Financial liabilities
Long-term loans and others (b – Level 2) 1,714,259 1,714,813
Debentures (c – Level 1) 8,152,990 10,409,445
a) The fair value of the other non-current assets is based on a discounted future cash flows, using the acceptable
interest rate for similar investment having similar characteristics (Level 2).
b) The fair value of the long-term loans and others is based on a discounted future cash flows, using the acceptable
interest rate for similar loans having similar characteristics (Level 2).
c) The fair value of the debentures is based on stock exchange quotes (Level 1).
2. The interest rates used in determining fair value
The interest rates used to discount the estimate of anticipated cash flows are:
June 30, 2019
%
Brazilian real interest 5.98 – 6.26
U.S. dollar interest 2.37 – 2.58
Indian Rupee 6.14 – 6.96
147
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
IX. Fair Value - (cont’d)
3. Fair value hierarchy of financial instruments measured at fair value
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The table below presents an analysis of financial
instruments measured at fair value. The various levels have been defined as follows:
Level 1: quoted prices (unadjusted) in active market for identical instrument.
Level 2: inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly.
Level 3: inputs that are not based on observable market data (unobservable inputs).
The Company’s forward contracts and options are carried at fair value and are evaluated by observable inputs
and therefore are concurrent with the definition of level 2.
June 30
2019
Forward contracts and options used for hedging the cash flow (Level 2) (65,921)
Forward contracts and options used for economic hedging (Level 2) (209,348)
Debt instruments (Level 1) 15,365
Other equity investment (Level 2) 87,812
Other non-current asset (Level 2) 23,395
Call option in respect of business combination (Level 2) 15,097
Other (Level 2) 17,709
Financial Instrument Fair value
Fair value measured on the basis of discounting the difference between the
stated forward price in the contract and the current forward price for the
Forward contracts
residual period until redemption using an appropriate interest rates.
Foreign currency options The fair value is measured based on the Black&Scholes model.
4. No transfer between any levels of the fair value hierarchy in the reporting period.
5. No change in the valuation techniques in the reporting period.
- 148 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
X. Related parties and related party transactions
1. Information on parent Company
Company Registered Registered capital Shareholding Percentage
name place Business nature (Thousand RMB) percentage of voting rights
Beijing, Production and sales
CNAC China of agrochemicals 3,338,220 78.91% 78.91%
The ultimate controller of the company is China National Chemical Corporation.
2. Information on the largest subsidiaries of the Company
For information about the subsidiaries of the Company, refer to Note VII.1.
3. Information on largest joint ventures and associates of the Company
For information about the joint ventures and associates of the Company, refer to Note V.12.
Other joint ventures and associates that have related party transactions with the Group during this period or the
previous periods are as follows:
Name of entity Relationship with the Company
Alfa Agricultural Supplies S. Joint venture of the Group
Innovaroma SA Joint venture of the Group
Agribul Ltd. Joint venture of the Group
- 149 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
X. Related parties and related party transactions - (cont’d)
4. Information on other related parties
Name of other related parties Related party relationship
Jingzhou Sanonda holdings co. LTD Common control
CNAC International Co., Ltd. (SPV Company) (Headquarter) Common control
ChemChina Asset Management Co., Ltd. Common control
ChemChina Information Center Co., Ltd. Common control
Syngenta Crop Protection AG Common control
Syngenta Supply AG Common control
Syngenta Crop Protection LLC. Common control
Syngenta Romania SRL Common control
Syngenta France SAS Common control
Syngenta Australia Pty Ltd Common control
Syngenta Agro Sociedad Anonima Common control
Syngenta Protecao De Cultivos LTDA Common control
Syngenta Czech s.r.o. Common control
Syngenta Espana S.A. Common control
Syngenta India Limited Common control
Syngenta Agro AG Common control
Syngenta Polska Sp. z o.o. Common control
Syngenta Agro, S.A. DE C.V. Common control
Syngenta Italia S.p.A. Common control
Syngenta Crop Protection Lda. Common control
Syngenta Crop Protection NV Common control
Syngenta Nordics A.S. Common control
Syngenta Tarim Sanayi ve Ticaret A.S. Common control
Syngenta Agro GmbH Common control
Syngenta Kazakhstan Limited Liability Partnership Common control
