ADAMA overcomes headwinds to conclude another quarter with billion-
dollar sales
Continues gaining share, crossing the $2 billion mark year-to-date
Q2 Sales of $1,002 million, in line with last year in local currencies, lower by 2.1% in US
dollar terms
Continued robust growth in Latin America and Asia-Pacific, together with contribution of
joiners, largely offsetting weather- and supply-related delays in North America, Europe and
India
Continued price increases, averaging 3% across all regions
Jingzhou old site gradually resuming operation, resulting in short supply of high-demand
products
H1 sales of $2,008 million, exceeding last year’s in constant currencies, lower by 1.8% in
US dollar terms
Cumulative 8% price increases across the portfolio since the beginning of 2018
Lack of high-demand products due to Jingzhou old site disruption constraining H1 sales by
approximately $100 million
Sales of formulated, branded products in China, other than those from the Jingzhou old site,
grew by more than 20% in both the quarter and the half-year
Q2 Gross Profit of $327 million
Gross margin of 32.6% vs. 33.4% last year
H1 gross profit of $673 million, with gross margin of 33.5% vs. 33.9% last year
Robust prices largely offset lower volume, higher procurement costs and softer currencies
Jingzhou old site disruption constraining H1 gross profit by approximately $35 million
Q2 EBITDA of $177 million
EBITDA margin of 17.7%, 0.8 p.p. below last year
H1 EBITDA of $365 million, with EBITDA margin of 18.2%, in line with H1 of last year
Strong containment of operating expenses while recording idleness cost at Jingzhou old site
Jingzhou old site disruption, including idleness cost, constraining H1 EBITDA by
approximately $50 million
Q2 Net Income of $51 million
Net income margin of 5.1%, 2.0 p.p. below last year
H1 net income of $131 million, with net income margin of 6.5%
Jingzhou old site disruption, including expected lower resulting taxes, constraining H1 Net
Income by approximately $40 million
1
BEIJING, CHINA and TEL AVIV, ISRAEL, August 21, 2019 – ADAMA Ltd. (the “Company”) (SZSE
000553) today reported its financial results for the second quarter and six-month period ended June
30, 2019.
Table 1. Financial Performance Summary
% %
% %
Adjusted, US$m Q2 2019 Q2 2018 Change H1 2019 H1 2018 Change
Change Change
CER CER
Revenues 1,002 1,023 -2.1% -0.6% 2,008 2,045 -1.8% +0.2%
Gross profit 327 342 -4.3% 673 694 -3.0%
Gross margin 32.6% 33.4% 33.5% 33.9%
Operating income (EBIT) 116 137 -15.6% 242 273 -11.2%
EBIT margin 11.5% 13.4% 12.1% 13.3%
Net income 51 73 -30.3% 131 157 -16.5%
Net income margin 5.1% 7.1% 6.5% 7.7%
EBITDA 177 189 -6.2% 365 379 -3.7%
EBITDA margin 17.7% 18.5% 18.2% 18.5%
Earnings per share - USD 0.0208 0.0929 0.0535 0.0641
- RMB 0.1419 0.1905 0.3626 0.4083
All income statement items contained in this release are presented on an adjusted basis. A detailed description and
analysis of differences between the adjusted income statement and that reported in the financial statements is contained in
the “Analysis of Gaps between Adjusted Income Statement and Income Statement in Financial Statements” in the
appendix to this release. EPS are the same for basic and diluted. Q2 and H1 2019 include the results of both Bonide and
Anpon following the completion of their acquisition.
Commenting on the results, Yang Xingqiang, Chairman of ADAMA’s Board of Directors, said, “In
challenging times, the Company’s ability to successfully execute on its growth strategy anchors our
strength. Our robust and expanding product portfolio, combined with our strong global market
presence, has allowed us to overcome market and supply challenges and deliver a resilient
performance.”
Chen Lichtenstein, President and CEO of ADAMA, added, “We now cross difficult market
conditions, with adverse weather, industry-wide supply constraints and currency headwinds. In
addition, as the gradual ramp-up of production at the Jingzhou old site is ongoing, we still lack
sufficient supply of products in high demand. We drive our performance by capitalizing on growth
markets, deepening our commercial presence and launching new and differentiated products, and
continue to outgrow the market.”
Performance in Context of Market Environment
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
2
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.
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.
