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沙隆达B:2018年第三季度报告正文(英文版)2018-10-31  

						Hubei Sanonda Co., Ltd.                                         Simplified Version of the Third Quarter Report




  Stock code:000553, 200553      Stock Abbreviation:Sanonda A(B)        Announcement No:2018-50




                     HUBEI SANONDA CO., LTD.

              THIRD QUARTER REPORT 2018




Adama Agricultural Solutions Ltd., one of the world's leading crop protection companies, and Hubei
Sanonda Co., Ltd. have combined, creating the only integrated, publicly traded Global-China crop
protection company.


At ADAMA, 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 6,600 strong team reaches farmers in
over 100 countries, providing them with solutions to control weeds, insects and disease, and
improve their yields.


Please see key additional information and further details included in the Annex.



                                       October 2018

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Hubei Sanonda Co., Ltd.                                         Simplified Version of the Third Quarter Report




                          Section I Important Notice
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 presentation 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 in charge of 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.
This Report has 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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Hubei Sanonda Co., Ltd.                                                      Simplified Version of the Third Quarter Report



              Section II Financial Highlights & Shareholder Changes

I Highlights of accounting data and financial indicators

Whether the Company performs any retroactive adjustments to or restatements of its accounting data of last year due to
change in accounting policies or correction of accounting errors
□Yes √ No
                                                                                                            Unit: RMB’000
                                             End of Reporting Period          End of last year               +/- (%)
Total assets                                       42,628,220                 39,685,756 Note 1              7.41%
Net assets attributable to shareholders of
the Company                                        22,423,162                 18,849,847 Note 1              18.96%
                                                                                                            Unit: RMB’000
                                                 July - September                    January - September
                                                                         +/- (%)                                  +/- (%)
                                                2018           2017                   2018         2017
Operating revenues                           5,928,627      5,624,175    5.41%     18,954,885 18,394,239          3.05%
Net profit attributable to shareholders of
the Company                                   179,661       282,520     (36.41%)    2,542,442      1,599,514     58.95%
Net profit attributable to shareholders of
the Company excluding non-recurring
profit and loss                               175,718       270,892     (35.13%)     966,014        436,359      121.38%
Net cash flow from operating activities                                             1,454,557      2,521,540     (42.31%)
Basic EPS (RMB/share)                         0.0734         0.1206     (39.14%)      1.0392        0.6830        52.15%
Diluted EPS (RMB/share)                         N/A            N/A          -           N/A           N/A            -
Weighted average return on net assets         28.0%          18.1%      (49.10%)     12.31%          9.28%        32.70%


Note 1:
The amounts specified are 2018 opening balance amounts rather than 2017 closing balance amounts. As of January 1,
2018, the Company began to adopt the revised Accounting Standards for Business Enterprises (“ASBE”) regarding
financial instruments and revenues, promulgated by Ministry of Finance in 2017. According to the transitional
requirements of relevant revised ASBEs, the opening balances of total assets and net assets attributable to the
shareholders of the Company have been adjusted. The total assets and net assets attributable to the shareholders of the
Company as at December 31, 2017 were RMB’000 39,613,922 and RMB’000 18,778,013, respectively.


Please see key additional information and further details included in the Annex.




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Hubei Sanonda Co., Ltd.                                                            Simplified Version of the Third Quarter Report


Non-Recurring profit/loss
√ Applicable □ Not applicable
                                                                                                                    Unit: RMB’000
Item                                                                   Reporting Period                     Note
Gains/losses on the disposal of non-current assets                                              Divestment in Europe, related
                                                                           1,996,244
(including the offset part of asset impairment provisions)                                      to the Syngenta Transaction.
Government grants recognized through profit or loss
(excluding government grants closely related to business of
                                                                             16,667                            --
the Company and given at a fixed quota or amount in
accordance with government’s uniform standards)
Recovery or reversal of provision for bad debts which is
                                                                             17,027                            --
assessed individually during the years
Other non-operating income and expenses other than the
                                                                             (4,134)                           --
above
Less: Income tax effects                                                    449,376                            --
Total                                                                      1,576,428                           --
Explanation of why the Company classified an item as exceptional profit/loss according to the definition in the Explanatory
Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Exceptional Profit
and Loss, or reclassified any exceptional 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.