Syngenta Slovakia S.R.O. Common control
Syngenta Hungary Kft. Common control
Syngenta UK Ltd Common control
Syngenta Ireland Ltd Common control
China Bluestar Lehigh Engineering Corp. Common control
China National Bluestar Co., Ltd. Common control
China Bluestar Chengrand Common control
Bluestar (Beijing) Chemical Machinery Co., Ltd. Common control
Hangzhou (Torch) Xidoumen Membrane Industry Co., Ltd Common control
Shandong Dacheng International Trading Common control
Shandong Dacheng agricultural chemical co. LTD. Common control
Southwest Chemical Research and Design Institute Co., Ltd. Common control
Jiangsu Lianhai Testing Co., Ltd. Common control
Jiamusi Black Dragon Pesticide Chemical Co., Ltd. Common control
Beijing Guangyuan Yinong Chemical Co., Ltd. Common control
Anhui Research Institute of Chemical Industry Common control
Haohua engineering co. LTD. Common control
Shanghai branch of China blue lianhai design and research institute. Common control
Jiangsu Huaihe Chemical Co.,Ltd. Common control
Zhonglan International Chemical Co., Ltd Common control
- 150 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
X. Related parties and related party transactions - (cont’d)
5. Transactions and balances with related parties
(1) Transactions with related parties
Six months ended June 30
2018 (Restate
2019 d)
Type of purchase Related Party Relationship
Summary of purchase of
goods/services:
Purchase of goods/services received Common control under
ChemChina 734,273 847,818
Purchase of fixed assets and other Common control under
assets ChemChina 13,098 2,129,457
Purchase of goods/services received Joint venture 3,332 6,325
Summary of Sales of goods:
Sale of goods/ Service rendered Common control under
ChemChina 408,089 333,327
Sale of goods/ Service rendered Joint venture 108,664 99,823
(2) Leases
The Group as lessor
June 30 June 30
Lessee 2018 (Restate
Type of leased assets
2019 d)
Building and Structures Common control under
ChemChina - 10
- 151 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
X. Related parties and related party transactions - (cont’d)
5. Transactions and balances with related parties - (cont'd)
(3) Guarantee
The Group as the guarantee receiver
Amount of Inception date Maturity date Guaranty
Guarantee provider guaranteed loan of guaranty of guaranty completed (Y / N)
Parent company 50,000 18/10/2017 18/10/2021 N
300,000 20/11/2017 20/11/2022 N
100,000 13/06/2018 12/06/2022 N
30,000 12/07/2018 11/07/2019 N
20,000 01/03/2017 20/02/2020 N
30,000 07/08/2018 06/08/2019 N
50,000 01/06/2019 29/05/2020 N
50,000 30/10/2018 29/10/2019 N
40,000 30/07/2018 29/07/2019 N
40,000 15/08/2018 14/08/2019 N
64,000 19/02/2019 18/02/2020 N
15,000 25/02/2019 23/08/2019 N
50,000 28/03/2019 14/02/2020 N
80,000 02/02/2019 30/01/2020 N
50,000 01/11/2018 26/10/2019 N
50,000 01/12/2018 26/11/2019 N
Ultimate controller of the Group 160,000 27/05/2014 09/06/2021 Y
(4) Remuneration of key management personnel and directors
Periods ended June 30
2018 (Restate
2019 d)
Remuneration of key management personnel 32,606 24,999
Directors Fee 150 -
- 152 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
X. Related parties and related party transactions - (cont’d)
5. Transactions and balances with related parties - (cont'd)
(5) Receivables from and payables to related parties (including loans)
Receivable Items
June 30 December 31
2019 2018 (Restated)
Related Party Relationship Bad debt Bad debt
Items
Provision provision
Trade receivables Common control under ChemChina 136,347 - 39,420 -
Trade receivables Joint venture 30,366 - 30,562 -
Other receivables Common control under ChemChina - - 42,969 -
Prepayments Common control under ChemChina 34,962 - 31,867 -
Other Non-
Current assets Common control under ChemChina 38,098 - - -
Other assets Joint venture - - 7,543 -
Payable Items
June 30 December 31
Items Related Party Relationship 2019 2018 (Restated)
Trade payables Common control under ChemChina 94,835 329,049
Trade payables Joint venture 703 397
Other payables Common control under ChemChina 436,748 21,636
Other non-current Common control under ChemChina 171,770 171,770
liabilities *
* The liability is a loan from a related party, the interest expense for the six months ended June 30, 2019 is
1,042 thousand RMB (six months ended June 30,2018: 1,042 thousand RMB).
(6) Acquisition of a subsidiary
June 30 December 31
Related Party Related Party Relationship 2019 2018 (Restated)
Parent Acquisition of a subsidiary 415,000 -
(7) Other related party transactions
The closing balance of bank deposit in ChemChina Finance Corporation was 231,316 thousand RMB
(31.12.18: 295,661 thousand RMB) Interest income of bank deposit for the current period was 1,654
thousand RMB (amount for six months ended June 30, 2018 is 738 thousand RMB).