Financial Highlights
Revenues in the second quarter were $1,002 million, in-line with the same period last year in
constant currency terms, and somewhat lower in US dollar terms (5% up in RMB terms). Half-year
sales reached $2,008 million, slightly above last year in constant currency terms, and somewhat
below in US dollar terms (5% up in RMB terms), reflecting the lack of high-demand products due to
the Jingzhou old site disruption, which constrained H1 sales by approximately $100 million.
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. The continued supportive pricing environment allowed for the passing on of
some of the impact of the constrained supply and higher procurement costs, while mitigating the
impact of generally softer currencies. ADAMA continues to drive growth with new launches of
differentiated product throughout all regions.
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.
Gross profit in the second quarter was $327 million (gross margin of 32.6%) and $673 million
(gross margin of 33.5%) in the half-year, compared to $342 million (gross margin of 33.4%) and
$694 million (gross margin of 33.9%) in the corresponding periods last year, respectively (up by 2%
and 3%, respectively, in RMB terms). The relatively modest decline in gross margin reflects the
benefit of stronger pricing, which compensated for a large part of the impact of the lower available
volumes, higher procurement costs and softer currencies. The Jingzhou old site disruption
constrained H1 gross profit by approximately $35 million.
Operating expenses. Total operating expenses were $211 million (21.1% of sales) in the second
quarter and $430 million (21.4% of sales) in the half-year, compared to $205 million (20.0% of sales)
and $421 million (20.6% of sales) in the corresponding periods last year, respectively. These
moderate increases reflect the ongoing containment of expenses, aided by softer currencies as well
as net other operating income of $18 million in the half-year from expropriation of land, which offset
the inclusion of joiners as well as the recording of a charge in the half-year of $20 million in respect
of idleness costs at the Jingzhou old site, as it advances its gradual ramp-up in production.
Sales and Marketing expenses in the second quarter were $160 million (16.0% of sales), and $324
million (16.1% of sales) in the first half, compared to $157 million (15.4% of sales) and $319 million
(15.6% of sales) in the corresponding periods last year, respectively. The moderate increase reflects
the benefit of expense containment and softer currencies, offset by joiners' first-time inclusion.
General and Administrative expenses in the second quarter were $36 million (3.6% of sales), and
$68 million (3.4% of sales) in the first half, compared to $35 million (3.5% of sales) and $75 million
(3.6% of sales) in the corresponding periods last year, respectively.
3
R&D expenses in the second quarter were $15 million (1.5% of sales), and $31 million (1.5% of
sales) in the first half, compared to $12 million (1.2% of sales) and $25 million (1.2% of sales) in the
corresponding periods last year, reflecting higher spend on strategic research and development
projects.
Operating income in the second quarter was $116 million (11.5% of sales) and $242 million (12.1%
of sales) in the first half, compared to $137 million (13.4% of sales) and $273 million (13.3% of sales)
in the corresponding periods last year, respectively.
EBITDA in the second quarter was $177 million (17.7% of sales) and $365 million (18.2% of sales)
in the first half, compared to $189 million (18.5% of sales) and $379 million (18.5% of sales) in the
corresponding periods last year, respectively (up by 0.2% and 2.5%, respectively in RMB terms).
The Jingzhou old site disruption, including idleness costs, constrained H1 EBITDA by approximately
$50 million.
Financial expenses and investment income. Total net financial expenses and investment income
were $49 million in the second quarter and $87 million in the first half, compared to $33 million and
$67 million in the corresponding periods last year, respectively. This reflects the impact of both the
appreciation of the Israeli Shekel as well as the higher CPI on the Shekel-denominated, CPI-linked
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.
Tax expenses. Net tax expenses were $15 million in the second quarter and $24 million in the first
half, compared to $31 million and $49 million in the corresponding periods last year, respectively.
The lower tax expenses this year were 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.
Net income in the second quarter was $51 million (5.1% of sales) and $131 million (6.5% of sales)
in the first half compared to $73 million (7.1% of sales) and $157 million (7.7% of sales) in the
corresponding periods last year, respectively (lower by 26% and 11%, respectively, in RMB terms).
The Jingzhou old site disruption, including the expected lower resulting taxes, constrained H1 Net
Income by approximately $40 million.
Working capital at June 30, 2019 was $2,067 million, compared to $1,700 million at the same point
last year. The higher level 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 somewhat
lower payable days, notably due to the inclusion of joiners. 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 additions of joiners.
