ADAMA DELIVERS RECORD SALES IN THIRD QUARTER AND FIRST
NINE MONTHS IN SPITE OF EUROPE DROUGHT DRAG
Q3 Sales up 3.4% to a record $872 million
Continued volume growth driven by demand for differentiated products and market share
gains in all key regions, despite worst drought in 40 years across most of Europe, which
reduced demand for high-end fungicides by several tens of millions. Global growth outside
Europe was 10.0% in the quarter
In constant currency terms, Q3 sales grew by 10.7%
Continued price increases of 6% supported by solid demand conditions, largely offsetting
softer currencies
As previously communicated, the negative impact of 2017 European hedge positions largely
ended in the first half of the year, and had negligible impact in the third quarter
Nine-month sales grew 8.0% to a record $2,918 million (up 9.2% in constant currency terms),
driven by 5.7% growth in volumes and increased prices. Growth outside Europe was 13.1% in
the nine-month period
Excluding the negative impact of hedge positions on European currencies created in
2017, sales over the nine-month period grew 9.4% to $2,957 million
Q3 Gross profit of $279 million vs. $298 million Q3 record last year, largely due to
European drought reducing sales of high-end fungicides, and thereby gross profit by
several tens of millions
Gross margin of 32.0% vs 35.4% in Q3 last year
Strong price increases and continued differentiated volume growth offset by softer currencies
and higher procurement costs
Gross profit over the nine-month period up 1.1% to a record $972 million, with gross margin of
33.3% vs. 35.6% in the same period last year
Excluding the 2017 European hedge impact, gross profit over the nine-month period
was $1,011 million and gross margin 34.2%
Operating cost, collection and supply chain discipline result in improved cost/sales ratio,
record low receivable and inventory days, and improved working capital/sales ratio
Q3 EBITDA of $140 million vs. $161 million Q3 record last year
EBITDA margin of 16.0% vs 19.1% in Q3 last year
EBITDA over the nine-month period of $518 million (margin of 17.8%) vs. $546 million nine-
month record (margin of 20.2%) in the same period last year
Excluding the 2017 European hedge impact, EBITDA over the nine-month period was
$558 million and EBITDA margin 18.9%
Q3 Net income of $46 million compared to last year’s Q3 record of $55 million
Net income margin of 5.3% vs 6.5% in Q3 last year
Net income over the nine-month period of $203 million (margin of 7.0%) vs. $255 million nine-
month record (margin of 9.4%) in the same period last year
Excluding the 2017 European hedge impact, net income over the nine-month period
was $242 million and net income margin 8.2%
Continued strong cash flow generation
Operating Cash Flow of $99 million in Q3 and $221 million over the nine-month period
Free Cash Flow generation of $52 million in Q3 and $93 million over the nine-month period
Significant $327 million reduction in balance sheet net debt over the last 12 months to
$435 million
Net debt / EBITDA ratio of 0.7x vs. 1.2x at same point last year
1
BEIJING, CHINA and TEL AVIV, ISRAEL, October 30, 2018 – Adama Agricultural Solutions Ltd.
(“Solutions”), together with Hubei Sanonda Co., Ltd. (the “Listed Entity”), to be named ADAMA
(together, “ADAMA” or “the Combined Company”), today reported their combined consolidated
financial results for the third quarter and nine-month period ended September 30, 2018.
9M 2018
% %
Adjusted, US$m Q3 2018 Q3 2017 9M 2018 9M 2017 (ex. ‘17 EU
Change Change
hedge)
Revenues 872 844 3.4% 2,918 2,702 8.0% 2,957
Gross profit 279 298 -6.5% 972 962 1.1% 1,011
Gross margin 32.0% 35.4% 33.3% 35.6% 34.2%
Operating income (EBIT) 87 108 -19.9% 359 391 -8.1% 399
EBIT margin 10.0% 12.9% 12.3% 14.5% 13.5%
Net income 46 55 -16.3% 203 255 -20.2% 242
Net income margin 5.3% 6.5% 7.0% 9.4% 8.2%
EBITDA 140 161 -13.5% 518 546 -5.1% 558
EBITDA margin 16.0% 19.1% 17.8% 20.2% 18.9%
Earnings per share – USD 0.0188 0.0235 0.0830 0.1088
– RMB 0.1281 0.1570 0.5367 0.7429
All income statement items contained in this release are presented on a combined, adjusted basis, reflecting the
performance of the Combined Company. For a detailed description and analysis of the differences between the adjusted
income statement items and the items as reported in the financial statements, see “Analysis of Gaps between Adjusted
Income Statement and Income Statement in Financial Statements” in the appendix to this release.
Revenue growth in constant currencies in the third quarter was 10.7%, and 9.2% in the nine-month period.
Earnings per share are the same for basic and diluted. The number of shares used to calculate earnings per share in Q3
2017 is 2,341.9 million shares. The number of shares used to calculate earnings per share in Q3 2018 is 2,446.6 million
shares, reflecting the issuance of shares in the private placement equity offering.