- 153 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XI. Commitments and contingencies
1. Significant commitments
June 30 December 31
2019 2018 (Restated)
Investment in Fixed assets 711,386 667,785
2. Commitments and Contingent Liabilities
On December 10, 2018 the 9th meeting of the 8th session of the Board of Directors of the Company resolved
to approve the extension of the engagement in annual liability insurance policies for directors, supervisors and
senior officers of the Company as approved by the 22nd meeting of the 7th session of Board of Directors and
the 4th interim Shareholders meeting, and to authorize the management to annually deal with all matters relating
to renewal/extension of the customary D&O liability insurance policies, with up to 20% flexibility in the
relevant terms of the original policy. On December 26, 2018 the 3rd interim Shareholders meeting approved the
above resolution.
Environmental protection
The manufacturing processes of the Company, and the products it produces and markets, entail environmental
risks that impact the environment. The Company invests substantial resources in order to comply with the
applicable environmental laws and attempts to prevent or minimize the environmental risks that could occur as
a result of its activities. To the best of the Company’s knowledge, at the balance sheet date, none of its applicable
permits and licenses with respect to environmental issues have been revoked.
At the end of January 2019, the Company voluntarily suspended operations at Sanonda’s old site in Jingzhou,
which is in the process of being relocated to a nearby advanced site, due to recording of higher than permitted
levels of wastewater compounds. The Company was subsequently instructed by the local government not to
resume operations before rectification. The Company rectified the discharge levels and at the beginning of April
2019 resumed operations at the old site. Following the resumption, the Company is advancing the gradual ramp-
up of production. As the ramp-up of production proceeds, the site continues to remain under inspection of the
relevant authorities with whom the Company is working in close and constant collaboration.
Claims against subsidiaries
In the ordinary course of business, legal claims are filed against subsidiaries, including lawsuits, regarding
claims for patent infringement. Inter alia, from time to time, the Company, similar to other companies operating
in the plant protection industry, is exposed to class actions for large amounts, which it must defend against while
incurring considerable costs, even if these claims, from the start, have no basis. In the estimation of the
Company’s management, based, inter alia, on opinions of its legal counsel regarding the prospects of the
proceedings, the financial statements include appropriate provisions where necessary to cover the exposure
resulting from the claims.
Various immaterial claims have been filed against Group companies in courts throughout the world, in
immaterial amounts, for causes of action involving mainly employee-employer relations and various civil claims,
for which the Company did not record a provision in the financial statements. Furthermore, claims were filed
for product liability damages, for which the Company has appropriate insurance coverage, such that the
Company’s exposure in respect thereof is limited to the amount its deductible requirement or the amount thereof
does not exceed the deductible amount.
XII. Events subsequent to the balance sheet date
There are no events occur after the balance sheet date.
- 154 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XIII. Share-based Payments
1. In December 2017, the remuneration committee and the Board of Directors (and the General Meeting with
respect to the CEO) of Adama solutions, a wholly-owned subsidiary, approved the allocation of 49,042,146
phantom warrants to officers and employees in accordance with the long-term phantom compensation plan
("the Plan"). The allocation date is December 28, 2017
The warrants will vest in four equal portions, where the first and second quarters are exercisable after one year,
the third quarter after two years and the fourth quarter after three years from January 1, 2018. The warrants
will be exercisable, in whole or in part, in accordance with the terms of the plan, and subject to achieving
financial targets as determined in the plan. The warrants may be exercised until the end of 2023.
Upon exercise of each warrant, the offeree will be entitled to receive cash payment equal to the difference
between the base price as determined at the time of the grant and the closing price of one share of the company
on the Shenzhen Stock Exchange, as it will be on the exercise date up to the ceiling that was determined under
the plan.
The fair value of the granted warrants as aforesaid was estimated using the binomial pricing model.
The cost of the benefit embodied in the warrants that were allocated as aforesaid, based on the fair value at the
end of the reporting period, amounted to a total of 113 million RMB. The liability at the end of the reporting
period was recorded according to the vesting period as determined in the plan, taking into account the extent
of the service that the employees provided until that date.
Statement of share based payments in the period Phantom warrants
Total number of Phantom warrants at the beginning of the period 48,101,391
Total number of Phantom warrants granted in current period -
Total number of Phantom warrants exercised in current period -
Total number of Phantom warrants forfeited in current period (231,851)
Total number of Phantom warrants at the end of the period 47,869,540
The range of the exercise prices and the remainder of the contractual period RMB 15.067-15.13, 4.5
for Phantom warrants outstanding at the end of period years
The parameters used in implementing the model are as follows:
Stock price (RMB) 10.72
Exercise increment (RMB) 15.067/15.13
Expected volatility 44.83%
Risk-free interest rate 2.98%
Economic value as of June 30, 2019 (in thousands RMB) 112,571
The methods for the determination of the fair value of
liabilities arising from cash-settled share-based payments The binomial pricing model
Accumulated amount of liabilities arising from cash-settled
share-based payments (in thousands RMB) 93,199
Expenses arising from cash-settled share-based payments in
current period (in thousands RMB) 30,430
- 155 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XIII. Share-based Payments - (cont’d)
2. In February 2019, the remuneration committee and the Company's Board of Directors (and the General
Meeting with respect to the CEO and to a Vice President who also serves as a director) approved the
allocation of 77,864,910 phantom warrants to officers and employees in accordance with the long-term
phantom compensation plan (hereinafter - "the 2019 Plan"). The allocation date is February 21, 2019.