Cash Flow. Operating cash flow of $144 million was generated in the quarter and $47 million was
consumed in the first half, compared to $156 million and $122 million generated in the
corresponding periods last year, respectively, mainly reflecting the build-up of working capital and
the impact of the partially operational Jingzhou old site.
Net cash used in investing activities was $44 million in the quarter and $203 million in the first half
compared to cash outflows of $49 million and $41 million in the corresponding periods last year,
respectively, with the higher 2019 outflow reflecting acquisitions, 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. Investments in fixed assets,
net of investment grants, amounted to $25 million in the quarter and $47 million in the first half
compared to $29 million and $56 million in the corresponding periods last year, respectively.
4
Free cash flow of $59 million was generated in the second quarter compared to $72 million
generated in the same period last year. In the first half, free cash flow consumed was $297 million
compared to the $42 million that the Company generated in the corresponding period last year,
noting the impact of net proceeds from divestitures in 2018, and outflow for acquisitions in 2019.
Leverage: Balance sheet net debt at the end of the quarter was $866 million, compared to $447
million as of June 30, 2018, reflecting the aforementioned net consumption of cash, acquisitions, the
assumption of their debt and dividend paid out.
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 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 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.
Table 2. Regional Sales Performance
Q2 2019 Q2 2018 Change Change H1 2019 H1 2018 Change Change
$m $m CER USD $m $m CER USD
Europe 267 309 -16.7% -13.6% 628 702 -13.6% -10.6%
North America 220 213 +3.7% +3.5% 400 407 -1.3% -1.6%
Latin America 196 172 +20.0% +14.2% 355 311 +22.6% +14.4%
Asia Pacific 173 167 +7.8% +3.1% 358 356 +5.2% +0.7%
Of which China 86 88 +1.7% -3.0% 179 173 +7.8% +3.9%
India, Middle East & Africa 146 162 -6.2% -10.2% 267 270 +5.9% -1.4%
Total 1,002 1,023 -0.6% -2.1% 2,008 2,045 +0.2% -1.8%
CER: Constant Exchange Rates
Europe: Sales in Europe were lower by 16.7% in the quarter and 13.6% in the first half, in constant
currency terms, compared to the corresponding periods last year. This is primarily due to 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.
5
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.
In US dollar terms, sales in Europe were lower by 13.6% in the quarter and 10.6% in the first half
compared to the corresponding periods last year, reflecting positive hedging contribution.
North America: Sales increased by 3.7% in the quarter and were 1.3% lower in the first half, in
constant currency terms, compared with the corresponding periods last year, with continued price
increases partially offsetting adverse weather conditions.
Significant and extended precipitation in the first quarter, followed by unprecedented floodings in
the second quarter, 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.
In US dollar terms, sales in North America increased by 3.5% in the quarter and were 1.6% lower
in the first half, compared to the corresponding periods last year.
Latin America: Latin America delivered exceptionally strong growth in both the second quarter
and half year period, with sales up by 20.0% and 22.6%, in constant currency terms, compared to
the corresponding periods last year, respectively. Business growth in key countries across the
region, alongside continued price increases, more than offset 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.
In US dollar terms, sales in Latin America increased by 14.2% in the quarter and 14.4% in the first
half, compared to the corresponding periods last year, reflecting the impact of softer currencies.
Asia-Pacific: Sales in the region grew by 7.8% in the second quarter and 5.2% in the first half, in
constant currency terms, compared to the corresponding periods last year, 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.
6
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.
In US dollar terms, sales in Asia-Pacific grew by 3.1% in the second quarter and by 0.7% in the
first half, compared to the corresponding periods last year, reflecting the impact of softer currencies.
India, Middle East & Africa: Sales were lower by 6.2% in the second quarter, yet up by 5.9% in
the first half, in constant currency terms, compared to the corresponding periods last year.
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.
In US dollar terms, sales were lower by 10.2% in the second quarter and 1.4% in the first half,
compared to the corresponding periods last year, reflecting the impact of softer currencies.
Table 3. Revenues by operating segment
Second quarter sales
Q2 2019 Q2 2018
% %
USD(m) USD(m)
Crop Protection 905 90.3% 957 93.5%
Intermediates and Ingredients 97 9.7% 66 6.5%
Total 1,002 100.0% 1,023 100.0%
First half sales
H1 2019 H1 2018
% %
USD(m) USD(m)
Crop Protection 1,814 90.4% 1,905 93.1%
Intermediates and Ingredients 194 9.6% 141 6.9%
Total 2,008 100.0% 2,045 100.0%
7
Further Information
All filings of the Company, together with a presentation of the key financial highlights of the period,
can be accessed through the Company website at www.adama.com.