Commenting on the results, Yang Xingqiang, Chairman of ADAMA’s Board of Directors, said,
“The harsh drought in Europe stopped us short of achieving a great quarter, as the need for our
leading fungicide products was absent. However, ADAMA continues to prove its ability to grow
strongly elsewhere, and has once again posted record revenues in both the quarter and the nine-
month period. The Company’s strong commercial and operational efficiency allowed us to deliver
robust cash flow generation and lowest ever leverage level, ensuring that ADAMA can look to the
future with confidence, and continue to execute on its growth strategy.”
Chen Lichtenstein, President and CEO of ADAMA, added, “The extraordinarily dry summer in
Europe this year has been the toughest we have seen in decades, impacting our top line and profit
in the quarter. In spite of this challenge, we continue to grow our business and gain share in key
markets across the globe. In addition, expense discipline and working capital management mitigated
the impact and we continue to generate strong cash flow. We continue to invest in the expansion
and further differentiation of our product portfolio, building on our strong foundations to drive growth
and profits going forward.”
2
Performance in Context of Market Environment
The third quarter saw extreme drought conditions across most of Europe. The unprecedented dry
weather led to reduced disease pressure, impacting sales of high-margin fungicides. This resulted in
lower sales and gross profit contribution from Europe, which moderated the Combined Company’s
overall growth and adversely impacted the gross margin.
Softness of many currencies during the third quarter, most notably in Brazil (which seem to be
reversing), India, Turkey and Argentina, impacted sales and profit contribution, yet was more than
offset by the strong growth and price increases.
As previously communicated, the negative impact of 2017 European hedge positions largely ended
in the first half of the year, and had negligible impact on the Q3 2018 results. There was, however, a
marked effect over the nine-month period, with a negative impact of almost $40 million on sales and
profits.
ADAMA continues to deliver robust growth, driven by the introduction of new and differentiated
products, and increased penetration in markets across the globe.
The Combined Company continues to maintain manufacturing cost discipline. Shortage in certain
raw materials and intermediates, mostly owing to increased environmental focus in China, led to
higher procurement costs and to some extent limited even greater volume growth.
Robust demand conditions facilitated increased prices in the quarter of approximately 6% across the
portfolio.
The Company continues to advance collaboration opportunities with other ChemChina group entities,
as well as other entities in China, to make the most of its positioning.
The Company is to enter into an agreement, through a US affiliate, to acquire Bonide Products Inc.,
a provider of pest-control solutions for the consumer Home & Garden market with 2017 sales of
approximately $70 million. With a nationwide distribution network, Bonide will provide enhanced
access to an approximately $1.5 billion market. The acquisition is expected to close by the end of
2018, subject to customary closing conditions and required regulatory approvals.
Financial Highlights
Revenues grew by 3.4% in the quarter and by 8.0% in the nine-month period in US dollar terms,
compared to the corresponding periods last year. In constant currency terms, revenues grew by
10.7% in the quarter and by 9.2% in the nine-month period, compared to the corresponding periods
last year. Excluding the 2017 European hedge impact, revenues increased by 9.4% to $2,957
million in the nine-month period, compared to the corresponding period last year.
This increase was driven by volume growth of 3.8% in the quarter and 5.7% in the nine-month
period. Especially strong performance was recorded in Latin America, India, Middle East and Africa
as well as in Asia-Pacific, which more than offset the tens of millions of sales missed due to the
severe drought in Europe. In addition to the volume growth, improved demand conditions facilitated
a stronger pricing environment, largely compensating for the softer currencies and allowing the
passing on of some of the impact of the constrained supply and higher procurement costs.
Gross profit in the quarter was lower by 6.5% to $279 million (gross margin of 32.0%), while gross
profit in the nine-month period increased by 1.1% to $972 million (gross margin of 33.3%), compared
to the corresponding periods last year. Excluding the 2017 European hedge impact, gross profit
increased by 5.1% to $1,011 million (gross margin of 34.2%) in the nine-month period, compared to
the corresponding period last year.
3
The lower gross profit in the quarter reflects primarily the impact of the missed high-margin sales in
Europe due to the drought in the region, particularly of fungicides, which hurt gross profit by tens of
millions. Apart from the drought impact, strong volume growth and increased prices more than offset
continued higher procurement costs of raw materials and intermediates and the softer currencies,
most notably the Brazilian Real and the Indian Rupee.
Operating expenses. Total operating expenses were contained at $192 million (22.0% of sales) in
the quarter and $612 million (21.0% of sales) in the nine-month period, while accommodating
significantly higher sales, compared to $190 million (22.5% of sales) and $571 million (21.1% of
sales) in the corresponding periods last year, respectively.
Sales and Marketing expenses in the quarter were $144 million (16.5% of sales), in line with $143
million (17.0% of sales) in the corresponding period last year. Sales and Marketing expenses in the
nine-month period were $463 million (15.9% of sales), compared to $432 million (16.0% of sales) in
the corresponding period last year. This resulted primarily from an increase in sales, marketing and
product development teams in growing geographies and higher other variable expenses as a result
of the increased sales volumes.