The warrants will vest in four equal portions, where the first and second quarters are exercisable after two
years, the third quarter after three years and the fourth quarter after four years from January 1, 2019. The
warrants will be exercisable, in whole or in part, in accordance with the terms of the 2019 plan, and subject to
achieving financial targets as determined in the plan. The warrants will be exercisable until the end of 2025.
Upon exercise of each warrant, the offeree will be entitled to receive cash payment equal to the difference
between the base price as determined at the time of the grant and the closing price of one share of the company
on the Shenzhen Stock Exchange, as it will be on the exercise date up to the ceiling that was determined under
the plan.
The fair value of the granted warrants as aforesaid was estimated using the binomial pricing model.
The cost of the benefit embodied in the warrants that were allocated as aforesaid, based on the fair value at the
grant date, amounted to a total of 187 million RMB . The liability at the end of the reporting period was
recorded according to the vesting period as determined in the plan, taking into account the extent of the service
that the employees provided until that date.
Statement of share based payments in the period Phantom warrants
Total number of Phantom warrants at the beginning of the period -
Total number of Phantom warrants granted in current period 76,383,331
Total number of Phantom warrants exercised in current period -
Total number of Phantom warrants forfeited in current period -
Total number of Phantom warrants at the end of the period 76,383,331
The exercise prices and the remainder of the contractual period for Phantom
warrants outstanding at the end of period RMB 10.03, 6.5 years
The parameters used in implementing the model are as follows:
Stock price (RMB) 10.72
Exercise increment (RMB) 10.03/10.85
Expected volatility 44.71%
Risk-free interest rate 3.16%
Economic value as of June 30, 2019 (in thousands RMB) 186,886
The methods for the determination of the fair value of liabilities arising from
cash-settled share-based payments The binomial pricing model
Accumulated amount of liabilities arising from cash-settled share-based
payments (in thousands RMB) 37,590
Expenses arising from cash-settled share-based payments in current period
(in thousands RMB) 37,064
- 156 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XIV. Other significant items
1. Segment reporting
The Company presents its segment reporting based on a format that is based on a breakdown by business
segments:
Crop Protection (Agro)
This is the main area of the Company’s operations and includes the manufacture and marketing of
conventional agrochemical products.
Other (Non Agro)
This field of activity includes a large number of sub-fields, including: Lycopan (an oxidization retardant),
aromatic products, and other chemicals. It combines all the Company’s activities not included in the agro-
products segment.
Segment results reported to the chief operating decision maker include items directly attributable to a segment
as well as items that can be allocated on a reasonable basis. Unallocated items comprise mainly financing
expenses, net, gains from changes in fair value, investment income and tax expenses.
All assets and liabilities that can be attributed to a specific segment were allocated accordingly. Attributed
assets include: accounts and bills receivables, receivables financing, inventory, fixed assets, right-of-use assets,
construction in progress, intangible assets, goodwill, non-current trade receivables and long-term equity
investments. Attributed liabilities include account payables, bill payables, contractual liabilities, deferred
income and lease liabilities. All other assets and liabilities which are not attributable to a specific segment are
presented as unallocated assets and liabilities.
- 157 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XIV. Other significant items - (cont'd)
1. Segment reporting - (cont’d)
Information regarding the results and assets and liabilities of each reportable segment is included below:
Crop Protection (Agro) Other (Non Agro) Elimination among segments Total
Six months ended Six months ended Six months ended Six months ended
June 30 June 30 June 30 June 30
2019 2018 (Restated) 2019 2018 (Restated) 2019 2018 (Restated) 2019 2018 (Restated)
Operating income from external
customers 12,302,544 12,247,053 1,313,488 1,392,020 - - 13,616,032 13,639,073
Inter-segment operating income - - 692 380 (692) (380) - -
Interest in the profit or loss of
associates and joint ventures 11,463 12,394 10,262 364 - - 21,725 12,758
Segment's results 1,244,460 3,480,246 74,943 103,115 - - 1,319,403 3,583,361
Financial expenses, net (938,346) (347,557)
Gain (loss) from changes in fair 884,135 (243,376)
value
Investment income (536,017) 134,297
Profit before tax 729,175 3,126,725
Income tax expense (140,537) (737,558)
Net profit 588,638 2,389,167
Crop Protection (Agro) Other (Non Agro) Unallocated assets and liabilities Total
June 30 December 31 June 30 December 31 June 30 December 31 June 30 December 31
2019 2018 (Restated) 2019 2018 (Restated) 2019 2018 (Restated) 2019 2018 (Restated)
Total assets 34,676,096 32,310,319 2,582,309 2,404,190 8,551,684 9,420,554 45,810,089 44,135,063
Total liabilities 4,724,360 4,800,772 291,902 300,843 18,314,423 16,274,174 23,330,685 21,375,789
- 158 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XIV. Other significant items - (cont'd)
1. Segment reporting - (cont’d)
Geographic information
The following tables sets out information about the geographical segments of the Group’s operating income
based on the location of customers (sales target) and the Group's non-current assets (including fixed assets,
right-of-use assets, construction in progress, investment properties intangible assets and goodwill). In the case
of investment property, fixed assets and construction in progress, the geographical location of the assets is
based on its physical location. In case of intangible assets and goodwill, the geographical location of the
company which owns the assets.