II Total number of shareholders and shareholdings of top 10 shareholders at the period-end

1. Total number of ordinary shareholders and preference shareholders who had resumed their voting right &
shareholdings of top 10 shareholders at the period-end
                                                                                                                        Unit: share

                                            52,055             Total    number         of   preference
Total   number      of   ordinary
                                           (including          shareholders who had resumed their
shareholders at the end of                                                                                          0
                                    35,817 for A shares and    voting right at the end of the
the Reporting Period
                                     16,238 for B shares)      Reporting Period (if any)

                                            Shareholdings of top 10 shareholders

                                                                                 Number of        Pledged or frozen shares
                             Nature of     Shareholding        Number of
 Name of shareholder                                                              restricted
                            shareholder      percentage        shares held                          Status            Number
                                                                                shares held

China National
                            State-owned
Agrochemical                                  74.02%          1,810,883,039    1,810,883,039             -                -
                            legal person
Corporation (CNAC)

Jingzhou Sanonda            State-owned
                                               4.89%          119,687,202               -                -                -
Holding Co., Ltd.           legal person

China Cinda Asset     State-owned
                                               1.37%           33,557,046        33,557,046              -                -
Management Co., Ltd. legal person
China Structural      State-owned
                                               1.37%           33,557,046        33,557,046              -                -
Reform Fund Co., Ltd. legal person
CCB
                         Others                0.53%           12,885,906        12,885,906              -                -
Principal-ICBC-Avic


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Hubei Sanonda Co., Ltd.                                                      Simplified Version of the Third Quarter Report


Trust, Trust Plan of
Pooled Funds of CCB
Principal Private
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)
Portfolio No.503 of
National Social              Others         0.25%          5,999,921             -               -                 -
Security Fund
                            Domestic
Jiang Yun                                   0.21%          5,200,173             -               -                 -
                          natural person
Portfolio No.118 of
National Social              Others         0.21%          5,065,684             -               -                 -
Security Fund
GUOTAI JUNAN
                          Foreign legal
SECURITIES(HONG                             0.20%          4,838,044             -               -                 -
                             person
KONG) LIMITED
                                   Shareholdings of top 10 non-restricted shareholders

                                                            Number of non-restricted              Type of shares
                  Name of shareholder
                                                          shares held at the period-end        Type           Number

                                                                                          RMB ordinary
Jingzhou Sanonda Holding Co., Ltd.                                 119,687,202                              119,687,202
                                                                                              share

                                                                                          RMB ordinary
Portfolio No.503 of National Social Security Fund                   5,999,921                                5,999,921
                                                                                              share

                                                                                          RMB ordinary
Jiang Yun                                                           5,200,173                                5,200,173
                                                                                              share

                                                                                          RMB ordinary
Portfolio No.118 of National Social Security Fund                   5,065,684                                5,065,684
                                                                                              share

                                                                                          Domestically
GUOTAI JUNAN SECURITIES(HONGKONG) LIMITED                           4,838,044             listed foreign     4,838,044
                                                                                              share

                                                                                          RMB ordinary
Qichun County State-owned Assets Administration                     4,169,266                                4,169,266
                                                                                              share

Agricultural Bank of China Limited - CSI 500 Exchange                                     RMB ordinary
                                                                    4,034,562                                4,034,562
Traded Fund                                                                                   share

                                                                                          RMB ordinary
Wu Feng                                                             2,980,237                                2,980,237
                                                                                              share

                                                                                          Domestically
Xie Qingjun                                                         2,500,000             listed foreign     2,500,000
                                                                                              share

Aegon-Industrial Fund – Agricultural Bank of China –              2,493,609             RMB ordinary       2,493,609



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Hubei Sanonda Co., Ltd.                                                       Simplified Version of the Third Quarter Report


China Pacific Life Insurance –Entrusted Investment by                                         share
Private Placement Strategic Product (Assured Amount
Bonus)

                                    Jingzhou Sanonda Holdings Co., Ltd. and CNAC are related parties, and are
                                    acting-in-concert parties as prescribed in the Administrative Methods for Acquisition
Related or act-in-concert parties   of Listed Companies. Sanonda Holding is a wholly-controlled subsidiary of CNAC. It
among the shareholders above        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.