General and Administrative expenses in the quarter were $28 million (3.2% of sales) compared to
$36 million (4.3% of sales) in the corresponding period last year. This decrease resulted primarily
from lower personnel-related expenses, as well as reversal of provisions related to successful
resolution of legal claims. General and Administrative expenses in the nine-month period were $103
million (3.5% of sales) compared to $102 million (3.8% of sales) in the corresponding period last
year.
R&D expenses in the quarter were $16 million (1.8% of sales) compared to $9 million (1.1% of sales)
in the corresponding period last year. R&D expenses in the nine-month period were $40 million (1.4%
of sales) compared to $28 million (1.0% of sales) in the corresponding period last year. These
increases resulted primarily from higher spend on strategic research and development projects.
In addition to these factors, operating expenses in the third quarter benefited somewhat from the
softer currencies against the US dollar.
Operating income in the quarter was $87 million and $359 million in the nine-month period, lower
by 19.9% and 8.1% compared to the corresponding periods last year, respectively. Excluding the
2017 European hedge impact, operating income increased by 2.0% to $399 million in the nine-
month period, compared to the corresponding period last year.
EBITDA in the quarter was $140 million and $518 million in the nine-month period, lower by 13.5%
and 5.1% compared to the corresponding periods last year, respectively. Excluding the 2017
European hedge impact, EBITDA increased by 2.1% to $558 million in the nine-month period,
compared to the corresponding period last year.
Financial expenses and investment income. Total net financial expenses and investment income
in the quarter were $30 million compared to $34 million in the corresponding period last year. This
decrease was primarily due to foreign exchange income related to balance sheet positions and
lower interest costs due to reduced debt levels. These were partially offset by the adoption of a new
accounting standard (which classifies interest income on sales as revenue) and an increase in costs
of the CPI-linked bonds as a result of the increase in the Israeli CPI over the quarter, compared to a
decrease in the index in the corresponding quarter last year. Total net financial expenses and
investment income in the nine-month period were $97 million compared to $95 million in the
corresponding period last year, reflecting the adoption of the new accounting standard and the
increase in bond costs due to the higher Israeli CPI, largely offset by lower interest costs due to
reduced debt levels.
4
Tax expenses. Net tax expenses were $11 million in the quarter, compared to $19 million in the
corresponding period last year. This decrease was primarily due to lower profits accrued. Net tax
expenses in the nine-month period were $59 million compared to $41 million in the corresponding
period last year, reflecting mainly the devaluation of net, non-cash tax assets as a result of the
weakening of the Brazilian Real against the US dollar, a trend which seems to be reversing.
Net income in the quarter was $46 million and $203 million in the nine-month period, compared to
$55 million and $255 million in the corresponding periods last year, respectively. Excluding the 2017
European hedge impact, net income was lower by 4.8% at $242 million in the nine-month period,
compared to the corresponding period last year.
Working capital was higher by only $51 million compared to the corresponding point last year,
accommodating the strong sales growth momentum of more than $300 million during this period.
Inventories were higher due to significant product preparation in advance of the upcoming season,
as well as the higher procurement costs. Notwithstanding the stronger growth momentum, due to the
continued implementation of advanced supply chain alignment, inventory days have reached record
low levels.
Strong collection and the impact of currencies have driven receivables lower in the third quarter and
compared to the same period last year, notwithstanding continued sales growth in the quarter and
over the last 12 months. Ongoing control of credit has resulted in receivable days at their record best
levels for this time of year.
Net working capital has also benefited from a higher level of payables in comparison to the same
point last year.
Cash Flow. Operating cash flow of $99 million was generated in the third quarter compared to $41
million in the same period last year. Over the nine month period, operating cash flow of $221 million
was generated, compared to $369 million generated in the corresponding period last year. Strong
working capital discipline facilitated the continued generation of robust operating cash flow, while
accommodating the significant sales growth.
Net cash used in investing activities amounted to $44 million in the quarter and $85 million in the
nine-month period, compared to $54 million and $125 million invested in the corresponding periods
last year, respectively. Additions to assets include investments in product registrations and other
intangible and fixed assets, including the transfer of products in Europe from Syngenta in the first
quarter of 2018. Proceeds from disposal of assets include the divestment of certain products in
Europe in the first quarter of 2018 in connection with the approval of the European Commission for
ChemChina’s acquisition of Syngenta, while in 2017 similarly includes one-time proceeds resulting
from the divestment of certain products in the US in the second quarter of 2017 in connection with
the approval of the US FTC for ChemChina’s acquisition of Syngenta, as well as the sale of non-
core assets. Investments in fixed assets, net of investment grants, amounted to $22 million in the
quarter, and $77 million in the nine-month period, compared to $33 million and $77 million invested
in the corresponding periods last year, respectively.
Free cash flow of $52 million was generated in the quarter and $93 million in the nine-month period,
compared to $19 million used and $192 million generated in the corresponding periods last year,
respectively.