Operating income from external
customers
Six months ended June 30
2019 2018 (Restated)
Europe 4,252,479 4,469,617
North America 2,715,528 2,689,565
Latin America 2,411,530 1,978,828
Asia Pacific 2,426,931 2,762,968
Africa, Middle East (including Israel) and India 1,809,564 1,738,095
13,616,032 13,639,073
Specified non-current assets
June 30 December 31
2019 2018 (Restated)
Europe 883,894 733,855
Latin America 2,065,178 2,065,089
North America 1,293,860 503,093
Asia Pacific 2,900,154 2,815,195
Africa, Middle East (including Israel) and India 11,491,336 11,659,701
18,634,422 11,776,933
The dependency on major customers
No single customer's proportion of the total amount of sales is over 10%.
- 159 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XIV. Other significant items - (cont'd)
2. Calculation of Earnings per share and Diluted earnings per share
Amount for Amount for
the current the prior
period period
Net profit from continuing operations attributable to ordinary shareholders 588,638 2,389,167
Amount for Amount for
the current the prior
Thousands shares period period
Number of ordinary shares outstanding at the beginning of the year 2,446,554 2,341,856
Add: weighted average number of ordinary shares issued during the year - 104,698
Less: weighted average number of ordinary shares repurchased during the
year - -
Weighted average number of ordinary shares outstanding at the end of the
year 2,446,554 2,446,554
In December 2017, non-publicly offered 104,697,982 ordinary shares (A-share) at nominal value of RMB 1 per
share to specific investors. The Company received proceeds of 1,531,920 thousand RMB, net of the issuing cost of
28,080 thousand RMB on December 27, 2017.
Amount for Amount for
the current the prior
period period
Calculated based on net profit attributable to ordinary shareholders
Basic earnings per share 0.24 0.98
Diluted earnings per share N/A N/A
Calculated based on net profit from continuing operations
attributable to ordinary shareholders:
Basic earnings per share 0.24 0.98
Diluted earnings per share N/A N/A
Calculated based on net profit from discontinued operations
attributable to ordinary shareholders:
Basic earnings per share N/A N/A
Diluted earnings per share N/A N/A
- 160 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements
1. Cash at bank and on hand
June 30 December 31
2019 2018
Deposits in banks 2,132,174 2,005,313
Other cash and bank 40,993 52,940
2,173,167 2,058,253
As at June 30, 2019, restricted cash and bank balances was 40,993 thousand RMB (as at December 31, 2018-
52,940 thousand RMB) mainly including deposits that guarantee bank acceptance drafts.
2. Accounts receivable
a. By category
June 30, 2019
Provision for bad and
Book value doubtful debts
Carrying
Amount Percentage (%) Amount Percentage (%) amount
Account receivables assessed
individually for impairment 190,972 50 131,416 69 59,556
Account receivables assessed
collectively for impairment 192,663 50 149 - 192,514
383,635 100 131,565 34 252,070
December 31, 2018
Provision for bad and
Book value doubtful debts
Carrying
Amount Percentage (%) Amount Percentage (%) amount
Account receivables assessed
individually for impairment 190,376 23 127,406 67 62,970
Account receivables assessed
collectively for impairment 631,764 77 2,535 - 629,229
822,140 100 129,941 16 692,199
b. Aging analysis
June 30, 2019
Within 1 year (inclusive) 194,863
Over 1 year but within 2 years 73,272
Over 2 years but within 3 years 103,291
Over 3 years but within 4 years 2,635
Over 4 years but within 5 years 1,266
Over 5 years 8,308
383,635
- 161 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
2. Accounts receivable - (cont'd)
c. Addition, written-back and written-off of provision for bad and doubtful debts during the period
Six months ended June 30, 2019
Balance as of January 1, 129,941
Addition during the year, net 1,624
Write back during the year -
Write-off during the year -
Exchange rate effect -
Balance as of December 31 131,565
d. Five largest accounts receivable at June 30, 2019:
Proportion of
Accounts Allowance of
Name Closing balance receivable (%) doubtful debts
Party 1 177,039 46 117,483
Party 2 114,094 30 -
Party 3 47,002 12 -
Party 4 8,774 2 -
Party 5 6,739 2 -
353,648 92 117,483
3. Receivable financing
June 30 December 31
2019 2018
Bank acceptance draft 46,331 19,917
46,331 19,917
As at June 30, 2019, bank acceptance endorsed but not yet due amounts to 127,816 thousands RMB.