                                    Shareholder Wu Feng held 775,726 shares of the Company through a credit
Top 10 ordinary shareholders
                                    collateral securities trading account and held 2,204,511shares of the Company
conducting securities margin
                                    through a common securities account, who thus held 2,980,237shares of the
trading (if any)
                                    Company in total.


Did any of the top 10 ordinary shareholders or the top 10 non-restricted ordinary shareholders of the Company conduct
any promissory repo during the Reporting Period?
□ Yes √ No
No such cases in the Reporting Period.


2. Total number of preference shareholders and shareholdings of the top 10 of them at the period-end
□ Applicable √ Not applicable




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Hubei Sanonda Co., Ltd.                                             Simplified Version of the Third Quarter Report 2018




                            Section III Significant Events
I Changes in main accounting statement items and financial indicators in the Reporting
Period, as well as reasons for the changes

√ Applicable □ Not applicable
                                                                                                        Unit: RMB’000
     Assets and liabilities         September 30, 2018   January 1, 2018         +/- (%)    Main reason for change
Financial assets held for trading        47,528              23,000              107%         Additional investment
Derivative financial assets                                                                         Revaluation of
                                         677,223            455,153               49%
                                                                                                      derivatives
Assets held for sale                                                                         Divestment transaction
                                            -               403,297              (100%)
                                                                                                      completed
Other current assets                                                                             Decrease in bank
                                         533,834            765,028              (30%)
                                                                                                  acceptance bills
Long term receivables                                                                          Mainly collection and
                                         134,984            192,968              (30%)       devaluation of a foreign
                                                                                                       currency
                                                                                             CIP transferred to fixed
Construction in progress                 433,350            803,421              (46%)
                                                                                                        assets
                                                                                                Mainly purchase of
Intangible assets                       5,900,418          4,036,588              46%      intangible from Syngenta
                                                                                                          AG
                                                                                           Repayment of short term
Short term loans                         452,729           2,280,912             (80%)
                                                                                                         loans
                                                                                                    Revaluation of
Derivative financial liabilities        1,045,164           789,050               32%
                                                                                                      derivatives
                                                                                             Decrease in advances
Advances from customers                  140,211            226,711              (38%)
                                                                                                   from customers
                                                                                                 Mainly increase in
                                                                                             liabilities for discounts,
Other payables                          2,201,178          1,422,734              55%        accrued expenses and
                                                                                               liability in respect of
                                                                                           securitization transaction
Taxes and fares payable                                                                    Mainly due to increase in
                                                                                           corporate income tax due
                                         630,084            431,275               46%
                                                                                              to increase in taxable
                                                                                                         profit
Long-term loans                                                                            Mainly due to repayment
                                         304,549            514,320              (41%)
                                                                                                       of loans
Deferred tax liabilities                                                                     Mainly due to utilization
                                                                                             of losses carry forward
                                         431,346            224,613               92%
                                                                                           due to gain from disposal
                                                                                               of intangible assets.
Provisions                                                                                  Decrease in provision in
                                         102,337            163,913              (38%)      respect of contingencies
                                                                                                     and law suits
Deferred income                                                                             Deferred income related
                                         34,485                 -                100%
                                                                                           to divestment transaction
Other comprehensive income                                                                 Mainly due to revaluation
                                                                                           of hedge transaction and
                                        1,108,221           (104,080)            1165%
                                                                                                translation effect of
                                                                                                 foreign operations
                                                                                                 Additions to safety
Special reserves (China)                 16,255              9,349                74%
                                                                                                production reserve