Leverage: Balance sheet net debt at the end of the quarter was $435 million, down by $327 million
compared to net debt of $762 million as of September 30, 2017. This puts the Combined Company’s
net debt/EBITDA ratio at 0.7x, compared to 1.2x at the same time last year.
5
Regional Sales Performance
Q3 2018 Q3 2017 Change Change 9M 2018 9M 2017 Change Change
$m $m USD CER $m $m USD CER
Europe 168 206 -18.5% -19.2% 870 892 -2.5% -5.0%
North America 124 125 -1.0% -0.9% 530 486 +9.0% +8.5%
Latin America 277 231 +20.2% +40.2% 588 497 +18.4% +30.4%
Asia Pacific 131 125 +4.9% +8.4% 487 444 +9.7% +6.8%
Of which China 59 61 -3.8% -0.7% 231 187 +23.4% +18.3%
India, Middle East & Africa 172 157 +9.7% +17.7% 442 383 +15.4% +18.7%
Total 872 844 +3.4% +10.7% 2,918 2,702 +8.0% +9.2%
CER: Constant Exchange Rates
Europe: Sales were lower by 19.2% in the quarter and by 5.0% in the nine-month period in
constant currency terms, compared with the corresponding periods last year.
The unprecedented drought that began towards the end of the second quarter continued
throughout the third quarter, resulting in a decline in highly profitable sales in the region. The dry
weather caused a reduction in disease and insect pressure, mainly impacting sales of high margin
fungicides, as well as delaying the planting of the winter cereal crops, pushing some herbicide
sales into the fourth quarter.
New products were registered in the quarter, including TRIVOR, a unique insecticide combination
product for sucking pests in citrus, as well as NIKITA, a novel three-way herbicide mixture with
triple modes-of-action for corn, both in Italy.
In US dollar terms, sales in Europe were lower by 18.5% in the quarter and by 2.5% in the nine-
month period compared with the corresponding periods last year. Excluding the 2017 European
hedge impact, sales in the region increased by 1.9% to $909 million in the nine-month period.
North America: Sales were lower by 0.9% in the quarter, yet increased by 8.5% in the nine-month
period in constant currency terms, compared with the corresponding periods last year.
The slight decline in sales in the quarter was largely due to dry weather conditions in Texas and
Western Canada, which was largely offset by increased selling prices.
In the US, the generally stronger pricing environment continued in the face of industry-wide supply
shortages, compensating for the higher procurement costs.
Consumer and Professional Solutions continues to perform well, with strong momentum in both
professional pest and industrial vegetation management.
In US dollar terms, sales in North America were lower by 1.0% in the quarter, yet increased by 9.0%
in the nine-month period, compared to the corresponding periods last year.
Latin America: Sales increased by 40.2% in the quarter and by 30.4% in the nine-month period in
constant currency terms, compared with the corresponding periods last year. This strong
performance was a result of recent product launches, alongside increased pricing across most
countries in the region.
6
ADAMA continued to grow strongly in Brazil, with a robust increase in volumes and increased
prices partially compensating for the volatility of the Brazilian Real.
During the third quarter, the recently launched CRONNOS TOV exceeded expectations both in
Brazil as well as in Paraguay, with strong market acceptance of this novel three-way mixture
fungicide meeting unmet needs in soybean rust.
In US dollar terms, sales in Latin America increased by a significant 20.2% in the quarter and by
18.4% in the nine-month period compared with the corresponding periods last year, reflecting the
softness of local currencies.
Asia-Pacific: Sales increased by 8.4% in the quarter and by 6.8% in the nine-month period in
constant currency terms, compared with the corresponding periods last year.
The robust performance in the quarter was driven by increased volumes and prices,
notwithstanding the continued severe drought conditions in Australia and Indonesia.
In China, sales of branded and formulated products continue to grow strongly, as ADAMA
continues to expand its product portfolio and geographic reach, and despite typhoon conditions in
the south of the country in August. A number of new registrations were obtained, including the
herbicide AGIL in potato, the insecticide GALIL in citrus, and BANJO FORTE a broad-spectrum
fungicide in pepper. ADAMA is markedly shifting away from selling unformulated, technical product
to intermediaries, by prioritizing the sale rather of distinctive branded, formulated products through
both its domestic and global commercial networks, and in so doing benefiting from the full product
positioning as well as end-to-end margin.
Thailand, Korea, and Japan performed well, supported by an expanded and increasingly
differentiated portfolio and favorable weather conditions. In spite of the continued drought in
Australia, ADAMA continues to grow its share in the country.
ADAMA registered a number of new and differentiated products, including RIMON FAST, a
unique mixture insecticide in the Philippines, OUTSHINE, a differentiated combination herbicide
for cereals in Australia, as well as BREVIS, ADAMA’s unique fruit thinner for apples in Australia,
and NIMITZ, the proprietary nematicide in Vietnam.
In US dollar terms, sales increased by 4.9% in the quarter, while sales increased by 9.7% in the
nine-month period, compared to the corresponding periods last year.