- 162 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
4. Other Receivables
June 30 December 31
2019 2018
Dividends receivable - 1,808
Other receivables 13,912 29,940
13,912 31,748
(1) Dividends receivable
a. Dividends receivable by categories
June 30 December 31
Items/Invested companies 2019 2018
Hubei Bank - 1,808
As at 30 June 2019, the Company did not have any significant dividends receivable exceeded 1 year.
(2) Other receivables
a. Other receivables by categories
June 30 December 31
2019 2018
Other 19,053 35,072
Provision for doubtful debts (5,141) (5,132)
13,912 29,940
b. Other receivables by aging
June 30, 2019
Within 1 year (inclusive) 13,910
Over 1 year but within 2 years -
Over 2 years but within 3 years 72
Over 3 years but within 4 years 10
Over 4 years but within 5 years -
Over 5 years 5,061
19,053
- 163 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
4. Other Receivables - (cont 'd)
(2) Other receivables - (cont'd)
c. Additions, recovery or reversal and written-off of provision for bad and doubtful debts during the
period:
Six months ended
June 30, 2019
Balance as of January 1, 2019 5,132
Addition during the period 9
Written back during the period -
Write-off during the period -
Balance as of June 30, 2019 5,141
d. Five largest other receivables at June 30 2019:
Proportion of other
Name Closing balance receivables (%) Credit loss provision
Party 1 10,553 55 -
Party 2 3,125 16 3,125
Party 3 2,000 11 -
Party 4 651 3 -
Party 5 548 3 548
16,877 88 3,673
- 164 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
5. Long-term equity investments
June 30, 2019 December 31, 2018
Amount Impairment Amount Impairment
balance loss Book value balance loss Book value
Invest in
subsidiaries. 16,403,642 - 16,403,642 15,939,826 - 15,939,826
16,403,642 - 16,403,642 15,939,826 - 15,939,826
Investments in subsidiaries
Current Balance
provision provision
Opening Closing Impairment Impairment
Invested unit balance Increase Decrease balance loss loss
Jingzhou Hongxiang chemical
co. LTD. 37,620 - - 37,620 - -
Hubei Sanonda foreign trade co.
LTD. 11,993 - - 11,993 - -
Jiangsu Anpon Electrochemical
co. LTD. - 463,816 - 463,816 - -
ADAMA Agricultural Solutions
Ltd 15,890,213 - - 15,890,213 - -
15,939,826 463,816 - 16,403,642 - -
6. Operating Income and operating costs
Six months ended June 30, 2019 Six months ended June 30, 2018
Operating Operating
Revenue costs Revenue costs
Main operations 704,594 493,979 1,585,485 1,096,095
Other operations 30,832 24,582 81,088 73,662
735,426 518,561 1,666,573 1,169,757
- 165 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
7. Notes to items in the cash flow statements
(1) Other cash received relevant to operating activities
Six months ended Six months ended
June 30, 2019 June 30, 2018
Interest income 14,333 13,035
Government subsidies 4,414 748
Other 211 1,409
18,958 15,192
(2) Other cash paid relevant to operating activities
Six months ended Six months ended
June 30, 2019 June 30, 2018
Professional services 44,848 36,133
Transportation and Commissions 28,438 38,259
Other 16,284 11,790
89,570 86,182
(3) Other cash received relevant to financing activities
Six months ended Six months ended
June 30, 2019 June 30, 2018
Restricted cash 11,947 -
(4) Other cash paid relevant to financing activities:
Six months ended Six months ended
June 30, 2019 June 30, 2018
Repurchase of B shares - 393,025
Restricted cash - 28,150
Other 200 3,138
200 424,313
- 166 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
8. Supplementary information to cash flow statement
Six months ended June 30
2019 2018
a. Reconciliation of net profit to net cash flows generated
from operating activities:
Net profit (37,789) 282,383
Add: Assets impairment loss 272 905
Credit impairment loss 1,633 3,073
Depreciation of fixed assets 99,602 79,145
Amortization of intangible assets 2,347 2,503
Amortization of-right-of use assets 209 N/A
Loss on disposal of fixed assets, intangible assets and other
long-term assets 293 44
Financial expenses 12,588 (9,876)
Decrease (increase) in deferred income tax assets (11,220) (4,870)
Decrease (increase) in inventory 39,895 13,343
Increase in accounts receivable from operating activities 411,591 15,037
Increase in payables from operating activities (236,900) 99,968
Net cash flows generated from operating activities 282,521 481,655
b. Net increase in cash and cash equivalents
Closing balance of cash 2,132,174 1,761,572
Less: Opening balance of cash 2,005,313 1,864,003
Net increase in cash and cash equivalents 126,861 (102,431)
- 167 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
9. Related parties and related parties transactions
(1) Information on parent Company
Registered
Company Registered capital Shareholding Percentage
name place Business nature (Thousand) percentage (%) of voting rights (%)
Production and sales of
CNAC Beijing, China agrochemicals 3,338,220 78.91 78.91
The ultimate controller of the company is China National Chemical Corporation.