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     Hubei Sanonda Co., Ltd.                                                                        Simplified Version of the Third Quarter Report 2018


     Retained earnings                                 5,671,403                        3,307,924                     71%                 Mainly net profit
              Profit and losses                  January-September                January-September
                                                                                                                    +/- (%)         Main reason for change
                                                       2018                             2017
     Taxes and surcharges                             63,870                           48,661                         31%             Increase in revenues
     Research and Development                                                                                                       Increase in investments
                                                         262,581                         196,579                      43%
     expenses                                                                                                                            in R&D projects
     Credit impairment loss                               14,096                              -                      100%             Adoption of ASBE 22
                                                                                                                                    Mainly due to change in
     Gains (Losses) from changes in
                                                        (344,673)                        170,228                   (302%)                the fair value of
     fair value
                                                                                                                                            derivatives
                                                                                                                                    Mainly due to realization
     Investment income (loss)                            355,813                          28,088                    1167%
                                                                                                                                           of derivatives
     Gain (Loss) from disposal of                                                                                                     Gain from disposal of
                                                       1,996,242                          55,761                    3480%
     assets                                                                                                                             intangible assets
                                                                                                                                   Increase in non-recurring
     Non-operating income                                 30,407                          22,763                      34%
                                                                                                                                              income
                                                                                                                                     Mainly due to gain from
                                                                                                                                      disposal of intangible
                                                                                                                                   assets and devaluation of
     Income tax expenses                                 787,319                         259,358                     204%
                                                                                                                                    the Brazilian Real which
                                                                                                                                   resulted in a decrease in
                                                                                                                                       the local tax assets


     II Progress on significant events, as well as the influence and solutions
     □ Applicable √ Not applicable


     III None completion of Commitments that should have been completed in the reporting
     period by the Company, actual controller, shareholders, related parties, acquirer, and other
     committed parties.
     □ Applicable √ Not applicable
     No such cases in the Reporting Period.



     IV Performance forecast for Y2018
     Warning of possible loss or considerable YoY change in the accumulative net profit made during the year-beginning to the

     end of the next reporting period, as well as the reasons
     □ Applicable √ Not applicable

     V Securities investment
     □ Applicable √ Not applicable
     No such cases in the Reporting Period.


     VI Wealth management entrustment
     □ Applicable      √ Not applicable
     No such cases in the Reporting Period.


     VII Investment in derivative financial instruments
     √ Applicable □ Not applicable
                                                                                                                                                    Unit: RMB’000
The party   Relation   Related             Initial   Starting   Expiring   Investment    Amount      Amount sold   Impairment     Investment   Percentage of   Gain/loss
                                 Type
  that      with the    party           investment    date       date       amount at   purchased     during the    accrued (if    amount at    investment     during the


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        Hubei Sanonda Co., Ltd.                                                                                          Simplified Version of the Third Quarter Report 2018


operates the Company       transaction                amount                                beginning of    during the       reporting        any)        end of the    amount divided    reporting
 investment                   or not?                                                        the period     reporting         period                        period      by net asset at    period
                                                                                                              period                                                      end of the
                                                                                                                                                                            period

Banks             No           No        Option       52,274      03/06/2018 09/03/2019        52,274        6,097,265     (2,547,865)         No         3,601,674        16.06%         (229,646)


Banks             No           No        Forward 15,911,923 28/05/2018 11/01/2019            15,911,923     20,962,417     (23,768,719)        No        13,105,621        58.45%         (35,845)


Total                                               15,964,197         --           --       15,964,197     27,059,682     (26,316,584)                  16,707,295        74.51%         (265,491)