India, Middle East & Africa: Sales grew by 17.7% in the quarter and by 18.7% in the nine-month
period in constant currency terms, compared with the corresponding periods last year, driven by
significant volume growth as well as substantial price increases, as a result of strong demand for
the Combined Company’s portfolio and generally favorable weather conditions.
India saw solid growth in the quarter. ADAMA continues to expand its portfolio of differentiated
products in the country, with the launch in the quarter of BARAZIDE, a tailor-made mixture
insecticide developed specifically for the Indian market, SHAMIR a novel fungicide with dual
modes of action and NIMROD, a systemic fungicide with both protective and curative activity
against powdery mildew.
Sales in Africa grew strongly in the quarter, with South Africa enjoying a robust recovery after the
breaking of the drought in the Cape, and as well as significant growth in West Africa.
In US dollar terms, sales increased by a strong 9.7% in the quarter and 15.4% in the nine-month
period, compared to the corresponding periods last year, with the softness of local currencies,
most notably the Indian Rupee and Turkish Lira, against the US dollar, somewhat moderating the
strong growth in constant currency terms.
7
Further Information
All filings of the Combined Company, together with a presentation of the key financial highlights of
the period, can be accessed through the websites of the Combined Company at www.adama.com
and www.sanonda.cn.
##
About the Combined Company
The Combined Company, which will be named ADAMA subject to required approvals, is comprised
of Adama Agricultural Solutions Ltd. and Hubei Sanonda Ltd., and 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 6,600 strong team
reaches farmers in over 100 countries, providing them with solutions to control weeds, insects and
disease, and improve their yields. For more information, visit us at www.adama.com and follow us
on Twitter at @AdamaAgri.
Contact
Wayne Rudolph Zhujun Wang
Head of Investor Relations China Investor Relations
Email: ir@adama.com Email: irchina@adama.com
8
Abridged Consolidated Financial Statements
The following abridged consolidated financial statements and notes have been prepared as
described in Note 1. While prepared based on the principles of PRC GAAP, they do not contain all
of the information which either PRC GAAP or IFRS would require for a complete set of financial
statements and should be read in conjunction with the consolidated financial statements of both
Hubei Sanonda Co., Ltd and Adama Agricultural Solutions Ltd. as filed with the Shenzhen and Tel
Aviv Stock Exchanges, respectively.
Abridged Consolidated Income Statement for the Third Quarter
Q3 2018 Q3 2017 Q3 2018 Q3 2017
Adjusted1
USD(m) USD(m) RMB(m) RMB(m)
Revenues 872 844 5,929 5,624
Cost of Sales 591 543 4,019 3,618
Business taxes and surcharges 2 2 12 16
Gross profit 279 298 1,897 1,990
% of revenue 32.0% 35.4% 32.0% 35.4%
Operating expenses 192 190 1,307 1,267
Operating income (EBIT) 87 108 590 723
% of revenue 10.0% 12.9% 10.0% 12.9%
Financial expenses and investment income 30 34 203 226
Income before taxes 57 75 387 498
Taxes on Income 11 19 73 130
Net income 46 55 313 368
% of revenue 5.3% 6.5% 5.3% 6.5%
EBITDA 140 161 949 1,078
% of revenue 16.0% 19.1% 16.0% 19.1%
Earnings per Share – Basic 0.0188 0.0235 0.1281 0.1570
– Diluted 0.0188 0.0235 0.1281 0.1570
The number of shares used to calculate earnings per share in Q3 2017 is 2,341.9 million shares. The number of shares used to
calculate earnings per share in Q3 2018 is 2,446.6 million shares, reflecting the issuance of shares in the private placement equity
offering.
1
For an analysis of the differences between the adjusted income statement items and the income statement items as reported in the
financial statements, see below “Analysis of Gaps between Adjusted Income Statement and Income Statement in Financial Statements”.
9
Abridged Consolidated Income Statement for the First Nine Months
9M 2018 9M 2018
2 9M 2018 9M 2017 ex. EU 9M 2018 9M 2017 ex. EU
Adjusted
USD(m) USD(m) hedge RMB(m) RMB(m) hedge
USD(m) RMB(m)
Revenues 2,918 2,702 2,957 18,955 18,394 19,205
Cost of Sales 1,937 1,733 1,937 12,591 11,799 12,591
Business taxes and surcharges 8 7 8 54 49 54
Gross profit 972 962 1,011 6,310 6,547 6,560
% of revenue 33.3% 35.6% 34.2% 33.3% 35.6% 34.2%
Operating expenses 612 571 612 3,984 3,882 3,984
Operating income (EBIT) 359 391 399 2,326 2,665 2,577
% of revenue 12.3% 14.5% 13.5% 12.3% 14.5% 13.5%
Financial expenses and investment income 97 95 97 630 646 630
Income before taxes 263 296 302 1,697 2,019 1,947
Taxes on Income 59 41 60 384 279 384
Net income 203 255 242 1,313 1,740 1,564
% of revenue 7.0% 9.4% 8.2% 6.9% 9.5% 8.2%
EBITDA 518 546 558 3,360 3,724 3,611
% of revenue 17.8% 20.2% 18.9% 17.7% 20.2% 18.9%
Earnings per Share – Basic 0.0830 0.1088 0.5367 0.7429
– Diluted 0.0830 0.1088 0.5367 0.7429
2
For an analysis of the differences between the adjusted income statement items and the income statement items as reported in the
financial statements, see below “Analysis of Gaps between Adjusted Income Statement and Income Statement in Financial Statements”.