(2) Information on the subsidiaries of the Company
For information about the subsidiaries of the Company, refer to Note VII.1.
(3) Transactions with related parties
a. Transactions of goods and services
Six months ended June 30
2019 2018
Related Party Relationship
Summary of Purchase of goods/services
received:
Purchase of goods/services received Common control under
ChemChina 7,571 7,846
Purchase of fixed assets and other assets Common control under
ChemChina 12,766 54,060
Purchase of goods/services received Subsidiary 48,064 114,174
Summary of Sales of goods:
Sale of goods Subsidiary 260,266 419,636
Sale of raw materials Subsidiary 331 54,210
Sale of fixed assets Subsidiary - 1,528
- 168 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
9. Transactions and balances with related parties - (cont'd)
(3) Transactions with related parties - (cont'd)
b. Leases
The Company as lessor
June 30 December 31
Type of leased assets Lessee 2019 2018
Building and Structures Common control under - 10
ChemChina
The Company as the guarantee receiver
Amount of Inception Maturity Guaranty
guaranteed date of date of completed
Guarantee provider loan guaranty guaranty (Y/ N)
Parent 300,000 20/11/2017 20/11/2022 N
50,000 18/10/2017 18/10/2021 N
100,000 13/06/2018 12/06/2022 N
Ultimate controller 160,000 27/05/2014 09/06/2021 Y
- 169 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
9. Transactions and balances with related parties - (cont'd)
(3) Transactions with related parties - (cont'd)
c. Receivables from and payables to related parties (including loans)
Receivable Items
June 30 December 31
2019 2018
Related Party Book Bad debt Book Bad debt
Items Relationship Balance Provision Balance Provision
Trade receivables Subsidiary 338,135 117,483 753,369 113,245
Common control under
Prepayments ChemChina 684 - 298 -
Other non-current Common control under
assets ChemChina 38,098 - - -
Payable Items
June 30 December 31
Items Related Party Relationship 2019 2018
Trade payables Common control under ChemChina 2,974 184
Other payables Subsidiary 102,170 105,164
Other payables Common control under ChemChina 415,250 240
Other non-current
liabilities* Common control under ChemChina 171,770 171,770
*loans from related party, the interest expense for the 6 months ended June 30, 2019 and 2018 was
1,042 thousand RMB for each of the periods.
d. Other related party transactions
The closing balance of bank deposit in ChemChina Finance Corporation was 231,316 thousand RMB
(31.12.18: 295,661 thousand RMB) Interest income of bank deposit for the current period was 1,654
thousand RMB (amount for six months ended June 30, 2018 is 738 thousand RMB).
- 170 -
ADAMA Ltd. Semi-Annual Report 2019
Supplementary information
(Expressed in RMB '000)
1. Extraordinary Gain and Loss
Six months ended
June 30, 2019
Disposal of non-current assets 115,514
Government grants recognized through profit or loss 14,854
Profit of subsidiaries generated before combination date of a business combination involving
enterprises under common control 38,027
Recovery or reversal of provision for bad debts which is assessed individually during the years 15,748
Other non-operating income and expenses besides items above (8,431)
Tax effect (17,344)
158,368
Note: Extraordinary gain and loss items listed above are presented in the amount before taxation
2. Return on net assets and earnings per share (“EPS”)
The information of Return on net assets and EPS is in accordance with the Preparation Rules for Information
Disclosure by Companies Offering Securities to the Public No. 9 – Calculation and Disclosure of Return on net
assets and Earnings per share (2010 Amendment) issued by China Securities Regulatory Commission
Weighted average
rate of return on net Basic EPS Diluted EPS
Profit during the reporting period assets (%) (RMB/share) (RMB/share)
Net profit attributable to ordinary
shareholders of the Company 2.59% 0.24 N/A
Net profit after deduction of extraordinary
gains/losses attributable to ordinary
shareholders of the Company 1.89% 0.18 N/A
ADAMA Ltd. Semi-Annual Report 2019
Supplementary information - (cont'd)
(Expressed in RMB '000)
3. Supplementary information for retrospective restatement
During March 2019, the acquisition of Anpon, a wholly-owned subsidiary of CNAC, was successfully
completed. On March 29, 2019, the entire share capital of Anpon was transferred from CNAC to the
Company, in return for cash installments of 415 million RMB. The transaction was considered as a
business combination under common control.