##
About ADAMA
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 more than 7,000-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
Ben Cohen Zhujun Wang
Global 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
ADAMA Ltd. and Adama Agricultural Solutions Ltd. as filed with the Shenzhen and Tel Aviv Stock
Exchanges, respectively.
Table 4. Abridged Consolidated Income Statement for the Second Quarter
Q2 2019 Q2 2018 Q2 2019 Q2 2018
Adjusted1
USD(m) USD(m) RMB(m) RMB(m)
Revenues 1,002 1,023 6,828 6,527
Cost of Sales 672 679 4,577 4,330
Business taxes and surcharges 3 3 22 18
Gross profit 327 342 2,229 2,179
% of revenue 32.6% 33.4% 32.6% 33.4%
Selling and distribution expenses 160 157 1,092 1,003
General and administrative expenses 37 35 248 225
Research and development expenses 15 12 105 76
Other operating expenses / (income) -1 0.2 -4 1
Total Operating expenses 211 205 1,441 1,305
Operating income (EBIT) 116 137 788 873
% of revenue 11.5% 13.4% 11.5% 13.4%
Financial expenses and investment income 49 33 337 210
Income before taxes 66 104 451 663
Taxes on Income 15 31 104 197
Net income 51 73 347 466
% of revenue 5.1% 7.1% 5.1% 7.1%
EBITDA 177 189 1,207 1,204
% of revenue 17.7% 18.5% 17.7% 18.5%
Earnings per Share – Basic 0.0208 0.0299 0.1419 0.1907
– Diluted 0.0208 0.0299 0.1419 0.1907
Earnings per share are the same for basic and diluted. The number of shares used to calculate earnings per share is
2,446.6 million shares.
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 Stateme nts”.
9
Table 5. Abridged Consolidated Income Statement for the First Half
H1 2019 H1 2018 H1 2019 H1 2018
Adjusted2
USD(m) USD(m) RMB(m) RMB(m)
Revenues 2,008 2,045 13,616 13,026
Cost of Sales 1,329 1,346 9,010 8,571
Business taxes and surcharges 7 6 46 37
Gross profit 673 694 4,560 4,418
% of revenue 33.5% 33.9% 33.5% 33.9%
Selling and distribution expenses 324 319 2,195 2,030
General and administrative expenses 69 75 464 474
Research and development expenses 31 25 211 156
Other operating expenses / (income) 7 3 49 21
Total Operating expenses 431 421 2,919 2,682
Operating income (EBIT) 242 273 1,641 1,735
% of revenue 12.1% 13.3% 12.1% 13.3%
Financial expenses and investment income 87 67 589 426
Income before taxes 155 206 1,052 1,309
Taxes on Income 24 49 165 310
Net income 131 157 887 999
% of revenue 6.5% 7.7% 6.5% 7.7%
EBITDA 365 379 2,471 2,411
% of revenue 18.2% 18.5% 18.2% 18.5%
Earnings per Share – Basic 0.0535 0.0641 0.3626 0.4083
– Diluted 0.0535 0.0641 0.3626 0.4083
Earnings per share are the same for basic and diluted. The number of shares used to calculate earnings per share is
2,446.6 million shares.
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 St atements”.