10
Abridged Consolidated Balance Sheet
September 30 September 30 September 30 September 30
2018 2017 2018 2017
USD (m) USD (m) RMB (m) RMB (m)
Assets
Current assets:
Cash at bank and on hand 933 655 6,416 4,347
Bills and accounts receivable 942 917 6,479 6,089
Inventories 1,296 1,117 8,918 7,413
Assets held for sale - 54 - 360
Other current assets, receivables and
347 399 2,384 2,649
prepaid expenses
Total current assets 3,517 3,143 24,197 20,858
Non-current assets:
Fixed assets, net 1,052 1,072 7,237 7,118
Intangible assets, net 1,453 1,224 9,996 8,123
Deferred tax assets 98 101 673 671
Other non-current assets 76 76 525 502
Total non-current assets 2,679 2,473 18,431 16,414
Total assets 6,197 5,616 42,628 37,272
Liabilities
Current liabilities:
Loans and credit from banks and
129 202 887 1,342
other lenders
Bills and accounts payable 610 548 4,195 3,635
Other current liabilities 798 800 5,492 5,309
Total current liabilities 1,537 1,550 10,574 10,286
Long-term liabilities:
Long-term loans from banks and other
44 71 305 469
lenders
Debentures 1,151 1,168 7,915 7,752
Deferred tax liabilities 63 35 431 235
Employee benefits 93 69 637 456
Other long-term liabilities 50 86 344 568
Total long-term liabilities 1,400 1,428 9,631 9,480
Total liabilities 2,937 2,978 20,205 19,766
Equity
Total equity 3,260 2,638 22,423 17,505
Total equity 3,260 2,638 22,423 17,505
Total liabilities and equity 6,197 5,616 42,628 37,272
11
Abridged Consolidated Cash Flow Statement for the Third Quarter
Q3 2018 Q3 2017 Q3 2018 Q3 2017
USD (m) USD (m) RMB (m) RMB (m)
Cash flow from operating activities:
Cash flow from operating activities 99 41 675 272
Cash flow from operating activities 99 41 675 272
Investing activities:
Additions to fixed and intangible assets -42 -51 -288 -338
Proceeds from disposal of fixed and intangible assets 0 0 0 2
Other investing activities -2 -4 -10 -24
Cash flow used for investing activities -44 -54 -298 -360
Financing activities:
Receipt of loans from banks and other lenders 12 11 85 76
Repayment of loans from banks and other lenders -10 -8 -68 -51
Other financing activities -33 -7 -218 -44
Cash flow from (used for) financing activities -30 -3 -201 -19
Effects of exchange rate movement on cash and cash -9 0 174 -94
equivalents
Net change in cash and cash equivalents 16 -16 350 -201
Cash and cash equivalents at the beginning of the period 910 670 6,021 4,538
Cash and cash equivalents at the end of the period 926 653 6,371 4,337
Free Cash Flow 52 -19 352 -128
12
Abridged Consolidated Cash Flow Statement for the First Nine Months
9M 2018 9M 2017 9M 2018 9M 2017
USD (m) USD (m) RMB (m) RMB (m)
Cash flow from operating activities:
Cash flow from operating activities 221 369 1,455 2,522
Cash flow from operating activities 221 369 1,455 2,522
Investing activities:
Additions to fixed and intangible assets -463 -156 -2,966 -1,061
Proceeds from disposal of fixed and intangible assets 380 14 2,413 96
Other investing activities -1 17 -10 118
Cash flow used for investing activities -85 -125 -563 -847
Financing activities:
Receipt of loans from banks and other lenders 12 27 85 181
Repayment of loans from banks and other lenders -332 -99 -2,116 -676
Other financing activities -81 -71 -526 -488
Cash flow from (used for) financing activities -401 -143 -2,557 -983
Effects of exchange rate movement on cash and cash -13 0 -172 -189
equivalents
Net change in cash and cash equivalents -277 101 -1,493 503
Cash and cash equivalents at the beginning of the period 1,204 553 7,864 3,834
Cash and cash equivalents at the end of the period 926 653 6,371 4,337
Free Cash Flow 93 192 616 1,320
13
Notes to Abridged Consolidated Financial Statements
Note 1: Basis of preparation
Basis of presentation and accounting policies: The abridged consolidated financial statements for the
quarters and nine-month periods ended September 30, 2018 and 2017 incorporate the financial statements of
Hubei Sanonda Ltd. (so called prior to its expected name change) and of all of its subsidiaries (“The Combined
Company”), including Adama Agricultural Solutions Ltd. (“Solutions”) and its subsidiaries.