The restated consolidated balance sheets as at January 1, 2018 and December 31, 2018 are as follows:
January 1, December 31 June 30
2018 2018 2019
(Restated) (Restated)
Current assets
Cash at bank and on hand 7,984,102 6,400,190 5,425,392
Financial assets at fair value through profit or loss 23,000 46,095 33,074
Derivative financial assets 455,153 517,726 416,991
Bills receivables 29,927 40,569 54,702
Accounts receivable 5,229,446 6,573,100 7,674,381
Receivables financing 282,645 73,216 68,629
Prepayments 298,036 410,506 319,471
Other receivables 1,083,330 1,079,332 929,945
Inventories 7,669,358 9,433,876 10,337,924
Assets held for sale 403,297 - -
Non-current assets due within one year 46 48 -
Other current assets 614,957 660,806 715,767
Total current assets 24,073,297 25,235,464 25,976,276
Non-current assets
Available-for-sale financial assets 91,090 157,600 174,246
Long-term receivables 192,968 108,350 135,075
Long-term equity investments 102,384 91,559 87,812
Investment properties 4,408 4,094 3,933
Fixed assets 6,872,164 7,263,866 7,167,032
Construction in progress 841,100 487,204 534,351
Right-of-use assets N/A N/A 554,372
Intangible assets 4,102,983 5,741,962 5,802,932
Goodwill 3,890,097 4,085,945 4,298,747
Deferred tax assets 896,326 741,737 767,928
Other non-current assets 183,519 217,282 307,385
Total non-current assets 17,177,039 18,899,599 19,833,813
Total assets 41,250,336 44,135,063 45,810,089
172
ADAMA Ltd. Semi-Annual Report 2019
Supplementary information - (cont'd)
(Expressed in RMB '000)
3. Supplementary information for retrospective restatement - (cont'd)
January 1, December 31 June 30
2018 2018 2019
(Restated) (Restated)
Current liabilities
Short-term loans 3,080,912 1,122,774 2,308,286
Derivative financial liabilities 789,050 1,451,670 688,267
Bills payable 311,557 445,533 375,777
Accounts payable 3,983,018 4,627,936 4,178,668
Contract liabilities 781,374 848,402 917,747
Employee benefits payable 1,013,830 944,175 912,354
Taxes payable 437,457 616,780 437,227
Other payables 1,062,400 1,197,579 1,970,641
Non-current liabilities due within one year 448,504 301,814 422,208
Other current liabilities 466,078 578,184 344,127
Total current liabilities 12,374,180 12,134,847 12,555,302
Non-current liabilities
Long-term loans 514,320 235,819 673,796
Debentures payable 7,777,410 7,649,098 8,152,990
Lease liabilities N/A N/A 418,814
Long-term payables 23,909 25,106 26,419
Long-term employee benefits payable 652,071 620,646 644,449
Provisions 186,020 132,351 135,924
Deferred tax liabilities 224,613 392,404 350,735
Other non-current liabilities 225,586 199,930 372,256
Total non-current liabilities 9,603,929 9,255,354 10,775,383
Total liabilities 21,978,109 21,390,201 23,330,685
Shareholders' capital
Share capital 2,446,554 2,446,554 2,446,554
Capital reserve 13,331,312 13,324,491 12,903,168
Other comprehensive income (104,048) 1,090,827 972,845
Special reserves 9,349 13,536 16,798
Surplus reserve 207,823 240,162 240,162
Retained earnings 3,381,237 5,629,292 5,899,877
Total shareholders’ equity 19,272,227 22,744,862 22,479,404
Total liabilities and shareholders’ equity 41,250,336 44,135,063 45,810,089
173
ADAMA Ltd. Semi-Annual Report 2019
Section XI Documents Available for Reference
(I) Financial Statements carried with signatures and seals of Legal Representative and Accounting Principal as well as Head of the
Accounting Organ;
(II) In the Reporting Period, originals of all documents of the Company ever disclosed publicly in media designated by China Securities
Regulatory Commission as well as the originals of all the public notices were deposited in the office of the Company.
ADAMA Ltd.
Legal Representative: Chen Lichtenstein
August 21, 2019
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