10
Table 6. Abridged Consolidated Balance Sheet
June 30 June 30 June 30 June 30
2019 2018 2019 2018
USD (m) USD (m) RMB (m) RMB (m)
Assets
Current assets:
Cash at bank and on hand 789 914 5,425 6,050
Bills and accounts receivable 1,201 1,087 8,254 7,194
Inventories 1,504 1,251 10,338 8,275
Other current assets, receivables and
285 306 1,959 2,026
prepaid expenses
Total current assets 3,779 3,558 25,976 23,544
Non-current assets:
Fixed assets, net 1,121 1,061 7,708 7,021
Rights of use assets 80 - 548 -
Intangible assets, net 1,469 1,486 10,102 9,835
Deferred tax assets 112 94 768 624
Other non-current assets 103 84 708 554
Total non-current assets 2,885 2,726 19,834 18,034
Total assets 6,664 6,284 45,810 41,578
Liabilities
Current liabilities:
Loans and credit from banks and
397 132 2,730 872
others
Bills and accounts payable 662 660 4,554 4,366
Other current liabilities 767 825 5,270 5,460
Total current liabilities 1,826 1,617 12,555 10,699
Long-term liabilities:
Long-term loans 98 48 674 320
Debentures 1,186 1,141 8,153 7,549
Deferred tax liabilities 51 71 351 472
Employee benefits 94 95 644 631
Other long-term liabilities 139 55 954 363
Total long-term liabilities 1,567 1,411 10,775 9,336
Total liabilities 3,393 3,028 23,331 20,034
Equity
Total equity 3,270 3,256 22,479 21,543
Total equity 3,270 3,256 22,479 21,543
Total liabilities and equity 6,664 6,284 45,810 41,578
11
Table 7. Abridged Consolidated Cash Flow Statement for the Second Quarter
Q2 2019 Q2 2018 Q2 2019 Q2 2018
USD (m) USD (m) RMB (m) RMB (m)
Cash flow from operating activities:
Cash flow from operating activities 144 156 985 995
Cash flow from operating activities 144 156 985 995
Investing activities:
Acquisitions of fixed and intangible assets -47 -48 -319 -304
Cash received from disposal of investments 2 - 12 -
Proceeds from disposal of fixed and intangible assets - - - 1
Acquisitions of a subsidiary - - -2 -
Other investing activities 1 -1 9 -7
Cash flow used for investing activities -44 -49 -300 -310
Financing activities:
Receipt of loans from banks and other lenders 66 - 451 -
Repayment of loans from banks and other lenders -30 -33 -205 -212
Other financing activities -50 -41 -343 -258
Cash flow from (used for) financing activities -14 -74 -98 -470
Effects of exchange rate movement on cash and cash -7 -14 57 209
equivalents
Net change in cash and cash equivalents 79 20 643 424
Cash and cash equivalents at the beginning of the period 704 890 4,739 5,597
Cash and cash equivalents at the end of the period 783 910 5,382 6,021
Free Cash Flow 59 72 404 453
12
Table 8. Abridged Consolidated Cash Flow Statement for the First Half
H1 2019 H1 2018 H1 2019 H1 2018
USD (m) USD (m) RMB (m) RMB (m)
Cash flow from operating activities:
Cash flow from operating activities -47 122 -305 780
Cash flow from operating activities -47 122 -305 780
Investing activities:
Acquisitions of fixed and intangible assets -89 -421 -606 -2,678
Cash received from disposal of investments 3 - 20 -
Proceeds from disposal of fixed and intangible assets 5 380 31 2,413
Acquisitions of a subsidiary -123 - -827 -
Other investing activities 2 - 12 1
Cash flow used for investing activities -203 -41 -1,370 -265
Financing activities:
Receipt of loans from banks and other lenders 294 - 1,988 -
Repayment of loans from banks and other lenders -68 -322 -464 -2,048
Other financing activities -116 -48 -788 -308
Cash flow from (used for) financing activities 109 -370 736 -2,356
Effects of exchange rate movement on cash and cash -2 -4 -25 -2
equivalents
Net change in cash and cash equivalents -142 -294 -964 -1,843
Cash and cash equivalents at the beginning of the period 925 1,204 6,346 7,864
Cash and cash equivalents at the end of the period 783 910 5,382 6,021
Free Cash Flow -297 42 -1,996 254
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 ended June 30, 2019 and 2018 incorporate the financial statements of ADAMA Ltd. and of all of its
subsidiaries (the “Company”), including Adama Agricultural Solutions Ltd. (“Solutions”) and its subsidiaries.
The 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").