The Combined Company has adopted the Accounting Standards for Business Enterprises issued by the
Ministry of Finance (the "MoF") and the implementation guidance, interpretations and other relevant provisions
issued or revised subsequently by the MoF (collectively referred to as "CASBE").
Solutions’ consolidated financial statements are prepared in accordance with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
The abridged consolidated financial statements contained in this release are presented in both Chinese
Renminbi (RMB) as the Combined Company’s shares are traded on the Shenzhen Stock Exchange as well as
in United States dollars ($) as this is the major currency in which the Combined Company’s business is
conducted. For the purposes of this release, a customary convenience translation has been used for the
translation from RMB to US dollars, with Income Statement and Cash Flow items being translated using the
quarterly average exchange rate, and Balance Sheet items being translated using the exchange rate at the
end of the period.
The preparation of financial statements requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimated.
Note 2: Abridged Financial Statements
For ease of use, the Financial Statements shown in this release have been abridged as follows:
Abridged Consolidated Income Statement:
“Operating expenses” includes selling and distribution expenses; general and administrative (including
research and development); impairment losses; gain (loss) from disposal of assets and non-operating
income and expenses
“Financial expenses and investment income” includes net financing expenses; gains from changes in
fair value; and investment income (including share of income of equity accounted investees)
Abridged Consolidated Balance Sheet:
“Other current assets, receivables and prepaid expenses” includes financial assets held for trading;
financial assets in respect of derivatives; prepayments; other receivables; and other current assets
“Fixed assets, net” includes fixed assets and construction in progress
“Intangible assets, net” includes intangible assets and goodwill
“Other non-current assets” includes other equity investments; long-term equity investments; long-term
receivables; investment property; and other non-current assets
“Loans and credit from banks and other lenders” includes short-term loans and non-current liabilities
due within one year
“Other current liabilities” includes financial liabilities in respect of derivatives; payables for employee
benefits, taxes, interest, dividends and others; advances from customers and other current liabilities
“Other long-term liabilities” includes long-term payables, provisions, deferred income and other non-
current liabilities
14
Analysis of Gaps between Adjusted Income Statement and Reported
Income Statement in Financial Statements
Q3 Adjusted Adjustments Reported
USD(m) Q3 2018 Q3 2017 Q3 2018 Q3 2017 Q3 2018 Q3 2017
Revenues 872 844 - - 872 844
Gross profit 279 298 - 1 279 297
Operating expenses 192 190 -22 -13 214 203
Operating income (EBIT) 87 108 22 15 65 94
Income before taxes 57 75 22 15 35 60
Net income 46 55 20 13 26 42
EBITDA 140 161 - 6 140 155
Earnings per share 0.0188 0.0235 0.0080 0.0055 0.0108 0.0181
Q3 Adjusted Adjustments Reported
RMB(m) Q3 2018 Q3 2017 Q3 2018 Q3 2017 Q3 2018 Q3 2017
Revenues 5,929 5,624 - - 5,929 5,624
Gross profit 1,897 1,990 0 10 1,897 1,981
Operating expenses 1,307 1,267 -147 -88 1,454 1,355
Operating income (EBIT) 590 723 147 98 443 625
Income before taxes 387 498 147 98 240 400
Net income 313 368 134 85 180 283
EBITDA 949 1,078 - 41 949 1,037
Earnings per share 0.1281 0.1570 0.0547 0.0364 0.0734 0.1206
9M Adjusted Adjustments Reported
USD(m) 9M 2018 9M 2017 9M 2018 9M 2017 9M 2018 9M 2017
Revenues 2,918 2,702 - - 2,918 2,702
Gross profit 972 962 1 1 970 960
Operating expenses 612 571 260 -22 353 593
Operating income (EBIT) 359 391 -258 24 618 367
Income before taxes 263 296 -258 24 521 272
Net income 203 255 -195 21 398 234
