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 1 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. 2 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. 3 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 4 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 5 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 6 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 7 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 8 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 9 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 10