The abridged consolidated financial statements contained in this release are presented in both Chinese
Renminbi (RMB), as the 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 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 expenses;
research and development expenses; asset and credit 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,
derivatives financial assets, receivables financing, prepayments, other receivables; and other current
assets
“Fixed assets, net” includes fixed assets, construction in progress and rights-of-use assets
“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 others” includes short-term loans and non-current liabilities due
within one year
“Other current liabilities” includes derivatives financial liabilities, payables for employee benefits,
contract liabilities, taxes payable, other payables and other current liabilities
“Other long-term liabilities” includes long-term payables, lease liability, provisions and other non-
current liabilities
14
Table 9. Analysis of Gaps between Adjusted Income Statement and
Reported Income Statement in Financial Statements
Q2 Adjusted Adjustments Reported
USD(m) Q2 2019 Q2 2018 Q2 2019 Q2 2018 Q2 2019 Q2 2018
Revenues 1,002 1,023 - - 1,002 1,023
Gross profit 327 342 -1 - 328 342
Operating expenses 211 205 -22 -23 233 228
Operating income (EBIT) 116 137 21 23 95 114
Income before taxes 66 104 20 23 46 81
Net income 51 73 18 21 33 52
EBITDA 177 189 -3 2 180 187
Earnings per share 0.0208 0.0299 0.0133 0.0212
Q2 Adjusted Adjustments Reported
RMB(m) Q2 2019 Q2 2018 Q2 2019 Q2 2018 Q2 2019 Q2 2018
Revenues 6,828 6,527 - - 6,828 6,527
Gross profit 2,229 2,179 -3 - 2,233 2,179
Operating expenses 1,441 1,305 -144 -148 1,586 1,453
Operating income (EBIT) 788 873 141 148 647 726
Income before taxes 451 663 137 148 314 515
Net income 347 466 125 135 222 331
EBITDA 1,207 1,204 -22 10 1,229 1,194
Earnings per share 0.1419 0.1905 0.0907 0.1352
H1 Adjusted Adjustments Reported
USD(m) H1 2019 H1 2018 H1 2019 H1 2018 H1 2019 H1 2018
Revenues 2,008 2,045 - - 2,008 2,045
Gross profit 673 694 2 2 671 692
Operating expenses 430 421 -49 -63 479 140
Operating income (EBIT) 242 273 51 -281 191 553
Income before taxes 155 206 47 -280 108 486
Net income 131 157 44 -215 87 372
EBITDA 365 379 2 -310 363 689
Earnings per share 0.0535 0.0641 0.0355 0.1518
H1 Adjusted Adjustments Reported
RMB(m) H1 2019 H1 2018 H1 2019 H1 2018 H1 2019 H1 2018
Revenues 13,616 13,026 - - 13,616 13,026
Gross profit 4,560 4,418 13 10 4,547 4,408
Operating expenses 2,919 2,682 -330 1,790 3,249 892
Operating income (EBIT) 1,641 1,735 343 -1,781 1,298 3,516
Income before taxes 1,052 1,309 323 -1,781 729 3,090
Net income 887 999 298 -1,364 589 2,363
EBITDA 2,471 2,411 10 -1,976 2,461 4,387
Earnings per share 0.3626 0.4083 0.2406 0.9658
15
Table 10. Income Statement Adjustments
In addition to the reported financial results that the Company prepares in accordance with PRC GAAP, the
Company’s management prepares non-GAAP, Adjusted financial results to present what the Company
believes is a more useful view of the true economic performance of the business on an ongoing basis. These
Adjusted results exclude items that are of a one-time or non-cash/non-operational nature that do not impact
the ongoing performance of the business and reflects the way the Company’s management and Board of
Directors view the performance of the Company. The Company believes that excluding the effects of these
items from its operating results allows an effective assessment and comparison of the underlying financial
performance of its business from period to period and within the market.