EBITDA 518 546 -311 -6 829 553
Earnings per share 0.0830 0.1088 -0.0796 0.0089 0.1626 0.0999
9M Adjusted Adjustments Reported
RMB(m) 9M 2018 9M 2017 9M 2018 9M 2017 9M 2018 9M 2017
Revenues 18,955 18,394 - - 18,955 18,394
Gross profit 6,310 6,547 9 9 6,300 6,538
Operating expenses 3,984 3,882 1,642 -152 2,341 4,034
Operating income (EBIT) 2,326 2,665 -1,633 160 3,959 2,505
Income before taxes 1,697 2,019 -1,633 160 3,330 1,859
Net income 1,313 1,740 -1,229 140 2,542 1,600
EBITDA 3,360 3,724 -1,976 -44 5,336 3,768
Earnings per share 0.5367 0.7429 -0.5025 0.0599 1.0392 0.6830
15
Income Statement Adjustments
Q3 2018 Q3 2017 Q3 2018 Q3 2017
USD (m) USD (m) RMB (m) RMB (m)
Net Income (as Reported) 26.4 42.3 179.7 282.5
Non-cash legacy amortization of 2011 PPA for acquisition of Solutions, net of tax 9.5 9.5 64.6 63.4
Non-cash Amortization of Transfer assets from Syngenta related to 2017 ChemChina 10.2 - 69.2 -
acquisition of Syngenta
One-time capital gain from sale of EU and US registrations, related to 2017 ChemChina - - - -
acquisition of Syngenta, net of taxes
Reinstatement of depreciation expenses due to classification of to-be-divested - -0.1 - -0.6
European registrations as “Held-for-Sale”, related to 2017 ChemChina acquisition of
Syngenta
Adjustment of 2017 LTI provision made in Q4 to accrual over the full year - -2.1 - -13.9
Combination Transaction – one-time bonus for long-serving employees without option - 5.5 - 36.4
plan
Total adjustments 19.7 12.8 133.8 85.2
Net Income (as Adjusted) 46.1 55.1 313.5 367.8
9M 2018 9M 2017 9M 2018 9M 2017
USD (m) USD (m) RMB (m) RMB (m)
Net Income (as Reported) 397.9 233.9 2,542.4 1,599.5
Non-cash legacy amortization of 2011 PPA for acquisition of Solutions, net of tax 28.5 28.5 185.7 194.0
Non-cash Amortization of Transfer assets from Syngenta related to 2017 ChemChina 20.3 - 134.0 -
acquisition of Syngenta
One-time capital gain from sale of EU and US registrations, related to 2017 ChemChina -244.8 -8.6 -1,556.6 -59.0
acquisition of Syngenta, net of taxes
Reinstatement of depreciation expenses due to classification of to-be-divested -2.6 -1.5 -16.5 -10.2
European registrations as “Held-for-Sale”, related to 2017 ChemChina acquisition of
Syngenta
Adjustment of 2017 LTI provision made in Q4 to accrual over the full year - -6.3 - -42.6
Non-core asset disposal 2.3 - 14.8 -
Combination Transaction – one time taxes 1.5 - 9.4 -
Combination Transaction – one-time bonus for long-serving employees without option - 5.8 - 38.5
plan
Net expense related to conclusion of 1985 tax claim in Brazil - 2.9 - 19.6
Total adjustments -194.8 20.8 -1,229.3 140.2
Net Income (as Adjusted) 203.2 254.7 1,313.2 1,739.7
16
Exchange Rate Data for the Combined Company's Principal
Functional Currencies
September 30 Q3 Average 9M Average
2018 2017 Change 2018 2017 Change 2018 2017 Change
EUR/USD 1.162 1.178 (1.3%) 1.163 1.175 (1.0%) 1.194 1.111 7.5%
USD/BRL 4.004 3.168 (26.4%) 3.958 3.164 (25.1%) 3.603 3.174 (13.5%)
USD/PLN 3.675 3.652 (0.6%) 3.704 3.624 (2.2%) 3.559 3.841 7.3%
USD/ZAR 14.182 13.496 (5.1%) 14.105 13.050 (8.1%) 12.891 13.159 2.0%
AUD/USD 0.721 0.782 (7.8%) 0.731 0.789 (7.4%) 0.758 0.766 (1.0%)
GBP/USD 1.306 1.342 (2.6%) 1.303 1.309 (0.4%) 1.351 1.274 6.0%
USD/ILS 3.627 3.529 (2.8%) 3.631 3.556 (2.1%) 3.553 3.626 2.0%
USD LIBOR 3M 2.40% 1.34% 79.1% 2.34% 1.31% 77.8% 2.19% 1.20% 82.9%
September 30 Q3 Average 9M Average
2018 2017 Change 2018 2017 Change 2018 2017 Change
USD/RMB 6.879 6.637 3.6% 6.797 6.668 1.9% 6.511 6.803 (4.3%)
EUR/RMB 7.996 7.818 2.3% 7.903 7.833 0.9% 7.776 7.558 2.9%
RMB/BRL 0.582 0.477 (21.9%) 0.582 0.475 (22.7%) 0.553 0.467 (18.6%)
RMB/PLN 0.534 0.550 2.9% 0.545 0.544 (0.2%) 0.547 0.565 3.2%
RMB/ZAR 2.062 2.033 (1.4%) 2.075 1.957 (6.0%) 1.980 1.934 (2.3%)
AUD/RMB 4.963 5.193 (4.4%) 4.971 5.264 (5.6%) 4.933 5.208 (5.3%)
GBP/RMB 8.987 8.906 0.9% 8.857 8.726 1.5% 8.795 8.670 1.4%
RMB/ILS 0.527 0.532 0.8% 0.534 0.533 (0.2%) 0.546 0.533 (2.4%)
RMB SHIBOR 3M 2.85% 4.36% (34.6%) 3.11% 4.34% (28.3%) 3.98% 4.30% (7.5%)
17