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.
                                                     Regarding credit and liquidity risk, the Group is working with large and substantial banks only and with some of them the Group has ISDA
                                                     agreements.
                                                     As to operational risk, the Group is working with approved software for all transactions.
                                                     No legal risk is involved.
Risk and control analysis for the reporting The controls taken in order to further reduce said risks are:
period (including but not limited to market risk,                   The relevant subsidiaries have specific guidelines, under the Group’s policy, which were approved by the subsidiaries' Financial
liquidity risk, credit risk, operational risk, legal                Statements Committee of the Board, which specifies, inter alia, the hedging policy, the persons that have the authorization to
risk, etc.)                                                         deal with hedging, the tools, ranges etc. The only subsidiary that has hedging positions in the Group in the period was Adama
                                                                    Solutions and its subsidiaries.
                                                                    The relevant subsidiaries apply local SOX audits that audit the working process and the controls of the hedging transactions, in
                                                                    addition to the quarterly audit.
                                                                    The controllers of the relevant subsidiaries are involved and monitor 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 term 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 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 up to 1.5 years. Therefore, the valuation is straightforward, and the exchange rates are
investments                                         provided by the accounting department of the relevant subsidiary and all other parameters are provided by the external 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 avoiding the risk of market fluctuations. The investments respond to
Independent Directors’ opinion on the
                                               the Company’s routine business demands and are in accordance with the relevant laws and regulations. Additionally, the Company has
investment in derivative financial instruments
                                               adopted Currency Risk Hedging Policy to strengthen the risk management and control which benefit the Company’s ability to protect against
and related risk controls
                                               market risk. The derivative investments do not harm the interests of the Company and its shareholders.




        VIII Visits paid to the Company for purposes of research, communication, interview, etc.
        during the Reporting Period
        √ Applicable □ Not applicable

                    Date of visit                                Way of visit                             Type of visitor                                          About

                                                                                                                                          Introduced        the        Company's          overall
                   July 10, 2018                           Call (One to Many)                      Institutional Investors
                                                                                                                                          situation and business development.

                                                                                                                                          Introduced        the        Company's          overall
                   July 11, 2018                            On Site Research                       Institutional Investors
                                                                                                                                          situation and business development.

                                                                                                                                          Introduced the global overall situation of
                                                          Public Day of Capital
                   July 17, 2018                                                                   Institutional Investors                Agrochemical industry, and the business
                                                                   Market
                                                                                                                                          of each function of the Company.

                                                                                                                                          Introduced the global overall situation of
                                                          Public Day of Capital
                   July 19, 2018                                                                   Institutional Investors                Agrochemical industry, and the business
                                                                   Market
                                                                                                                                          of each function of the Company.

                                                                                                                                          Communication on the Q2 and the first
                 August 27, 2018                           Call (One to Many)                      Institutional Investors
                                                                                                                                          half year performances of the Company.

                                                                                                                                          Communication on the Q2 and the first
                 August 28, 2018                      Roadshow (One to Many)                       Institutional Investors
                                                                                                                                          half year performances of the Company.

                 August 29, 2018                      Roadshow (One to Many)                       Institutional Investors                Communication on the Q2 and the first


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Hubei Sanonda Co., Ltd.                                                   Simplified Version of the Third Quarter Report 2018


        Date of visit                  Way of visit           Type of visitor                           About

                                                                                     half year performances of the Company.

                                                                                     Communication on the Q2 and the first
      August 30, 2018             Roadshow (One to Many)   Institutional Investors
                                                                                     half year performances of the Company.

                                                                                     Introduced   the     Company's   overall
                                                                                     situation, business development, and the
     September 4, 2018        Brokers’ Strategy Meeting   Institutional Investors
                                                                                     Q2 and the first half year performances
                                                                                     of the Company.

                                                                                     Communication on the Q2 and the first
     September 6, 2018        Brokers’ Strategy Meeting   Institutional Investors
                                                                                     half year performances of the Company.


IX Illegal provision of guarantees for external parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.


X Utilization of the Company’s capital by the controlling shareholder or its related parties for
non-operating purposes
□ Applicable √ Not applicable
No such cases in the Reporting Period.




                                                                                                   Hubei Sanonda Co., Ltd.
                                                                                                           30 October 2018




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