Q2 2019 Q2 2018 Q2 2019 Q2 2018
USD (m) USD (m) RMB (m) RMB (m)
Net Income (Reported) 32.6 51.9 221.9 330.8
Adjustments to COGS & Operating Expenses:
1. Amortization of Legacy PPA of 2011 acquisition of Solutions (non- 11.5 11.5 78.1 73.0
cash)
2. One-time capital gain from Divestment of registrations due to 2017 - - - -
ChemChina-Syngenta transaction
3. Amortization of Transfer assets received and written-up due to 2017 9.2 10.2 62.5 64.8
ChemChina-Syngenta transaction (non-cash)
4. Reinstatement of amortization expenses due to Divestment (non- - - - -
cash)
5. Accelerated depreciation due to relocation (non-cash) 2.2 - 15.2 -
6. Non-core assets closure (non-cash) - 0.8 - 4.9
7. Long-term incentive classified on an equity-settled basis (non-cash) -3.3 0.8 -22.7 5.0
8. Amortization of acquisition PPA (non-cash) 1.2 - 8.1 -
9. Sanonda-ADAMA Combination transaction one-time stamp tax - - - -
Total Adjustments to Operating Income (EBIT) 20.7 23.2 141.1 147.7
Total Adjustments to EBITDA -3.2 1.6 -21.6 9.9
Adjustments to Financing Expenses:
10. Revaluation of non-cash adjustment related to non-controlling -0.7 - -4.5 -
interest
Total Adjustments to Income before Taxes 20.0 23.2 136.7 147.7
Adjustments to Taxes
1. Tax shield on Legacy PPA of 2011 acquisition of Solutions -1.9 -1.9 -13.3 -12.4
2. Tax expense due to capital gain from registrations Divestment - - - -
8. Deferred tax due to PPA 0.3 - 1.9 -
Total adjustments to Net Income 18.4 21.2 125.3 135.3
Net Income (Adjusted) 50.9 73.1 347.2 466.1
16
H1 2019 H1 2018 H1 2019 H1 2018
USD (m) USD (m) RMB (m) RMB (m)
Net Income (Reported) 86.9 371.5 588.7 2,362.8
Adjustments to COGS & Operating Expenses:
1. Amortization of Legacy PPA of 2011 acquisition of Solutions (non- 22.9 22.9 155.3 145.8
cash)
2. One-time capital gain from Divestment of registrations due to 2017 - -314.3 - -1,998.5
ChemChina-Syngenta transaction
3. Amortization of Transfer assets received and written-up due to 2017 19.8 10.2 134.2 64.8
ChemChina-Syngenta transaction (non-cash)
4. Reinstatement of amortization expenses due to Divestment (non- - -2.6 - -16.5
cash)
5. Accelerated depreciation due to relocation (non-cash) 4.5 - 30.7 -
6. Non-core assets closure (non-cash) - 2.3 - 14.8
7. Long-term incentive classified on an equity-settled basis (non-cash) 1.4 -0.1 9.2 -0.9
8. Amortization of acquisition PPA (non-cash) 2.1 - 14.1 -
9. Sanonda-ADAMA Combination transaction one-time stamp tax - 1.5 - 9.4
Total Adjustments to Operating Income (EBIT) 50.7 -280.2 343.6 -1,781.0
Total Adjustments to EBITDA 1.6 -310.9 10.3 -1,976.7
Adjustments to Financing Expenses:
10. Revaluation of non-cash adjustment related to non-controlling -3.0 - -20.5 -
interest
Total Adjustments to Income before Taxes 47.7 -280.2 323.0 -1,781.0
Adjustments to Taxes
1. Tax shield on Legacy PPA of 2011 acquisition of Solutions -3.9 -3.9 -26.4 -24.8
2. Tax expense due to capital gain from registrations Divestment - 69.5 - 441.8
8. Deferred tax due to PPA 0.3 - 1.9 -
Total adjustments to Net Income 44.1 -214.6 298.5 -1,363.9
Net Income (Adjusted) 131.0 156.9 887.1 998.8
Notes:
1. Amortization of Legacy PPA of 2011 acquisition of Solutions (non-cash): Under PRC GAAP, the Company has inherited the historical
“legacy” amortization charge from the first combined reporting for Q3 2017 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 completed and removed in the
second half of 2020.
2. One-time capital gain from Divestment of registrations due to 2017 ChemChina-Syngenta transaction: In the first quarter of 2018, the
Company earned a one-time profit on the Divestment of crop protection products in connection with the approval by the EU Commission of the
acquisition of Syngenta by ChemChina. This one-time profit is excluded from the Adjusted financial results due to its one-time nature, while the
related tax expense is also adjusted for.
3. Amortization of Transfer assets received and written-up due to 2017 ChemChina-Syngenta transaction (non-cash): 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, and since the Company excludes the one-time gain that it made on the divested products, the additional amortization charge
incurred due to the written-up of the acquired assets is also excluded to present a consistent view of Divestment and Transfer transactions,
which had no net impact on the underlying economic performance of the Company. See note 2.
4. Reinstatement of amortization expenses, related to the Divestment (non-cash): Reinstatement of amortization expenses due to
classification of to-be-divested European registrations as “Held-for-Sale”, related to 2017 ChemChina acquisition of Syngenta.
5. Accelerated depreciation due to relocation (non-cash): Production assets located in the old production sites in Jingzhou and Huai’An will
be relocated to the new sites in the coming years. Since some of the older production assets may not be able to be relocated, some of these
assets which are no longer operational are being written off (or impaired), while for others, their economic life has been shortened and
therefore will be depreciated over a shorter period. Since these are older assets that were built many years ago and will be replaced by newer
production facilities at the new sites, and since the ongoing operations of the business will not be impacted thereby, the Company adjusts for
the impact of the accelerated depreciation of these assets.
17
6. Non-core assets closure (non-cash): One-time charge due to closure of peripheral, non-material assets.
7. Long-term incentive classified on an equity-settled basis (non-cash): The Company granted its employees, who are mainly non-Chinese
residents, a long term incentive (LTI) in the form of 'phantom' options, due to the complexity of granting Chinese-listed, equity-settled options to
non-Chinese employees. As such, the Company records an expense, or recognizes income, depending on the fluctuation in the Company’s
share price, even though the Company will not incur any cash impact prior to exercise of the phantom options. To neutralize the impact of such
share price movements on the measurement of the Company’s performance and expected employee compensation, in the Company’s
adjusted financial performance, the LTI is presented on an equity-settled basis in accordance with the value of the plan at the grant date.
8. Amortization of acquisition PPA (non-cash): Related to the amortization of non-cash intangible assets created as part of acquisitions; has
no impact on the ongoing performance of the companies acquired.
9. Sanonda-ADAMA Combination transaction one-time stamp tax: One-time stamp tax expense incurred related to the Combination.
10. Revaluation of non-cash adjustment related to non-controlling interest: Relates to put options issued to non-controlling interests as part
of historical business combinations which took place before January 1, 2010. The put options are presented as a liability at the present value of
the future exercise price. The revaluation of these put options in Solutions is recognized under IFRS to Goodwill, but due to the acquisition of
Solutions by the Company in 2017, which is treated from an accounting perspective as a “Business Combination Under Common Control”,
such revaluation is recorded as a profit or loss item in the financial reports of the Company. The revaluations of such put options have no
bearing on the ongoing performance of the Company and are therefore adjusted for.
18
Table 11. Exchange Rate Data for the Company's Principal
Functional Currencies
June 30 Q2 Average H1 Average
2019 2018 Change 2019 2018 Change 2019 2018 Change
EUR/USD 1.138 1.166 (2.4%) 1.124 1.193 (5.8%) 1.130 1.211 (6.7%)
USD/BRL 3.832 3.856 0.6% 3.919 3.606 (8.7%) 3.845 3.425 (12.3%)
USD/PLN 3.734 3.744 0.3% 3.812 3.575 (6.6%) 3.801 3.487 (9.0%)
USD/ZAR 14.140 13.701 (3.2%) 14.407 12.623 (14.1%) 14.213 12.284 (15.7%)
AUD/USD 0.703 0.739 (4.9%) 0.700 0.757 (7.5%) 0.706 0.771 (8.4%)
GBP/USD 1.270 1.317 (3.5%) 1.285 1.361 (5.6%) 1.294 1.376 (6.0%)
USD/ILS 3.566 3.650 2.3% 3.595 3.570 (0.7%) 3.620 3.514 (3.0%)
USD LIBOR 3M 2.32% 2.34% (0.9%) 2.51% 9..2% 9.2% 2.69% 9.22% 27.5%
June 30 Q2 Average H1 Average
2019 2018 Change 2019 2018 Change 2019 2018 Change
USD/RMB 6.875 6.617 3.9% 6.816 6.376 3.9% 6.780 6.367 6.5%
EUR/RMB 7.821 7.714 1.4% 7.661 7.605 0.7% 7.661 7.708 (0.6%)
RMB/BRL 0.557 0.583 4.3% 0.575 0.565 (1.7%) 0.567 0.538 (5.4%)
RMB/PLN 0.543 0.566 4.0% 0.559 0.561 0.3% 0.561 0.548 (2.3%)
RMB/ZAR 0.486 0.483 (0.7%) 0.473 0.505 6.3% 0.477 0.518 8.0%
AUD/RMB 4.832 4.892 (1.2%) 4.773 4.828 (1.1%) 4.790 4.912 (2.5%)
GBP/RMB 8.734 8.715 0.2% 8.762 8.679 1.0% 8.773 8.761 0.1%
RMB/ILS 0.519 0.552 6.0% 0.527 0.560 5.8% 0.534 0.552 3.3%
RMB SHIBOR 3M 2.708% 4.155% (34.8%) 2.867% 4.190% (31.6%) 2.866% 4.441% (35.5%)
19
